Pizza Hut 2008 Annual Report Download - page 213

91
Note 17 – Other Compensation and Benefit Programs
Executive Income Deferral Program (the “EID Plan”)
The EID Plan allows participants to defer receipt of a portion of their annual salary and all or a portion of their incentive
compensation. As defined by the EID Plan, we credit the amounts deferred with earnings based on the investment options
selected by the participants. These investment options are limited to cash, phantom shares of our Common Stock,
phantom shares of a Stock Index Fund and phantom shares of a Bond Index Fund. Additionally, the EID Plan allows
participants to defer incentive compensation to purchase phantom shares of our Common Stock and receive a 33%
Company match on the amount deferred. Deferrals receiving a match are similar to a restricted stock unit award in that
participants will generally forfeit both the match and incentive compensation amounts deferred if they voluntarily separate
from employment during a vesting period that is two years. We expense the intrinsic value of the match and, beginning in
2006, the incentive compensation over the requisite service period which includes the vesting period. Investments in
cash, the Stock Index fund and the Bond Index fund will be distributed in cash at a date as elected by the employee and
therefore are classified as a liability on our Consolidated Balance Sheets. We recognize compensation expense or income
for the appreciation or depreciation, respectively, of these investments. We recognized compensation income of $4
million in 2008 and compensation expense of $4 million and $3 million in 2007 and 2006, respectively, for losses and
earnings on these investments.
As investments in the phantom shares of our Common Stock can only be settled in shares of our Common Stock, we do
not recognize compensation expense for the appreciation or the depreciation, if any, of these investments. Deferrals into
the phantom shares of our Common Stock are credited to the Common Stock Account. As of December 27, 2008,
deferrals to phantom shares of our Common Stock within the EID Plan totaled approximately 6.2 million shares. We
recognized compensation expense for amortization of the Company match of $6 million, $5 million and $5 million, in
2008, 2007 and 2006, respectively. These expense amounts do not include the salary or bonus actually deferred into
Common Stock of $20 million, $17 million and $16 million in 2008, 2007 and 2006, respectively.
Contributory 401(k) Plan
We sponsor a contributory plan to provide retirement benefits under the provisions of Section 401(k) of the Internal
Revenue Code (the “401(k) Plan”) for eligible U.S. salaried and hourly employees. Participants are able to elect to
contribute up to 75% of eligible compensation on a pre-tax basis. Participants may allocate their contributions to one or
any combination of 10 investment options within the 401(k) Plan. Effective for contributions made from and after April
1, 2008, we match 100% of the participant’s contribution to the 401(k) Plan up to 6% of eligible compensation. Prior to
April 1, 2008, we matched 100% of the participant’s contribution to the 401(k) Plan up to 3% of eligible compensation
and 50% of the participant’s contribution on the next 2% of eligible compensation. We recognized as compensation
expense our total matching contribution of $16 million in 2008, $13 million in 2007 and $12 million in 2006.
Form 10-K