Pizza Hut 2013 Annual Report Download - page 73

YUM! BRANDS, INC.-2014Proxy Statement 51
Proxy Statement
EXECUTIVE COMPENSATION
Pension Benefits
The table below shows the present value of accumulated
benefits payable to each of the NEOs, including the number
of years of service credited to each NEO, under the YUM!
Brands Retirement Plan (“Retirement Plan”), the YUM!
Brands, Inc. Pension Equalization Plan (“PEP”), and the YUM!
Brands International Retirement Plan (“YIRP”) determined
using interest rate and mortality rate assumptions consistent
with those used in the Company’s financial statements.
2013 FISCAL YEAR PENSION BENEFITS TABLE
Name Plan Name
Number of Years of
Credited Service
(#)
Present Value of
Accumulated Benefit(4)
($)
Payments During
Last Fiscal Year
($)
(a) (b) (c) (d) (e)
Novak(i) Retirement Plan(1) 27 1,395,996 —
Pension Equalization Plan(2) — — —
Grismer(ii) — — — —
Su International Retirement Plan(3) 24 18,503,747 —
Creed(iii) Retirement Plan(1) 2 125,882 —
Pant(ii) — — — —
(i) Mr. Novak no longer receives benefits under the PEP. The Management Planning and Development Committee discontinued Mr. Novak’s accruing pension
benefits under the PEP effective January 1, 2012 and replaced this benefit, effective January 1, 2013, with a benefit determined under the Leadership
Retirement Plan (“LRP”), an unfunded, unsecured, deferred account-based retirement plan. See footnote (5) to the Summary Compensation Table at page44
for more detail. No other NEOs participate in this plan.
(ii) 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 the LRP.
(iii) Mr. Creed is not an active participant in the Retirement Plan but maintains a balance in the Retirement Plan for the two years (2002 and 2003) during
which he was a participant in the plan. As discussed at page 40, Mr. Creed participates in the Third Country National plan, an unfunded, unsecured deferred
account-based retirement plan.
(1) YUM! Brands Retirement Plan
The Retirement Plan provides an integrated program of
retirement benefits for salaried employees who were hired
by the Company prior to October 1, 2001. The Retirement
Plan replaces 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.
Final Average Earnings
A participant’s final average earnings is determined based on
his highest five 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 five years of
vesting service. Upon attaining five years of vesting service,
a participant becomes 100% vested. All NEOs eligible for
the Retirement Plan or YIRP are 100% vested.