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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[ ] Soliciting Material Pursuant to Rule 14a-12
Pier 1 Imports, Inc.
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(Name of Registrant as Specified In Its Charter)
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PIER 1 IMPORTS, INC.
301 COMMERCE STREET, SUITE 600
FORT WORTH, TEXAS 76102
May 22, 2001
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 28, 2001, at the Renaissance Worthington Hotel,
Trinity Ballroom, 200 Main Street, 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.
Also, the enclosed proxy card contains instructions on voting by telephone
instead of executing and returning the card. If you are able to attend the
meeting and wish to vote in person, you may withdraw your proxy at that time.
Sincerely,
/s/ MARVIN J. GIROUARD
Marvin J. Girouard
Chairman and Chief Executive Officer
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PIER 1 IMPORTS, INC.
301 COMMERCE STREET, SUITE 600
FORT WORTH, TEXAS 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 28, 2001
The Annual Meeting of Shareholders of Pier 1 Imports, Inc., a Delaware
corporation (the "Company"), will be held on June 28, 2001, at 10:00 a.m., local
time, at the Renaissance Worthington Hotel, Trinity Ballroom, 200 Main Street,
Fort Worth, Texas for the following purposes:
(1) to elect seven Directors to hold office until the next Annual
Meeting of Shareholders;
(2) to approve an amendment to the Company's Stock Purchase Plan to
make all employees eligible to participate; and
(3) to transact any other business as may properly come before the
Annual Meeting or any adjournment.
Only holders of record of Common Stock at the close of business on May 2,
2001, 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. Also, the enclosed proxy
card contains instructions on voting by telephone instead of executing and
returning the card. You may revoke your proxy 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,
/s/ J. RODNEY LAWRENCE
J. Rodney Lawrence
Senior Vice President and Secretary
May 22, 2001
Fort Worth, Texas
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY,
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING
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PIER 1 IMPORTS, INC.
301 COMMERCE STREET, SUITE 600
FORT WORTH, TEXAS 76102
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 28, 2001
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 28, 2001, 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 2, 2001, 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, 96,365,006 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). The accompanying proxy card also contains
instructions on voting by telephone instead of executing and returning the card.
Shares voted by telephone may be revoked by providing subsequent telephone
voting instructions or by using any method described above for revoking proxies.
With regard to all proposals 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, as to that matter
will not be treated as shares present and will be disregarded.
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 22, 2001.
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. Messrs.
Girouard, Hoak, Thomas, Burgoyne and Ferrari are
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Directors of the Company now in office and are nominees for re-election. Mr.
Carreker and Ms. Katz are nominees for election. Mrs. Sally F. McKenzie will
continue to serve as a Director until the Annual Meeting at which time she will
retire from the Board of Directors. The Board of Directors recommends a vote
"FOR" the nominees.
NOMINEES FOR DIRECTORS
MARVIN J. GIROUARD
Marvin J. Girouard, age 61, has served as Chairman and Chief Executive
Officer of the Company and has been a member of the Executive/Nominating
Committee since December 1998. He has been a Director of the Company since
August 1988. From June 1998 to February 1999, Mr. Girouard served as President
and Chief Executive Officer of the Company and from August 1988 to June 1998,
Mr. Girouard served as President and Chief Operating Officer. 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 is also a
Director of Tandy Brands Accessories, Inc., Brinker International, Inc., and
Neptune Orient Lines, Ltd.
JAMES M. HOAK, JR.
James M. Hoak, Jr., age 57, has been a Director of the Company since
September 1991 and is Chairman of the Executive/Nominating Committee and
Chairman of the Audit Committee. He has served as Chairman and a Principal of
Hoak Capital Corporation (a private equity investment firm) since September
1991. He also served as Chairman of HBW Holdings, Inc. (an investment bank) from
July 1996 to November 1999, and continues to serve as a director of that firm.
He served as Chairman of Heritage Media Corporation (a broadcasting and
marketing services firm) from its inception in August 1987 to its sale in August
1997. From February 1991 to January 1995, he served as Chairman and Chief
Executive Officer of Crown Media, Inc. (a cable television company). He is also
a Director of PanAmSat Corporation, TeleCorp PCS, Inc., and Texas Industries,
Inc.
TOM M. THOMAS
Tom M. Thomas, age 59, has been a Director of the Company since September
1998, is Chairman of the Compensation Committee and is a member of the
Executive/Nominating Committee. Mr. Thomas has served as Senior Partner of
Thomas & Culp, L.L.P. (a law firm) since 1994.
JOHN H. BURGOYNE
John H. Burgoyne, age 59, has been a Director of the Company since February
1999 and is a member of the Compensation Committee. Mr. Burgoyne has served as
President of Burgoyne and Associates (an international consulting firm) since
March 1996. From May 1995 to March 1996, Mr. Burgoyne served as the General
Manager of IBM's Travel Industry sector for their Asia Pacific Region. Prior to
that time, he served as the President and General Manager of IBM China
Corporation Ltd.
MICHAEL R. FERRARI
Michael R. Ferrari, age 61, has been a Director of the Company since
February 1999 and is a member of the Audit Committee. Dr. Ferrari has served as
Chancellor of Texas Christian University since July 1998 and has served as
Professor of Management in the M. J. Neeley School of Business at Texas
Christian University since July 1998. From 1985 to 1998, he served as President
of Drake University.
JAMES D. CARREKER
James D. Carreker, age 53, is a nominee for Director. He established JDC
Holdings (a private equity investment facility) in October 2000. He served as
Chairman and Chief Executive Officer of Wyndham International, Inc. (a hotel
management company) from January 1996 to October 2000. Prior to that time, he
served as President and Chief Executive Officer of Wyndham Hotels and Resorts
from 1988 to 1996. Also, he
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served as President and Chief Executive Officer of the Trammell Crow Company (a
real estate development firm) from 1994 to 1995. He served from 1984 to 1988 as
President of Burdines, the Florida division of Federated Department Stores. He
is a Director of Outrigger Hotels & Resorts, Crow Holdings and Carreker
Corporation.
KAREN W. KATZ
Karen W. Katz, age 44, is a nominee for Director. She has served as
President and Chief Executive Officer of Neiman Marcus Direct (a division of the
Neiman Marcus Group) since May 2000. Prior to that time, she served as Executive
Vice President of Stores for Neiman Marcus Stores from February 1998 to May 2000
and Senior Vice President and Director of Stores of Neiman Marcus Stores from
October 1996 to February 1998. Also, she has held various merchandise and store
management positions with Neiman Marcus Stores since 1987.
BOARD MEETINGS, COMMITTEES AND FEES
During the last fiscal year, the Board of Directors of the Company met on
four 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
$33,000 during the past fiscal year and also received $1,750 for each Board
meeting attended, $1,000 for each telephonic Board meeting attended, $750 for
each committee meeting attended and $500 for each telephonic committee meeting
attended. Directors participating in the Director Deferred Stock Program must
defer 50%, and may elect to defer up to 100% of their cash fees, which are
matched 50% by the Company, into an equivalent value of deferred stock units.
Upon retirement from the Board, Directors receive shares of Common Stock in
exchange for their deferred stock units. Messrs. Burgoyne, Ferrari, Hoak and
Thomas deferred all of their cash fees last year. Each non-employee Director
receives an annual grant of stock options under the Company's 1999 Stock Plan
covering 6,000 shares of Common Stock. Mrs. McKenzie participates in the
Company's Stock Purchase Plan by making monthly contributions and receives 50%
matching contributions from the Company. Directors of the Company who are
employees of the Company serve without compensation for their services as
Directors of the Company.
Executive/Nominating Committee. The Executive/Nominating Committee is
entitled to direct and manage the business and affairs of the Company in the
intervals between Board meetings, with all the powers and authority of the Board
in the management of the business and affairs of the Company to the extent
permitted by law and the By-laws. The Executive/Nominating Committee is also
responsible for considering and making recommendations to the Board regarding
nominees for election to the Board. The Executive/ Nominating Committee will
consider recommendations submitted by Shareholders for nominees for election to
the Board. The Executive/Nominating Committee met on three occasions and took
action by unanimous written consent on one occasion during the last fiscal year.
Executive/Nominating Committee members are Directors Hoak (chairman), Girouard
and Thomas.
Audit Committee. The Audit Committee provides assistance to the Board in
fulfilling its oversight responsibility relating to the Company's accounting,
auditing, financial reporting and systems of internal controls regarding finance
and accounting. The Audit Committee recommends a firm of independent auditors
for appointment by the Board and reviews their performance, consults with
management on the appointment of internal auditors and reviews their
performance, and reviews with management and the independent auditors the
adequacy of the Company's financial controls and reporting process. The Audit
Committee also reviews the Company's quarterly and year-end financial
statements. The Audit Committee held six meetings during the last fiscal year.
During fiscal 2001, Audit Committee members were Directors Hoak (chairman),
McKenzie and Ferrari.
Compensation Committee. The Compensation Committee establishes, amends and
oversees the Company's administration of incentive-based and other compensation
plans for senior executive officers and such other executive officers as the
Compensation Committee deems appropriate. It also oversees the Company's
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administration of benefit plans and recommends to the Board compensation of
Directors and changes in or the establishment of compensation plans for the
Company's employees. The Compensation Committee held three meetings and took
action by unanimous written consent on two occasions during the last fiscal
year. Compensation Committee members are Directors Thomas (chairman) and
Burgoyne.
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates the ownership on April 7, 2001, of the
Company's Common Stock by each Director and nominee, each executive officer
named in the Summary Compensation Table, and all Directors, nominees and
executive officers as a group:
SHARES PERCENT
BENEFICIALLY OF
NAME OWNED(1)(2) CLASS
- ---- ------------ -------
John H. Burgoyne............................................ 21,391 *
Michael R. Ferrari.......................................... 19,900 *
Marvin J. Girouard.......................................... 1,620,510 1.67%
James M. Hoak, Jr. ......................................... 188,246 *
Jay R. Jacobs............................................... 86,856 *
J. Rodney Lawrence.......................................... 230,564 *
Sally F. McKenzie........................................... 32,351 *
Tom M. Thomas............................................... 23,446 *
Charles H. Turner........................................... 121,989 *
E. Mitchell Weatherly....................................... 206,116 *
All Directors and Executive Officers as a Group............. 2,913,698 2.98%
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(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 7, 2001 to Mr. Burgoyne (17,000 shares), Mr. Ferrari
(17,000 shares), Mr. Girouard (720,541 shares), Mr. Hoak (60,264 shares),
Mr. Jacobs (63,000 shares), Mr. Lawrence (183,313 shares), Mrs. McKenzie
(25,500 shares), Mr. Thomas (17,000 shares), Mr. Turner (96,000 shares), Mr.
Weatherly (182,002 shares) and to all Directors and Executive Officers as a
group (1,684,475 shares), upon the exercise of stock options granted
pursuant to the Company's stock option plans. Nominees Carreker and Katz, as
of April 7, 2001, owned no shares of the Company's Common Stock.
(2) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to his or her shares. Includes 15,000 shares
over which Mr. Lawrence has shared voting and shared dispositive power.
* Represents less than 1% of the outstanding shares of such class.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table indicates the ownership on April 7, 2001, by each
person who was known by the Company to own beneficially five percent or more of
any class of the Company's Common Stock:
SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED(1) CLASS
- ------------------- ------------ -------
Wellington Management Company, LLP.......................... 5,592,650 5.79%
75 State Street
Boston, Massachusetts
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(1) Includes 3,545,160 shares over which it has shared voting power and
5,592,650 shares over which it has shared dispositive power. This
information was obtained from the beneficial owner's Schedule 13G Report
filed with the Securities and Exchange Commission on December 31, 2000.
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EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation with respect
to 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
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
--------------------------------------- AMOUNT OF AMOUNT OF
OTHER RESTRICTED SECURITIES
NAME AND FISCAL ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS COMPENSATION(3)
- ------------------ ------ -------- ---------- --------------- ---------- ---------- ---------------
Marvin J. Girouard....... 2001 $800,000 $1,332,000 $43,170 -- 230,000 $287,274
Chairman and Chief 2000 755,000 495,470 40,658 -- 200,000 167,428
Executive Officer 1999 725,000 511,125 38,220 -- 100,000 160,342
Charles H. Turner........ 2001 275,000 305,250 34,953 -- 60,000 48,028
Senior Vice President, 2000 250,000 115,000 30,998 -- 50,000 29,993
Finance, Chief
Financial 1999 225,000 105,750 26,207 -- 30,000 28,481
Officer and Treasurer
Jay R. Jacobs............ 2001 275,000 305,250 22,132 -- 60,000 48,556
Senior Vice President, 2000 250,000 115,000 23,845 -- 50,000 27,591
Merchandising 1999 225,000 105,750 23,012 -- 30,000 32,339
J. Rodney Lawrence....... 2001 212,000 212,000 26,973 -- 60,000 41,000
Senior Vice President, 2000 200,000 75,000 26,363 -- 50,000 26,861
Legal Affairs 1999 190,000 71,440 24,246 -- 30,000 26,059
E. Mitchell Weatherly.... 2001 202,000 202,000 39,016 -- 60,000 39,588
Senior Vice President, 2000 190,000 70,000 20,324 -- 50,000 25,624
Human Resources 1999 180,000 67,680 41,206 -- 30,000 24,776
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(1) Includes reimbursements for club dues, automobile expenses, financial
planning and medical expenses.
(2) No restricted stock awards were granted during the periods covered by this
table. The total amount and the dollar value (based on the closing price of
the Common Stock on the date of grant) of restricted stock held at March 3,
2001, were: Mr. Girouard, 84,825 shares ($1,060,313); Mr. Turner, 4,500
shares ($56,250), Mr. Jacobs, 4,500 shares ($56,250), Mr. Lawrence, 4,500
shares ($56,250) and Mr. Weatherly, 4,500 shares ($56,250).
(3) Includes in fiscal year 2001 the Company's accrued matching contributions
under the Company's 401(k) Retirement Plan of $6,227 for Mr. Girouard,
$6,677 for Mr. Turner, $4,990 for Mr. Jacobs, $6,538 for Mr. Lawrence and
$6,757 for Mr. Weatherly; accrued matching contributions under the Company's
Benefit Restoration Plan of $64,857 for Mr. Girouard, $11,896 for Mr.
Turner, $14,111 for Mr. Jacobs, $12,923 for Mr. Lawrence and $12,312 for Mr.
Weatherly; and accrued matching contributions under the Company's Stock
Purchase Plan of $216,190 for Mr. Girouard, $29,455 for Mr. Turner, $29,455
for Mr. Jacobs, $21,539 for Mr. Lawrence and $20,519 for Mr. Weatherly.
The Company has entered into Post-Employment Consulting Agreements with
Messrs. Girouard, Turner, Jacobs, Lawrence, Weatherly and three other executive
officers (each 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 a maximum of two years, depending
on the Executive's number of years of service as an officer of the Company, and
pay a monthly fee equal to one-twelfth of 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
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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 two Supplemental Retirement Plans to aid in
attracting and retaining key executives. Messrs. Girouard, Lawrence and
Weatherly are fully vested in a plan, adopted by the Company in 1986, which
provides that upon death, disability, retirement or other termination (but
commencing at retirement age of 65), a participant will receive annual benefits
over a period of 15 years (or a discounted lump-sum at the time of retirement in
lieu of annual benefits) which, when added to Social Security retirement
benefits, generally equal his target percentage of 50% of the average of his
highest annual salary and bonus for any three years, increased by 6% per year
for 15 years. If a participant retires after age 65, the percentage of his
highest average annual salary and bonus (prior to age 65) used to calculate his
benefit is increased above 50% by 5% for each year of service after age 65, to a
total not greater than 65%. All participants in the plan have elected to receive
benefits in a lump-sum distribution rather than annual benefits.
The following table shows for various levels of average annual compensation
the computed annual benefit and the alternative lump-sum benefit, payable at age
65, discounted at a rate equal to the lesser of the Pension Benefit Guaranty
Corporation interest rate for immediate annuities (PBGC rate) or a 24 month
rolling average of the PBGC rate, and less a calculated Social Security
retirement benefit.
COMPUTED
AVERAGE ANNUAL ANNUAL LUMP-SUM
COMPENSATION BENEFIT BENEFIT
- -------------- ---------- -----------
$ 300,000................................... $ 210,762 $ 2,339,059
400,000.................................. 288,349 3,200,121
500,000.................................. 365,936 4,061,183
600,000.................................. 443,522 4,922,245
700,000.................................. 521,109 5,783,307
800,000.................................. 598,695 6,644,369
1,000,000.................................. 753,868 8,366,493
1,200,000.................................. 909,042 10,088,617
1,500,000.................................. 1,141,801 12,671,803
1,600,000.................................. 1,219,388 13,532,882
The applicable average annual compensation for Mr. Girouard is $1,320,531,
for Mr. Lawrence is $291,147 and for Mr. Weatherly is $276,560.
Messrs. Turner, Jacobs, and three other executive officers participate in a
supplemental retirement plan, adopted by the Company in 1995, which provides
that upon death, disability, retirement or other termination (but commencing at
retirement age), a participant will receive an annuity based on annual benefits
which, when added to Social Security retirement benefits, generally equal a
percentage (not to exceed a maximum of 60%) of the participant's highest average
annual salary and bonus (based on a three-year average). If a participant
retires prior to age 65, the percentage of his highest average annual salary and
bonus used to calculate his benefit is reduced by 5% for each year his
retirement precedes age 65. Benefits vest for each participant at the rate of
10% per year of participation in the plan. Further, benefits accrue for each
participant at a rate of 5% per year of credited service with the Company. The
years of participation in the plan for Mr. Turner are 5 years and for Mr. Jacobs
are 5 years; and the years of credited service for Mr. Turner are 9 years and
for Mr. Jacobs are 23 years.
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The following table shows for various levels of average annual compensation
the computed annual benefit payable at age 65 including current maximum annual
Social Security retirement benefits.
COMPUTED
AVERAGE ANNUAL ANNUAL
COMPENSATION BENEFIT(1)
- -------------- ----------
$ 300,000................................................ $180,000
400,000............................................... 240,000
500,000............................................... 300,000
600,000............................................... 360,000
700,000............................................... 420,000
800,000............................................... 480,000
1,000,000............................................... 600,000
1,200,000............................................... 720,000
1,500,000............................................... 900,000
1,600,000............................................... 960,000
The applicable average annual compensation for Mr. Turner is $367,333 and
for Mr. Jacobs is $364,833.
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(1) Assuming full vesting and accrual.
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information relating to stock options
granted during the fiscal year ended March 3, 2001, to the executive officers
named in the Summary Compensation Table.
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)
- ---- ---------- ------------ -------------- ---------- ----------------
Marvin J. Girouard............. 230,000 14.80% $10.4375 10/12/10 $1,215,941
Charles H. Turner.............. 60,000 3.86 10.4375 10/12/10 317,202
Jay R. Jacobs.................. 60,000 3.86 10.4375 10/12/10 317,202
J. Rodney Lawrence............. 60,000 3.86 10.4375 10/12/10 317,202
E. Mitchell Weatherly.......... 60,000 3.86 10.4375 10/12/10 317,202
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(1) Options to Messrs. Girouard, Turner, Jacobs, Lawrence and Weatherly covering
230,000, 60,000, 60,000, 60,000 and 60,000 shares, respectively, were
granted on October 12, 2000, and become exercisable in annual installments
of 25% on each of the four anniversaries of the date of grant. The
administrative committee of the stock option plan may permit an employee to
tender previously owned shares to pay the exercise price of an option and
may permit an employee to satisfy his income tax withholding obligations up
to the minimum statutory rate 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, one year after death or disability, or 3 years after
retirement.
(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; option term of 6 years; interest rate
of 5.68%, which represents the interest rate at such option grant date of
U.S. treasury securities having a six-year maturity; dividend payment rate
of $.16 per share per year; and a volatility factor of 55.9%, which is based
on Common Stock prices for a six-year period prior to the date of grant. For
purposes of determining these option valuations, a term
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of six years was used for the length of the option term rather than the
actual 10-year option term. Six years represents the historical average
length of time from grant date to exercise date for all options previously
granted by the Company. 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 executive officers named in the Summary Compensation Table during
the last fiscal year, and the number and value of exercisable and unexercisable
stock options held by such officers at March 3, 2001.
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- ----------- -------------
Marvin J. Girouard.... -- $ -- 720,541 467,500 $3,852,042 $1,677,500
Charles H. Turner..... 38,563 315,807 96,000 139,500 198,000 480,531
Jay R. Jacobs......... 86,450 570,899 63,000 139,500 46,000 480,531
J. Rodney Lawrence.... -- -- 183,313 139,500 895,631 480,531
E. Mitchell
Weatherly........... 18,617 191,271 182,002 139,500 884,225 480,531
- ---------------
(1) Computed as the difference between the option exercise prices and the market
price of the Common Stock at the date of exercise.
(2) Computed as the difference between the option exercise prices and $12.50
(the closing price of the Common Stock at fiscal year-end).
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is composed entirely of independent,
non-employee directors, establishes, amends and oversees the Company's
administration of incentive-based compensation plans and makes recommendations
to the Board of Directors on matters relating to other compensation and
perquisites for the Chief Executive Officer and other executive officers as the
Committee deems appropriate. The Compensation Committee may from time to time
retain 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 results from performance-based compensation plans. In
addition to base salary, executive compensation can include annual bonus, stock
options, restricted stock, benefits and perquisites. As management
responsibility increases, a greater portion of the executive's compensation is
directed toward performance-based programs with larger percentages of potential
compensation related to the price of the Company's Common Stock. These incentive
programs involve short-term bonus plans to reward annual performance and
long-term, stock-based plans to 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.
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The base salary level of the Chief Executive Officer is reviewed annually
by the Compensation Committee. Base salary is based primarily upon Company
growth 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.
During the 2001 fiscal year, the Company maintained an annual bonus plan
for the Chief Executive Officer and other employees that paid bonus awards based
on the attainment of targeted levels of pretax income, excluding certain
non-recurring items. The Compensation Committee believes that pretax income is
the main determinant for establishing shareholder value. Each year the
Compensation Committee establishes target incentives to be paid when certain
pretax income levels are met. These pretax income levels are established based
on percentages of the current year's pretax profit plan. Target incentives are
expressed as a percentage of the base salary of participants and are competitive
when compared to the retail industry.
Long-term incentives are provided through the grant of stock options. Under
the stock option plan, executives and other key employees may be awarded options
to purchase Company stock, which in the past have always 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.
Long-term incentives for the senior executives have been awarded in a
combination of stock option and restricted stock awards. Restricted stock has
been awarded only at the time of the granting of stock options and subject to
restrictions that the Compensation Committee established at the time of the
award. Rights to transfer the restricted stock by the executive vest only upon
the satisfaction of all restrictions. Executives may vote and receive dividends
on unvested restricted stock. For the past five years, the Company has annually
awarded stock options to the Chief Executive Officer, and restricted stock
awards were granted in conjunction with the grant of stock options to the Chief
Executive Officer in each of the first two years of the five year period. All
stock options were granted with exercise prices of market value at the dates of
grant, and the restricted stock was awarded in amounts generally representing
25% of the shares subject to stock options. The Compensation Committee, however,
has determined to discontinue the use of restricted stock as part of long-term
compensation and will award restricted stock in the future only in exceptional
circumstances. The amount of awards to each executive were determined to reward
the executive for Company and stock performance and to provide incentives for
the executive to remain with the Company. The number of currently held options
by each executive was not considered in making stock option and restricted stock
awards.
COMPENSATION COMMITTEE
Tom M. Thomas (Chairman)
John H. Burgoyne
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BOARD OF DIRECTORS AUDIT COMMITTEE REPORT
In accordance with its written charter, which was approved in its current
form by the Board of Directors on March 31, 2000, the Audit Committee assists
the Board in oversight of the quality and integrity of the accounting, auditing
and financial reporting practices of the Company. A copy of the Audit Committee
charter is attached to this Proxy Statement as Appendix A.
The Audit Committee consists of three independent members (as independence
is defined by the rules of the New York Stock Exchange).
In performing its oversight function, the Audit Committee reviewed and
discussed the audited consolidated financial statements of the Company as of and
for the fiscal year ended March 3, 2001 with management and the Company's
independent auditors. The Audit Committee also discussed with the Company's
independent auditors all matters required by generally accepted auditing
standards, including those described in Statement on Auditing Standards No. 61,
as amended, "Communication with Audit Committees" and, with and without
management present, discussed and reviewed the results of the independent
auditors' examination of the financial statements.
The Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company that
might bear on the auditors' independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees." The
Audit Committee discussed with the auditors any relationships that may have an
impact on their objectivity and independence and satisfied itself as to the
auditors' independence. The Audit Committee also considered whether the
provision of non-audit services by Ernst & Young LLP, the Company's independent
auditors for 2001, to the Company is compatible with maintaining Ernst & Young
LLP's independence.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board of Directors
that the Company's audited consolidated financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year ended March 3, 2001,
for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
James M. Hoak, Jr. (Chairman)
Sally F. McKenzie
Michael R. Ferrari
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COMPANY STOCK 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 S&P Retail Stores Composite Index.
S&P RETAIL STORES
PIER 1 IMPORTS, INC. S&P 500 INDEX COMPOSITE INDEX
-------------------- ------------- -----------------
1996 100.00 100.00 100.00
1997 133.74 125.38 119.96
1998 311.04 169.28 183.52
1999 152.00 202.69 269.52
2000 138.83 220.95 240.79
2001 226.73 206.93 264.44
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% 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 10% 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 10% beneficial owners during the last fiscal year
were observed.
PROPOSAL TO AMEND THE STOCK PURCHASE PLAN
The Pier 1 Imports, Inc. Stock Purchase Plan (the "Plan") was established
to provide eligible participants with the opportunity to acquire an ownership
interest in the Company and thereby provide those who will be responsible for
the continued growth of the Company with a more direct concern about its welfare
and a common interest with the Company's other shareholders. The Plan provides a
voluntary method of acquiring shares of the Company's Common Stock in convenient
installments by payroll and other compensation deductions, supplemented by
contributions from the Company.
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The Plan has been in effect since 1980. The Board of Directors has approved
an amendment to the Plan, subject to shareholder approval at the Annual Meeting,
that would make all employees of the Company eligible to participate in the
Plan. Currently, the Plan limits eligibility to full-time employees of the
Company.
ELIGIBILITY
All full-time employees of the Company, and certain of its subsidiaries
that have adopted the Plan, who have attained the age of majority of their state
of residence and have completed 60 days of full-time employment with the Company
or a designated subsidiary are eligible to participate in the Plan as currently
in effect. The Plan was amended so that all employees, including full-time and
part-time employees who have met the other requirements for eligibility will be
eligible subject to and effective upon shareholder approval of the amendment at
the Annual Meeting. At April 30, 2001, under the amended Plan the Company would
have had approximately 12,045 eligible employees, of which 5,273 were full-time
employees and 6,772 were part-time employees. Currently, 1,853 employees are
participants in the Plan. Members of the Board of Directors of the Company who
are not employees are also eligible to participate in the Plan.
PARTICIPANT ACCOUNTS
The Company maintains an account in the name of each participant, deducts
funds from each participant's pay as authorized and pays monthly to the Plan for
each participant's account such deducted funds plus contributions by the Company
on the participant's behalf. Such funds are used to purchase shares of Common
Stock of the Company (i) on the New York Stock Exchange, or (ii) directly from
the Company; provided that no such purchase of Common Stock may be made at a
price which is greater than the last sale price or highest current independent
bid price, whichever is higher, for such stock on the New York Stock Exchange.
The Company currently intends to purchase all shares either on the New York
Stock Exchange or from the Company's treasury. Purchased shares are allocated at
average cost to the accounts of participants in proportion to the funds received
for each respective account. Any broker's commissions or markups on purchases
made by the broker are paid by the Company. Broker's commissions, markups or
markdowns or other charges in connection with any sales and reinvestment of
dividends are payable by participants.
Each participant, for whose account funds are received, acquires full and
immediate ownership of all shares (and fractional interests) of Common Stock
allocated to his account. All shares are registered in the name of the Plan and
remain so registered until delivery is requested by a participant. Shares of
Common Stock held by the Plan in a participant's account may be sold, assigned,
hypothecated or otherwise dealt with at will by the participant, and he may
request that a certificate for any or all of his full shares be delivered to him
at any time. Participation of a participant in the Plan will be terminated upon
any assignment or hypothecation by a participant of his interest in the Plan.
A participant's account is credited with all dividends, if any, paid on
full and fractional shares held in his account. Cash dividends are reinvested in
Common Stock unless the participant otherwise instructs the Company.
COMPENSATION DEDUCTIONS
A participant must specify the amount to be withheld from his compensation
in multiples of $1.00, with a minimum of $10.00 per pay period and a maximum of
10% of his compensation. A director may contribute to the Plan in amounts not to
exceed his monthly director's fees. Subject to the Plan limitations,
compensation deductions may be increased or decreased at any time by the
participant.
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COMPANY CONTRIBUTIONS
The Company contributes an amount of from 10% to 50% of each participant's
monthly compensation deduction, depending upon the participant's length of
continuous participation in the Plan. The Company's contribution is as follows:
COMPANY
YEARS OF CONTINUOUS CONTRIBUTION
PARTICIPATION RATE
- ------------------- ------------
less than 1.............................................. 10%
greater than or equal to 1 but less than 2............... 20%
greater than or equal to 2 but less than 3............... 30%
greater than or equal to 3 but less than 4............... 40%
greater than or equal to 4............................... 50%
All participants who were allocated Company contributions at a rate of 50% or
more at the close of business on October 31, 1985, however, remain at the then
existing rate of contribution. A director who is not an employee of the Company
may contribute all his director's fees paid by the Company, but the Company will
match only 50% of the director's annual retainer fee.
AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors may amend or discontinue the Plan at any time. Any
such amendment or termination will not result in the forfeiture of any funds
contributed by any participant or the Company, or of any shares or fractional
interest in shares purchased for the participant, or of any dividends or other
distributions with respect to such shares, that were effective before the
effective date of the amendment or termination of the Plan. Certain material
amendments to the Plan must be submitted for shareholder approval.
FEDERAL INCOME TAX EFFECTS
The amount of the participant's and the Company's contribution to the Plan
is treated as "earned income" to the participant, and his withholding taxes will
be increased appropriately. Assuming federal income tax withholding requirements
are satisfied, the Company will be allowed a deduction for the Company's and
each participant's contribution to participants' accounts. The amount of any
broker's commissions or mark-ups on purchases of Common Stock that are paid by
the Company will be treated as income to the participant (and deductible by the
Company) to the extent allocated to shares credited to his account.
BENEFITS UNDER THE PLAN
The following table shows for the persons and groups indicated, the amounts
actually contributed in cash by the employee and the Company and the number of
shares purchased under the Plan for their respective accounts during the fiscal
year ended March 3, 2001. Such amounts would not have been materially different
if the proposed amendment had been in effect for such fiscal year.
EMPLOYEE CASH COMPANY CASH
NAME AND POSITION CONTRIBUTIONS CONTRIBUTIONS SHARES PURCHASED
- ----------------- ------------- ------------- ----------------
Marvin J. Girouard................................ $ 132,537 $132,537 23,739
Charles H. Turner................................. 39,885 19,942 5,347
Jay R. Jacobs..................................... 39,885 19,942 5,347
J. Rodney Lawrence................................ 29,377 14,689 3,936
E. Mitchell Weatherly............................. 27,838 13,919 3,729
All Executive Officers............................ 189,407 99,304 25,805
Non-Executive Directors........................... 2,400 1,200 329
Non-Executive Officer Employees................... 1,761,654 805,986 238,347
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PROPOSED AMENDMENT
The Board of Directors has determined that it is in the best interests of
the Company to amend the Plan to change an element of the participation
eligibility from full-time employees to all employees which would include all
full-time and part-time employees. A copy of the Company's Stock Purchase Plan,
as amended, is attached to this Proxy Statement as Appendix B. Adoption of this
Proposal requires approval by the affirmative vote of the holders of at least a
majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Annual Meeting.
MANAGEMENT RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
OTHER BUSINESS
No other matters are scheduled to be presented for action at the meeting
other than the matters described in this Proxy Statement. 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 2002 fiscal year at the meeting of the Board of
Directors which follows the Annual Meeting of Shareholders.
The Board of Directors appointed Ernst & Young LLP as auditors for the
Company for fiscal year 2001. A representative of Ernst & Young LLP is expected
to be present at the Annual Meeting of Shareholders and will be given the
opportunity to make a statement if he or she so desires and to respond to
appropriate questions from Shareholders.
INDEPENDENT AUDITOR FEES
The Company paid Ernst & Young LLP the following fees for services rendered
during the fiscal year ended March 3, 2001:
Audit Fees: For audit fees in connection with Ernst & Young LLP's
review and audit of the Company's annual financial statements for the
fiscal year ended March 3, 2001 and that firm's review of the Company's
interim financial statements included in its Quarterly Reports on Form 10-Q
for that fiscal year, the Company paid Ernst & Young LLP approximately
$311,000.
Financial Information Systems Design and Implementation Fees: The
Company did not engage Ernst & Young LLP to provide advice regarding
financial information systems design and implementation during the fiscal
year ended March 3, 2001.
All Other Fees: The Company paid Ernst & Young LLP approximately
$911,000 for all other non-audit related services.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
The date by which Shareholder proposals must be received by the Company for
inclusion in the Proxy Statement for the 2002 Annual Meeting of Shareholders is
January 19, 2002.
A Shareholder desiring to bring a matter before the 2002 Annual Meeting of
Shareholders that will not be contained in the Proxy Statement, including the
nomination of an individual for election as a director, must comply with the
advance notice provisions of the Company's By-laws. The By-laws require that
notice of the matter must be received by the Company no earlier than April 1,
2002, and no later than April 29, 2002. The Secretary of the Company may be
contacted to obtain the specific information regarding the matter that must be
provided to the Company with the advance notice.
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PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. The services
of Georgeson Shareholder Communications Inc. will be employed for the purpose of
facilitating the solicitation. The fees of Georgeson Shareholder Communications
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 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.
/s/ J. RODNEY LAWRENCE
J. Rodney Lawrence
Secretary
May 22, 2001
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APPENDIX A
AUDIT COMMITTEE CHARTER
POLICY
The Audit Committee's function is to provide assistance to the Board of
Directors in fulfilling its oversight responsibility relating to the Company's
accounting, auditing, financial reporting and systems of internal controls
regarding finance and accounting. In so doing, the Committee should foster free
and open communications among the directors, the independent auditors, the
internal auditors and the financial and senior management of the Company.
The Company's independent auditors are ultimately accountable to the Board
of Directors and the Audit Committee, and the Audit Committee and the Board of
Directors have the ultimate authority and responsibility to select, evaluate and
replace the independent auditors.
COMPOSITION
The Audit Committee shall consist of at least three directors, each of whom
has no relationship with the Company that may interfere with the exercise of his
or her independence from management and the Company, as required by the listing
standards of the New York Stock Exchange. In that connection, no member of the
Committee may (i) be an employee of the Company or any of its affiliates or an
immediate family member of an executive officer of the Company or any of its
affiliates until three years following the termination of that employee's or
executive officer's employment, (ii) have had a business relationship, direct or
indirect, with the Company within the prior three years, unless the Board of
Directors determines in its business judgment that the relationship does not
interfere with that person's exercise of independent judgment or (iii) be an
executive of another corporation where any of the Company's executives serve on
that corporation's compensation committee. All members of the Committee shall be
financially literate, as such qualification is interpreted by the Board of
Directors in its business judgment, or must become financially literate within a
reasonable time after their appointment to the Committee. At least one member of
the Committee shall have accounting or related financial management expertise,
as the Board of Directors interprets such qualification in its business
judgment.
RESPONSIBILITIES
The Committee will meet at least four times each year or more frequently as
circumstances require. In connection with fostering open communication among
groups providing accounting, auditing and financial reporting services for the
Company, the Committee will meet at least annually with the independent
auditors, the internal auditor and financial and senior management in separate
sessions to discuss any matter that the Committee or any of these groups
believes should be discussed privately.
In fulfilling its responsibilities, the Committee is expected to:
- Recommend to the Board of Directors each year a firm of independent
auditors for the Company, periodically evaluate the performance of the
independent auditors and, when appropriate, recommend their replacement;
- Require the independent auditors to submit annually to the Committee a
formal written statement describing all relationships between the
auditors and the Company; review and discuss with the independent
auditors all of their relationships or services that may impact their
objectivity and independence; and recommend to the Board of Directors
appropriate action to ensure the independence of the independent
auditors;
- Confer with the independent auditors and the internal auditor as to the
scope of each of their proposed audits, including directing special
attention to specific matters or areas deemed by the Committee or the
independent auditors or internal auditors to be of special significance;
and confirm both of the auditors' understanding that they have the
authority and responsibility to inform the Committee of any unresolved
issues they encounter;
A-1
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- Consult with management on the appointment of the internal auditors;
review the proficiency, capabilities and independence of the internal
auditors;
- Review the findings and recommendations of the independent auditors on
completion of their annual audit;
- Review with the independent auditors and the internal auditors, outside
the presence of management, any significant disagreements with management
and unresolved issues;
- Review with management and the independent auditors the Company's
year-end financial statements and report of the independent auditors;
- Review by the Chairman of the Committee the quarterly earnings release
prior to its public dissemination; review the Company's Form 10-Q prior
to its filing;
- Discuss with the independent auditors their judgments about the clarity
of the Company's financial disclosure practices and the quality and
appropriateness of the accounting principles and estimates and other
judgments applied in the Company's financial reporting;
- Review, in consultation with the independent auditors, the internal
auditors and the financial management of the Company, the adequacy of the
Company's financial controls and procedures and financial reporting
procedures and financial reporting process;
- Review at least annually the findings and recommendations of the internal
auditors and management's actions regarding internal audit
recommendations;
- Consider and approve, if appropriate, changes to accounting principles
applied in the Company's financial reporting;
- At its discretion, review the expense reports of the Chief Executive
Officer;
- Consider annually and recommend to the Board of Directors, as
appropriate, changes to the Committee charter;
- Consult with and retain such advisors and consultants as the Committee
deems necessary, including legal counsel, who may be counsel to the
Company; and
- Report all actions taken at its meetings to the Board of Directors at the
next following meeting of the Board.
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APPENDIX B
PIER 1 IMPORTS, INC.
STOCK PURCHASE PLAN
RESTATED AS AMENDED DECEMBER 8, 2000
PURPOSE OF PLAN
The purpose of the Pier 1 Imports, Inc. Stock Purchase Plan (the "Plan") is
to provide Eligible Participants with the opportunity to acquire an ownership
interest in Pier 1 Imports, Inc. (the "Company") and thereby provide those who
will be responsible for the continued growth of the Company with a more direct
concern about its welfare and a common interest with the Company's other
shareholders. The Plan provides a voluntary method of acquiring shares of Common
Stock in convenient installments by compensation deductions, supplemented by
contributions from the Company.
ARTICLE I
ELIGIBILITY
All employees of the Company who have attained the age of majority of their
state of residence and have completed 60 days of employment with the Company
will be eligible to participate in the Plan, at their election; provided,
however, that a Participant who has withdrawn from the Plan will again be
eligible to participate only after a period of 12 months from the date of such
withdrawal. Members of the Board of Directors of the Company who are not
employees shall also be eligible to participate in the Plan.
ARTICLE II
PARTICIPATION
An Eligible Participant at his election may enroll as a Participant by
filling in and signing a form of compensation deduction authorization. Such
forms may be obtained through the Human Resources Department of the Company.
Enrollment shall become effective and the Company will establish an Account for
Participant on the first day of the first month after the authorization for
compensation deductions is received by the Company or as soon thereafter as
practicable.
ARTICLE III
METHOD OF OPERATION
The Company, assisted by the Administrative Committee, will administer the
Plan and will establish an Account in the name of each Participant. The Company
will deduct funds from each Participant's pay as authorized and will pay monthly
to the Plan for the Account of such Participant such deducted funds plus
contributions by the Company on behalf of Participant. Such funds will promptly
be used to purchase shares of Common Stock (i) on the New York Stock Exchange by
a Broker designated by the Administrative Committee of the Company or (ii)
directly from Pier 1 Imports, Inc.; provided that no such purchase of Common
Stock may be made at a price which is greater than the last sale price or
highest current independent bid price, whichever is higher, for such stock on
the New York Stock Exchange. Such shares will be allocated to the Accounts of
Participants, at the average cost thereof, in proportion to the funds received
for each respective Account. Allocation will be made in full shares of Common
Stock and fractional interests therein to the one-thousandth of a share.
Any Broker's commissions or markups on purchases made by the Broker will be
paid by the Company. Broker's commissions, markups or markdowns or other charges
in connection with sales and reinvestment of dividends will be payable by
Participants.
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ARTICLE IV
COMPANY CONTRIBUTIONS
The Company will contribute an amount which will range from 10% to 50% of
each Participant's monthly compensation deduction, depending upon Participant's
length of continuous participation in the Plan. A Director may participate in
the Plan, as well as all other contributory employee benefit plans of the
Company, but only in amounts not to exceed his monthly Director's fees. The
Company's contribution will be as follows:
SCHEDULE
COMPANY CONTRIBUTION
YEARS OF CONTINUOUS PARTICIPATION RATE
- --------------------------------- --------------------
less than 1 year................................. 10%
greater than or equal to 1 year but less than 2
years.......................................... 20%
greater than or equal to 2 years but less than 3
years.......................................... 30%
greater than or equal to 3 years but less than 4
years.......................................... 40%
greater than or equal to 4 years................. 50%
Provided, however, at the close of business on October 31, 1985, all
Participants who were allocated Company contributions at a rate of 50% or more
shall remain at the then existing rate of contribution, and Participants who
were allocated Company contributions at a rate of less than 50% shall after such
date participate in the Plan at the Company Contribution Rate which applied to
such Participant on October 31, 1985, and thereafter, the Company Contribution
Rate shall increase based on Participant's Years of Continuous Participation to
a maximum rate of 50%. The maximum amount a Participant may contribute through
compensation deductions is 10% of his compensation. A Director who is not an
employee of the Company may participate in the Plan and contribute all his
Director's fees paid by the Company; however, the Company shall match only 50%
of the Director's annual retainer fee which shall be determined by the Board of
Directors of the Company from time to time. A Participant's Years of Continuous
Participation in the Plan shall be calculated on January 1 and July 1 of each
year, and only complete Years of Continuous Participation in the Plan shall be
used on such dates to determine Participant's applicable Company Contribution
Rate.
ARTICLE V
COMPENSATION DEDUCTIONS
A Participant will specify in the compensation deduction authorization, in
multiples of $1.00, the amount to be withheld from his Compensation, with a
minimum of $10.00 per pay period and a maximum as provided in Article IV hereof.
Compensation deductions will be made from each check payable to a Participant,
and authorization will remain effective until revised or terminated as
hereinafter provided.
Compensation deductions may be increased or decreased (in multiples of
$1.00, subject to the minimum and maximum limitations set forth above) at any
time by Participant's written request submitted to the Human Resources
Department of the Company. Commencement of increases or decreases of deductions
will become effective on the first day of the first month after a Participant's
request is received by the Company or as soon thereafter as practicable.
ARTICLE VI
TERMINATION OF COMPENSATION DEDUCTIONS
A Participant's compensation deduction authorization shall automatically
terminate without notice upon his death or termination of his employment and may
be terminated at any time by Participant's written request submitted to the
Human Resources Department of the Company. Voluntary termination of deductions
shall become effective on the first day of the first month after receipt by the
Human Resources Department of the Company of a Participant's request or as soon
thereafter as practicable. After termination of payroll
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authorization, a Participant may maintain or close his Account as herein
provided in Article IX. An employee who has terminated his compensation
deduction authorization may not re-enter the Plan within 12 months after the
effective date of such termination but may thereafter re-enter the Plan by
following the procedure set forth in Article II.
ARTICLE VII
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves the right to amend or discontinue the Plan
at any time. Any such amendment or termination will not result in the forfeiture
of any funds deducted from the Compensation of any Participant or contributed by
the Company on behalf of any Participant, or of any shares or fractional
interest in shares purchased for Participant, or of any dividends or other
distributions in respect of such shares, effective before the effective date of
the amendment or termination of the Plan.
Any amendment to the Plan will be submitted to the shareholders for
approval by a majority of the shares present or entitled to a vote at a meeting
called therefor, if the amendment would:
(a) materially increase the benefits accruing to participants under
the Plan; or
(b) materially increase the number of securities which may be issued
under the Plan; or
(c) materially modify the requirements as to eligibility for
participation in the Plan.
ARTICLE VIII
PARTICIPANT'S ACCOUNTS
Each Participant for whose Account funds were received immediately acquires
full ownership of all shares of Common Stock and any fractional interest therein
when the shares are allocated to his Account. All shares will be registered in
the name of the Plan and will remain so registered until delivery of the shares
to the Participant pursuant to the Plan. A Participant's participation will
terminate if he assigns or hypothecates his interest in the Plan. Shares of
Common Stock held by the Plan in a Participant's Account may be sold, assigned,
hypothecated or otherwise dealt with at will by Participant, and he may request
that a certificate for any or all of his full shares be delivered to him at any
time. Any such action may, however, result in the automatic withdrawal of
Participant from the Plan (see Article IX, "Withdrawal from the Plan").
A Participant's Account will be credited with all dividends, if any, paid
in respect to the full shares and any fractional interest in shares held in his
Account. Cash dividends will be reinvested in Common Stock following payment
thereof unless Participant instructs the Company to the contrary.
Stock dividends and/or any stock splits in respect of shares held in
Participant's Account will be credited to the Account without charge.
Distributions of other securities and rights to subscribe will be sold and the
proceeds will be handled in the same manner as a cash dividend.
A Participant will receive quarterly and annual statements of his Account.
Such statements should be retained by Participant as a permanent record.
The Company will send to each Participant as promptly as practicable, by
mail or otherwise, all notices of meetings, proxy statements and other materials
distributed by the Company to its shareholders. Upon receipt of instructions
from a Participant, the administrator of the Plan will vote, or exercise
dissenter's rights when applicable, full shares of Common Stock in Participant's
Account in accordance with the instructions of Participant. The administrator of
the Plan will vote, or exercise dissenter's rights when applicable, shares of
Common Stock in Participants' Accounts for which no instructions were received
in the same proportion as shares for which instructions were received are voted.
In the event of a tender offer for Common Stock, the Company will send to
each Participant the tender offer documents and other materials relating to such
tender offer that are received by the Plan as a holder of
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24
Common Stock, together with a form to provide instructions whether to direct the
administrator of the Plan to tender into the tender offer the Common Stock in a
Participant's Account. Upon receipt of instructions from a Participant, the
administrator of the Plan will take such action as directed by Participant. In
addition, the administrator of the Plan will tender into such tender offer only
that number of shares of Common Stock for which valid instructions were not
received from Participants that bears the same ratio to the total of all shares
for which valid instructions were not received as the number of shares for which
valid instructions to tender into the tender offer bears to the total number of
shares in Participants' Accounts.
ARTICLE IX
WITHDRAWAL FROM THE PLAN
A Participant may withdraw from the Plan at any time by delivering, to the
Company's Human Resources Department, a written notice of terminating his
compensation deduction authorization. Further, a Participant will be
automatically withdrawn from the Plan upon any delivery of certificates from the
Plan or the sale by the Company of any of the shares in the Account pursuant to
Participant's instructions, except that without so withdrawing, all shares in
the Account of each Participant shall be automatically distributed to the
Participant at least once each calendar year. A Participant who withdraws from
the Plan may not re-enter the Plan for a period of 12 months following such
withdrawal, but may thereafter re-enter upon submission of a new compensation
deduction form.
ARTICLE X
RESALE OF STOCK ACQUIRED UNDER THE PLAN
Participants acquiring shares pursuant to the terms of the Plan may sell or
transfer such shares in any manner permitted by law; provided, however, that the
automatic withdrawal provisions of Article IX herein may be applicable to any
such sale or transfer. Participants who are deemed to be "affiliates" of the
Company within the meaning of the Securities Act of 1933 ("Act") may sell or
transfer such shares only in accordance with the provisions of Rule 144 under
such Act, in a transaction otherwise exempt from registration under such Act or
pursuant to an effective registration under such Act.
ARTICLE XI
FEDERAL INCOME TAX WITHHOLDING
Both the amount of the compensation deductions and the Company's
contribution to the Plan are treated as "earned income" to Participant under the
Internal Revenue Code of 1954, as amended ("Code"), and the Company will
withhold from the balance of a Participant's Compensation federal income tax
(and state and local taxes where applicable), upon the basis of each
Participant's income subject thereto. Hence, when a Participant authorizes a
specific compensation deduction, his withholding taxes on his remaining
Compensation will be increased to cover the withholding taxes on the amount
deducted and the Company's contributions on behalf of such Participant.
Upon the sale of stock acquired pursuant to the Plan, a Participant will
have a taxable gain or loss depending upon the selling price and tax basis of
the stock. The sale will result in a capital transaction and will be subject to
the provisions of the Code, particularly those which deal with capital gains and
losses. Participants should discuss their particular tax circumstances and
consequences of sales with their tax advisors.
B-4
25
ARTICLE XII
MISCELLANEOUS
1. Neither the act of establishing the Plan nor any provision thereof or
action taken thereunder shall be construed as giving any Participant the right
to be retained as an employee of the Company, and the right of the Company to
dismiss or discharge any employee is specifically reserved.
2. The Company may require compliance with or satisfaction of any legal
requirement which may be deemed by it necessary as a condition for participation
in the Plan or for distribution or payment of interests or benefits thereunder.
3. By his act of participating in the Plan, or of accepting any benefits
thereunder, a Participant and any person claiming under or through him shall
thereby be conclusively deemed to have accepted and consented to the application
to him of the provisions of the Plan.
4. Neither the Company nor any Director, officer, employee or agent of the
Company warrants or represents in any way to any Participant that the value of
Common Stock will increase or will not decrease or that dividends will be paid
on Common Stock, either at all or at any particular level. Each Participant
assumes all risks in connection with changes in value of Common Stock and all
risks that dividends may not be paid, either at all or at any particular level.
5. Any words used herein in the masculine gender shall be construed as
though they were used in the feminine gender wherever appropriate.
6. The Plan is hereby amended and restated in its entirety as of December
8, 2000.
ARTICLE XIII
DEFINITIONS
For the purpose of the Plan, unless the context clearly or necessarily
indicates the contrary, the following words and phrases shall have the meanings
set forth in the definitions below:
a. "Account" shall mean the separate Account established and
maintained for each Participant pursuant to Article VIII hereof.
b. "Administrative Committee" shall mean the committee which may be
formed to assist the Company in the administration of the Plan, the members
of which shall be appointed by the Board of Directors. The committee shall
be comprised of not less than two Directors of the Company to administer
the Plan. Only "Disinterested Persons" as that term is defined in Rule
16b-3(b) promulgated under the 1934 Act, as amended, shall be eligible to
serve as members of the committee.
c. "Board of Directors" shall mean the Board of Directors of Pier 1
Imports, Inc.
d. "Broker" shall mean the broker appointed by the Administrative
Committee pursuant to Article III.
e. "Common Stock" shall mean shares of common stock, par value $1 per
share, of Pier 1 Imports, Inc.
f. "Company" shall mean any division, office or employing unit of Pier
1 Imports, Inc., a Delaware corporation, its successors and assigns and any
of its subsidiaries both corporate and non-corporate (including, but not
limited to, any business trust) any of which shall be so designated by the
Board of Directors and which shall adopt the Plan by action of its board of
directors, or other governing person or entity, if applicable.
g. "Compensation," whether paid currently or deferred pursuant to a
written agreement between the employee and the Company, shall mean the
employee's gross base pay, overtime pay, and incentive cash bonuses. The
definition of Compensation shall not include severance pay, insurance and
unemployment
B-5
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benefits and other remuneration, including without limitation, stock
options, retirement plan contributions, cash payments under any stock
option or similar arrangements measured by stock values, supplemental
insurance benefits, benefits payable under any type of employee benefit
plan, Company contributions to any retirement plan and reimbursement for
expense, all determined in accordance with such rules, regulations or
standards as may be prescribed by the Board of Directors.
h. "Eligible Participant" shall mean any employee or Director who
meets the requirements stated in Article I.
i. "Participant" shall mean any employee or outside Director of the
Company who elects in accordance with the provisions of the Plan to
participate in the Plan through authorized compensation deductions and so
notifies the Human Resources Department in writing.
j. "Plan" shall mean the Pier 1 Imports, Inc. Stock Purchase Plan.
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27
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 28, 2001
The undersigned hereby appoints MARVIN J. GIROUARD, 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 2,
2001, at the annual meeting of shareholders to be held at 10:00 a.m. local time
on June 28, 2001 at the Renaissance Worthington Hotel, Trinity Ballroom, 200
Main Street, 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
proposal to approve the amendment to the Company's Stock Purchase Plan.
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 or vote by telephone.
(Continued and to be signed and dated on the reverse side)
- --------------------------------------------------------------------------------
Please mark your votes as
indicated in this example [x]
Proposal 1. Election of Directors
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
listed below for all nominees listed below
Nominees: 01 Marvin J. Girouard, 02 James D. Carreker, 03 James M. Hoak, Jr., 04
Tom M. Thomas, 05 John H. Burgoyne, 06 Michael R. Ferrari and 07 Karen W. Katz
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space below.)
*Exceptions
--------------------------------------------------------------------
28
Proposal 2. Proposal to approve the amendment to the Company's Stock Purchase
Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal 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 [ ] Please date, sign and return promptly in
Comments Mark Here the enclosed envelope.
Signature Signature Date
------------------ ----------------- -----------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- --------------------------------------------------------------------------------
TO VOTE BY TELEPHONE
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE BY TELEPHONE OR
BY MAILING BACK YOUR SIGNED AND DATED PROXY CARD
TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone 24
hours a day-7 days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the
lower right hand corner of this form
OPTION 1: To vote as the Board of Directors recommends on ALL proposals,
press 1
When asked, please confirm by Pressing 1.
OPTION 2: If you choose to vote on each Proposal separately, press 0. You
will hear these instructions:
29
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR
ALL nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and
listen to the instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0.
When asked, please confirm by Pressing 1.
NOTE: IF YOU VOTE BY TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR PROXY CARD.
THANK YOU FOR VOTING.