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>
[First mailed to shareholders on May 20, 1998]
PIER 1 IMPORTS, INC.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
May 20, 1998
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 25, 1998, at the Fort Worth Club, Horizon
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 25, 1998
The Annual Meeting of Shareholders of Pier 1 Imports, Inc., a Delaware
corporation (the "Company"), will be held on June 25, 1998, at 10:00 a.m.,
local time, at the Fort Worth Club, Horizon Room, 306 West 7th Street, 12th
Floor, Fort Worth, Texas for the following purposes:
(1) To elect six Directors to hold office until the next Annual
Meeting of Shareholders.
(2) To amend the Company's Certificate of Incorporation to increase
the number of authorized shares of common stock from 200,000,000 to
500,000,000.
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only holders of record of Common Stock at the close of business on May 6,
1998, 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, 1998
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 25, 1998
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 25, 1998, 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
6, 1998, 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, 67,437,880 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 in place of executing and returning the card. Shares voted by
telephone may be revoked by providing subsequent telephone voting
instructions or by using any method described above for revoking proxies.
With regard to all 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, 1998.
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. 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 67, 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. and Metro Media International Group.
MARVIN J. GIROUARD
Marvin J. Girouard, age 58, 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.
SALLY F. McKENZIE
Sally F. McKenzie, age 69, has been a Director of the Company since
November 1985 and is a member of the Audit Committee. Mrs. McKenzie has
served as a civic leader on a local, regional and national basis for over
six years.
JAMES M. HOAK, JR.
James M. Hoak, Jr., age 54, 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 served as Chairman
of Heritage Media Corporation from its inception in August 1987 to its sale
in August 1997, and has served as Chairman of Hoak Capital Corporation since
September 1991, as Chairman and President of James M. Hoak & Company since
April 1995, and as 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., PanAmSat Corporation and Texas Industries, Inc.
He is a former Governor of the American Stock Exchange.
MARTIN L. BERMAN
Martin L. Berman, age 58, 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. and since August 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 43, 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
four occasions and took action by unanimous written consent in lieu of a
meeting on one occasion. 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, and $750 for each committee meeting attended. Directors
receive annual grants of stock options covering 4,500 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
$3,600 for their service on a special committee to investigate and make
recommendations on the trading losses which occurred in 1995. 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), Johnson
and Berman. During the last fiscal year, the Executive Committee also
included former director Charles R. Scott.
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 five 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 four meetings and
took action by unanimous written consent on three 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, 1998, 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. . . . . . . 33,007 *
Marvin J. Girouard. . . . . . 853,690 1.3%
Craig C. Gordon . . . . . . . 18,592 *
James M. Hoak, Jr.. . . . . . 106,653 *
Clark A. Johnson. . . . . . . 617,270 *
Sally F. McKenzie . . . . . . 8,296 *
Jay R. Jacobs . . . . . . . . 31,714 *
Stephen F. Mangum . . . . . . 27,559 *
Charles H. Turner . . . . . . 18,813 *
All Directors and Executive
Officers as a Group . . . . 2,013,020 2.9%
- ------------------
(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, 1998, to Mr. Girouard (260,589
shares), Mr. Gordon (4,500 shares), Mr. Hoak (27,675 shares), Mr.
Johnson (152,408 shares), Mrs. McKenzie (4,500 shares), Mr. Berman
(18,225 shares), Mr. Jacobs (15,150 shares), Mr. Mangum (9,000 shares),
Mr. Turner (2,075 shares) and to all Directors and Executive Officers
as a group (632,202 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 or her shares.
* 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 1, 1998, 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
- -------------------- ------------- ---------
Putnam Investments, Inc. 5,204,529(1) 7.7%
One Post Office Square
Boston, Massachusetts
- ------------------
(1) Includes 866,535 shares over which such company has shared voting power
and 5,204,529 shares over which it 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. The number of shares of
restricted stock and common stock subject to stock options during the 1996
and 1997 fiscal years has been adjusted to reflect the effect of the 3-for-2
stock split effected as a stock dividend in July 1997.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------- ---------------------------
Other Securities All
Name and Fiscal Annual Restricted Underlying Other
Principal Position Year Salary Bonus Compensation(1) Stock Awards(2) Options(#) Compensation(3)
- ------------------ ------ -------- -------- ------------ --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Clark A. Johnson 1998 $700,000 $787,500 $55,791 $962,500 77,500 $118,108
Chairman and Chief 1997 625,000 703,125 54,452 93,757 261,585 84,764
Executive Officer 1996 625,000 625,000 51,522 93,759 54,218 98,400
Marvin J. Girouard 1998 600,000 675,000 42,296 481,250 100,000 171,151
President and Chief 1997 425,000 478,125 34,652 53,121 208,232 120,769
Operating Officer 1996 392,000 352,800 23,573 49,001 28,338 96,111
Stephen F. Mangum 1998 315,000 236,250 102,457 231,000 48,000 5,250
Senior Vice President, 1997 161,500 120,000 66,399 -- 45,000 150
Chief Financial Officer
and Treasurer(4)
Charles H. Turner 1998 195,000 146,250 26,948 231,000 48,000 24,798
Senior Vice President, 1997 180,000 110,000 17,693 -- 30,000 11,501
Stores 1996 160,000 70,000 16,399 -- 15,000 8,730
Jay R. Jacobs 1998 185,000 138,750 20,635 231,000 48,000 19,741
Senior Vice President, 1997 155,000 95,000 18,853 -- 30,000 10,563
Merchandising 1996 130,000 60,000 15,016 -- 15,000 21,020
- ----------------
<FN>
(1) Includes reimbursements for club dues, automobile expenses, financial planning, medical expenses and
moving expenses, if applicable.
(2) Dollar value of restricted stock is computed using the closing price of the Common Stock, on the date of
grant of the restricted stock. Recipients of such restricted stock awards will receive cash dividends
paid on such stock. The restricted stock grants for the 1996 fiscal year to Messrs. Johnson (13,556
shares) and Girouard (7,085 shares) and for the 1997 fiscal year to Messrs. Johnson (9,147 shares) and
Girouard (5,183 shares) may vest over periods extending up to 10 years. The restricted stock grants for
the 1998 fiscal year to Messrs. Johnson (50,000 shares), Girouard (25,000 shares), Mangum (12,000
shares), Turner (12,000 shares) and Jacobs (12,000 shares) will vest 25% annually on each of the four
anniversaries of the date of grant. The total amount and the dollar value of restricted stock held at
February 28, 1998, were: Mr. Johnson, 67,938 shares ($1,817,342); Mr. Girouard, 62,800 shares
($1,679,900); Mr. Mangum, 12,000 shares ($321,000); Mr. Turner, 12,000 shares ($321,000) and Mr. Jacobs,
12,000 shares ($321,000).
(3) Includes Company matching contributions in fiscal year 1998 for Messrs. Johnson, Girouard, Turner and
Jacobs of $12,685, $5,838, $4,915 and $2,573, respectively, under the Company's 401(k) Retirement Plan,
of $74,197, $38,149, $5,945 and $4,803, respectively, under the Company's Benefit Restoration Plan, and
of $67,572, $127,163, $13,938 and $12,365, respectively, under the Company's Stock Purchase Plan.
Includes contributions for Mr. Mangum of $5,250 under the Company's Stock Purchase Plan.
(4) Mr. Mangum's compensation for fiscal year 1997 reflects employment from August 1996 through the end of
the 1997 fiscal year.
</TABLE>
The Company has entered into Post-Employment Consulting Agreements with
Messrs. Johnson, Girouard, Mangum, Turner, Jacobs 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 and two
other executive officers participate and are fully vested 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 $500,000. 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, but not greater than 65%. All
participants in the plan have elected to receive benefits in a lump-sum
distribution. Messrs. Mangum, Turner, Jacobs and two other executive
officers participate in a different supplemental retirement plan which
provides that upon death, disability, retirement or other termination (but
commencing at retirement age), a participant will receive an annuity based on
annual benefits which, when added to Social Security retirement benefits,
generally equal a percentage (calculated as 3% multiplied by the
participant'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 $500,000. 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. Messrs. Mangum, Turner and Jacobs each
have 1 year, 6 years and 20 years, respectively, of credited service and 1
year, 2 years and 2 years, respectively, 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 February 28, 1998, 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 77,500 13.63% $19.25 12/23/07 $605,585
Marvin J. Girouard 100,000 17.59 19.25 12/23/07 781,400
Stephen F. Mangum 48,000 8.44 19.25 12/23/07 375,072
Charles H. Turner 48,000 8.44 19.25 12/23/07 375,072
Jay R. Jacobs 48,000 8.44 19.25 12/23/07 375,072
- ----------------
<FN>
(1) Options to Messrs. Johnson, Girouard, Mangum, Turner and Jacobs covering 77,500, 100,000,
48,000, 48,000 and 48,000, respectively, were granted on December 23, 1997, and become
exercisable in annual installments of 25% on each of the four anniversaries of the date of
grant. An employee may elect to satisfy his income tax withholding obligations up to the
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, 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 rate of 5.68%, which represents the interest rate at such option grant
date of U.S. treasury securities having a five-year maturity; dividend payment rate of
$.16 per share per year; and a volatility factor of 34.4%, which is based on Common Stock
prices for a six-year period prior to the date of grant. For purposes of determining
these option valuations, a term of six years was used for the length of the option term
rather than the actual 10-year option term. Six years represents the historical average
length of time from grant date to exercise date for all options previously granted by the
Company. The five-year term for U.S. treasury securities is the term nearest the six-year
period used for the option term for which interest rate data was available. 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 February 28, 1998.
<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 207,026 $3,073,571 152,408 221,847 $2,551,243 $2,914,352
Marvin J. Girouard -- -- 260,589 211,200 4,900,233 2,530,257
Stephen F. Mangum -- -- 9,000 84,000 142,250 929,000
Charles H. Turner 29,245 530,081 -- 89,375 -- 1,096,280
Jay R. Jacobs 3,150 57,632 13,750 85,725 246,154 1,016,705
- -----------------
<FN>
(1) Computed as the difference between the option exercise prices and $26 3/4 (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 and the Chief Operating 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. 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 Senior Management Annual
Bonus Plan and the Company's employee stock option plan to qualify for the
performance-based compensation exclusion applicable to the deduction
limitation.
Base salary levels of senior executive officers are reviewed annually by
the Compensation Committee. Salaries are based primarily upon Company growth
and individual performance of the executive during the preceding year. The
Compensation Committee considers the factors it deems relevant, but does not
assign specific weights to different factors. For the 1998 fiscal year the
salary of the Chief Executive Officer increased by $75,000 to $700,000.
During the 1998 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 1998 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 50% 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 1998, the Chief Executive Officer earned the maximum
bonus of $787,500.
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. Awards of restricted
stock have been made to senior executives in conjunction with the granting of
stock options. Executives may vote and receive dividends on unvested
restricted stock.
Long-term incentives for the senior executives have been awarded in a
combination of stock option and restricted stock awards. Restricted stock
has been awarded only at the time of the granting of stock options and
subject to restrictions that the Compensation Committee established at the
time of the award. Rights to transfer the restricted stock by the executive
vest only upon the satisfaction of all restrictions. For the past five
years, the Company has awarded annually both stock options and restricted
stock awards to the Chief Executive Officer and the Chief Operating Officer
and during the past year made awards to the other executive officers. All
stock options were granted with exercise prices of market value at the dates
of grant, and the restricted stock was awarded in amounts generally
representing 25% of the shares subject to stock options. The grants during
the past year of restricted stock and stock options vest over a four-year
period. The Compensation Committee, however, has determined to discontinue
the use of restricted stock as part of long-term compensation and will award
restricted stock in the future only in exceptional circumstances. The amount
of awards to each executive were determined to reward the executive for
Company and stock performance and to provide incentives for the executive to
remain with the Company. The number of currently held options by each
executive was not considered in making stock option and restricted stock
awards. During the 1998 fiscal year, the Chief Executive Officer was awarded
50,000 shares of restricted stock in conjunction with the granting of options
to purchase 77,500 shares under the stock option plan.
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 13 specialty and
department store retail companies.
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Pier 1 Imports, Inc. 100 76 87 123 164 382
S&P 500 Index 100 108 116 157 197 267
Peer Group 100 92 82 86 115 198
The companies comprising the peer group are The Bombay Co., Inc.,
Charming Shoppes, Inc., Dayton Hudson Corporation, Dillard Department Stores,
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 was evidenced by an unsecured promissory note which was payable on
demand, and if no demand was made, on December 31, 1997. The note accrued
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 provided 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, would 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. On October 24,
1997, Mr. Johnson paid off the remaining balance due under the loan.
In August 1996, the Company loaned Mr. Mangum $100,000 relating to the
purchase of a residence. The loan was evidenced by an unsecured promissory
note which was payable on demand, and if no demand was made, on August 30,
1998, the note accrued interest at a floating rate of interest equal to 1%
above the prime rate as established by Texas Commerce Bank from time to time.
On June 12, 1997, Mr. Mangum paid off the remaining balance due under the
loan.
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 R. Scott and J. Rodney Lawrence.
PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE COMPANY'S AUTHORIZED COMMON STOCK
On March 19, 1998, the Board of Directors adopted, subject to
Shareholder approval, an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of Common Stock
from 200,000,000 to 500,000,000 shares. As of May 6, 1998, the Company had
67,437,880 shares of Common Stock outstanding. After giving effect to shares
reserved for future issuance under the Company's employee benefit stock
plans, reserved for conversion of the Company's 5 3/4% Convertible Notes and
reserved for exercise of outstanding rights issued pursuant to the
shareholder rights plan, approximately 41,000,000 shares of Common Stock are
presently available for issuance. If this amendment is approved by
Shareholders, an additional 300,000,000 shares of Common Stock will be
available for issuance. No change is proposed for the 5,000,000 presently
authorized and unissued shares of Preferred Stock.
The Board believes it is in the best interests of the Company and its
Shareholders to increase the authorized number of shares of Common Stock.
The additional shares will provide an adequate supply of Common Stock for
possible future transactions, such as stock dividends or splits, the sale of
stock to raise additional capital, acquisitions of other businesses or
properties where the use of Common Stock is deemed advantageous,
implementation of other employee benefit and stock option plans, the
potential exercise of Rights issued in connection with outstanding Common
Stock as explained in the following paragraph, and other general corporate
purposes. The Company has no present plan to issue shares of the Common
Stock proposed to be authorized. The Board would have sole discretion,
however, to authorize the issuance of the additional shares of Common Stock
from time to time for any corporate purpose without further action by
Shareholders, except as required by law or by rules of the New York Stock
Exchange.
Under certain circumstances, the Company could use additional shares of
Common Stock to create voting impediments or to frustrate persons seeking to
effect a takeover or otherwise gain control of the Company or could privately
place such shares with purchasers who might side with the Board in opposing a
hostile takeover bid. The Company has no present intention to issue Common
Stock for any such purposes. In December 1994, the Company distributed to
Shareholders one Common Stock Purchase Right (a "Right") that expires in
December 2004 for each outstanding share of Common Stock. One Right has been
and will be issued with respect to each additional share of Common Stock
issued after December 21, 1994, prior to the earliest of the time the Rights
become exercisable, expire or are redeemed. The issuance of Rights may deter
attempts to acquire the Company in a manner or on terms not approved by the
Board. Each Right, upon becoming exercisable, will entitle the holder to
purchase at a specified exercise price one share of Common Stock. The Rights
will become exercisable after the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or associated
persons have acquired beneficial ownership of 15% or more of the outstanding
common stock or (ii) 10 business days (or such later date as determined by
the Board of Directors) following the commencement of, or announcement of an
intention to make, a tender or exchange offer the consummation of which would
result in beneficial ownership by a person or group of 15% or more of the
outstanding common stock. If the Company were acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power were sold, proper provision would be made so that each Right
would entitle its holder to purchase, upon the exercise of the Right at the
then current exercise price, that number of shares of common stock of the
acquiring company having a market value of twice the exercise price of the
Right. If any person or group were to acquire beneficial ownership of 15% or
more of the Company's outstanding Common Stock, each Right would entitle its
holder (other than such acquiring person whose Rights would become void) to
purchase, upon the exercise of the Right at the then current exercise price,
that number of shares of Common Stock having a market value on the date of
such 15% acquisition of twice the exercise price of the Right. The Board of
Directors may at its option, at any time after such 15% acquisition but prior
to the acquisition of more than 50% of outstanding Common Stock, exchange all
or part of the then outstanding and exercisable Rights (other than those held
by such acquiring person whose Rights would become void) for common stock at
an exchange rate per Right of one-half the number of shares of common stock
receivable upon exercise of a Right. The Board of Directors may, at any time
prior to such 15% acquisition, redeem all the Rights at a redemption price of
$.01 per Right.
The Board proposes that the first paragraph of Article Fourth of the
Company's Certificate of Incorporation be amended to read as follows:
"FOURTH: The number of shares of stock which the corporation
shall have authority to issue is five hundred million (500,000,000)
shares of Common Stock having a par value of one dollar ($1.00) per
share and five million (5,000,000) shares of Preferred Stock having
a par value of one dollar ($1.00) per share."
Adoption of the amendment requires the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock.
THE BOARD RECOMMENDS VOTING "FOR" THIS PROPOSAL.
OTHER BUSINESS
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 1999 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 1998. 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.
Shareholder Proposals for 1999 Annual Meeting
The date by which Shareholder proposals must be received by the Company
for inclusion in the Proxy Statement for the 1999 Annual Meeting of
Shareholders is January 20, 1999.
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, 1998
<PAGE>
APPENDIX
PIER 1 IMPORTS, INC.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
PROXY
Solicited on Behalf of the Board of Directors for Annual Meeting of
Shareholders, June 25, 1998
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 6, 1998, at the annual meeting of shareholders to be held at 10:00 a.m.
local time on June 25, 1998, at the Fort Worth Club, Horizon 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, and "FOR" the
amendment to the Company's Certificate of Incorporation.
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote
in accordance with the Board of Directors' recommendations. The Proxies
cannot vote your shares unless you sign and return this card or vote by
telephone.
(Continued and to be signed and dated on the reverse side)
- -----------------------------------------------------------------------------
Please mark your votes as
indicated in this example [x]
Item 1. Election of Directors
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
listed below for all nominees listed below
Nominees: 01 Clark A. Johnson, 02 Marvin J. Girouard, 03 Sally F. McKenzie,
04 James M. Hoak, Jr., 05 Martin L. Berman and 06 Craig C. Gordon
(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 _______________________________________________________________
Item 2. Approval of the proposed amendment to the Company's Certificate of
Incorporation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Item 3. In their discretion, the Proxies are authorized to vote as described
in the Proxy Statement and upon such other business as may properly
come before the meeting or any adjournment thereof.
Change of Address and/or [ ] Please date, sign and return promptly in the
Comments Mark Here 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.
- -----------------------------------------------------------------------------
TO VOTE BY TELEPHONE
Your telephone vote authorizes the named proxies to vote your shares in the
same manner as if you marked, signed and returned your proxy card.
* You will be asked to enter a Control Number which is located in the box in
the lower right hand corner of this form.
OPTION 1: To vote as the Board of Directors recommends on ALL items, Press 1
When asked, please confirm your vote by Pressing 1.
OPTION 2: If you choose to vote on each item separately, press 0. You will
hear these instructions:
Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9.
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and
listen to the instructions.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press
0.
When asked, you must confirm your vote by pressing 1.
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF VOTED BY PHONE.
Call ** Toll Free ** On a Touch Tone Telephone
1-800-840-1208 ANYTIME
There is NO CHARGE to you for this call.
CONTROL NUMBER
