Pizza Hut 2011 Annual Report Download - page 85

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under the Retirement Plan. Benefits are generally determined and payable under the same terms and
conditions as the Retirement Plan (except as noted below) without regard to federal tax limitations on
amounts of includible compensation and maximum benefits. Benefits paid are reduced by the value of
benefits payable under the Retirement Plan.
Participants who earned at least $75,000 during calendar year 1989 are eligible to receive benefits
calculated under the Retirement Plan’s pre-1989 formula, if this calculation results in a larger benefit from
the YUM! Brands Inc. Pension Equalization Plan. Messrs. Novak, Carucci, and Allan qualify for benefits
under this formula. This formula is similar to the formula described above under the Retirement Plan
except that part C of the formula is calculated as follows:
C. 12⁄3% of an estimated primary Social Security amount multiplied by Projected Service up to
30 years
Retirement distributions are always paid in the form of a lump sum. In the case of a participant whose
benefits are payable based on the pre-1989 formula, the lump sum value is calculated as the actuarial
equivalent to the participant’s 50% Joint and Survivor Annuity with no reduction for survivor coverage. In
all other cases, lump sums are calculated as the actuarial equivalent of the participant’s life only annuity.
Participants who terminate employment prior to meeting eligibility for Early or Normal Retirement must
take their benefits from this plan in the form of a monthly annuity.
(3) YUM! Brands International Retirement Plan
The YUM! Brands International Retirement Plan (the ‘‘YIRP’’) is an unfunded, non-qualified
defined benefit plan that covers certain international employees who are designated by the Company as
third country nationals. Mr. Su is eligible for benefits under this plan. The YIRP provides a retirement
benefit similar to the Retirement Plan except that part C of the formula is calculated as the sum of:
a) Company financed State benefits or Social Security benefits if paid periodically
b) The actuarial equivalent of all State paid or mandated lump sum benefits financed by the
Company
Proxy Statement
c) Any other Company financed benefits that are attributable to periods of pensionable service and
that are derived from a plan maintained or contributed to by the Company or one or more of the
group of corporations that is controlled by the Company.
Benefits are payable under the same terms and conditions as the Retirement Plan without regard to
Internal Revenue Service limitations on amounts of includible compensation and maximum benefits.
(4) Present Value of Accumulated Benefits
As noted at footnote 5 of the Summary Compensation Table on page 58, the change in pension value
for the 2011 fiscal year is mainly the result of a significantly lower discount rate applied to calculate the
present value of the benefit. For all plans, the Present Value of Accumulated Benefits (determined as of
December 31, 2011) is calculated assuming that each participant is eligible to receive an unreduced benefit
payable in the form of a single lump sum at age 62. In Mr. Carucci’s case, he has not attained eligibility for
Early or Normal Retirement, therefore, benefits are based on the formula applicable to non-retirement
eligible participants as discussed above. This is consistent with the methodologies used in financial
accounting calculations. In addition, the economic assumptions for the lump sum interest rate, post
retirement mortality, and discount rate are also consistent with those used in financial accounting
calculations.
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