Pizza Hut 2012 Annual Report Download - page 38

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YUM! BRANDS, INC.-2013Proxy Statement20
Proxy Statement
ITEM3ADVISORY VOTE ON EXECUTIVE COMPENSATION
We Considered Your Feedback After Our 2012 Say On Pay Vote and Made Changes
toOurExecutive Compensation Program for 2013
As described in the Compensation Discussion and Analysis,
our Management Planning and Development Committee (the
“Committee”) considered the say-on-pay voting results at the
2012 Annual Meeting of Shareholders and, as a result, reached
out to many of our major institutional shareholders for feedback,
which the Committee considered during its 2012 year-end review
of our executive compensation program. The Committee’s review
led to signifi cant changes, described below, in our executive
compensation program, which we believe refl ect the feedback we
received from shareholders. Because our compensation program
for 2012 had already been put in place before the 2012 Annual
Meeting, these changes could not be implemented until 2013.
Specifi cally, changes made by the Committee include:
•
Updating Executive Peer Group to Enhance Alignment with
Company’s Executive Peer Group - updating the Company’s
executive compensation peer group by removing Coca-Cola,
Kraft and PepsiCo to enhance alignment of the Company and
other members of its peer group in terms of company size;
•
Re-designing Performance Share Plan to Measure Average
Relative Total Shareholder Return - i mplementing average
total shareholder return of the Company for a three-year period
compared to the S&P 500 as the sole performance measure
for the Company’s Performance Share Plan, beginning with the
2013-2015 performance period;
•
Changing CEO’s Long-Term Incentive Compensation Mix
- changing the long-term incentive compensation mix for the
Company’s Chief Executive Offi cer to 75% stock appreciation
rights and 25% performance share plan units (from approximately
90% stock appreciation rights and 10% performance share
plan units in 2012);
•
Eliminating CEO’ s Accruals under Company’ s Pension
Equalization Plan - eliminating our Chief Executive Offi cer’ s
accruing nonqualifi ed pension benefi ts and replacing that
benefi t with a benefi t based on our Leadership Retirement Plan,
a non-qualifi ed unfunded defi ned contribution plan. Our Chief
Executive Offi cer will receive an annual allocation equal to 9.5%
of his salary and target bonus and will receive an annual interest
allocation on his balance equal to 120% of the applicable federal
rate (this change is discussed in more detail at footnote (5) to
the Summary Compensation Table at page 45);
•
Eliminating Excise Tax Gross-Ups - eliminating the tax gross-up
provisions contained in Change in Control Severance Agreements
with executives, including the Named Executive Offi cers, with
respect to excess parachute payments under Section 4999 of
the Internal Revenue Code; and
•
Implementing “Double Trigger” Vesting Upon a Change
in Control - implementing “double trigger” vesting of equity
awards made in 2013 and beyond upon a change in control
of the Company.
We believe these changes will further align our executive
compensation program with best practices, enhance shareholder
value, and enable us to better achieve our business goals.
Accordingly, we ask our shareholders to vote in favor of the
following resolution at the Annual Meeting:
RESOLVED, that the shareholders approve the compensation
awarded to our Named Executive Offi cers, as disclosed pursuant
to SEC rules, including the Compensation Discussion and Analysis,
the compensation tables and related materials included in this
proxy statement.
What vote is required to approve this proposal?
Approval of this proposal requires the affi rmative vote of a majority
of shares present in person or represented by proxy and entitled
to vote at the Annual Meeting. While this vote is advisory and
non-binding on the Company, the Board of Directors and the
Management Planning and Development Committee will review
the voting results and consider shareholder concerns in their
continuing evaluation of the Company’s compensation program.
What is the recommendation of the Board of Directors?
The Board of Directors recommends that you vote FOR approval of this proposal.