Pizza Hut 2010 Annual Report Download - page 66

9MAR201101381779
In the case of Mr. Su, he receives several perquisites related to his overseas assignment. These
perquisites were part of his original compensation package and the Committee has elected to continue to
provide them. The amount of these perquisites is reported on page 54. Mr. Su’s agreement provides that
the following will be provided: annual foreign service premium; local social club dues; car; housing,
commodities, and utilities allowances; tax preparation services; tax equalization to the United States for
salary and bonus; and tax equalization to Hong Kong (up to a maximum of $5 million) with respect to
income attributable to certain stock option and SAR exercises and to distributions of deferred income.
When Mr. Su retires from the Company, he will be required to reimburse the Company for the tax
reimbursements for certain stock option and SARs exercises, if any, made within six months of his
retirement. Beginning in 2011, Mr. Su will no longer receive the following perquisites: annual foreign
service premiums, car allowance or social club dues. In recognition of this change, he received a one time
salary increase of $35,000 during 2011.
Review of Total Compensation
We intend to continue our strategy of compensating our executives through programs that emphasize
performance-based compensation. To that end, executive compensation through annual incentives and
stock appreciation rights/stock option grants is tied directly to our performance and is structured to ensure
that there is an appropriate balance between our financial performance and shareholder return. The
Committee reviewed each element of compensation and believes that the compensation was reasonable in
its totality. In addition, the Committee believes that various elements of this program effectively achieve
the objective of aligning compensation with performance measures that are directly related to the
Company’s financial goals and creation of shareholder value without encouraging executives to take
unnecessary and excessive risks.
Before finalizing compensation actions, the Committee took into consideration all elements of
compensation accruing to each NEO in 2010. These elements included salary, annual incentive award,
long-term incentive awards, value of outstanding equity awards (vested and unvested), and lump sum value
of pension at retirement and gains realized from exercising stock options. The Committee will continue to
review total compensation at least once a year.
YUM’s Executive Stock Ownership Guidelines
The Committee has established stock ownership guidelines for our top 600 employees. Our Chief
Proxy Statement
Executive Officer is required to own 336,000 shares of YUM stock or stock equivalents (approximately
eleven times his base salary at the end of fiscal 2010). Executive officers (other than Mr. Novak) are
expected to attain their ownership targets, equivalent in value to two to three times their current annual
base salary depending upon their positions, within five years from the time the established targets become
applicable. If an executive does not meet his or her ownership guideline, he or she is not eligible for a grant
under the LTI Plan. In 2010, all executive officers and all other employees subject to guidelines met or
exceeded their ownership guidelines.
Value of Shares
Ownership Shares Value of Owned as
Guidelines Owned(1) Shares(2) Multiple of Salary
Novak 336,000 2,391,850 $117,320,243 84
Carucci 50,000 144,341 $ 7,079,926 10
Su 50,000 351,632 $ 17,247,550 21
Allan 50,000 672,870 $ 33,004,274 40
Bergren 50,000 149,701 $ 7,342,834 11
(1) Calculated as of December 31, 2010 and represents shares owned outright by the NEO and RSUs
acquired under the Company’s executive income deferral program.
(2) Based on YUM closing stock price of $49.05 as of December 31, 2010.
Under our Code of Conduct, speculative trading in YUM stock, including trading in puts, calls or
other hedging or monetization transactions, is prohibited.
47