Pizza Hut 2015 Annual Report Download - page 56

YUM! BRANDS, INC.-2016Proxy Statement42
Proxy Statement
EXECUTIVE COMPENSATION
B. Compensation Changes for 2015
The Committee made significant compensation changes for 2015, including changes to CEO pay:
•
Consideration of pay philosophy, benchmark data
and pay decisions. During 2015, the Committee
considered the Company’s pay philosophy, benchmarking
practices and use of market data. Based on this review,
the Committee decided that beginning in September
2015 it would review market data and make decisions
for each executive officer most often within a range of
the market median for each element of compensation,
including base, bonus target and long-term incentive
target. In addition to the market data, the Committee will
continue to take into account the role, level of responsibility,
experience, individual performance and future potential
in setting compensation. Prior to this change the Committee
targeted compensation for all NEOs at the 50
th
percentile
for salary, 75th percentile for annual bonus and 50th
percentile for long term incentive compensation.
•CEO total direct compensation set below median of
our Executive Peer Group. Mr.Creed was appointed
CEO by the Board of Directors effective January 1, 2015.
The Committee reviewed compensation for internal peers
and a range of market data for quick service restaurant
CEOs and CEOs of YUMs Executive Peer Group, which
is comprised of the companies listed on page 58. Because
Mr.Creed was new to his role, the Committee set
Mr.Creed’s total direct compensation below the median
CEO compensation of YUM’s Executive Peer Group.
Long-Term
Incentive
Base
Target Bonus
2015 CEO Pay
$4,300,000
$1,100,000
$1,650,000
2015 CEO Pay
vs. Peer Group
<50th percentile
Total
Direct Compensation $7,050,000 <50th percentile
<50th percentile
50th percentile
Note: The Long-Term Incentive value does not match the Summary Compensation Table due to the value of SARs/Options for this table being determined based on the full
10-year term for the CEO rather than the expected term of all SARs/Options granted by the Company.
• Executive Chairman pay will target median
compensation philosophy. Mr.Novak retired as CEO
effective December 31, 2014 and was appointed Executive
Chairman of the YUM Board of Directors effective January
1, 2015. Based on the Committee’s review of a variety
of external and internal factors, the Committee targeted
total compensation and set pay at the 50th percentile,
which was based on executive chairs in the Fortune 250
who were not founders of their companies.
•Updated the Company’s Executive Peer Group. The
Committee removed OfficeMax, Darden, H.J. Heinz
Company and JC Penney and added Starwood, Hilton,
Office Depot and Kraft to the Executive Peer Group in
order to better align the size of the peer group companies
with YUM.
•
Aligned ownership guidelines with market best practice.
Our ownership guidelines in effect for 2015 are described
at page 58. The Committee determined it was appropriate
to adjust the guidelines beginning in 2015 to be more in
line with market practice. The guidelines in effect prior to
2015 had been in place for many years, and the increase
in the Company’s stock price over these years had resulted
in the guidelines exceeding market practice by a wide
margin. For 2015, under the revised ownership guidelines
Mr.Creed and Mr.Novak were required to own 100,000
shares and our Chief Financial Officer and Division CEOs
were required to own 30,000 shares. As a multiple of
salary, this represents over six times for Mr.Creed and
Mr.Novak and over three times for the Chief Financial
Officer and Division CEOs. At these multiples of salary,
the new guidelines are above the median for YUM’s
Executive Peer Group.