Pizza Hut 2011 Annual Report Download - page 27

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acceptance of the resignation. The Board will, through a process managed by the Nominating and
Governance Committee and excluding the nominee in question, accept or reject the resignation
within 90 days after the Board receives the resignation. If the Board rejects the resignation, the
reason for the Board’s decision will be publicly disclosed.
What access do the Board and Board committees have to Management and to Outside Advisors?
•Access to Management and Employees. Directors have full and unrestricted access to the management
and employees of the Company. Additionally, key members of management attend Board meetings
to present information about the results, plans and operations of the business within their areas of
responsibility.
•Access to Outside Advisors. The Board and its committees may retain counsel or consultants without
obtaining the approval of any officer of the Company in advance or otherwise. The Audit
Committee has the sole authority to retain and terminate the independent auditor. The Nominating
and Governance Committee has the sole authority to retain search firms to be used to identify
director candidates. The Management Planning and Development Committee has the sole
authority to retain compensation consultants for advice on executive compensation matters.
What is the Board’s role in risk oversight?
The Board maintains overall responsibility for overseeing the Company’s risk management. In
furtherance of its responsibility, the Board has delegated specific risk-related responsibilities to the Audit
Committee and to the Management Planning and Development Committee. The Audit Committee
engages in substantive discussions of risk management at its regular committee meetings held during the
year. At these meetings, it receives functional risk review reports covering significant areas of risk from
senior managers responsible for these functional areas, as well as receiving reports from the Company’s
Chief Auditor. Our Chief Auditor reports directly to the Chairman of the Audit Committee and our Chief
Financial Officer. The Audit Committee also receives reports at each meeting regarding legal and
regulatory risks from management. The Audit Committee provides a summary to the full Board at each
regular Board meeting of the risk area reviewed together with any other risk related subjects discussed at
Proxy Statement
the Audit Committee meeting. In addition, our Management Planning and Development Committee
considers the risks that may be implicated by our compensation programs through a risk assessment
conducted by management and reports its conclusions to the full Board.
Has the Company conducted a risk assessment of its compensation policies and practices?
As stated in the Compensation Discussion and Analysis at page 39, the philosophy of our
compensation programs is to reward performance by designing pay programs at all levels that align team
performance, individual performance, customer satisfaction and shareholder return, emphasize long-term
incentives and require executives to personally invest in Company stock.
In 2012, the Management Planning and Development Committee of the Board of Directors oversaw
the performance of a risk assessment of our compensation programs for all employees to determine
whether they encourage unnecessary or excessive risk taking. In conducting this review, each of our
compensation practices and programs was reviewed against the key risks facing the Company in the
conduct of its business. Based on this review, the Committee concluded that our compensation policies and
practices do not encourage our employees to take unnecessary or excessive risks.
As part of this assessment, the Committee concluded that the following policies and practices of the
Company’s cash and equity incentive programs serve to reduce the likelihood of excessive risk taking:
• Our compensation system is balanced, rewarding both short term and long term performance.
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