Pizza Hut 2012 Annual Report Download - page 52

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YUM! BRANDS, INC.-2013Proxy Statement34
Proxy Statement
EXECUTIVE COMPENSATION
•Compensation recovery (i.e., “clawback”)
•Limit on future severance agreements
•
Double trigger vesting of equity awards upon change in control
•No employment agreements
•No re-pricing of stock appreciation rights or stock options
•No excise tax gross-ups upon change in control
•No hedging or pledging of Company stock
•
No inclusion of the value of equity awards in pension calculations
•No tax gross-ups
•
Independent compensation consultant to advise Management
Planning and Development Committee
2012 Executive Compensation Program and Decisions
Our annual compensation program has three primary pay components:
•Base salary
•Annual performance-based cash bonuses
•Long-term equity performance-based incentives
Our target pay philosophy for these components as compared to
the market is (see page 35 for discussion on comparator group):
•
Chief Executive Offi cer total cash and total compensation at
the 75th percentile
•
Named Executive Offi cer base salary between the 50
th
and
75
th
percentile, bonus target at 75
th
percentile and long-term
incentives at the 50th percentile
The Committee reviews the pay mix at several specifi c companies
in our Executive Peer Group, and also considers the pay mix of the
Executive Peer Group as a whole.
As the graph below shows, and consistent with our philosophy to reward performance, the performance-based bonus and equity incentives
constitute by far the largest portion of target direct compensation for our Named Executive Offi cers:
13%
21%
66%
CHIEF EXECUTIVE OFFICER TARGET PAY MIX—2012
21%
58%
21%
ALL OTHER NAMED EXECUTIVE OFFICERS TARGET PAY MIX—2012
Base Salary Annual Bonus
Long-Term Equity Incentive
Base Salary Annual Bonus Long-Term Equity Incentive
Details regarding compensation decisions follow.
How Compensation Decisions Are Made
Role of the Committee and Chief Executive Offi cer
In Januaryof each year, the Committee reviews the performance
and total compensation package of our Chief Executive Offi cer and
the other Named Executive Offi cers. The Committee reviews and
establishes each Named Executive Offi cers’ total compensation
target for the current year which includes base salary, annual bonus
opportunities and long-term incentive awards. The Committee’s
decisions impacting our Chief Executive Offi cer are also reviewed
and ratifi ed by the independent members of the Board.
In making these compensation decisions, the Committee relies on
the Chief Executive Offi cer’s in-depth review of the performance
of the other Named Executive Offi cers as well as competitive
market information. Compensation decisions are ultimately made
by the Committee using its judgment, focusing primarily on each
Named Executive Offi cer’s performance against his or her fi nancial
and strategic objectives, qualitative factors and the Company’s
overall performance. In making its decisions, the Committee also
consider s the total compensation of each Named Executive Offi cer
and retains discretion to make compensation decisions that are
refl ective of overall business performance.