Pizza Hut 2015 Annual Report Download - page 70

YUM! BRANDS, INC.-2016Proxy Statement56
Proxy Statement
EXECUTIVE COMPENSATION
elected to continue to provide them, noting that this practice
is consistent with how we treat other executives on foreign
assignment. Mr.Su’s agreement stipulates that the following
will be provided:
• Housing, commodities and utilities allowances
• Tax preparation services
• Tax equalization to Hong Kong with respect to income
attributable to certain SARs/options exercises and to
distributions of deferred income
On August 19, 2015, Mr.Su retired as Chairman and CEO
of the China Division and assumed the role of Executive
Advisor to the new CEO of the China Division, Micky Pant.
Mr.Su retired as an employee of the Company on
February15, 2016. At the time of his retirement as Chairman
and CEO of the China Division, the Company agreed to
make tax equalization payments to Mr.Su (as if he were a
resident of Hong Kong) for China income tax incurred by
him with respect to his stock option and SAR exercises
and deferral plan payouts up to a maximum of $5 million.
At the end of 2015, Mr.Su had benefitted from approximately
$3.2 million in tax equalization payments under the agreement
as reported at page 54.
VI. How Compensation Decisions Are Made
Shareholder Outreach, Engagement and 2015 Vote on NEO Compensation
At our 2015 Annual Meeting of Shareholders, 65% of votes
cast on our annual advisory vote on NEO compensation
were in favor of our NEOs’ compensation program, as
disclosed in our 2015 proxy statement. During 2015, we
continued our shareholder outreach program to better
understand our investors’ opinions on our compensation
practices and respond to their questions. Committee
members and management team members from
compensation, investor relations and legal continued to be
directly involved in engagement efforts during 2015 that
served to reinforce our open door policy. The efforts included:
• Contacting the top 100 shareholders, representing
ownership of approximately 46% of our shares
•
Meeting with shareholders representing 17% of our shares
•Dialogue with proxy advisory firm
•Investor road shows and conferences
•Presenting shareholder feedback to the Committee
•Considering letters from shareholders
Our annual engagement efforts allow many shareholders
the opportunity to provide feedback. The Committee carefully
considers shareholder and advisor feedback, among other
factors discussed in this CD&A, in making its compensation
decisions. Shareholder feedback, including the 2015 voting
results on NEO compensation, has influenced and reinforced
a number of compensation design changes over the years,
including:
•
Moving away from above-market benchmarking for
CEOpay
•
Adjusting CEO long-term incentives from 100% SARs/
Options to a mix comprised of 75% SARs/Options and
25% PSUs
•
Moving away from EPS to TSR-based targets under PSU
awards thus, removing duplicative measures between
the bonus and long-term incentive plan
Shareholder feedback further influenced the changes to our
compensation program for 2015 described above. The Company
and the Committee appreciate the feedback from our
shareholders and plan to continue these engagement efforts.
Role of the Committee
Compensation decisions are ultimately made by the
Committee using its judgment, focusing primarily on each
NEO’s performance against his financial and strategic
objectives, qualitative factors and the Company’s overall
performance. The Committee considers the total
compensation of each NEO and retains discretion to make
decisions that are reflective of overall business performance
and each executive’s strategic contributions to the business.
In making its compensation decisions, the Committee
typically follows the annual process described below: