Pizza Hut 2005 Annual Report Download - page 69
Download and view the complete annual report
Please find page 69 of the 2005 Pizza Hut annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.AsummaryofoptionactivityasofDecember31,2005,
andchangesduringtheyearthenendedispresentedbelow.
Weighted-
Weighted- Average Aggregate
Average Remaining Intrinsic
Exercise Contractual Value(in
Shares Price Term millions)
Outstandingatthe
beginningoftheyear 37,108 $21.53
Granted 4,516 46.58
Exercised (8,442) 17.46
Forfeitedorexpired (1,463) 30.88
Outstandingattheend
oftheyear 31,719 $25.75 5.81 $670
Exercisableattheend
oftheyear 18,960 $19.79 4.56 $514
The weighted-average grant-date fair value of options
granted during 2005, 2004, and 2003 were $17.78,
$15.11,and$9.43,respectively.Thetotalintrinsicvalue
ofoptionsexercisedduringtheyearsendedDecember31,
2005,December25,2004,andDecember27,2003,was
$271million,$282millionand$90million,respectively.
AsofDecember31,2005,therewas$119millionof
unrecognizedcompensationcost,whichwillbereducedby
anyforfeituresthatoccur,relatedtounvestedstockoptions
thatisexpectedtoberecognizedoveraweighted-average
period of 2.7 years. The total fair value at grant date of
stockoptions vested during 2005,2004, and 2003 was
$57million,$103million,and$95million,respectively.
Cashreceivedfromoptionsexercisesfor2005,2004
and2003,was$148million,$200millionand$110million,
respectively.Taxbenefitsrealizedfromtaxdeductionsassoci-
atedwithoptionsexercisesfor2005,2004and2003totaled
$94million,$102millionand$26million,respectively.
TheCompanyhasapolicyofrepurchasingsharesonthe
openmarkettosatisfyshareoptionexercisesandexpects
torepurchaseapproximately8.0millionsharesduring2006
basedonestimatesofoptionexercisesforthatperiod.
16.OTHER
COMPENSATIONANDBENEFITPROGRAMS
ExecutiveIncomeDeferralProgram(the“EIDPlan”) The
EIDPlan allowsparticipants todefer receiptofaportion
of their annual salary and all ora portion of their incen-
tivecompensation. Asdefinedby the EIDPlan, wecredit
theamountsdeferred withearnings basedonthe invest-
ment options selected by the participants. In 2004 and
2003,theseinvestmentoptionswerelimitedtocashand
phantomsharesofourCommonStock.In2005,weadded
twonewphantominvestmentoptionstotheplan,aStock
IndexFundandtheBondIndexFund.Additionally,theEID
Planallows participants todeferincentive compensation
to purchase phantom shares of our Common Stock at a
25%discountfromtheaveragemarketpriceatthedateof
deferral (the“Discount StockAccount”).Deferralsto the
DiscountStockAccountaresimilartoarestrictedstockunit
awardinthatparticipantswillforfeitboththediscountand
incentivecompensationamountsdeferredtotheDiscount
StockAccountiftheyvoluntarilyseparatefromemployment
duringthetwoyearvestingperiod.Weexpensetheintrinsic
valueofthediscountoverthevestingperiod.Investments
incash,theStockIndexfundandtheBondIndexfundwill
bedistributedincashatadateaselectedbytheemployee
andthereforeareclassifiedasaliabilityonourConsolidated
BalanceSheets.Werecognizecompensationexpensefor
theappreciationordepreciationoftheseinvestments.As
investmentsinthephantomsharesofourCommonStock
canonlybesettledinsharesofourCommonStock,wedo
notrecognizecompensationexpensefortheappreciationor
thedepreciation,ifany,oftheseinvestments.Deferralsinto
thephantomsharesofourCommonStockarecreditedto
theCommonStockAccount.
AsofDecember31,2005totaldeferralstophantom
shares of ourCommonStock within the EID Plan totaled
approximately3.3millionshares.Werecognizedcompensa-
tionexpenseof$4millionin2005and2004and$3million
in2003fortheEIDPlan.
RestrictedStock InNovember1997,wegrantedperfor-
mancerestrictedstockunitsofYUM’sCommonStockin
the amountof $3.6million toourChief Executive Officer
(“CEO”). The award was made under the 1997 LTIP and
wastobepaidinCommonStockorcashatthediscretion
oftheCompensationCommitteeoftheBoardofDirectors.
PaymentoftheawardwasmadeincashonFebruary6,2006
onattainmentofcertainpre-establishedearningsthresh-
olds.Theannualexpenserelatedtothisawardincludedin
earningswas$0.4millionfor2005,2004and2003.
Contributory 401(k) Plan We sponsor a contributory
plantoprovideretirementbenefitsundertheprovisionsof
Section401(k)oftheInternalRevenueCode(the“401(k)
Plan”) for eligible U.S. salaried and hourly employees.
Participants are able toelect tocontribute up to25% of
eligiblecompensationonapre-taxbasis.Participantsmay
allocatetheircontributionstooneoranycombinationof10
investmentoptionswithinthe401(k)Plan.Wematch100%
oftheparticipant’scontributiontothe401(k)Planupto3%
ofeligiblecompensationand50%oftheparticipant’scontri-
butiononthenext2%ofeligiblecompensation.Allmatching
contributionsaremadetotheYUMCommonStockFund.
Werecognizedascompensationexpenseourtotalmatching
contributionof$12millionin2005,$11millionin2004and
$10millionin2003.
17.SHAREHOLDERS’RIGHTSPLAN
In July 1998, our Board of Directors declared a dividend
distributionofonerightforeach shareofCommonStock
outstandingasofAugust3,1998(the“RecordDate”).As
aresultofthetwoforonestocksplitdistributedonJune17,
2002,eachholderofCommonStockisentitledtooneright
Yum!Brands,Inc. | 73.