Pizza Hut 2010 Annual Report Download - page 198

101
Potential awards to employees and non-employee directors under the LTIPs include stock options, incentive stock options,
SARs, restricted stock, stock units, restricted stock units (“RSUs”), performance restricted stock units, performance share
units (“PSUs”) and performance units. Through December 25, 2010, we have issued only stock options, SARs, RSUs and
PSUs under the LTIPs. While awards under the LTIPs can have varying vesting provisions and exercise periods,
outstanding awards under the LTIPs vest in periods ranging from immediate to 5 years and expire ten years after grant.
Potential awards to employees under the RGM Plan include stock options, SARs, restricted stock and RSUs. Through
December 25, 2010, we have issued only stock options and SARs under this plan. RGM Plan awards granted have a four
year cliff vesting period and expire ten years after grant. Certain RGM Plan awards are granted upon attainment of
performance conditions in the previous year. Expense for such awards is recognized over a period that includes the
performance condition period.
Potential awards to employees under SharePower include stock options, SARs, restricted stock and RSUs. Through
December 25, 2010, we have issued only stock options and SARs under this plan. These awards generally vest over a
period of four years and expire no longer than ten years after grant.
At year end 2010, approximately 21 million shares were available for future share-based compensation grants under the
above plans.
Our Executive Income Deferral (“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.
Investments in cash and phantom shares of both index funds 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 for the appreciation or the depreciation, if any, of investments in cash and both of the index funds. Deferrals into
the phantom shares of our Common Stock will be distributed in shares of our Common Stock, under the LTIPs, at a date
as elected by the employee and therefore are classified in Common Stock on our Consolidated Balance Sheets. We do not
recognize compensation expense for the appreciation or the depreciation, if any, of investments in phantom shares of our
Common Stock. Our EID plan also 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 RSU 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.
The Company has a policy of repurchasing shares on the open market to satisfy award exercises and expects to repurchase
approximately 8 million shares during 2011 based on estimates of stock option and SAR exercises for that period.
Form 10-K