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. )
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Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] 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):
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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.:
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4) Date Filed:
<PAGE>
PIER 1 IMPORTS, INC.
301 Commerce Street, Suite 600
Fort Worth, Texas 76102
May 19, 1999
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 24, 1999, at the Worthington Hotel,
Brazos Room I, 200 Main Street, Fort Worth, Texas. The formal Notice of the
Annual Meeting of Shareholders and Proxy Statement are attached. Please
read them carefully.
It is important that your shares be voted at the meeting in accordance
with your preference. If you do not plan to attend, please complete the
proxy card located in the envelope's address window by indicating your vote
on the issues presented and sign, date and return the proxy in the prepaid
envelope provided. If you are able to attend the meeting and wish to vote
in person, you may withdraw your proxy at that time.
Sincerely,
Marvin J. Girouard
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 24, 1999
The Annual Meeting of Shareholders of Pier 1 Imports, Inc., a Delaware
corporation (the "Company"), will be held on June 24, 1999, at 10:00 a.m.,
local time, at the Worthington Hotel, Brazos Room I, 200 Main Street, Fort
Worth, Texas for the following purposes:
(1) To elect six Directors to hold office until the next Annual
Meeting of Shareholders.
(2) To vote on a proposal to approve the Pier 1 Imports, Inc. 1999
Stock 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
5, 1999, 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 19, 1999
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 24, 1999
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 24, 1999, 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
5, 1999, as the record date for the determination of the Shareholders
entitled to notice of and to vote at the Annual Meeting. On the record
date, 96,417,736 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 proposals submitted for Shareholder vote, abstentions are
not counted as voting for approval of a matter and, therefore, will have the
same effect as a vote "against" the matter, even though the Shareholder may
interpret such action differently. Votes withheld, including broker non-
votes, are neither counted as voting for nor against a matter and,
therefore, as to that matter will not be treated as shares present and will
be disregarded.
The accompanying proxy also covers shares of Common Stock held for
participants in the Company's Stock Purchase Plan and will serve as voting
instructions for the Plan administrators to vote such shares.
This Proxy Statement and the accompanying proxy are being first sent to
Shareholders on May 19, 1999.
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
MARVIN J. GIROUARD
Marvin J. Girouard, age 59, has served as Chairman and Chief Executive
Officer of the Company and has been a member of the Executive Committee
since December 1998. He has been a Director of the Company since August
1988. From June 1998 to February 1999, Mr. Girouard served as President and
Chief Executive Officer of the Company and from August 1988 to June 1998,
Mr. Girouard served as President and Chief Operating Officer. From May 1985
until August 1988, he served as Senior Vice President - Merchandising of
Pier 1 Imports (U.S.), Inc., a wholly owned subsidiary of the Company. He
is also a Director of Tandy Brands Accessories, Inc. and Brinker
International, Inc.
SALLY F. McKENZIE
Sally F. McKenzie, age 70, 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 more
than ten years.
JAMES M. HOAK, JR.
James M. Hoak, Jr., age 55, has been a Director of the Company since
September 1991 and is Chairman of the Executive Committee and Chairman of
the Audit Committee. He has served as Chairman of Hoak Capital Corporation
since September 1991 and as Chairman of HBW Holdings, Inc. since July 1996.
He served as Chairman of Heritage Media Corporation from its inception in
August 1987 to its sale in August 1997. 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.
TOM M. THOMAS
Tom M. Thomas, age 57, has been a Director of the Company since
September 1998 and is Chairman of the Compensation Committee and is a member
of the Executive Committee. Mr. Thomas has served as Senior Partner of
Thomas, Sheehan & Culp, L.L.P. since 1994.
JOHN H. BURGOYNE
John H. Burgoyne, age 57, has been a Director of the Company since
February 1999 and is a member of the Compensation Committee. Mr. Burgoyne
has served as President of Burgoyne and Associates since March 1996. From
May 1995 to March 1996 Mr. Burgoyne served as the General Manager of IBM's
Travel Industry sector for their Asia Pacific Region. Prior to that time he
served as the President and General Manager of IBM China Corporation Ltd.
MICHAEL R. FERRARI
Michael R. Ferrari, age 59, has been a Director of the Company since
February 1999 and is a member of the Audit Committee. Dr. Ferrari has
served as Chancellor of Texas Christian University since July 1998 and has
served as Professor of Management in the M. J. Neeley School of Business at
Texas Christian University since July 1998. From 1985 to 1998, he served as
President of Drake University.
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 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
$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 6,750 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. 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 By-laws. The Executive Committee met on one
occasion and 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), Girouard and Thomas. During the last fiscal
year, the Executive Committee also included former directors Clark A.
Johnson and Martin L. 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. 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 the
independent audit and other reports of the independent auditors, actions to
be taken thereon by management and the Company's internal audit
organization. The Audit Committee held three meetings during the last
fiscal year. Audit Committee members are Directors Hoak (chairman),
McKenzie and Ferrari. During the last fiscal year, the Audit Committee also
included former director Martin L. Berman.
Compensation Committee. The Compensation Committee establishes and
administers incentive-based compensation plans for senior executive
officers, administers other benefit plans 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 four occasions during the last fiscal year. Compensation
Committee members are currently Directors Thomas (chairman), Burgoyne and
Gordon. During the 1999 fiscal year the Compensation Committee members were
Directors Gordon and Hoak.
<PAGE>
Security Ownership of Management
The following table indicates the ownership on April 1, 1999, 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
- ---- ----------- ------
John H. Burgoyne. . . . . . . 969 *
Marvin J. Girouard. . . . . . 1,489,087 1.54%
Craig C. Gordon . . . . . . . 44,873 *
Michael R. Ferrari. . . . . . 831 *
James M. Hoak, Jr.. . . . . . 173,952 *
Clark A. Johnson. . . . . . . 192,939 *
Sally F. McKenzie . . . . . . 19,535 *
Jay R. Jacobs . . . . . . . . 81,318 *
J. Rodney Lawrence. . . . . . 131,812 *
Stephen F. Mangum . . . . . . 56,969 *
Tom M. Thomas . . . . . . . . 4,517 *
Charles H. Turner . . . . . . 65,544 *
All Directors and Executive
Officers as a Group . . . . 2,688,015 2.75%
- ------------------
(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, 1999, to Mr. Girouard (537,767
shares), Mr. Gordon (13,500 shares), Mr. Hoak (48,264 shares), Mr.
Johnson (116,250 shares), Mrs. McKenzie (13,500 shares), Mr. Jacobs
(56,588 shares), Mr. Lawrence (88,088 shares), Mr. Mangum (31,500
shares), Mr. Turner (39,338 shares) and to all Directors and Executive
Officers as a group (266,297 shares), upon the exercise of stock
options granted pursuant to the Company's 1980 and 1989 Stock Option
Plans. Messrs. Thomas, Burgoyne and Ferrari held no options.
(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.
<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 former and current
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 1997 and 1998 fiscal years has
been adjusted to reflect the effect of the three for two stock split
effected as a stock dividend in July 1998.
<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>
Marvin J. Girouard 1999 $725,000 $511,125 $38,220 $ -- 100,000 $160,342
Chairman and Chief 1998 600,000 675,000 42,296 481,250 150,000 171,151
Executive Officer 1997 425,000 478,125 34,652 53,121 312,347 120,769
Clark A. Johnson 1999 700,000 158,190 69,614 -- -- 83,617
Former Chairman and 1998 700,000 787,500 55,791 962,500 116,250 118,108
Chief Executive 1997 625,000 703,125 54,452 93,757 392,378 84,764
Officer
Stephen F. Mangum 1999 335,000 157,450 33,352 -- 30,000 960
Senior Vice President, 1998 315,000 236,250 102,457 231,000 72,000 5,250
Chief Financial 1997 161,500 120,000 66,399 -- 67,500 150
Officer and
Treasurer(4)
Charles H. Turner 1999 225,000 105,750 26,207 -- 30,000 28,481
Senior Vice President, 1998 195,000 146,250 26,948 231,000 72,000 24,798
Stores 1997 180,000 110,000 17,693 -- 45,000 11,501
Jay R. Jacobs 1999 225,000 105,750 23,012 -- 30,000 32,339
Senior Vice President, 1998 185,000 138,750 20,635 231,000 72,000 19,741
Merchandising 1997 155,000 95,000 18,853 -- 45,000 10,563
J. Rodney Lawrence 1999 190,000 71,440 24,246 -- 30,000 26,059
Senior Vice President, 1998 180,000 125,000 34,497 231,000 72,000 27,813
Legal Affairs 1997 172,500 105,000 23,308 -- 45,000 27,321
- ----------------
<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 1997 fiscal year to Messrs. Johnson (13,721
shares) and Girouard (7,773 shares) may vest over periods extending up to 10 years. The restricted stock
grants for the 1998 fiscal year to Messrs. Johnson (75,000 shares), Girouard (37,500 shares), Mangum
(18,000 shares), Turner (18,000 shares), Jacobs (18,000 shares) and Lawrence (18,000 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 27, 1999, were: Mr. Johnson, 3,430 shares ($29,583); Mr.
Girouard, 84,825 shares ($731,616); Mr. Mangum, 13,500 shares ($116,437); Mr. Turner, 13,500 shares
($116,437), Mr. Jacobs, 13,500 shares ($116,437) and Mr. Lawrence, 39,124 shares ($337,445).
(3) Includes in fiscal year 1999 Company matching contributions under the Company's 401(k) Retirement Plan of
$3,992 for Mr. Johnson, $5,146 for Mr. Girouard, $4,781 for Mr. Turner, $6,248 for Mr. Jacobs and $5,236
for Mr. Lawrence; matching contributions under the Company's Benefit Restoration Plan of $44,625 for Mr.
Johnson, $35,815 for Mr. Girouard, $7,393 for Mr. Turner, $9,784 for Mr. Jacobs and $7,809 for Mr.
Lawrence; and matching contributions under the Company's Stock Purchase Plan of $35,000 for Mr. Johnson,
$119,382 for Mr. Girouard, $16,307 for Mr. Turner, $16,307 for Mr. Jacobs and $13,014 for Mr. Lawrence.
Includes matching contributions under the Company's Stock Purchase Plan during each fiscal year for Mr.
Mangum.
(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. Girouard, Mangum, Turner, Jacobs, Lawrence and three 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 one-twelfth of his base salary
immediately prior to termination. The Executive will also receive 50% of the
Executive's cost for continuing medical and dental insurance coverage. If
the Executive enters into employment during the consulting period that
provides compensation equal to or greater than the amount of the consulting
fees, the Company will pay the Executive an immediate one-time payment in the
amount of 50% of the difference between the total fees that otherwise would
have been payable during the term of the consulting agreement and the
aggregate fees actually paid prior to reemployment. If the Executive enters
into employment during the consulting period that provides compensation less
than the consulting fees, the Company will reduce the monthly consulting fee
by the amount of the monthly compensation for reemployment and at the end of
the consulting period will pay the Executive 50% of the difference between
the total fees that otherwise would have been payable during the term of the
consulting agreement and the aggregate fees actually paid.
The Company maintains two Supplemental Retirement Plans to aid in
attracting and retaining key executives. Messrs. Girouard, Lawrence and one
other executive officer 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. The years of credited service in the plan
for Mr. Mangum are 2 years, Mr. Turner, 7 years and Mr. Jacobs, 21 years;
and, the years of participation in the plan for Mr. Mangum are 2 years, Mr.
Turner, 3 years and Mr. Jacobs, 3 years.
<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 27, 1999, 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 -- -- % $ -- -- $ --
Marvin J. Girouard 100,000 6.45 8.50 09/17/08 333,000
Stephen F. Mangum 30,000 1.94 8.50 09/17/08 99,900
Charles H. Turner 30,000 1.94 8.50 09/17/08 99,900
Jay R. Jacobs 30,000 1.94 8.50 09/17/08 99,900
J. Rodney Lawrence 30,000 1.94 8.50 09/17/08 99,900
- ----------------
<FN>
(1) Options to Messrs. Girouard, Mangum, Turner, Jacobs and Lawrence covering 100,000, 30,000,
30,000, 30,000 and 30,000, respectively, were granted on September 17, 1998, and become
exercisable in annual installments of 25% on each of the four anniversaries of the date of
grant. The administrative committee of the stock option plan may permit an employee to
tender previously owned shares to pay the exercise price of an option and may permit an
employee to satisfy his income tax withholding obligations up to the minimum statutory
rate by the delivery of previously owned shares or the withholding of shares otherwise
issuable upon exercise of the option. Options will terminate at the time of termination
of employment if the termination is for "cause" or for resignation without the consent of
the Company, or three months after termination in the case of any other termination, 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 4.7%, which represents the interest rate at such option grant date
of U.S. treasury securities having a six-year maturity; dividend payment rate of $.12 per
share per year; and a volatility factor of 38.6%, 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. 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 27, 1999.
The number of shares of Common Stock have been adjusted to reflect the effect
of the three for two stock split effected as a stock dividend in July 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 431,414 $2,801,781 129,969 -- $ 24,550 $ --
Marvin J. Girouard 49,643 214,756 537,767 220,274 1,335,097 26,412
Stephen F. Mangum 13,500 136,400 31,500 124,500 17,937 57,562
Charles H. Turner -- -- 39,338 124,725 69,749 98,791
Jay R. Jacobs -- -- 56,588 122,362 112,009 86,018
J. Rodney Lawrence -- -- 88,088 124,725 273,596 98,791
- -----------------
<FN>
(1) Computed as the difference between the option exercise prices and $8.625 (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. During the 1999 fiscal year,
the salary for the office of the Chief Executive Officer increased by $25,000
to $725,000.
During the 1999 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 was 75% of base salary for
fiscal 1999 pretax income attaining a level 16% 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 25% 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 1999,
the Chief Executive Officer earned a bonus of $511,125.
Long-term incentives are provided through the grant of stock options.
Under the stock option plan, executives and other key employees may be
awarded options to purchase Company stock, which in the past have always been
at a purchase price of fair market value on the date of grant. Awards under
the stock option plan are designed with the intention of promoting the
success of the Company and retention of the executive with the Company in a
manner that produces value to the employee only when there is a corresponding
increase in value to all shareholders. In the past, restricted stock awards
were made to senior executives in conjunction with granting of stock options;
however, this practice was discontinued in fiscal year 1999. 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 stock options to the Chief Executive
Officer and the Chief Operating Officer and restricted stock awards were
granted in conjunction with the grant of stock options to the Chief Executive
Officer and Chief Operating Officer in each of the first four years of the
five year period. All stock options were granted with exercise prices of
market value at the dates of grant, and the restricted stock was awarded in
amounts generally representing 25% of the shares subject to stock options.
The Compensation Committee, however, has determined to discontinue the use of
restricted stock as part of long-term compensation and will award restricted
stock in the future only in exceptional circumstances. The amount of awards
to each executive were determined to reward the executive for Company and
stock performance and to provide incentives for the executive to remain with
the Company. The number of currently held options by each executive was not
considered in making stock option and restricted stock awards. During the
1999 fiscal year, the Chief Executive Officer was granted an option to
purchase 100,000 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, the S&P Retail Stores Composite Index and the peer
group, consisting of 13 retail companies. Each index is weighted by market
capitalization of the constituent companies. The S&P Retail Stores Composite
Index will replace the peer group to compare total shareholder return. The
Company believes that the S&P Retail Stores Composite Index is more
appropriate for comparison than the peer group. The peer group was
established in 1992 as part of a prior executive bonus plan, which is no
longer used by the Company. The peer group currently has no other
significance within the Company.
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Pier 1 Imports, Inc. 100 114 162 216 503 246
S&P 500 Index 100 107 145 182 246 295
Peer Group 100 89 92 119 211 384
S&P Retail Stores
Composite Index 100 91 101 124 190 279
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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10%
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission and the New York Stock Exchange initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than
10% shareholders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on review of the copies
of such reports furnished to the Company, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners during the last fiscal year were observed.
PROPOSAL TO APPROVE THE 1999 STOCK PLAN
Subject to approval of the Company's Shareholders, the Board of
Directors approved the adoption of the Pier 1 Imports, Inc. 1999 Stock Plan
(the "Plan"). The Plan will replace the Company's two expiring stock option
plans, which are the 1989 Employee Stock Option Plan and the 1989 Non-
Employee Director Stock Option Plan. In connection with adoption of the
Plan, the Board of Directors terminated the Company's Restricted Stock Grant
Plan, under which 921,960 shares had been available for grant as restricted
stock. The text of the Plan, which is summarized below, is included as
Appendix A to this Proxy Statement, and this summary is qualified by
reference to the Plan.
The purpose of the Plan is to promote the acquisition by directors and
certain employees of the Company and its subsidiaries of a proprietary
interest in the Company through ownership of the Company's Common Stock.
This ownership is intended to encourage employees to remain with the Company
and to attract other qualified persons to become employees and directors.
The Plan provides for the awarding of options to purchase shares of Common
Stock to directors, officers and other key employees of the Company and its
subsidiaries. Approximately 200 persons will be eligible to participate in
the Plan.
The Plan will be administered by the Compensation Committee of the Board
of Directors. The Committee will interpret the Plan and make all
determinations to administer the Plan. The Committee will determine the
participants to be granted options, the options granted to the participants,
vesting provisions and other terms of each option. Options may be granted at
not less than fair market value of the Common Stock on the date of grant.
The Plan provides for the granting of options to directors and employees
and the issuance of deferred stock units to outside directors. A maximum of
7,000,000 shares of Common Stock may be issued under the Plan, of which not
more than 250,000 may be issued in exchange for deferred stock units. No
person may be issued options covering more than 1,750,000 shares. For
purposes of determining the number of shares available for issuance under the
Plan, only net shares issued are counted as issued. Therefore, net shares
would exclude shares delivered or withheld for payment of exercising an
option or for payment of tax withholding and would exclude shares remaining
subject to options which expire or are terminated. Options may be either
incentive stock options authorized under Section 422 of the Internal Revenue
Code or non-qualified options which do not qualify as incentive stock
options.
The term of each option will be fixed by the Committee, but may not be
longer than 10 years from the date of grant. The exercise price of each
option will be determined by the Committee, but may not be less than the fair
market value of the Common Stock on the date of grant. Each option will be
exercisable at the times and subject to any conditions established by the
Committee, and unless otherwise determined by the Committee all options will
vest upon a change in control of the Company, as defined in the Plan. The
exercise price will be paid in cash or, if permitted by the Committee, in
Common Stock previously owned by the option holder. The Committee may
provide the option holder with the right to satisfy any minimum withholding
tax obligation by delivery of previously owned shares or withholding shares
otherwise issuable upon exercise of the option. In the event of a stock
dividend or stock split, the number of shares subject to outstanding options
will be proportionately increased and the exercise price proportionately
decreased, unless the Committee determines otherwise. The number of shares
available under the Plan and maximum number of shares issuable to one person
will also be proportionately increased, unless the Committee determines
otherwise. In the event of a combination of shares, recapitalization,
reclassification, merger or other similar capital or corporate structure
change, the Committee may adjust the terms of outstanding options, the number
of shares available under the Plan, the maximum number of shares issuable to
one person and other provisions of the Plan.
Upon the death or disability of an option holder, all options held by
that person will become fully exercisable and terminate after one year. Upon
the resignation of a director or of an employee with the consent of the
Company, the person's options will terminate three months after the
resignation. Upon retirement, a holder's options will become fully
exercisable and terminate three years later or, if earlier, at the expiration
date of the option. In the event of any other termination of employment of
an option holder, all options held by that person will immediately terminate.
The Plan provides for participation by outside directors in a deferred
stock program, as that program may be instituted, amended or suspended at any
time by the Board of Directors. The Plan permits the deferral of part or all
of each director's cash fees into a deferred stock account maintained by the
Company. The number of deferred stock units would be based on the amount of
cash fees deferred and the market value of the Common Stock on the date of
deferral. After the termination of a director's membership of the Board of
Directors, the deferred stock units would be exchanged into Common Stock and
delivered to the departing director. Under the deferred stock program, all
or part of the cash fees otherwise payable to directors may be deferred at
the election of each director. Elective deferrals will be credited as
deferred stock units at the rate of 150% of the cash fees deferred. Deferred
stock units will be credited with dividends paid on the Common Stock.
The Plan will terminate 10 years after its adoption by Shareholders.
The Board of Directors may at any time suspend or terminate the Plan or amend
the Plan in any respect; except that without Shareholder approval no
amendment may increase the maximum number of shares subject to the Plan,
increase the maximum number of shares covered by options that may be granted
to one person, change the class of employees eligible to receive options or
decrease the minimum option exercise price at which options may be granted.
Federal Income Tax Consequences
No taxable income will be realized by a participant upon the grant of a
non-qualified stock option. Upon exercise, the excess of the fair market
value of the shares at the time of exercise over the option exercise price
for the shares will generally constitute taxable compensation. The Company
or a subsidiary will be entitled to a deduction for such compensation income,
assuming any federal income tax withholding requirements are satisfied. Upon
disposition of the shares acquired upon exercise, any appreciation (or
depreciation) in the stock value after the date of exercise will be treated
as capital gain (or loss).
No taxable income will be recognized by a participant upon the grant or
exercise of an incentive stock option, assuming there is no disposition of
the option shares within two years after the option was granted or within one
year after the option was exercised (the "holding period"), and providing
that the participant has been employed by the Company or one of its
subsidiaries from the date of grant to a date that is not more than three
months before the date of exercise. The exercise of an incentive stock
option, however, could result in an item of tax preference for purposes of
the alternative minimum tax. The sale of incentive stock option shares after
the holding period at a price in excess of the participant's adjusted basis,
which is ordinarily the option exercise price, will constitute capital gain
to the participant. Neither the Company nor any subsidiary will be entitled
to a federal income tax deduction by reason of the grant or exercise of an
incentive stock option or the sale of the shares. If incentive stock option
shares are sold by the participant prior to the expiration of the holding
period, generally the participant will have compensation income taxable in
the year of the sale in an amount equal to the excess of the fair market
value of the shares at the time of exercise of the option (or, if less, the
amount received upon the sale) over the option exercise price for the shares.
The Company or a subsidiary will be entitled to a deduction for that
compensation income, assuming any federal income tax withholding requirements
are satisfied.
Adoption of this Proposal requires approval by the affirmative vote of
holders of a majority of the shares of Common Stock voting on this Proposal
if holders of a majority of the outstanding shares of Common Stock vote on
the Proposal.
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 2000 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 1999. 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 2000 Annual Meeting
The date by which Shareholder proposals must be received by the Company
for inclusion in the Proxy Statement for the 2000 Annual Meeting of
Shareholders is January 19, 2000.
A Shareholder desiring to bring a matter before the 2000 Annual Meeting
of Shareholders that will not be contained in the Proxy Statement, including
the nomination of an individual for election as a director, must comply with
the advance notice provisions of the Company's By-laws. The By-laws require
that notice of the matter must be received by the Company no earlier than
March 26, 2000, and no later than April 25, 2000. The Secretary of the
Company may be contacted to obtain the specific information regarding the
matter that must be provided to the Company with the advance notice.
Proxy Solicitation
The cost of soliciting proxies will be borne by the Company. The
services of Kissel-Blake will be employed for the purpose of facilitating the
solicitation. The fees of Kissel-Blake in this connection will be borne by
the Company and are not expected to exceed $7,500 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 19, 1999
<PAGE>
Appendix A
PIER 1 IMPORTS, INC.
1999 STOCK PLAN
1. Purpose. The purpose of the Plan is to advance the Company's
interests by encouraging certain employees of the Company and its
subsidiaries and non-employee directors of the Company to acquire a
proprietary interest in the Company through ownership of Common Stock. Such
ownership is intended to encourage employees to remain with the Company and
to help attract other qualified persons to become employees and directors.
2. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee is authorized to grant
Options under the Plan, and the Committee is authorized to interpret the Plan
and the Options, to prescribe, amend and rescind rules and regulations
relating to the Plan and the Options, and to make other determinations
necessary or advisable for the administration of the Plan. The Committee is
also authorized to administer the Director Deferred Stock Program. All of
such determinations shall be conclusive and binding on all persons. The
Committee shall act pursuant to a majority vote or by unanimous written
consent. No member of the Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any grant thereunder.
3. Eligibility. Options may be granted under the Plan to Non-Employee
Directors and to key employees of the Company or any of its Subsidiaries as
the Committee shall determine from time to time.
4. Types of Options. Options granted pursuant to the Plan may be
either Incentive Stock Options or non-qualified Options not so qualifying
under the Code. It is the intent of the Company that non-qualified stock
Options granted under the Plan not be classified as Incentive Stock Options,
that Incentive Stock Options granted under the Plan be consistent with and
contain or be deemed to contain all provisions required under Section 422 and
the other appropriate provisions of the Code and any implementing regulations
(and any successor provisions thereof), and that any ambiguities in
construction be interpreted in order to effectuate such intent.
5. Stock Subject to the Plan. The aggregate number of Shares that may
be issued or sold under Options or delivered in exchange for Deferred Stock
Units pursuant to the Plan shall not exceed 7,000,000 Shares, of which not
more than 250,000 Shares may be issued in exchange for Deferred Stock Units;
provided, that additional Shares above such maximum amount may be issued in
exchange for Deferred Stock Units that shall have been credited to any
Deferred Stock Account solely as a result of dividends or adjustments
pursuant to Section 8(d) or 8(e) hereof; and provided, further, that no
person shall be granted Options under the Plan covering an aggregate of more
than 1,750,000 Shares. Shares may be either authorized but unissued shares
of Common Stock or issued shares of Common Stock that shall have been
reacquired by the Company. The aggregate number of Shares issuable under the
Plan and to one person shall be subject to adjustment as provided in Section
9 hereof. For purposes of calculating the maximum number of Shares of Common
Stock which may be issued under the Plan, Shares shall include only net
Shares issued upon exercise of Options and, accordingly, shall exclude Shares
delivered or withheld for payment of Option exercises or for tax withholding
and shall exclude Shares remaining subject to Options which expire or are
terminated for any reason.
6. Non-transferability of Options. Except as otherwise authorized by
the Committee, in its discretion, and expressly provided in the Option
agreement pursuant to which an Option is granted, no Option shall be
transferable except by will or the laws of descent and distribution.
7. Options. The Committee shall have the power, subject to the
limitations contained in the Plan, to prescribe the terms and conditions of
any Option granted hereunder. Each Option shall be evidenced by an agreement
in such form as the Committee shall from time to time determine, which
agreement shall contain such terms and conditions not inconsistent with the
Plan as the Committee, in its sole discretion, may prescribe. Options shall
be subject to the following provisions:
(a) Allotment of Shares; Option Price. The Committee shall
determine the total number of Shares subject to each Option under the
Plan. The Option exercise price for the Shares subject to each Option
shall be determined by the Committee, but shall not be less than the
Fair Market Value of the Common Stock on the date of grant.
(b) Duration of Options. Except as otherwise set forth herein,
Options shall expire after such term as the Committee shall determine.
No option shall be exercisable after the expiration of 10 years from the
date of grant.
(c) Exercise of Options. Each option granted under the Plan shall
be exercisable from time to time as the Committee shall determine. No
option shall be exercised for fewer than 100 Shares unless the remaining
Shares that have become so purchasable are fewer than 100 Shares. In
the event of the retirement, death or disability of an Optionee, or in
the event of a Change in Control (as hereinafter defined), all Options
granted to such Optionee shall immediately become fully exercisable to
the extent of all Shares then covered by such Options, except that in
the case of a Change in Control only if the Board of Directors shall not
have determined otherwise prior to such Change in Control. A "Change in
Control" shall mean any of the following events:
(i) a merger or consolidation to which the Company is a party
if the individuals and entities who were stockholders of the
Company immediately prior to the effective date of such merger or
consolidation have beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of less than 50% of the total combined
voting power for election of directors of the surviving corporation
or other entity following the effective date of such merger or
consolidation;
(ii) the acquisition or holding of direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Exchange
Act) of securities of the Company representing in the aggregate 30%
or more of the total combined voting power of the Company's then
issued and outstanding voting securities by any person, entity or
group of associated persons or entities acting in concert, other
than any employee benefit plan of the Company or of any Subsidiary
or any entity holding such securities for or pursuant to the terms
of any such plan;
(iii) the election of members of the Board of Directors at
a meeting of stockholders or by written consent, the majority of
which were not nominated by the Board of Directors;
(iv) the sale of all or substantially all of the assets of the
Company to any person or entity that is not a wholly owned
Subsidiary; or
(v) the approval by the stockholders of the Company of any
plan or proposal for the liquidation of the Company or its
Subsidiaries, other than into the Company.
(d) Payment for Shares. The purchase price of each Share
purchased upon the exercise of any Option shall be paid in full at the
time of such purchase, and a stock certificate representing Shares so
purchased shall be delivered to the person entitled thereto. Until the
stock certificate for such Shares is issued in the Optionee's name, the
Optionee shall have no rights of a stockholder. Payment may be made in
whole or in part in cash or, if the Committee so permits, in Common
Stock owned by the Optionee without restriction for the preceding six
months valued at Fair Market Value on the date preceding the date the
Option is exercised. The Committee may permit an Optionee to pay the
purchase price by irrevocably authorizing a third party to sell Shares
acquired upon exercise of the Option and remit to the Company a
sufficient portion of the sale proceeds to pay the purchase price and
any tax withholding resulting from the exercise of the Option. It shall
be a condition to the performance of the Company's obligation to issue
or transfer Shares upon exercise of an Option that the Optionee pay, or
make provision satisfactory to the Company for the payment of, any taxes
(other than stock transfer taxes) which the Company is obligated to
collect with respect to the issue or transfer upon such exercise. The
Committee may provide the Optionee with the right to satisfy minimum
required federal or state tax withholding obligations by delivery of
previously owned shares of Common Stock or electing the withholding of
Shares otherwise issuable upon exercise of a non-qualified Option, the
Fair Market Value of which does not exceed the amount to cover the
minimum required federal and state tax withholding obligations incurred
in connection with the exercise of the Option.
(e) Termination of Options. Unless otherwise provided in an
Option agreement or otherwise agreed to by the Committee:
(i) upon the death or Permanent Disability of an Optionee,
any Option granted to the Optionee shall become fully exercisable
to the extent of all unexercised Shares pertaining to such Option,
and may be exercised by the Optionee, or in the case of death, by
the Optionee's estate or a person who acquires the right to
exercise such Option by bequest, inheritance or transfer (if
transferability were specifically provided for in the Option
agreement) until the earlier of (I) the remaining Option Term and
(II) the first anniversary of such death or disability;
(ii) upon the Retirement of an Optionee, any Option granted to
the Optionee may be exercised by the Optionee to the extent
exercisable on the date of such retirement until the earlier of (I)
the remaining Option Term and (II) the third anniversary of such
retirement;
(iii) upon the resignation or expiration of the term of
office of a director who does not stand for re-election, or upon
the resignation of an employee with the consent of the Company, any
Option granted to the Optionee may be exercised by the Optionee to
the extent exercisable on the date of such resignation or
expiration of term of office until the earlier of (I) the remaining
Option Term and (II) the 91st day following such resignation or
expiration; provided, that in the event of the death of the
Optionee after such resignation or expiration but prior to the end
of such period of exercisability, the period during which the
Option may be exercised shall be extended until the earlier of (I)
the remaining Option Term and (II) the first anniversary of such
resignation or expiration; and
(iv) upon termination of an Optionee's employment, other than
as provided in subsections 7(e)(i), (ii) or (iii), all Options
granted to the Optionee shall terminate immediately at such
termination of employment.
Options granted under the Plan shall not be affected by any change of
employment so long as the Optionee continues to be an employee of the
Company or any of its Subsidiaries. The Option agreement may contain
such provisions as the Committee shall approve with respect to the
effect of approved leaves of absence. Cessation of any corporation's
relationship with the Company as a Subsidiary shall constitute a
"termination of employment" hereunder as to individuals employed by that
corporation.
8. Director Deferred Stock Program. Each Non-Employee Director shall
be eligible to participate in the Director Deferred Stock Program through
deferral of part or all of such director's cash compensation into Deferred
Stock Units, as participation in such program shall be provided for by the
Board of Directors from time to time.
(a) Deferred Stock Account. Subject to the availability of Shares
under the Plan, the Board of Directors may in its discretion provide
that part or all of the compensation of Non-Employee Directors otherwise
payable in cash to each Non-Employee Director be payable, either
mandatorily and/or at the election of each Non-Employee Director, in
Deferred Stock Units. Deferred Stock Units shall be held in a Deferred
Stock Account for each Non-Employee Director in accordance with the
provisions of the Director Deferred Stock Program.
(b) Mandatory Deferral. To the extent any cash compensation to a
Non-Employee Director shall be mandatorily payable in Deferred Stock
Units, in lieu of paying such compensation in cash the Company shall
credit the Deferred Stock Account for each Non-Employee Director the
number of Deferred Stock Units equal to the quotient of the amount of
cash to be deferred divided by the Fair Market Value per share of Common
Stock on the date of credit.
(c) Elective Deferral. To the extent provided in the Director
Deferred Stock Program, each Non-Employee Director may elect to defer
all or part of his eligible cash compensation relating to the
forthcoming year by filing, not later than the date of the Company's
annual meeting of stockholders, an irrevocable election with the Company
on a form provided for that purpose. The election shall be effective
for compensation payable for services rendered during the year
commencing the day after the Company's annual meeting of stockholders.
The election form shall specify an amount to be deferred in increments
of $1,000. In lieu of paying such elected amount of compensation, the
Company shall credit the Deferred Stock Account of each Non-Employee
Director electing a deferral the number of Deferred Stock Units equal to
the product of 1.5 multiplied by the amount of compensation elected for
deferral, divided by the Fair Market Value per share of Common Stock on
the date of credit.
(d) Dividends. Each time a dividend shall be paid on Common
Stock, other than a dividend of capital stock of the Company, each
Deferred Stock Account shall be credited with additional Deferred Stock
Units equal to the product of the dividend payment amount (or, if other
than in cash, the fair market value thereof) per share multiplied by the
number of Deferred Stock Units credited to the Deferred Stock Account as
of the record date for the dividend, divided by the Fair Market Value of
the Common Stock on the dividend payment date.
(e) Adjustments. In the event of a stock dividend, stock split or
combination of shares of Common Stock, recapitalization,
reclassification, merger or other similar capital or corporate structure
change of the Company, then the number and the rights and privileges of
Deferred Stock Units in each Deferred Stock Account shall be adjusted in
a like manner as if the Deferred Stock Units had been issued and
outstanding shares of Common Stock at the time of such occurrence.
(f) Payment. The balance of each Non-Employee Director's Deferred
Stock Account shall be paid to such director on the first of the month
following the 90th day after such director terminates his position as a
Non-Employee Director. Each Deferred Stock Unit shall be exchanged for
a whole share of Common Stock. Any fractional Deferred Stock Unit shall
be paid in cash based on the Fair Market Value of the Common Stock on
the date of such termination.
(g) Non-Assignability. The right of a Non-Employee Director or
any person claiming under such director to receive payments from any
Deferred Stock Account may not be assigned, transferred, pledged,
anticipated, commuted or encumbered except by will or the laws of
descent and distribution, nor shall a Deferred Stock Account be subject
to seizure for payment of any debts or judgment of any Non-Employee
Director or any person claiming through or under such director.
9. Adjustments. In the event of a stock dividend or stock split,
unless the Committee shall determine otherwise, (i) the number of Shares at
the time of such stock dividend or stock split issuable under the Plan
pursuant to Options or in exchange for Deferred Stock Units, (ii) the
limitation on the maximum number of Shares underlying Options that may be
granted to one person and (iii) the number of Shares subject to any
outstanding Option shall each be increased in direct proportion to the
increase in the number of shares of Common Stock by reason of such stock
dividend or stock split, and the exercise price per Share of any outstanding
Option shall be proportionately decreased; provided that the adjusted number
of Shares shall always be a whole number with any fractional Shares being
deleted therefrom. In the event of a combination of shares,
recapitalization, reclassification, merger or other similar capital or
corporate structure change of the Company, the Committee may, in its
discretion, adjust (i) the number of Shares at the time of such change
issuable under the Plan pursuant to Options or in exchange for Deferred Stock
Units, (ii) the limitation on the maximum number of Shares underlying Options
that may be granted to one person, (iii) the number of Shares subject to any
outstanding Option and/or the exercise price thereof and (iv) such other
provisions of the Plan or outstanding Options that the Committee determines
to be appropriate or advisable, including without limitation, changing the
security into which the Option is exercisable, terminating the Option with
prior notice to the Optionee, and exchanging the Option for cash, another
option or other security.
10. Effective Date; Stockholder Approval; Term. The Plan shall become
effective on the date of the last to occur of the (i) adoption of the Plan by
the Board of Directors and (ii) approval of the Plan, within 12 months of
such adoption, by the holders of a majority of the Common Stock present and
voting on the Plan at a duly held meeting of stockholders if holders of a
majority of the outstanding Common Stock vote on the proposal. No Option
shall be granted after the 10th anniversary of the Plan's effective date (or,
if earlier, the 10th anniversary of the adoption of the Plan in the case of
an Incentive Stock Option) or the earlier suspension or termination of the
Plan in accordance with its terms. The Plan shall terminate on the 10th
anniversary of the Plan's effective date or on such earlier date as it may be
terminated under the provisions of Section 11 hereof; provided that each
Option granted prior to such date shall remain in effect in accordance with
its terms and each Deferred Stock Account shall be credited with dividends
and subject to adjustment until full payment of such Deferred Stock Account.
11. Amendment or Discontinuance of the Plan. The Board of Directors
may, insofar as permitted by law and subject to the limitations contained in
the Plan, at any time or from time to time, suspend or terminate the Plan or
revise or amend it in any respect whatsoever, except that, without
appropriate approval of the stockholders of the Common Stock, no such
revision or amendment shall increase the maximum number of Shares subject to
the Plan, increase the maximum number of Shares covered by Options that may
be granted to one person, change the designation of the class of employees
eligible to receive options or decrease the minimum exercise price at which
Options may be granted.
12. Applicable Laws or Regulations and Notification of Disposition.
The Company's obligation to sell and deliver Shares under an Option is
subject to such compliance as the Company deems necessary or advisable with
federal and state laws, rules and regulations applying to the authorization,
issuance, listing or sale of securities. The Company may also require in
connection with any exercise of an Incentive Stock Option that the Optionee
agree to notify the Company when making any disposition of the Shares,
whether by sale, gift, or otherwise, within two years of the date of grant or
within one year of the date of exercise.
13. No Employment Right, No Obligation to Exercise Option. Nothing
contained in the Plan, or in any Option, shall confer upon any Optionee any
right to continued employment by the Company or any of its Subsidiaries or to
continued membership on the Board of Directors of the Company or limit in any
way the right of the Company or any of its Subsidiaries to terminate the
Optionee's employment at any time.
14. No Implied Rights. No person shall, by reason of participation in
the Plan, acquire any right in or title to any assets, funds or property of
the Company or any Subsidiary. Rights conferred under the Plan are solely
contractual rights to Shares, if any, payable under the Plan, unsecured by
any assets of the Company or any Subsidiary.
15. Definitions. As used in this Plan, the following definitions shall
apply:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean the Compensation Committee of the Board
of Directors or, in the case of granting an Option and determining its
terms and conditions, the Board of Directors, if the Board of Directors
so determines.
(d) "Common Stock" shall mean the Company's common stock, par
value $1.00 per share.
(e) "Company" shall mean Pier 1 Imports, Inc. or any successor.
(f) "Deferred Stock Account" shall mean an appropriate bookkeeping
account or record maintained by the Company denominated in Deferred
Stock Units for the sole purpose of measuring and determining the number
of shares of Common Stock to be delivered to the Non-Employee Director
in exchange for Deferred Stock Units. The Deferred Stock Account shall
not constitute or be treated as an escrow or trust fund of any kind, but
shall constitute an unfunded, unsecured liability of the Company to make
payments in accordance with the provisions of the Director Deferred
Stock Program. The Non-Employee Director shall not be entitled to
redeem, exchange or otherwise receive any amount from the Deferred Stock
Account except as provided in the Director Deferred Stock Program.
(g) "Deferred Stock Unit" shall mean a unit of credit of the
Deferred Stock Account representing one share of Common Stock. If the
Company shall declare and pay a dividend on the Common Stock in capital
stock other than Common Stock or the Company shall engage in a
recapitalization, reclassification, merger or other transaction to
change the capital or corporate structure of the Company, then in
accordance with Section 8(e) hereof, Deferred Stock Units shall
represent such other capital stock in place of or in addition to Common
Stock, and references to Common Stock with respect to Section 8 hereof
shall in addition mean, as appropriate, such other capital stock. In
such an event, a Deferred Stock Account may be denominated in separate
classes of Deferred Stock Units representing different classes of
capital stock. In any calculation of Deferred Stock Units to be
credited to a Deferred Stock Account, the number of Deferred Stock Units
shall be rounded to the nearest one-hundredth of a unit.
(h) "Director Deferred Stock Program" shall mean the program of
the Company authorized in Section 8 hereof and as specifically
instituted, amended or suspended from time to time by the Board of
Directors.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(j) "Fair Market Value" shall be the applicable day's closing
sales price of the security as reported for consolidated transactions on
the principal exchange on which such security is listed or admitted to
trading, or, if no sales occur on that date, the price on the most
recent trading day prior thereto, or, if the security is not listed or
admitted to trading on a national securities exchange, the average of
the highest bid and lowest ask prices on such day as reported by the
National Association of Securities Dealers or a comparable service.
(k) "Incentive Stock Option" shall mean a stock option qualifying
under Section 422 of the Code.
(l) "Non-Employee Director" shall mean a member of the Board of
Directors of the Company who is not an officer or employee of the
Company or any Subsidiary.
(m) "Option" shall mean a non-qualified stock option or an
Incentive Stock Option granted pursuant to the Plan.
(n) "Optionee" shall mean a holder of an Option.
(o) "Option Term" shall mean the period during which an Option may
be exercised, which shall be 10 years from the date of grant thereof
unless a shorter period is provided by the Committee or by a provision
of the Plan.
(p) "Permanent Disability" shall mean long-term disability as
defined in the Company's employee long-term disability plan.
(q) "Plan" shall mean the Pier 1 Imports, Inc. 1999 Stock Plan.
(r) "Retirement" shall mean (i) as to an employee, the separation
from employment, other than by the Company for cause, after the earlier
of (I) completing 15 years of service with the Company or any Subsidiary
and attaining age 55 or (II) attaining age 65, and (ii) as to a
director, ceasing to be a member of the Board of Directors, other than
by reason of death, disability or removal from office, after attaining
age 70.
(s) "Shares" shall mean shares of Common Stock subject to Options
or deliverable in exchange for Deferred Stock Units pursuant to the
Plan.
(t) "Subsidiary" shall mean any corporation or other entity of
which at least 50% of the voting securities are owned directly or
through one or more Subsidiaries.
<PAGE>
APPENDIX B
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 24, 1999
The undersigned hereby appoints MARVIN J. GIROUARD, MARK L. HART, JR.
and J. RODNEY LAWRENCE, and each of them, proxies with full power of
substitution, to represent and to vote as set forth herein all the shares of
the Common Stock of Pier 1 Imports, Inc. held of record by the undersigned on
May 5, 1999, at the annual meeting of shareholders to be held at 10:00 a.m.
local time on June 24, 1999 at the Worthington Hotel, Brazos Room I, 200 Main
Street, Fort Worth, Texas, and any adjournment thereof.
This Proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is made, this proxy
will be voted "FOR" the election of the directors nominated, and "FOR" the
proposal to approve the Pier 1 Imports 1999 Stock Plan.
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote
in accordance with the Board of Directors' recommendations. The Proxies
cannot vote your shares unless you sign and return this card or vote by
telephone.
(Continued and to be signed and dated on the reverse side)
- -----------------------------------------------------------------------------
Please mark your votes as
indicated in this example [x]
Proposal 1. Election of Directors
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
listed below for all nominees listed below
Nominees: 01 Marvin J. Girouard, 02 Sally F. McKenzie, 03 James M. Hoak, Jr.,
04 Tom M. Thomas, 05 John H. Burgoyne and 06 Michael R. Ferrari
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space below.)
*Exceptions _______________________________________________________________
Proposal 2. Proposal to approve the Pier 1 Imports 1999 Stock Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal 3. In their discretion, the Proxies are authorized to vote
as described in the Proxy Statement and upon such other
business as may properly come before the meeting or any
adjournment thereof.
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, administrator, trustee or guardian, please
give full title as such.
- -----------------------------------------------------------------------------
TO VOTE BY TELEPHONE
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE BY TELEPHONE OR
BY MAILING BACK YOUR SIGNED AND DATED PROXY CARD
TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone 24
hours a day-7days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in
the lower right hand corner of this form
OPTION 1: To vote as the Board of Directors recommends on ALL proposals,
press 1.
When asked, please confirm by Pressing 1.
OPTION 2: If you choose to vote on each proposal separately, press 0. You
will hear these instructions:
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR
ALL nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and
listen to the instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0.
When asked, please confirm by Pressing 1.
NOTE: IF YOU VOTE BY TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR PROXY
CARD.
THANK YOU FOR VOTING.
