Pizza Hut 2009 Annual Report Download - page 47

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21MAR201012032309
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The power of YUM is in our ability to deliver consistently strong results, even in a tough economic
environment like we faced in 2009. That is why we are especially pleased to report we achieved 13%
Earnings per Share (EPS) growth, marking the eighth consecutive year that we exceeded our annual target
of at least 10% and achieved at least 13%. We grew worldwide system sales and once again strengthened
our claim as the number one retail developer of units outside the United States as we opened over 1,400
new restaurants—the ninth straight year we’ve opened more than 1,000 new units. We also improved our
worldwide restaurant margins by 1.7 percentage points, and operating profits grew by 9% prior to special
items and foreign currency translation. We generated, for the first time, over $1.0 billion dollars in net
income and we generated $1.4 billion of cash from operations. Importantly, we maintained our industry
leading return on invested capital of 20%. Our overall performance proved once again the resilience of our
global portfolio of leading brands to deliver consistent double digit EPS growth.
As in past years, the compensation of our executives reflects the Company’s performance. We
designed our executive compensation program to attract, reward and retain the talented leaders necessary
to enable our Company to succeed in the highly competitive market for talent, while maximizing
shareholder returns. We believe that our management team has been a key driver in YUM’s strong
performance over both the long and short term.
In this Compensation Discussion & Analysis, we discuss our executive compensation program and
how it worked in 2009. Among other topics, we address the following:
• The philosophy underlying our executive compensation program (page 29)
• The objectives of our executive compensation program (page 29)
• An overview of the key elements of our executive compensation program (page 29)
• The process the Management Planning and Development Committee (‘‘Committee’’) uses to set
and review executive compensation (page 30)
Proxy Statement
• The alignment of our executive compensation with the Company’s business and financial
performance (page 30)
• The allocation between fixed and variable compensation (page 30)
• The role of our independent compensation consultant (page 30)
• The role of comparative compensation data and how we select the companies that are used to
generate the comparative data (page 31)
• Team performance measures, which are used in the calculation of the annual bonus (page 33)
• Individual performance measures, which are also used in the calculation of the annual bonus
(page 33)
• Our CEO’s compensation (page 38)
• Our stock ownership guidelines (page 41)
Our Named Executive Officers (NEOs) for 2009:
• David C. Novak, Chairman, Chief Executive Officer and President
• Richard T. Carucci, Chief Financial Officer
• Jing-Shyh S. Su, President—China Division and Vice Chairman
28