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YUM! BRANDS, INC.-2014Proxy Statement 33
Proxy Statement
EXECUTIVE COMPENSATION
How Compensation Decisions Are Made
Shareholder Outreach, Engagement and 2013 Vote on NEO Compensation
At our 2013 Annual Meeting of Shareholders, 96% of votes
cast on our annual advisory vote on NEO compensation were
in favor of our NEOs’ compensation program, as disclosed
in our 2013 proxy statement. These results represented an
overwhelming majority support and, while we did not make any
changes to our compensation program as a result of this vote,
we continued our extensive shareholder outreach program to
better understand our investors’ opinions on our compensation
practices and have the opportunity to answer their questions.
Over the past two years, members of our management team
from compensation, investor relations and legal were directly
involved in key engagement efforts that served to reinforce our
open door policy, which included:
•Outreach calls to our top 100 shareholders
•
Actively offering meetings to the top 25 shareholders,
representing ownership of approximately 48% of YUM
shares
•Dialogue with two proxy advisory firms
•Investor road shows and conferences
•Presenting shareholder feedback to the Committee
Our annual engagement efforts have enabled us to meet
with many of our shareholders. The Company and the
Committee appreciate the feedback from our shareholders
and the proxy advisory firms. The Committee considers the
feedback, among other factors discussed in this CD&A, in
making its compensation decisions. Shareholder feedback
has influenced several of our compensation design changes,
including the five compensation changes adopted prior to
the 2013 Annual Meeting of Shareholders, as previously
discussed on page 30. The Committee did not make any
changes to our executive compensation program and
policies as a result of the vote on the 2013 proposal to
approve our NEOs’ compensation.
Role of the Committee and Chief Executive Officer
In January of each year, the Committee reviews the
performance and total compensation package of our CEO
and the other NEOs. The Committee reviews and establishes
each NEO’s total target and actual compensation for the
current year which includes base salary, annual bonus
opportunities and long-term incentive awards. The
Committee’s total compensation decisions impacting our
CEO are also reviewed and ratified by the independent
members of the Board.
In making these compensation decisions, the Committee
relies on the CEO’s in-depth review of the performance of
the other NEOs as well as competitive market information.
Compensation decisions are ultimately made by the
Committee using its judgment, focusing primarily on each
NEO’s performance against his or her financial and strategic
objectives, qualitative factors and the Company’s overall
performance. In making its decisions, the Committee also
considers the total compensation of each NEO and retains
discretion to make compensation decisions that are reflective
of overall business performance.
Role of the Independent Consultant
The Committee’s charter states the Committee may retain
outside compensation consultants, lawyers or other advisors.
The Committee retains an independent consultant, Meridian
Compensation Partners, LLC (“Meridian”), to advise it on
certain compensation matters. The Committee has instructed
Meridian that:
•
it is to act independently of management and at the
direction of the Committee;
•
its ongoing engagement will be determined by the
Committee;
•
it is to inform the Committee of relevant trends and
regulatory developments;
•
it is to provide compensation comparisons based on
information that is derived from comparable businesses
of a similar size to the Company for the NEOs; and
•
it is to assist the Committee in its determination of the
annual compensation package for our CEO and other
NEOs.
The Company considered the following factors, among
others, in determining that Meridian meets the criteria to
serve as the Committee’s independent compensation
consultant:
•
Meridian did not provide any services to the Company
unrelated to executive compensation.