Pizza Hut 2013 Annual Report Download - page 52

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YUM! BRANDS, INC.-2014Proxy Statement30
Proxy Statement
EXECUTIVE COMPENSATION
As indicated below, three out of the five NEOs had below target bonus payouts in 2013 as they did not achieve target performance
levels.
NEO TARGET BONUS VS. ACTUAL(1)
GRISMER
Target
Bonus
SU CREED PANTNOVAK
198% 198%
161%
41% 43% 49%
273%
202% 216%
105%
(1) Bonus payout as percentage of target
Actual (%)
0
50
100
150
200
250
300
20132012
Long-term incentive payouts also decreased under our Performance Share Plan. 2011 PSU awards were not paid out to
our NEOs since the earnings per share average during the 2011-2013 performance cycle did not reach the required
minimum average growth threshold of seven percent.
These results reflect our commitment to pay-for-performance.
2013 Compensation Changes
As discussed in last year’s CD&A, as a result of our 2012
shareholder vote and feedback, the following changes were
made to our compensation program for 2013:
•
Updated the Company’s Executive Peer Group to better
align the size of the peer group companies with YUM.
•
Eliminated use of similar metrics in short-term incentive
(“STI”) and long-term incentive (“LTI”) programs by re-
designing our 2013-2015 performance share plan to
measure relative total shareholder return vs. the S&P 500.
•
Increased use of performance shares in our LTI program
by changing the CEO’s mix from 90% SARs and 10%
PSUs to 75% SARs and 25% PSUs.
•
Replaced our CEO’s nonqualified pension benefits under
the Pension Equalization Plan (“PEP”) with a benefit in
the Leadership Retirement Plan (“LRP”). As a result of
this change, Mr. Novak will receive a long-term benefit
that is similar to what he would have received under PEP,
assuming historically normal interest rates, without the
fluctuation from interest rate volatility that is inherent in
the PEP.
•
Consistent with the dominant governance model, eliminated
excise tax gross-ups upon a change in control for current
and future agreements and implemented double trigger
vesting upon a change in control of the Company for
equity awards made in 2013 and beyond.
Executive Compensation Governance Practices
We employ key compensation governance practices that provide a foundation for our pay for performance program.
We Do We Don’t Do
✓Executive Stock Ownership Guidelines ✗Employment agreements
✓Compensation recovery (i.e., “clawback”) ✗Re-pricing of SARs or stock options
✓Limited future severance agreements ✗Excise tax gross-ups upon change in control
✓Double trigger vesting of equity awards upon change in control ✗Hedging or pledging of Company stock
The philosophies, actions and practices described above reinforce our longstanding commitment to an executive
compensation program that emphasizes performance and shareholder alignment.