Pizza Hut 2012 Annual Report Download - page 41

YUM! BRANDS, INC.-2013Proxy Statement 23
Proxy Statement
ITEM4RE-APPROVAL OF YUM! BRANDS,INC. LONGTERM INCENTIVE PLAN PERFORMANCE MEASURES
subsidiary, operating unit or division performance measures: cash
fl ow; earnings; earnings per share; market value added or economic
value added; profi ts; return on assets; return on equity; return
on investment; revenues; stock price; total shareholder return;
customer satisfaction metrics; or restaurant unit development.
Each goal may be expressed on an absolute and/or relative basis,
may be based on or otherwise employ comparisons based on
internal targets, the past performance of the Company and/or the
past or current performance of other companies, and in the case
of earnings-based measures, may use or employ comparisons
relating to capital, shareholders’ equity, shares outstanding,
investments, assets or net assets.
Authorized Shares. The LTIP provides for 70,600,000shares that
may be delivered under the LTIP (subject to the adjustment for
any future stock splits or other capital transactions as described
below).To the extent any shares of stock covered by an award
are not delivered to a Participant or benefi ciary because the
award is forfeited or canceled, or the shares of stock are not
delivered because the award is settled in cash or used to satisfy
the applicable tax withholding obligation, such shares shall not be
deemed to have been delivered for purposes of determining the
maximum number of shares of stock available for delivery under
the LTIP. If the exercise price of any stock option granted under
the LTIP is satisfi ed by tendering shares of stock to the Company
(by either actual delivery or by attestation), only the number of
shares of stock issued net of the shares of stock tendered shall
be deemed delivered for purposes of determining the maximum
number of shares of stock available for delivery under the LTIP.
For purposes of applying the limit of the number of shares of
stock available under the LTIP, each share of stock delivered to
a Participant or benefi ciary pursuant to the grant of other stock
awards (including stock units, restricted stock units, performance
shares, performance units, and restricted stock) would be counted
as covering two shares of stock, and would reduce the total
number of shares of stock available for delivery under the LTIP
by two shares; except, however, restricted shares or restricted
units granted as settlement of earned annual incentives or base
salary will be counted as covering one share and will reduce the
total number of shares of stock available for delivery under the
LTIP by one share.
Maximum Amount of Compensation. The following maximums
apply to grants of awards:
• a maximum of 9,000,000shares of stock may be issued for
options and SARs granted to any one individual in any fi ve
calendar-year period;
• a maximum of 3,000,000shares of stock may be issued for stock
unit, restricted stock, restricted stock unit, and performance
share awards that are intended to be qualifi ed performance-
based compensation (for Section 162(m) purposes) granted to
any one individual during any fi ve calendar-year period;
• a maximum of 12,000,000shares of stock may be issued for
stock units, restricted stock, restricted stock units, performance
shares, and performance units awards (except that stock units
and restricted stock granted with respect to the deferral of salary
or annual cash incentive awards and in lieu of the receipt of such
awards will not count toward this maximum); and
• a maximum of $10,000,000 may be covered by performance
unit awards that are intended to be qualifi ed performance-based
compensation (for Section 162(m) purposes) granted to any one
individual during any one calendar-year period.
Adjustments. In the event of a corporate transaction involving the
Company (including, without limitation, any stock dividend, stock
split, extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination or exchange of
shares), the Committee will make equitable adjustments to awards
to preserve the benefi ts or potential benefi ts of the awards as the
Committee determines to be necessary and appropriate. Action by
the Committee may include: (i)adjustment of the number and kind
of shares (or other property) which may be delivered; (ii)adjustment
of the number and kind of shares subject to outstanding awards;
(iii)adjustment of the grant or exercise price of outstanding options
and SARs; and (iv)the terms, conditions or restrictions of outstanding
awards and/or award agreements.
Change in Control. Generally, the Committee may provide under
the terms of any award that upon a change in control, as defi ned
in the LTIP, all outstanding options and SARs will become fully
exercisable and all stock units, restricted stock, restricted stock
units and performance shares will become fully vested. Under
current practice, any restricted shares attributable to deferrals
under the Company’s income deferral plan shall become fully
vested upon a change of control. Effective for awards granted in
2013 and beyond, outstanding options and SARs will become
fully exercisable and other stock awards will fully vest immediately
if the Participant is employed on the date of a change in control
of the Company and the Participant’s employment is involuntarily
terminated (other than by the Company for cause) on or within two
years following the change in control (“double trigger” vesting).
Amendments. The Board may, at any time, amend or terminate
the LTIP, provided that no amendment or termination may, in the
absence of consent to the change by the affected Participant,
adversely affect the rights of any Participant or benefi ciary under any
award granted under the LTIP prior to the date such amendment is
adopted by the Board. In addition, without shareholder approval,
no amendment may increase the limits on shares reserved for
issuance under the LTIP or the maximum individual limits described
above, decrease the minimum option or SAR exercise price or
modify the restrictions on repricing, expand the class of persons
eligible to receive awards under the LTIP, or decrease the minimum
vesting provisions for service-based awards (described above).
Adjustments in the event of a corporate transaction or reorganization
are not subject to the foregoing restrictions.
Tax Treatment of A wards. The following is a brief description
of the U.S. federal income tax treatment that will generally apply
to awards under the LTIP based on current U.S. federal income
tax rules.
• NON-QUALIFIED STOCK OPTIONS. The grant of a non-qualifi ed
stock option will not result in taxable income to the Participant.
Except as described below, the Participant will realize ordinary
income at the time of exercise in an amount equal to the excess
of the fair market value of the stock acquired over the exercise
price for those shares, and the Company will be entitled to a
corresponding tax deduction. Gains or losses realized by the