UNITED STATES SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PIER 1 IMPORTS, INC.
(Name of Registrant as Specified In Its Charter)
PIER 1 IMPORTS, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PIER 1 IMPORTS, INC.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
May 20, 1997
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, 1997, at the Fort Worth Club, Trinity
Room, 306 West 7th Street, 12th Floor, Fort Worth, Texas. The formal Notice
of the Annual Meeting of Shareholders and Proxy Statement are attached.
Please read them carefully.
It is important that your shares be voted at the meeting in accordance
with your preference. If you do not plan to attend, please complete the
proxy card located in the envelope's address window by indicating your vote
on the issues presented and sign, date and return the proxy in the prepaid
envelope provided. If you are able to attend the meeting and wish to vote
in person, you may withdraw your proxy at that time.
Sincerely,
Clark A. Johnson
Chairman and Chief Executive Officer
<PAGE>
PIER 1 IMPORTS, INC.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 26, 1997
The Annual Meeting of Shareholders of Pier 1 Imports, Inc., a Delaware
corporation (the "Company"), will be held on June 26, 1997, at 10:00 a.m.,
local time, at the Fort Worth Club, Trinity Room, 306 West 7th Street, 12th
Floor, Fort Worth, Texas for the following purposes:
(1) To elect seven Directors to hold office until the next Annual
Meeting of Shareholders.
(2) To consider and vote upon the adoption of the Senior Management
Annual Bonus Plan.
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only holders of record of Common Stock at the close of business on May 7,
1997, are entitled to notice of and to vote at the Annual Meeting. A
complete list of shareholders entitled to vote will be available for
examination at the Company's offices at 301 Commerce Street, Suite 600, Fort
Worth, Texas by any Company Shareholder during ordinary business hours for a
period of ten days prior to the date of the Annual Meeting.
To ensure that your vote will be counted, please complete, sign and date
the enclosed proxy card and return it promptly in the enclosed prepaid
envelope, whether or not you plan to attend the Annual Meeting. Your proxy
may be revoked in the manner described in the accompanying Proxy Statement
at any time before it has been voted at the Annual Meeting.
By Order of the Board of Directors,
J. Rodney Lawrence
Senior Vice President and Secretary
May 20, 1997
Fort Worth, Texas
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY,
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING
<PAGE>
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, 1997
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, 1997, 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, 1997, 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, 45,360,945 shares of Common Stock were outstanding and entitled to be
voted at the meeting. Each share of Common Stock entitles the registered
holder thereof to one vote on each matter submitted to a vote at the
meeting.
All shares of Common Stock represented at the Annual Meeting by properly
executed proxies received prior to the meeting, unless the proxies have been
properly revoked prior to voting, will be voted in accordance with the
instructions on such proxies. If no instructions are given, proxies will be
voted in accordance with the recommendations of the Board of Directors, as
noted in this Proxy Statement. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before it is
voted. Proxies may be revoked by delivery to the Corporate Secretary of the
Company at the Company's principal executive offices at 301 Commerce Street,
Suite 600, Fort Worth, Texas 76102 of a written notice of revocation bearing
a later date than the proxy, or by duly executing and delivering to the
Corporate Secretary a subsequent proxy relating to the same shares, or by
attending the Annual Meeting and voting in person (although attendance at
the Annual Meeting will not in and of itself constitute revocation of a
proxy). With regard to all items submitted for Shareholder vote,
abstentions are not counted as voting for approval of a matter and,
therefore, will have the same effect as a vote "against" the matter, even
though the Shareholder may interpret such action differently. Votes
withheld, including broker non-votes, are neither counted as voting for nor
against a matter and, therefore, 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 20, 1997.
ELECTION OF DIRECTORS
Seven Directors of the Company are to be elected at the Annual Meeting to
serve until the next Annual Meeting of Shareholders of the Company and until
their respective successors shall have been elected and qualified. Unless
authority to vote for one or more Directors is withheld, proxies will be
voted for the election of the persons listed below or, if any such person
shall unexpectedly become unable or unwilling to accept nomination or
election, for the election of such other person as the Board of Directors
may recommend. Directors will be elected by holders of a majority of the
shares of Common Stock present in person or represented by proxy and
entitled to vote. The persons listed below are Directors of the Company now
in office and are nominees for re-election. The Board of Directors
recommends a vote "FOR" the nominees.
Nominees for Directors
CLARK A. JOHNSON
Clark A. Johnson, age 66, has served as Chairman and Chief Executive
Officer of the Company and has been a member of the Executive Committee
since March 1988. He has been a Director of the Company since March 1983.
From May 1985 to March 1988, Mr. Johnson served as President and Chief
Executive Officer of the Company. He is a Director of Albertson's Inc.,
InterTAN, Inc., Metro Media International Group, Anacomp, Inc. and Heritage
Media Corporation.
CHARLES R. SCOTT
Charles R. Scott, age 69, is a member of the Executive Committee and has
been a Director of the Company since March 1983. He is a principal,
President and Chief Executive Officer of Leadership Centers USA, Inc., which
conducts business under the name TEC-The Executive Committee. Mr. Scott
served as President and Chief Executive Officer and Director of The Actava
Group Inc. from February 1991 until April 1994, and from August 1970 to
February 1991 served as Chairman, President and Chief Executive Officer of
Intermark, Inc. He is also a Director of The Union Bank of California.
MARVIN J. GIROUARD
Marvin J. Girouard, age 57, has served as President and Chief Operating
Officer of the Company and as a Director since August 1988. From May 1985
until August 1988, he served as Senior Vice President - Merchandising of
Pier 1 Imports (U.S.), Inc., a wholly owned subsidiary of the Company. He
also is a Director of ENSERCH Corporation.
SALLY F. McKENZIE
Sally F. McKenzie, age 68, has been a Director of the Company since
November 1985 and is a member of the Audit Committee. Mrs. McKenzie has
served as a volunteer leader on a local, regional and national basis for
over five years.
JAMES M. HOAK, JR.
James M. Hoak, Jr., age 53, has been a Director of the Company since
September 1991 and is Chairman of the Executive Committee and a member of
the Audit Committee and the Compensation Committee. He has served as
Chairman of Heritage Media Corporation since August 1987; Chairman of Hoak
Capital Corporation since September 1991; Chairman and President of James M.
Hoak & Company since April 1995; and Chairman of HBW Holdings, Inc. since
July 1996. From 1971 to 1987, he served as President and Chief Executive
Officer of Heritage Communications, Inc. and as its Chairman and Chief
Executive Officer from August 1987 to December 1990. From February 1991 to
January 1995 he served as Chairman and Chief Executive Officer of Crown
Media, Inc. He is also a Director of Dynamex, Inc., MidAmerican Energy
Company, PanAmSat Corporation, and Texas Industries, Inc. He is a former
Governor of the American Stock Exchange.
MARTIN L. BERMAN
Martin L. Berman, age 57, has been a Director of the Company since June
1994 and is Chairman of the Audit Committee and a member of the Executive
Committee. Since April 1995, he has been Chairman, Chief Executive Officer
and a principal of Palisade Capital Management L.L.C. ("Palisade") and since
August 21, 1996 he has been Chief Executive Officer of Palisade Capital
Securities, L.L.C., a related company. From 1990 to April 1995, he served
as a managing director at Smith Barney Inc., prior to which he served as a
managing director at Drexel Burnham Lambert, Incorporated.
CRAIG C. GORDON
Craig C. Gordon, age 42, has been a Director of the Company since March
1995, and is Chairman of the Compensation Committee. He has served as
President of Off-The-Record Research since November 1994. From April 1987
to March 1995, he was a principal of RCM Capital Management.
Board Meetings, Committees and Fees
During the last fiscal year, the Board of Directors of the Company met on
seven occasions and took action by unanimous written consent in lieu of a
meeting on two 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
$30,000 during the past fiscal year and also received $1,500 for each Board
meeting attended, and $500 for each committee meeting attended. Directors
receive annual grants of stock options covering 3,000 shares per Director
under the Non-Employee Director Stock Option Plan and are eligible to
participate in the Company's Stock Purchase Plan by contributing monthly up
to the full amount of their Director fees and receiving matching
contributions from the Company of 50% of their contributions, excluding
contributions made from Board meeting fees and committee fees. In addition,
during the past fiscal year Messrs. Hoak, Berman and Gordon each received
$1,500 for their service on a special committee to investigate and make
recommendations on trading losses. Directors of the Company who are
employees of the Company serve without compensation for their services as
Directors of the Company.
Executive Committee. The Executive Committee is entitled to exercise all
powers of the Board when the Board is not in session to the extent permitted
by law and the Bylaws. The Executive Committee took action by unanimous
written consent in lieu of a meeting on one occasion during the last fiscal
year. Executive Committee members are Directors Hoak (chairman), Scott,
Johnson and Berman.
The Executive Committee also performs the functions of the nominating
committee and is responsible for considering and making recommendations to
the Board regarding nominees for election to the Board and Board Committee
assignments. The Executive Committee will consider recommendations
submitted by Shareholders for nominees for election to the Board.
Audit Committee. The Audit Committee recommends independent auditors for
appointment by the Board and is responsible for reviewing the financial
condition of the Company and its internal controls. It also reviews audit
and other reports of the independent auditors and actions to be taken
thereon by management. The Audit Committee held four meetings during the
last fiscal year. Audit Committee members are Directors Berman (chairman),
McKenzie and Hoak.
Compensation Committee. The Compensation Committee establishes and
administers incentive-based compensation plans for senior executive officers
and reviews and makes recommendations to the Board concerning other
compensation policies. The Compensation Committee held three meetings and
took action by unanimous written consent on two occasions during the last
fiscal year. Compensation Committee members are Directors Gordon (chairman)
and Hoak.
<PAGE>
Security Ownership of Management
The following table indicates the ownership on April 1, 1997, of the
Company's Common Stock by each Director and nominee, each executive officer
named in the Summary Compensation Table, and all Directors and executive
officers as a group:
Shares Percent
Beneficially of
Name Owned(1)(2) Class
- ---- ----------- ------
Martin L. Berman. . . . . . . 24,810 * %
Marvin J. Girouard. . . . . . 466,638 1.0
Craig C. Gordon . . . . . . . 16,458 *
James M. Hoak . . . . . . . . 65,600 *
Clark A. Johnson. . . . . . . 798,612 1.8
Sally F. McKenzie . . . . . . 18,384 *
Charles R. Scott. . . . . . . 77,177 *
J. Rodney Lawrence. . . . . . 55,373 *
Stephen F. Mangum . . . . . . 4,208 *
E. Mitchell Weatherly . . . . 44,518 *
All Directors and Executive
Officers as a Group . . . . 1,649,703 3.6%
- ------------------
(1) Included in the table are shares acquired through and held by the
Company's Stock Purchase Plan. Also included in the table are shares
issuable within 60 days of April 1, 1997, to Mr. Girouard (97,091
shares), Mr. Gordon (6,000 shares), Mr. Hoak (15,450 shares), Mr.
Johnson (168,118 shares), Mrs. McKenzie (15,963 shares), Mr. Berman
(9,150 shares), Mr. Scott (31,658 shares), Mr. Lawrence (21,474
shares), Mr. Weatherly (21,007 shares) and to all Directors and
Executive Officers as a group (432,331 shares), upon the exercise of
stock options granted pursuant to the Company's 1980 and 1989 Stock
Option Plans.
(2) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to his shares.
* Represents less than 1% of the outstanding shares of such class.
<PAGE>
Security Ownership of Certain Beneficial Owners
The following table indicates the ownership on April 1, 1997, 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:
Name and Shares Percent
Address of Beneficially of
Beneficial Owner Owned Class
- -------------------- ------------- ---------
FMR Corp. 4,586,260 (1) 10.18%
82 Devonshire Street
Boston, Massachusetts 02109
Denver Investment Advisors LLC 3,078,020 (2) 6.9%
1225 17th Street, 26th Floor
Denver, Colorado 80202
Clover Capital Management, Inc. 2,624,561 (3) 5.8%
11 Tobey Village Office Park
Pittsford, New York 14534
Mellon Bank Corporation 2,272,000 (4) 5.03%
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
- ------------------
(1) Includes 24,760 shares over which such company has sole voting power
and 4,586,260 shares over which such company has sole power to dispose or to
direct the disposition.
(2) Includes 1,987,000 shares over which such company has sole voting power
and 3,072,800 shares over which such company has sole dispositive power and
5,220 shares over which such company has shared dispositive power.
(3) Includes 2,624,561 shares over which such company has shared voting
power and 2,624,561 shares over which it has shared dispositive power.
(4) Includes 2,221,000 shares over which such company has sole voting power
and 1,061,000 shares over which such company has sole dispositive power and
1,208,000 shares over which such company has shared dispositive power.
<PAGE>
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. Mr. Mangum's summary
reflects compensation for a partial fiscal year since August 1996.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------- ---------------------------
Other Securities All
Name and Fiscal Annual (1) Restricted Underlying Other(3)
Principal Position Year Salary Bonus Compensation Stock Awards(2) Options(#) Compensation
- ------------------ ------ -------- -------- ------------ --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Clark A. Johnson 1997 $625,000 $703,125 $54,452 $93,757 174,390 $84,764
Chairman and Chief 1996 625,000 625,000 51,522 93,759 36,145 98,400
Executive Officer 1995 610,000 610,000 50,054 96,078 45,887 65,580
Marvin J. Girouard 1997 425,000 478,125 34,652 53,121 138,821 120,769
President and Chief 1996 392,000 352,800 23,573 49,001 18,892 96,111
Operating Officer 1995 380,000 342,000 30,702 49,882 23,821 78,582
Stephen F. Mangum 1997 161,500 120,000 66,399 -- 30,000 150
Senior Vice President,
Chief Financial Officer
and Treasurer
J. Rodney Lawrence 1997 172,500 105,000 23,308 -- 20,000 27,321
Senior Vice President, 1996 165,000 75,000 17,184 -- 10,000 21,602
Legal and Secretary 1995 156,000 55,500 18,807 -- 10,500 15,029
E. Mitchell Weatherly 1997 162,500 100,000 27,114 -- 20,000 26,261
Senior Vice President, 1996 155,000 70,000 19,802 -- 10,000 20,778
Human Resources 1995 147,500 52,000 28,324 -- 10,500 15,831
- ----------------
<FN>
(1) Includes reimbursements for club dues, automobile expenses, financial planning, medical expenses, moving
expenses and aircraft allowance, if applicable.
(2) Dollar value of restricted stock is computed using the closing price of the Common Stock on September 26,
1996, the date of grant of the restricted stock. Recipients of such restricted stock awards will receive
cash dividends paid on such stock. Restricted stock held by Messrs. Johnson and Girouard will vest at
the times and to the extent that 25% of the stock options granted in conjunction with the award of
restricted stock are exercised. The total amount and the dollar value of restricted stock held at March
1, 1997, were: Mr. Johnson, 34,543 shares ($600,185); Mr. Girouard, 25,200 shares ($437,850); Mr.
Lawrence 15,845 shares ($275,307); and Mr. Weatherly 14,790 shares ($256,976). Restricted stock held by
Mr. Lawrence and Mr. Weatherly was granted under a different plan.
(3) Includes Company matching contributions in fiscal year 1997 for Messrs. Johnson, Girouard, Lawrence and
Weatherly of $4,260, $3,429, $5,201, and $5,341, respectively, under the Company's 401(k) Retirement
Plan, of $39,844, $27,078, $8,295, and $7,845, respectively, under the Company's Benefit Restoration
Plan, and of $40,660, $90,262, $13,825 and $13,075, respectively, under the Company's Stock Purchase
Plan. Includes contributions for Mr. Mangum of $150 under the Company's Stock Purchase Plan.
</TABLE>
The Company has entered into Post-Employment Consulting Agreements with
Messrs. Johnson, Girouard, Lawrence, Mangum, Weatherly and four other
executive officers (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 his base salary immediately
prior to termination divided by twelve. The Executive will also receive 50%
of the Executive's cost for continuing medical and dental insurance coverage.
If the Executive enters into employment during the consulting period that
provides compensation equal to or greater than the amount of the consulting
fees, the Company will pay the Executive an immediate one-time payment in the
amount of 50% of the difference between the total fees that otherwise would
have been payable during the term of the consulting agreement and the
aggregate fees actually paid prior to reemployment. If the Executive enters
into employment during the consulting period that provides compensation less
than the consulting fees, the Company will reduce the monthly consulting fee
by the amount of the monthly compensation for reemployment and at the end of
the consulting period will pay the Executive 50% of the difference between
the total fees that otherwise would have been payable during the term of the
consulting agreement and the aggregate fees actually paid.
The Company maintains two Supplemental Retirement Plans to aid in
attracting and retaining key executives. Messrs. Johnson, Girouard, Lawrence
and Weatherly participate in a plan which provides that upon death,
disability, retirement or other termination (but commencing at retirement
age), a participant will receive annual benefits over 15 years (or a
discounted lump-sum) which, when added to Social Security retirement
benefits, generally equal his vested percentage of 50% of the participant's
highest average annual salary and bonus (based on a three-year average), but
in no event more than $350,000. If a participant retires after age 65, the
percentage of his highest average annual salary and bonus used to calculate
his benefit is increased above 50% by 5% for each year of service after age
65, but not greater than 65%. Benefits vest for each participant at the rate
of 10% per year of service with a maximum of five years of credit allowed for
service to the Company prior to participation in the plan. Messrs. Johnson,
Girouard, Lawrence and Weatherly are each fully vested. All participants in
the plan have elected to receive benefits in a lump sum distribution. Mr.
Mangum and four other executive officers participate in a different
supplemental retirement plan which provides that upon death, disability,
attaining age 65 or later retirement from the Company, a participant will
receive an annuity based on annual benefits which, when added to Social
Security retirement benefits, generally equal a percentage (calculated as 3%
multiplied by the participants's total number of years of service to a
maximum of 60%) of the participant's highest average annual salary and bonus
(based on a three-year average), but in no event more than $350,000.
Benefits vest for each participant at the rate of 10% per year of
participation in the plan. 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.
Mr. Mangum has no credited years of participation in the plan.
<PAGE>
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, 1997, to the executive officers
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
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)
- ---- ---------- ----------- -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Clark A. Johnson 24,390 2.98% $15.38 09/26/06 $140,657
150,000 18.36 16.63 12/12/06 1,023,300
Marvin J. Girouard 13,821 1.69 15.38 09/26/06 79,706
125,000 15.30 16.63 12/12/06 852,750
Stephen F. Mangum 10,000 1.22 16.00 08/12/06 59,430
20,000 2.45 16.63 12/12/06 136,440
J. Rodney Lawrence 20,000 2.45 16.63 12/12/06 136,440
E. Mitchell Weatherly 20,000 2.45 16.63 12/12/06 136,440
- ----------------
<FN>
(1) Options to Messrs. Johnson and Girouard covering 24,390 and 13,821 shares, respectively,
were granted on September 26, 1996, and become exercisable in installments of 25% of the
amount awarded six months after the date of grant and 25% on each of the following three
anniversaries of the date of grant. Options to Messrs. Johnson and Girouard covering
150,000 and 125,000 shares, respectively, were granted on December 12, 1996, and become
exercisable in installments of 50% of the amount awarded on each of the two anniversaries
following the date of grant. Options to Mr. Mangum covering 10,000 shares were granted on
August 12, 1996, and options to Messrs. Mangum, Lawrence and Weatherly covering 20,000
shares each were granted on December 12, 1996, and become exercisable in annual
installments of 20% of the amount awarded beginning one year after the date of grant. An
employee may elect to satisfy his income tax withholding obligations by the delivery of
previously owned shares or the withholding of shares otherwise issuable upon exercise of
the option. Options will terminate at the time of termination of employment if the
termination is for cause or for resignation without the consent of the Company, or three
months after termination in the case of any other termination, or one year after death or
disability.
(2) Exercise price is equal to the current market value at the date of grant.
(3) The present value of options on the date of grant was determined using a variation of the
Black-Scholes option pricing model. The estimated values under the Black-Scholes option
pricing model are based on the following assumptions at the time of grant: an exercise
price equal to the fair market value of the underlying Common Stock; option term of 6
years; interest rates of 6.22%, 6.41% and 6.12% for options granted on August 12, 1996,
September 26, 1996, and December 12, 1996, respectively, which represent the interest
rates at such option grant dates of U.S. treasury securities having six-year maturities;
dividend payment rate of $.16 per share per year; and volatility factors of 27.2%, 27.3%
and 33.5%, which are based on Common Stock prices for two-year periods prior to each such
date of grant. For purposes of determining these option valuations, a term of six years
was used for the length of each option term and the terms of the U.S. treasury securities,
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.
</TABLE>
<PAGE>
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 1, 1997.
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options Options
at Fiscal Year-End at Fiscal Year-End(1)
------------------------ -------------------------
Shares Acquired Value
Name on Exercise Realized(2) Exercisable Unexercisable Exercisable Unexercisable
- ----- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clark A. Johnson 121,344 $1,337,818 162,020 203,934 $1,531,324 $394,828
Marvin J. Girouard 55,157 608,106 93,636 154,222 797,949 242,839
Stephen F. Mangum -- -- -- 30,000 -- 28,650
J. Rodney Lawrence 10,028 126,418 19,724 37,800 209,830 165,638
E. Mitchell Weatherly 8,373 108,556 19,374 37,567 206,741 163,582
- -----------------
<FN>
(1) Computed as the difference between the option exercise prices and $17 3/8 (the closing price of
the Common Stock at fiscal year-end).
(2) Computed as the difference between the option exercise prices and the closing market price of the
Common Stock at the date of exercise.
</TABLE>
Board of Directors Compensation Committee Report on Executive Compensation
The Compensation Committee, which is composed entirely of independent,
non-employee directors, establishes and administers incentive-based
compensation plans for the senior executives, who are the Chief Executive
Officer, the Chief Operating Officer and the Chief Financial Officer, and
recommends to the Board of Directors other compensation for the senior
executives and compensation for such other officers as the Compensation
Committee deems appropriate. The Compensation Committee from time to time
retains an independent consultant to assist the Committee in determining
compensation levels and programs.
The Company's overall management compensation philosophy reflects a
strong incentive orientation with an aim that more than half of potential
senior executive compensation result from performance-based compensation
plans. In addition to base salary, executive compensation can include annual
bonus, stock options, restricted stock, benefits and perquisites. The
Compensation Committee's objective is to provide executives with salaries
valued near the size-adjusted median of comparable companies in its industry,
and to provide additional incentive compensation. 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. In this connection, the
Compensation Committee intends for awards under the proposed Senior
Management Annual Bonus Plan, which is submitted for Shareholder approval at
this Annual Meeting, and the Company's employee stock option plan to qualify
for the performance-based compensation exclusion applicable to the deduction
limitation.
Base salary levels of senior executive officers are reviewed annually by
the Compensation Committee. Salaries are based primarily upon salary levels
of executives in comparable companies in the industry and individual
performance of the executive during the preceding year. The Compensation
Committee considers the factors it deems relevant, but does not assign
specific weights to different factors. The salary of the Chief Executive
Officer for the 1997 fiscal year was not changed from the $625,000 paid for
the 1996 fiscal year.
During the 1997 fiscal year, the Company maintained an annual bonus plan
for senior executives and other employees that paid bonus awards based on the
attainment of budgeted levels of pretax income, excluding certain non-
recurring items. The Compensation Committee believes that pretax operating
income is the main determinant for establishing shareholder value. The
target bonus for the Chief Executive Officer and the Chief Operating Officer
was 75% of base salary for fiscal 1997 pretax income attaining a level 22%
higher than pretax income for the prior year. The plan provided for a
minimum bonus of 15% of base salary for pretax income increasing 3% over the
prior year and a maximum bonus of 113% of base salary for pretax income
increasing 36% over the prior year. The target bonus amounts for other plan
participants were set at from 10% to 40% of each participant's base salary,
depending on the level of responsibility of the participant, and reflected
the average for bonus targets from a broad spectrum of comparable size
companies. In fiscal 1997, the Chief Executive Officer earned the maximum
bonus of $703,125.
Long-term incentives are provided through awards under stock option and
restricted stock plans. Under the stock option plan, executives and other
key employees may be awarded options to purchase Company stock, which in the
past have 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 Company has two
restricted stock plans to provide long-term incentives and encourage
ownership of stock by management. One plan is currently intended for senior
executives and is implemented in conjunction with the granting of stock
options. The other plan is designed for other executives and provides for
the vesting of restricted stock awards over a ten-year period. Under both
plans, executives may vote and receive dividends on unvested restricted
stock.
Long-term incentives for the senior executives are awarded in a
combination of stock option and restricted stock awards. Restricted stock is
awarded only in conjunction with the granting of stock options and is subject
to such restrictions as the Compensation Committee establishes at the time of
the award. Rights to transfer the restricted stock will be acquired by the
executive only upon the satisfaction of all restrictions. For the past five
years, the Company has awarded annually a combination of stock options and
restricted stock awards to the Chief Executive Officer and the Chief
Operating Officer. Restricted stock was awarded in amounts representing 25%
of the shares subject to certain stock options, with the restricted stock
vesting at the time the associated stock options are exercised. During the
1997 fiscal year, restricted stock and stock options with exercise prices of
market value at the dates of grant were awarded to the Chief Executive
Officer and the Chief Operating Officer. The number of currently held
options by each executive was not considered in making stock option and
restricted stock awards. During the 1997 fiscal year, the Chief Executive
Officer was awarded 6,098 shares of restricted stock in conjunction with the
granting of options to purchase 24,390 shares under the stock option plan,
and was awarded additional options to purchase 150,000 shares.
The Company provides benefits and perquisites to executive officers to
respond to competitive practices in the industry. The Compensation Committee
believes these benefits are typical for companies of its size.
COMPENSATION COMMITTEE
Craig C. Gordon
James M. Hoak, Jr.
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 peer group, consisting of 14 specialty and
department store retail companies.
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Pier 1 Imports, Inc. 100 117 89 103 144 192
S&P 500 Index 100 111 120 129 174 219
Peer Group 100 115 107 97 102 131
The companies comprising the peer group are The Bombay Co., Inc.,
Charming Shoppes, Inc., Dayton Hudson Corporation, Dillard Department Stores,
Inc., Duty Free International, Inc., The Gap, Inc., The Home Depot, Inc., The
Limited, Inc., Michaels Stores, Inc., Nordstrom, Inc., The Sherwin-Williams
Company, Toys "R" Us, Inc., Wal-Mart Stores, Inc., and Walgreen Co.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1988, the Company loaned Mr. Johnson $1,191,928 for the
purchase of shares of the Company's Common Stock in the open market. The
loan is evidenced by an unsecured promissory note which is payable on demand,
and if no demand is made, on December 31, 1997, unless such loan is renewed.
The note accrues interest at a floating rate of interest equal to 0.5% over
the daily weighted average interest rate applicable to the Company's variable
rate indebtedness. The note provides that no less than one-half of the
accrued interest will be due and payable on each December 31 and that the
remaining accrued interest, as of each December 31, will be added to the
principal amount of the note. The loan was granted in conjunction with the
termination of 91,080 stock options and the grant of other options to acquire
45,540 shares of Common Stock. Mr. Johnson was permitted to elect to
maintain the above-stated options or to surrender for termination such
options, and in consideration therefor, be granted options to purchase 50% of
the shares subject to the terminated options at an option price equal to the
fair market value of the shares on the date of grant and be loaned funds by
the Company to purchase up to 100% of the shares subject to the terminated
options. As of March 1, 1997, the principal amount of Mr. Johnson's
promissory note was $855,729.80.
In August 1996, the Company loaned Mr. Mangum $100,000 relating to the
purchase of a residence. The loan is evidenced by an unsecured promissory
note which is payable on demand, and if no demand is made, on August 30,
1998, the note accrues interest at a floating rate of interest equal to 1%
above the prime rate as established by the Texas Commerce Bank from time to
time. As of March 1, 1997, the principal amount of Mr. Mangum's promissory
note was $100,000.
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
ten-percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors and
greater than ten-percent shareholders are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section
16(a) forms they file. To the Company's knowledge, based solely on review of
the copies of such reports furnished to the Company, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-
percent beneficial owners with respect to the last fiscal year were observed,
except that due to an error by the Company one report each was filed late by
Charles H. Turner and Sally F. McKenzie.
PROPOSED SENIOR MANAGEMENT ANNUAL BONUS PLAN
On March 17, 1997, the Board of Directors adopted, subject to
shareholder approval, the Senior Management Annual Bonus Plan. The purpose
of the Plan is to encourage superior performance and to reward senior
executives of the Company for effective service and to strengthen the ability
of the Company to retain and attract the senior management upon which
continued growth and profitability of the Company depend.
In 1993, Section 162(m) of the Internal Revenue Code was enacted to
limit deductibility of compensation in excess of $1,000,000 paid during the
Company's taxable year to the chief executive officer or any of the four
other most highly compensated officers unless the compensation is
performance-based and paid pursuant to plans approved by shareholders. The
Board of Directors intends for the Plan to satisfy the requirements of
Section 162(m) and is submitting the Plan for Shareholder approval in order
to permit full deductibility of all bonus awards under the Plan.
The Plan will be administered by a committee (the "Committee") composed
of two or more "outside directors" so qualifying under Section 162(m). The
Compensation Committee of the Board will function as the Committee unless the
members of the Compensation Committee do not qualify as outside directors.
The Committee will have the power to interpret the Plan and make all
determinations necessary or advisable for the administration of the Plan.
The Committee will select participants in the Plan, who may be any
executive officer of the Company.
Bonus awards under the Plan may only be paid if performance goals
specified for the fiscal year are attained and only if the participant is
employed by the Company or any of its subsidiaries on the last day of the
fiscal year to which the bonus relates. The Committee in its discretion may
reduce or eliminate any bonus payable to a participant, but may not increase
the amount of any bonus above the amount associated with the performance goal
achieved. The Committee will establish the performance goals for a fiscal
year prior to the end of the first quarter of that fiscal year. Performance
goals may be expressed in terms of one or more financial or other objective
goals, which may be Company-wide, on an individual basis or otherwise.
Financial goals may be expressed, for example, in terms of sales, operating
earnings, net income, earnings per share, cash flow, stock price, return on
equity or other return ratios. Other objective goals may include the
attainment of various productivity and long-term growth objectives, including
for example, reductions in the Company's expense to sales ratios. Performance
criteria may be measured in absolute terms, or as a change for the Company
from a prior year or years, or as compared to another company or companies.
Performance goals must provide: a threshold level of performance below which
no bonus payment may be made, levels of performance at which specified
percentages of the target bonus will be paid and a maximum level of
performance above which no additional bonus will be paid. Performance goals
may be, but need not be, different for each fiscal year, and different
performance goals may be applicable to different participants. The maximum
amount of any bonus that may be paid for any year to any participant is
$1,500,000.
The Board of Directors may at any time suspend or terminate the Plan in
whole or in part and may at any time amend the Plan, except that no amendment
which requires stockholder approval in order for the Plan to continue to
comply with Section 162(m) will be effective until approved by the Company's
shareholders. The Committee may amend the Plan as it deems necessary to
comply with other applicable laws, rules and regulations.
For this fiscal year ending February 28, 1998, the Committee selected
Clark A. Johnson, Chairman and Chief Executive Officer of the Company, and
Marvin J. Girouard, President and Chief Operating Officer, to participate in
the Plan. The performance goals for this fiscal year are based on pretax
profit and provide for a minimum bonus for each participant of 15% of his
base salary if 1998 fiscal year pretax profit attains 84.5% of planned pretax
profit for the year, and up to a maximum of 112.5% of his base salary if
pretax profit reaches 111.6% of planned pretax profit.
The Plan will become effective for the 1998 fiscal year if approved by
Shareholders. Adoption of the Plan requires the affirmative vote of the
holders of a majority of the shares of Common present in person or
represented by proxy and entitled to vote at the Annual Meeting. If the Plan
is not approved by Shareholders, it will not become effective and no bonuses
will be paid under the Plan, but it is anticipated that the Compensation
Committee would establish some form of bonus program for the senior
executives.
THE BOARD OF DIRECTORS 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 1998 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 1997. 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 so desires and to respond to
appropriate questions from Shareholders.
Shareholder Proposals for 1998 Annual Meeting
The date by which Shareholder proposals must be received by the Company
for inclusion in the Proxy Statement for the 1998 Annual Meeting of
Shareholders is January 20, 1998.
Proxy Solicitation
The cost of soliciting proxies will be borne by the Company. The
services of Shareholder Communications Corporation will be employed for the
purpose of facilitating the solicitation. The fees of Shareholder
Communications Corporation in this connection will be borne by the Company
and are not expected to exceed $5,000 plus mailing and delivery expenses. In
addition to solicitations by mail, officers and regular employees of the
Company may solicit proxies personally and by telephone or other means, for
which they will receive no compensation in addition to their normal
compensation. Arrangements may also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of stock held of record by such persons,
and the Company will reimburse them for their reasonable out-of-pocket and
clerical expenses.
YOUR VOTE IS IMPORTANT
You are encouraged to let us know your preference by completing and
returning the enclosed proxy card.
J. Rodney Lawrence
Secretary
May 20, 1997
<PAGE>
APPENDIX I
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, 1997
The undersigned hereby appoints CLARK A. JOHNSON, MARK L. HART, JR. and
J. RODNEY LAWRENCE, and each of them, proxies with full power of
substitution, to represent and to vote as set forth herein all the shares of
the Common Stock of Pier 1 Imports, Inc. held of record by the undersigned on
May 7, 1997, at the annual meeting of shareholders to be held at 10:00 a.m.
local time on June 26, 1997, at the Fort Worth Club, Trinity Room, 306 West
7th Street, 12th Floor, 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, "FOR" the Senior
Management Annual Bonus 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.
(Continued and to be signed and dated on the reverse side)
- -----------------------------------------------------------------------------
Item 1. Election of Directors.
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ]
listed below for all nominees listed below
*EXCEPTIONS [ ]
Nominees: Clark A. Johnson, Charles R. Scott, Marvin J. Girouard, Sally F.
McKenzie, James M. Hoak, Jr., Martin L. Berman and Craig C. Gordon
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominees's name in the space below.)
*Exceptions _______________________________________________________________
Item 2. Approval of the proposed Senior Management Annual Bonus Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Item 3. In their discretion, the Proxies are authorized to vote as described
in the Proxy Statement and upon such other business as may properly
come before the meeting or any adjournment thereof.
Change of Address and/or [ ]
Comments Mark Here
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, administer, trustee or guardian, please give
full title as such.
<PAGE>
APPENDIX II
PIER 1 IMPORTS, INC.
SENIOR MANAGEMENT ANNUAL BONUS PLAN
1. Purpose. The purposes of the Pier 1 Imports, Inc. Senior
Management Annual Bonus Plan (the "Plan)" are to encourage superior
performance and reward senior management of the Company for effective service
and to strengthen the ability of the Company to retain and attract the senior
management upon which continued growth and profitability of the Company
depends.
2. Definitions. For purposes of the Plan, the following terms shall
have the meanings set forth below unless otherwise expressly provided or
unless the context otherwise requires:
"Board of Directors" means the Board of Directors of the Company.
"Bonus" means any annual incentive bonus award granted pursuant to the
Plan, the payment of which shall be contingent upon the attainment of
Performance Goals with respect to a Plan Year.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee appointed by the Board of Directors,
which committee shall be composed of not less than two directors of the
Company who each qualify as an "outside director" under Treasury Regulations
Section 1.162-27 promulgated under Section 162(m) of the Code or any
successor provisions. The Compensation Committee of the Board of Directors
shall be the Committee unless its membership does not qualify hereunder.
"Company" means Pier 1 Imports, Inc., a Delaware corporation, or any
successor corporation.
"Participant" means an executive officer of the Company specified by
the Committee for participation in the Plan.
"Performance Goals" means the criteria and objectives which must be met
during the Plan Year as a condition of the Participant's receipt of payment
with respect to a Bonus, as described in Section 4 hereof.
"Plan Year" means a fiscal year of the Company for which awards are
determined under the Plan.
3. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall have full and
final authority to administer and interpret the Plan, to exercise all powers
either specifically granted to it under the Plan or as are necessary or
advisable in the administration of the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan, all
of which shall be binding on all persons, including the Company, the
Participants (or any person claiming any rights under the Plan from or
through any Participant) and any stockholder of the Company. A majority of
the Committee shall constitute a quorum, and the Committee shall act pursuant
to a majority vote or by unanimous written consent. No member of the Board
of Directors or the Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Bonus
granted hereunder.
4. Performance Goals. Performance Goals for each Plan Year shall be
established by the Committee not later than the latest date permissible under
Code Section 162(m). Such Performance Goals may be expressed in terms of one
or more financial or other objective goals which may be Company-wide, on an
individual basis or otherwise. Financial goals may be expressed, for example,
in terms of sales, operating earnings, net income, earnings per share, cash
flow, return on equity or other return ratios, or stock price. Other
objective goals may include the attainment of various productivity and long-
term growth objectives, including for example, reductions in the Company's
overhead ratio and expense to sales ratios. Any criteria may be measured in
absolute terms, as a change from a prior year or years, or as compared to
another company or companies. To the extent applicable, any such Performance
Goal shall be determined in accordance with the Company's audited financial
statements and generally accepted accounting principles. Performance Goals
shall include a threshold level of performance below which no Bonus payment
shall be made, levels of performance at which specified percentages of the
target Bonus shall be paid and a maximum level of performance above which no
additional Bonus shall be paid. The Performance Goals established by the
Committee may be, but need not be, different for each Plan Year and different
Performance Goals may be applicable to different Participants.
5. Bonuses. (a) General. Payment of the amount of a Bonus for a
particular Plan Year shall be made only if and to the extent the specified
Performance Goals with respect to such Plan Year are attained and only if the
Participant is employed by the Company or any of its subsidiaries on the last
day of such Plan Year. The Committee may, in its discretion, reduce or
eliminate the amount of any Bonus payable to any Participant, based upon such
factors as the Committee may deem relevant, but the Committee may not
increase the amount of any Bonus payable to any Participant above the amount
established in accordance with the relevant Performance Goals.
(b) Certification and Payment. Payments of any Bonus shall be made
only after the Committee has certified the achievement of the required
Performance Goals. After such certification the Company shall pay in cash or
as otherwise determined by the Committee the applicable amount of the Bonus
to the appropriate Participant.
(c) Maximum Payment. No Bonus shall be paid to any Participant in
excess of $1,500,000 for any Plan Year.
6. General Provisions. (a) Compliance With Legal Requirements. The
Plan and the granting of Bonuses, as well as the other obligations of the
Company under the Plan shall be subject to all federal and state laws, rules
and regulations, and to such approvals by any regulatory or governmental
agency as may be required.
(b) No Right To Continued Employment. Nothing in the Plan or in any
Bonus shall confer upon any Participant the right to continue in the employ
of the Company or any of its subsidiaries or to be entitled to any
remuneration or benefits not set forth in the Plan or to interfere with or
limit in any way the right of the Company or any of its subsidiaries to
terminate such Participant's employment.
(c) Withholding Taxes. The Company or any subsidiary employing any
Participant shall deduct from all payments and distributions under the Plan
any taxes required to be withheld by federal, state or local governments.
(d) Amendment and Termination of the Plan. The Board of Directors
may at any time and from time to time alter, amend, suspend. or terminate the
Plan in whole or in part; provided, however, that no amendment which requires
stockholder approval in order for the Plan to continue to comply with Code
Section 162(m) shall be effective unless the same shall be approved by the
requisite vote of the shareholders of the Company. The Committee may make
such amendments as it deems necessary to comply with other applicable laws,
rules and regulations. Notwithstanding the foregoing, no amendment shall
affect adversely any of the rights of any Participant, without such
Participant's consent, under any Bonus previously paid under the Plan.
(e) Participant Rights. No Participant shall have any claim to be
granted any Bonus under the Plan, nor is there any obligation for uniformity
of treatment among Participants.
(f) Unfunded Status of Bonus. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. Nothing contained in the Plan or
any Bonus shall give any Participant any rights with respect to any Bonus
payments which at any time have been certified by the Committee but not yet
paid to a Participant that are greater than those of a general creditor of
the Company and/or its subsidiaries.
(g) Governing Law. The Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of
the State of Texas, without giving effect to the choice of law principles
thereof.
(h) Effective Date. The Plan shall become effective with respect to
the 1998 Plan Year, provided that the Plan shall have been approved at the
1997 Annual Meeting of Shareholders by the requisite approval of the
shareholders of the Company required under Section 162(m) of the Code.
(i) Interpretation. The Plan is designed and intended to comply with
Section 162(m) of the Code, and all provisions hereof shall be construed in a
manner so to comply.
