Pizza Hut 2015 Annual Report Download - page 55

YUM! BRANDS, INC.-2016Proxy Statement 41
Proxy Statement
EXECUTIVE COMPENSATION
II. Compensation Overview
A. Compensation Philosophy and Practices
Our compensation program is designed to support our long-term growth model, while holding our executives accountable
to achieve key annual results year after year. YUM’s compensation philosophy for the NEOs is reviewed annually by the
Committee and has the following objectives:
Pay Element
Objective Base Salary
Annual
Performance-Based
Cash Bonuses
Long-Term Equity
Performance-
Based Incentives
Retain and reward the best talent to achieve superior
shareholder results—To be consistently better than our competitors,
we need to recruit and retain superior talent who are able to drive
superior results. We have structured our compensation programs to be
competitive and to motivate and reward high performers.
✓ ✓ ✓
Reward performance—The majority of NEO pay is performance
based and therefore at risk. We design pay programs that incorporate
team and individual performance, customer satisfaction and
shareholder return.
✓ ✓
Emphasize long-term value creation—Our belief is simple: if we create
value for shareholders, then we share a portion of that value with those
responsible for the results. Stock Appreciation Rights/Options (‘‘SARs/
Options’’) reward value creation generated from sustained results and
the favorable expectations of our shareholders. Performance Share Unit
(‘‘PSU’’) awards reward for superior relative performance as compared to
the S&P 500.
✓
Drive ownership mentality—We require executives to personally
invest in the Company’s success by owning a substantial amount of
Company stock. ✓
We employ compensation and governance best practices that provide a foundation for our pay-for-performance program
and align Company and shareholder interests.
We Do We Don’t Do
✓Independent compensation committee (Management Planning
& Development Committee), which oversees the Company’s
compensation policies and strategic direction
✘Employment agreements
✓Directly link Company performance to pay outcomes ✘Re-pricing of SARs/Options
✓Executive ownership guidelines reviewed annually against
Company guidelines ✘Grants of SARs/Options with exercise price less than fair market value of common stock
on date of grant
✓“Clawback” compensation if executive’s conduct results in
significant financial or reputational harm to Company ✘Permit executives to hedge or pledge Company stock
✓Make a substantial portion of NEO target pay “at risk” ✘Payment of dividends or dividend equivalents
on PSUs unless or until they vest
✓Double-trigger vesting of equity awards upon change in control ✘Excise tax gross-ups upon change in control
✓Utilize independent Compensation Consultant ✘Excessive executive perquisites like car
allowances or country club memberships
✓Incorporate comprehensive risk mitigation into plan design
✓Periodic review of Executive Peer Group to align appropriately
with Company size and complexity
✓Evaluate CEO and executive succession plans
✓Conduct annual shareholder engagement program to obtain
feedback from shareholders for consideration in annual
compensation program design