RESTRICTED STOCK AWARD AGREEMENT APRIL 14, 2017 PERFORMANCE-BASED AWARD (“EBITDA”)

Exhibit 10.3

 

RESTRICTED STOCK AWARD AGREEMENT
APRIL 14, 2017 PERFORMANCE-BASED AWARD (“EBITDA”)

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) is made effective and entered into as of April 14, 2017, by and between PIER 1 IMPORTS, INC., a Delaware corporation (the “Company”), and ______________________ (the “Grantee”).

WHEREAS, pursuant to the provisions of the Pier 1 Imports, Inc. 2015 Stock Incentive Plan (the “Plan”), the Committee that administers the Plan has the authority to grant Awards under the Plan to employees of the Company and its Affiliates; and

WHEREAS, the Committee has determined that the Grantee be granted a Restricted Stock Award under the Plan for the number of shares and upon the terms set forth below;

NOW, THEREFORE, the Company and the Grantee hereby agree as follows:

“The transferability of this certificate and the shares of Common Stock represented hereby are subject to the terms, conditions and restrictions (including forfeiture) contained in the Pier 1 Imports, Inc. 2015 Stock Incentive Plan and the Restricted Stock Award Agreement entered into between the registered owner and Pier 1 Imports, Inc.  A copy of such plan and agreement is on file in the offices of Pier 1 Imports, Inc., ▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.”

Any Common Stock certificates or book-entry uncertificated shares evidencing such shares shall be held in custody by the Company or, if specified by the Committee, with a third party custodian or trustee, until the restrictions thereon shall have lapsed, and, as a condition of this Award, the Grantee shall deliver a stock power, duly endorsed in blank, relating to any certificated restricted shares of Common Stock covered by this Award.

(a) Certain Definitions.  For purposes of this Award, the term:

 

 

“Cause” means the occurrence of any of the following events:

 

(i)	refusal by Grantee to follow a lawful direction of any superior officer of the Company or an Affiliate, provided the direction is not materially inconsistent with the duties or responsibilities of Grantee’s position;

(ii)	performance deficiencies which are communicated to Grantee in writing as part of performance reviews and/or other written communications from any superior officer of the Company or an Affiliate;

(iii)

willful misconduct or reckless disregard by Grantee of his duties or of the interest or property of the Company or its Affiliates;

(iv)	any act by Grantee of fraud against, material misappropriation from, or significant dishonesty to either the Company or an Affiliate; or

(v)	conviction by Grantee of a felony.

 

“Closing Price(s)” means on any date the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in the composite transactions table for the principal U.S. national or regional securities exchange on which the common stock is listed for trading. If the common stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, then the “Closing Price” of the common stock will be the average of the bid and ask prices (or, if more than one in either case, the average of the average bid and the average ask prices) for the common stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or similar organization. If the common stock is not so quoted, the “Closing Price” of the common stock will be such other amount as the Committee may ascertain reasonably to represent such “Closing Price.” The Closing Price shall be determined without reference to extended or after-hours trading.

 

“EBITDA” means the Company’s adjusted consolidated operating cash earnings before interest, taxes, depreciation and amortization from all domestic and international operations, but not including discontinued operations, unusual or non-recurring charges nor recurring non-cash items.

 

“Final Stock Price” means the average of the Closing Prices for the 20 Trading Days (as herein defined) during the 20-trading-day-period ending on and including the last Trading Day of the Measurement Period (as hereinafter defined).

 

“Good Reason” means the occurrence of all of the events listed in either (i) or (ii) below:

(i)

a material diminution of Grantee’s responsibilities as modified by the Company or an Affiliate from time to time hereafter, such that Grantee would no longer have responsibilities substantially equivalent to those of similarly situated employees at companies with similar revenues and market capitalization; provided that Grantee gives written notice to the Company of the facts and circumstances constituting such material diminution within ten (10) days following the occurrence of such event; the Company (or Affiliate) fails to remedy such material diminution within ten (10) days following Grantee’s written notice of such event; and Grantee terminates employment within ten (10) days following the Company’s or Affiliate’s failure to remedy such material diminution; or

(ii)

the Company or an Affiliate materially reduces Grantee’s base salary without Grantee’s consent, unless the reduction is applied equally, expressed as percentage of base salaries, to all similarly situated employees; provided that Grantee gives written notice to the Company within ten (10) days following Grantee’s receipt of the notice of reduction in base salary of Grantee’s objection to the reduction; the Company or Affiliate fails to rescind the notice of reduction within ten (10) days following Grantee’s written notice; and Grantee terminates employment within ten (10) days following the Company’s or Affiliate’s failure to rescind the notice.

 

“Initial Stock Price” means the average of the Closing Prices for the 20 Trading Days during the 20-trading-day-period beginning on and including the first Trading Day of the Measurement Period.

 

“Measurement Period” means the Company’s three (3) fiscal years beginning on and including February 26, 2017 and ending on and including February 29, 2020.

 

“Peer Group” means the companies in the ▇▇▇▇▇▇▇ 1000 Specialty Retail Index as constituted on the first day of the Measurement Period, with the addition of any other specialty retailers included in the Company's peer group for executive compensation purposes and not included in the ▇▇▇▇▇▇▇ 1000 Specialty Retail Index.  The Company's peer group for executive compensation purposes shall be as determined by the Committee prior to or within sixty (60) days of the first day of the Measurement Period.

 

“TSR” means a company’s total shareholder return, calculated by dividing (i) the sum of (A) the cumulative amount of such company’s dividends for the Measurement Period, assuming same day reinvestment into the common stock of the company on the ex-dividend date, plus (B) the difference of (1) the Final Stock Price for such company, minus (2) the Initial Stock Price for such company, by (ii) the Initial Stock Price for such company.

 

The TSR of a component company in the Peer Group and of the Company shall be adjusted to take into account stock splits, reverse stock splits, and special dividends that occur during the Measurement Period.  The determination of TSR shall be subject to the following additional adjustments:

(i)	If during the Measurement Period two component companies of the Peer Group merge or otherwise combine into a single entity, the surviving entity shall remain a component company of the Peer Group and the non-surviving entity shall be removed from the Peer Group.

(ii)	If during the Measurement Period a component company of the Peer Group merges into or otherwise combines with an entity that is not a component company of the Peer Group, such component company shall be removed from the Peer Group.

(iii)

If during the Measurement Period a component company of the Peer Group files a petition for reorganization under ch. 11 of the U.S. Bankruptcy Code or liquidation under ch. 7 of the U.S. Bankruptcy Code, such component company shall remain as part of the Peer Group and be designated with a TSR of negative 100%.

(iv)

If a component company of the Peer Group becomes a debtor entity operating under the protection of the U.S. Bankruptcy Code during the Measurement Period and subsequently emerges from bankruptcy protection during the Measurement Period, such component company shall not be reintroduced into the Peer Group.

 

“Trading Day(s)” means a day on which (i) trading in the common stock generally occurs on the New York Stock Exchange or, if the common stock is not then listed on the New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which the common stock is then listed or, if the common stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the common stock is then traded, and (ii) a Closing Price for the common stock is available on such securities exchange or market.

(b) Vesting.  The target amount of Performance-Based Shares under this Award is ______________ (_____________) Performance-Based Shares (the “Target Performance-Based Shares”). Provided that (y) the Company’s EBITDA for the Measurement Period equals or exceeds the threshold amount as shown on the table set forth on the execution page hereof (the “Execution Page”), and (z) the Grantee is employed by the Company or an Affiliate on the date of filing of the Company’s Annual Report on Form 10-K with the Securities and Exchange Commission (“SEC”) for the Company’s fiscal year ending February 29, 2020, and subject to the other terms and conditions of this Agreement, the restrictions on the Performance-Based Shares covered by this Award shall lapse and such shares shall vest over a range from 50% to 200% of the Target Performance-Based Shares as shown on the table set forth on the Execution Page.  Any fractional shares created by such vesting will be rounded down to the nearest whole share.

 

The determination by the Committee with respect to the achieving of condition (y) above shall be effective upon the filing of the Company’s Annual Report on Form 10-K with the SEC for fiscal year 2020.

(c) TSR Modifier.  Any Performance-Based Shares which vest under this Award will be increased or decreased by ten percent (10%) as shown in the following table:

Company's Percentile Rank (as determined below) Within Peer Group	Modification of Vested Shares
75% and above	+ 10%*
above 25% and below 75%	no modification
25% and below	-10%

          *Provided the Company’s absolute TSR is not negative

Any fractional shares created by such modification of vested shares will be rounded down to the nearest whole share.

The annual equivalent return (“AER”) of the TSR shall be calculated for the Company and each component company of the Peer Group over the Measurement Period.  Each AER shall be ranked from highest to lowest.  The percentile rank of the AER of the Company shall then be determined relative to the AER ranking of each component company in the Peer Group (the “Company’s Percentile Rank”).  The Company’s Percentile Rank shall then be utilized, as shown in the table above, to determine the percentage, if any, of the modification of Performance-Based Shares that vested under this Award.  The AER calculations shall be derived utilizing a calculation consistent with the annual equivalent return calculation employed by Bloomberg L.P.’s comparative total return (COMP) function as of the date of this Agreement.  Performance-Based Shares that vest under this Award will not be modified upward if the Company’s absolute TSR is negative.

(d) Corporate Change. A pro rata portion of the restrictions on the Target Performance-Based Shares shall lapse and such pro rata portion of shares shall vest upon (i) a Corporate Change (as defined in the Plan) AND (ii) the occurrence of one of the following: (a) the Performance-Based Shares covered by this Award are not assumed by the surviving or acquiring entity or otherwise equitably converted or substituted in connection with the Corporate Change, or (b) the Performance-Based Shares covered by this Award are assumed by the surviving or acquiring entity or otherwise equitably converted or substituted in connection with the Corporate Change and the termination of Grantee’s employment by the Company (or the surviving or acquiring entity) without Cause or Grantee’s resignation for Good Reason occurs within one year after the effective date of the Corporate Change. The pro rata portion of shares under this Section 3(d) shall be calculated based on the portion of the Measurement Period that has elapsed at the time of vesting associated with a Corporate Change.

 

(e) Termination of Employment.  Upon termination of employment of the Grantee with the Company or any Affiliate of the Company (or the successor of any such company) for any reason other than as specified in Section 3(d) above, the Grantee shall forfeit all rights in the Performance-Based Shares to the extent not vested, and the ownership of such shares shall immediately vest in the Company.  For purposes of this Award, no termination of Grantee’s employment shall occur as a result of the transfer of Grantee between the Company and any Affiliate or as a result of the transfer of the Grantee between two Affiliates.  The cessation of a relationship between the Company and an Affiliate with which the Grantee is employed whereby such company is no longer an Affiliate shall constitute a termination of employment of the Grantee.

 

 

This Award along with all other Awards received by the Grantee (including any proceeds, gains or other economic benefit actually or constructively received by the Grantee upon any receipt or exercise of any Award) shall be subject to the provisions of the Company’s claw-back policy as set forth in Section 10 of the Company’s Code of Business Conduct and Ethics (as amended from time to time) including any amendments of such claw-back policy adopted to comply with the requirements of the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇ Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder.

 

 

EXECUTION PAGE OF RESTRICTED STOCK AWARD AGREEMENT

Performance-Based Award Vesting Schedule
EBITDA 2/26/17 – 2/29/20 (FY18 – FY20)	Percent of Target Performance-Based Shares Vested
Less than $__________	0%
*$__________- $__________	50%
*$__________- $__________	60%
*$__________- $__________	80%
*$__________- $__________	100%
*$__________- $__________	110%
*$__________- $__________	120%
*$__________- $__________	130%
*$__________- $__________	140%
*$__________- $__________	160%
*$__________- $__________	180%
$__________ or Higher	200%

*Vesting of shares between the minimum and maximum EBITDA targets in each band shall be interpolated.  For example, if EBITDA is $__________, then 95% of the Target Performance-Based Shares would vest.  If EBITDA is $__________, then 105% of the Target Performance-Based Shares would vest.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

 

 

COMPANY:	GRANTEE:
Pier 1 Imports, Inc.
By: _______________________________________________________	_______________________________________________________
▇▇▇▇▇ ▇. London
Interim President and CEO
	Address:_________________________________________________
	_________________________________________________
	Email:___________________________________________________