Pizza Hut 2010 Annual Report Download - page 64

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he should receive a long-term incentive award consistent with their desire to compensate Mr. Novak near
or at the 75th percentile for total compensation.
At the conclusion of 2010, the Committee determined Mr. Novak earned an annual incentive award
payment for 2010 performance of $5,066,880. In January 2010, the Committee established Mr. Novak’s
Team Performance Factor measures and targets for 2010 as set forth on page 44. The Committee
determined that the Company’s actual performance against these criteria and goals produced a Team
Performance Factor of 156. Refer to page 42 for information on how this Team Performance Factor was
determined.
For purposes of determining Mr. Novak’s Individual Performance Factor, in addition to the criteria
highlighted on page 41, the Committee considered Mr. Novak’s leadership in enabling the Company to
exceed the 10% target EPS growth, and delivering 17% EPS growth in a challenging economic
environment. The Committee also considered the very strong performance of the China Division in
exceeding profit, system sales and development targets as well as Pizza Hut U.S.’s strong turnaround from
2009 results.
Based on this individual performance, the Committee awarded Mr. Novak an Individual Performance
Factor of 145.
After determination of the Team Performance Factor and Individual Performance Factor, Mr. Novak’s
annual incentive was calculated as shown on page 42.
While the Committee did not specifically discuss why Mr. Novak’s compensation exceeds that of other
NEOs, it does review every year, as part of its process for setting compensation described beginning on
page 39, data from Meridian which substantiates on a comparative basis this difference in target
compensation for the CEO role relative to other executive roles. This comparative market data analyzed
over several years supports the differences in salary, annual incentive payment and long term incentives.
Other Benefits
Retirement Benefits
Proxy Statement
We offer competitive retirement benefits through the YUM! Brands Retirement Plan. This is a broad-
based qualified plan designed to provide a retirement benefit based on years of service with the Company
and average annual earnings. In addition, the YUM! Brands, Inc. Pension Equalization Plan for employees
at all levels who meet the eligibility requirements is a ‘‘restoration plan’’ intended to restore benefits
otherwise lost under the qualified plan due to various governmental limits. This plan is based on the same
underlying formula as the YUM! Brands Retirement Plan. The annual benefit payable under these plans
to U.S.-based employees hired prior to October 1, 2001 is discussed following the Pension Benefits Table
on page 59. This benefit is designed to provide income replacement of approximately 40% of salary and
annual incentive compensation (less the company’s contribution to social security on behalf of the
employee) for employees with 20 years of service who retire after age 62.
The annual change in pension value for each NEO is set forth on page 52, in the Summary
Compensation Table, and the actual projected benefit at termination is set forth on page 59, in the Pension
Benefits Table.
For executives hired or re-hired after September 30, 2001, the Company designed the Leadership
Retirement Plan (‘‘LRP’’). This is an unfunded, unsecured account based retirement plan which allocates a
percentage of pay to a phantom account payable to the executive following the later to occur of the
executive’s retirement from the Company or attainment of age 55. For 2010, Mr. Bergren was the only
NEO eligible for the LRP since he was rehired after September 30, 2001. Under the LRP, he receives an
annual allocation to his account equal to 28% of his base salary and target bonus. For 2010, he received an
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