Pizza Hut 2013 Annual Report Download - page 67

YUM! BRANDS, INC.-2014Proxy Statement 45
Proxy Statement
EXECUTIVE COMPENSATION
(1) The amounts reflect compensation for 53 weeks in 2011 compared to 52 weeks in fiscal 2013 and 2012 due to timing of fiscal period end. Amounts shown are
not reduced to reflect the NEOs’ elections, if any, to defer receipt of salary into the Executive Income Deferral (“EID”) Program or into the Company’s 401(k) Plan.
(2) Amounts shown in column (d) represent the grant date fair values for performance share units (PSUs) granted in 2013, 2012 and 2011 and, for Mr. Grismer,
restricted stock units (RSUs) granted in 2012. Further information regarding the 2013 awards is included in the “Grants of Plan-Based Awards” and “Outstanding
Equity Awards at Year-End” tables later in this proxy statement. The grant date fair value of the PSUs reflected in this column is the target payout based on the
probable outcome of the performance condition, determined as of the grant date. The maximum potential values of the PSUs is 200% of target. For 2013, Mr.
Novak’s PSU maximum value at grant date fair value would be $3,137,310; Mr. Grismer’s PSU maximum value would be $228,196; Mr. Su’s PSU maximum value
would be $684,588; Mr. Creed’s PSU maximum value would be $407,470; and Mr. Pant’s PSU maximum value would be $407,470. In 2012, Mr. Grismer did not
receive a PSU award since he became a NEO after PSU awards were granted for that year. Mr. Grismer was instead permitted to defer his annual incentive award
into RSUs under the Company’s EID Program. Under the EID Program (which is described in more detail beginning on page 53), an executive may defer his or her
annual incentive award and invest that deferral into stock units, RSUs, or other investment alternatives offered under the EID Program. An executive who elects
to defer his or her annual incentive award into RSUs receives additional RSUs equal to 33% of the RSUs acquired with the deferral of the annual incentive award
(“matching contribution”). As a result, for 2012, the amount in that column represents the deferral of 100% of Mr. Grismer’s annual incentive award ($760,760),
plus his matching contribution ($253,587).
(3) The amounts shown in column (e) represent the grant date fair values of the stock options and stock appreciation rights (SARs) awarded in 2013, 2012 and 2011,
respectively. For a discussion of the assumptions and methodologies used to value the awards reported in column (d) and column (e), please see the discussion of
stock awards and option awards contained in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2013 Annual Report in Notes to Consolidated
Financial Statements at Note 15, “Share-based and Deferred Compensation Plans.” For Mr. Grismer, this column also includes his 2013 Chairman’s Award with a
grant date fair value of $661,927. See the Grants of Plan-Based Awards table for details.
(4) Except as provided below and in footnote (2) above, amounts in column (f) reflect the annual incentive awards earned for the 2013, 2012 and 2011 fiscal year
performance periods, which were awarded by our Management Planning and Development Committee (“Committee”) in January 2014, January 2013 and January
2012, respectively, under the Yum Leaders’ Bonus Program, which is described further in our Compensation Discussion and Analysis (“CD&A”) beginning at page 28
under the heading “Annual Performance-Based Cash Bonuses”. Pursuant to SEC rules, annual incentives deferred into RSUs under the EID Program and subject
to a risk of forfeiture are reported in column (d). If the deferral or a portion of the deferral is not subject to a risk of forfeiture, it is reported in column (f). In 2012,
Mr. Grismer elected to defer 100% of his annual incentive ($760,760) into RSUs resulting in nothing to report for him in column (f) for that year.
(5) The amount listed under “Change In Pension Value”, column (g) for Mr. Novak, reflects the aggregate increase in actuarial present value of his accrued benefit
under the YUM! Brands Retirement Plan (“Retirement Plan”) during the 2013 fiscal year (using interest rate and mortality assumptions consistent with those used
in the Company’s financial statements). As discussed in the CD&A, effective January 1, 2012, the Committee discontinued Mr. Novak’s accruing nonqualified
pension benefits under the YUM! Brands, Inc. Pension Equalization Plan (“PEP”) and, effective January 1, 2013, replaced his PEP benefit with a pension account
determined under the Leadership Retirement Plan (“LRP”). The amount transferred to his LRP-based pension account effective January 1, 2013 was $27,600,000
(representing his December 31, 2012 estimated lump amount under PEP). Mr. Novak now receives a market rate of interest on his LRP account plus an annual
benefit allocation equal to 9.5% of his salary plus target bonus.
For Mr. Su, amounts in column (g) reflect the aggregate increase in actuarial present value of age 62 accrued benefits under the Yum International Retirement Plan
(“YIRP”) during the 2013 fiscal year. See the Pension Benefits Table at page 51 for a detailed discussion of the Company’s pension benefits. Mr. Grismer and Mr.
Pant were hired after September 30, 2001, and were ineligible for the Company’s Retirement Plan. Mr. Creed is not an active participant in the Retirement Plan but
holds a balance under the Retirement Plan from the two years (2002 and 2003) during which he was a participant. His benefit under the Retirement Plan reflects
an aggregate decrease in the actuarial present value ($13,181), which in accordance with SEC rules is not reflected in the Summary Compensation Table.
For Messrs. Grismer, Creed and Pant, amounts in column (g) also represent the above market earnings as established pursuant to SEC rules which have accrued
under each of their accounts under the LRP for Messrs. Grismer and Pant and the Third Country National Plan (“TCN”) for Mr. Creed, which is described in more
detail beginning at page 53 under the heading “Nonqualified Deferred Compensation”.
(6) Amounts in column (h) are explained in the All Other Compensation Table and footnotes to that table, which follows.
(7) Mr. Grismer became a NEO in May 2012. No amounts are reported for Mr. Grismer for 2011 since he was not a NEO for that year.
(8) No amounts are reported for Mr. Creed for 2011 and 2012 since he was not a NEO for those years.
(9) As of January 2014, Mr. Pant’s title is Chief Executive Officer of KFC.