Pizza Hut 2013 Annual Report Download - page 78

YUM! BRANDS, INC.-2014Proxy Statement56
Proxy Statement
EXECUTIVE COMPENSATION
Potential Payments Upon Termination or Change in Control
The information below describes and quantifies certain
compensation that would become payable under existing plans
and arrangements if the NEO’s employment had terminated
on December 31, 2013, given the NEO’s compensation and
service levels as of such date and, if applicable, based on the
Company’s closing stock price on that date. These benefits
are in addition to benefits available generally to salaried
employees, such as distributions under the Company’s
401(k) Plan, retiree medical benefits, disability benefits and
accrued vacation pay.
Due to the number of factors that affect the nature and amount
of any benefits provided upon the events discussed below,
any actual amounts paid or distributed may be different.
Factors that could affect these amounts include the timing
during the year of any such event, the Company’s stock price
and the executive’s age.
Stock Options and SAR Awards. If one or more NEOs terminated
employment for any reason other than retirement, death,
disability or following a change in control as of December 31,
2013, they could exercise the stock options and SARs that were
exercisable on that date as shown at the Outstanding Equity
Awards at Year-End table on page 48, otherwise all options
and SARs, pursuant to their terms, would have been forfeited
and cancelled after that date. If the NEO had retired, died or
become disabled as of December 31, 2013, exercisable stock
options and SARs would remain exercisable through the term
of the award. Except in the case of a change in control, no
stock options or SARs become exercisable on an accelerated
basis. Benefits a NEO may receive on a change of control are
discussed below.
Deferred Compensation. As described in more detail beginning
at page 53, the Named Executive Officers participate in the
EID Program, which permits the deferral of salary and annual
incentive compensation. The last column of the Nonqualified
Deferred Compensation Table on page 55 includes each NEO’s
aggregate balance at December 31, 2013. The NEOs are
entitled to receive their vested amount under the EID Program
in case of voluntary termination of employment. In the case
of involuntary termination of employment, they are entitled to
receive their vested benefit and the amount of the unvested
benefit that corresponds to their deferral. In the case of death,
disability or retirement after age 65, they or their beneficiaries
are entitled to their entire account balance as shown in the
last column of the Nonqualified Deferred Compensation table
on page 55.
In the case of an involuntary termination of employment
as of December 31, 2013, each NEO would receive the
following: Mr. Novak $202,182,864; Mr. Grismer $1,201,850;
Mr. Su $8,516,801; Mr. Creed $7,163,701; and Mr. Pant
$7,288,324. If Mr. Grismer had left voluntarily, he would have
received no payout since this deferral was subject to vesting
provisions which lapse in February 2014. As discussed at
page 55, these amounts reflect bonuses previously deferred
by the executive and appreciation on these deferred amounts
(see page 53 for discussion of investment alternatives available
under the EID)� In Mr� Novak’s case, over 80% of his balance
is invested in Company RSUs, which he will receive in the
form of Company stock following his retirement� The other
NEOs’ EID balances are invested primarily in RSUs� Thus,
Mr� Novak and the other NEOs’ EID account balances represent
deferred bonuses (earned in prior years) and appreciation
of their accounts based primarily on the performance of the
Company’s stock�
Leadership Retirement Plan. Under the LRP, participants
age 55 are entitled to a lump sum distribution of their
account balance following their termination of employment�
Participants under age 55 who terminate with more than
five years of service will receive their account balance at
their 55th birthday. In case of termination of employment
as of December 31, 2013, Mr. Novak would have received
$29,043,612. Mr. Grismer would receive $615,165 when he
attains age 55 and Mr. Pant would have received $1,914,320.
Third Country National Plan. Under the TCN, participants
age 55 or older are entitled to a lump sum distribution of their
account balance in the quarter following their termination
of employment. Participants under age 55 who terminate
will receive interest annually and their account balance will
be distributed in the quarter following their 55
th
birthday.
In case of termination of employment as of December 31,
2013, Mr. Creed would have received $978,179.
Performance Share Unit Awards. If one or more NEOs
terminated employment for any reason other than retirement
or death or following a change in control and prior to
achievement of the performance criteria and vesting period,
then the award would be cancelled and forfeited. If the NEO
had retired, or died as of December 31, 2013, the PSU
award would be paid out based on 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, 2013, Messrs� Novak, Grismer, Su, Creed
and Pant would have been entitled to $1,407,154, $56,910,
$481,902, $295,614 and $303,686, respectively, assuming
target performance�
Pension Benefits. The Pension Benefits Table on page 51
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