UNITED STATES SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
PROXY STATEMENT
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(Amendment No. )
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[ ] Preliminary Proxy Statement
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[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
PIER 1 IMPORTS, INC.
(Name of Registrant as Specified In Its Charter)
PIER 1 IMPORTS, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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PIER 1 IMPORTS, INC.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
May 19, 1995
Dear Shareholder:
On behalf of the Board of Directors and Management, you are cordially
invited to attend the Annual Meeting of Shareholders to be held at 10:00 a.m.
local time on Thursday, June 22, 1995, at the Roundup Inn, Will Rogers
Memorial Center Complex, 3400 Crestline Road, Fort Worth, Texas. The formal
Notice of the Annual Meeting of Shareholders and Proxy Statement are
attached. Please read them carefully.
It is important that your shares be voted at the meeting in accordance
with your preference. If you do not plan to attend, please complete the
proxy card located in the envelope's address window by indicating your vote
on the issues presented and sign, date and return the proxy in the prepaid
envelope provided. If you are able to attend the meeting and wish to vote in
person, you may withdraw your proxy at that time.
Sincerely,
Clark A. Johnson
Chairman and Chief
Executive Officer
PIER 1 IMPORTS, INC.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 22, 1995
The Annual Meeting of Shareholders of Pier 1 Imports, Inc., a Delaware
corporation (the "Company"), will be held on June 22, 1995, at 10:00 a.m.,
local time, at the Roundup Inn, Will Rogers Memorial Center Complex, 3400
Crestline Road, Fort Worth, Texas for the following purposes:
(1) To elect seven Directors to hold office until the next Annual
Meeting of Shareholders.
(2) To amend the Company's Certificate of Incorporation to increase
the number of authorized shares of common stock from 100,000,000 to
200,000,000.
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only holders of record of Common Stock at the close of business on May
3, 1995, are entitled to notice of and to vote at the Annual Meeting. A
complete list of shareholders entitled to vote will be available for
examination at the Company's offices at 301 Commerce Street, Suite 600, Fort
Worth, Texas by any Company Shareholder during ordinary business hours for a
period of ten days prior to the date of the Annual Meeting.
To ensure that your vote will be counted, please complete, sign and date
the enclosed proxy card and return it promptly in the enclosed prepaid
envelope, whether or not you plan to attend the Annual Meeting. Your proxy
may be revoked in the manner described in the accompanying Proxy Statement at
any time before it has been voted at the Annual Meeting.
By Order of the Board of Directors,
J. Rodney Lawrence
Senior Vice President and Secretary
May 19, 1995
Fort Worth, Texas
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY,
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING
PIER 1 IMPORTS, INC
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 22, 1995
This Proxy Statement is being furnished to the holders of Common Stock,
par value $1.00 per share (the "Common Stock") of Pier 1 Imports, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual
Meeting of Shareholders to be held on June 22, 1995, and at any adjournments
or postponements thereof. Shareholders representing a majority of the Common
Stock outstanding and entitled to vote must be present in person or
represented by proxy in order to constitute a quorum to conduct business at
the meeting. The Board of Directors has fixed the close of business on May
3, 1995, as the record date for the determination of the Shareholders
entitled to notice of and to vote at the Annual Meeting. On the record date,
37,737,008 shares of Common Stock were outstanding and entitled to be voted
at the meeting. Each share of Common Stock entitles the registered holder
thereof to one vote on each matter submitted to a vote at the meeting.
All shares of Common Stock represented at the Annual Meeting by properly
executed proxies received prior to the meeting, unless the proxies have been
properly revoked prior to voting, will be voted in accordance with the
instructions on such proxies. If no instructions are given, proxies will be
voted in accordance with the recommendations of the Board of Directors, as
noted in this Proxy Statement. Any proxy given pursuant to this solicitation
may be revoked by the person giving it at any time before it is voted.
Proxies may be revoked by delivery to the Corporate Secretary of the Company
at the Company's principal executive offices at 301 Commerce Street, Suite
600, Fort Worth, Texas 76102 of a written notice of revocation bearing a
later date than the proxy, or by duly executing and delivering to the
Corporate Secretary a subsequent proxy relating to the same shares, or by
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute revocation of a proxy).
With regard to all items submitted for Shareholder vote, abstentions are not
counted as voting for approval of a matter and, therefore, will have the same
effect as a vote "against" the matter, even though the Shareholder may
interpret such action differently. Votes withheld, including broker non-
votes, are neither counted as voting for nor against a matter and, therefore,
will be disregarded as to that matter.
The accompanying proxy also covers shares of Common Stock held for
participants in the Company's Stock Purchase Plan and will serve as voting
instructions for the Plan administrators to vote such shares.
This Proxy Statement and the accompanying proxy are being first sent to
Shareholders on May 19, 1995.
ELECTION OF DIRECTORS
Seven Directors of the Company are to be elected at the Annual Meeting
to serve until the next Annual Meeting of Shareholders of the Company and
until their respective successors shall have been elected and qualified.
Unless authority to vote for one or more Directors is withheld, proxies will
be voted for the election of the persons listed below or, if any such person
shall unexpectedly become unable or unwilling to accept nomination or
election, for the election of such other person as the Board of Directors may
recommend. Directors will be elected by holders of a majority of the shares
of Common Stock present in person or represented by proxy and entitled to
vote. The persons listed below are Directors of the Company now in office
and are nominees for re-election.
Nominees for Directors
CLARK A. JOHNSON
Clark A. Johnson, age 64, has served as Chairman and Chief Executive
Officer of the Company and has been a member of the Executive Committee since
March 1988. He has been a Director of the Company since March 1983. From
May 1985 to March 1988 Mr. Johnson served as President and Chief Executive
Officer of the Company. He is a director of Albertson's Inc., InterTAN,
Inc., The Actava Group Inc., Anacomp, Inc. and Heritage Media Corporation.
CHARLES R. SCOTT
Charles R. Scott, age 67, is Vice Chairman of the Board of Directors of
the Company, is a member of the Executive and the Compensation Committees and
has been a Director of the Company since March 1983. He is a principal,
president and chief executive officer of Leadership Centers USA, Inc., which
conducts business under the name TEC-The Executive Committee. Mr. Scott
served as President and Chief Executive Officer of The Actava Group Inc. from
February 1991 until April 1994, and from August 1970 to February 1991 served
as chairman, president and chief executive officer of Intermark, Inc. He is
also a director of Bank of California.
MARVIN J. GIROUARD
Marvin J. Girouard, age 55, has served as President and Chief Operating
Officer of the Company and as a Director since August 1988. From May 1985
until August 1988, he served as Senior Vice President - Merchandising of Pier
1 Imports (U.S.), Inc., a wholly owned subsidiary of the Company. He also is
a director of ENSERCH Corporation.
SALLY F. McKENZIE
Sally F. McKenzie, age 66, has been a Director of the Company since
November 1985 and is chairman of the Compensation Committee and a member of
the Audit Committee. Mrs. McKenzie has served as a volunteer leader on a
local, regional and national basis for over five years.
JAMES M. HOAK, JR.
James M. Hoak, Jr., age 51, has been a Director of the Company since
September 1991 and is chairman of the Executive Committee and a member of the
Audit Committee. He has served as chairman of Heritage Media Corporation
since August 1987. From 1971 to 1987 he served as president of Heritage
Communications, Inc. and as its chairman and director from August 1987 to
December 1990. From February 1991 to January 1995 he served as chairman and
director of Crown Media, Inc. He is also a director of Airgas, Inc., Sun
Coast Industries, Inc., Texas Industries, Inc. and Midwest Resources, Inc.
Until April 1994, he served as a Governor of the American Stock Exchange.
MARTIN L. BERMAN
Martin L. Berman, age 55, has been a Director of the Company since June
1994 and is chairman of the Audit Committee. Since April 1995 he has been
chairman, chief executive officer and a principal of Palisade Capital
Management L.L.C. ("Palisade") and senior managing director of Palisade
Capital Securities, L.L.C., a related company. From 1990 to April 1995 he
served as a managing director at Smith Barney Inc., prior to which he served
as a managing director at Drexel Burnham Lambert, Incorporated. He is a
director of Calvin Klein Jeanswear.
CRAIG C. GORDON
Craig C. Gordon, age 40, has been a Director of the Company, since March
1995. He has served as president of Off-The-Record Research since November
1994. From April 1987 to March 1995, he was a principal of RCM Capital
Management.
Board Meetings, Committees and Fees
During the 1995 fiscal year, the Board of Directors of the Company met
on four occasions and took action by unanimous written consent in lieu of a
meeting on three occasions. Each of the Directors attended at least 75% of
the total number of meetings of the Board of Directors and of the Committees
on which he or she served.
Each Director who was not an officer of the Company was paid a fee of
$24,000 during the past fiscal year and also received $1,250 for each Board
meeting attended and $500 for each committee meeting attended. Directors
receive annual grants of stock options covering 3,000 shares per Director
under the Non-Employee Director Stock Option Plan and are eligible to
participate in the Company's Stock Purchase Plan by contributing monthly up
to the full amount of their Director fees and receiving matching
contributions from the Company of from 10% to 50% of their contributions,
depending on length of service with the Company. Directors of the Company
who are employees of the Company serve without compensation for their
services as Directors of the Company.
Executive Committee. The Executive Committee is entitled to exercise
all powers of the Board when the Board is not in session to the extent
permitted by law and the Bylaws. The Executive Committee took action by
unanimous written consent in lieu of a meeting on one occasion during the
last fiscal year. Committee members are Directors Hoak (chairman), Scott and
Johnson.
The Executive Committee also performs the functions of the nominating
committee and is responsible for considering and making recommendations to
the Board regarding nominees for election to the Board and Board Committee
assignments. The Executive Committee will consider recommendations submitted
by Shareholders for nominees for election to the Board.
Audit Committee. The Audit Committee recommends independent auditors
for appointment by the Board and is responsible for reviewing the financial
condition of the Company, its internal controls and audit program, the
performance and findings of internal audits, and any action to be taken
thereon by management. Also, it reviews audit and examination reports of the
independent auditors. The Audit Committee held two meetings during the last
fiscal year. Committee members are Directors Berman (chairman), McKenzie and
Hoak.
Compensation Committee. The Compensation Committee establishes and
administers incentive-based compensation plans for senior executive officers
and reviews and makes recommendations to the Board concerning other
compensation policies. The Compensation Committee held seven meetings during
the last fiscal year. Committee members are Directors McKenzie (chairman)
and Scott.
Security Ownership of Management
The following table and footnotes indicate the ownership on April 1,
1995, of the Company's Common Stock by each Director and nominee, each
executive officer named in the Summary Compensation Table, and all Directors
and executive officers as a group:
Shares Percent
Beneficially of
Name Owned(1)(2) Class
- ---- ----------- ------
Martin L. Berman. . . . . . . 7,872 * %
Marvin J. Girouard. . . . . . 480,771 1.3
Craig C. Gordon . . . . . . . 439 *
James M. Hoak . . . . . . . . 36,853 *
Clark A. Johnson. . . . . . . 763,559 2.0
Sally F. McKenzie . . . . . . 29,456 *
Charles R. Scott. . . . . . . 82,708 *
Robert G. Herndon . . . . . . 59,349 *
Adrian G. Long. . . . . . . . 27,333 *
J. Rodney Lawrence. . . . . . 58,005 *
All Directors and Executive
Officers as a Group . . . . 1,648,304 4.3
_______________
(1) Included in the table are shares acquired through and held by the
Company's Stock Purchase Plan. Also included in the table are shares
issuable within 60 days of April 1, 1995, to Mr. Girouard (110,829
shares), Mr. Hoak (9,000 shares), Mr. Johnson (350,201 shares), Mrs.
McKenzie (27,724 shares), Mr. Berman (3,000 shares), Mr. Scott (30,814
shares), Mr. Herndon (7,228 shares), Mr. Long (6,405 shares), Mr.
Lawrence (23,221 shares) and to all Directors and Executive Officers as
a group (645,386 shares), upon the exercise of stock options granted
pursuant to the Company's 1980 and 1989 Stock Option Plans.
(2) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to his shares.
* Represents less than 1% of the outstanding shares of such class.
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid during
the past three fiscal years for services rendered in all capacities to the
Company and its subsidiaries by the Chief Executive Officer and the four
other most highly compensated executive officers.
Summary Compensation Table
Annual Compensation Long-Term Compensation
-------------------------------- -----------------------------------------
Other Securities All
Name and Fiscal Annual (1) Restricted Underlying Other (3)
Principal Position Year Salary Bonus Compensation Stock Awards(2) Options(#) Compensation
- ------------------ ------ -------- -------- ------------ --------------- ---------- ------------
Clark A. Johnson 1995 $610,000 $610,000 $50,054 $ 91,505 43,702 $65,580
Chairman and Chief 1994 580,000 40,600 37,209 87,093 38,667 43,716
Executive Officer 1993 580,000 556,800 45,804 129,141 43,500 85,136
Marvin J. Girouard 1995 380,000 342,000 30,702 47,503 22,687 78,582
President and Chief 1994 365,000 25,550 28,245 45,630 20,278 51,954
Operating Officer 1993 350,000 308,000 24,984 64,944 21,875 72,156
Robert G. Herndon 1995 250,000 212,500 21,863 25,008 11,941 30,421
Executive Vice President, 1994 240,000 16,800 22,013 24,003 10,667 21,116
Chief Financial Officer 1993 225,000 177,790 21,735 33,404 11,250 32,016
Adrian G. Long 1995 178,000 63,000 17,668 -- 10,000 19,526
Senior Vice President, 1994 167,000 11,900 15,714 -- 9,444 25,708
Merchandising 1993 155,000 108,500 13,785 -- -- 24,127
J. Rodney Lawrence 1995 156,000 55,500 18,807 -- 10,000 15,029
Senior Vice President, 1994 149,000 10,500 24,308 -- 8,333 18,061
Legal and Secretary 1993 143,000 75,000 15,895 -- -- 15,274
________________
<FN>
(1) Includes reimbursements for club dues, automobile expenses, financial planning, medical expenses.
(2) Dollar value of restricted stock is computed using the closing price of the Common Stock on September 19,
1994, the date of grant of the restricted stock. Recipients of such restricted stock awards will receive
cash dividends paid on such stock. Restricted stock held by Messrs. Johnson, Girouard and Herndon will
vest at the times and to the extent that 25% of the stock options granted in conjunction with the award
of restricted stock have been exercised and the option shares held for two years. The total amount and
the dollar value of restricted stock held at February 25, 1995, were: Mr. Johnson, 31,478 shares
($314,780); Mr. Girouard, 16,211 shares ($162,110); Mr. Herndon, 8,466 shares ($84,660); Mr. Long, 14,138
shares ($141,380); and Mr. Lawrence 16,741 shares ($167,410). Restricted stock held by Messrs. Long and
Lawrence was granted under a different plan.
(3) Includes Company matching contributions for Messrs. Johnson, Girouard, Herndon, Long and Lawrence of
$2,042, $5,336, $4,877, $4,160 and $4,444, respectively, under the Company's 401(k) Retirement Plan, of
$2,596, $1,074, $2,438, $1,266 and $0, respectively, under the Company's Benefit Restoration Plan, and of
$60,942, $72,142, $23,106, $14,100 and $10,585, respectively, under the Company's Stock Purchase Plan.
The Company has entered into Post-Employment Consulting Agreements with
Messrs. Johnson, Girouard, Herndon, Long and Lawrence (individually, an
"Executive"). Upon termination of the Executive's employment by the Company
prior to retirement other than for "cause" or by the Executive for "good
reason," as defined in the agreements, the Company will retain the Executive
as a consultant for two years and pay a monthly fee equal to his base salary
immediately prior to termination. The Executive will also receive 50% of the
Executive's cost for continuing medical and dental insurance coverage. If
the Executive enters into employment during the consulting period that
provides compensation equal to or greater than the amount of the consulting
fees, the Company will pay the Executive an immediate one-time payment in the
amount of 50% of the difference between the total fees that otherwise would
have been payable during the term of the consulting agreement and the
aggregate fees actually paid prior to reemployment. If the Executive enters
into employment during the consulting period that provides compensation less
than the consulting fees, the Company will reduce the monthly consulting fee
by the amount of the monthly compensation for reemployment and at the end of
the consulting period will pay the Executive 50% of the difference between
the total fees that otherwise would have been payable during the term of the
consulting agreement and the aggregate fees actually paid.
The Company maintains a Supplemental Executive Retirement Plan (the
"Supplemental Plan") to aid in attracting and retaining employees of
exceptional ability by providing certain benefits. Messrs. Johnson,
Girouard, Herndon and Lawrence participate in the Supplemental Plan, which
provides that upon death, disability, attaining age 65 (62 in Mr. Herndon's
case) or later retirement from the Company, a participant will receive annual
benefits which, when added to Social Security retirement benefits, generally
equal his vested percentage of 50% of the participant's highest average
annual compensation (based on a three-year average), but in no event more
than $250,000 ($150,000 in Mr. Herndon's case). Pre-retirement and post-
retirement death and disability benefits are calculated in a similar manner.
All participants have elected to receive benefits in a lump sum distribution.
Benefits vest for each participant at the rate of 10% per year over 10 years
of service with a maximum of five years of credit allowed for service to the
Company prior to participation in the Supplemental Plan. Messrs. Johnson,
Girouard, Herndon and Lawrence have 10, 10, 9, and 9 credited years of
service, respectively. In the event of retirement, death, disability or
certain terminations of employment within two years of a change in control of
the Company, the benefits under the Supplemental Plan become vested.
Option Grants in the Last Fiscal Year
The following table sets forth information relating to stock options
granted during the fiscal year ended February 25, 1995, to the Chief
Executive Officer and the four other most highly compensated officers.
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Expiration Grant Date
Name Granted(1) Fiscal Year (per share)(2) Date Present Value(3)
- ---- ---------- ----------- -------------- ---------- ----------------
Clark A. Johnson 43,702 11.3% $8.38 9/19/04 $118,432
Marvin J. Girouard 22,687 5.9 8.38 9/19/04 61,482
Robert G. Herndon 11,941 3.1 8.38 9/19/04 32,360
Adrian G. Long 10,000 2.6 7.63 12/07/04 21,300
J. Rodney Lawrence 10,000 2.6 7.63 12/07/04 21,300
_______________
<FN>
(1) Options were granted on September 19, 1994, to Messrs. Johnson, Girouard and Herndon and
become exercisable in installments of 25% of the amount awarded six months after the date
of grant and 25% on each of the following three anniversaries of the date of grant.
Options were granted on December 7, 1994, to Messrs. Long and Lawrence and become
exercisable in annual installments of 20% of the amount awarded beginning one year after
the date of grant. With the consent of the administrative committee of the stock option
plan, an employee may elect to satisfy his income tax withholding obligations by the
delivery of previously owned shares or the withholding of shares otherwise issuable upon
exercise of the option. Options will terminate at the time of termination of employment
if the termination is for cause or for resignation without the consent of the Company, or
three months after termination in the case of any other termination, or one year after
death or disability.
(2) Exercise price is equal to the current market value at the date of grant.
(3) The present value of options on the date of grant was determined using a variation of the
Black-Scholes option pricing model. The estimated values under the Black-Scholes option
pricing model are based on the following assumptions at the time of grant: an exercise
price equal to the fair market value of the underlying Common Stock; an option term of 10
years; an interest rate of 7.46% for the September grants and 7.81% for the December
grants, that represents the interest rate on a U.S. treasury security with a maturity date
corresponding to the option term; dividend payment rate of $.12 per share per year; a
volatility of 33.0% and 31.2% for the September and December grants, respectively, which
is based on Common Stock prices for the one-year period prior to the date of grant; and
standard actuarial assumptions, estimated from a large universe of option holders, that
yield reductions of 15.4% for the September grants and 25.7% for the December grants to
reflect the probability of forfeiture of the option due to termination prior to vesting;
and reductions of 19.9% for the September grants and 17.0% for the December grants to
reflect the probability of a shortened option term due to termination of employment prior
to the option expiration date. These assumptions were made as of the time of grant and
may or may not be valid assumptions at later points in time. The actual value, if any,
that an executive may realize from the options will be the excess of the market price of
the Common Stock on the day of exercising the options over the exercise price of the
options. The actual value may or may not be near the value estimated in the table.
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End
Option Values
The following table provides information relating to the exercise of
stock options by the Chief Executive Officer and the other four most highly
compensated executive officers during the last fiscal year, and the number
and value of exercisable and unexercisable stock options held by such
officers at February 25, 1995.
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options Options
at Fiscal Year-End at Fiscal Year-End(1)
------------------------- -------------------------
Shares Acquired Value
Name on Exercise Realized(2) Exercisable Unexercisable Exercisable Unexercisable
- ----- --------------- ----------- ----------- ------------- ----------- -------------
Clark A. Johnson 51,961 $ 0 340,535 73,908 $1,823,121 $111,878
Marvin J. Girouard -- -- 100,087 38,295 355,505 57,830
Robert G. Herndon 10,959 0 1,576 20,085 9,015 30,299
Adrian G. Long -- -- 4,516 18,604 15,654 36,626
J. Rodney Lawrence -- -- 21,555 17,716 94,405 35,742
______________
<FN>
(1) Computed as the difference between the option exercise prices and $10 (the closing price of the
Common Stock at fiscal year-end).
(2) Computed as the difference between the option exercise prices and the closing market price of the
Common Stock at the date of exercise.
Board of Directors Compensation Committee Report on Executive Compensation
The Compensation Committee, which is composed entirely of independent,
non-employee directors, establishes and administers incentive-based
compensation plans for the senior executives, who are the Chief Executive
Officer, the Chief Operating Officer and the Chief Financial Officer, and
recommends to the Board of Directors other compensation of the senior
executives and compensation of such other officers as the Compensation
Committee deems appropriate. The Compensation Committee from time to time
retains an independent consultant to assist the Committee in determining
compensation levels and programs.
The Company's overall management compensation philosophy reflects a
strong incentive orientation with an aim that more than half of potential
senior executive compensation result from performance-based compensation
plans. In addition to base salary, executive compensation can include annual
bonus, stock options, restricted stock, benefits and perquisites. The
Compensation Committee's objective is to provide executives with salary and
incentive program opportunities that are valued near the size-adjusted median
of comparable companies in its industry, but with additional emphasis on
incentive compensation. As management responsibility increases, a greater
portion of the executive's compensation is directed toward performance-based
programs. These incentive programs involve short-term bonus plans to reward
annual performance and long-term, stock-based plans to encourage stock
ownership and reward the enhancement of shareholder value.
Section 162(m) of the Internal Revenue Code generally prohibits publicly
held companies such as the Company from deducting from corporate income all
compensation paid to the chief executive officer or any of the four other
most highly compensated officers that exceeds for each officer $1,000,000
during the tax year. Qualifying performance-based compensation paid pursuant
to plans approved by shareholders will not be subject to this deduction
limitation. It is the intent of the Compensation Committee to take
reasonable measures to obtain full corporate tax deductions for compensation
paid to the Company's executive officers. In 1994, the Company's
shareholders approved the Senior Management Annual Bonus Plan. The
Compensation Committee intends for awards under the Senior Management Annual
Bonus Plan and the Company's employee stock option plan to qualify for the
performance-based compensation exclusion applicable to the deduction
limitation.
Base salary levels of senior executive officers are reviewed annually by
the Compensation Committee. Salaries are based primarily upon salary levels
of executives in comparable companies in the industry and individual
performance of the executive during the preceding year. The Compensation
Committee considers the factors it deems relevant, but does not assign
specific weights to different factors. Comparable companies are considered
with reference to a peer group of 15 high-growth retail companies, whose
average performance is shown in the Stock Price Performance Graph below. The
Compensation Committee aims to set executive salaries near the size-adjusted
median of salaries paid by the peer group. At the time annual salaries were
established for the 1995 fiscal year, data specifying salary, bonus and long-
term compensation components of total cash compensation for the peer group
companies were unavailable for that year as well as the preceding year, and
as a result certain assumptions and estimates were made in comparing peer
group salary compensation levels. The salary of the Chief Executive Officer
was increased $30,000 to $680,000 for the 1995 fiscal year. Base salary for
each of the Company's senior executives during the last fiscal year fell
above the median of estimated base salary for comparable executives of the
peer group companies.
The Company maintains two annual bonus plans, one for senior executives
and another for other management personnel. During the 1995 fiscal year, the
bonus plan for senior executives established a formula designed to reward for
superior total shareholder return of the Company during the year relative to
the prior year compared to the change in total shareholder return of the peer
group companies. Total shareholder return is defined as the percentage
change in price of the common stock at the end of the fiscal year compared to
the price of such stock at the end of the prior year plus the percentage
return on dividends paid (other than dividends paid in common stock), based
on the price of the common stock at the end of the prior year. In order for
executives to receive any bonus, the Company's performance must rank at least
twelfth relative to the companies in the peer group. From this threshold
level, the amount of bonus available to the two senior executives other than
the Chief Executive Officer ranges from approximately 32% of base salary if
the Company ranks twelfth in relative performance within the peer group, up
to approximately 110% of base salary if the Company ranks first. The amount
of bonus available to the Chief Executive Officer ranges from 40% of his base
salary if the Company ranks twelfth in relative performance up to 125% of
base salary if the Company ranks first. The bonus plan is designed to
provide competitive levels of bonus opportunity when comparable levels of
performance are achieved relative to the peer group companies and to provide
above average bonus opportunity with superior performance. The bonus plan
does not provide for discretionary bonuses when performance targets are not
met. In fiscal 1995, the Company's total shareholder return ranked fourth in
relative performance within the peer group, and the Chief Executive Officer
was awarded a bonus of $610,000.
The annual bonus for the Company's other executives is dependent upon
the attainment of budgeted levels of pretax earnings and provides bonus
awards based on a formula when earnings meet or exceed certain budgeted
levels. Target bonus amounts are set at from 10 to 35 percent of each
executive's base salary. Bonus targets were established to reflect the
average for bonus targets from a broad spectrum of comparable size companies,
including companies in the peer group.
Long-term incentives are provided through awards under stock option and
restricted stock plans. Under the stock option plan, executives and other
key employees may be awarded options to purchase Company stock, which in the
past have been at a purchase price of fair market value on the date of grant.
Awards under the stock option plan are designed with the intention of
promoting the success of the Company and retention of the executive with the
Company in a manner that produces value to the employee only when there is a
corresponding increase in value to all shareholders. The Company has two
restricted stock plans to provide long-term incentives and encourage
ownership of stock by management. One plan is currently intended for senior
executives and is implemented in conjunction with the granting of stock
options. The other plan is designed for other executives and provides for
the vesting of restricted stock awards over a ten-year period. Under both
plans, executives may vote and receive dividends on unvested restricted
stock.
Long-term incentives for the senior executives are awarded in a
combination of stock option and restricted stock awards. Restricted stock is
awarded only in conjunction with the granting of stock options and is subject
to such restrictions as the Compensation Committee establishes at the time of
the award. Rights to transfer the restricted stock will be acquired by the
executive only upon the satisfaction of all restrictions. The Company
currently intends to award annually a combination of stock options and
restricted stock awards. During the 1995 fiscal year, stock options vesting
over three years with an exercise price at market value were granted to the
Chief Executive Officer, the Chief Operating Officer and the Chief Financial
Officer. The Compensation Committee intends to use stock options and
restricted stock in proportions to produce awards of approximately equal
value. In conjunction with the stock options, restricted stock was awarded
in amounts representing 25% of the shares subject to the corresponding stock
options. The restrictions on the stock will lapse only to the extent the
executive has exercised stock options that were granted in conjunction with
the restricted stock and has held the shares of option stock for two years.
The amounts of the stock option and restricted stock awards are based on the
size-adjusted median total long-term incentive compensation paid to officers
of the peer group companies. The number of currently held options by each
executive was not considered in making stock option and restricted stock
awards. During the 1995 fiscal year the Chief Executive Officer was awarded
10,926 shares of restricted stock under this plan in conjunction with the
granting of options to purchase 43,702 shares under the stock option plan.
This stock option/restricted stock award was based on the value of the size-
adjusted average annualized long-term compensation awarded for chief
executive officers in the peer group.
The Company provides benefits and perquisites to executive officers to
respond to competitive practices in the industry. The Compensation Committee
believes these benefits are typical for companies of its size.
COMPENSATION COMMITTEE
Sally F. McKenzie
Charles R. Scott
Compensation Committee Interlocks and Insider Participation
Mr. Scott, who serves on the Company's Compensation Committee, served as
an officer of the Company in the capacity of Chairman of the Board of the
Company from 1983 until 1991. Until April 1994 during the last fiscal year,
Mr. Scott was President and Chief Executive Officer of The Actava Group Inc.,
a company of which Clark A. Johnson, Chairman and Chief Executive Officer of
the Company, was also a director. The Board of Directors believes that the
nature of these relationships and Mr. Scott's participation on the
Compensation Committee present no conflict of interest.
Company Stock Price Performance Graph
The following graph provides an indicator of the percentage change
during the Company's last five fiscal years of cumulative total shareholder
return, assuming the reinvestment of dividends, of the Company's Common
Stock, the S&P 500 Index and the peer group, consisting of 15 high-growth
retail companies.
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Pier 1 Imports, Inc. 100 49 108 126 96 110
S&P 500 Index 100 115 133 147 159 171
Peer Group 100 146 215 246 225 200
The companies comprising the peer group are The Bombay Co., 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.,
and Walgreen Co.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1988, the Company loaned Mr. Johnson $1,191,928 for the
purchase of shares of the Company's Common Stock in the open market. The
loan is evidenced by an unsecured promissory note which is payable on demand,
and if no demand is made, on December 31, 1997, unless such loan is renewed.
The note accrues interest at a floating rate of interest equal to 0.5% over
the daily weighted average interest rate applicable to the Company's variable
rate indebtedness. The note provides that no less than one-half of the
accrued interest will be due and payable on each December 31 and that the
remaining accrued interest, as of each December 31, will be added to the
principal amount of each note. The loan was granted in conjunction with the
termination of 91,080 stock options and the grant of other options to acquire
45,540 shares of Common Stock. The price per share of the terminated options
was $9.14. Mr. Johnson was permitted to elect to maintain the above-stated
options or to surrender for termination such options, and in consideration
therefor, be granted options to purchase 50% of the shares subject to the
terminated options at an option price equal to the fair market value of the
shares on the date of grant and be loaned funds by the Company to purchase up
to 100% of the shares subject to the terminated options. As of February 25,
1995, the principal amount of Mr. Johnson's promissory note was $810,106.91.
In March 1993 the Company invested $3,000,000 in a limited partnership
fund that invests primarily in securities of companies with small to medium
size market capitalizations. The fund is managed by Whiffletree Corporation,
one of whose principals is Steven E. Berman, a brother of Martin L. Berman.
Whiffletree Corporation is an affiliate of Palisade, of which Martin L.
Berman, a director of the Company, is chief executive officer. The Company
has incurred fees to Whiffletree Corporation of approximately $78,000 during
the last fiscal year.
In April 1994, the Company entered into an agreement with Smith Barney
Inc., with which Martin L. Berman was a managing director until April 1995,
to act as trustee of the Company's 401(k) defined contribution plan.
Additionally, Smith Barney Inc was retained to select and monitor management
of the plan's funds and to provide investment advice to participants of the
plan as they may request. For these services, the Company paid fees of
$53,000 in the last fiscal year. The Company also engaged Smith Barney for
investment banking services during the year and paid fees of $50,000.
In December 1989, a subsidiary of the Company and Berman Industries,
Inc. ("BII"), a company wholly owned by Martin L. Berman, entered into a
Joint Operating and User Agreement (the "User Agreement") for each company to
hold an undivided 1/8 ownership in a Cessna jet aircraft (the "Aircraft
Interest"). The Company acquired the Aircraft Interest for $420,000 on
December 21, 1989, and under the User Agreement sold 50% of the Aircraft
Interest to BII at a price of $210,000. The User Agreement provides for each
company to pay its respective per-hour and fixed costs of operating the
aircraft. BII has the right at any time to sell its share of the Aircraft
Interest to the Company and the Company has the right to purchase BII's
interest for a pro rata portion of the purchase price paid by BII. The
Company and BII have committed to purchasing a new Cessna jet aircraft for
$450,000 (after allowance for trade-in of the Aircraft Interest) and will
enter into a new agreement with terms similar to those of the User Agreement.
In June 1991, the Company leased from Comdisco, Inc. a mainframe
computer for a period of five years at a rental rate of $91,000 per month.
Kenneth N. Pontikes, the former Chairman and President of Comdisco, Inc., was
a Director of the Company from April 1993 until June 1994.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than
ten-percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors and
greater than ten-percent shareholders are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were observed, except due to an error by the Company one report was
filed late by Sally F. McKenzie.
PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE COMPANY'S AUTHORIZED COMMON STOCK
On March 15, 1995, the Board of Directors adopted, subject to
Shareholder approval, an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of Common Stock
from 100,000,000 to 200,000,000 shares. As of May 8, 1995, the Company had
39,621,680 shares of Common Stock outstanding. After giving effect to shares
reserved for future issuance under the Company's employee benefit plans,
reserved for conversion of the Company's 6-7/8 Convertible Notes, and
reserved for exercise of outstanding rights issued pursuant to the
shareholder rights plan, approximately 2,300,000 shares of Common Stock are
presently available for issuance. If this amendment is approved by
Shareholders, an additional 100,000,000 shares of Common Stock will be
available for issuance. No change is proposed for the 5,000,000 presently
authorized and unissued shares of Preferred Stock.
The Board believes it is in the best interests of the Company and its
Shareholders to increase the authorized number of shares of Common Stock.
The additional shares will provide an adequate supply of Common Stock for
possible future transactions, such as stock dividends or splits, the sale of
stock to raise additional capital, acquisitions of other businesses or
properties where the use of Common Stock is deemed advantageous,
implementation of other employee benefit and stock option plans, the
potential exercise of Rights issued in connection with outstanding Common
Stock as explained in the following paragraph, and other general corporate
purposes. The Company has no present plan to issue shares of the Common
Stock proposed to be authorized. The Board would have sole discretion,
however, to authorize the issuance of the additional shares of Common Stock
from time to time for any corporate purpose without further action by
Shareholders, except as required by law or by rules of the New York Stock
Exchange.
Under certain circumstances, the Company could use additional shares of
Common Stock to create voting impediments or to frustrate persons seeking to
effect a takeover or otherwise gain control of the Company or could privately
place such shares with purchasers who might side with the Board in opposing a
hostile takeover bid. The Company has no present intention to issue Common
Stock for any such purposes. In December 1994, the Company distributed to
Shareholders one Common Stock Purchase Right (a "Right") that expires in
December 2004 for each outstanding share of Common Stock. One Right has been
and will be issued with respect to each additional share of Common Stock
issued after December 21, 1994, prior to the earliest of the time the Rights
become exercisable, expire or are redeemed. The issuance of Rights may deter
attempts to acquire the Company in a manner or on terms not approved by the
Board. Each Right, upon becoming exercisable, will entitle the holder to
purchase at a specified exercise price one share of Common Stock. The Rights
will become exercisable after the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or associated
persons have acquired beneficial ownership of 15% or more of the outstanding
common stock or (ii) 10 business days (or such later date as determined by
the Board of Directors) following the commencement of, or announcement of an
intention to make, a tender or exchange offer the consummation of which would
result in beneficial ownership by a person or group of 15% or more of the
outstanding common stock. If the Company were acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power were sold, proper provision would be made so that each Right
would entitle its holder to purchase, upon the exercise of the Right at the
then current exercise price, that number of shares of common stock of the
acquiring company having a market value of twice the exercise price of the
Right. If any person or group were to acquire beneficial ownership of 15% or
more of the Company's outstanding common stock, each Right would entitle its
holder (other than such acquiring person whose Rights would become void) to
purchase, upon the exercise of the Right at the then current exercise price,
that number of shares of the Company's common stock having a market value on
the date of such 15% acquisition of twice the exercise price of the Right.
The Board of Directors may at its option, at any time after such 15%
acquisition but prior to the acquisition of more than 50% of the Company's
outstanding common stock, exchange all or part of the then outstanding and
exercisable Rights (other than those held by such acquiring person whose
Rights would become void) for common stock at an exchange rate per Right of
one-half the number of shares of common stock receivable upon exercise of a
Right. The Board of Directors may, at any time prior to such 15%
acquisition, redeem all the Rights at a redemption price of $.01 per Right.
The Board proposes that the first paragraph of Article Fourth of the
Company's Certificate of Incorporation be amended to read as follows:
"FOURTH: The number of shares of stock which the corporation
shall have authority to issue is two hundred million (200,000,000)
shares of Common Stock having a par value of one dollar ($1.00) per
share and five million (5,000,000) shares of Preferred Stock having
a par value of one dollar ($1.00) per share."
Adoption of the amendment requires the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock. The Board
recommends voting "FOR" this proposal.
OTHER BUSINESS
In response to requests regarding the Company's operations in Burma (now
named Myanmar), the Company reports that since 1990 Burma has been a non -
approved country for its merchandise buyers to visit to source merchandise to
sell in Pier 1 Imports stores.
The Board of Directors is unaware of any matters to be presented for
action at the meeting other than the election of Directors and approval of
the amendment to the Company's Certificate of Incorporation that are set
forth in Items 1 and 2 of the accompanying Proxy. If any other business
should properly come before the meeting, the persons named in the proxy
intend to vote thereon in accordance with their best judgment.
Relationship with Independent Auditors
The Board of Directors of the Company annually selects independent
public accountants to serve as auditors for the upcoming fiscal year. The
Board plans to select auditors for the 1996 fiscal year at the meeting of the
Board of Directors which follows the Annual Meeting of Shareholders.
The Board of Directors appointed Price Waterhouse LLP as auditors for
the Company for fiscal year 1995. A representative of Price Waterhouse LLP
is expected to be present at the Annual Meeting of Shareholders and will be
given the opportunity to make a statement if he so desires and to respond to
appropriate questions from Shareholders.
Shareholder Proposals for 1996 Annual Meeting
The date by which Shareholder proposals must be received by the Company
for inclusion in the Proxy Statement for the 1996 Annual Meeting of
Shareholders is January 19, 1996.
Proxy Solicitation
The cost of soliciting proxies will be borne by the Company. The
services of Kissel-Blake, Inc. will be employed for the purpose of
facilitating the solicitation. The fees of Kissel-Blake, Inc. in this
connection will be borne by the Company and are not expected to exceed $5,000
plus mailing and delivery expenses. In addition to solicitations by mail,
officers and regular employees of the Company may solicit proxies personally
and by telephone or other means, for which they will receive no compensation
in addition to their normal compensation. Arrangements may also be made
with brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of stock held of
record by such persons, and the Company will reimburse them for their
reasonable out-of-pocket and clerical expenses.
YOUR VOTE IS IMPORTANT
You are encouraged to let us know your preference by completing and
returning the enclosed proxy card.
J. Rodney Lawrence
Secretary
May 19, 1995
APPENDIX
PIER 1 IMPORTS, INC.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
PROXY
Solicited on Behalf of the Board of Directors for Annual Meeting of
Shareholders, June 22, 1995
The undersigned hereby appoints CLARK A. JOHNSON, MARK L. HART, JR. and
J. RODNEY LAWRENCE, and each of them, proxies with full power of
substitution, to represent and to vote as set forth herein all the shares of
the Common Stock of Pier 1 Imports, Inc. held of record by the undersigned on
May 3, 1995, at the annual meeting of shareholders to be held at 10:00 a.m.
local time on June 22, 1995, at the Roundup Inn, Will Rogers Memorial Center
Complex, 3400 Crestline Road, Fort Worth, Texas, and any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is made, this proxy
will be voted "FOR" the election of the directors nominated and "FOR" the
proposed amendment to the Company's Certificate of Incorporation.
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot
vote your shares unless you sign and return this card.
(Continued and to be signed and dated on the reverse side)
- -----------------------------------------------------------------------------
Item 1.
Election of Directors. FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ]
listed below for all nominees listed below
*EXCEPTIONS [ ]
Nominees: Clark A. Johnson, Charles R. Scott, Marvin J. Girouard Sally F.
McKenzie, James M. Hoak, Jr., Martin L. Berman and Craig C. Gordon
(INSTRUCTIONS: To withhold authority to vote or any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space below.)
*Exceptions _______________________________________________________________
Item 2. Approval of the proposed amendment to the Company's Certificate of
Incorporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Item 3. In their discretion, the Proxies are authorized to vote as described
in the Proxy Statement and upon such other business as may properly
come before the meeting or any adjournment thereof.
Change of Address and/or [ ]
Comments Mark Here
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign. When
signing as attorney, executor, administer,
trustee or guardian, please give full title
as such.
Dated: __________________________, 1995
_______________________________________
Signature
_______________________________________
Signature if held jointly
Votes must be indicated
(x) in Black or Blue Ink [ ]
Please date, sign and return promptly in the enclosed envelope.