Pizza Hut 2011 Annual Report Download - page 86

16MAR201218540977
NONQUALIFIED DEFERRED COMPENSATION
Amounts reflected in the Nonqualified Deferred Compensation table below are provided for under
the Company’s Executive Income Deferral (‘‘EID’’) Program and Leadership Retirement Plan (‘‘LRP’’).
Both plans are unfunded, unsecured deferred, account based compensation plans. For each calendar year,
participants are permitted under the EID program to defer up to 85% of their base pay and/or 100% of
their annual incentive award. As discussed at page 50, Mr. Pant is eligible to participate in the LRP. The
LRP provides an annual allocation to Mr. Pant’s account equal to 20% of his salary plus target bonus.
Deferred Program Investments under the EID. Amounts deferred under the EID Program may be
invested in the following phantom investment alternatives (12 month investment returns are shown in
parenthesis):
• YUM! Stock Fund (20.31%*)
• S&P 500 Index Fund (2.06%)
• Bond Market Index Fund (7.72%)
• Stable Value Fund (0.68%)
* assumes dividends are not reinvested
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 tracks the investment return of the Company’s common stock. Participants may transfer funds
between the investment alternatives on a quarterly basis except funds invested in the YUM! Stock Fund
may not be transferred once invested in this fund.
LRP Account Returns. The LRP provides an annual earnings credit to each participant’s account
based on the value of participant’s account at the end of each year. Under the LRP, Mr. Pant receives an
annual earnings credit equal to 5%.
Proxy Statement
Distributions under EID and LRP. When participants elect to defer amounts into the EID Program,
they also select when the amounts ultimately will be distributed to them. Distributions may either be made
in a specific year—whether or not employment has then ended—or at a time that begins at or after the
executive’s retirement or separation or termination of employment.
Distributions can be made in a lump sum or up to 20 annual installments. Initial deferrals are subject
to a minimum two year deferral. In general, with respect to amounts deferred after 2005 or not fully vested
as of January 1, 2005, participants may change their distribution schedule, provided the new elections
satisfy the requirements of Section 409A of the Internal Revenue Code. In general, Section 409A requires
that:
• Distribution schedules cannot be accelerated (other than for a hardship)
• To delay a previously scheduled distribution,
• A participant must make an election at least one year before the distribution otherwise would
be made, and
• The new distribution cannot begin earlier than five years after it would have begun without the
election to re-defer.
With respect to amounts deferred prior to 2005, to delay a distribution the new distribution cannot
begin until two years after it would have begun without the election to re-defer.
68