Pizza Hut 2000 Annual Report Download - page 60

58 TRICON GLOBAL RESTAURANTS, INC. AND SUBSIDIARIES
Participants bear the risk of forfeiture of both the discount
and any amounts deferred if they voluntarily separate from
employment during the two year vesting period. We expense
the intrinsic value of the discount over the vesting period.
We phased in certain program changes to the EID Plan
during 1999 and 2000. These changes included limiting
investment options, primarily to phantom shares of our
Common Stock, and requiring the distribution of invest-
ments in the TRICON Common Stock investment options
to be paid in shares of our Common Stock. Due to these
changes, in 1998 we agreed to credit a one time premium
to participant accounts on January 1, 2000. The premium
totaled approximately $3 million and was equal to 10% of
the participants’ account balances as of December 31, 1999,
excluding (a) investments in the Discount Stock Account
and (b) deferrals made in 1999.
Prior to January 1, 1999, we recognized as compensation
expense all investment appreciation or depreciation within
the EID Plan. Subsequent to January 1, 1999, we no longer
recognize as compensation expense the appreciation or depre-
ciation, if any, attributable to investments in the Discount
Stock Account since these investments can only be settled in
shares of our Common Stock. For 1998, we expensed $9 mil-
lion related to appreciation attributable to investments in the
Discount Stock Account. We also reduced our liabilities by
$21 million related to investments in the Discount Stock
Account and increased the Common Stock Account by the
same amount at January 1, 1999.
Subsequent to January 1, 2000, we no longer recognized
as compensation expense the appreciation or depreciation, if
any, attributable to investments in the phantom shares of our
Common Stock, since these investments can only be settled
in shares of our Common Stock. For 1999, we recorded a
benefit of $3 million related to depreciation of investments
in phantom shares of our Common Stock impacted by the
January 2000 plan amendment. We also reduced our liabilities
by $12 million related to investments in the phantom shares
of our Common Stock and increased the Common Stock
Account by the same amount at January 1, 2000.
Our obligations under the EID Plan as of the end of 2000
and 1999 were $27 million and $50 million, respectively. We
recognized compensation expense of $6 million in both 2000
and 1999 and $20 million in 1998 for the EID Plan.
Investment options in the RDC Plan consist of phantom
shares of various mutual funds and TRICON Common
Stock. During 1998, RDC participants also became eligible
to purchase phantom shares of our Common Stock
under YUMSOP as defined below. We recognize
compensation expense for the appreciation or
depreciation, if any, attributable to all invest-
ments in the RDC Plan as well as for our
matching contribution. Our obligations
under the RDC program as of the end
of 2000 and 1999 were $10 million and $6 million, respec-
tively. We recognized annual compensation expense of
$1 million in 2000, 1999 and 1998 for the RDC Plan.
We sponsor a contributory plan to provide retirement
benefits under the provisions of Section 401(k) of the Internal
Revenue Code (“401(k) Plan”) for eligible full-time U.S.
salaried and certain hourly employees. Participants may elect
to contribute up to 15% of their eligible compensation on a
pre-tax basis. We are not required to make contributions to the
Plan. In 1998, a Stock Ownership Program (“YUMSOP”)
was added to the TRICON Common Stock investment option.
Under YUMSOP, we make a partial discretionary matching
contribution equal to a predetermined percentage of each
participant’s contribution to the TRICON Common Stock
Fund. We determine our percentage match at the beginning
of each year based on the immediate prior year performance
of our Concepts. We recognized as compensation expense our
total matching contribution of $4 million in both 2000 and
1999 and $1 million in 1998.
Note 17 Shareholders’ Rights Plan
On July 21, 1998, our Board of Directors declared a dividend
distribution of one right for each share of Common Stock
outstanding as of August 3, 1998 (the “Record Date”). Each
right initially entitles the registered holder to purchase a unit
consisting of one one-thousandth of a share (a “Unit”) of
Series A Junior Participating Preferred Stock, without par
value, at a purchase price of $130 per Unit, subject to adjust-
ment. The rights, which do not have voting rights, will
become exercisable for our Common Stock ten business days
following a public announcement that a person or group has
acquired, or has commenced or intends to commence a tender
offer for, 15% or more, or 20% or more if such person
or group owned 10% or more on the adoption date of this
plan, of our Common Stock. In the event the rights become
exercisable for Common Stock, each right will entitle its holder
(other than the Acquiring Person as defined in the Agreement)
to purchase, at the right’s then-current exercise price, TRICON
Common Stock having a value of twice the exercise price of
the right. In the event the rights become exercisable for
Common Stock and thereafter we are acquired in a merger or
other business combination, each right will entitle its holder to
purchase, at the right’s then-current exercise price,
common stock of the acquiring company having
a value of twice the exercise price of the right.
We can redeem the rights in their
entirety, prior to becoming exercisable, at
$0.01 per right under certain specified con-
ditions. The rights expire on July 21,
2008, unless we extend that date or we
have earlier redeemed or exchanged the
rights as provided in the Agreement.