Pizza Hut 2012 Annual Report Download - page 65

YUM! BRANDS, INC.-2013Proxy Statement 47
Proxy Statement
EXECUTIVE COMPENSATION
Grants of Plan-Based Awards
The following table provides information on stock options, SARs, RSUs and PSUs granted for 2012 to each of the Company’s Named
Executive Offi cers. The amount of these awards that were expensed is shown in the Summary Compensation Table at page 44 .
Name
Grant
Date
Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards(1)
Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)
All Other Option
Awards; Number
of Securities
Underlying
Options
(#)(3)
Exercise
or Base
Price of
Option
Awards
($/Sh)(4)
Grant
Date Fair
Value($)(5)
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k)
Novak 2/8/2012 0 2,320,000 6,960,000
2/8/2012 377,328 64.44 5,625,960
2/8/2012 — 11,996 23,992 773,022
Grismer 2/8/2012 0 385,000 1,155,000
2/8/2012 33,102 64.44 493,551
2/8/2012 — — — —
Su 2/8/2012 0 1,265,000 3,795,000
2/8/2012 165,509 64.44 2,467,739
2/8/2012 — 5,975 11,950 385,029
Carucci 2/8/2012 0 1,050,000 3,150,000
2/8/2012 115,856 64.44 1,727,413
2/8/2012 — 4,113 8,226 265,042
Pant 2/8/2012 0 750,000 2,250,000
2/8/2012 115,856 64.44 1,727,413
2/8/2012 — 3,880 7,760 250,027
(1) Amounts in columns (c), (d)and (e)provide the minimum amount, target amount and maximum amounts payable as annual incentive compensation under the YUM
Leaders’ Bonus Program based on the Company’s performance and on each executive’s individual performance during 2012. The actual amount of annual incentive
compensation awarded for 2012 are shown in column (f) (column (d) for Mr. Grismer) of the Summary Compensation Table on page 44 . The performance measurements,
performance targets, and target bonus percentages are described in the Compensation Discussion and Analysis beginning on page 30 under the discussion of annual
incentive compensation.
(2) Reflects grants of PSUs subject to performance-based vesting conditions under the Long Term Incentive Plan in 2012. The PSUs vest on December27,2014, subject
to the Company’s achievement of specified earnings per share (“EPS”) growth during the performance period ending on December27,2014. The performance target
for all the PSU awards granted to the Named Executive Officers in 2012 is compounded annual EPS growth of 10%, determined by comparing EPS as measured at
the end of the performance period to base EPS (2011 EPS). Both base EPS and EPS for the performance period are adjusted to exclude certain items as described on
page 40 of this proxy statement. If the 10% growth target is achieved, 100% of the PSUs will pay out in shares of Company stock. If less than 7% compounded EPS
growth is achieved, there will be no payout. If EPS growth is at or above 16%, PSUs pay out at the maximum, which is 200% of target. If EPS growth is at or above
the 7% threshold but below the 16% maximum, the awards will pay out in proportion to the level of EPS growth achieved between the threshold and the target and
between the target and the maximum, as applicable. The terms of the PSUs provide that in case of a change in control during the first year of the award shares will
be distributed assuming target performance was achieved subject to reduction to reflect the portion of the performance period following the change in control. In case
of a change in control after the first year of the award, shares will be distributed assuming performance at the greater of target level or projected level at the time of
the change in control subject to reduction to reflect the portion of the performance period following the change in control.
(3) Amounts in this column reflect the number of 2012 stock appreciation rights (“SARs”) and stock options granted to executives during the Company’s 2012 fiscal
year. For each executive, the grants were made February8,2012. SARs/stock options become exercisable in equal installments on the first, second, third and fourth
anniversaries of the grant date. The terms of each SAR/stock option grant provide that, in case of a change in control, all outstanding awards become exercisable
immediately. SARs allow the grantee to receive the number of shares of YUM common stock that is equal in value to the appreciation in YUM common stock with
respect to the number of SARs granted from the date of grant to the date of exercise.
Participants who have attained age 55 with 10years of service who terminate employment may exercise SARs/stock options that were vested on their date of
termination through the expiration date of the SAR/stock option (generally, the tenth anniversary following the SARs/stock options grant date). Vested SARs/stock
options of grantees who die may also be exercised by the grantee’s beneficiary through the expiration date of the vested SARs/stock options and the grantees
unvested SARs/stock options expire on the grantees’ death. If a grantee’s employment is terminated due to gross misconduct, the entire award is forfeited. For other
employment terminations, all SARs/stock options expire upon termination of employment.
(4) The exercise price of the SARs/stock options granted in 2012 equals the closing price of YUM common stock on the grant date, February8,2012.
(5) Amounts in this column reflect the full grant date fair value of the PSUs shown in column(g) and the SARs/stock options shown in column(i ). These amounts reflect
the amounts to be recognized by the Company as accounting expense and do not correspond to the actual value that will be recognized by the Named Executive
Officers. The grant date fair value is the amount that the Company is expensing in its financial statements over the award’s vesting schedule. For PSUs, fair value was
calculated using the closing price of the Company’s common stock on the date of grant. For SARs/stock options, fair value was calculated using the Black-Scholes
value on the February8,2012 grant date of $14.91. For additional information regarding valuation assumptions of SARs/stock options, see the discussion of stock
awards and option awards contained in PartII, Item8, “Financial Statements and Supplementary Data” of the 2012 Annual Report in Notes to Consolidated Financial
Statements at Note15, “Share-based and Deferred Compensation Plans.”
There can be no assurance that the SARs/stock options will ever be exercised or PSUs paid out (in which case no value will be realized by the executive) or that the
value upon exercise or payout will equal the grant date fair value.