Pizza Hut 2012 Annual Report Download - page 40

YUM! BRANDS, INC.-2013Proxy Statement22
Proxy Statement
ITEM4RE-APPROVAL OF YUM! BRANDS,INC. LONGTERM INCENTIVE PLAN PERFORMANCE MEASURES
awards in jurisdictions outside the UnitedStates, the Committee
has the authority and discretion to modify those restrictions as the
Committee determines to be necessary or appropriate to conform
to applicable requirements or practices of jurisdictions outside of
the UnitedStates. The Committee has the authority and discretion
to interpret the LTIP, to establish, amend, and rescind any rules
and regulations relating to the LTIP, to determine the terms and
provisions of any award agreement made pursuant to the LTIP,
and to make all other determinations that may be necessary or
advisable for the administration of the LTIP. Any interpretation of the
LTIP by the Committee and any decision made by it under the LTIP
is fi nal and binding on all persons. Except to the extent prohibited
by applicable law or the applicable rules of a stock exchange, the
Committee may allocate all or any portion of its responsibilities
and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or
persons selected by it. Until action to the contrary is taken by the
Board or the Committee, the Committee’s authority with respect
to matters concerning participants below the Executive Offi cer
level is delegated to the Chief Executive Offi cer and Chief People
Offi cer of the Company.
Eligibility. The Committee may grant one or more awards to
any employee of the Company or its subsidiaries (determined in
accordance with the LTIP) and to any director of the Company (the
“Participants”). Awards may be granted to an eligible individual
in connection with hiring, retention or otherwise and prior to the
fi rst day on which the eligible individual provides services to the
Company or its subsidiaries (provided that the award may not vest
until the individual fi rst performs services). As of December29,2012,
the Company and its subsidiaries had approximately 523,000
employees. The specifi c Participants who are granted awards
under the LTIP and the type and amount of any such award is
determined and designated by the Committee.
Awards.
• OPTIONS. The Committee may grant options under the LTIP
to purchase stock which options may be either non-qualifi ed
stock options or incentive stock options. The purchase price
of a share of stock under each option shall not be less than
the closing price of a share of stock on the date the option is
granted. The option shall be exercisable in accordance with the
terms established by the Committee. In general, the Committee
intends that the option terms will provide that options will become
exercisable in equal proportions on the four anniversary dates
after grant and will require the Participant to be employed up
until the date of exercise. From time to time, the Committee
may award “Chairman’s A wards” for superlative performance.
These grants may vest over four or fi ve years as determined
by the Committee. In any event, the Committee reserves the
right to grant options with other terms that are in accordance
with the terms of the LTIP. The full purchase price of each share
of stock purchased upon the exercise of any option shall be
paid at the time of exercise. Except as otherwise determined
by the Committee, the purchase price shall be payable in cash,
in stock (valued at closing price as of the day of exercise), or
in any combination thereof. The Committee may impose such
conditions, restrictions, and contingencies on stock acquired
pursuant to the exercise of an option as the Committee determines
to be desirable. Except as provided in the LTIP with respect to
adjustment to shares in the event of a corporate transaction,
the exercise price for any outstanding stock option may not
be decreased after the date of grant nor may an outstanding
stock option be surrendered to the Company as consideration
in exchange for the grant of a new stock option with a lower
exercise price.
• STOCK APPRECIATION RIGHTS. The Committee may grant a
stock appreciation right (“SAR”) in connection with any portion of
a previously or contemporaneously granted option or independent
of any option grant. A SAR entitles the Participant to receive the
amount by which the fair market value of a specifi ed number
of shares on the exercise date exceeds an exercise price
established by the Committee. The exercise price may not be
less than the closing price of a share of the stock on the date
the SAR is granted. Such excess amount shall be payable in
stock, in cash, or in any combination thereof, as determined
by the Committee.
• OTHER STOCK AWARDS. The Committee may grant stock units
(a right to receive stock in the future), performance shares (a right
to receive stock or stock units contingent upon achievement
of performance or other objectives), performance units (a right
to receive a designated dollar amount of stock contingent on
achievement of performance or other objectives) and restricted
stock and restricted stock units (a grant of stock and the right to
receive stock in the future, respectively, with such shares or rights
subject to a risk of forfeiture or other restrictions that lapse upon
the achievement of one or more goals relating to completion of
service by the Participant or the achievement of performance or
other objectives, as determined by the Committee). Any such
award shall be subject to such conditions, restrictions and
contingencies as the Committee determines.
Vesting. Vesting of restricted shares, restricted stock units,
performance shares or performance units granted to Participants
is based on achievement of performance objectives, completion
of a specifi ed period of service, or both. In the case of awards to
employees, the LTIP requires that, if vesting is contingent solely
on completion of a period of service (and is not granted in lieu of
other compensation), the minimum service required will be three
years (subject to acceleration for death, disability, retirement,
change in control, and certain involuntary termination), except in
the case of annual incentive deferrals where the minimum vesting
period is two years for awards granted in the form of restricted
shares. These awards are granted as a settlement of earned
annual cash incentives and are designed to encourage employee
stock ownership. In addition, employees are permitted to defer
their salary or annual cash incentive into stock units payable at
a date elected by the employee. This feature is also designed to
encourage employee stock ownership.
Performance Goals. The Committee may designate whether any
award being granted to any Participant is intended to be qualifi ed
performance-based compensation. Any such awards designated
as intended to be qualifi ed performance-based compensation shall
be conditioned on the achievement of one or more performance
measures to the extent required by Section 162(m). The performance
goals that may be used by the Committee for the awards described
above may be based on any one or more of the following Company,