Pizza Hut 2015 Annual Report Download - page 84

YUM! BRANDS, INC.-2016Proxy Statement70
Proxy Statement
EXECUTIVE COMPENSATION
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 (2.45%*)
•YUM! Matching Stock Fund (2.45%*)
•S&P500 Index Fund (-0.74%)
•Bond Market Index Fund (-0.19%)
•Stable Value Fund (1.54%)
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. Eligible amounts attributable to the matching
contribution under the YUM! Matching Stock Fund are
included in column(c)below as contributions by the Company
(and represent amounts actually credited to the NEO’s
account during 2015). Beginning with their 2009 annual
incentive award, those who are eligible for PSU awards 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 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 first
anniversary of the grant and ending on the second anniversary
of the grant and are fully vested on the second anniversary.
Distributions under EID Program. When participants elect to
defer amounts into the EID Program, they also select when
the amounts ultimately will be distributed to them. Distributions
may either be made in a specific year— whether or not
employment has then ended— or at a time that begins at or
after the executive’s retirement, separation or termination of
employment.
Distributions can be made in a lump sum or quarterly or annual
installments for up to 20 years. Initial deferrals are subject to
a minimum two year deferral. In general, with respect to
amounts deferred after 2005 or not fully vested as of January1,
2005, participants may change their distribution schedule,
provided the new elections satisfy the requirements of
Section409A of the Internal Revenue Code. In general,
Section409A requires that:
•
Distribution schedules cannot be accelerated (other than for
a hardship)
•To delay a previously scheduled distribution,
– A participant must make an election at least one year before
the distribution otherwise would be made, and
– The new distribution cannot begin earlier than five years after
it would have begun without the election to re-defer.
With respect to amounts deferred prior to 2005, to delay a
distribution the new distribution cannot begin until two years
after it would have begun without the election to re-defer.
Investments in the YUM! Stock Fund and YUM! Matching
Stock Fund are only distributed in shares of Company stock.
* Assumes dividends are not reinvested.