Pizza Hut 2011 Annual Report Download - page 69

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Mr. Su receives several perquisites related to his overseas assignment. These perquisites were part of
his original compensation package and the Committee has elected to continue to provide them. Mr. Su’s
agreement provides that the following will be provided: housing, commodities and utilities allowances; tax
preparation services; tax equalization to the United States for salary and bonus; and tax equalization to
Hong Kong with respect to income attributable to certain stock option and SAR exercises and to
distributions of deferred income. (The value of these perquisites is included in the Summary
Compensation Table in the column headed ‘‘All Other Compensation.) When Mr. Su retires from the
Company, he will be required to reimburse the Company for the tax reimbursements for certain stock
option and SARs exercises, if any, made within six months of his retirement. Beginning in 2011, Mr. Su
ceased receiving the following perquisites: annual foreign service premiums, car allowance and social club
dues. He received a one-time salary increase of $35,000 during 2011 in recognition of this change.
Our CEO does not receive perquisites or allowances. However, Mr. Novak is required to use the
Company aircraft for personal as well as business travel pursuant to the Company’s executive security
program established by the Board of Directors. The Board’s security program also covers Mrs. Novak. In
this regard, the Board of Directors noted that from time to time, Mr. Novak has been physically assaulted
while traveling and he and his family have received letters and calls at his home from people around the
globe with various special interests, establishing both an invasion of privacy and implicit or explicit threats.
The Board has considered this enough of a concern to require security for Mr. Novak, including the use of
the corporate aircraft for personal travel. NEOs and other executives may use corporate aircraft for
personal use with the prior approval of Mr. Novak. In addition, depending on seat availability, family
members of NEOs and other executive officers may travel on the Company aircraft to accompany
executives who are traveling on business. There is no incremental cost to the Company for these trips. The
incremental cost of the personal use by Mr. Novak is reported on page 59. We do not gross up for taxes on
the personal use of the company aircraft. We also pay for the cost of the transmission of home security
information from Mr. Novak’s home to our security department and that incremental cost is reflected in
the ‘‘Other’’ column of the All Other Compensation Table.
Review of Total Compensation
We intend to continue our strategy of compensating our NEOs and other executives through
Proxy Statement
programs that emphasize performance-based compensation. To that end, executive compensation through
annual bonuses and stock appreciation rights/stock option grants is tied directly to our performance and is
structured to ensure that there is an appropriate balance between our financial performance and
shareholder return. The Committee reviewed each element of compensation and believes that the
compensation was reasonable in its totality. In addition, the Committee believes that various elements of
this program effectively achieve the objective of aligning compensation with performance measures that
are directly related to the Company’s financial goals and creation of shareholder value without
encouraging executives to take unnecessary and excessive risks.
Before finalizing compensation actions, the Committee took into consideration all elements of
compensation accruing to each NEO for 2011. These elements included salary, annual bonuses, long-term
incentive awards, value of outstanding equity awards (vested and unvested), and lump sum value of
pension at retirement and gains realized from exercising stock options. The Committee will continue to
review total compensation at least once a year.
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