Pizza Hut 2011 Annual Report Download - page 28

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• Long term Company performance is emphasized. The majority of incentive compensation for the
top level employees is associated with the long term performance of the Company.
• The annual incentive target setting process is closely linked to the annual financial planning process
and supports the Company’s overall strategic plan.
• Compensation is primarily determined by results of the business.
• Financial performance which determines employee rewards is closely monitored by and certified by
the Audit Committee and the full Board.
• Compensation performance measures are set for each division and YUM, are transparent and are
tied to multiple measurable factors, none of which exceeds a 50% weighting. The measures are both
apparent to shareholders and drivers of their returns.
• Strong stock ownership guidelines for approximately 600 senior employees are enforced (discussed
further at page 52).
• We have implemented a compensation recovery or ‘‘clawback’’ policy (discussed further at page 54).
How does the Board determine which directors are considered independent?
The Company’s Corporate Governance Principles, adopted by the Board, require that we meet the
listing standards of the NYSE. The full text of the Principles can be found on the Company’s Web site
(www.yum.com/investors/governance/principles.asp).
Pursuant to the Principles, the Board undertook its annual review of director independence. During
this review, the Board considered transactions and relationships between each director or any member of
his or her immediate family and the Company and its subsidiaries and affiliates. As provided in the
Principles, the purpose of this review was to determine whether any such relationships or transactions were
inconsistent with a determination that the director is independent.
As a result of this review, the Board affirmatively determined that all of the directors are independent
of the Company and its management under the rules of the NYSE, with the exception of David Novak and
Proxy Statement
Jing-Shyh S. Su. Mr. Novak and Mr. Su are not considered independent directors because of their
employment by the Company.
In determining that the other directors did not have a material relationship with the Company, the
Board determined that Messrs. Dorman, Ferragamo, Grissom, Holland, Langone, Linen, Nelson, Ryan
and Walter and Mses. Graddick-Weir and Hill had no other relationship with the Company other than
their relationship as director.
How do shareholders communicate with the Board?
Shareholders and other parties interested in communicating directly with individual directors, the
non-management directors as a group or the entire Board may do so by writing to the Nominating and
Governance Committee, c/o Corporate Secretary, YUM! Brands, Inc., 1441 Gardiner Lane, Louisville,
Kentucky 40213. The Nominating and Governance Committee of the Board has approved a process for
handling letters received by the Company and addressed to individual directors, non-management
members of the Board or the Board. Under that process, the Corporate Secretary of the Company reviews
all such correspondence and regularly forwards to a designated individual member of the Nominating and
Governance Committee copies of all such correspondence (although we do not forward commercial
correspondence and correspondence duplicative in nature; however, we will retain duplicate
correspondence and all duplicate correspondence will be available for directors’ review upon their request)
and a summary of all such correspondence. The designated director of the Nominating and Governance
Committee will forward correspondence directed to individual directors as he or she deems appropriate.
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