Pizza Hut 2012 Annual Report Download - page 69

YUM! BRANDS, INC.-2013Proxy Statement 51
Proxy Statement
EXECUTIVE COMPENSATION
Pension Benefi ts
The table below shows the present value of accumulated benefi ts
payable to each of the Named Executive Offi cers, including the
number of years of service credited to each such Named Executive
Offi cer, under the YUM!Brands Retirement Plan (“Retirement Plan”)
and the YUM!Brands,Inc. Pension Equalization Plan (“Pension
Equalization Plan”) or the YUM!Brands International Retirement
Plan determined using interest rate and mortality rate assumptions
consistent with those used in the Company’s fi nancial statements.
2012 FISCAL YEAR PENSION BENEFITS TABLE
Name Plan Name
Number of Years of
Credited Service
(#)
Present Value of
Accumulated Benefi t(4)
($)
Payments During
Last Fiscal Year
($)
(a) (b) (c) (d) (e)
Novak Qualifi ed Retirement Plan(1) 26 1,378,645 —
Pension Equalization Plan(2) 26 27,600,000 —
Grismer* Qualifi ed Retirement Plan —
Pension Equalization Plan —
Su International Retirement Plan(3) 23 17,776,317 —
Carucci Qualifi ed Retirement Plan 28 1,039,616 —
Pension Equalization Plan 28 8,521,082 —
Pant* Qualifi ed Retirement Plan — —
Pension Equalization Plan — —
* Mr.Grismer and Mr.Pant are not accruing a benefit under these plans because each was hired after September30,2001 and are therefore ineligible for these
benefits. Mr.Grismer and Mr.Pant participate in an unfunded, unsecured account based retirement plan called the Leadership Retirement Plan to which the Company
made allocations in 2012.
(1) YUM!Brands Retirement Plan
The Retirement Plan and the Pension Equalization Plan (discussed
below) provide an integrated program of retirement benefi ts 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 qualifi ed plan, and it is
designed to provide the maximum possible portion of this integrated
benefi t on a tax qualifi ed and funded basis.
Benefi t Formula
Benefi ts 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
Benefi t 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, benefi ts are calculated using the formula
above except that actual service attained at the participant’s
retirement date is used in place of Projected Service.
Final Average Earnings
A participant’s Final Average Earnings is determined based on his
highest fi ve 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 fi veyears of vesting service. Upon
attaining fi veyears of vesting service, a participant becomes 100%
vested. All Named Executive Offi cers eligible for the Retirement
Plan or YIRP are 100% vested .
Normal Retirement Eligibility
A participant is eligible for Normal Retirement following the later
of age 65 or 5years of vesting service.
Early Retirement Eligibility and Reductions
A participant is eligible for Early Retirement upon reaching age
55 with 10years of vesting service. A participant who has met
the requirements for Early Retirement and who elects to begin
receiving payments from the plan prior to age 62 will receive a
reduction of 1/12 of 4% for each month benefi ts begin before
age62. Benefi ts are unreduced at age 62.