Pizza Hut 2011 Annual Report Download - page 45

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MANAGEMENT STATEMENT IN OPPOSITION
TO SHAREHOLDER PROPOSAL
The Board of Directors recommends that shareholders vote AGAINST this proposal.
What is the Company’s position regarding this proposal?
The proposal seeks to separate the roles of Chairman of the Board and Chief Executive Officer and
requests that the Board Chairman be an independent director who has not previously served as an
executive officer of the Company. The Company does not support the proposal.
Our Board approaches its work with the belief that good corporate governance and accountability to
shareholders are not only marks of good management, but critical to a successful enterprise. We are
strongly supportive of advancing appropriate and effective corporate governance mechanisms to enhance
long-term shareholder value.
For example, we have instituted annual election of Directors; instituted a majority vote by-law in
uncontested Director elections; require shareholder approval of certain executive severance agreements;
provide Directors full and unrestricted access to management and employees; and provide for an
independent Presiding Director. Furthermore, the independent members of the Board, led by our
Presiding Director, regularly meet without management present to consider Company matters, including
the performance of the CEO.
Our governance practices include designating an independent director to act as Presiding Director.
The Presiding Director presides over all meetings of non-employee Directors, at which the Chairman and
Chief Executive Officer is not present, approves in advance Board meeting agendas, schedules and
information provided to the directors and performs other duties as determined by the non-employee
Directors, as described at page 8 of this proxy statement.
While the Presiding Director is a key element to the effective functioning of our Board, it is important
to note that the strong leadership of all of our independent Directors serves our shareholders very well by
effectively overseeing management and providing rigorous oversight on strategy, risk and integrity. All
Directors play an active role in overseeing the Company’s business both at the Board level and through the
Proxy Statement
Board’s Committees. Our Directors are skilled and experienced leaders in business. Most serve or have
served as CEOs or members of senior management of Fortune 500 companies or in investment banking.
Why does the Company oppose the proposal?
As discussed under the heading ‘‘What is the Board’s Leadership Structure’’ at page 7, the Board
believes that the consistency in the leadership provided by one person serving as its Chairman and CEO,
together with our independent Board committees, our independent Presiding Director and our other good
governance practices, currently provide the most effective Board leadership structure for our Company.
This leadership structure provides strong independent oversight of management while ensuring clear
strategic alignment throughout the Company.
By preserving the Board’s flexibility to select the best person to serve as Chairman of the Board, the
Board can make changes in the Company’s leadership structure when and if it believes circumstances so
warrant and shareholder interests would be better served by a different leadership structure.
The combined roles of Chairman and CEO have served the Company’s shareholders well for many
years, and we believe that combining the roles continues to be the appropriate leadership structure for the
Company. This flexibility to select the appropriate structure based on the specific needs of the business is
critical, and it is part of the judgment a board should exercise. We believe that a specifically defined
approach that ties the Board’s hands will not serve shareholders well over time.
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