Pizza Hut 2013 Annual Report Download - page 69

YUM! BRANDS, INC.-2014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 2013 to each of the
Company’s NEOs. The full grant date fair value of these awards 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/
SAR
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 2/6/2013 0 2,320,000 6,960,000
2/6/2013 360,956 62.93 5,255,519
2/6/2013 — 30,590 61,180 1,568,655
Grismer 2/6/2013 0 650,000 1,950,000
2/6/2013 75,770 62.93 1,103,211
2/6/2013 45,462 62.93 661,927
2/6/2013 — 2,225 4,450 114,098
Su 2/6/2013 0 1,265,000 3,795,000
2/6/2013 121,231 62.93 1,765,123
2/6/2013 — 6,675 13,350 342,294
Creed 2/6/2013 0 750,000 2,250,000
2/6/2013 90,923 62.93 1,323,839
2/6/2013 — 3,973 7,946 203,735
Pant 2/6/2013 0 750,000 2,250,000
2/6/2013 90,923 62.93 1,323,839
2/6/2013 — 3,973 7,946 203,735
(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 2013. The actual amount of
annual incentive compensation awarded for 2013 are shown in column (f) of the Summary Compensation Table on page 44. The performance measurements,
performance targets, and target bonus percentages are described in the CD&A beginning on page 28 under the discussion of annual incentive compensation.
(2) Reflects grants of PSU awards subject to performance-based vesting conditions under the LTIP in 2013. The PSU awards vest on December 31, 2015 and
PSU award payouts are subject to the Company’s achievement of specified relative total shareholder return (“TSR”) rankings against its peer group (which is
the S&P 500) during the performance period ending on December 31, 2015. The performance target for all the PSU awards granted to the NEOs in 2013 is
a 50% TSR percentile ranking for the Company, determined by comparing the Company’s relative TSR ranking against its peer group as measured at the end
of the performance period. If the 50% TSR percentile ranking target is achieved, 100% of the PSU award will pay out in shares of Company stock, subject to
executive’s election to defer PSU awards into the EID Program. If less than 40% TSR percentile ranking is achieved, there will be no payout. If the Company’s
TSR percentile ranking is 90% or higher, PSU awards pay out at the maximum, which is 200% of target. The terms of the PSU awards 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 2013 SARs and stock options granted to executives during the Company’s 2013 fiscal year. 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. For each executive, the grants were made February 6, 2013. SARs/stock options become
exercisable in equal installments on the first, second, third and fourth anniversaries of the grant date; except, however, 45,462 SARs granted to Mr. Grismer
become exercisable on the fifth anniversary of the grant date. The terms of each SAR/stock option grant provide that, in case of a change in control if an
executive is employed on the date of a change in control and is involuntarily terminated on or within two years following the change in control (other than by
the Company for cause) then all outstanding awards become exercisable immediately.
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
grantee’s unvested SARs/stock options expire on the grantee’s date of death. If a grantee’s employment is terminated due to gross misconduct, the entire
award is forfeited. For other employment terminations, all vested or previously exercisable SARs/stock options as of the last day of employment must be
exercised within 90 days following termination of employment.
(4) The exercise price of the SARs/stock options granted in 2013 equals the closing price of YUM common stock on the grant date, February 6, 2013.
(5) Amounts in this column reflect the full grant date fair value of the PSU awards 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 NEOs. The grant date fair value is the amount that the Company is expensing in its financial statements over the award’s vesting schedule. For PSU awards
granted prior to 2013, fair value was calculated using the closing price of the Company’s common stock on the date of grant. In 2013, the Company granted PSU
awards with market-based conditions valued using a Monte Carlo simulation. For SARs/stock options, fair value of $14.56 was calculated using the Black-Scholes
value on the February 6, 2013 grant date. 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 2013 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 PSU
awards 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.