Pizza Hut 2009 Annual Report Download - page 53

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The minimum team performance factor is 0% and the maximum is 200%. The minimum individual
performance factor is 0% and the maximum is 150%. The combined impact of the team performance
factor and individual performance factor produces a potential range for total annual bonus of 0 - 300% of
the target award. Applying these ranges under the YUM Leaders’ Bonus Program to the NEO’s 2009
salaries determined the threshold, target and maximum awards potential under the program for 2009,
which are reported in dollars in the Grants of Plan-Based Awards table on page 49.
A detailed description of how team and individual performance factors are determined and measured
can be found below under the heading ‘‘Performance Factors.’’
Annual Target Bonus Percentage. The ‘‘Annual Target Bonus Percentage’’ for each NEO for 2009 was:
Novak Carucci Allan Su Creed
160% 95% 115% 115% 90%
The Committee noted the 2009 target bonus opportunities, when compared to the survey data, were
significantly above the 75th percentile for Messrs. Su and Allan and at the 75th percentile for Messrs. Creed
and Carucci. Consistent with prior years, the Committee did not consider the actual percentile above or
below the 75th percentile when making its final target bonus percentages decision. Rather, it considered the
strong performance of Messrs. Su and Allan in continuing to lead their respective divisions of YUM and
their current and expected performance and strategic position of their divisions in the growth of the
company. The Committee increased the 2009 target bonus percentage for Messrs. Carucci and Creed by
5 percentage points to recognize their strong performance and to keep pace with increases in comparative
data. Mr. Novak’s performance is discussed beginning on page 38.
Performance Factors. To determine the performance factors for each NEO, the Committee reviews
actual performance against pre-established consolidated operating Company measures and targets (‘‘Team
Performance Factor’’) and individual performance measures and targets (‘‘Individual Performance
Factor’’).
Team Performance Factor. For 2009, the Committee determined each executive’s Team Performance
Measure and Team Performance Target, based on recommendations from management. Consistent with
Proxy Statement
prior years, the Committee established the business team performance measures, targets and relative
weights in January 2009 and reviewed actual performance against these measures and targets as set forth in
the chart below for the NEOs. The targets were developed through the Company’s annual financial
planning process, in which we assessed historical performance, the future operating environment, and
profit growth initiatives and built projections of anticipated results. These projections include profit growth
to achieve our EPS growth target of 10%. Division targets may be adjusted during the year when doing so
is consistent with the objectives and intent at the time the targets were originally set. In 2009, division
operating profit growth targets were adjusted to reflect certain YUM approved investments and restaurant
divestitures not reflective of annual operating performance.
We believe these performance measures and targets are key factors that drive individual and team
performance, which will result in increased shareholder value over the long term. These measures are
designed to align employee goals with the Company’s individual divisions’ current year objectives to grow
earnings and sales, develop new restaurants, improve margins and increase customer satisfaction. The
measures also serve as effective motivation because they are easy to track and clearly understood by
employees. When setting targets for each specific Team Performance Measure, the Company takes into
account overall business goals and structures the target to motivate achievement of desired performance
consistent with broader shareholder commitments such as EPS growth, ROIC and cash flow. The targets
are the same as those that we disclose from time to time to our investors and may be slightly above or
below disclosed guidance when determined by our Committee to be appropriate. A leverage formula for
each Team Performance Measure magnifies the potential impact that performance above or below the
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