Pizza Hut 2014 Annual Report Download - page 63

Long-Term Equity Performance-Based Incentives
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We provide performance-based long-term equity Performance Share Plan
compensation to our NEOs to encourage long-term Under the Company’s Performance Share Plan, the PSU
decision making that creates shareholder value. To that awards granted in 2014 are earned based on the Company’s
end, we use vehicles that motivate and balance the 3-year average total shareholder return (‘‘TSR’’) relative to the
tradeoffs between short-term and long-term performance. companies in the S&P 500. Incorporating TSR supports the
Performance-based long-term equity compensation also Company’s pay-for-performance philosophy while diversifying
serves as a retention tool. performance criteria and aligning our NEOs’ reward with the
Our NEOs are awarded long-term incentives annually creation of shareholder value. The threshold and maximum
based on the Committee’s subjective assessment of the are aggressively set, exceeding market best practice. The
following items for each NEO (without assigning weight to target, threshold and maximum shares that may be paid out
any particular item): under these awards for each NEO are described at page 48.
The target grant value for the CEO is 25% of his total long-term
Prior year individual and team performance incentive award value and for the other NEOs is 20% of their
Expected contribution in future years total long-term incentive award value.
Consideration of the market value of the executive’s role For the performance period covering 2014 – 2016 calendar
compared with similar roles in our Executive Peer Group years, each NEO will earn a percentage of his target PSU
award based on the achieved TSR percentile ranking as set
Achievement of stock ownership guidelines forth in the chart below:
Stock Appreciation Rights/Stock Options
TSR Percentile Ranking <40% 40% 50% 70% 90%
In general, our SARs/Options have ten-year terms and vest Payout as % of Target 0% 50% 100% 150% 200%
over at least four years. Each SAR/Option award was granted
with an exercise price based on the closing market price of the Dividend equivalents will accrue during the performance
underlying YUM common stock on the date of grant. period and will be distributed as incremental shares but only in
the same proportion and at the same time as the original
Each year, the Committee reviews the mix of long-term
awards are earned. If no awards are earned, no dividend
incentives to determine if it is appropriate to continue
equivalents will be paid. The awards are eligible for deferral
predominantly using SARs/Options as the long-term incentive
under the Company’s Executive Income Deferral Program. As
vehicle. The Committee continues to choose SARs/Options
discussed on page 30, PSU awards granted in 2011 did not
because they emphasize the Company’s focus on long-term
pay out since YUM did not attain the minimum performance
growth and they reward employees only if YUM’s stock price
threshold (these awards would have paid out during 2014 had
increases. For each NEO, the breakdown between SAR/
the Company’s average earnings per share during the
Option award values and PSU award values can be found
2011 – 2013 performance period reached the required
under the Summary Compensation Table, page 46 at
minimum average growth threshold of seven percent).
columns e and f.
2014 Long-term Incentive Awards
Based on the Committee’s assessment as described above, the Committee set the following 2014 values for long-term incentive
awards, including SARs/Options and PSU awards, for each NEO:
Novak $7,150,000(1) Award brought his total direct compensation to our target philosophy
Grismer $1,825,000(1) Award brought his total direct compensation to our target philosophy
Su $2,350,000(1) Awarded at above target philosophy based on his sustained long-term results in role
Creed $1,675,000(1)(2) Awarded at above target philosophy based on his sustained long-term results in role
Bergren $1,450,000(1)(2) Awarded at above target philosophy based on his sustained long-term results in role
(1) 2014 grant values are rounded to the nearest $25,000 to reflect the Committee approved valuation figures.
(2) Mr. Creed and Mr. Bergren’s 2014 grant values exclude their 2014 Chairman’s Awards of $1,200,000 (rounded to the nearest $25,000 to
reflect the Committee-approved valuation figures). Mr. Creed received his award in February 2014 based on his superlative leadership in
helping Taco Bell achieve strong 2013 results and Mr. Bergren received his award in February 2014 in recognition of his multi-year
contributions to drive brand innovation across all divisions.
2015 Proxy Statement YUM! BRANDS, INC. 41
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2014
NEO Grant Value Reason
EXECUTIVE COMPENSATION
Proxy Statement