Pizza Hut 2015 Annual Report Download - page 82

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YUM! BRANDS, INC.-2016Proxy Statement68
Proxy Statement
EXECUTIVE COMPENSATION
(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. 0.43% 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.
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.