Pizza Hut 2011 Annual Report Download - page 66

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measure or review the percentile ranking of the value realized from any LTI award. Realized value is a
function of the performance of the Company common stock and the length of time a participant holds an
award after vesting.
The Performance Share Plan under our LTI Plan awards performance share units (‘‘PSUs’’) which are
denominated in shares of Company common stock. The PSU awards provide for the distribution of a
number of shares of Company common stock based on the 3-year compound annual growth rate
(‘‘CAGR’’) of the Company’s EPS adjusted to exclude special items believed to be distortive of
consolidated results on a year-over-year basis. The target grant value is set based on a value equal to 33%
of the NEO’s annual bonus target. The Committee continued the Performance Share Plan for 2011 for
each NEO. The performance period covers 2011-2013 fiscal years and will be leveraged up or down based
on the 3-year CAGR EPS performance against a target of 10%. The potential payout range is 0 - 200% of
the target number of shares granted with no payout if CAGR EPS is less than 7% and a 200% payout if
CAGR EPS is at or above 16%. Dividend equivalents will accrue during the performance cycle but will be
distributed in shares only in the same proportion and at the same time as the original PSUs are earned. If
no PSUs are earned, no dividend equivalents will be paid. The PSUs are eligible for deferral under the
Executive Income Deferral Plan. The target, threshold and maximum potential value of these awards for
each NEO are described at page 60.
From time to time and in addition to the regular annual grant, Chairman’s Award stock option or
SAR grants are made to selected employees in recognition of superlative performance and extraordinary
impact on business results. In the case of employees below the Senior Leadership Team Level, these
awards are made at the discretion of the CEO within guidelines set by the Committee. Awards to
executives on the Senior Leadership Team must be approved by the Committee. These SARs or stock
options may vest in their entirety after four or five years or 25% per year over four years. In 2011, in
addition to their regular grants, Messrs. Carucci and Pant each received a Chairman’s Award grant of stock
appreciation rights with a grant date fair value of approximately $1.2 million. Mr. Carucci’s award was
based on the Committee’s subjective assessment of the consistently superior financial performance of the
Company in the areas of total shareholder return, return on net assets, EPS growth and operating income
growth under his leadership. Mr. Pant’s award, granted at year-end, was based on the Committee’s
subjective assessment of the continued strong performance of YRI, his position as a senior leader of the
Proxy Statement
Company and as part of his compensation package upon his promotion to President of the International
Division at year end.
Mr. Novak’s long-term incentive compensation is discussed below.
How we Compensate our Chief Executive Officer
Comparative Compensation Data for Mr. Novak
The discussion of the comparative compensation data and peer group used by the Committee for
Mr. Novak begins at page 43. Meridian provided a comprehensive review for the Committee using data
from the peer group.
Mr. Novak’s Compensation
Each year, our Board, under the leadership of the Committee Chairperson, conducts an evaluation of
the performance of our CEO, David Novak. This evaluation includes a review of his:
• leadership pertaining to the achievement of business results
• leadership in the development and implementation of Company strategies
• development of culture, diversity and talent management
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