EXHIBIT 10.2
PIER 1 IMPORTS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective May 1, 1986
Restated as of January 1, 1996
PIER 1 IMPORTS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I-PURPOSE
The purpose of this Supplemental Executive Retirement Plan (hereinafter
referred to as the "Plan") is to provide supplemental retirement benefits for
a select group of management or highly compensated employees of Pier 1
Imports, Inc. It is intended that the Plan will aid in retaining and
attracting employees of exceptional ability by providing such individuals
with these benefits. This Plan shall be effective as of May 1, 1986, and
shall be restated as of January 1, 1996.
ARTICLE II-DEFINITIONS
For the purposes of this Plan, the following terms shall have the
meanings indicated unless the context clearly indicates otherwise:
2.1 Beneficiary
"Beneficiary" means the person, persons or entity entitled under Article
V to receive Plan benefits after a Participant's death.
2.2 Board
"Board" means the Board of Directors of Pier 1 Imports, Inc.
2.3 Cause
"Cause" means that the Participant:
(a) Has misappropriated, stolen or embezzled funds of the
Employer; or
(b) Has committed an act of deceit, fraud, dereliction of duty, or
gross or willful misconduct; or
(c) Has been convicted of either a felony or a crime involving
moral turpitude or entered a plea of nolo contendre in response to an
indictment for such crime or felony; or
(d) Has intentionally disclosed confidential information of the
Employer except when such disclosure is made pursuant to the direction
of the Employer or in accordance with Employer policy; or
(e) Has engaged in competitive behavior against the Employer, has
purposely aided a competitor of the Employer or has misappropriated or
aided in misappropriating a material opportunity of the Employer.
2.4 Change of Control of the Employer
"Change of Control of the Employer" shall be deemed to have occurred if:
(a) Any "person" [as defined in Sections 3(a)(9) and 13(d)(3) of
the Securities Exchange Act of 1934 (the "Act")] becomes the "beneficial
owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Act) of
securities of the Pier 1, representing 35% or more of the voting power
of the outstanding securities of Pier 1 having the right under ordinary
circumstances to vote at an election of the Board of Directors of Pier
1; or
(b) There shall occur a change in the composition of a majority of
the Board of Directors within a two (2) year period which change shall
not have been affirmatively approved by a majority of the Board of
Directors as constituted immediately prior to the commencement of such
period; or
(c) At any meeting of the stockholders of Employer called for the
purpose of electing directors, a majority of persons nominated by the
Board of Directors for election as directors shall fail to be elected.
2.5 Committee
"Committee" means the Employees Retirement Plan Committee appointed to
administer the Employees Retirement Plan for the employees of Pier 1 Imports,
Inc. or any successor tax-qualified retirement plan, or any other Committee
chosen by the Board.
2.6 Compensation
"Compensation" means the rate at which salary is being paid to a
Participant by Employer as of the last day of a calendar year and any bonuses
actually paid to a Participant by Employer during that calendar year.
2.7 Deferred Retirement Date
"Deferred Retirement Date" means the first day of the month coincident
with or next following the date that the Participant actually separates from
employment after the Participant's Normal Retirement Date.
2.8 Employer
"Employer" means any of Pier 1, its subsidiaries, and their respective
successors.
2.9 Good Reason
"Good Reason" means, without the written consent of the Participant:
(a) A reduction in the Participant's base salary or a reduction in
the Participant's benefits received from the Employer (other than in
connection with an across-the-board reduction in salaries and/or
benefits for similarly situated employees of the Employer or pursuant to
the Employer's standard retirement policy), in each case as in effect
immediately prior to a Change of Control; or
(b) The relocation of the Participants full-time office to a
location greater than fifty (50) miles from the Employers current
corporate office; or
(c) A reduction in the Participants corporate title as in effect
immediately prior to a Change of Control; or
(d) The failure by the Employer to obtain the assumption of this
agreement by any successor as contemplated in this Plan.
2.10 Highest Average Compensation
"Highest Average Compensation" means the sum of the Participants
Compensation paid during the highest paid three (3) full calendar years of
employment with Employer prior to termination of employment (whether or not
such years are consecutive) divided by three (3); provided, however, that if
the Participant has been employed for less than three (3) full calendar
years, the "Highest Average Compensation" shall be determined by using the
sum of the Participants Compensation paid during the number of completed
months of employment divided by the number of actual completed months of
employment multiplied by twelve (12).
2.11 Normal Retirement Date
"Normal Retirement Date" means the first day of the month coincidental
with or next following the date on which a Participant attains age sixty-five
(65).
2.12 Participant
"Participant" means any individual who is participating or has
participated in this Plan pursuant to Article III.
2.13 Pier 1
"Pier 1" means Pier 1 Imports, Inc., a Delaware corporation and its
successors.
2.14 Retirement
"Retirement" means separation from employment with the Employer at the
Participant's Normal Retirement Date or Deferred Retirement Date. Retirement
shall also mean the date as of which a Participant separates from employment
within twenty-four (24) months of a Change of Control of the Employer due to
termination of the employment of a Participant without regard to Years of
Credited Service unless such separation is:
(a) By the Employer for Cause or Total and Permanent Disability;
or
(b) Because of the Participant's death; or
(c) By the Participant other than:
(i) For Good Reason; or
(ii) Upon the Participant's voluntary separation from
employment after his/her Normal Retirement Date.
2.15 Supplemental Retirement Benefit
"Supplemental Retirement Benefit" means the benefit determined under
Article IV of this Plan.
2.16 Termination
"Termination" means separation from employment with the Employer for any
reason other than Retirement, death or Total and Permanent Disability.
2.17 Total and Permanent Disability
"Total and Permanent Disability" means a physical or mental condition
which, in the opinion of the Committee, prevents a Participant from
satisfactorily performing the Participants usual duties for the Employer, or
any other employer, or such other duties as the Employer, or any other
employer, may make available to the Participant. For the purpose of this
section, other duties will give due regard to the Participant's position and
earnings prior to disability and will take into consideration the
qualifications of such Participant by reason of training, education and
experience. The Committees decision as to total and permanent disability will
be based upon medical reports and/or other evidence satisfactory to the
Committee.
2.18 Years of Credited Service
"Years of Credited Service" means the years of credited vesting service
with the Employer, determined in accordance with the provisions of The
Employees Retirement Plan of the Employer, or any successor tax-qualified
retirement plan.
ARTICLE III-PARTICIPATION AND VESTING
3.1 Participation
Participation in this Plan shall be limited to those employees of the
Employer nominated by the Chief Executive Officer of Pier 1 and approved by
the Committee and by the Board, and who elect to participate in this Plan by
executing a Participation Agreement in the form designated by the Committee.
3.2 Supplemental Retirement Benefit Vesting
(a) Vesting Percentage. Each Participant shall become vested in a
Supplemental Retirement Plan Benefit based upon the following schedule:
Years of Credited Service Vesting Percentage
Less than 1 0%
1 but less than 2 10
2 but less than 3 20
3 but less than 4 30
4 but less than 5 40
5 but less than 6 50
6 but less than 7 60
7 but less than 8 70
8 but less than 9 80
9 but less than 10 90
10 or more 100
(b) Prior Years of Credited Service. For purposes of this Plan,
Years of Credited Service earned prior to the date of Plan adoption by
the Employer shall be limited to five (5).
(c) Conditions for Immediate Vesting. Regardless of a
Participant's actual Years of Credited Service or age, a Participant
shall be one hundred percent (100%) vested in a Supplemental Retirement
Benefit upon Retirement, termination of employment due to Total and
Permanent Disability, or death.
(d) Initial Participants. Notwithstanding anything in this
Article to the contrary, any employee of the Employer who becomes a
Participant in this Plan within 30 days of the effective date of this
Plan shall be at least fifty percent (50%) vested in any Plan Benefits
herein upon attaining age fifty-five (55).
ARTICLE IV-SUPPLEMENTAL RETIREMENT BENEFITS
4.1 Benefit
Upon separation from employment, a Participant shall receive a
Supplemental Retirement Benefit from this Plan which, along with the
Participant's benefits from primary Social Security, shall equal
approximately fifty percent (50%) of the Participant's Highest Average
Compensation. The computation of said Supplemental Retirement Benefit shall
be made in accordance with the following provisions of this Article IV, but
in no event shall the amount of the Supplemental Retirement Benefit paid
annually to any Participant exceed three hundred and fifty thousand dollars
($350,000).
4.2 Retirement; Disability; Death
If a Participant separates from employment due to Retirement, Total and
Permanent Disability, or death prior to the commencement of benefits under
this Plan, the Employer shall pay to the Participant a Supplemental
Retirement Benefit calculated as follows:
(a) Fifty percent (50%) times the Participant's Highest Average
Compensation.
(b) Increase the amount determined in (a) by six percent (6%)
compounded annually for fifteen (15) years.
(c) Sum the annual amounts determined in (b).
(d) The sum of a Participant's primary Social Security benefit
determined at the time of and according to the laws in effect at the
Participant's Retirement Date increased two percent (2%) compounded
annually for fifteen (15) years. However, if a Participant separates
from employment before the Normal Retirement Date, the primary Social
Security benefit shall be determined based upon the primary Social
Security benefit the Participant would have received at the Normal
Retirement Date based upon the assumption the Participant will receive
no future compensation after the date of separation from employment and
based upon the relevant Social Security law at the time of separation
from employment.
(e) The sum of the annual premium charged by the Employer to
active employees for the Employer-provided major medical and
hospitalization insurance coverage for Participants and their dependents
in the year of separation from service increased two percent (2%)
compounded annually for fifteen (15) years.
(f) (c) offset by (d) and (e) divided by one hundred eighty (180).
4.3 Adjustments for Deferred Retirement
If the Participant separates from employment at a Deferred Retirement
Date, the Employer shall pay to the Participant a Supplemental Retirement
Benefit as calculated in paragraph 4.2 above, but adjusted as follows:
(a) The percentage of Highest Average Compensation set forth in
paragraph 4.2(a) shall be increased by five (5) percentage points for
each Year of Credited Service performed past the Participant's Normal
Retirement Date, but in no event shall the increase be more than fifteen
(15) percentage points;
(b) The calculation of Highest Average Compensation shall not take
into consideration any Compensation earned after the Participant attains
age 65; and
(c) The Participant shall forfeit twenty percent (20%) of the
Supplemental Retirement Benefit otherwise due for each Year of Credited
Service performed past the Participant's attained age seventy (70).
4.4 Termination
If a Participant separates from employment due to Termination, the
Employer shall pay to the Participant the Supplemental Retirement Benefit
calculated under paragraph 4.2 above, multiplied by the vesting percentage of
benefit as provided in paragraph 3.2 above.
4.5 Form of Benefit Payment
Effective as of December 20, 1991, each Participant shall, upon becoming
a Participant, irrevocably elect in writing that his or her benefits under
this Plan be paid in one of the following forms:
(a) Equal monthly installments paid over a period of one hundred
eighty (180) months;
(b) A lump sum;
(c) An annuity for the life of the Participant; or
(d) A joint and survivor annuity over the lives of Participant and
the Participant's Beneficiary.
Those individuals who are already Participants on December 20, 1991, but
who are not yet receiving benefits under this Plan, shall within ten (10)
days after such date irrevocably elect in writing one of the foregoing forms
for the payment of his or her benefits under this Plan. The forms of payment
specified in subparagraphs (b), (c) and (d) above shall be the actuarial and
financial equivalents of the form of payment specified in subparagraph (a)
above.
For purposes of determining actuarial equivalence, the benefits referred
to in subparagraphs (b), (c) and (d) above shall be discounted at a rate
equal to the lesser of (i) the Pension Benefit Guaranty Corporation interest
rate for immediate annuities, as published in Appendix B to Part 2619 of
Title 29 of the Code of Federal Regulations, or any successor or replacement
rate (the "PBGC rate") in effect on January 1 of each year; or (ii) a twenty-
four (24) month rolling average of the PBGC rate, using the current rate as
of the beginning of the month in which the calculation is made and the
twenty-three (23) previous months.
Beginning January 1, 1996, the vested, accrued benefit shall be
calculated as of January 1 each year for each Participant, and in no event
shall the vested, accrued benefit be less than such benefit calculated for a
previous year. For example, if a Participant has elected a lump-sum benefit
and the lump-sum benefit as of January 1, 1996 is $750,000 but, due to an
increase in the discount rate, drops to $700,000 as of January 1, 1997, the
Participants vested, accrued lump-sum benefit as of January 1, 1997 would be
$750,000.
4.6 Withholding; Payroll Taxes
To the extent required by the law in effect at the time payments are
made, the Employer shall withhold from payments made hereunder any taxes
required to be withheld from a Participant's wages by the federal, state or
local government.
4.7 Commencement of Payments
Any benefit due under this Article shall commence on the appropriate
date as set forth below:
(a) Supplemental Retirement Benefits due as a result of Retirement
shall commence within thirty (30) days of the earlier of:
(i) The Participant's Retirement and attaining age sixty-five
(65); or
(ii) The Participant's death.
(b) Supplemental Retirement Benefits due as a result of
Termination or Total and Permanent Disability shall commence within
thirty (30) days of the earlier of the Participant's attaining age
sixty-five (65) or death;
(c) Supplemental Retirement Benefits due as a result of death
shall commence within thirty (30) days of the death of the Participant.
4.8 Payment to Guardian
If a Plan benefit is payable to a minor or a person declared incompetent
or to a person incapable of handling the disposition of property, the
Committee may direct payment of such Plan benefit to the guardian, legal
representative or person having the care and custody of such minor,
incompetent or person. The Committee may require proof of incompetency,
minority, incapacity or guardianship as it may deem appropriate prior to
distribution of the Plan benefit. Such distribution shall completely
discharge the Committee and Employer from all liability with respect to such
benefit.
4.9 Major Medical and Hospitalization Insurance Coverage
If a Participant separates from employment for any reason whatsoever,
such Participant (for himself and his dependents) shall have the right to
participate, during the fifteen (15) years immediately after the date such
Participant attains age sixty-five (65), in the Employer-provided major
medical and hospitalization insurance coverage, if any, made available
generally to the Employers active employees and their dependents; provided,
however, that such Participant shall pay, or reimburse the Employer for, the
total premium (i.e., Employer and employee portions) for such insurance
coverage at such times as the Employer and such active employees pay their
respective premiums for such insurance coverage.
ARTICLE V-BENEFICIARY DESIGNATION
5.1 Beneficiary Designation
Each Participant shall have the right, at any time, to designate any
person or persons as his Beneficiary or Beneficiaries (both primary and
contingent) to whom payment under this Plan shall be paid in the event of
death prior to complete distribution to the Participant of the benefits due
under the Plan. Each Beneficiary designation shall be in a written form
prescribed by the Committee and will be effective only when filed with the
Committee during the Participant's lifetime. If a Participant's Compensation
is community property, any Beneficiary designation shall be valid or
effective only as permitted under applicable law.
5.2 Amendments
Any Beneficiary designation may be changed by a Participant without the
consent of any designated Beneficiary by the filing of a new Beneficiary
designation with the Committee. The filing of a new Beneficiary designation
form will cancel all Beneficiary designations previously filed.
5.3 No Beneficiary Designation
If any Participant fails to designate a Beneficiary in the manner
provided above, or if the Beneficiary designated by a deceased Participant
predeceases the Participant, the Committee, in its discretion, shall direct
the Employer to distribute such Participant's benefits (or the balance
thereof) as follows:
(a) To the Participant's surviving spouse, if any; or
(b) If the Participant shall have no surviving spouse, then to the
Participant's children in equal shares, by right of representation; or
(c) If the Participant shall have no surviving spouse or children,
then to the Participant's estate.
5.4 Effect of Payment
Payment to the Beneficiary shall completely discharge Employers
obligations under this Plan.
5.5 Death of Beneficiary
Following commencement of payment of Plan benefits, if the Beneficiary
designated by a deceased Participant dies before receiving complete
distribution of the benefits, the Committee shall direct the Employer to
distribute the balance of such benefits:
(a) As designated by the Beneficiary in accordance with the
provisions in paragraph 5.1 above; or
(b) If the Beneficiary shall not have made such designation, then
to the Beneficiarys estate.
ARTICLE VI-ADMINISTRATION
6.1 Committee; Duties
This Plan shall be administered by the Committee. Members of the
Committee may be Participants under this Plan.
6.2 Agents
The Committee may appoint an individual to be the Committees agent with
respect to the day-to-day administration of the Plan. In addition, the
Committee may, from time to time, employ other agents and delegate to them
such administrative duties as it sees fit, and may from time to time consult
with counsel who may be counsel to the Employer.
6.3 Binding Effect of Decisions
The decision or action of the Committee with respect to any question
arising out of or in connection with the administration, interpretation and
application of the Plan and the rules and regulations promulgated hereunder
shall be final and binding upon all persons having any interest in the Plan.
6.4 Indemnity of Committee
The Company shall indemnify and hold harmless the members of the
Committee against any and all claims, loss, damage, expense or liability
arising from any action or failure to act with respect to this Plan, except
in the case of gross negligence or willful misconduct by the Committee.
ARTICLE VII-CLAIMS PROCEDURE
7.1 Claim
Any person claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan shall present the
request in writing to the Committee which shall respond in writing as soon as
practicable.
7.2 Denial of Claim
If the claim or request is denied, the written notice of denial shall be
made within ninety (90) days of the date of receipt of such claim or request
by the Committee and shall state:
(a) The reason for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information
required and an explanation of why it is necessary.
(c) An explanation of the Plans claims review procedure.
7.3 Review of Claim
Any person whose claim or request is denied or who has not received a
response within ninety (90) days may request review by notice given in
writing to the Committee within sixty (60) days of receiving a response or
one hundred fifty (150) days from the date the claim was received by the
Committee. The claim or request shall be reviewed by the Committee who may,
but shall not be required to, grant the claimant a hearing. On review, the
claimant may have representation, examine pertinent documents, and submit
issues and comments in writing.
7.4 Final Decision
The decision on review shall normally be made within sixty (60) days
after the Committees receipt of a request for review. If an extension of time
is required for a hearing or other special circumstances, the claimant shall
be notified and the time shall be one hundred twenty (120) days after the
Committees receipt of a request for review. The decision shall be in writing
and shall state the reason and the relevant Plan provisions. All decisions on
review shall be final and bind all parties concerned.
ARTICLE VIII-TERMINATION, SUSPENSION OR AMENDMENT
8.1 Amendment or Termination
The Board may, in its sole discretion, amend or terminate this Plan at
any time, in whole or in part; provided, however, that no such amendment or
termination shall adversely affect the benefits of Participants which have
vested in accordance with paragraph 3.2 above prior to such action, the
benefits of any Participant who has previously retired, or the benefits of
any Beneficiary of a Participant who has died; provided further, however,
that the amendment or termination of this Plan shall not alter in any manner
the timing or form of benefit payments under this Plan.
8.2 Successor Employer
The provisions of this Plan shall be binding upon and inure to the
benefit of any successor or assign of the Employer. If a successor Employer
amends or terminates this Plan, no such amendment or termination shall
adversely affect the benefits of Participants which have vested in accordance
with paragraph 3.2 above prior to such action, the benefits of any
Participant who has previously retired, or the benefits of any Beneficiary of
a Participant who has previously died.
ARTICLE IX-MISCELLANEOUS
9.1 Unsecured General Creditor
Benefits to be provided under this Plan are unfunded obligations of the
Employer. Participants and their Beneficiaries, heirs, successors, and
assigns shall have no secured interest or claim in any property or assets of
Employer, nor shall they be Beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by Employer ("Policies"). Except as
provided in paragraph 9.2, such Policies or other assets of Employer shall
not be held under any trust for the benefit of Participants, their
Beneficiaries, heirs, successors or assigns, or be considered in any way as
collateral security for the fulfilling of the obligations of Employer under
this Plan.
9.2 Trust Fund
Employer shall be responsible for the payment of all benefits provided
under the Plan. At its discretion, Employer may establish one (1) or more
trusts, with such trustees as the Board may approve, for the purpose of
providing for the payment of such benefits. Although such a trust shall be
irrevocable, its assets shall be held for payment of all Employers general
creditors in the event of insolvency. To the extent any benefits provided
under the Plan are paid from any such trust, Employer shall have no further
obligation to pay them. If not paid from the trust, such benefits shall
remain the obligation of Employer.
9.3 Nonassignability
Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, hypothecate or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof. No part of the amounts payable
shall, prior to actual payment, be subject to seizure or sequestration for
the payment of any debts, judgments, alimony or separate maintenance owed by
a Participant or any other person, nor be transferable by operation of law in
the event of a Participant's or any other persons bankruptcy or insolvency.
9.4 Not a Contract of Employment
The terms and conditions of this Plan shall not be deemed to constitute
a contract of employment between Employer and the Participant, and the
Participant (or his Beneficiary) shall have no rights against the Employer
except as may otherwise be specifically provided herein. Moreover, nothing in
this Plan shall be deemed to give a Participant the right to be retained in
the service of Employer or to interfere with the right of Employer to
discipline or discharge him at any time.
9.5 Suicide
Notwithstanding the provisions of Article IV, no benefit shall be paid
to a Beneficiary if the Participant's death occurs as a result of suicide
during the twelve (12) successive calendar months beginning with the calendar
month following the commencement of an individuals participation in this
Plan.
9.6 Participant's Cooperation
A Participant will cooperate with Employer by furnishing any and all
information requested by Employer in order to facilitate the payment of
benefits hereunder, and by taking such physical examinations and such other
action as may be requested by Employer.
9.7 Terms
Whenever any words are used herein in the masculine, they shall be
construed as though they were used in the feminine in all cases where they
would so apply; and wherever any words are used herein in the singular or in
the plural, they shall be construed as though they were used in the plural or
the singular, as the case may be, in all cases where they would so apply.
9.8 Captions
The captions of the articles, sections and paragraphs of this Plan are
for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
9.9 Governing Law
The provisions of this Plan shall be construed and interpreted according
to the laws of the State of Delaware.
9.10 Validity
In case any provision of this Plan shall be illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.
9.11 Successors
The provisions of this Plan shall bind and inure to the benefit of
Employer and its successors and assigns. The term successors as used herein
shall include any corporate or other business entity which shall, whether by
merger, consolidation, purchase or otherwise acquire all or substantially all
of the business and assets of Employer, and successors of any such
corporation or other business entity.
9.12 Notice
Any notice or filing required or permitted to be given to the Committee
under the Plan shall be sufficient if in writing and hand delivered, or sent
by registered or certified mail, to any member of the Committee, the
President of the Employer, or the Employer's Statutory Agent. Such notice
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of three (3) days following the date shown on the postmark or on the
receipt for registration or certification.