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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</Table>
Pier 1 Imports, Inc.
- --------------------------------------------------------------------------------
(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 19, 2003
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 26, 2003, at the Renaissance Worthington Hotel,
Brazos Room, 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, you may vote your proxy by
telephone, Internet or mail. A toll-free telephone number and website address
are included on your proxy card. If you choose to vote by mail, please complete
the proxy card located in the envelope's address window by indicating your vote
on the issues presented and sign, date and return the proxy in the prepaid
envelope provided. If you are able to attend the meeting and wish to vote in
person, you may withdraw your proxy at that time.
Sincerely,
-s- MARVIN J. GIROUARD
Marvin J. Girouard
Chairman and Chief Executive Officer
PIER 1 IMPORTS, INC.
301 COMMERCE STREET, SUITE 600
FORT WORTH, TEXAS 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 2003
The Annual Meeting of Shareholders of Pier 1 Imports, Inc., a Delaware
corporation (the "Company"), will be held on June 26, 2003, at 10:00 a.m., local
time, at the Renaissance Worthington Hotel, Brazos Room, 200 Main Street, Fort
Worth, Texas for the following purposes:
(1) to elect six Directors to hold office until the next Annual
Meeting of Shareholders;
(2) to approve amendments to the Company's 1999 Stock Plan to increase
the number of shares available for issuance; 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 7,
2003, 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
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 or by Internet 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
Executive Vice President and Secretary
May 19, 2003
Fort Worth, Texas
PLEASE PROMPTLY SUBMIT YOUR PROXY BY MAIL,
TELEPHONE OR INTERNET WHETHER OR NOT YOU INTEND
TO BE PRESENT AT THE ANNUAL MEETING.
PIER 1 IMPORTS, INC.
301 COMMERCE STREET, SUITE 600
FORT WORTH, TEXAS 76102
---------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 2003
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 26, 2003, 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 7, 2003, 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, 90,025,764 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 or by Internet instead of executing and
returning the card. Shares voted by telephone or by Internet may be revoked by
providing subsequent telephone or Internet 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 not counted as
voting either for or 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 19, 2003.
ELECTION OF DIRECTORS
Six 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, Ferrari and Mrs. Katz are Directors of the
Company now in office and are nominees for re-election. James D. Carreker
resigned from the Board of Directors on December 5, 2002, and the Nominating
Committee is in the process of identifying a qualified candidate to fill the
vacancy created by Mr. Carreker's resignation. Although the Company has set the
number of directors constituting the entire Board of Directors at seven, proxies
cannot be voted for greater than six persons. The Board of Directors recommends
a vote "FOR" the nominees.
NOMINEES FOR DIRECTORS
MARVIN J. GIROUARD
Marvin J. Girouard, age 63, has been a Director of the Company since August
1988, has served as Chairman and Chief Executive Officer of the Company since
March 1999 and has been a member of the Executive Committee since December 1998.
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
Brinker International, Inc.
JAMES M. HOAK, JR.
James M. Hoak, Jr., age 59, has been a Director of the Company since
September 1991 and is Chairman of the Nominating Committee, Chairman of the
Audit Committee and a member of the Executive 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 until 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
and Texas Industries, Inc.
TOM M. THOMAS
Tom M. Thomas, age 61, has been a Director of the Company since September
1998, and is Chairman of the Executive Committee, Chairman of the Compensation
Committee and a member of the Nominating Committee. Mr. Thomas has served as
Senior Partner of Kolodey, Thomas & Blackwood (a law firm) since September 2001.
He also served as Senior Partner of Thomas & Culp, L.L.P. (a law firm) from 1994
to August 2001.
JOHN H. BURGOYNE
John H. Burgoyne, age 61, 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
2
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 63, 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.
KAREN W. KATZ
Karen W. Katz, age 46, has been a Director of the Company since June 2001
and is a member of the Nominating Committee and the Audit Committee. She has
served as President and Chief Executive Officer of Neiman Marcus Stores since
December 2002. From May 2000 to December 2002, she served as President and Chief
Executive Officer of Neiman Marcus Direct (a division of the Neiman Marcus
Group). 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.
CORPORATE GOVERNANCE, BOARD STRUCTURE,
DIRECTOR COMPENSATION AND STOCK OWNERSHIP
CORPORATE GOVERNANCE
In 2000, the Company's Board of Directors adopted formal, written corporate
governance guidelines, policies and procedures. Since their adoption, the Board
has reviewed and updated the guidelines, policies and procedures as it has
deemed appropriate, and expects to adopt further changes to its policies and
procedures that the Board believes are in the best interests of the Company and
its Shareholders as well as to comply with the Sarbanes-Oxley Act of 2002 and
any rule changes implemented by the Securities and Exchange Commission and the
New York Stock Exchange (the "NYSE"). The Company intends to post certain
governance and other information that may be of interest to investors on its
website, www.pier1.com, from time to time in order to improve availability of
information to investors.
BOARD MEETINGS, COMMITTEES AND FEES
During the last fiscal year, the Board of Directors of the Company met on
five 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 participate in the Director Deferred Stock Program and 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 leaving the Board, Directors receive shares of Common Stock in exchange for
their deferred stock units. Messrs. Burgoyne, Ferrari, Hoak, Thomas and Mrs.
Katz deferred all of their cash fees last year, and Mr. Carreker received 6,176
shares of Common Stock in exchange for his deferred stock units upon his
resignation from the Board. Each non-employee Director receives an annual grant
of stock options under the Company's 1999 Stock Plan covering 6,000 shares of
3
Common Stock. Directors of the Company who are employees of the Company serve
without compensation for their services as Directors of the Company.
Executive Committee. The Executive Committee is entitled to 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 Committee met on one occasion during the last fiscal
year. Executive Committee members are Directors Thomas (chairman), Girouard and
Hoak.
Nominating Committee. The Nominating Committee is responsible for
considering and making recommendations to the Board regarding nominees for
election to the Board. The Nominating Committee will consider recommendations
submitted by Shareholders for nominees for election to the Board. The Nominating
Committee met on one occasion during the last fiscal year. Nominating Committee
members are Directors Hoak (chairman), Thomas and Katz.
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. In the
future, the Audit Committee will become directly responsible for the
appointment, compensation, retention and oversight of the Company's independent
auditors. The Audit Committee also reviews the Company's quarterly and year-end
financial statements. The Audit Committee held ten meetings during the last
fiscal year. Audit Committee members are Directors Hoak (chairman), Ferrari and
Katz, each of whom meet the independence and experience requirements of the
NYSE. Mr. Carreker also served on the Audit Committee during fiscal 2003 but was
replaced by Mrs. Katz upon his retirement from the Board of Directors in
December 2002.
Compensation Committee. The Compensation Committee establishes, amends and
oversees the Company's administration of incentive-based compensation plans for
the chief executive officer and such other senior officers as the Compensation
Committee deems appropriate. It also oversees the Company's administration of
other compensation and benefit plans and recommends to the Board compensation of
Directors and changes in or the establishment of compensation and benefit plans
for the Company's employees. The Compensation Committee held four meetings
during the last fiscal year. Compensation Committee members are Directors Thomas
(chairman) and Burgoyne.
4
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates the ownership on April 5, 2003, of the
Company's Common Stock by each Director and nominee, each executive officer
named in the Summary Compensation Table, and all Directors and executive
officers as a group:
<Table>
<Caption>
SHARES
BENEFICIALLY PERCENT
NAME OWNED(1)(2) OF CLASS
- ---- ------------ --------
Robert A. Arlauskas........................................ 152,046 *
John H. Burgoyne........................................... 33,437 *
Michael R. Ferrari......................................... 31,900 *
Marvin J. Girouard......................................... 1,955,585(3) 2.14%
James M. Hoak, Jr. ........................................ 150,246 *
Jay R. Jacobs.............................................. 70,287 *
Karen W. Katz.............................................. 17,000 *
J. Rodney Lawrence......................................... 205,207 *
Tom M. Thomas.............................................. 29,000 *
Charles H. Turner.......................................... 142,466 *
All Directors and Executive Officers as a Group............ 3,342,601 3.61%
</Table>
- ---------------
(1) Included in the table are shares acquired through and held by the Company's
Stock Purchase Plan through March 31, 2003. Also included in the table are
shares issuable within 60 days of April 6, 2003 to Mr. Arlauskas (127,875
shares), Mr. Burgoyne (29,000 shares), Mr. Ferrari (29,000 shares), Mr.
Girouard (1,046,360 shares), Mr. Hoak (65,176 shares), Mr. Jacobs (60,000
shares), Mrs. Katz (17,000 shares), Mr. Lawrence (194,500 shares), Mr.
Thomas (29,000 shares), Mr. Turner (122,000 shares) and to all Directors and
Executive Officers as a group (2,221,711 shares), upon the exercise of stock
options granted pursuant to the Company's stock option plans.
(2) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to his or her shares.
(3) Includes 92,821 shares owned beneficially with sole voting power only.
* 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 5, 2003, 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:
<Table>
<Caption>
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED OF CLASS
- ------------------- ------------ --------
FMR Corp. .................................................. 7,633,040(1) 8.24%
82 Devonshire Street
Boston, Massachusetts 02109
</Table>
- ---------------
(1) The beneficial owner has sole voting power over 814,440 of the shares and
sole dispositive power over all of the shares listed. This information was
obtained from the beneficial owner's Schedule 13G Report filed with the
Securities and Exchange Commission on February 14, 2003.
5
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
<Table>
<Caption>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
---------------------------------------- RESTRICTED SECURITIES
NAME AND FISCAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS(#) COMPENSATION(3)
- ------------------ ------ -------- ---------- --------------- ---------- ---------- ---------------
Marvin J. Girouard.............. 2003 $900,000 $1,980,000(4) $ 47,115 -- 300,000 $438,454
Chairman and Chief 2002 850,000 924,375(4) 43,441 -- 300,000 370,205
Executive Officer 2001 800,000 1,332,000 43,170 -- 230,000 302,791
Charles H. Turner............... 2003 325,000 536,250 42,837 -- 100,000 70,399
Executive Vice President, 2002 300,000 217,500 103,626 -- 100,000 43,810
Finance, Chief Financial 2001 275,000 305,250 34,953 -- 60,000 49,245
Officer and Treasurer
Jay R. Jacobs................... 2003 325,000 536,250 42,840 -- 100,000 79,415
Executive Vice President, 2002 300,000 217,500 24,691 -- 100,000 49,436
Merchandising 2001 275,000 305,250 22,132 -- 60,000 50,018
J. Rodney Lawrence.............. 2003 250,000 412,500 26,305 -- 100,000 67,452
Executive Vice President, 2002 230,000 166,750 28,716 -- 100,000 42,033
Legal Affairs 2001 212,000 212,000 26,973 -- 60,000 43,996
Robert A. Arlauskas............. 2003 250,000 412,500 30,046 -- 100,000 61,767
Executive Vice President, 2002 225,000 163,125 35,537 -- 100,000 37,843
Stores 2001 195,000 195,000 24,693 -- 60,000 35,427
</Table>
- ---------------
(1) Includes reimbursements for club dues, automobile expenses, financial
planning, moving expenses and medical expenses. Except for the amount paid
to Mr. Turner in fiscal year 2002, Other Annual Compensation paid to the
named executives did not equal or exceed $50,000 or ten percent of the total
annual salary and bonus paid to any such executive in the years reported.
During fiscal year 2002, the Company reimbursed Mr. Turner $65,963 for
moving 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 at fiscal year end) of restricted stock held at March 1,
2003 was: Mr. Girouard, 43,781 shares ($699,183).
(3) Includes in fiscal year 2003 Company matching contributions under the
Company's 401(k) Retirement Plan of $6,288 for Mr. Girouard, $5,996 for Mr.
Turner, $5,942 for Mr. Jacobs, $5,954 for Mr. Lawrence and $5,942 for Mr.
Arlauskas; matching contributions under the Company's Benefit Restoration
Plan ("BRP") of $86,400 for Mr. Girouard, $18,000 for Mr. Turner, $25,780
for Mr. Jacobs, $19,829 for Mr. Lawrence and $19,817 for Mr. Arlauskas;
above-market earnings on the BRP of $39,751 for Mr. Girouard, $3,437 for Mr.
Turner, $4,727 for Mr. Jacobs, $8,621 for Mr. Lawrence and $2,979 for Mr.
Arlauskas; matching contributions under the Company's Stock Purchase Plan of
$288,000 for Mr. Girouard, $157,401 of which was deferred, $42,966 for Mr.
Turner, $42,966 for Mr. Jacobs, $33,048 for Mr. Lawrence and $33,029 for Mr.
Arlauskas and above-market earnings on compensation deferred by Mr. Girouard
of $18,015.
(4) Mr. Girouard deferred all of his bonus for fiscal years 2002 and 2003.
EMPLOYMENT RELATED CONTRACTS, SEVERANCE AND CHANGE-IN-CONTROL AGREEMENTS
Although the Company has no employment contracts, the Company has entered
into Post-Employment Consulting Agreements with Messrs. Girouard, Turner,
Jacobs, Lawrence,
6
Arlauskas 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 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 also maintains two Supplemental Retirement Plans to aid in
attracting and retaining key executives. Messrs. Girouard, Lawrence and one
other executive officer 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 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. 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.
<Table>
<Caption>
COMPUTED
AVERAGE ANNUAL ANNUAL LUMP-SUM
COMPENSATION BENEFIT BENEFIT
- -------------- ---------- -----------
$ 300,000.............................. $ 208,950 $ 2,412,088
400,000.............................. 286,537 3,307,735
500,000.............................. 364,123 4,203,383
600,000.............................. 441,710 5,099,030
700,000.............................. 519,296 5,994,677
800,000.............................. 596,883 6,890,325
1,000,000.............................. 752,056 8,681,619
1,200,000.............................. 907,229 10,472,914
1,500,000.............................. 1,139,989 13,159,856
1,600,000.............................. 1,217,575 14,055,503
1,800,000.............................. 1,372,749 15,846,798
2,000,000.............................. 1,527,922 17,638,093
</Table>
7
The applicable average annual compensation as determined under the Plan for
Mr. Girouard is $1,802,125 and for Mr. Lawrence is $391,250.
Messrs. Turner, Jacobs, Arlauskas, and two 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 a life 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 7 years, for Mr. Jacobs are 7 years, and for Mr. Arlauskas are 3 years; and
the years of credited service for Mr. Turner are 11 years, for Mr. Jacobs are 25
years, and for Mr. Arlauskas are 22 years.
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.
<Table>
<Caption>
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
1,800,000............................................. 1,080,000
2,000,000............................................. 1,200,000
</Table>
- ---------------
(1) Assuming full vesting and accrual.
The applicable average annual compensation for Mr. Turner is $512,583, for
Mr. Jacobs is $512,583, and for Mr. Arlauskas is $364,375.
The Company's 1999 Stock Plan, a copy of which is attached as Appendix A to
this Proxy Statement, provides that options granted to employees thereunder,
including the named executive officers, immediately become fully exercisable in
the event of a "Change-in-Control" (as defined in the plan), unless the Board of
Directors shall have determined otherwise prior to the Change-in-Control.
8
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information relating to stock options
granted during the fiscal year ended March 1, 2003, to the executive officers
named in the Summary Compensation Table.
<Table>
<Caption>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR (PER SHARE)(2) DATE PRESENT VALUE(3)
- ---- ---------- ------------ -------------- ---------- ----------------
Marvin J. Girouard........ 300,000 10.80% $20.38 09/26/12 $2,910,000
Charles H. Turner......... 100,000 3.60% 20.38 09/26/12 970,000
Jay R. Jacobs............. 100,000 3.60% 20.38 09/26/12 970,000
J. Rodney Lawrence........ 100,000 3.60% 20.38 09/26/12 970,000
Robert A. Arlauskas....... 100,000 3.60% 20.38 09/26/12 970,000
</Table>
- ---------------
(1) Options to Messrs. Girouard, Turner, Jacobs, Lawrence and Arlauskas covering
300,000, 100,000, 100,000, 100,000 and 100,000 shares, respectively, were
granted on September 26, 2002, 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 three 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 five years; interest
rate of 2.82%, which represents the interest rate at such option grant date
of U.S. treasury securities having a five-year maturity; an expected
dividend yield of 1.5% per year and a stock price volatility factor of
56.98%, which is based on Common Stock prices for a five-year period prior
to the date of grant. For purposes of determining these option valuations, a
term of five years was used for the length of the option term rather than
the actual ten-year option term. Five 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 differ significantly from 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
9
the number and value of exercisable and unexercisable stock options held by such
officers at March 1, 2003.
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- ----------- -------------
Marvin J. Girouard.......... 51,681 $ 755,690 1,046,360 690,000 $8,385,410 $2,878,863
Charles H. Turner........... 47,500 601,985 122,000 217,500 546,017 871,194
Jay R. Jacobs............... 72,000 759,962 60,000 217,500 458,731 871,194
J. Rodney Lawrence.......... 110,813 1,787,046 194,500 217,500 1,189,574 871,194
Robert A. Arlauskas......... -- -- 127,875 217,500 956,496 871,194
</Table>
- ---------------
(1) Computed as the difference between the option exercise prices and $15.97
(the closing price of the Common Stock at fiscal year-end).
(2) Computed as the difference between the option exercise prices and the market
price of the Common Stock at the date of exercise.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information regarding the Company's
equity compensation plans as of March 1, 2003.
<Table>
<Caption>
NUMBER OF NUMBER OF SECURITIES
SECURITIES TO BE REMAINING AVAILABLE FOR
ISSUED UPON WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION
OUTSTANDING OUTSTANDING PLANS (EXCLUDING
OPTIONS, WARRANTS OPTIONS, WARRANTS SECURITIES REFLECTED IN
PLAN CATEGORY AND RIGHTS(1) AND RIGHTS(1) THE FIRST COLUMN)(2)
- ------------- -------------------- -------------------- -----------------------
Equity Compensation plans approved
by Shareholders................. 9,246,037 $12.27 1,668,236
Equity Compensation plans not
approved by Shareholders(3)..... N/A N/A N/A
Total:............................ 9,246,037 $12.27 1,668,236
</Table>
- ---------------
(1) The Company has not granted warrants or rights applicable to this chart.
(2) Includes 268,594 shares which may be awarded under the terms of the
Company's Management Restricted Stock Plan. The Company's Stock Purchase
Plan permits all Participants to elect to have deductions of up to 10% of
their compensation to purchase Company Common Stock monthly at market
values. The Company provides matching contributions of from 10% to 100% of
each Participant's deduction, depending on length of service with the
Company.
(3) The Company does not maintain equity compensation plans which have not been
approved by its Shareholders.
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 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
10
can include a 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. The
Compensation Committee has attempted to preserve the federal tax deductibility
of compensation to the extent doing so is consistent with the executive
compensation objective and goals mentioned above. Accordingly, while the
Committee is cognizant of the requirements of Section 162(m), the Committee does
not believe that compensation decisions should be based solely upon the amount
of compensation that is deductible for federal income tax purposes.
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 profitability along with 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 2003 fiscal year, the Company maintained a bonus plan for the
Chief Executive Officer and other employees that paid bonus awards based on the
attainment of targeted levels of pretax income. The Compensation Committee
believes that pretax income is the main determinant for establishing Shareholder
value. The Compensation Committee establishes percentages of target incentives
to be paid when certain pretax income levels are met. Pretax income levels are
established based on percentages of pretax profit plan during a period of not
less than one fiscal quarter nor more than one fiscal year, as determined by the
Compensation Committee. Target incentives are expressed as a percentage of the
base salary of participants and are competitive when compared to the retail
industry.
The target bonus for the Chief Executive Officer was set at 100% of base
salary for the fiscal year 2003 plan. The target bonuses for other participants
were set at 10% to 75% of base salaries. The Chief Executive Officer earned
$1,980,000 under the plan.
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.
The Compensation Committee may use restricted stock as part of long-term
compensation. The amount of awards to each executive will be determined to
reward the executive for Company and stock performance and to provide incentives
for the executive to remain with the Company.
COMPENSATION COMMITTEE
Tom M. Thomas
John H. Burgoyne
11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 2003 fiscal year, the Compensation Committee was composed
entirely of Directors Thomas and Burgoyne, neither of whom is an employee of the
Company. Neither Director Thomas nor Director Burgoyne served on the board of
directors of any company that either employs an executive who is a Director of
the Company or includes on its board of directors another member of the
Company's Board.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the 2003 fiscal year, there were no transactions between the Company
and any of its officers, directors or shareholders owning 5% or more of the
Company's Common Stock in which the amount involved exceeded $60,000. In
addition, there are no currently proposed transactions, or series of similar
transactions, to which the Company was or is to become a party.
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 and was attached as an appendix
to the Company's proxy statement dated May 22, 2001, the Audit Committee assists
the Board in oversight of the quality and integrity of the accounting, auditing
and financial reporting practices of the Company. During the past year, the
Sarbanes-Oxley Act of 2002 added a number of provisions to federal law to
strengthen corporate audit committees. Related rules impacting audit committee
membership and authority have been proposed by the NYSE and will become
applicable to the Company when finally adopted. The Audit Committee's charter is
presently under review in light of the Sarbanes-Oxley Act and NYSE proposed
rules, and it is expected that the Board, upon recommendation of the Audit
Committee, will amend the charter later this year.
The Audit Committee consists of three independent members (as independence
is defined by the rules of the NYSE). The Sarbanes-Oxley Act requires that the
NYSE adopt additional rules that define independence more restrictively than
under current rules. The Committee does not expect that these new rules will
require any change in the Company's practices or in the membership of the Audit
Committee.
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 1, 2003 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 consolidated 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 fiscal 2003, to the Company is compatible with maintaining Ernst &
Young LLP's independence.
12
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 1, 2003,
for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
James M. Hoak, Jr. (Chairman)
Michael R. Ferrari
Karen W. Katz
13
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.
(PERFORMANCE GRAPH)
<Table>
<Caption>
02/28/98 02/27/99 02/26/00 03/03/01 03/02/02 03/01/03
-------- -------- -------- -------- -------- --------
Pier 1 Imports, Inc. ........ 100.00 48.87 48.24 72.90 119.51 95.43
S&P 500 Index................ 100.00 119.74 137.99 122.24 113.65 85.92
S&P Retail Stores. Composite
Index 100.00 151.74 165.98 155.69 190.21 137.83
</Table>
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 NYSE 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 1999 STOCK PLAN
With the approval of the Shareholders, the Pier 1 Imports, Inc. 1999 Stock
Plan (the "Plan") became effective on June 24, 1999. The text of the Plan as
proposed to be amended, which is summarized below, is included as Appendix A to
this Proxy Statement, and this summary is qualified by reference to the Plan.
14
The Board of Directors has determined that it is in the best interests of
the Company to amend the Plan to increase the number of authorized shares
issuable under the plan by an additional 2,000,000 shares for a total of
11,000,000 shares.
The Plan is administered by the Compensation Committee of the Board of
Directors. The Committee interprets the Plan and makes all determinations
necessary or advisable for the administration of the Plan. The Committee will
determine the participants to be granted options, the options granted to the
participants, vesting provisions and other terms of each option. Options may be
granted at not less than the fair market value of the Common Stock on the date
of grant.
The Plan provides for the granting of options to directors and employees
and the issuance of deferred stock units to outside directors. Subject to
Shareholder approval, a maximum of 11,000,000 shares of Common Stock may be
issued under the Plan, of which not more than 250,000 may be issued in exchange
for deferred stock units. No person may be issued options covering more than
2,250,000 shares. For purposes of determining the number of shares available for
issuance under the Plan, only net shares issued are counted as issued.
Therefore, net shares would exclude shares delivered or withheld for payment of
exercising an option or for payment of tax withholding and would exclude shares
remaining subject to options which expire or are terminated. Options may be
either incentive stock options authorized under Section 422 of the Internal
Revenue Code or non-qualified options which do not qualify as incentive stock
options. At March 1, 2003, options granted and outstanding under the Plan
covered an aggregate of 7,426,775 shares, leaving 297,680 shares remaining for
issuance pursuant to subsequent grants. If the proposed amendment is approved by
Shareholders, the total number of shares that will then be available for future
grants under the Plan will increase to 2,297,680 shares. Additionally, there are
150,403 shares reserved for issuance in exchange for deferred stock units under
the Director Deferred Stock Program.
During the last fiscal year, the executive officers of the Company named in
the Summary Compensation Table were granted the number of options set forth in
the Option Grant Table. During the last fiscal year, the current executive
officers of the Company were granted 1,000,000 options in the aggregate, the
current directors who are not executive officers were granted 36,000 options in
the aggregate, and all employees who are not executive officers were granted
1,778,000 options in the aggregate.
The term of each option will be fixed by the Committee, but may not be
longer than 10 years from the date of grant. The exercise price of each option
will be determined by the Committee, but may not be less than the fair market
value of the Common Stock on the date of grant. Each option will be exercisable
at the times and subject to any conditions established by the Committee, and
unless otherwise determined by the Committee all options will vest upon a change
in control of the Company, as that term is defined in the Plan. The exercise
price will be paid in cash or, if permitted by the Committee, in Common Stock
previously owned by the option holder. The Committee may provide the option
holder with the right to satisfy any minimum withholding tax obligation by
delivery of previously owned shares or withholding shares otherwise issuable
upon exercise of the option. In the event of a stock dividend or stock split,
the number of shares subject to outstanding options will be proportionately
increased and the exercise price proportionately decreased, unless the Committee
determines otherwise. The number of shares available under the Plan and maximum
number of shares issuable to one person will also be proportionately increased,
unless the Committee determines otherwise. In the event of a combination of
shares, recapitalization, reclassification, merger or other similar capital or
corporate structure change, the Committee may adjust the terms of outstanding
options, the number of shares available under the Plan, the maximum number of
shares issuable to one person and other provisions of the Plan.
15
Upon the death or disability of an option holder, all options held by that
person will become fully exercisable and terminate after one year. Upon the
resignation of a director or of an employee with the consent of the Company, the
person's options will terminate three months after the resignation. Upon
retirement, a holder's options will become fully exercisable and terminate three
years later or, if earlier, at the expiration date of the option. In the event
of any other termination of employment of an option holder, all options held by
that person will immediately terminate.
The Plan provides for participation by outside directors in a deferred
stock program, as that program may be instituted, amended or suspended at any
time by the Board of Directors. The Plan permits the deferral of part or all of
each director's cash fees into a deferred stock account maintained by the
Company. The number of deferred stock units would be based on the amount of cash
fees deferred and the market value of the Common Stock on the date of deferral.
When a Board member's position as a director terminates, the deferred stock
units would be exchanged into Common Stock and delivered to the departing
director. Under the deferred stock program, all or part of the cash fees
otherwise payable to directors may be deferred at the election of each director.
Elective deferrals will be credited as deferred stock units at the rate of 150%
of the cash fees deferred. Deferred stock units will be credited with dividends
paid on the Common Stock.
The Plan will terminate 10 years after its adoption by Shareholders. The
Board of Directors may at any time suspend or terminate the Plan or amend the
Plan in any respect; except that without Shareholder approval no amendment may
increase the maximum number of shares subject to the Plan, increase the maximum
number of shares covered by options that may be granted to one person, change
the class of employees eligible to receive options or decrease the minimum
option exercise price at which options may be granted.
FEDERAL INCOME TAX CONSEQUENCES
No taxable income will be realized by a participant upon the grant of a
non-qualified stock option. Upon exercise, the excess of the fair market value
of the shares at the time of exercise over the option exercise price for the
shares will generally constitute taxable compensation. The Company or a
subsidiary will be entitled to a deduction for such compensation income,
assuming any federal income tax withholding requirements are satisfied. Upon
disposition of the shares acquired upon exercise, any appreciation (or
depreciation) in the stock value after the date of exercise will be treated as
capital gain (or loss).
No taxable income will be recognized by a participant upon the grant or
exercise of an incentive stock option, assuming there is no disposition of the
option shares within two years after the option was granted or within one year
after the option was exercised (the "holding period"), and providing that the
participant has been employed by the Company or one of its subsidiaries from the
date of grant to a date that is not more than three months before the date of
exercise. The exercise of an incentive stock option, however, could result in an
item of tax preference for purposes of the alternative minimum tax. The sale of
incentive stock option shares after the holding period at a price in excess of
the participant's adjusted basis, which is ordinarily the option exercise price,
will constitute capital gain to the participant. Neither the Company nor any
subsidiary will be entitled to a federal income tax deduction by reason of the
grant or exercise of an incentive stock option or the sale of the shares after
the holding period. If incentive stock option shares are sold by the participant
prior to the expiration of the holding period, generally the participant will
have compensation income taxable in the year of the sale in an amount equal to
the excess of the fair market value of the shares at the time of exercise of the
option (or, if less, the amount received upon the sale) over the option exercise
price for the shares. The Company or a subsidiary will be entitled to a
deduction for that compensation income, assuming any federal income tax
withholding requirements are satisfied.
16
Adoption of this Proposal requires approval by the affirmative vote of
holders of a majority of the shares of Common Stock voting on this Proposal if
holders of a majority of the outstanding shares of Common Stock vote on the
Proposal. Should such Shareholder approval not be obtained, then the amendments
to the Plan that are included in this Proposal will not be implemented. However,
the Plan as in effect prior to the amendments that are the subject of this
Proposal will continue to remain in effect.
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 has traditionally selected
independent public accountants to serve as auditors for the upcoming fiscal
year. The Board plans to select auditors for the 2004 fiscal year at the meeting
of the Board of Directors which follows the Annual Meeting of Shareholders. In
the future, the Audit Committee will become directly responsible for the
appointment, compensation, retention and oversight of the Company's independent
auditors.
The Board of Directors appointed Ernst & Young LLP as auditors for the
Company for fiscal year 2003. 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 following table presents fees incurred for professional services
rendered by Ernst & Young LLP, the Company's independent auditors, for fiscal
years ended March 1, 2003 and March 2, 2002.
<Table>
<Caption>
MARCH 1, 2003 MARCH 2, 2002
------------- -------------
Audit Fees(1)........................................... $401,000 $371,000
Audit-Related Fees(2)................................... 41,000 59,000
Tax Fees(3)............................................. 293,000 288,000
All Other Fees(4)....................................... -- 137,000
-------- --------
$735,000 $855,000
======== ========
</Table>
- ---------------
(1) Includes fees for services related to the annual audit of the consolidated
financial statements, required statutory audits and reviews of the Company's
quarterly reports on Form 10-Q.
(2) Includes fees for services related to employee benefit plan audit,
securitization of the Company's proprietary credit card receivables and
various accounting and reporting consultations.
(3) Includes fees for services related to tax compliance, tax advice and tax
planning.
(4) Includes fees for consulting services.
17
PRE-APPROVAL OF NONAUDIT FEES
The Audit Committee is responsible for pre-approving all non-audit services
to be performed by the Company's independent auditors. All fees paid or to be
paid by the Company to its independent auditors for non-audit services during
fiscal 2004 have been or will be pre-approved by the Audit Committee.
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
The date by which Shareholder proposals must be received by the Company for
inclusion in the Proxy Statement for the 2004 Annual Meeting of Shareholders is
January 19, 2004.
A Shareholder desiring to bring a matter before the 2004 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 March 28,
2004, and no later than May 27, 2004. 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.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. The services
of Mellon Investor Services, LLC will be employed for the purpose of
facilitating the solicitation. The fees of Mellon Investor Services, LLC 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 or by voting by telephone or the Internet.
-S- J. RODNEY LAWRENCE
J. Rodney Lawrence
Secretary
May 19, 2003
18
APPENDIX A
PIER 1 IMPORTS, INC.
1999 STOCK PLAN
(AS AMENDED [ , 2003])
1. Purpose. The purpose of the Plan is to advance the Company's interests
by encouraging certain employees of the Company and its subsidiaries and
non-employee directors of the Company to acquire a proprietary interest in the
Company through ownership of Common Stock. Such ownership is intended to
encourage employees to remain with the Company and to help attract other
qualified persons to become employees and directors.
2. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee is authorized to grant
Options under the Plan, and the Committee is authorized to interpret the Plan
and the Options, to prescribe, amend and rescind rules and regulations relating
to the Plan and the Options, and to make other determinations necessary or
advisable for the administration of the Plan. The Committee is also authorized
to administer the Director Deferred Stock Program. All of such determinations
shall be conclusive and binding on all persons. The Committee shall act pursuant
to a majority vote or by unanimous written consent. No member of the Committee
shall be liable for any action taken or decision made in good faith relating to
the Plan or any grant thereunder.
3. Eligibility. Options may be granted under the Plan to Non-Employee
Directors and to key employees of the Company or any of its Subsidiaries as the
Committee shall determine from time to time.
4. Types of Options. Options granted pursuant to the Plan may be either
Incentive Stock Options or non-qualified Options not so qualifying under the
Code. It is the intent of the Company that non-qualified stock Options granted
under the Plan not be classified as Incentive Stock Options, that Incentive
Stock Options granted under the Plan be consistent with and contain or be deemed
to contain all provisions required under Section 422 and the other appropriate
provisions of the Code and any implementing regulations (and any successor
provisions thereof), and that any ambiguities in construction be interpreted in
order to effectuate such intent.
5. Stock Subject to the Plan. The aggregate number of Shares that may be
issued or sold under Options or delivered in exchange for Deferred Stock Units
pursuant to the Plan shall not exceed 11,000,000 Shares, of which not more than
250,000 Shares may be issued in exchange for Deferred Stock Units; provided,
that additional Shares above such maximum amount may be issued in exchange for
Deferred Stock Units that shall have been credited to any Deferred Stock Account
solely as a result of dividends or adjustments pursuant to Section 8(d) or 8(e)
hereof; and provided, further, that no person shall be granted Options under the
Plan covering an aggregate of more than 2,250,000 Shares. Shares may be either
authorized but unissued shares of Common Stock or issued shares of Common Stock
that shall have been reacquired by the Company. The aggregate number of Shares
issuable under the Plan and to one person shall be subject to adjustment as
provided in Section 9 hereof. For purposes of calculating the maximum number of
Shares of Common Stock which may be issued under the Plan, Shares shall include
only net Shares issued upon exercise of Options and, accordingly, shall exclude
Shares delivered or withheld for payment of Option exercises or for tax
withholding and shall exclude Shares remaining subject to Options which expire
or are terminated for any reason.
6. Non-transferability of Options. Except as otherwise authorized by the
Committee, in its discretion, and expressly provided in the Option agreement
pursuant to which an Option is granted, no Option shall be transferable except
by will or the laws of descent and distribution.
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7. Options. The Committee shall have the power, subject to the limitations
contained in the Plan, to prescribe the terms and conditions of any Option
granted hereunder. Each Option shall be evidenced by an agreement in such form
as the Committee shall from time to time determine, which agreement shall
contain such terms and conditions not inconsistent with the Plan as the
Committee, in its sole discretion, may prescribe. Options shall be subject to
the following provisions:
(a) Allotment of Shares; Option Price. The Committee shall determine
the total number of Shares subject to each Option under the Plan. The
Option exercise price for the Shares subject to each Option shall be
determined by the Committee, but shall not be less than the Fair Market
Value of the Common Stock on the date of grant.
(b) Duration of Options. Except as otherwise set forth herein,
Options shall expire after such term as the Committee shall determine. No
option shall be exercisable after the expiration of 10 years from the date
of grant.
(c) Exercise of Options. Each option granted under the Plan shall be
exercisable from time to time as the Committee shall determine. No option
shall be exercised for fewer than 100 Shares unless the remaining Shares
that have become so purchasable are fewer than 100 Shares. In the event of
the Retirement, death or Permanent Disability of an Optionee, or in the
event of a Change in Control (as hereinafter defined), all Options granted
to such Optionee shall immediately become fully exercisable to the extent
of all Shares then covered by such Options, except that in the case of a
Change in Control only if the Board of Directors shall not have determined
otherwise prior to such Change in Control. A "Change in Control" shall mean
any of the following events:
(i) a merger or consolidation to which the Company is a party if
the individuals and entities who were stockholders of the Company
immediately prior to the effective date of such merger or consolidation
have beneficial ownership (as defined in Rule 13d-3 under the Exchange
Act) of less than 50% of the total combined voting power for election of
directors of the surviving corporation or other entity following the
effective date of such merger or consolidation;
(ii) the acquisition or holding of direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of
securities of the Company representing in the aggregate 30% or more of
the total combined voting power of the Company's then issued and
outstanding voting securities by any person, entity or group of
associated persons or entities acting in concert, other than any
employee benefit plan of the Company or of any Subsidiary or any entity
holding such securities for or pursuant to the terms of any such plan;
(iii) the election of members of the Board of Directors at a
meeting of stockholders or by written consent, the majority of which
were not nominated by the Board of Directors;
(iv) the sale of all or substantially all of the assets of the
Company to any person or entity that is not a wholly owned Subsidiary;
or
(v) the approval by the stockholders of the Company of any plan or
proposal for the liquidation of the Company or its Subsidiaries, other
than into the Company.
(d) Payment for Shares. The purchase price of each Share purchased
upon the exercise of any Option shall be paid in full at the time of such
purchase, and a stock certificate representing Shares so purchased shall be
delivered to the person entitled thereto. Until the stock certificate for
such Shares is issued in the Optionee's name, the Optionee shall have no
rights of a stockholder. Payment may be made in whole or in part in cash
or, if the Committee so permits, in Common Stock owned by the Optionee
without
A-2
restriction for the preceding six months valued at Fair Market Value on the
date preceding the date the Option is exercised. The Committee may permit
an Optionee to pay the purchase price by irrevocably authorizing a third
party to sell Shares acquired upon exercise of the Option and remit to the
Company a sufficient portion of the sale proceeds to pay the purchase price
and any tax withholding resulting from the exercise of the Option. It shall
be a condition to the performance of the Company's obligation to issue or
transfer Shares upon exercise of an Option that the Optionee pay, or make
provision satisfactory to the Company for the payment of, any taxes (other
than stock transfer taxes) which the Company is obligated to collect with
respect to the issue or transfer upon such exercise. The Committee may
provide the Optionee with the right to satisfy minimum required federal or
state tax withholding obligations by delivery of previously owned shares of
Common Stock or electing the withholding of Shares otherwise issuable upon
exercise of a non-qualified Option, the Fair Market Value of which does not
exceed the amount to cover the minimum required federal and state tax
withholding obligations incurred in connection with the exercise of the
Option.
(e) Termination of Options. Unless otherwise provided in an Option
agreement or otherwise agreed to by the Committee:
(i) upon the death or Permanent Disability of an Optionee, any
Option granted to the Optionee shall become fully exercisable to the
extent of all unexercised Shares pertaining to such Option, and may be
exercised by the Optionee, or in the case of death, by the Optionee's
estate or a person who acquires the right to exercise such Option by
bequest, inheritance or transfer (if transferability were specifically
provided for in the Option agreement) until the earlier of (I) the
remaining Option Term and (II) the first anniversary of such death or
disability;
(ii) upon the Retirement of an Optionee, any Option granted to the
Optionee may be exercised by the Optionee to the extent exercisable on
the date of such Retirement until the earlier of (I) the remaining
Option Term and (II) the third anniversary of such Retirement;
(iii) upon the resignation or expiration of the term of office of a
director who does not stand for re-election, or upon the resignation of
an employee with the consent of the Company, in each case without the
Optionee's Retirement as provided in Subsection 7(e)(ii), any Option
granted to the Optionee may be exercised by the Optionee to the extent
exercisable on the date of such resignation or expiration of term of
office until the earlier of (I) the remaining Option Term and (II) the
91st day following such resignation or expiration; provided, that in the
event of the death of the Optionee after such resignation or expiration
but prior to the end of such period of exercisability, the period during
which the Option may be exercised shall be extended until the earlier of
(I) the remaining Option Term and (II) the first anniversary of such
resignation or expiration; and
(iv) upon termination of an Optionee's employment, other than as
provided in subsections 7(e)(i), (ii) or (iii), all Options granted to
the Optionee shall terminate immediately at such termination of
employment.
Options granted under the Plan shall not be affected by any change of
employment so long as the Optionee continues to be an employee of the
Company or any of its Subsidiaries. The Option agreement may contain such
provisions as the Committee shall approve with respect to the effect of
approved leaves of absence. Cessation of any corporation's relationship
with the Company as a Subsidiary shall constitute a "termination of
employment" hereunder as to individuals employed by that corporation.
A-3
8. Director Deferred Stock Program. Each Non-Employee Director shall be
eligible to participate in the Director Deferred Stock Program through deferral
of part or all of such director's cash compensation into Deferred Stock Units,
as participation in such program shall be provided for by the Board of Directors
from time to time.
(a) Deferred Stock Account. Subject to the availability of Shares
under the Plan, the Board of Directors may in its discretion provide that
part or all of the compensation of Non-Employee Directors otherwise payable
in cash to each Non-Employee Director be payable, either mandatorily and/or
at the election of each Non-Employee Director, in Deferred Stock Units.
Deferred Stock Units shall be held in a Deferred Stock Account for each
Non-Employee Director in accordance with the provisions of the Director
Deferred Stock Program.
(b) Mandatory Deferral. To the extent any cash compensation to a
Non-Employee Director shall be mandatorily payable in Deferred Stock Units,
in lieu of paying such compensation in cash the Company shall credit the
Deferred Stock Account for each Non-Employee Director the number of
Deferred Stock Units equal to the quotient of the amount of cash to be
deferred divided by the Fair Market Value per share of Common Stock on the
date of credit.
(c) Elective Deferral. To the extent provided in the Director
Deferred Stock Program, each Non-Employee Director may elect to defer all
or part of his eligible cash compensation relating to the forthcoming year
by filing, not later than the date of the Company's annual meeting of
stockholders, an irrevocable election with the Company on a form provided
for that purpose. The election shall be effective for compensation payable
for services rendered during the year commencing the day after the
Company's annual meeting of stockholders. The election form shall specify
an amount to be deferred in increments of $1,000. In lieu of paying such
elected amount of compensation, the Company shall credit the Deferred Stock
Account of each Non-Employee Director electing a deferral the number of
Deferred Stock Units equal to the product of 1.5 multiplied by the amount
of compensation elected for deferral, divided by the Fair Market Value per
share of Common Stock on the date of credit.
(d) Dividends. Each time a dividend shall be paid on Common Stock,
other than a dividend of capital stock of the Company, each Deferred Stock
Account shall be credited with additional Deferred Stock Units equal to the
product of the dividend payment amount (or, if other than in cash, the fair
market value thereof) per share multiplied by the number of Deferred Stock
Units credited to the Deferred Stock Account as of the record date for the
dividend, divided by the Fair Market Value of the Common Stock on the
dividend payment date.
(e) Adjustments. In the event of a stock dividend, stock split or
combination of shares of Common Stock, recapitalization, reclassification,
merger or other similar capital or corporate structure change of the
Company, then the number and the rights and privileges of Deferred Stock
Units in each Deferred Stock Account shall be adjusted in a like manner as
if the Deferred Stock Units had been issued and outstanding shares of
Common Stock at the time of such occurrence.
(f) Payment. The balance of each Non-Employee Director's Deferred
Stock Account shall be paid to such director on the first of the month
following the 90th day after such director terminates his position as a
Non-Employee Director. Each Deferred Stock Unit shall be exchanged for a
whole share of Common Stock. Any fractional Deferred Stock Unit shall be
paid in cash based on the Fair Market Value of the Common Stock on the date
of such termination.
A-4
(g) Non-Assignability. The right of a Non-Employee Director or any
person claiming under such director to receive payments from any Deferred
Stock Account may not be assigned, transferred, pledged, anticipated,
commuted or encumbered except by will or the laws of descent and
distribution, nor shall a Deferred Stock Account be subject to seizure for
payment of any debts or judgment of any Non-Employee Director or any person
claiming through or under such director.
9. Adjustments. In the event of a stock dividend or stock split, unless
the Committee shall determine otherwise, (i) the number of Shares at the time of
such stock dividend or stock split issuable under the Plan pursuant to Options
or in exchange for Deferred Stock Units, (ii) the limitation on the maximum
number of Shares underlying Options that may be granted to one person and (iii)
the number of Shares subject to any outstanding Option shall each be increased
in direct proportion to the increase in the number of shares of Common Stock by
reason of such stock dividend or stock split, and the exercise price per Share
of any outstanding Option shall be proportionately decreased; provided that the
adjusted number of Shares shall always be a whole number with any fractional
Shares being deleted therefrom. In the event of a combination of shares,
recapitalization, reclassification, merger or other similar capital or corporate
structure change of the Company, the Committee may, in its discretion, adjust
(i) the number of Shares at the time of such change issuable under the Plan
pursuant to Options or in exchange for Deferred Stock Units, (ii) the limitation
on the maximum number of Shares underlying Options that may be granted to one
person, (iii) the number of Shares subject to any outstanding Option and/or the
exercise price thereof and (iv) such other provisions of the Plan or outstanding
Options that the Committee determines to be appropriate or advisable, including
without limitation, changing the security into which the Option is exercisable,
terminating the Option with prior notice to the Optionee, and exchanging the
Option for cash, another option or other security.
10. Effective Date; Stockholder Approval; Term. The Plan shall become
effective on the date of the last to occur of the (i) adoption of the Plan by
the Board of Directors and (ii) approval of the Plan, within 12 months of such
adoption, by the holders of a majority of the Common Stock present and voting on
the Plan at a duly held meeting of stockholders if holders of a majority of the
outstanding Common Stock vote on the proposal. No Option shall be granted after
the 10th anniversary of the Plan's effective date (or, if earlier, the 10th
anniversary of the adoption of the Plan in the case of an Incentive Stock
Option) or the earlier suspension or termination of the Plan in accordance with
its terms. The Plan shall terminate on the 10th anniversary of the Plan's
effective date or on such earlier date as it may be terminated under the
provisions of Section 11 hereof; provided that each Option granted prior to such
date shall remain in effect in accordance with its terms and each Deferred Stock
Account shall be credited with dividends and subject to adjustment until full
payment of such Deferred Stock Account.
11. Amendment or Discontinuance of the Plan. The Board of Directors may,
insofar as permitted by law and subject to the limitations contained in the
Plan, at any time or from time to time, suspend or terminate the Plan or revise
or amend it in any respect whatsoever, except that, without appropriate approval
of the stockholders of the Common Stock, no such revision or amendment shall
increase the maximum number of Shares subject to the Plan, increase the maximum
number of Shares covered by Options that may be granted to one person, change
the designation of the class of employees eligible to receive options or
decrease the minimum exercise price at which Options may be granted.
12. Applicable Laws or Regulations and Notification of Disposition. The
Company's obligation to sell and deliver Shares under an Option is subject to
such compliance as the Company deems necessary or advisable with federal and
state laws, rules and regulations applying to the authorization, issuance,
listing or sale of securities. The Company may also require in connection with
any exercise of an Incentive Stock Option that the Optionee agree to notify the
Company when making any disposition of the Shares, whether by sale, gift, or
otherwise, within two years of the date of grant or within one year of the date
of exercise.
A-5
13. No Employment Right, No Obligation to Exercise Option. Nothing
contained in the Plan, or in any Option, shall confer upon any Optionee any
right to continued employment by the Company or any of its Subsidiaries or to
continued membership on the Board of Directors of the Company or limit in any
way the right of the Company or any of its Subsidiaries to terminate the
Optionee's employment at any time.
14. No Implied Rights. No person shall, by reason of participation in the
Plan, acquire any right in or title to any assets, funds or property of the
Company or any Subsidiary. Rights conferred under the Plan are solely
contractual rights to Shares, if any, payable under the Plan, unsecured by any
assets of the Company or any Subsidiary.
15. Definitions. As used in this Plan, the following definitions shall
apply:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Compensation Committee of the Board of
Directors or, in the case of granting an Option and determining its terms
and conditions, the Board of Directors, if the Board of Directors so
determines.
(d) "Common Stock" shall mean the Company's common stock, par value
$1.00 per share.
(e) "Company" shall mean Pier 1 Imports, Inc. or any successor.
(f) "Deferred Stock Account" shall mean an appropriate bookkeeping
account or record maintained by the Company denominated in Deferred Stock
Units for the sole purpose of measuring and determining the number of
shares of Common Stock to be delivered to the Non-Employee Director in
exchange for Deferred Stock Units. The Deferred Stock Account shall not
constitute or be treated as an escrow or trust fund of any kind, but shall
constitute an unfunded, unsecured liability of the Company to make payments
in accordance with the provisions of the Director Deferred Stock Program.
The Non-Employee Director shall not be entitled to redeem, exchange or
otherwise receive any amount from the Deferred Stock Account except as
provided in the Director Deferred Stock Program.
(g) "Deferred Stock Unit" shall mean a unit of credit of the Deferred
Stock Account representing one share of Common Stock. If the Company shall
declare and pay a dividend on the Common Stock in capital stock other than
Common Stock or the Company shall engage in a recapitalization,
reclassification, merger or other transaction to change the capital or
corporate structure of the Company, then in accordance with Section 8(e)
hereof, Deferred Stock Units shall represent such other capital stock in
place of or in addition to Common Stock, and references to Common Stock
with respect to Section 8 hereof shall in addition mean, as appropriate,
such other capital stock. In such an event, a Deferred Stock Account may be
denominated in separate classes of Deferred Stock Units representing
different classes of capital stock. In any calculation of Deferred Stock
Units to be credited to a Deferred Stock Account, the number of Deferred
Stock Units shall be rounded to the nearest one-hundredth of a unit.
(h) "Director Deferred Stock Program" shall mean the program of the
Company authorized in Section 8 hereof and as specifically instituted,
amended or suspended from time to time by the Board of Directors.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Fair Market Value" shall be the applicable day's closing sales
price of the security as reported for consolidated transactions on the
principal exchange on which such security is listed or admitted to trading,
or, if no sales occur on that date, the price on the most recent
A-6
trading day prior thereto, or, if the security is not listed or admitted to
trading on a national securities exchange, the average of the highest bid
and lowest ask prices on such day as reported by the National Association
of Securities Dealers or a comparable service.
(k) "Incentive Stock Option" shall mean a stock option qualifying
under Section 422 of the Code.
(l) "Non-Employee Director" shall mean a member of the Board of
Directors of the Company who is not an officer or employee of the Company
or any Subsidiary.
(m) "Option" shall mean a non-qualified stock option or an Incentive
Stock Option granted pursuant to the Plan.
(n) "Optionee" shall mean a holder of an Option.
(o) "Option Term" shall mean the period during which an Option may be
exercised, which shall be 10 years from the date of grant thereof unless a
shorter period is provided by the Committee or by a provision of the Plan.
(p) "Permanent Disability" shall mean long-term disability as defined
in the Company's employee long-term disability plan.
(q) "Plan" shall mean the Pier 1 Imports, Inc. 1999 Stock Plan.
(r) "Retirement" shall mean (i) as to an employee, the separation from
employment, other than by the Company for cause, after the earlier of (I)
completing 15 years of service with the Company or any Subsidiary and
attaining age 55 or (II) attaining age 65, and (ii) as to a director,
ceasing to be a member of the Board of Directors, other than by reason of
death, disability or removal from office, after attaining age 70.
(s) "Shares" shall mean shares of Common Stock subject to Options or
deliverable in exchange for Deferred Stock Units pursuant to the Plan.
(t) "Subsidiary" shall mean any corporation or other entity of which
at least 50% of the voting securities are owned directly or through one or
more Subsidiaries.
A-7
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 26, 2003
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 7,
2003, at the annual meeting of shareholders to be held at 10:00 a.m. local time
on June 26, 2003 at the Renaissance Worthington Hotel, Brazos Room, 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 (i) "FOR" the election of the directors nominated, and (ii) "FOR"
the proposal to approve the amendments to the Company's 1999 Stock 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 or the
Internet.
(Continued and to be signed and dated on the reverse side)
Address Change/Comments (Mark the corresponding box on the reverse side)
- --------------------------------------------------------------------------------
Please Mark Here for
Address Change or Comments [ ]
SEE REVERSE SIDE
Proposal 1. Election of Directors
FOR all nominees WITHHOLD AUTHORITY *EXCEPTIONS
listed below to vote for all
(except as marked to nominees listed
the contrary below) below
[ ] [ ] [ ]
Nominees: 01 Marvin J. Girouard, 02 James M. Hoak, Jr., 03 Tom M. Thomas, 04
John H. Burgoyne, 05 Michael R. Ferrari and 06 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
--------------------------------------------------------------------
Proposal 2. Proposal to approve the amendments to the Company's 1999 Stock 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.
In the future, if you would like to access your Annual Report
and Proxy Statement electronically via the Internet rather Consent
than receiving them by U.S. Mail, please check mark the [ ]
box to the right signifying your consent.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN 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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11 PM Eastern Time the day
prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
Internet
http://www.eproxy.com/pir
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the web site. You will be prompted to enter your control number, located
in the box below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the directions given.
OR
Mail
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your proxy card.