Pizza Hut 2011 Annual Report Download - page 83

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account based retirement plan called the Leadership Retirement Plan to which the Company made
allocations in 2011.
(1) YUM! Brands Retirement Plan
The Retirement Plan and the Pension Equalization Plan (discussed below) provide an integrated
program of retirement benefits for salaried employees who were hired by the Company prior to October 1,
2001. Both plans apply the same formulas (except as noted below), and together they replace the same
level of pre-retirement pensionable earnings for all similarly situated participants. The Retirement Plan is
a tax qualified plan, and it is designed to provide the maximum possible portion of this integrated benefit
on a tax qualified and funded basis.
Benefit Formula
Benefits under the Retirement Plan are based on a participant’s Final Average Earnings (subject to
the limits under Internal Revenue Code Section 401(a)(17)) and service under the plan. Upon termination
of employment, a participant’s Normal Retirement Benefit from the plan is equal to
A. 3% of Final Average Earnings times Projected Service up to 10 years of service, plus
B. 1% of Final Average Earnings times Projected Service in excess of 10 years of service, minus
C. .43% of Final Average Earnings up to Social Security covered compensation multiplied by
Projected Service up to 35 years of service
the result of which is multiplied by a fraction the numerator of which is actual service as of date of
termination and the denominator of which is the participant’s Projected Service. Projected Service is the
service that the participant would have earned if he had remained employed with the Company until his
Normal Retirement Age (generally age 65).
If a participant leaves employment after becoming eligible for Early or Normal Retirement, benefits
are calculated using the formula above except that actual service attained at the participant’s retirement
date is used in place of Projected Service.
Proxy Statement
Final Average Earnings
A participant’s Final Average Earnings is determined based on his highest 5 consecutive years of
pensionable earnings. Pensionable earnings is the sum of the participant’s base pay and annual incentive
compensation from the Company, including amounts under the YUM Leaders’ Bonus Program. In general
base pay includes salary, vacation pay, sick pay and short term disability payments. Extraordinary bonuses
and lump sum payments made in connection with a participant’s termination of employment are not
included.
Vesting
A participant receives a year of vesting service for each year of employment with the Company. A
participant is 0% vested until he has been credited with at least 5 years of vesting service. Upon attaining
5 years of vesting service, a participant becomes 100% vested. All NEOs are vested, except for Mr. Pant,
who is ineligible for the plan.
Normal Retirement Eligibility
A participant is eligible for Normal Retirement following the later of age 65 or 5 years of vesting
service.
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