Pizza Hut 2008 Annual Report Download - page 82

23MAR200920294881
Proxy Statement
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(2) Amounts in this column reflect the number of RSUs each executive received with respect to the executive’s deferral of his 2008 annual
incentive under the Company’s EID Program which is described in more detail beginning on page 71. The grant dates for RSUs in 2009 reflect the date of the annual incentive award made on February 5, 2009, as approved, by the Compensation Committee at its January 23, 2009 meeting. The per-RSU FAS 123R value was $29.29 on February 5. There can be no assurance that the value of the common stock received upon settlement of the RSU will equal the FAS 123R values. In addition, in January of 2008, the Compensation Committee approved a retention award of 187,398 RSUs to Mr. Novak based on his strong leadership and the Company’s performance. The award vests after 4 years and had a grant date economic value of $7 million. The award will be paid to Mr. Novak in shares of YUM Common stock six months following his retirement provided he does not leave the Company before the award vests.
(3) Amounts in this column reflect the number of 2008 stock appreciation rights (‘‘SARs’’) and stock options granted to executives during the
Company’s 2008 fiscal year. For each executive, the grants were made January 24, 2008. SARs/stock options become exercisable in equal installments on the first, second, third and fourth anniversaries of the grant date. (Except, however, 267,712 stock option awards and 133,856 SARs, granted to Mr. Su, and Mr. Carucci, respectively, become exercisable on the fifth anniversary of the grant date.) The terms of each SAR/stock option grant provides that, if specified corporate control changes occur, all outstanding awards become exercisable immediately. SARs allow the grantee to receive the number of shares of YUM common stock that is equal in value to the appreciation in YUM common stock with respect to the number of SARs granted from the date of grant to the date of exercise. Participants who have attained age 55 with 10 years of service who terminate employment may exercise SARs/stock options that were
vested on their date of termination through the expiration date of the stock appreciation right (generally, the tenth anniversary following the SARs/stock options grant date). Vested SARs/grant options of grantees who die may also be exercised by the grantee’s beneficiary through the expiration date of the vested SARs/stock options and the grantees unvested SARs/stock options expire on the grantees’ death. If a grantee’s employment is terminated due to gross misconduct, the entire award is forfeited. For other employment terminations, all SARs/stock options expire upon termination of employment. There can be no assurance that the SARs/stock options will ever be exercised (in which case no value will be realized by the executive) or that the value upon exercise will equal the FAS 123R value.
(4) The exercise price of all SARs/stock options granted in 2008 equals the closing price of YUM common stock on the grant date, January 24,
2008.
(5) Amounts in this column reflect the full grant date fair value under FAS 123R of the RSUs shown in column (f) and the SARs/stock options
shown in column (g). These amounts reflect the amounts to be recognized by the Company as accounting expense and do not correspond to the actual value that will be recognized by the named executives. The full grant date fair value is the amount that the Company is expensing in its financial statements over the award’s vesting schedule. For RSUs, fair value is equal to the closing price of the Company’s common stock on the date of grant. For SARs/stock options, fair value was calculated using the Black-Scholes value on the grant date of $11.00. For additional information regarding valuation assumptions of SARs/stock options, see the discussion of stock awards and option awards contained in Part II, Item 8, ‘‘Financial Statements and Supplementary Data’’ of the Annual Report in Notes to Consolidated Financial Statements at Note 16, ‘‘Stock Options and Stock Appreciation Rights.’’