Pizza Hut 2012 Annual Report Download - page 57

YUM! BRANDS, INC.-2013Proxy Statement 39
Proxy Statement
EXECUTIVE COMPENSATION
Individual Performance
Our Board, under the leadership of the Management Planning
and Development Committee Chair, approved Mr.Novak’s written
goals at the beginning of the year and conducted a mid-year
and year-end evaluation of his performance. These evaluations
included a review of his leadership pertaining to the achievement
of written goals that included business results, leadership in the
development and implementation of Company strategies, and
development of Company culture and talent.
The Committee determined that Mr.Novak’s overall performance for
2012 was above target and awarded him an individual performance
factor of 130. This determination was based on the Committee’s
assessment of Mr.Novak’s performance against his written goals
including (without assigning a weight to any particular item):
• 13% EPS growth by delivering above-plan profi t performance;
•Breakthrough product innovation that drove same-store sales
growth in every division;
•Record number of units developed in China and YRI;
• His development of strong leaders and fostering the employee
culture in the Company; and
• His continued commitment to corporate social responsibility
through the World Food Programme and other hunger-related
organizations
Individual performance of the Named Executive Offi cers (other than
the Chief Executive Offi cer) is based upon the Committee’s subjective
assessment of each Named Executive Offi cer’s performance for
the year, including consideration of specifi c objective individual
performance goals set at the beginning of the year. The Chief
Executive Offi cer provides the Committee with his evaluation of each
of the Named Executive Offi cer’s performance and recommends
an individual performance rating to the Committee.
For Mr.Grismer, the Committee determined his performance as
the Chief Financial Offi cer was above target and approved a 130
individual performance factor. This was based upon the overall
strong fi nancial results of the Company, success with our supply
chain process improvement and leadership of growth initiatives.
For Mr.Su, the Committee determined his overall individual
performance for 2012 was above target and approved a 125
individual performance factor. This was based upon the China
Division achieving over $1 billion in operating profi t for the fi rst
time, signifi cantly exceeding its development and system sales
growth targets and exceeding its customer satisfaction target.
For Mr.Carucci, the Committee determined his overall individual
performance for 2012 was on target and approved a 115 individual
performance factor. This determination was based upon his
leadership of the Taco Bell, Pizza Hut and KFC US Divisions and
Yum! Restaurants International Division along with the successful
transition of Mr.Grismer to the Chief Financial Offi cer role.
For Mr.Pant, the Committee determined his overall individual
performance for 2012 was above target and approved a 135
individual performance factor. This was based upon the Yum!
Restaurants International Division signifi cantly exceeding its
development target and exceeding its operating profi t growth,
system sales growth and customer satisfaction targets.
Long-Term Equity Performance-Based Incentives
We provide performance-based long-term equity compensation
to our Named Executive Offi cers to encourage long-term decision
making which creates shareholder value. This means using vehicles
that motivate and balance the tradeoffs between short-term and
long-term performance. Performance-based long-term equity
compensation also serves as a retention tool.
Our Named Executive Offi cers are awarded long-term incentives
annually based on the Committee’s subjective assessment of the
following items for each Named Executive Offi cer (without assigning
weight to any particular item):
•Prior year individual and team performance
•Expected contribution in future years
• Consideration of market value for these roles compared with
similar roles in our Executive Peer Group
•Achievement of stock ownership guidelines
In general, our stock options and SARs have ten-year terms and
vest 25% per year over four years. Each SAR and stock option
was granted with an exercise price based on the closing market
price of the underlying YUM common stock on the date of grant.
Each year, the Committee reviews the mix of long-term incentives
to determine if it is appropriate to continue predominantly using
stock options and SARs as the long-term incentive vehicle. The
Committee continues to choose stock options and SARs because
they emphasize the Company’s focus on long-term growth and
they reward employees only if the stock price increases. For
each Named Executive Offi cer, the breakdown between SARs/
stock option award and performance share unit award values
can be found under the Summary Compensation Table, page 44
at columns d and e.