Pizza Hut 2013 Annual Report Download - page 74

YUM! BRANDS, INC.-2014Proxy Statement52
Proxy Statement
EXECUTIVE COMPENSATION
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 benefits
begin before age 62. Benefits are unreduced at age 62.
The table below shows when each of the NEOs became eligible for early retirement and the estimated lump sum value of
the benefit each participant would receive from YUM plans (both qualified and non-qualified) if he retired from the Company
on December 31, 2013 and received a lump sum payment.
Name
Earliest Retirement
Date
Estimated Lump
Sum from a
Qualified Plan(1)
Estimated Lump
Sum from a Non-
Qualified Plan(2)
Total Estimated
Lump Sum
David C. Novak November 1, 2007 1,433,263 — 1,433,263
Jing-Shyh S. Su May 1, 2007 — 18,691,094 18,691,094
Greg Creed August 1, 2012 166,010 — 166,010
(1) The Retirement Plan
(2) The YIRP
The estimated lump sum values in the table above are calculated assuming no increase in the participant’s Final Average
Earnings. The lump sums are estimated using the mortality table and interest rate assumptions in the Retirement Plan. Actual
lump sums may be higher or lower depending on the mortality table and interest rate in effect at the time of distribution and the
participant’s Final Average Earnings at his date of retirement.
Lump Sum Availability
Lump sum payments are available to participants who meet
the requirements for early or normal retirement. Participants
who leave the Company prior to meeting the requirements
for Early or Normal Retirement must take their benefits in
the form of a monthly annuity and no lump sum is available.
When a lump sum is paid from the plan, it is calculated based
on actuarial assumptions for lump sums required by Internal
Revenue Code Section 417(e)(3).
(2) YUM! Brands, Inc. Pension Equalization Plan
The PEP is an unfunded, non-qualified plan that complements
the Retirement Plan by providing benefits that federal tax
law bars providing 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 PEP. 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. 1
2
/
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 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
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.