Pizza Hut 2011 Annual Report Download - page 44

16MAR201218540977
ITEM 4: SHAREHOLDER PROPOSAL REGARDING INDEPENDENT CHAIRMAN
(Item 4 on the Proxy Card)
What am I voting on?
International Brotherhood of Teamsters General Fund has advised us that it intends to present the
following shareholder proposal at the Annual Meeting. We will furnish the address and share ownership of
the proponent upon request.
RESOLVED: The shareholders of Yum! Brands, Inc. (the ‘‘Company’’) urge the Board of Directors
to adopt a policy that the Board’s chairman be an independent director. The policy should be implemented
so as not to violate any contractual obligation and should specify: (a) how to select a new independent
chairman if a current chairman ceases to be independent during the time between annual meetings of
shareholders; and, (b) that compliance with the policy is excused if no independent director is available
and willing to serve as chairman.
SUPPORTING STATEMENT: It is the responsibility of the Board of Directors to protect
shareholders’ long-term interests by providing independent oversight of management. By setting agendas,
priorities and procedures, the position of Chairman is critical in shaping the work of the Board.
In our opinion, a Board of Directors is less likely to provide rigorous independent oversight of
management if the Chairman is the CEO, as is the case with our company. CEO David C. Novak has
served as both Chairman and CEO since January 2001.
We believe that having a board chairman who is independent of the Company and its management is a
governance practice that will promote greater management accountability to shareholders and lead to a
more objective evaluation of management.
According to the Millstein Center for Corporate Governance and Performance (Yale School of
Management), ‘‘The independent chair curbs conflicts of interest, promotes oversight of risk, manages the
relationship between the board and CEO, serves as a conduit for regular communication with shareowners,
and is a logical next step in the development of an independent board.’’ (Chairing the Board: The Case for
Independent Leadership in Corporate North America, 2009)
Proxy Statement
An NACD Blue Ribbon Commission on Directors’ Professionalism recommended several years ago
that an independent director should be charged with ‘‘organizing the board’s evaluation of the CEO and
provide ongoing feedback; chairing executive sessions of the board; setting the agenda and leading the
board in anticipating and responding to crises.’’ A blue-ribbon report from The Conference Board echoed
that sentiment a few years later.
A number of institutional investors believe that a strong, objective board leader can best provide the
necessary oversight of management. Thus, the California Public Employees’ Retirement System’s Global
Principles of Accountable Corporate Governance recommends that a Company’s board should generally
be chaired by an independent director, as does the Council of Institutional Investors.
We thus believe that an independent director serving as chairman can help ensure the functioning of
an effective board.
We urge you to vote FOR this resolution.
26