Pizza Hut 2011 Annual Report Download - page 53

16MAR201218542623
As a result of this strong support, the Committee decided to retain the same approach to executive
compensation and will continue to consider shareholder feedback in the future.
Our goal is to provide an executive compensation program that best serves the long-term interests of
our shareholders. The Committee designed our compensation program to support our vision to be the
Defining Global Company That Feeds the World, to enable our major growth strategies and to attract,
reward and retain the talented leaders necessary to enable our Company to succeed in the highly
competitive market for talent, while maximizing shareholder returns. We believe that our management
team has been a key driver in YUM’s strong performance over both the long and short term. Therefore, we
intend to continue to provide a competitive compensation package to our NEOs and other executives, tie a
significant portion of pay to performance and utilize components that best align the interests of our NEOs
and other executives with those of our shareholders.
The following is a summary of important aspects of our executive compensation program discussed
later in this CD&A:
•Key elements. The key elements of our program are:
• Base salary,
• Annual performance-based cash bonuses, and
• Long-term equity compensation consisting of stock options or stock-settled stock appreciation
rights (‘‘SARs’’) and performance share units (‘‘PSUs’’).
•Pay for Performance. We emphasize pay-for-performance in order to align executive compensation
with our business strategy and the creation of long-term shareholder value.
•At-Risk Pay. We emphasize variable (i.e., ‘‘at risk’’) pay tied to performance; however, we believe
our program does not encourage excessive risk-taking by our NEOs or other executives.
•Share Ownership Guidelines. Our NEOs and other executives are subject to share ownership
guidelines and are prohibited from hedging against the economic risk of such ownership.
•No Employment Agreements or Guaranteed Bonuses. Our NEOs and other executives do not have
Proxy Statement
employment agreements or guaranteed bonuses.
•Compensation Recovery Policy. We have a compensation recovery policy that gives the Board
discretion to recover incentive compensation paid to senior management in the event of a
restatement of our financial statements due to misconduct.
•Future Severance Policy. We have a future severance policy that limits any future severance
agreements with an NEO or other executive.
•Change in Control Agreements. We have change in control agreements with our NEOs to ensure
continuity of management in the event of a prospective change in control of the Company.
•Perquisites. Effective in 2011, all perquisites except for those related to overseas service assignment
benefits and personal use of corporate aircraft have been eliminated. (These are discussed at
page 50).
35