Pizza Hut 2009 Annual Report Download - page 191

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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 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 expense of $4 million in 2009,
compensation income of $4 million in 2008 and compensation expense of $4 million in 2007 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 they are earned. As of
December 26, 2009, deferrals to phantom shares of our Common Stock within the EID Plan totaled approximately 6.4
million shares. We recognized compensation expense for amortization of the Company match of $5 million, $6 million
and $5 million, in 2009, 2008 and 2007, respectively. These expense amounts do not include the salary or bonus actually
credited to Common Stock of $23 million, $20 million and $17 million in 2009, 2008 and 2007, 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 or a self-managed account 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 2009 and 2008 and $13 million in
2007.
Form 10-K