Pizza Hut 2008 Annual Report Download - page 89

23MAR200920295069
NONQUALIFIED DEFERRED COMPENSATION
Amounts reflected in the Nonqualified Deferred Compensation table below are provided for under
the Company’s Executive Income Deferral (‘‘EID’’) Program, an unfunded, unsecured deferred
compensation plan. For each calendar year, participants are permitted under this program to defer up to
85% of their base pay and/or 100% of their annual incentive award.
Deferred Program Investments. Amounts deferred under the EID Program may be invested in the
following phantom investment alternatives, which are (12 month investment returns are shown in
parenthesis):
• YUM! Stock Fund (ǁ15.91%),
• YUM! Discount Stock Fund (ǁ15.91%),
• S&P 500 Index Fund (ǁ36.97%),
• Bond Market Index Fund (5.36%) and
• Stable Value Fund (3.67%).
All of the phantom investment alternatives offered under the EID Program are designed to match the
performance of actual investments, that is, they provide market rate returns and do not provide for
preferential earnings. The S&P 500 index fund, bond market index fund and stable value fund are designed
to track the investment return of like-named funds offered under the Company’s 401(k) Plan. The YUM!
Stock Fund and YUM! Discount Stock Fund track the investment return of the Company’s common stock.
Participants may transfer funds between the investment alternatives on a quarterly basis except (1) funds
invested in the YUM! Stock Fund or YUM! Discount Stock Fund may not be transferred once invested in
these funds and (2) a participant may only elect to invest into the Discount Stock Fund at the time the
annual incentive deferral election is made. In the case of the Discount Stock Fund, participants who defer
their annual incentive into this fund, acquire additional phantom shares (called restricted stock units
(‘‘RSUs’’)) equal to 33% of the RSUs received with respect to the deferral of their annual incentive into
the Discount Stock Fund (the additional RSUs are referred to as ‘‘matching contributions’’). The RSUs
Proxy Statement
attributable to the matching contributions are allocated on the same day the RSUs attributable to the
annual incentive are allocated, which is the same day we make our annual stock appreciation right grants.
Amounts attributable to the matching contribution under the YUM! Discount Stock Fund are reflected in
column (c) below as contributions by the Company (and represent amounts actually credited to the named
executive’s account during 2008).
RSUs attributable to annual incentive deferrals into the Discount Stock Fund and matching
contributions vest on the second anniversary of the grant (or a change of control of the Company, if
earlier) and are payable as shares of YUM common stock pursuant to the participant’s deferral election.
Unvested RSUs held in a participant’s Discount Stock Fund account are forfeited if the participant
voluntarily terminates employment with the Company within two years of the deferral date. If a participant
terminates employment involuntarily, the portion of the account attributable to the matching contributions
is forfeited and the participant will receive an amount equal to the amount of the original amount
deferred. If a participant dies or becomes disabled during the restricted period, the participant fully vests
in the RSUs. Dividend equivalents are accrued during the restricted period but are only paid if the RSUs
vest. RSUs held by a participant who has attained age 65 with five years of service vest immediately. In the
case of a participant who has attained age 55 with 10 years of service, RSUs attributable to the bonus
deferrals into the Discount Stock Fund vest immediately and RSUs attributable to the matching
contribution vest pro rata during the period beginning on the date of grant and ending on the first
anniversary of the grant and are fully vested on the first anniversary. For each named executive, the
number of RSUs awarded and their value attributable to deferred 2008 annual incentives are set forth at
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