Pizza Hut 2013 Annual Report Download - page 75

YUM! BRANDS, INC.-2014Proxy Statement 53
Proxy Statement
EXECUTIVE COMPENSATION
(4) Present Value of Accumulated Benefits
For all plans, the Present Value of Accumulated Benefits
(determined as of December 31, 2013) is calculated assuming
that each participant is eligible to receive an unreduced benefit
payable in the form of a single lump sum at age 62. This is
consistent with the methodologies used in financial accounting
calculations. In addition, the economic assumptions for
the lump sum interest rate, post retirement mortality, and
discount rate are also consistent with those used in financial
accounting calculations at each measurement date.
Nonqualified Deferred Compensation
Amounts reflected in the Nonqualified Deferred Compensation
table below are provided for under the Company’s Executive
Income Deferral (“EID”) Program, Leadership Retirement
Plan (“LRP”) and Third Country National Plan (“TCN”). These
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 up to 100% of their annual incentive
award. As discussed beginning at page 40, Messrs. Novak,
Grismer and Pant are eligible to participate in the LRP. The
LRP provides an annual allocation to the accounts of Messrs.
Novak and Grismer equal to 9.5% of each of his salary
plus target bonus and to Mr. Pant’s account equal to 20%
of his salary plus target bonus. As discussed beginning at
page 40, Mr. Creed is eligible to participate in the TCN. The
TCN provides for an annual allocation to Mr. Creed’s account
equal to 15% of his salary plus target bonus.
EID Program
Deferred Investments under the EID Program. Amounts deferred
under the EID Program may be invested in the following phantom
investment alternatives (12 month investment returns are shown
in parentheses):
•YUM! Stock Fund (16.26%*)
•YUM! Matching Stock Fund (16.26%*)
•S&P 500 Index Fund (32.32%)
•Bond Market Index Fund (-2.12%)
•Stable Value Fund (1.58%)
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
and YUM! Matching Stock Fund track the investment return
of the Company’s common stock. Participants may transfer
funds between the investment alternatives on a quarterly basis
except (1) funds invested in the YUM! Stock Fund or YUM!
Matching Stock Fund may not be transferred once invested
in these funds and (2) a participant may only elect to invest
into the YUM! Matching Stock Fund at the time the annual
incentive deferral election is made. In the case of the Matching
Stock Fund, participants who defer their annual incentive into
this fund acquire additional phantom shares (called restricted
stock units (“RSUs”)) equal to 33% of the RSUs received with
respect to the deferral of their annual incentive into the YUM!
Matching Stock Fund (the additional RSUs are referred to
as “matching contributions”). The RSUs attributable to the
matching contributions are allocated on the same day the
RSUs attributable to the annual incentive are allocated, which
is the same day we make our annual stock appreciation right
grants. Amounts attributable to the matching contribution
under the YUM! Matching Stock Fund are reflected in column
(c) below as contributions by the Company (and represent
amounts actually credited to the NEO’s account during 2013)�
Beginning with their 2009 annual incentive award, NEOs are
no longer eligible to participate in the Matching Stock Fund�
RSUs attributable to annual incentive deferrals into the YUM!
Matching Stock Fund and matching contributions vest on
the second anniversary of the grant (or upon a change of
control of the Company, if earlier) and are payable as shares
of YUM common stock pursuant to the participant’s deferral
election� Unvested RSUs held in a participant’s YUM! Matching
Stock Fund account are forfeited if the participant voluntarily
terminates employment with the Company within two years
of the deferral date� If a participant terminates employment
involuntarily, the portion of the account attributable to the
matching contributions is forfeited and the participant will
receive an amount equal to the amount of the original amount
deferred� If a participant dies or becomes disabled during
the restricted period, the participant fully vests in the RSUs�
Dividend equivalents are accrued during the restricted period
but are only paid if the RSUs vest� RSUs held by a participant
who has attained age 65 with five years of service vest
immediately. In the case of a participant who has attained age
55 with 10 years of service, RSUs attributable to pre-2009
bonus deferrals into the YUM! Matching Stock Fund vest
immediately and RSUs attributable to the matching contribution
vest on a pro rata basis during the period beginning on the
date of grant and ending on the first anniversary of the grant
and are fully vested on the first anniversary.
* Assumes dividends are not reinvested.