Pizza Hut 2015 Annual Report Download - page 54

YUM! BRANDS, INC.-2016Proxy Statement40
Proxy Statement
EXECUTIVE COMPENSATION
I. Executive Summary
A. Yum 2015 Performance(1)
In 2015 YUM’s overall performance was below expectations.
Although our three global brand Divisions (excluding the
China and India Divisions) collectively grew operating profit
8% which is in-line with our ongoing growth model target,
our China Division’s results did not meet our expectations.
As a result, total operating profit grew 7%. These results,
combined with the negative impact of foreign currency,
resulted in earnings per share (“EPS”) growth of 3% in 2015.
While these overall results were disappointing, YUM delivered
the following results, which will help build long-term
shareholder value and enhanced shareholder returns:
•
Worldwide systems sales grew 5% and restaurant margin
increased 1.5 percentage points.
•Opened 2,365 new restaurants including 1,972 outside
the U.S., with 80% of the international development
occurring in emerging markets.
•
The China Division grew system sales 2%, and operating
profit 8% with impressive cost management partially
offsetting weaker than originally anticipated sales results.
• The KFC Division grew system sales 7%, same-store
sales 3% and operating profit 8%.
•
The Taco Bell Division delivered exceptional results,
continuing to roll-out innovative products and building on
its breakfast menu, fueling 8% system sales growth, 5%
same-store sales growth and 12% operating profit growth.
• Increased the quarterly dividend by 12%, marking the
eleventh consecutive year of dividend increases at a
double-digit percentage rate.
In October, 2015 we announced our intent to separate
YUM’s China business from YUM into an independent,
publicly-traded company by the end of 2016. This transaction,
which is expected to be a tax-free spin-off of our China
business, will create two powerful, independent, focused
growth companies with distinct strategies, financial profiles
and investment characteristics. The new China entity will
become a licensee of YUM in mainland China, with exclusive
rights to the KFC, Pizza Hut and Taco Bell concepts and
90% company-owned restaurants currently. Upon completion
of the planned spin-off, YUM will become more of a “pure
play” franchisor with more stable earnings, higher profit
margins, lower capital requirements and stronger cash flow
conversion. Consistent with this strategy YUM is targeting
96% franchisee ownership of its restaurants by the end
of2017.
B. Named Executive Officers
Greg Creed became the Company’s new CEO on January 1, 2015, succeeding David C. Novak. The named executive
officers (“NEOs”) for 2015 discussed in this CD&A are as follows:
Name Title
Greg Creed Chief Executive Officer
Patrick J. Grismer Chief Financial Officer
David C. Novak Executive Chairman of the Board of Directors
Micky Pant Chief Executive Officer of YUM Restaurants China
Brian Niccol Chief Executive Officer of Taco Bell Division
Jing-Shyh S. Su Former Chief Executive Officer of YUM Restaurants China
Although Mr.Su retired as Vice Chairman and as Chairman and Chief Executive Officer of YUM Restaurants China on
August 18, 2015, he is included because his 2015 total compensation would have placed him among the three most
highly-compensated executive officers after the CEO and CFO.
(1) Note: All comparisons are versus the same period a year ago and exclude Special Items unless noted. System sales and operating profit figures in this section exclude
the impact of foreign currency translation and restaurant margin figures are as reported.