EXHIBIT 10.16
PIER 1 IMPORTS, INC.
SENIOR MANAGEMENT ANNUAL BONUS PLAN
For the Fiscal Year Ending February 25, 1995
1. Purpose. The purpose of the Pier 1 Imports, Inc. Senior Management
Annual Bonus Plan (the "Plan") is to encourage superior performance and
reward senior management of the Company for effective service as measured by
total shareholder return of the Company relative to a peer group of specialty
retail companies as specifically set forth below. The opportunities for
compensation under the Plan are further intended to strengthen the ability of
the Company to retain and attract the senior management upon which continued
growth and profitability of the Company depend.
2. Definitions. For purposes of the Plan, the following terms shall
have the meanings set forth below unless otherwise expressly provided or
unless the context otherwise requires:
"Committee" means the Compensation Committee of the Board of Directors of
the Company.
"Company" means Pier 1 Imports, Inc., a Delaware corporation.
"CEO" means the Chief Executive Officer of the Company.
"CFO" means the Chief Financial Officer of the Company.
"COO" means the Chief Operating Officer of the Company.
"Participant" means each of the CEO, COO and CFO.
"Peer Group" means the group of companies provided in Section 5(c) hereof.
"Target Year" means the fiscal year of the Company for which awards are
determined under the Plan.
"Total Shareholder Return" of a company for a year means a fraction,
expressed as a percentage, in which (A) the numerator of the fraction is the
sum (which can be a negative amount) of (i) the price of the publicly traded
common stock of the company at the end of the year minus the price of such
stock at the end of the prior year, plus (ii) the total value (at the time of
payment) of all dividends and other distributions (other than dividends and
distributions consisting of shares of common stock of such company) actually
paid during the year with respect to a single share of common stock, and (B)
the denominator of the fraction is the price of the common stock at the end
of the prior year. The price of the common stock at the end of the prior
year shall be adjusted to reflect stock dividends, stock splits, combinations
of shares and similar changes to the company's capital structure during the
year. For purposes of these calculations, the year for each company shall be
the Target Year. The price of the common stock of a company shall be
determined as the average of the closing prices, as reported for composite
transactions, of such common stock during the 10 consecutive days in which
such common stock was publicly traded ending on the last day of the Target
Year or the year preceding the Target Year, as appropriate.
3. Administration. The Plan shall be administered by the Committee,
which shall have the power to interpret the Plan and to make all other
determinations necessary or advisable for the administration of the Plan.
4. Participation. Each Participant shall participate in the Plan
during each Target Year that the Participant is employed in such capacity by
the Company. If a Participant ceases to be employed by the Company for any
reason prior to the end of a Target Year, such Participant's participation in
the Plan will terminate, and such Participant will be ineligible to receive
any compensation under the Plan for such Target Year.
5. Awards.
(a) Annual awards under the Plan shall be based on Total Shareholder
Return of the Company's Common Stock for the Target Year compared with Total
Shareholder Return for each of the companies constituting the Peer Group. No
awards shall be payable under the Plan to the extent that consolidated net
income (after inclusion of awards hereunder) of the Company shall be less
than zero.
(b) In order to determine awards for each Participant, the Company
shall be ranked relative to each of the Peer Group companies in accordance
with Total Shareholder Return for the Target Year. After the Company's rank
has been established within the Peer Group, the amount of the award for each
Participant shall equal the portion of such Participant's base salary during
the Target Year that is equal to the percent of such Participant's base
salary listed opposite the Company's ranked position in the table set forth
on Exhibit A attached hereto.
(c) The Peer Group shall consist of the high-growth specialty retail
companies listed on Exhibit B attached hereto. In the event that during a
Target Year one or more of the companies comprising the Peer Group shall
dissolve, merge, consolidate, cease to be publicly traded or are no longer
appropriate for comparison in the Peer Group, as determined by the Committee
in its discretion, then such company or companies shall be automatically
deleted from the Peer Group and for each company deleted a company listed
under "Alternate companies" on Exhibit B shall, in the order listed, replace
such deleted company. If the number of companies in the Peer Group that
dissolve, merge, consolidate, cease to be publicly traded or are no longer
appropriate for comparison in the Peer Group, as determined by the Committee
in its discretion, shall be greater than the number listed as "Alternate
companies" on Exhibit B, then the Committee shall select additional companies
for replacement or make such other changes to the Plan that the Committee in
its discretion deems appropriate. The Committee may, in its discretion prior
to the commencement of a Target Year, delete, add or substitute companies in
the Peer Group when in the judgment of the Committee such changes to the Peer
Group advance the purposes of the Plan.
6. Certification and Payment of Awards. As soon as practicable after
the end of a Target Year, the independent certified public accountants for
the Company shall report to the Committee the amount of the awards for the
Participants, along with supporting data for such determination. After
review of such information, and upon determination that the awards conform to
the provisions of the Plan, the Committee shall certify that the awards
conform to the Plan. After such certification, the Company shall pay such
awards in cash to the appropriate Participants.
7. Effective Date; Shareholder Approval. The Plan shall be effective
as of the beginning of the Company's fiscal year ending February 25, 1995;
provided that prior to the completion of such fiscal year, the Plan shall be
approved by the holders of a majority of the shares of Company Common Stock
present or represented by proxy and voting on the Plan at a duly held meeting
of the shareholders of the Company.
8. Amendment of the Plan. The Committee may from time to time modify
or amend the Plan in any respect and make reasonable interpretations of the
Plan to take into account extraordinary or unusual items or events that
affect the purposes of the Plan; provided that any material amendments
regarding eligible Participants, the terms of the performance goals or the
maximum amounts of compensation payable under the Plan shall be approved by
the shareholders of the Company prior to any payments to Participants under
the amended Plan.
9. Termination of the Plan. The Board of Directors of the Company may
terminate the Plan prior to the commencement of any fiscal year to which the
Plan would otherwise apply.
10. Employment Rights. Nothing in the Plan shall confer upon any
Participant the right to continue in the employ of the Company or its
subsidiaries or shall interfere with or restrict in any way the rights of the
Participant's employer to discharge the Participant at anytime for any reason
whatsoever, with or without cause.
EXHIBIT A
Bonus as % of Base Salary
Ranked Position
Award Level of the Company CEO COO CFO
and Peer Group
Maximum Highest 125% 110% 100%
2 100% 90% 85%
3 100% 90% 85%
4 100% 90% 85%
5 75% 70% 60%
6 75% 70% 60%
7 75% 70% 60%
8 75% 70% 60%
9 40% 36% 32%
10 40% 36% 32%
11 40% 36% 32%
Threshold 12 40% 36% 32%
13 No Bonus Paid
14 No Bonus Paid
15 No Bonus Paid
Lowest
EXHIBIT B
The Peer Group shall be comprised of the following companies:
The Bombay Company, Inc.
Charming Shoppes, Inc.
Dayton Hudson Corporation
Dillard Department Stores, Inc.
Duty Free International, Inc.
Fabri-Centers of America, Inc.
The Gap, Inc.
The Home Depot, Inc.
The Limited, Inc.
Michaels Stores, Inc.
Nordstrom Inc.
The Sherwin-Williams Company
Toys "R" Us, Inc.
Wal-Mart Stores, Inc.
Walgreen Co.
Alternate companies:
Heilig-Meyers Company
Lands' End, Inc.
Price/Costco, Inc.