Pizza Hut 2011 Annual Report Download - page 89

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actual performance for the performance period, subject to a pro rata reduction reflecting the portion of
the performance period not worked by the NEO. If any of these terminations had occurred on
December 31, 2011, Messrs. Novak, Carucci, Su, Allan and Pant would have been entitled to $1,737,628,
$528,330, $728,416, $726,389 and $338,354, respectively, assuming target performance.
Pension Benefits. The Pension Benefits Table on page 64 describes the general terms of each pension
plan in which the NEOs participate, the years of credited service and the present value of the annuity
payable to each NEO assuming termination of employment as of December 31, 2011. The table on page 66
provides the present value of the lump sum benefit payable to each NEO when they attain eligibility for
Early Retirement (i.e., age 55 with 10 years of service) under the plans.
Life Insurance Benefits. For a description of the supplemental life insurance plans that provide
coverage to the NEOs, see the All Other Compensation Table on page 59. If the NEOs had died on
December 31, 2011, the survivors of Messrs. Novak, Carucci, Su, Allan and Pant would have received
Company paid life insurance of $3,360,000, $1,600,000, $2,150,000, $1,903,000 and $1,500,000, respectively,
under this arrangement. Executives and all other salaried employees can purchase additional life insurance
benefits up to a maximum combined company paid and additional life insurance of $3.5 million. This
additional benefit is not paid or subsidized by the Company and, therefore, is not shown here.
Change in Control. Change in control severance agreements are in effect between YUM and certain
key executives (including Messrs. Novak, Carucci, Su, Allan and Pant). These agreements are general
obligations of YUM, and provide, generally, that if, within two years subsequent to a change in control of
YUM, the employment of the executive is terminated (other than for cause, or for other limited reasons
specified in the change in control severance agreements) or the executive terminates employment for
Good Reason (defined in the change in control severance agreements to include a diminution of duties
and responsibilities or benefits), the executive will be entitled to receive the following:
• a proportionate annual incentive assuming achievement of target performance goals under the
bonus plan or, if higher, assuming continued achievement of actual Company performance until
date of termination,
• a severance payment equal to two times the sum of the executive’s base salary and the target bonus
Proxy Statement
or, if higher, the actual bonus for the year preceding the change in control of the Company,
• outplacement services for up to one year following termination, and
• a ‘‘tax gross-up payment’’ which, in the event an executive becomes entitled to receive a severance
payment and other severance benefits and such severance payment and benefits are subject to an
excise tax, ensures the executive will be in the same after-tax position as if no excise tax had been
imposed. (Except, however, where the severance payment to the executive will generate an excise
tax but the total severance payment does not exceed by more than 10% the threshold for which the
excise tax becomes payable, then no gross-up payment will be made and the executive’s severance
payment will be reduced to the threshold to ensure no excise tax is payable.)
In addition to the payments described above under the agreements, upon a change in control:
• All stock options and SARs held by the executive will automatically vest and become exercisable.
• All RSUs under the Company’s EID Program held by the executive will automatically vest.
• All PSU awards under the Company’s Performance Share Plan awarded in the year in which the
change in control occurs will be paid out at target assuming a target level performance had been
achieved for the entire performance period, subject to a pro rata reduction to reflect the portion of
the performance period after the change in control. All PSUs awarded for performance periods that
begin before the year in which the change in control occurs will be paid out assuming performance
achieved for the performance period was at the greater of target level performance or projected
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