UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.)
Filed by the Registrant |
Filed by a Party other than the Registrant |
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Preliminary Proxy Statement | ||
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BYRULE 14a-6(e)(2)) | ||
Definitive Proxy Statement | ||
Definitive Additional Materials | ||
Soliciting Material under§240.14a-12 |
YUM! BRANDS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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YUM! Brands, Inc.
1441 Gardiner Lane
Louisville, Kentucky 40213
April 5, 20198, 2022
Dear Fellow Shareholders:
On behalf of your Board of Directors, we are pleased to invite you to attend the 20192022 Annual Meeting of Shareholders of YUM! Brands, Inc. The Annual Meeting will be held Thursday, May 16, 2019,19, 2022, at 9:00 a.m., localcentral time, in the Yum! ConferenceYUM! Brands Center of Restaurant Excellence at 1900 Colonel Sanders Lane7100 Corporate Drive in Louisville, Kentucky.Plano, Texas.
We intend to hold our annual meeting in person. However, we continue to monitor the situation regarding COVID-19 closely, taking into account guidance from the Centers for Disease Control and Prevention and the World Health Organization. The health and well-being of our various stakeholders is our top priority. Accordingly, we are planning for the possibility that the annual meeting may be required to be postponed or held solely by webcast in the event we or governmental officials determine that it is not advisable to hold an in-person meeting. In the event the annual meeting is postponed or held solely by webcast, we will announce that fact as promptly as practicable, and details on how to participate will be issued by press release, posted on the Investor Relations section of our website and filed with the U.S. Securities and Exchange Commission as additional proxy material.
Once again, we encourage you to take advantage of the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their shareholders over the Internet. We believe that thise-proxy process expedites shareholders’ receipt of proxy materials, lowers the costs of delivery and helps reduce the Company’s environmental impact.
Your vote is important. We encourage you to vote promptly whether or not you plan to attend the meeting. You may vote your shares via a toll-free telephone number or over the Internet. If you received a paper copy of the proxy card by mail, you may sign, date and mail the proxy card in the envelope provided. Instructions regarding the three methods of voting prior to the meeting are contained on the notice or proxy card.
If you plan to attend the meeting in person, please bring your notice, admission ticket from your proxy card or proof of your ownership of YUM common stock as of March 18, 201914, 2022, as well as a valid picture identification. Whether or not you plan to attend, the meeting, we encourage you to consider the matters presented in the proxy statement and vote as soon as possible.
Sincerely,
David Gibbs
Greg Creed
Chief Executive Officer
Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to Be Held on May 16, 2019—19, 2022—this notice and the proxy statement are available atwww.investors.yum.com/governance-documents. https://investors.yum.com/governance/governance-documents. The Annual Report on Form10-K is available atwww.investors.yum.com/annual-reports.https://investors.yum.com/financial-information/annual-reports/.
YUM! Brands, Inc.
1441 Gardiner Lane
Louisville, Kentucky 40213
Notice of Annual Meeting of Shareholders |
Thursday, May 16, 201919, 2022 9:00 a.m.
Yum! ConferenceYUM! Brands Center 1900 Colonel Sanders Lane, Louisville, Kentucky 40213of Restaurant Excellence, 7100 Corporate Drive, Plano, Texas 75024.
ITEMS OF BUSINESS:
(1) | To elect |
(2) | To ratify the selection of KPMG LLP as our independent auditors for the fiscal year ending December 31, |
(3) | To consider and hold an advisory vote on executive compensation. |
(4) |
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To transact such other business as may properly come before the meeting. |
WHO CAN VOTE?:
You can vote if you were a shareholder of record as of the close of business on March 18, 2019.14, 2022.
ANNUAL REPORT:
A copy of our 20182021 Annual Report on Form10-K is included with this proxy statement.
WEBSITE:
You may also read the Company’s Annual Report and this Notice and proxy statement on our website at www.investors.yum.com/annual-reports.https://investors.yum.com/financial-information/annual-reports/.
DATE OF MAILING:
This Notice, the proxy statement and the form of proxy are first being mailed to shareholders on or about April 5, 2019.
8, 2022.
By Order of the Board of Directors
Scott A. Catlett
General Counsel andChief Legal & Franchise Officer & Corporate Secretary
YOUR VOTE IS IMPORTANT
Under securities exchange rules, brokers cannot vote on your behalf for the election of directors or on executive compensation related matters without your instructions. Whether or not you plan to attend the Annual Meeting, please provide your proxy by following the instructions on your Notice or proxy card. On or about April 5, 2019,8, 2022, we mailed to our shareholders a Notice containing instructions on how to access the proxy statement and our Annual Report and vote online.
If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. Instead, you should follow the instructions included in the Notice on how to access and review the proxy statement and Annual Report. The Notice also instructs you on how you may submit your vote by proxy over the Internet.
If you received the proxy statement and Annual Report in the mail, please submit your proxy by marking, dating and signing the proxy card included and returning it promptly in the envelope enclosed. If you are able to attend the Annual Meeting and wish to vote your shares personally, you may do so at any time before the proxy is exercised.
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PROXY STATEMENT | 1 | |||||
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING | 1 | |||||
GOVERNANCE OF THE COMPANY | ||||||
MATTERS REQUIRING SHAREHOLDER ACTION |
YUM! Brands, Inc.
1441 Gardiner Lane
Louisville, Kentucky 40213
For Annual Meeting of Shareholders To Be Held On
May 16, 201919, 2022
The Board of Directors (the “Board of Directors” or the “Board”) of YUM! Brands, Inc., a North Carolina corporation (“YUM” or the “Company”), solicits the enclosed proxy for use at the Annual Meeting of Shareholders of the Company to be held at 9:00 a.m. (Eastern(Central Time), on Thursday, May 16, 2019,19, 2022, at the YUM! Brands Center of Restaurant Excellence at 7100 Corporate Drive in Plano, Texas.
We intend to hold our annual meeting in person. However, we continue to monitor the situation regarding COVID-19 closely, taking into account guidance from the Centers for Disease Control and Prevention and the World Health Organization. The health and well-being of our various stakeholders is our top priority. Accordingly, we are planning for the possibility that the annual meeting may be required to be postponed or held solely by webcast in the Yum! Conference Center at 1900 Colonel Sanders Lane in Louisville, Kentucky. event we or governmental officials determine that it is not advisable to hold an in-person meeting. In the event the annual meeting is postponed or held solely by webcast, we will announce that fact as promptly as practicable, and details on how to participate will be issued by press release, posted on the Investor Relations section of our website and filed with the U.S. Securities and Exchange Commission as additional proxy material.
This proxy statement contains information about the matters to be voted on at the Annual Meeting and the voting process, as well as information about our directors and most highly paid executive officers.
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
What is the purpose of the Annual Meeting?
At our Annual Meeting, shareholders will vote on several important Company matters. In addition, our management will report on the Company’s performance over the last fiscal year and, following the meeting, respond to questions from shareholders.
Why am I receiving these materials?
You received
The Board has made these materials because our Boardavailable to you over the internet, or has delivered printed versions of Directorsthese materials to you by mail, in connection with the Board’s solicitation of proxies for use at the 2022 Annual Meeting of Shareholders (the “Annual Meeting”). The Annual
Meeting is soliciting your proxyscheduled to vote your sharesbe held on Thursday, May 19, 2022 at 9:00 a.m. Central Time, at 7100 Corporate Drive, Plano, Texas. This solicitation is for proxies for use at the Annual Meeting. As a shareholder, you are invited to attendMeeting or at any reconvened meeting after an adjournment or postponement of the Annual Meeting and are entitled to vote on the items of business described in this proxy statement.Meeting.
YUM! BRANDS, INC. - 2022 Proxy Statement | 1 |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING |
Why did I receive aone-page Notice in the mail regarding the Internet availability of proxy materials this year instead of a full set of proxy materials?
As permitted by Securities and Exchange Commission (“SEC”) rules, we are making this proxy statement and our Annual Report available to our shareholders electronically via the Internet. On or about April 5, 2019,8, 2022, we mailed to our shareholders a Notice containing instructions on how to access this proxy statement and our Annual Report and vote online. If you received a Notice by mail you will not receive a printed copy of the proxy materials in the mail unless you request a copy. The Notice instructs you on how to access and review all of the important information
contained in the proxy statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice.
We encourage you to take advantage of the availability of the proxy materials on the Internet in order to help lower the costs of delivery and reduce the Company’s environmental impact.
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Who may attend the Annual Meeting?
The Annual Meeting is open to all shareholders of record as of close of business on March 18, 2019,14, 2022, or their duly appointed proxies. Seating is limited and admission is on a first-come, first-served basis.
What do I need to bring to attend the Annual Meeting?Meeting In-Person?
You will need a valid picture identification and either an admission ticket or proof of ownership of YUM’s common stock to enter the Annual Meeting. If you are a registered owner, your Notice will be your admission ticket.
If you received the proxy statement and Annual Report by mail, you will find an admission ticket attached to the proxy card sent to you. If you plan to attend the Annual Meeting in person, please so indicate when you vote and bring the ticket with you to the Annual Meeting. If your shares are held in the name of a bank or broker, you will need to bring your legal proxy from your bank or broker and your admission ticket.ticket in order to vote at the meeting. If you do not bring your admission ticket, you will need proof of ownership to be admitted to the Annual Meeting. A recent brokerage statement or letter from a bank or broker is
an example of proof of ownership. If you arrive at the
Annual Meeting without an admission ticket, we will admit you only if we are able to verify that you are a YUM shareholder. Your admittance to the Annual Meeting will depend upon availability of seating. All shareholders will be required to present valid picture identification prior to admittance. IF YOU DO NOT HAVE A VALID PICTURE IDENTIFICATION AND EITHER AN ADMISSION TICKET OR PROOF THAT YOU OWN YUM COMMON STOCK, YOU MAY NOT BE ADMITTED INTO THE ANNUAL MEETING.
Please note that cellular and smart phones/devices, computers, cameras, sound or video recording equipment, cellular and smart phones, tablets and other similar devices, large bags, briefcases and packages will not be allowed in the meeting room.
May shareholders ask questions?
Yes. Representatives of the Company will answer shareholders’ questions of general interest following the Annual Meeting. In order Seating is limited and admission is on a first-come, first-served basis. Seating may be further limited if necessary to give a greater number of shareholders an opportunity to ask questions, individuals or groups will be allowed to ask only one question and no repetitive orcomply with applicable follow-upCOVID-19 questions will be permitted.
Who may vote?
You may vote if you owned YUM common stock as of the close of business on the record date, March 18, 2019. Each share of YUM common stock is entitled to one vote. As of March 18, 2019, YUM had 305.9 million shares of common stock outstanding.
What am I voting on?
You will be voting on the following six (6) items of business at the Annual Meeting:
The election of eleven (11) directors to serve until the next Annual Meeting of Shareholders and until their respective successors are duly elected and qualified;
The ratification of the selection of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2019;
An advisory vote on executive compensation; and
Three (3) shareholder proposals.
We will also consider other business that properly comes before the meeting.safety guidelines.
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QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
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May shareholders ask questions?
Yes. Representatives of the Company will answer shareholders’ questions of general interest following the Annual Meeting. In order to give a greater number of shareholders an opportunity to ask questions, individuals or groups will be allowed to ask only one
question and no repetitive or follow-up questions will be permitted.
Questions will be answered as time allows.
Who may vote?
You may vote if you owned YUM common stock as of the close of business on the record date, March 14, 2022. Each share of YUM common stock is entitled to one vote. As of March 14, 2022, YUM had 288.2 million shares of common stock outstanding.
What am I voting on?
You will be voting on the following three (3) items of business at the Annual Meeting:
The election of twelve (12) directors to serve until the next Annual Meeting of Shareholders and until their respective successors are duly elected and qualified;
The ratification of the selection of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2022; and
An advisory vote on executive compensation.
We will also consider other business that properly comes before the meeting.
How does the Board of Directors recommend that I vote?
Our Board of Directors recommends that you vote your shares:
FOR each of the nominees named in this proxy statement for election to the Board;
FOR the ratification of the selection of KPMG LLP as our independent auditors; and
FOR the proposal regarding an advisory vote on executive compensation; and
AGAINST each of the three (3) shareholder proposals.compensation.
How do I vote before the Annual Meeting?
There are three ways to vote before the meeting:
• | By Internet — If you have Internet access, we encourage you to vote onwww.proxyvote.com by following instructions on the Notice or proxy card; |
By telephone — by making a toll-free telephone call from the U.S. or Canada to 1(800)690-6903 (if you have any questions about how to vote over the phone, call 1(888)298-6986); or
By mail — If you received your proxy materials by mail, you can vote by completing, signing and returning the enclosed proxy card in the postage-paid envelope provided.
returning the enclosed proxy card in the postage-paid envelope provided. |
If you are a participant in the direct stock purchase and dividend reinvestment plan (Computer Share(ComputerShare CIP), as a registered shareholder, you will receive all proxy materials and may vote your shares according to the procedures outlined herein.
If you are a participant in the YUM! Brands 401(k) Plan (“401(k) Plan”), the trustee of the 401(k) Plan will only vote the shares for which it has received directions to vote from you.
YUM! BRANDS, INC. - 2022 Proxy Statement | 3 |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING |
Proxies submitted through the Internet or by telephone as described above must be received by 11:59 p.m.,
Eastern Daylight Saving Time, on May 15, 2019.18, 2022. Proxies submitted by mail must be received prior to the meeting. Directions submitted by 401(k) Plan participants must be received by 12:00 p.m., Eastern Daylight Saving Time, on May 14, 2019.17, 2022.
Also, if you hold your shares in the name of a bank or broker, your ability to vote by telephone or the Internet depends on their voting processes. Please follow thedirections on your notice carefully. A number of brokerage firms and banks participate in a program
provided through Broadridge Financial Solutions, Inc. (“Broadridge”) that offers telephone and Internet voting options. If your shares are held in an account with a brokerage firm or bank participating in the Broadridge program, you may vote those shares telephonically by calling the telephone number shown on the voting instruction form received from your brokerage firm or bank, or through the Internet at Broadridge’s voting website(www.proxyvote.com). Votes submitted through the Internet or by telephone through the Broadridge program must be received by 11:59 p.m., Eastern Daylight Saving Time, on May 15, 2019.18, 2022.
Can I vote at the Annual Meeting?
Shares registered directly in your name as the shareholder of record may be voted in person at the Annual Meeting. Shares held through a broker or nominee may be voted in person only if you obtain a legal proxy from the broker or nominee that holds your shares giving you the right to vote the shares.
Even if you plan to attend the Annual Meeting, we encourage you to vote your shares by proxy. You may still vote your shares in person at the meeting even if you have previously voted by proxy.
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Can I change my mind after I vote?
You may change your vote at any time before the polls close at the Annual Meeting. You may do this by:
Signing another proxy card with a later date and returning it to us prior to the Annual Meeting;
Voting again by telephone or through the Internet prior to 11:59 p.m., Eastern Daylight Saving Time, on May 15, 2019;18, 2022;
Giving written notice to the Corporate Secretary of the Company prior to the Annual Meeting; or
Voting again at the Annual Meeting.
Your attendance at the Annual Meeting will not have the effect of revoking a proxy unless you notify our Corporate Secretary in writing before the polls close that you wish to revoke a previous proxy.
Who will count the votes?
Representatives of Computershare, Inc. will count the votes and will serve as the independent inspector of election.
What if I return my proxy card but do not provide voting instructions?
If you vote by proxy card, your shares will be voted as you instruct by the individuals named on the proxy card. If you sign and return a proxy card but do not specify how your shares are to be voted, the persons named as proxies on the proxy card will vote your shares in accordance with the recommendations of the Board. These recommendations are:
FOR the election of the eleven (11)twelve (12) nominees for director named in this proxy statement (Item 1);
FOR the ratification of the selection of KPMG LLP as our independent auditors for the fiscal year 20192022 (Item 2); and
FOR the proposal regarding an advisory vote on executive compensation (Item 3); and
AGAINST each Shareholder Proposal (Items4-6).
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QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING |
What does it mean if I receive more than one proxy card?
It means that you have multiple accounts with brokers and/or our transfer agent. Please vote all of these shares. We recommend that you contact your broker and/or our transfer agent to consolidate as many
accounts as possible under the same name and address. Our transfer agent is Computershare, Inc., which may be reached at 1 (888)439-4986 and internationally at 1 (781)575-2879.
Will my shares be voted if I do not provide my proxy?
Your shares may be voted if they are held in the name of a brokerage firm, even if you do not provide the brokerage firm with voting instructions. Brokerage firms have the authority under the New York Stock Exchange rules to vote shares for which their customers do not provide voting instructions on certain “routine” matters.
The proposal to ratify the selection of KPMG LLP as our independent auditors for fiscal year 20192022 is considered a routine matter for which brokerage firms
may vote shares for which they have not received voting instructions. The other proposals to be voted on at our Annual Meeting are not considered “routine” under applicable rules. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a “brokernon-vote.”
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How many votes must be present to hold the Annual Meeting?
Your shares are counted as present at the Annual Meeting if you attend the Annual Meeting in person or if you properly return a proxy by Internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of the outstanding shares of YUM common
stock, as of March 18, 2019,14, 2022, must be present in person or represented by proxy at the Annual Meeting. This is referred to as a quorum. Abstentions and brokernon-votes will be counted for purposes of establishing a quorum at the Annual Meeting.
How many votes are needed to elect directors?
You may vote “FOR” each nominee or “AGAINST” each nominee, or “ABSTAIN” from voting on one or more nominees. Unless you mark “AGAINST” or “ABSTAIN” with respect to a particular nominee or nominees or for all nominees, your proxy will be voted “FOR” each of the director nominees named in this proxy statement. In an uncontested election, a nominee will be elected as a director if the number of “FOR” votes exceeds the number of “AGAINST” votes.
Abstentions will be
counted as present but not voted. Abstentions and brokernon-votes will not affect the outcome of the vote on directors. Full details of the Company’s majority voting policy are set out in our Corporate Governance Principles at www.investors.yum.comhttps://investors.yum.com/governance/governance-documents/ and at page 1921 under “What other significant Board practices does the Company have? — Majority Voting Policy.”
YUM! BRANDS, INC. - 2022 Proxy Statement | 5 |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING |
How many votes are needed to approve the other proposals?
In order to be approved, the other proposals must receive the “FOR” vote of a majority of the shares, present in person or represented by proxy, and entitled to vote at the Annual Meeting. For each of these items, you may vote “FOR”, “AGAINST” or “ABSTAIN.” Abstentions will be counted as shares present and entitled to vote at the Annual Meeting. Accordingly,
Accordingly, abstentions will have the same effect as a vote “AGAINST” the proposals. Brokernon-votes will not be counted as shares present and entitled to vote with respect to the particular matter on which the broker has not voted. Thus, brokernon-votes will not affect the outcome of any of these proposals.
When will the Company announce the voting results?
The Company will announce the voting results of the Annual Meeting on a Current Report on Form8-K filed within four business days of the Annual Meeting.
What if other matters are presented for consideration at the Annual Meeting?
The Company knows of no other matters to be submitted to the shareholders at the Annual Meeting, other than the proposals referred to in this Proxy Statement. If any other matters properly come before the shareholders at the Annual Meeting, it is the intention of the persons named on the proxy to vote the shares represented thereby on such matters in accordance with their best judgment.
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The business and affairs of YUM are managed under the direction of the Board of Directors. The Board believes that good corporate governance is a critical factor in achieving business success and in fulfilling the Board’s responsibilities to shareholders. The Board believes that its practices align management and shareholder interests.
The corporate governance section of the Company website makes available the Company’s corporate governance materials, including the Corporate Governance Principles (the “Governance Principles”), the Company’s Articles of Incorporation and Bylaws, the charters for each Board committee, the Company’s WorldwideGlobal Code of Conduct, the Company’s Political Contributions and U.S. Government Advocacy Policy, and information about how to report concerns about the Company. To access these documents on the Company’s website, please visit, www.yum.comhttps://investors.yum.com/governance/governance-documents/, click on “Investors” and then “Corporate Governance”.
Governance Highlights Corporate Governance 11 Director Nominees 10 Independent Nominees Directors with experience, qualifications and skills across a wide range of public and private companies Board Access to Senior Management and Independent Advisors Independent Non-Executive Chairman Independent Board Committees Executive Sessions of Independent Directors at every regular Board and Committee meeting Risk Oversight by Board and its Committees Annual Board and Committee Self-Evaluations All Directors Attended at least 75% of Meetings Held YUM's Worldwide Code of Conduct Political Contributions and U.S. Government Advocacy Policy Audit Committee Complaint Procedures Policy regarding Accounting Matters No Hedging or Pledging of Company Stock Shareholder Rights Annual Election of Directors Majority Voting of Directors Proxy Access Shareholder Communication Process for communicating with Board Active Shareholder Engagement Program Compensation Independent Management Planning and Development Committee Independent Compensation Consultant Executive Compensation is Highly Performance Based to Align with Shareholder Interests and Promote Company Business Strategy At Risk Pay Tied to Performance Strong Stock Ownership Guidelines No Employment Agreements or Guaranteed Bonuses Compensation Recovery Policy (Clawback) applies to Equity and Bonus Awards Double trigger vesting upon Change in Control No excise tax gross ups
YUM! BRANDS, INC. - | 7 |
GOVERNANCE OF THE COMPANY
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What is the composition of the Board of Directors and how often are members elected?
Our Board of Directors presently consists of 1112 directors whose terms expire at this Annual Meeting. Our directors are elected annually. The average director tenure is 5.56 years, with our longest- and shortest-tenured directors having served for 1316 years (Mr. Nelson) and for 1 year2 years (Mr. Barr and 4 months, respectively (Ms. Domier).Mmes. Hobart and Young-Scrivner), respectively.
As discussed in more detail later in this section, the Board has determined that 1011 of the 1112 individuals standing for election are independent under the rules of the New York Stock Exchange (“NYSE”). The director tenure of the 12 individuals standing for election is reflected in the following chart:
How often did the Board meet in fiscal 2018?2021?
The Board of Directors met 56 times during fiscal 2018.2021. Each of the directors who served in 20182021 attended at least 75% of the meetings of the Board and the committees of which he or she was a member and that were held during the period he or she served as a director.
What is the Board’s policy regarding director attendance at the Annual Meeting of Shareholders?
The Board of Director’sDirectors’ policy is that all directors should attend the Annual Meeting and all persons then serving as directors attended the 20182021 Annual Meeting.
How does the Board select nominees for the Board?
The Nominating and Governance Committee considers candidates for Board membership suggested by its members and other Board members, as well as management and shareholders. The Committee’s charter provides that it may retain a third-party executive search firm to identify candidates from time to time.
In accordance with the Governance Principles, our Board seeks members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. Directors should have experience in positions with a high degree of responsibility, be leaders in the companies or institutions with which they are affiliated
8 | YUM! BRANDS, INC. - |
GOVERNANCE OF THE COMPANY
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and are selected based upon contributions they can make to the Board and management. The committee’sCommittee’s assessment of a proposed candidate will include a review of the person’s judgment, experience, independence, understanding of the Company’s business or other related industries and such other factors as the Nominating and Governance Committee determines are relevant in light of the needs of the Board of Directors. The committeeWhile the Board does not have a specific policy regarding director diversity, the Committee believes that its nominees should reflect a diversity of experience, gender, race, ethnicity and age. The Board does not have a specific policy regarding director diversity. The committeeCommittee also considers such other relevant factors as it deems appropriate, including the current composition of the Board, the balance of management and independent directors, the need for Audit Committee expertise and the evaluations of other prospective nominees, if any.
In connection with this evaluation, it is expected that each committee member of the Nominating and Governance Committee will interview the prospective nominee before the prospective nominee is presented to the full Board for consideration. After completing this evaluation and interview process, the committeeCommittee will make a recommendation to the full Board as to the person(s) who should be nominated by the Board, and the Board determines the nominee(s) after considering the recommendation and report of the committee.
In 2017 we implemented several initiatives to transform the Company, centering on a new multi-year strategy to accelerate growth, reduce volatility and increase capital returns to shareholders. In connection with thisCommittee.
transformation strategy we developedThe Company’s strategic vision is grounded in our “Recipe for Growth and Good.” whichOur Recipe for Growth focuses on four growth drivers intended to accelerate same-store sales growth andnet-new restaurant development at KFC, Pizza Hut and Taco Bell around the world. The Company remains focused on building the world’s most loved, trusted and fastest growing restaurant brands by:
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We look for director candidates thatwho have the skills and experience necessary to help us achieve success with respect to the four growth drivers and the Company’s implementation of its “Recipe for Growth.” As a result, the skills that our directors possess are thoroughly considered to ensure that they align with the Company’s goals.
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GOVERNANCE OF THE COMPANY |
The following table describes key characteristics of the Company’s “Recipe for Growth” and indicates how the skills our Board collectively possesses positively impacts the growth drivers:
Our “Recipe for Good” provides a roadmap for socially responsible and sustainable stewardship of people, food and planet. This allows us to elevate the importance of people and continue building an equitable and inclusive culture that, in turn, helps us better serve our customers and communities where we operate. Guided by this Recipe, we will strive to unlock potential in people and communities, grow sustainably and continue to serve delicious food that people trust. In 2020 we announced our Unlocking Opportunity Initiative, which focuses on equity and inclusion, education, and entrepreneurship and is supported by a $100 million investment over five years (beginning in 2020).
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GOVERNANCE OF THE COMPANY
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The following table describes key characteristics of the Company’s “Recipe for Growth” and indicates how the skills our Board collectively possesses positively impacts the growth drivers:
Yum!'s Recipe for Growth Building Distinctive, Relevant & Easy Brands, by increasing investment in consumer insights, core product innovation, digital excellence and initiatives that strengthen the quality, convenience and appeal of the customer experience. Developing Unmatched Franchise Operating Capability, by strengthening how we equip and recruit the best restaurant operators to deliver great customer experiences, and build and protect our brands; Driving Bold Restaurant Development through partnerships with growth-minded franchisees who can expand and penetrate markets with modem restaurants, strong economics and value Growing Unrivaled Culture and Talent to strengthen the customer experience and franchise success with best-in-class people capability and culture. We have a large global workforce, which represents one of our primary resources, as well as one of our most significant operating expenses. Relevant Skills our Board Collectively Possesses Marketing/Brand Management. Experience marketing and managing well-known brands or the types of products and experiences we sell. Technology or Digital. Experience in leadership and understanding of technology, digital platforms and new media, data security, and data analytics. Industry/Operations. Experience and understanding of operational and strategic issues facing large restaurant or consumer service driven companies. Global Experience. Experience at multinational companies or in international markets, which provides useful business and cultural perspectives. Finance. Experience in Public company management and financial stewardship. Talent Development . Experience building the knowledge, skills, and abilities of employees and helping them develop and achieve their potential within an organization. leadership Experience. Experience as executive officer level business leader who demonstrates strong abilities to motivate and manage others and to effectively manage organizations.
We believe that each of our directors has met the guidelines set forth in the Governance Principles. As noted in the director biographies that follow in this section, our directors have experience, qualifications and skills across a wide range of public and private companies, possessing a broad spectrum of experience both individually and collectively. In addition to the information provided in the director biographies, our director nominees’ qualifications, experiences and skills are summarized in the following matrix. This matrix is intended to provide a summary of our directors’ qualifications and should not be considered to be a complete list of each nominee’s strengths and contributions to the Board.
Experience/Background Alves Cavanagh Connor Cornell Creed Domier Graddick-Weir Nelson Skala Stock Walter Leadership Experience Global Experience Finance Industry/Operations Marketing/Brand management Talent Development Technology or Digital
For a shareholder to submit a candidate for consideration by the Nominating and Governance Committee, a shareholder must notify YUM’s Corporate Secretary, YUM! Brands, Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213. The recommendation must contain the information described on page 81.75.
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Paget L. Alves | Background
Paget L. Alves served as Chief Sales Officer of Sprint Corporation, a wireless and wireline communications services provider, from January 2012 to September 2013 after serving as President of that company’s Business Markets Group beginning in 2009. Mr. Alves currently serves on the boards of directors of Assurant, Inc. and Synchrony Financial. Mr. Alves has previously served as a Director of Ariel Investments, LLC and International Game Technology Specific Qualifications, Experience, Skills and
• Global sales experience
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Age
Director since 2016
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Committees: • Audit, Chair | ||||||
Favorite YUM! Brands Food: Chicken Chalupas |
Keith Barr |
Background
Specific Qualifications, Experience, Skills and Expertise:
• Operating and management experience, including as Chief Executive Officer of a franchised, global company • Expertise in strategic planning, branding and corporate leadership | |||||
Age 51 Director since 2020 Independent
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Committees: • Management Planning and Development | ||||||
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Christopher M. Connor | Background
Christopher M. Connor served as Chairman and Chief Executive Officer of The Sherwin-Williams Company, a global manufacturer of paint, architectural coatings, industrial finishes and associated supplies, until 2016. Mr. Connor held a number of executive positions at Sherwin-Williams beginning in 1983. He served as Chief Executive Officer from 1999 to 2015 and Chairman from 2000 to 2016. He currently serves on the boards of Eaton Corporation plc and International Paper Company.
• Expertise in marketing, human resources, talent development, public company executive compensation, planning and operational and financial processes
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Age
Director since 2017
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Committees: • Management Planning and Development, Chair
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Favorite YUM! Brands Food:
Chicken Pot Pie |
Brian C. Cornell | Background
Brian C. Cornell joined the Yum! Brands Board in 2015 and has served asNon-Executive Chairman since November 2018. Mr. Cornell is
• Expertise in strategic planning, retail business, branding and corporate leadership • Public company directorship experience and committee experience | |||||
Age 63 Director since 2015 Independent, Non-Executive Chairman
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Committees: • Management Planning and Development • Nominating and Governance | ||||||
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Tanya L. Domier |
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Tanya L. Domieris Chief Executive Officer of Advantage Solutions, Inc., a North American provider of outsourced sales, marketing and business solutions, and has served in that role since January 2013. Prior to serving as Advantage Solutions’ CEO, Ms. Domier served as its
• Operating and management experience as Chief Executive Officer • Expertise in strategic planning, finance, global commerce and corporate leadership • Public company directorship and committee experience | ||||||
Age 56 Director since 2018 Independent | ||||||
Committees: • Audit | ||||||
Favorite YUM! Brands Food: Thin Veggie Lover’s Pizza |
David W. Gibbs | Background David W. Gibbs is the current Chief Executive Officer of YUM. He has served in that position since January 2020. Prior to that, he served as President and Chief Operating Officer from August 2019 to December 2019, as President, Chief Operating Officer and Chief Financial Officer from January 2019 to August 2019 and as President and Chief Financial Officer from May 2016 to December 2018. Previously, Mr. Gibbs served as the Chief Executive Officer of the Company’s Pizza Hut Division from January 2015 until April 2016 and was its President from January 2014 through December 2014. Mr. Gibbs served as a director of Sally Beauty Holdings from March 2016 until January 2020. Mr. Gibbs has served as a director of Under Armour since September 2021. Specific Qualifications, Experience, Skills and Expertise: • Operational and global management experience, including as Chief Executive Officer, Chief Operating Officer and Chief Financial Officer of the Company • Expertise in finance, strategic planning, global branding, franchising and corporate leadership • Public company directorship and committee experience | |
Age 59 Director since 2019 | ||
Charburger |
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Mirian M. Graddick-Weir | Background
Mirian M. Graddick-Weir retired as Executive Vice President of Human Resources for Merck & Co., Inc., a pharmaceutical company, in November, 2018. She had held that position since 2008. From 2006 until 2008, she was Senior Vice President of Human Resources of Merck & Co., Inc. Prior to this position, she served as Executive Vice President of Human Resources of AT&T Corp. from 2001 to 2006. Ms. Graddick-Weir has served as a director of
• Management experience,
• | • Public company directorship and committee experience | ||||
Age
Director since 2012
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Committees: • Management Planning and Development • Nominating and Governance, Chair | ||||||
Favorite YUM! Brands Food: Hot Wings |
Lauren R. Hobart | Background Lauren R. Hobart is President and Chief Executive Officer of DICK’S Sporting Goods. She previously served as President of DICK’S Sporting Goods, beginning in 2017. Prior to this role, Ms. Hobart was Senior Vice President and Chief Marketing Officer of DICK’S Sporting Goods. Prior to joining DICK’S Sporting Goods, Ms. Hobart spent 14 years at PepsiCo in various roles. Ms. Hobart currently serves on the board of directors of DICK’S Sporting Goods and previously served on the board of directors of Sonic Corp. from 2014 to 2018. Specific Qualifications, Experience, Skills and Expertise: • Operating, marketing and management experience, including as President of a merchandise retailer • Expertise in technology, finance, strategic planning and marketing • Public company directorship experience | |
Age 53 Director since 2020 Independent | ||
Committees: • Audit | ||
Favorite YUM! Brands Food: Chicken Quesadilla |
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Thomas C. Nelson | Background
Thomas C. Nelson is President and Chief Executive Officer of National Gypsum Company, a building products Specific Qualifications, Experience, Skills and Expertise:
• Senior government experience
• | • Public company directorship and committee experience | ||
Age
Director since 2006
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Committees: • Management Planning and
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Favorite YUM! Brands Food: Pepperoni Lover’s Pizza |
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Background
P. Justin Skala is the Chief Executive Officer of BMI Group, the largest manufacturer of flat and pitched roofing and waterproofing solutions throughout Europe. He has served in that role since September 1, 2019. Prior to joining BMI Group, Mr. Skala served as Executive Vice President, Chief Growth
• | • Expertise in branding, marketing, finance, sales, strategic planning and international business development | |||||
Age
Director since 2016
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• Audit | ||||||
Favorite YUM! Brands Food: KFC Bucket of Original Recipe Chicken |
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Elane B. Stock | Background Elane B. Stock has served as the Chief Executive Officer of ServiceMaster Brands, LLC since 2020. Prior to this role, Ms. Stock served as Group President of Kimberly-Clark International, a division of Kimberly-Clark Corporation, a global consumer products company, from 2014 to 2016. From 2012 to 2014 she was the Group President for Kimberly-Clark Professional. Prior to this role, Ms. Stock was the Chief Strategy Officer of Kimberly-Clark Corporation. Earlier in her career, Ms. Stock was a partner at McKinsey & Company in the U.S. and Ireland, where she was the Managing Director. Ms. Stock currently serves on the Board of
• | • Expertise in branding, marketing, finance, sales, strategic planning and international business development • Public company directorship experience and committee experience | ||
Age
Director since 2014
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Committees: • Audit | ||||
Favorite YUM! Brands Food:
KFC Bucket of Original Recipe Chicken |
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Background
Specific Qualifications, Experience, Skills and
• | ||||||
Age
Director since
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Favorite YUM! Brands Food: Pan Pepperoni Pizza with Crushed Red Pepper |
If elected, we expect that all of the aforementioned nominees will serve as directors and hold office until the 20202023 Annual Meeting of Shareholders and until their respective successors have been elected and qualified.
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How are directors compensated?
Employee Directors. Employee directors do not receive additional compensation for serving on the Board of Directors.
Non-Employee Directors Annual Compensation. The annual compensation for eachnon-employee Director is summarized in the table below. For 2018,2021, eachnon-employee Director received an annual stock grant retainer with a fair market value of $240,000.$260,000. Directors may request to receive up toone-half of their stock retainer in cash. The request must be submitted to the Chair of the Management Planning and Development Committee. Directors may also defer payment of their retainers pursuant to the Directors Deferred Compensation Plan. Deferrals are invested in phantom Company stock and paid out in shares of Company stock. Deferrals may not be made for less than two yearsyears.
ChairmanChairperson of the Board and Committee Chairperson Retainers. In recognition of their added duties, the ChairmanChairperson of the Board (Mr. WalterCornell in 2018)2021) receives an additional $150,000$170,000 stock retainer annually and the Chairs of the Audit Committee (Mr. NelsonAlves in 2018)2021), Management Planning and Development Committee (Mr. CornellConnor in 2018)2021) and the Nominating and Governance Committee (Mr. Walter(Ms. Graddick-Weir in 2018)2021) each
receive an additional $25,000, $20,000 and $15,000$20,000 annual stock retainer, respectively. These committee chairperson retainers were paid in February of 2018.2021.
Initial Stock Grant upon Joining Board.Non-employee directors also receive aone-time stock grant with a fair market value of $25,000 on the date of grant upon joining the Board, distribution of which is deferred until termination from the Board.
Matching Gifts. To further YUM’s support for charities,non-employee directors are able to participate in the YUM! Brands, Inc. Matching Gifts Program on the same terms as members of YUM’s Global Leadership Team.executive team. Under this program, the YUM! Brands Foundation will
match up to $10,000 a year in contributions by the director to a charitable institution approved by the YUM! Brands Foundation. At its discretion, the Foundation may match director contributions exceeding $10,000.
Insurance. We also pay the premiums on directors’ and officers’ liability and business travel accident insurance policies. The annual cost of this coverage was approximately $2 million. This is not included in the tables below as it is not considered compensation to the directors.
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In setting director compensation, the Company considers the significant amount of time that directors expend in fulfilling their duties to the Company as well as the skill level required by the Company of members of the Board. The Board reviews each element of director compensation at least every two years.
In November 2018,2021, the Management Planning and Development Committee of the Board (“Committee”) benchmarked the Company’s director compensation against director compensation from the Company’s Executive Peer Group discussed at page 54.50. Data for this review was prepared for the Committee by its independent consultant, Meridian Compensation Partners LLC. This data revealed that the Company’s
total director compensation was approximately $20,000 below the 50th percentileat market median measured against this benchmark, that the retainer paid to ourNon-Executive ChairmanChairperson is belowslightly above market median and that the retainers paid to the Chairpersons of the Audit Committee, the Management Planning and Development Committee and the Nominating and Governance Committee were generally consistent with market practice.practice, although the Audit Committee chair retainer was approximately $2,500 below market median. Based on this data, the Committee recommended a $20,000 increaseno changes to the annual amount paid to the Directors, raising their retainer to $260,000 annually. TheNon-Executive Chairman’s retainer was also increased by $20,000 to $170,000 annually. The retainers paid to committee chairpersons were not increased.our director compensation program.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option/SAR Awards ($)(2) | All Other Compensation ($) | Total ($) | |||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (f)
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Alves, Paget | — | 240,000 | — | — | 240,000 | |||||||||||||||
Cavanagh, Michael | — | 240,000 | — | — | 240,000 | |||||||||||||||
Connor, Christopher | — | 240,000 | — | — | 240,000 | |||||||||||||||
Cornell, Brian | — | 260,000 | — | — | 260,000 | |||||||||||||||
Domier, Tanya | — | 205,000 | — | — | 205,000 | |||||||||||||||
Graddick-Weir, Mirian | — | 240,000 | — | — | 240,000 | |||||||||||||||
Nelson, Thomas | — | 265,000 | — | — | 265,000 | |||||||||||||||
Skala, Justin | — | 240,000 | — | — | 240,000 | |||||||||||||||
Stock, Elane | — | 240,000 | — | — | 240,000 | |||||||||||||||
Walter, Robert | — | 405,000 | — | — | 405,000 | |||||||||||||||
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Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option/SAR Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | |||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (f)
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Alves, Paget | — | 282,917 | — | 10,000 | 292,917 | |||||||||||||||
Barr, Keith | — | 260,000 | — | 10,000 | 270,000 | |||||||||||||||
Connor, Christopher | — | 280,000 | — | — | 280,000 | |||||||||||||||
Cornell, Brian | — | 430,000 | — | — | 430,000 | |||||||||||||||
Domier, Tanya | — | 260,000 | — | — | 260,000 | |||||||||||||||
Graddick-Weir, Mirian | — | 280,000 | — | — | 280,000 | |||||||||||||||
Hobart, Lauren | — | 238,333 | — | — | 238,333 | |||||||||||||||
Nelson, Thomas | — | 262,083 | — | — | 262,083 | |||||||||||||||
Skala, Justin | — | 260,000 | — | — | 260,000 | |||||||||||||||
Stock, Elane | — | 260,000 | — | — | 260,000 | |||||||||||||||
Young-Scrivner, Annie | — | 260,000 | — | 10,000 | 270,000 |
(1) | Amounts in column (c) represent the grant date fair value for annual stock retainer awards, Committee Chairperson retainer awards, Non-Executive Chairperson awards granted to directors in 2021. Retainer awards are pro-rated for partial years of service. |
(2) | At December 31, 2021, the aggregate number of stock appreciation rights (“SARs”) awards outstanding for each non-employee director was: |
Name | SARs | |||
Alves, Paget | — | |||
Barr, Keith | ||||
Connor, Christopher | — | |||
Cornell, Brian | 6,491 | |||
Domier, Tanya | — | |||
Hobart, Lauren | — | |||
Graddick-Weir, Mirian | 18,964 | |||
Nelson, Thomas | 18,964 | |||
Skala, Justin | 4,646 | |||
Stock, Elane | 10,003 | |||
Young-Scrivner, Annie | — |
(3) | Amounts in this column represent charitable matching gifts. |
What are the Company’s policies and procedures with respect to related person transactions?
Under the Company’s policies and procedures for the review of related person transactions the Nominating and Governance Committee reviews related person transactions in which we are or will be a participant to determine if they are in the best interests of our shareholders and the Company. Transactions, arrangements, or relationships or any series of similar transactions, arrangements or relationships in which a related person had or will have a material interest and that exceed $100,000 are subject to the Nominating and Governance committee’sCommittee’s review. Any member of
the Nominating and Governance Committee who is a related person with respect to a transaction under review may not participate in the deliberation or vote respecting approval or ratification of the transaction.
Related persons are directors, director nominees, executive officers, holders of 5% or more of our voting stock and their immediate family members. Immediate
family members are spouses, parents, stepparents, children, stepchildren, siblings,daughters-in-law,sons-in-law and any person, other than a tenant or
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domestic employee, who resides in the household of a director, director nominee, executive officer or holder of 5% or more of our voting stock.
After its review, the Nominating and Governance Committee may approve or ratify the transaction. The related person transaction policies and procedures provide that certain transactions are deemed to be
pre-approved, even though they exceed $100,000.Pre-approved transactions include employment of executive officers, director compensation, and transactions with other companies if the aggregate amount of the transaction does not exceed the greater of $1 million or 2% of that other company’s total revenues and the related person is not an executive officer of that other company.
Does the Company require stock ownership by directors?
The Board believes that the number of shares of the Company’s common stock owned by eachnon-management director is a personal decision; however, the Board strongly supports the position thatnon-management directors should own a meaningful number of shares in the Company and expects that eachnon-management director will (i) own Company common shares with a value of at least five times the
annual Board retainer; (ii) accumulate those shares during the first five years of the director’s service on the Board; and (iii) hold these shares at least until the director departs the Board. Each director may sell enough shares to pay taxes in connection with the receipt of theirhis or her retainer or the exercise of stock appreciation rights and the ownership guideline will be adjusted to reflect the sale to pay taxes.
How much YUM stock do the directors own?
Stock ownership information for each director is shown in the table on page 38.33.
Does the Company have stock ownership guidelines for executives and senior management?
The Committee has adopted formal stock ownership guidelines that set minimum expectations for executive and senior management ownership. These guidelines are discussed on page 55.51.
The Company has maintained an ownership culture among its executive and senior managers since its formation. Substantially all executive officers and members of senior management hold stock well in excess of the guidelines.
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How Can Shareholders Nominate for the Board?
Director nominations for inclusion in YUM’s proxy materials (Proxy Access). Our bylaws permit a shareholder, or group of up to 20 shareholders, owning continuously for at least three years shares of YUM stock representing an aggregate of at least 3% of our outstanding shares, to nominate and include in YUM’s proxy materials director nominees constituting up to 20% of YUM’s Board, provided that the shareholder(s) and nominee(s) satisfy the requirements in YUM’s bylaws. Notice of proxy access director nominees for the 20202023 Annual Meeting of Shareholders must be
received by us no earlier than November 7, 2019,9, 2022, and no later than December 7, 2019.9, 2022.
Director nominations to be brought before the 20202023 Annual Meeting of Shareholders. Director nominations that a shareholder intends to present at the 20202023 Annual Meeting of Shareholders, other than through the proxy access procedures described above, must have been received no later than February 16, 2020.18, 2023. These nominations must be submitted by a shareholder in accordance with the requirements specified in YUM’s bylaws.
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Where to send director nominations for the 20202023 Annual Meeting of Shareholders. Director nominations brought by shareholders must be delivered to YUM’s Corporate Secretary by mail at
YUM! Brands, Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213 and received by YUM’s Corporate Secretary by the dates set forth above.
What is the Board’s leadership structure?
OnIn November 16, 2018, Brian C. Cornell assumed the position ofNon-Executive ChairmanChairperson of the Board. He was preceded in that position by Robert D. Walter, who had held that position since May 20, 2016. Applying our Corporate Governance Principles, the Board determined that based on Mr. Cornell’s independence, it would not appoint a Lead Director when Mr. Cornell becameNon-Executive Chairman.Chairperson.
The Nominating and Governance Committee annually reviews the Board’s leadership structure and evaluates the performance and effectiveness of the Board of Directors. The Board retains the authority to modify its leadership structure in order to stay current with our Company’s circumstances and advance the best interests of the Company and its shareholders as and when appropriate. The Board’s annual self-evaluation includes questions regarding the Board’s opportunities for open communication and the effectiveness of executive sessions.
The Company’s Governance Principles provide that the Chief Executive Officer (“CEO”) may serve as ChairmanChairperson of the Board. These Principles also provide for an
independent Lead Director when the CEO is serving as Chairman.Chairperson. During 2018,2021, our CEO did not
serve as Chairman.Chairperson. Our Board believes that Board independence and oversight of management are effectively maintained through a strong independent ChairmanChairperson or Lead Director and through the Board’s
composition, committee system and policy of having regular executive sessions ofnon-employee directors, all of which are discussed below,below. AsNon-Executive Chairman,Chairperson, Mr. Cornell is responsible for supporting the CEO on corporate strategy along with leadership development. Mr. Cornell also works with the CEO in setting the agenda and schedule for meetings of the Board, in addition to performing the duties of thethat would otherwise be performed by a Lead Director, as described below.
As CEO, Mr. CreedGibbs is responsible for leading the Company’s strategies, organization design, people development and culture, and for providing theday-to-day leadership over operations.
To ensure effective independent oversight, the Board has adopted a number of governance practices discussed below.
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What are the Company’s governance policies and ethical guidelines?
• | Board Committee Charters. The Audit, Management Planning and Development, and Nominating and Governance Committees of the YUM Board of Directors operate pursuant to written charters. These charters were approved by the Board of Directors and reflect certain best practices in corporate governance. These charters comply with the requirements of the NYSE. Each charter is available on the Company’s website at |
• | Governance Principles. The Board of Directors has documented its corporate governance guidelines in the YUM! Brands, Inc. Corporate Governance Principles. These guidelines are available on the Company’s website at |
Ethical Guidelines. YUM’s Global Code of Conduct was adopted to emphasize the Company’s commitment
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What other significant Board practices does the Company have?
Private Executive Sessions. Ournon-management directors meet in executive session at each regular Board meeting. The executive sessions are attended only by thenon-management directors and are presided over by the Lead Director or ourNon-Executive Chairman,Chairperson, as applicable. Our independent directors meet in executive session at least once per year.
Role of Lead Director. Our Governance Principles require the election, by the independent directors, of a Lead Director when the CEO is also serving as Chairman.Chairperson.
The Board currently does not have a Lead Director, and the duties of the Lead Director are fulfilled by Mr. Cornell asNon-Executive Chairman.Chairperson. Since Mr. Cornell is independent, the Board determined that it would not appoint a separate Lead Director upon Mr. Cornell’s appointment asNon-Executive Chairman.Chairperson.
The Lead Director position is structured so that one independent Board member is empowered with sufficient authority to ensure independent oversight of the Company and its management. The Lead Director position has no term limit and is subject only to annual approval by the independent members of the Board. Based upon the recommendation of the Nominating
and Governance Committee, the Board has determined that the Lead Director, when appointed, is responsible for:
(a) | Presiding at all executive sessions of the Board and any other meeting of the Board at which the |
(b) | Approving in advance agendas and schedules for Board meetings and the information that is provided to directors, |
(c) | If requested by major shareholders, being available for consultations and direct communication, |
(d) | Serving as a liaison between the |
(e) | Calling special meetings of the independent directors. |
Advance Materials. Information and data important to the directors’ understanding of the business or matters to be considered at a Board or Board Committeecommittee meeting are, to the extent practical, distributed to the directors sufficiently in advance of the meeting to allow careful review prior to the meeting.
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Board and Committees’ Evaluations. The Board has an annual self-evaluation process that is led by the Nominating and Governance Committee. This assessment focuses on the Board’s contribution to the Company and emphasizes those areas in which the Board believes a better contribution could be made. As a part of this process, the Chairperson of the Board or the Chairperson of the Nominating and Governance Committee conduct personal interviews with each Board member completes an individual written questionnaire and a personal interview,of the Board, the results of which are summarized and discussed in an executive session. In addition, the Audit, Management Planning and Development and Nominating and Governance Committees also each conduct similar annual self-evaluations.
Majority Voting Policy. Our Articles of Incorporation require majority voting for the election of directors in uncontested elections. This means that director nominees in an uncontested election for directors must receive a number of votes “for” his or her election in excess of the number of votes “against.” The Company’s Governance Principles further provide that any incumbent director who does not receive a majority of “for” votes will promptly tender to the Board his or her resignation from the Board. The resignation will specify that it is effective upon the Board’s acceptance of the resignation. The Board will, through a process managed by the Nominating and Governance Committee and excluding the nominee in question, accept or reject the resignation within 90 days after the Board receives the resignation. If the Board rejects the resignation, the reason for the Board’s decision will be publicly disclosed.
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What access do the Board and Board committees have to management and to outside advisors?
Access to Management and Employees. Directors have full and unrestricted access to the management and employees of the Company. Additionally, key members of management attend Board meetings to present information about the results, plans and operations of the business within their areas of responsibility.
Access to Outside Advisors. The Board and its committees may retain counsel or consultants without obtaining the approval of any officer of the
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What is the Board’s role in risk oversight?
The Board maintains overall responsibility for overseeing the Company’s risk management, including succession planning, food safety and cybersecurity.digital/information security. In furtherance of its responsibility, the Board has delegated specific risk-related responsibilities to the Audit Committee and to the Management Planning and Development Committee.
The Audit Committee engages in substantive discussions of enterprise risk management and processes at its regular committee meetings held during the year. At these meetings, it receives functional risk review reports covering significant areas of risk from senior managersthe employees responsible for these functional areas, as well as receiving reports from the General CounselChief Legal Officer and the Vice President, Internal Audit. Our Vice President, Internal Audit reports
directly to the ChairmanChairperson of the
Audit Committee and our Chief Financial Officer (“CFO”). The Audit Committee also receives reports at each regular meeting regarding legal and regulatory risks from management and meets in separate executive sessions with our independent auditors and our Vice President, Internal Audit. The Audit Committee provides a summary to the full Board at each regular Board meeting of the risk area reviewed together with any other risk related subjects discussed at the Audit Committee meeting.
In addition, our Management Planning and Development Committee considers the risks that may be implicated by our compensation programs through a risk assessment conducted by management and reports its conclusions to the full Board.
What is the Board’s role in information security?
Information security and privacy has been and remains of the utmost importance to the Company in light of the value we place on maintaining the trust and confidence of our consumers, employees and other stakeholders. Accordingly, our Chief Information Security Officer and Chief Digital and Technology Officer advise the Audit Committee (at least four times per year) and the full Board of Directors regularly on our program for managing information security risks, including data privacy and data protection risks. We internally follow the NIST Cybersecurity Framework to assess the maturity of our cybersecurity programs. Additionally, we
have in place a formal privacy group combining resources from our information security and legal teams. Other aspects of our comprehensive information security program include:
Information security and privacy modules included in our mandatory onboarding and annual compliance training for restaurant support center employees, as well as targeted specialized training for any employees that routinely have access to personal data;
Regular testing, both by internal and external resources, of our information security defenses;
YUM! BRANDS, INC. - | 23 |
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Periodic phishing drills with all restaurant support center employees;
Global security and privacy policies; and
Table-top exercises with senior leaders covering ransomware and other third-party data security threats.
In addition, the Company maintains an information security risk insurance policy that provides coverage for data security breaches.
What is the Board’s role in the Company’s global sustainability initiatives?
The Company has an integrated, Board and executive-level governance structure to oversee its global sustainability initiatives. Oversight for environmental, social and governance issues ultimately resides with the Board of Directors. The Board receives regular updates on these matters from management through the Audit Committee. At the operational level, the Chief
Communications and Public Affairs Officer is responsible for overseeing the global reputation of YUM and is responsible for shaping the Citizenship and Sustainability Strategy, as approved by the Board, with the Chief Sustainability Officer and Vice President of Government Relations and Citizenship & Sustainability.Relations.
Has the Company conducted a risk assessment of its compensation policies and practices?
As stated in the Compensation Discussion and Analysis at page 39,34, the philosophy of our compensation programs is to reward performance by designing pay programs that incorporate team and individual performance, and shareholder return; emphasize long-term incentives; drive ownership mentality; and require executives to personally invest in Company stock.
In 2018,early 2022, the Committee examined our compensation programs for all employees to determine whether they encourage unnecessary or excessive risk taking. In conducting this review, each of our compensation practices and programs was reviewed against the key risks facing the Company in the conduct of its business. Based on this review, the Committee concluded our compensation policies and practices do not encourage our employees to take unreasonable or excessive risks.
As part of this assessment, the Committee concluded the following policies and practices of the Company’s cash and equity incentive programs serve to reduce the likelihood of excessive risk taking:
Our Compensation system is balanced, rewarding both short-term and long-term performanceperformance;
Long-term Company performance is emphasized. The majority of incentive compensation for the top leveltop-level employees is associated with the long-term performance of the CompanyCompany;
Strong stock ownership guidelines in place for approximately 190165 senior employees are enforcedenforced;
The annual incentive and performance share plans both cap the level of performance over which no additional rewards are paid, thereby mitigating any incentive to take unreasonable riskrisk;
The annual incentive target setting process is closely linked to the annual financial planning process and supports the Company’s overall strategic plan, which is reviewed and approved by the BoardBoard;
Compensation performance measures set for each Divisionin our annual incentive plans are transparent and tied to multiple measurable factors, none of which exceed a 50% weighting; measures are both apparent to shareholders and drivers of returnsreturns;
The performance which determines employee rewards is closely monitored by the Audit Committee and the full BoardBoard; and
The Company has a recoupment (clawback) policypolicy.
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GOVERNANCE OF THE COMPANY |
How does the Board determine which directors are considered independent?
The Company’s Governance Principles, adopted by the Board, require that we meet the listing standards of the NYSE. The full text of the Governance Principles can be found on the Company’s website (www.investors.yum.com/governance-documents)(https://investors.yum.com/governance/governance-documents/).
Pursuant to the Governance Principles, the Board undertook its annual review of director independence.
During this review, the Board considered transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates. As provided in the Governance Principles, the purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.
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As a result of this review, the Board affirmatively determined that all of the directors are independent of the Company and its management under NYSE rules, with the exception of Greg Creed,David Gibbs, who is not considered an independent director because of his employment by the Company.
In determining that the other directors did not have a material relationship with the Company, the Board determined that Messrs. Alves, Barr, Connor, Nelson,
Skala and Walter and Mmes. Domier, Graddick-Weir, Hobart, Stock and StockYoung-Scrivner had no other relationship with the Company other than their relationship as a director. The Board did note as discussed in the next two paragraphsparagraph that Comcast Corporation and Target Corporation, which employ Mr. Cavanagh andemploys Mr. Cornell, respectively, each havehas a business relationship with the Company; however, as noted below, the Board
determined that these relationships werethis relationship was not material to either director, Comcast CorporationMr. Cornell or Target Corporation, and therefore determined that Mr. Cavanagh and Mr. Cornell werewas independent.
Brian C. Cornell is the Chairman and Chief Executive Officer of Target Corporation. During 2018,2021, the Company received approximately $10.7$6 million in license fees from Target Corporation in the normal course of business. Divisions of the Company paid Target Corporation approximately $2.1$1 million in rebates
in 2018. Divisions of the Company have also offered Target approximately $2 million in additional incentives in 2019.2021. The Board determined that these payments did not create a material relationship between the Company and Mr. Cornell or the Company and Target Corporation as the payments represent less thanone-tenth of 1% 2% of Target Corporation’s revenues. Furthermore, the licensing relationship between the Company and Target Corporation was initially entered into before Mr. Cornell joined the Board or became employed by Target Corporation. The Board determined that this relationship was not material to Mr. Cornell or Target Corporation.
Michael J. Cavanagh is the Senior Executive Vice President and Chief Financial Officer of Comcast Corporation. During 2018, the Company, its affiliates and their respective franchisees collectively paid approximately $40 million to affiliates of Comcast for broadband services. In addition, U.S. brand advertising cooperatives, to which each of the Company’s brands and their franchisees contribute funds to purchase media for advertising, purchased approximately $79 million in advertising from affiliates of Comcast. The Board determined that these payments did not create a material relationship between the Company and Mr. Cavanagh or the Company and Comcast Corporation as the payments represent less than 1% of Comcast Corporation’s revenues.
How do shareholders communicate with the Board?
Shareholders and other parties interested in communicating directly with individual directors, thenon-management directors as a group or the entire Board may do so by writing to the Nominating and Governance Committee, c/o Corporate Secretary, YUM! Brands, Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213. The Nominating and Governance Committee of the Board has approved a process for handling letters received by the Company and addressed to individual directors,non-management members of the Board or the Board. Under that process, the Corporate Secretary of the Company reviews all such correspondence and regularly forwards to a designated individual member of the Nominating and Governance Committee copies of all such correspondence (although we do not forward commercial correspondence and correspondence duplicative in nature; however, we will retain duplicate correspondence and all duplicate correspondence will be available for directors’ review upon their request)
and a summary of all such correspondence. The designated director of the Nominating and Governance Committee will forward correspondence directed to individual directors as he or she deems appropriate. Directors may at any time review a log of all correspondence received by the Company that is addressed to members of the Board and request copies of any such correspondence. Written correspondence from shareholders relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Company’s Audit Committee Chair and to the internal audit department and handled in accordance with procedures established by the Audit Committee with respect to such matters (described below). Correspondence from shareholders relating to Management Planning and Development Committee matters are referred to the Chair of the Management Planning and Development Committee.
YUM! BRANDS, INC. - | 25 |
GOVERNANCE OF THE COMPANY
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What are the Company’s policies on reporting of concerns regarding accounting?
The Audit Committee has established policies on reporting concerns regarding accounting and other matters in addition to our policy on communicating with ournon-management directors. Any person, whether or not an employee, who has a concern about the conduct of the Company or any of our people, with respect to accounting, internal accounting controls or auditing matters, may, in a confidential or anonymous manner, communicate that concern to our General Counsel,Chief Legal Officer, Scott A. Catlett. If any person believes that he or she should communicate with our Audit Committee Chair, Thomas C. Nelson,Paget Alves, he or she may do so by writing him at c/o YUM! Brands, Inc.,
1441 Gardiner Lane, Louisville,
KY 40213. In addition, a person who has such a concern about the conduct of the Company or any of our employees may discuss that concern on a confidential or anonymous basis by contacting The Network at 1 (800)241-5689.(844) 418-4423. The Network is our designated external contact for these issues and is authorized to contact the appropriate members of management and/or the Board of Directors with respect to all concerns it receives. The full text of our Policy on Reporting of Concerns Regarding Accounting and Other Matters is available on our website atwww.investors.yum.com/governance-documentshttps://investors.yum.com/governance/governance-documents/.
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What are the Committees of the Board?
The Board of Directors has standing Audit, Management Planning and Development and Nominating and Governance and Executive/Finance Committees.
Name of Committee and Members | Functions of the Committee | Number of Meetings in Fiscal | ||
Audit: Paget L. Alves,Chair Tanya L. Domier Lauren Hobart P. Justin Skala Elane B. Stock Annie Young-Scrivner | • Possesses sole authority regarding the selection and retention of independent auditors • Reviews and has oversight over the Company’s internal audit function • Reviews and approves the cost and scope of audit andnon-audit services provided by the independent auditors • Reviews the independence, qualification and performance of the independent auditors • Reviews the adequacy of the Company’s internal systems of accounting and financial control • Reviews the annual audited financial statements and results of the audit with management and the independent auditors • Reviews the Company’s accounting and financial reporting principles and practices including any significant changes • Advises the Board with respect to Company policies and procedures regarding compliance with applicable laws and regulations and the Company’s • Discusses with management the Company’s policies with respect to risk assessment and risk management. Further detail about the role of the Audit Committee in risk assessment and risk management is included in the section entitled “What is the Board’s role in risk oversight?” set forth on page
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The Board of Directors has determined that all of the members of the Audit Committee are independent within the meaning of applicable SEC regulations and the listing standards of the NYSE and that Mr. Nelson,Alves, the Chair of the Committee, is qualified as an audit committee financial expert within the meaning of SEC regulations. The Board has also determined that Mr. NelsonAlves has accounting and related financial management expertise within the meaning of the listing standards of the NYSE and that each member is financially literate within the meaning of the listing standards of the NYSE.
26 | YUM! BRANDS, INC.- 2022 Proxy Statement |
GOVERNANCE OF THE COMPANY |
Name of Committee and Members | Functions of the Committee | Number of Meetings in Fiscal 2021 | ||
Management Planning and Development: Christopher M. Connor, Chair Keith Barr Brian C. Cornell Mirian M. Graddick-Weir Thomas C. Nelson | • Oversees the Company’s executive compensation plans and programs and associated risks and reviews and recommends changes to these plans and programs • Monitors the performance of the Chief Executive Officer and other senior executives in light of corporate goals set by the Committee • Reviews and approves the compensation of the Chief Executive Officer and other senior executive officers • Reviews management succession planning | 5 |
The Board has determined that all of the members of the Management Planning and Development Committee are independent within the meaning of the listing standards of the NYSE.
Name of Committee and Members | Functions of the Committee | Number of Meetings in Fiscal | ||
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The Board has determined that all of the members of the Management Planning and Development Committee are independent within the meaning of the listing standards of the NYSE.
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Nominating and Governance: Mirian M. Graddick-Weir, Chair Brian C. Cornell Thomas C. Nelson
| • Identifies and proposes to the Board suitable candidates for Board membership • Advises the Board on matters of corporate governance • Reviews and reassesses from time to time the adequacy of the Company’s Corporate Governance Principles • Receives comments from all directors and reports annually to the Board with assessment of the Board’s performance • Prepares and supervises the Board’s annual review of director independence
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The Board has determined that all of the members of the Nominating and Governance Committee are independent within the meaning of the listing standards of the NYSE.
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YUM! BRANDS, INC. - |
MATTERS REQUIRING SHAREHOLDER ACTION
ITEM 1 | Election of Directors (Item 1 on the Proxy Card) |
Who are this year’s nominees?
There are eleven (11)twelve (12) nominees recommended by the Nominating and Governance Committee of the Board of Directors for election this year to hold office until the 20202023 Annual Meeting and until their respective successors are elected and qualified. Their biographies are provided above at pages 1012 to 15.17. The biographies of each of the nominees contains information regarding the person’s service as a director, business experience, public-company director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director for the Company. In addition to the information presented above regarding each nominee’s specific experience, qualifications, attributes and skills that led our Board to the conclusion that he or she should serve as a director, we also believe that all of our director nominees have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to YUM and our Board. Finally, we value their significant experience on other public company boards of directors and board committees.
There are no family relationships among any of the directors and executive officers of the Company.
What is the recommendation of the Board of Directors?
The Board of Directors recommends that you vote FOR the election of these nominees.
What if a nominee is unwilling or unable to serve?
That is not expected to occur. If it does, proxies may be voted for a substitute nominated by the Board of Directors.
What vote is required to elect directors?
A nominee will be elected as a director if the number of “FOR” votes exceeds the number of “AGAINST” votes with respect to his or her election.
Our policy regarding the election of directors can be found in our Governance Principles atwww.investors.yum.com/governance-documentshttps://investors.yum.com/governance/governance-documents/ and at page 1922 under “What other significant Board practices does the Company have? — Majority Voting Policy.”
YUM! BRANDS, INC.- |
MATTERS REQUIRING SHAREHOLDER ACTION
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ITEM 2 | Ratification of Independent Auditors (Item 2 on the Proxy Card) |
What am I voting on?
A proposal to ratify the selection of KPMG LLP (“KPMG”) as our independent auditors for fiscal year 2019.2022. The Audit Committee of the Board of Directors has selected KPMG to audit our consolidated financial statements. During fiscal 2018,2021, KPMG served as our independent auditors and also provided other audit-related andnon-audit services.
Will a representative of KPMG be present at the meeting?
Representatives of KPMG will be present atattend the Annual Meeting and will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions from shareholders.
What vote is required to approve this proposal?
Approval of this proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting. If the selection of KPMG is not ratified, the Audit Committee will reconsider the selection of independent auditors.
What is the recommendation of the Board of Directors?
The Board of Directors recommends that you vote FOR approval of this proposal.
What were KPMG’s fees for audit and other services for fiscal years 20182021 and 2017?2020?
The following table presents fees for professional services rendered by KPMG for the audit of the Company’s annual financial statements for 20182021 and 2017,2020, and fees billed for audit-related services, tax services and all other services rendered by KPMG for 20182021 and 2017.2020.
2018 | 2017 | 2021 | 2020 | |||||||||||||
Audit fees(1)
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5,477,000
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$
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6,406,000
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$
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6,466,000
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$
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5,597,000
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Audit-related fees(2)
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310,000
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326,000
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| $
| 541,000
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| $
| 529,000
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Tax fees(3)
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563,000
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482,000
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| $
| 707,000
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| $
| 511,000
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All other fees
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0
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0
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| $
| 0
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| $
| 0
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TOTAL FEES
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6,350,000
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$
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7,214,000
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| $
| 7,714,000
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| $
| 6,637,000
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(1) | Audit fees include fees for the audit of the annual consolidated financial statements, reviews of the interim condensed consolidated financial statements included in the Company’s quarterly reports, audits of the effectiveness of the Company’s internal controls over financial reporting, and statutory |
(2) | Audit-related fees include fees associated with audits of financial statements and certain employee benefit plans, agreed upon procedures, other attestations, and |
(3) | Tax fees consist principally of fees for international tax compliance, tax audit assistance, |
YUM! BRANDS, INC. - |
MATTERS REQUIRING SHAREHOLDER ACTION
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What is the Company’s policy regarding the approval of audit and non-audit services?
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The Audit Committee has implemented a policy for thepre-approval of all audit and permittednon-audit services, including tax services, proposed to be provided to the Company by its independent auditors. Under the policy, the Audit Committee may approve engagements on acase-by-case basis orpre-approve engagements pursuant to the Audit Committee’spre-approval policy. The Audit Committee may delegatepre-approval authority to one of its independent members and has currently delegatedpre-approval authority up to certain amounts to its Chair.
Pre-approvals for services are granted at the January Audit Committee meeting each year. Any incremental audit or permittednon-audit services which are expected to exceed the relevant budgetary guideline must subsequently bepre-approved. In considering
pre-approvals, the Audit Committee reviews a description of the scope of services falling withinpre-designated services and imposes specific budgetary guidelines.Pre-approvals of designated services are generally effective for the succeeding 12 months.
The Corporate Controller monitors services provided by the independent auditors and overall compliance with thepre-approval policy. The Corporate Controller reports periodically to the Audit Committee about the status of outstanding engagements, including actual services provided and associated fees, and must promptly report anynon-compliance with thepre-approval policy to the Chair of the Audit Committee. The complete policy is available on the Company’s website atwww.investors.yum.com/committee-composition-and-chartershttps://investors.yum.com/governance/committee-composition-and-charters/.
ITEM 3 | Advisory Vote on Executive Compensation |
(Item 3 on the Proxy Card) |
What am I voting on?
In accordance with SEC rules, we are asking shareholders to approve, on anon-binding basis, the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.
Our Performance-Based Executive Compensation Program Attracts and Retains Strong Leaders and Closely Aligns with Our Shareholders’ Interests
Our performance-based executive compensation program is designed to attract, reward and retain the talented leaders necessary for our Company to succeed in the highly competitive market for talent, while maximizing shareholder returns. This approach has made our management team a key driver in the Company’s strong performance over both the long- and short-term. We believe that our compensation program has attracted and retained strong leaders and is closely aligned with the interests of our shareholders.
In deciding how to vote on this proposal, we urge you to read the Compensation Discussion and Analysis section of this proxy statement, beginning on page 39,34,
which discusses in detail how our compensation policies and procedures operate and are designed to meet our compensation goals and how our Management Planning and Development Committee makes compensation decisions under our programs.
Accordingly, we ask our shareholders to vote in favor of the following resolution at the Annual Meeting:
RESOLVED, that the shareholders approve, on an advisory basis, the compensation awarded to our Named Executive Officers, as disclosed pursuant to SEC rules, including the Compensation Discussion and Analysis, the compensation tables and related materials included in this proxy statement.
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Approval of this proposal requires the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. While this vote is advisory andnon-binding on the Company, the Board of Directors and the Management Planning and Development Committee will review the voting results and consider shareholder
concerns in their continuing evaluation of the Company’s compensation program. Unless the Board of Directors modifies its policy on the frequency of this advisory vote, the next advisory vote on executive compensation will be held at the 2020 Annual Meeting of Shareholders.
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The Board of Directors recommends that you vote FOR approval of this proposal.
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What am I voting on?
The Sisters of Charity of the Blessed Virgin Mary, have advised us that it intends to present the following shareholder proposal at the Annual Meeting. We will furnish the address and share ownership of the proponent upon request. In accordance with federal securities regulations, we have included the text of the proposal and supporting statement exactly as submitted by the proponent. We are not responsible for the content of the proposal or any inaccuracies it may contain.
Resolved:Shareholders request that Yum! Brands senior management, with oversight from the Board of Directors, issue a report on climate change mitigation strategies, assessing the feasibility of adopting quantitative, company-wide goals for increasing Yum! Brands’ use of renewable energy and any other measures deemed prudent by company management, to substantially reduce the company’s greenhouse gas emissions and climate change risks associated with the use of fossil fuel-based energy.
The report should be issued within one year of this filing at reasonable cost and omit proprietary information.
Supporting Statement:
By assessing goals to increase renewable energy as a share of total energy consumed, and other such measures to reduce greenhouse gas emissions that the company deems feasible, our company could prepare to take concrete, practical steps to reduce our emissions of greenhouse gases (GHGs) that contribute to climate change.
In order to mitigate the worst impacts of climate change, the Intergovernmental Panel on Climate Change estimates that a 45% reduction in anthropogenic GHG emissions globally is needed (from 2010 levels) by 2030 to stabilize global temperatures(Global Warming of 1.5 degreesC,IPCC,Oct 2018).
Assessing the feasibility of goals for renewable energy procurement and other greenhouse gas reducing measures could contribute to this end and serve as a practical step towards aligning our business operations with global efforts to limit climate change. This could help insulate our company from regulatory uncertainty and position Yum! Brands as contributing to climate solutions and produce reputational benefits.
Fortuitously, many major companies are finding that greenhouse gas reducing measures such as adopting
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renewable energy are practical, and often also benefit their bottom line. Nationally, the US Energy Information Association reports the average cost of electricity at $0.1068/kWh for commercial customers in 2017, up from $0.1043 in 2016. By contrast, according to Bloomberg New Energy Finance’s 2018 SustainableEnergy in America Factbook“the most competitive power purchase agreements (PPAs) came in at just over $20/MWh for solar [$0.02/kWh], while wind PPAs ... averaged an estimated $17/MWh in 2017 [$0.017/kWh].”
Unfortunately, Yum! Brands website is silent on specific goals to reduce the company’s greenhouse gas emissions. As such, Yum! lags behind its peers in in
the restaurant industry including McDonalds, which has recently adopted an approved Science-Based Target for GHG emissions reductions across their operations and supply chain. Many other leading food companies, including Kellogg, Grupo Bimbo, Mars, Nestle, and Starbucks are among the 154 RE100 member companies who have committed to going 100% renewable.
Accordingly, we urge Yum! Brands to emulate the best climate risk mitigation practices among its corporate peers and to study the feasibility of adopting goals for measures such as renewable energy sourcing, that can substantially reduce greenhouse gas emissions.
What is the Company’s position regarding this proposal?
Management Statement in Opposition to Shareholder Proposal
Our Board of Directors unanimously recommends that stockholders vote AGAINST this proposal, as it would divert time and resources that the Company has determined would be better used to support our strategy to target our sustainability efforts on areas that will provide the most meaningful impact, without providing a significant corresponding benefit to the Company.
Climate change mitigation strategies, including our use of renewable energy and any other measures to reduce the Company’s greenhouse gas emissions, have been a priority for the Company for the last several years as our sustainability strategy has evolved. Our approach to sustainability initiatives is guided by impact: we focus our efforts where we have the ability to influence meaningful outcomes.
With that principle in mind, our focus has been on reducing our energy consumption and the associated greenhouse gas emissions. In 2017 we achieved our 22% reduction target in energy consumption, as compared to our 2005 baseline, for company-owned and reporting franchise groups. The 2017 target followed up on our successful achievement of our 15% reduction goal in 2015.
The Company currently has a publicly stated goal to reduce average restaurant energy and greenhouse gas emissions by an additional 10 percent by the end of 2025. These initiatives to reduce our energy consumption are those that the Company has determined are best targeted to have the most direct impact. Moreover, the Company currently has in place procedures designed to mitigate risks involving greenhouse gas emissions and climate change, while ensuring that issues are surfaced and addressed in a timely manner.
Implementation of a broader reporting on our greenhouse gas emissions strategy is not necessary and would divert time, effort and resources, thereby limiting our ability to target our efforts on areas that will provide the most meaningful impact. For this reason, and other reasons outlined below, we believe that the request by the proponent is unnecessary, and has the potential to divert our resources with no corresponding benefit to the Company, our customers, or our shareholders.
30 | YUM! BRANDS, INC.- |
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Why does the Company oppose the proposal?
Specifically related to the identification and communication of potential climate change mitigation strategies and use of renewable energy, the Company has in place the following:
Public statements, policies and goals on Greenhouse Gas Emissions/Renewable Energy.The Company maintains a public website with policy statements representing our informed views and opinions on industry-related issues. Our fundamental, long-term strategy is twofold: First, it is to design, build and operate restaurants to be measurably more sustainable using green building standards to drive reductions in energy, GHG emissions, waste and water use and to report progress annually through CDP disclosures. Second, it is to work to elevate the supply chain to reduce deforestation though objectives including sourcing 100% of palm oil used for cooking and paper-based packaging from responsible and sustainable sources. Notably, we have a track record of setting and achieving goals for reducing our restaurant energy use and greenhouse gas emissions. The Company currently has a publicly stated goal to reduce average restaurant energy use and greenhouse gas emissions by an additional 10 percent by the end of 2025. This follows on our achievement in 2017 of our 22% reduction target in energy consumption, as compared to our 2005 baseline, for company-owned and reporting franchise groups. Further, the Company has conducted testing of onsite renewable energy applications, as well as Renewable Energy Credits. We continue to evaluate the feasibility of adoption of renewable energy measures.
Comprehensive voluntary disclosure on environmental sustainability issues.On a biennial basis, with updates during intervening years, the Company publishes its Global Citizenship & Sustainability Report at http://citizenship.yum.com/. Included in the Report are the Company’s commitments in the material sustainability areas of food, planet and people. Progress updates for these commitments, including goals related to energy consumption and greenhouse gas, are included in the Report. In addition, the Company discloses its climate, water and forests practices through CDP on an annual basis.
Collaboration with industry groups.The Company’s approach to GHG reduction through energy conservation has been informed by the Unites States Green Building Council’s (USGBC) LEED rating system. We have learned from having designed and built over 30 LEED certified buildings across the globe. We have been members of the USGBC since 2008. The Company’s palm oil and fiber policies and goals were developed in partnership with the World Wildlife Fund (WWF).
Integrated, executive-level governance structure to oversee the Company’s global sustainability initiatives.Oversight for environmental, social and governance (ESG) issues ultimately resides with the Yum! Brands Board of Directors, briefed through its Audit Committee on a regular basis. At the operational level, the Chief Communications and Public Affairs Officer oversees the global reputation of Yum! and is responsible for shaping the Citizenship and Sustainability Strategy with the Vice President, Government Relations and Citizenship & Sustainability.
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Approval of this proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting.
What is the recommendation of the Board of Directors?
The Board of Directors recommends that you vote AGAINST this proposal.
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What am I voting on?
SumOfUs on behalf of Mr. Keith Schnip, has advised us that it intends to present the following shareholder proposal at the Annual Meeting. We will furnish the address and share ownership of the proponent upon request. In accordance with federal securities regulations, we have included the text of the proposal and supporting statement exactly as submitted by the proponent. We are not responsible for the content of the proposal or any inaccuracies it may contain.
Resolved:Shareholders request that Yum’ Brands. Inc. (YUM) issue annual reports to investors, at reasonable expense and excluding proprietary information, on how the company is curtailing the impact on the Earth’s climate caused by deforestation in YUM’s supply chain. The reports should include quantitative metrics on supply chain impacts on deforestation and progress on goals for reducing such impacts.
Supporting Statement:
YUM utilizes beef, soy, palm oil, and pulp/paper in its business. These commodities are the leading drivers of deforestation globally. YUM’s limited action on deforestation sets the company behind its peers and exposes the company to significant business and market risks that deforestation may pose, given the link between deforestation and climate change, including supply chain unreliability, damage to the company’s brand value, and failure to meet shifting consumer and market expectations. The SCRIPT Soft Commodity Risk Platform scored YUM at 26 out of 100 due to lack of risk awareness, board oversight, overarching policies addressing deforestation risk, traceability, and timebound targets.
Deforestation has attracted significant attention from civil society, business and governments. It accounts for over 10% of global greenhouse gas emissions and contributes to climate change, biodiversity loss, soil
erosion, disrupted rainfall patterns, community land conflicts and forced labor. Commercial agriculture accounted for over 70% of tropical deforestation, 49% of which was illegal, between 2000 and 2012. (https://www.theguardian.com/global-development/ 2014/sep/11/tropical-forests-illegally-destroyed-commercial-agriculture)
According to the 2018 report of the Intergovernmental Panel on Climate Change (IPCC), restoring landscapes and forests is one of the best, most cost-effective options available to combat impacts of climate change. (http://www.ipcc.ch/report/sr15/) Value chains that are illegally engaged in deforestation are vulnerable to interruption with new regulations and enforcement, to which companies must adapt.
Companies that have failed to mitigate the impacts of their supply chain may face reputational damage. In recent years, major media outlets have reported on specific companies’ failure to adequately implement policies that address deforestation. This publicity, along with increased consumer awareness and concern about deforestation and climate change, poses a significant reputational risk.
Proponents believe meaningful indicators in a report like the one we request could include:
For key commodities that YUM sources such as palm oil, soy, beef, and pulp/paper, the proportion that can be traced back to its source and the proportion verified as not contributing to physical expansion into peatlands or forests, and including the supply chain across all geographies; and
Tracking these figures against an anticipated timeframe (as established by management) for meeting its sourcing goals for each commodity consistent with the criteria above, including processes for verification, suppliernon-compliance protocols, and grievance processes.
We urge shareholders to support this proposal.
MATTERS REQUIRING SHAREHOLDER ACTION
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What vote is the Company’s position regardingrequired to approve this proposal?
Management Statement in Opposition to Shareholder Proposal
Our Board of Directors unanimously recommends that stockholders vote AGAINST this proposal, as it would divert time and resources that the Company has determined would be better used to support our strategy to target our sustainability efforts on areas that will provide the most meaningful impact, without providing a significant corresponding benefit to the Company.
Sustainable sourcing, including minimizing deforestation risk, has been a priority for the Company for the last several years as our sustainability strategy has evolved. Our approach to sustainability initiatives is guided by impact: we focus our efforts where we have the ability to influence meaningful outcomes. With that principle in mind, we have established and disclosed policies and
time-bound, measurable goals for sourcing sustainable palm oil and fiber for paper packaging, where our sourcing decisions have the most direct impact. Moreover, the Company currently has in place procedures designed to mitigate deforestation risk and ensure that issues are surfaced and addressed in a timely manner.
Additional reporting on our deforestation policy is not feasible and would divert time, effort and resources to commodities (e.g., soy) where Yum can have a less direct or meaningful impact. For this reason, and other reasons outlined below, we believe that the request by the proponent is unnecessary, and has the potential to divert resources with no corresponding benefit to the Company, our customers, or our shareholders.
Why does the Company oppose the proposal?
Specifically relatedApproval of this proposal requires the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the identificationAnnual Meeting. While this vote is advisory and communication of potential climate impact caused by deforestation,non-binding on the Company, hasthe Board of Directors and the Management Planning and Development Committee will review the voting results and consider
shareholder concerns in placetheir continuing evaluation of the following:Company’s compensation program. Unless the Board of Directors modifies its policy on the frequency of this advisory vote, the next advisory vote on executive compensation will be held at the 2023 Annual Meeting of Shareholders.
What is the recommendation of the Board of Directors?
Public statements, polices and goals on deforestation issues.The Company maintains a public website with policy statements representing our informed views and opinions on industry-related issues. Notably, we have implemented policies and set goals for sourcing sustainable palm oil and fiber for paper packaging that seek to mitigate the impact of deforestation. Frying oil and packaging represent a significant procurement expenditure for the primary forest-related commodities, and thus they represent areas where our sourcing decisions may have material impact.
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Regarding frying oil, the Company has implemented a policy and associated goal for sourcing sustainable palm oil for cooking. Policy details can be reviewed at
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Collaboration with industry groups.The Company’s palm oil and fiber policies and goals were developed in partnership with the World Wildlife Fund (WWF), which provides companies with practical counsel around sustainable food sourcing. In the areaBoard of sustainable palm oil sourcing specifically, the Company is a memberDirectors recommends that you vote FOR approval of RSPO and in 2019 will be reporting its progress through that organization for the first time.this proposal.
YUM! BRANDS, INC. - |
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Integrated, executive-level governance structure to oversee the Company’s global sustainability initiatives.Oversight for environmental, social and governance (ESG) issues ultimately resides with the Yum! Brands Board of Directors, briefed through its Audit Committee on a regular basis. At the
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What vote is required to approve this proposal?
Approval of this proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting.
What is the recommendation of the Board of Directors?
The Board of Directors recommends that you vote AGAINST this proposal.
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What am I voting on?
As You Sow, on behalf of the Wynnette M. LaBrosse Trust, has advised us that it intends to present the following shareholder proposal at the Annual Meeting. We will furnish the address and share ownership of the proponent upon request. In accordance with federal securities regulations, we have included the text of the proposal and supporting statement exactly as submitted by the proponent. We are not responsible for the content of the proposal or any inaccuracies it may contain.
WHEREASwaste and recycling issues were ranked among the 10 most important issues to stakeholders in a Yum Brands 2017 materiality assessment, yet the company lags competitors by lacking a commitment to phase out plastic straws, uses harmful polystyrene foam beverage cups in some markets, and lacks a commitment to front of houseon-site container recycling.
The ocean contains an estimated 150 million tons of plastic, with about 8 million tons added annually, equivalent to a garbage truck load every minute. Experts predict there will be more plastic than fish by weight in oceans by 2050. Company straws, cups, and
lids are found in street and marine litter. 500 million plastic straws are used by Americans daily, which are not recycled. Polystyrene foam used for beverage cups, is rarely recycled.Non-recyclable plastic packaging is more likely to be littered and carried into waterways. In the marine environment, plastic straws, cups, and cup lids break down into small indigestible particles that birds and marine animals mistake for food, resulting in entanglement, suffocation, and drowning. More than 250 species have been impacted. Plastic does $13 billion in damage to marine ecosystems annually.
Company packaging that degrades in waterways can also transfer hazardous chemicals to animals and potentially to humans. Plastics absorb toxics like PCBs, pesticides, and metals from water, transferring them to the marine food web and potentially to human diets, increasing risk of adverse effects to wildlife and humans. Polystyrene foam may pose a higher risk to marine animals than other plastics due to its hazardous constituent chemicals and research showing it can accumulate high concentrations of water borne toxins in a short time frame. Polystyrene has caused
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decreased reproduction in laboratory populations of oysters and fish.
Antigua and Barbuda, Bangladesh, Barbados, France, Guyana, Haiti, Rwanda, Taiwan and states in India and Malaysia have enacted bans on foam packaging. More than 100 U.S. cities or counties have banned or restricted foam packaging. The problem can be exacerbated in developing countries with less sophisticated solid waste management systems. Recent scientific research estimates that one half of ocean plastic deposition comes from several rapidly developing Asian countries where our company does substantial business.
Competitor McDonald’s announced that it would phase out use of polystyrene foam packaging globally at the end of 2018. Competitor Starbucks has agreed to phase out plastic straws by 2020. The company
also lacks a commitment to recycle front of houseon-site post-consumer packaging. McDonald’s has committed to recycle post-consumer packaging in all restaurants globally by 2025.
BE IT RESOLVED Shareholders request that YUM Brands issue a report to shareholders, to be prepared at reasonable cost and omitting proprietary information, detailing efforts to achieve environmental leadership through a comprehensive policy on sustainable packaging.
Supporting statement:
Proponent believes that a comprehensive policy on sustainable packaging should, for example, address plastic straws, polystyrene beverage and food containers, and policies for front of house recycling. We urge shareholders to support this proposal.
What is the Company’s position regarding this proposal?
Management Statement in Opposition to Shareholder Proposal
Our Board of Directors unanimously recommends that stockholders vote AGAINST this proposal, as it would divert time and resources that the Company has determined would be better used to support our strategy to target our sustainability efforts on areas that will provide the most meaningful impact, without providing a significant corresponding benefit to the Company.
Sustainable packaging has been a priority for the Company for the last several years as our sustainability strategy has evolved. Our approach to sustainability initiatives is guided by impact: we focus our efforts where we have the ability to influence meaningful outcomes. With that principle in mind, our focus has been on our existing goal of diverting 50 percent ofback-of-house operational waste from landfills, measured by weight, generated in our U.S. restaurants by the end of 2020. In addition, we have focused on our goal of purchasing 100 percent of our paper-based packaging from responsibly managed forests and
recycled sources by the end of 2020. In January 2019, our KFC Division announced a significant new global sustainability commitment that all plastic-based, consumer-facing packaging will be recoverable or reusable by 2025. These initiatives are those that the Company has determined are best targeted to have the most direct impact. Moreover, the Company currently has in place procedures designed to mitigate packaging risks and ensure that issues are surfaced and addressed in a timely manner.
As the above highlights, implementation of broader reporting on our sustainable packaging policy, as requested by the proposal, is not necessary and would divert time, effort and resources, thereby limiting our ability to target our efforts on areas that will provide the most meaningful impact. For this reason, and other reasons outlined below, we believe that the request by the proponent is unnecessary, and has the potential to divert resources with no corresponding benefit to the Company, our customers, or our shareholders.
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Why does the Company oppose the proposal?
Specifically related to the identification and communication of a potential report on efforts to achieve environmental leadership through a comprehensive policy on sustainable packaging, the Company has in place the following:
Public statements, policies and goals on sustainable packaging issues.The Company maintains a public website with policy statements representing our informed views and opinions on industry-related issues. Notably, we have implemented policies for more sustainable packaging and waste handling. Given that packaging is an important part of our waste equation, we have done the following:
We are actively pursuing our goal of purchasing 100 percent of our paper-based packaging with fiber from responsibly managed forests and recycled sources by the end of 2020;
We have focused on our goal of diverting 50 percent ofback-of-house operational waste from landfills, measured by weight, generated in our U.S. restaurants by the end of 2020;
KFC has made a global sustainability commitment that all plastic-based, consumer-facing packaging will be recoverable or reusable by 2025; and
Taco Bell has replaced its cold drink cups with fully recyclable cold cups across 7,000 of its US restaurants, representing more than 95% of its drinks sold.
These policies and goals reflect our long-term intention to develop and implement more sustainable packaging and waste handling in our restaurants – by building on progress already made and industry innovations and infrastructure developments.
Comprehensive voluntary disclosure on environmental sustainability issues.On a biennial basis, with updates during intervening years, the Company publishes its Global Citizenship & Sustainability Report at http://citizenship.yum.com/. Included in the Report are the Company’s commitments in the material sustainability areas of food, planet and people, which includes sustainable packaging. Progress updates for these commitments, including packaging goals, are included in the Report. In addition, the Company discloses its climate, water and forests practices through CDP on an annual basis.
Collaboration with industry groups.We understand that the journey to more sustainable packaging includes innovation.The Company has joined the NextGen Cup Challenge, an initiative by the NextGen Consortium, a multi-year partnership of food-service industry leaders, to addresssingle-use food packaging waste globally. In its initial phase, the project hopes to advance recoverable solutions for a fiber, hot and cold,to-go cup system. The Company believes that this initiative can be an important step toward unlocking wider innovations and in overcoming the global infrastructure challenges ofsingle-use packaging.
Integrated, executive-level governance structure to oversee the Company’s global sustainability initiatives.Oversight for environmental, social and governance (ESG) issues ultimately resides with the Yum! Brands Board of Directors, briefed through its Audit Committee on a regular basis. At the operational level, the Chief Communications and Public Affairs Officer oversees the global reputation of Yum! and is responsible for shaping the Citizenship and Sustainability Strategy with the Vice President, Government Relations and Citizenship & Sustainability.
What vote is required to approve this proposal?
Approval of this proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting.
What is the recommendation of the Board of Directors?
The Board of Directors recommends that you vote AGAINST this proposal.
Who are our largest shareholders?
This table shows ownership information for each YUM shareholder known to us to be the owner of 5% or more of YUM common stock. This information is presented as of December 31, 2018,2021 and is based on a stock ownership report on Schedule 13G filed by such shareholders with the SEC and provided to us.
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Class
| Number of Shares Beneficially Owned
| Percent of Class
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T. Rowe Price Associates, Inc. 100 E. Pratt Street, Baltimore, MD 21202 |
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34,105,072 |
(1) |
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11.6% |
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Blackrock Inc. 55 East 52nd Street New York, NY 10055 |
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24,554,583 |
(2) |
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8.4% |
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The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355
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23,089,447 |
(1) |
| 7.39% |
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22,770,049 |
(3) |
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7.77% |
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Blackrock Inc. 55 East 52nd Street New York, NY 10055
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21,595,217 |
(2) |
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6.90% |
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Magellan Asset Management Limited 19 Martin Place Sydney, NSW, 2000, Australia |
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15,431,704 |
(4) |
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5.26% |
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(1) | The filing indicates sole voting power for |
(2) | The filing indicates sole voting power for |
(3) | The filing indicates sole voting power for 0 shares, shared voting power for 465,798 shares, sole dispositive power of |
(4) | The filing indicates sole voting power for 10,359,192 shares, shared voting power for 0 shares, sole dispositive power for 15,431,704 shares and shared dispositive power for 0 shares. |
How much YUM common stock is owned by our directors and executive officers?
This table shows the beneficial ownership of YUM common stock as of December 31, 20182021 by
each of our directors,
each of the executive officers named in the Summary Compensation Table on page 59,54, and
all directors and relevant executive officers as a group.
Unless we note otherwise, each of the following persons and their family members have sole voting and investment power with respect to the shares of common stock beneficially owned by him or her. None of the persons in this table (nor the Directors and executive officers as a group) holds in excess of one percent of the outstanding YUM common stock. Please see table above setting forth information concerning beneficial ownership by holders of five percent or more of YUM’s common stock. Directors
and executive officers as a group, beneficially own approximately 0.67%.
The table shows the number of shares of common stock and common stock equivalents beneficially owned as of December 31, 2018.2021. Included are shares that could have been acquired within 60 days of December 31, 20182021 through the exercise of stock options, stock appreciation rights (“SARs”) or distributions from the Company’s deferred compensation plans, together with additional underlying stock units as described in footnote (4) to the table. Under SEC rules, beneficial ownership includes any shares as to which the individual has either sole or shared voting power or investment power and also any shares that the individual has the right to acquire within 60 days through the exercise of any stock option or other right.
32 | YUM! BRANDS, INC. - |
STOCK OWNERSHIP INFORMATION
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Beneficial Ownership | Beneficial Ownership | |||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Shares Beneficially Owned(1) | Options/ SARs Exercisable within 60 Days(2) | Deferral Plans Stock Units(3) | Total Beneficial Ownership | Additional Underlying Stock Units(4) | Total | Number of Shares Beneficially Owned(1) | Options/ SARs Exercisable within 60 Days(2) | Deferral Plans Stock Units(3) | Total Beneficial Ownership | Additional Underlying Stock Units(4) | Total | ||||||||||||||||||||||||||||||||||||
Greg Creed(5) | 163,283 | 582,546 | 97,270 | 843,099 | 45,590 | 888,689 | ||||||||||||||||||||||||||||||||||||||||||
Paget Alves | 3,235 | — | — | 3,235 | 3,485 | 6,720 | 6,309 | — | — | 6,309 | 8,462 | 14,771 | ||||||||||||||||||||||||||||||||||||
Michael J. Cavanagh | 10,000 | 4,167 | — | 14,167 | 20,938 | 35,105 | ||||||||||||||||||||||||||||||||||||||||||
Keith Barr | — | — | — | — | 4,648 | 4,648 | ||||||||||||||||||||||||||||||||||||||||||
Christopher Connor | — | — | — | — | 4,857 | 4,857 | — | — | — | — | 13,215 | 13,215 | ||||||||||||||||||||||||||||||||||||
Brian C. Cornell | 452 | 1,474 | — | 1,926 | 11,297 | 13,223 | 452 | 2,076 | — | 2,528 | 24,012 | 26,540 | ||||||||||||||||||||||||||||||||||||
Tanya Domier | — | — | — | — | 2,611 | 2,611 | ||||||||||||||||||||||||||||||||||||||||||
Tanya Domier(5) | 4,957 | — | — | 4,957 | 8,135 | 13,092 | ||||||||||||||||||||||||||||||||||||||||||
Mirian M. Graddick-Weir | — | 5,216 | — | 5,216 | 24,158 | 29,374 | 1,233 | 6,022 | — | 7,255 | 32,481 | 39,736 | ||||||||||||||||||||||||||||||||||||
Lauren Hobart | — | — | — | — | 2,548 | 2,548 | ||||||||||||||||||||||||||||||||||||||||||
Thomas C. Nelson | 10,506 | 10,531 | — | 21,037 | 62,142 | 83,179 | 17,396 | 6,022 | — | 23,418 | 70,502 | 93,920 | ||||||||||||||||||||||||||||||||||||
Justin Skala | 2,150 | 1,064 | — | 3,214 | 7,104 | 10,318 | 8,753 | 1,491 | — | 10,244 | 8,330 | 18,574 | ||||||||||||||||||||||||||||||||||||
Elane B. Stock | 4,019 | 2,205 | — | 6,224 | 10,575 | 16,799 | 4,019 | 3.154 | — | 7,173 | 18,404 | 25,577 | ||||||||||||||||||||||||||||||||||||
Robert D Walter(5) | 112,284 | 10,531 | — | 122,815 | 50,438 | 173,253 | ||||||||||||||||||||||||||||||||||||||||||
Annie Young-Scrivner | 2,042 | — | — | 2,042 | 2,636 | 4,678 | ||||||||||||||||||||||||||||||||||||||||||
David Gibbs | 39,266 | 223,900 | 16,439 | 279,605 | 21,589 | 301,194 | 85,059 | 299,504 | 29,880 | 414,443 | 69,826 | 484,269 | ||||||||||||||||||||||||||||||||||||
Christopher Turner | 6,198 | 10,410 | — | 16,608 | 4,391 | 20,999 | ||||||||||||||||||||||||||||||||||||||||||
Tracy Skeans | 6,459 | 58,521 | 9,487 | 74,467 | 1,147 | 75,614 | 13,329 | 66,221 | 12,827 | 92,377 | 6,188 | 98,565 | ||||||||||||||||||||||||||||||||||||
Roger Eaton | 40,162 | 167,075 | 15,878 | 223,115 | 62,910 | 286,025 | ||||||||||||||||||||||||||||||||||||||||||
David Russell | 11,794 | 62,455 | 324 | 74,573 | 14,029 | 88,602 | ||||||||||||||||||||||||||||||||||||||||||
Marc Kesselman | — | 15,360 | 17,739 | 33,099 | 4,953 | 38,052 | ||||||||||||||||||||||||||||||||||||||||||
All Directors and Executive Officers as a Group (17 persons) | 406,593 | 1,154,910 | 157,137 | 1,718,640 | 347,823 | 2,066,463 | ||||||||||||||||||||||||||||||||||||||||||
Mark King | 8,034 | 7,901 | — | 15,935 | 7,318 | 23,253 | ||||||||||||||||||||||||||||||||||||||||||
Anthony Lowings(5) | 46,574 | 125,751 | 10,143 | 182,468 | 240 | 182,708 | ||||||||||||||||||||||||||||||||||||||||||
All Directors and Executive Officers as a Group (19 persons) | 222,302 | 647,576 | 58,824 | 928,702 | 325,454 | 1,254,156 |
(1) | Shares owned outright. These amounts include the following shares held pursuant to YUM’s 401(k) Plan as to which each named person has sole voting power: |
• Ms. Skeans, 4,9272,734
• Mr. Russell, 1,017Lowings, 1,214
• all relevant executive officers as a group, 5,9445,008 shares
(2) | The amounts shown include beneficial ownership of shares that may be acquired within 60 days pursuant to SARs awarded under our employee or director incentive compensation plans. For SARs, we report the shares that would be delivered upon exercise (which is equal to the number of SARs multiplied by the difference between the fair market value of our common stock atyear-end and the exercise price divided by the fair market value of the stock). |
(3) | These amounts shown reflect units denominated as common stock equivalents held in deferred compensation accounts for each of the named persons under our Director Deferred Compensation Plan or our Executive Income Deferral Program and include full value awards. Amounts payable under these plans will be paid in shares of YUM common stock at termination of directorship/employment or within 60 days, if so elected. |
(4) | The amounts shown include units denominated as common stock equivalents held in deferred compensation accounts which become payable in shares of YUM common stock at a time (a) other than at termination of directorship/employment or (b) after 60 days. |
(5) | For |
YUM! BRANDS, INC. - | 33 |
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own more than 10% of the outstanding shares of YUM common stock to file with the SEC reports of their ownership and changes in their ownership of YUM common stock. Directors, executive officers andgreater-than-ten percent shareholders are also required to furnish YUM with copies of all ownership reports they file with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to YUM and representations that no other reports were required, all of our directors and executive officers complied with all Section 16(a) filing requirements during fiscal 2018,2021, except that Ms. Skeans had one late Form 4 report thatfiled on behalf Mr. Skala reported 3 late transactionsone transaction (the exercisedistribution of a SAR and two sales transactions)shares from the Directors Deferred Compensation Plan), due to the broker’s failure to notify the executive officer or Company of the transactions.an administrative error.
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation philosophy and program, the compensation decisions of the Management Planning and Development Committee (the “Committee”) for our named executive officers (“NEOs”) and factors considered in making those decisions.
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III. | 43 | |||
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34 | YUM! BRANDS, INC.- 2022 Proxy Statement |
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The company’s 2021 performance was incredibly strong, resulting in system sales growth of 13%, underpinned by 10% same-store sales growth and 6% net unit growth. Each of our four global Brands contributed to the strength we saw in 2021 with positive same-store sales and net-new unit development. This diversified strength illustrates the health of our global system, driven by iconic Brands, strong unit economics and the unmatched operating capability of our capable, committed, and well-capitalized franchise partners, who are experiencing strong unit economics and profit growth. In 2021, we opened 4,180 gross units, marking the strongest development year in Yum!’s history and setting an industry record for unit development, demonstrating that our development engine is reignited.
Additionally, the Company reached new heights in digital, leading to over $22 billion in digital sales, an approximately 25% increase year-over-year. We galvanized our digital and technology strategy and accelerated the development of our ecosystem with both internal investments and the closing of the Kvantum, Tictuk and Dragontail acquisitions. Now more than ever, we’ve leaned into the structural advantages of our diversified global portfolio by leveraging our unmatched global scale, sophisticated supply chains, marketing and consumer insights expertise, and our growing digital and technology capabilities to fuel growth and deliver consistently strong results.
As we move into 2022, which marks the 25th anniversary of Yum, we are confident that we will continue to build the world’s most loved and trusted brands while delivering lasting value for our
stakeholders. To accomplish these goals, we will continue to rely on and elevate Our Recipe for Growth and Good. Under our Recipe for Growth, we will focus on our four key growth drivers which continue to guide our long- term strategy and form the basis of the Company’s strategic plans to accelerate same-store sales growth and net-new restaurant development around the world. The Company remains focused on building the world’s most loved, trusted and fastest growing restaurant brands by:
growing Unrivaled Culture and Talent to leverage our culture and people capability to fuel brand performance and franchise success;
developing Unmatched Operating Capability by recruiting and equipping the best restaurant operators in the world to deliver great customer experiences;
building Relevant, Easy and Distinctive Brands by innovating and elevating iconic restaurant brands people trust and champion; and
achieving Bold Restaurant Development by driving market and franchise expansion with strong economics.
By leveraging our Recipe for Good — our roadmap for socially responsible and sustainable stewardship of people, food and planet, internally and across our supply chain and franchise system — we will elevate the importance of people and continue building an equitable and inclusive culture that, in turn, helps us better serve our customers and communities where we operate. We remain confident in our business model and in the strength of our iconic brands as we look to accelerate growth in 2022.
(1) | See pages 29, 33 and 35 in Item 7 of YUM’s Form | for the fiscal year ended on December 31, 2021 for a discussion of Core Operating Profit in 2021. System Sales Growth excludes impact of foreign currency translation. |
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
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In 2016 we launched a series of initiatives to transform the Company, centering on a new multi-year strategy to accelerate growth, reduce volatility and increase capital returns to shareholders. By the end of 2018, we intended to own less than 1,000 restaurants (at least 98% franchised) and, in 2019, intend to have reduced annual run rate net capital expenditures to approximately $100 million and to have improved our efficiency by lowering general and administrative expenses as a percentage of system sales to 1.7%. The transformation strategy builds upon the principle that a more focused, more franchised and more efficient company will accelerate growth and create significant long-term value for all of our stakeholders. Our four key growth drivers, discussed below, are the principal drivers of the Company’s strategic plans to accelerate same-store sales andnet-new unit growth and serve as our guiding principles for strengthening and growing our KFC, Pizza Hut and Taco Bell brands around the world. In 2018, we achieved our goal of becoming at least 98% franchised and continued to make significant progress towards our 2019 goals.
Our successes in 2018 were possible because of our focus on four growth drivers, each a part of our “Recipe for Growth”, which form the basis of the Company’s strategic plans to accelerate same-store sales growth andnet-new restaurant development at KFC, Pizza Hut and Taco Bell around the world. The Company remains focused on building the world’s most loved, trusted and fastest growing restaurant brands by: (i) buildingDistinctive, Relevant and Easy Brands, by increasing investment in consumer insights, core product innovation, digital excellence and initiatives that strengthen the quality, convenience and appeal of the customer
experience; (ii) developingUnmatched Franchise Operating Capability, strengthening how we equip and recruit the best restaurant operators to deliver great customer experiences, and build and protect our brands; (iii) drivingBold Restaurant Development through partnerships with growth-minded franchisees who can expand and penetrate markets with modern restaurants, strong economics and value; and (iv) growingUnrivaled Culture and Talent to strengthen the customer experience and franchise success withbest-in-class people capability and culture.
Strong brands are critical to our ability to deliver sustained growth and to create long-term shareholder value. As a part of strategic efforts to improve franchise unit level economics, the Company made an investment in Grubhub Inc., partnered with Telepizza and acquired QuikOrder, Inc. during 2018. These actions are designed to expand our delivery capabilities, increase our footprint and scale and enhance our technology capabilities going forward.
2018 was a successful year for the Company and its progress towards the transformation initiative. System sales grew 5%, with same store sales growth of 2%. We achieved net unit growth of 7%, as a result of an increase in our system restaurant count by 3,039 units. Our adjusted operating profit also increased approximately 11% during 2018(see Appendix A: Reconciliation of Adjusted Operating Profit Growth to GAAP Operating Profit Growth). These results provide us with confidence that we are making meaningful progress towards our goal of building and strengthening our global KFC, Pizza Hut and Taco Bell brands. The following performance highlights illustrate the Company’s success in 2018
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The Company’s NEOs for 20182021 are as follows:
Name | Title | |
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Chief Executive Officer
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| Chief Operating Officer and Chief People Officer | |
Mark King | Chief Executive Officer of Taco Bell Division | |
Tony Lowings
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Retired Chief Executive Officer of KFC Division
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(1) | Effective January |
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The business performance of the Company is of the utmost importance in how our executives are compensated. Our compensation program is designed to both support our long-term growth model and hold
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 | ||||||||||||
Attract and retain 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 goals that lead to 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.
| ✓ | ||||||||||||||
Drive ownership mentality—We require executives to invest in the Company’s success by owning a substantial amount of Company stock.
| ✓ |
2021 Compensation Highlights
In January of 2021, the Committee made the following decisions and took the following actions:
The Committee set our CEO target for total direct compensation (base salary, annual cash bonus and annual long-term incentive award value at grant date) at a level around the 50th percentile of our Executive Peer Group (defined at page 50) for the CEO role;
The Committee set the equity mix for our NEOs’ annual long-term incentive awards at 50% stock appreciation rights (“SARs”) and 50% performance share units (“PSUs”); and
The Committee certified that our 2018 PSU awards under our Performance Share Plan paid out at 84% of target in 2021 based on the Company’s Total Shareholder Return (“TSR”) at the 67th percentile compared to the S&P 500 Consumer Discretionary Index and Earnings Per Share (“EPS”) growth of 5%, for the 2018- 2020 performance cycle (see discussion of PSUs at page 42).
36 | YUM! BRANDS, INC.- 2022 Proxy Statement |
EXECUTIVE COMPENSATION |
Say on Pay. At our May 2021 Annual Meeting of Shareholders, shareholders approved our “Say on Pay” proposal in support of our executive compensation program, with 83% of votes cast in favor of the proposal.
Shareholder Outreach. We continued our shareholder outreach program to better understand our investors’ opinions on our compensation practices and respond to their questions. Committee and management team members from compensation, sustainability, investor relations and legal continued to be directly involved in engagement efforts during 2021 that served to reinforce our open-door policy. The efforts included contacting our largest 35 shareholders, representing ownership of approximately 50% of our shares (discussed further on page 48).
Change in PSU Metrics. Because the continuing pandemic-influenced operating environment makes it difficult to set long-term targets which incorporate operating metrics or the previously used EPS metric, our annual PSU grants made in 2021 will be earned based completely on how the Company’s TSR performs relative to the S&P 500 Consumer Discretionary Index.
The Committee determined this change was consistent with the Company’s overall business strategy and realities of the current marketplace. Given that pandemic-related uncertainties are lessening, the Committee has determined to reintroduce operating metrics into the PSU design beginning in 2022.
Accelerating Profitable Growth PSU Award. In January, the Committee approved a one-time Accelerating Profitable Growth PSU award for approximately 500 of the Company’s leaders, which is intended to generate shareholder value by accelerating growth by aggressively restarting the Company’s development engine and motivating leaders to deliver breakthrough development, without losing focus on the other growth drivers of
the Company’s business. These PSU awards are designed to pay out only if bold net-new unit development targets are met. Further details of the Accelerating Profitable Growth PSU award are set forth beginning at page 43. |
2022 Changes to Compensation Program
Long Term Incentive Equity Mix for 2022. As mentioned above, following the Company’s 2021 Annual Meeting of Shareholders, significant shareholder engagement was undertaken by the Company in order to receive feedback on, among other things, the Company’s equity mix for annual long-term incentive awards. In response to this shareholder feedback, and in alignment with our business strategy and compensation philosophy, the Committee has determined that beginning in 2022, the annual long-term incentive award mix for the Company’s executive officers will be split as follows: 25% SARs, 25% Restricted Stock Units (“RSUs”) and 50% PSUs.
Change in PSU Metrics. In response to shareholder feedback, and consistent with the Company’s overall business strategy, beginning in 2022, annual PSU grants made to our executive officers will be earned based on 50% System Sales Growth and 50% Core Operating Profit Growth, with a positive or negative modifier based on the Company’s TSR performance relative to the S&P 500 Consumer Discretionary Index.
Updated the Company’s Executive Peer Group. In August 2021, the Committee approved a revised peer group to be used for NEO pay determinations beginning in 2022. The changes to the Executive Peer Group were made to better align the size of the peer group companies with YUM, and to include companies in relevant industry sectors. Many of the included companies have a global reach, franchised operations, multiple brands and a significant digital presence.
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
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2018 Compensation Highlights
In January of 2018, the Committee made the following decisions and took the following actions:
• The Committee set our CEO target compensation levels at the median of our Executive Peer Group (defined at page 54) for the CEO role;
• The Committee set the equity mix for our Global Leadership Team’s long-term incentive awards at 50% stock appreciation rights (“SARs”) and 50% performance share units (“PSUs”); and
• The Committee certified that our 2015 PSU awards under our Performance Share Plan paid out at 172% of target in 2018 based on the Company’s Total Shareholder Return (“TSR”) at the 79 percentile, compared to the S&P 500, for the 2015- 2017 performance cycle (see discussion of PSUs at page 46).
At our May 2018 Annual Meeting of Shareholders, shareholders approved our “Say on Pay” proposal in support of our executive compensation program, with 95% of votes cast in favor of the proposal.
We continued our shareholder outreach program to better understand our investors’ opinions on our compensation practices and respond to their questions. Committee and management team members from compensation, investor relations and legal continued to be directly involved in engagement efforts during 2018 that served to reinforce our open door policy. The efforts included contacting our largest 35 shareholders, representing ownership of approximately 50% of our shares (discussed further on page 52).
E. Relationship between Company Pay and Performance for the CEO
To focus on both the short-term and long-term success of the Company, approximately 90% of our CEO’s annual target compensation is“at-risk” pay, with the compensation paid based on Company results. If short-term and long-term financial and operational target goals are not achieved, then performance-related compensation will decrease. If target goals are exceeded, then performance-related compensation will increase. As demonstrated below,
our target annual pay mix
for our CEO emphasizes our commitment to“at-risk” pay in order to tie pay to performance. For purposes ofThe discussion in this section our discussion is limited to Mr. Gibbs, our CEO Mr. Creed.for 2021. Our other NEOs’ target annual compensation is subject to a substantially similar set of considerations, which are discussed in Section III, 20182021 Named Executive Officer Total Direct Compensation and Performance Summary, found at pages 4743 to 5147 of this CD&A.
CEO Total Direct Compensation
The Committee sets the CEO’s target for total direct compensation (base salary, annual cash bonus and annual long-term incentive award value at grant date) taking into account Company performance, the CEO’s performance, time in role, other job-related factors and the range of market practices of our Peer Group. The Committee was highly satisfied with Company results and the exemplary leadership of Mr. Gibbs, as by early
2021, the most dramatic and difficult part of the pandemic had been successfully weathered due to his leadership. In 2021, Mr. Gibbs’ target total direct compensation was set around the 50th percentile of our Executive Peer Group. For 2021, 76% of our CEO’s target pay was in the form of long-term equity incentive compensation.
YUM! BRANDS, INC.- |
EXECUTIVE COMPENSATION
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CEO Total Direct Compensation
The Committee sets the CEO’s target for total direct compensation (base salary, annual cash bonus and annual long-term incentive award value at grant date) every year to align appropriately with market data for our Executive Peer Group, taking into account the CEO’s performance, time in role and otherjob-related factors. For 2016 and 2017, the Committee set the CEO’s total compensation below the 50th percentile and for 2018, at the 50th percentile. The progression in
target total compensation reflects the CEO’s growth in role and ongoing continued strong performance.
As demonstrated below, the CEO’s actual total direct compensation was above target for the last three years, reflecting the Company’s above target performance. For 2018, 67% of our CEO’s pay was in the form of long-term equity incentive compensation.
(1) |
|
(2) | System sales growth excludes the impact of foreign currency translation and, for |
(3) | Total shareholder return is calculated as the |
(4) | Greg Creed was the Company’s Chief Executive Officer until December 31, 2019. |
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
|
II. Elements of Executive Compensation Program
Our annual executive compensation program has three primary pay components: base salary; annual performance-based cash bonuses; and long-term equity performance-based incentives. We also offer retirement and other benefits.
Element | Objective | Form | ||
Base salary | Attract and retain high-caliber talent and provide a fixed level of cash
| Cash | ||
Annual Performance-Based Cash Bonuses | Motivate high performance and reward short-term Company, team and individual
|
Cash | ||
Long-Term Equity Performance-Based Incentives | Align the interests of executives with shareholders and emphasize long-term
| SARs & PSUs | ||
Retirement and Additional Benefits | Provide for long-term retirement income and basic health and welfare coverage | Various
|
We provide base salary to compensate our NEOs for their primary roles and responsibilities and to provide a stable level of annual compensation. A NEO’s salary varies based on the role, level of responsibility,
experience, individual performance, potential and market value. Specific salary increases take into account these factors. The Committee reviews each NEO’s salary and performance annually.
B. Annual Performance-Based Cash Bonuses
Our performance-based annual bonus program, the YUM Leaders’ Bonus Program, is a cash-based plan. The principal purpose of the YUM Leaders’ Bonus
Program is to motivate and reward short-term team and individual performance that drives shareholder value.
The formula for calculating the performance-based annual bonus under the YUM Leaders’ Bonus Program is the product of the following:
Base Salary
| X |
Target Bonus Percentage | X |
Team Performance (0 – 200%)
| X |
Individual Performance (0 – 150%)
| = |
Bonus Payout (0 – 300%)
|
Team Performance
In light of the Company’s transformation, which began in 2016 and continued throughout 2017 and 2018, theThe Committee carefully considered our strategic direction to become a pure-play franchisor and established final team performance measures, targets and weights in May 2021, following an extensive review of these items in January 2018and a preliminary approval in March, after receiving input and recommendations from management. The team performance targets were also reviewed by the BoardCommittee to ensure that the goals support the Company’s overall strategic objectives.
The performance targets were developed through the Company’s annual financial planning process, which takes into account KFC, Pizza Hut, and Taco Bell and The Habit (each, a “Division”) growth strategies, historical performance, and the expected future operating environment for each Division.
When setting targets for each specific team performance measure, the Company takes into account overall business goals and structures the targettargets designed to motivate achievement of desired performance consistent with our growth commitment to shareholders. The performance targets are comparable to those we disclose to our investors and, when determined to be appropriate by our Committee, may be slightly above or below disclosed guidance.
A leverage formula for each team performance measure magnifies the potential impact that performance above or below the performance target will have on the calculation of the annual bonus. This leverage increases the payouts when targets are exceeded and reduces payouts when performance is below target. There is a threshold level of performance for all measures that must be met in order for any bonus to be paid, absent the use of discretion by the Committee in extraordinary circumstances.
YUM! BRANDS, INC.- |
EXECUTIVE COMPENSATION
|
for all measures that must be met in order for any bonus to be paid. Additionally, all measures have a cap on the level of performance over which no additional bonus will be paid regardless of performance above the cap.
The Committee may approve adjustments to Division targets or may exclude certainpre-established items from the financial results used to determine the annual bonus when doing so is consistent with the objectives and intent at the time the targets were originally set, in order to focus executives on the fundamentals of the
Company’s underlying business performance.
As part of the 20182021 target-setting process, the Committee decided that KFC, Pizza Hut, Taco Bell and/or YUM Operating Profit growth performance for 20182021 annual incentive
purposes should be measured adjusting for certain factors that were not considered indicative of underlying business performance for the year. These factors included amounts associated with Special Items (as defined in our Form 10K), the impacts of10-K at page 29) and foreign currency translation, the profit dilution resulting from the refranchising of company-owned stores, general and administrative reductions, incremental Pizza Hut US system advertising expense we agreed to as part of the Pizza Hut Transformation Agreement and the impact of a 2018 required change in the accounting standards for revenue recognition. For further details, refer to Appendix A: Reconciliation of Adjusted Operating Profit Growth.translation.
Detailed Breakdown of 20182021 Team Performance
The team performance targets, actual results, weights and overall performance for each measure for our NEOs are outlined below. The long-term drivers of value for YUM are profit growth, same-store sales growth and new storeunit development. Accordingly, the Committee selectedapproved these performance measures for
the Company’s annual incentive plan and these measures were included at both the corporate and divisional levels. For Divisions, the team performances arewere weighted 75% on Division operating measures and 25% on YUM team performance.
Team Performance | ||||||||||||||||||||||
NEO | Measures | Target | Actual | Earned Award as % of Target | Weighting | Final Team Performance | ||||||||||||||||
Creed
|
Adjusted Operating Profit Growth1
|
|
12%
|
|
|
11.4%
|
|
|
92
|
|
|
50%
|
|
|
46
|
| ||||||
Gibbs
|
System Same-Store Sales Growth
|
|
3.0%
|
|
|
2.0%
|
|
|
75
|
|
|
25%
|
|
|
19
|
| ||||||
Skeans
Russell(2)
Kesselman(2) |
System Net New Units
|
|
1,645
|
|
|
3,039
|
|
|
200
|
|
|
25%
|
|
|
50
|
| ||||||
FINAL YUM TEAM FACTOR | 115 | |||||||||||||||||||||
Eaton
|
Adjusted Operating Profit Growth1
|
|
12%
|
|
|
12.8%
|
|
|
115
|
|
|
50%
|
|
|
58
|
| ||||||
System Same-Store Sales Growth
|
|
3.0%
|
|
|
2.4%
|
|
|
84
|
|
|
25%
|
|
| 21
|
| |||||||
System Net New Units
|
|
850
|
|
|
1,134
|
|
|
200
|
|
|
25%
|
|
|
50
|
| |||||||
Total Weighted Team
|
|
129
|
| |||||||||||||||||||
Total Weighted Team
|
|
115
|
| |||||||||||||||||||
FINAL KFC TEAM FACTOR
|
|
126
|
|
Team Performance | ||||||||||||||||||||||||||||||
NEO | Measures | Min | Target | Max | Actual | Earned Award as % of Target | Weighting | Final Team Performance | ||||||||||||||||||||||
Gibbs Skeans Turner |
Core Operating Profit Growth1 |
|
$1,868MM
|
|
|
$1,957MM
|
|
|
$2,045MM
|
|
|
$2,094MM
|
|
|
200
|
|
|
50%
|
|
|
100
|
| ||||||||
System Same-Store Sales Growth |
|
3.25% |
|
|
8.5% |
|
|
10.5% |
|
|
10.1% |
|
|
179 |
|
|
25% |
|
|
45 |
| |||||||||
System Net New Units |
|
1,470
|
|
|
1,850
|
|
|
2,525
|
|
|
3,057
|
|
|
200
|
|
|
25% |
|
|
50 |
| |||||||||
FINAL YUM TEAM FACTOR |
| 195
|
| |||||||||||||||||||||||||||
Lowings |
Core Operating Profit Growth1 |
|
$1,039MM |
|
|
$1,115MM |
|
|
$1,144MM |
|
|
$1,185MM |
|
|
200 |
|
|
50% |
|
| 100
|
| ||||||||
System Same-Store Sales Growth |
|
5.25% |
|
|
11.25% |
|
|
13.25% |
|
|
11.2% |
|
|
99 |
|
|
25% |
|
|
25 |
| |||||||||
System Net New Units
|
|
990
|
|
|
1,325
|
|
|
1,525
|
|
|
1,928
|
|
|
200
|
|
|
25%
|
|
|
50
|
| |||||||||
Total Weighted Team
|
| 175
|
| |||||||||||||||||||||||||||
Total Weighted Team
|
| 195
|
| |||||||||||||||||||||||||||
FINAL KFC TEAM FACTOR |
|
180 |
| |||||||||||||||||||||||||||
King
|
Core Operating Profit Growth1 |
|
$721MM
|
|
| $742MM
|
|
| $754MM
|
|
|
$757MM
|
|
|
200
|
|
|
50%
|
|
|
100 |
| ||||||||
System Same-Store Sales Growth |
| 0.75%
|
|
| 4.75%
|
|
| 6.75%
|
|
| 10.5%
|
|
| 200
|
|
| 25%
|
|
| 50
|
| |||||||||
System Net New Units
|
| 225
|
|
| 300
|
|
| 360
|
|
| 364
|
|
| 200
|
|
| 25%
|
|
| 50
|
| |||||||||
Total Weighted Team
|
| 200
|
| |||||||||||||||||||||||||||
Total Weighted Team
|
| 195
|
| |||||||||||||||||||||||||||
FINAL TACO BELL TEAM FACTOR
|
|
|
199
|
|
(1) |
|
|
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
|
Individual Performance
Each NEO’s Individual Performance Factorindividual performance factor is determined by the Committee based upon its subjective determination of the NEO’s individual performance for the year, including consideration of specific objective individual performance goals set at the beginning of the year. Performance categories considered by the Committee include the NEO’s performance in: Fostering Unrivaled Culture and Talent; Driving Bold Restaurant Development and Returns; Building Relevant, Easy and Distinctive Brands; Developing Unmatched Operating Capability; Implementation of our Recipe for Good –focusing on People, Food and Planet; and Delivering on Shareholder Promises. The Committee’s determinations with respect to the individual performance of our NEOs is set forth below from pages 43 to 47.
C. Long-Term Equity Performance-Based Incentives
We provide performance-based long-term equity compensation to our NEOs to encourage long-term decision making that creates shareholder value. To that end, we use equity vehicles that motivate and balance the tradeoffs between short-term and long-term performance. Performance-based long-term equity compensation also serves as a retention tool.
Our NEOs are awarded long-term incentives annually based on the Committee’s subjective assessment of the following items for each NEO (without assigning weight to any particular item):
Prior year individual and team performance
Expected contribution in future years
Consideration of the market value of the executive’s role compared with similar roles in our Executive Peer Group
Achievement of stock ownership guidelines
Equity Mix
Each year, the Committee reviews the mix of long-term incentives. For 2018,2021, the Committee continued to choose SARs and PSU awards because these equity vehicles focus and reward management for enhancing long-term shareholder value, thereby aligning our NEOs with the interests of our shareholders.
At the beginning of 2018,2021, the Committee determined a target grant value for each member of the Global
Leadership TeamNEO (based on time in role, performance and market practice) and the split of that value between SARs and PSU grants. For each NEO, (other than Mr. Russell), the target grant value was split 50% SARs and 50% PSUs. Mr. Russell received 100% SARs because PSUs are not granted to Company employees at his level. For each NEO, the breakdown between SARs award values and PSU award values can be found under the Summary Compensation Table, page 5954 at columns e and f.
Stock Appreciation Rights Awards
The Committee believes that SARs reward value creationlong-term value-creation generated from sustained results. They are, therefore, strongly linked to and based on, the performance of Yum common stock. In 2018,2021, we granted to each of our NEOs SARs which haveten-year terms and vest over four years. The exercise price of each SAR award was based on the closing market price of the underlying YUM common stock on the date of grant. Therefore, SAR awards will only have value if our NEOs are successful in increasing the share price above the awards’ exercise price.
Performance Share Awards
Pursuant to the Performance Share Plan under our Long Term Incentive Plan (“LTIP”), we granted our NEOs (other than Mr. Russell) PSU awards in 2018.2021. These PSU awards are earned equally based on the Company’s3-year average TSR relative to the companies in the S&P 500 Consumer Discretionary Index and on compoundIndex. Using TSR in the annual3-year growth of PSU awards supports the Company’s Earnings Per Share (“EPS”). Incorporating TSR and EPS supports the Company’spay-for-performance philosophy while diversifying performance criteria by using measures not used in the annual bonus plan and aligning our NEOs’ reward with the creation of shareholder value. If TSR is negative, payouts may not exceed the target irrespective of the actual TSR percentile ranking of the Company. The target, threshold and maximum number of shares that may be paid under these awards for each NEO are described at page 61.
56. The Committee may, from time-to-time, grant PSU awards to eligible employees to incentivize various strategic initiatives, consistent with the terms of the LTIP. For the performance period covering 20182021 – 2020,2023, each NEO (other than Mr. Russell) will earn a percentage of his or her target PSU award, with 50%100% of the payout based on the achieved TSR percentile ranking andagainst the other 50% based on EPS growth.S&P 500 Consumer Discretionary Index. Indicative payouts as a percentage of target are as set forth in the table below:
Threshold | Target | Maximum | ||||||||||||
TSR Percentile Ranking | <30% | 30 | % | 50 | % | 75 | % | |||||||
Payout as % of Target | 0% | 35 | % | 100 | % | 200 | % | |||||||
EPS Growth(3-year CAGR, ex foreign currency translation) | <7% | 7 | % | 12 | % | 17 | % | |||||||
Payout as % of Target | 0% | 35 | % | 100 | % | 200 | % |
Threshold | Target | Maximum | ||||||||||||
TSR Percentile Ranking | <30% | 30 | % | 50 | % | 75 | % | |||||||
Payout as % of Target | 0% | 35 | % | 100 | % | 200 | % |
YUM! BRANDS, INC.- |
EXECUTIVE COMPENSATION
|
Dividend equivalents will accrue during the performance period and will be distributed as additional shares but only in the same proportion and at the same time as the original awards are earned. If no shares are earned, no dividend equivalents will be paid. The awards are eligible for deferral under the Company’s Executive Income Deferral (“EID”) Program.
Accelerating Profitable Growth Award – A One-Time Performance-Based Award to Drive Bold Net-New Unit Development
In January 2021, the Committee approved the Accelerating Profitable Growth award, an incremental one-time grant specifically designed to rapidly accelerate growth through net-new unit development and to foster retention of a broad-based group of approximately 500 Company leaders, including the NEOs. The Committee viewed a rapid, but well-considered, expansion in net-new unit development as essential for the Company in accelerating its growth in furtherance of its strategic model as we move beyond the pandemic. When designing the award, the Committee intended that the award would address vital strategic objectives including, but not limited to, the following:
• | Shareholder value – Generating shareholder value by accelerating growth and aggressively restarting the Company’s development engine – designed to maintain strong alignment with, and support from, the Company’s shareholders, who the Committee intends will ultimately benefit if the Company is successful in meeting the bold unit development targets set forth in the award; |
• | Breakthrough Growth – Incentivizing a broad group of Company leaders to ensure the delivery of breakthrough development, without their losing focus on the Company’s other growth drivers; |
• | Retention – Retaining our leaders at varying levels within the Company in an economically challenging |
environment and in the face of increased competition for our unrivaled talent; and |
• | Simplicity and Clarity – Creating an award that is simple for employees to understand and likely to allow them to coalesce around a unified goal. |
The performance metrics of the Accelerating Profitable Growth Award are reflective of the key emphasis the Company has placed on unit development, as described above. These PSUs may be earned based on the Company’s performance against the following objective and subject to the following terms:
(a) | Performance/Reward Structure. Performance requirements and corresponding incentive opportunities under the plan are as follows: |
Structure | Threshold | Target | Maximum | |||||||||
Net-New Units | 3,800 | 4,500 | 5,200 | |||||||||
Incentive as % of Target | 75 | % | 100 | % | 125 | % |
(b) | Notably, the number of net-new units necessary to satisfy threshold performance under this award is approximately equal to the Company’s highest historical two-year net-new unit development performance, excluding acquisitions. If the threshold development target is not reached, the award will not pay out. |
(c) | Performance Period. The performance period over which the award may be earned is January 1, 2021 to December 31, 2022 (if performance against the net-new unit target is below threshold for the period of January 1, 2021 through December 31, 2022 and the World Health Organization has declared a global pandemic which remains in effect after December 31, 2021, the performance period would become January 1, 2022 to December 31, 2023, excluding any net-new units developed during 2021). |
Generally, recipients of this award must remain employed with the Company through December 31, 2023 to vest in this award. Pro rata vesting is available in the event an award recipient’s employment is terminated prior to that date by reason of death, disability, retirement, or involuntary termination by the Company due to a job elimination or without cause.
III.
|
Below is a summary of each of our NEOs’ total direct compensation – which generally includes base salary, annual cash bonus, and long-term incentive awards – and an overview of their 20182021 performance relative to our annual and long-term incentive performance goals. The
The process the Committee used to determine each officer’s 20182021 compensation is described more fully in “How Compensation Decisions Are Made” beginning on page 52.48.
CEO Compensation
|
2018 Performance Summary
Our Board, under the leadership of the Committee Chair, approved Mr. Creed’s goals at the beginning of the year and conducted amid-year andyear-end evaluation of his performance. These evaluations included a review of his leadership pertaining to the achievement of his goals that included business results, leadership in the development and implementation of Company strategies, and development of Company culture and talent.
The Committee determined that Mr. Creed’s overall performance for 2018 merited an individual factor of 125. This individual factor was combined with YUM’s team factor of 115 (discussed at page 44) to calculate his annual cash bonus. This determination was based on the Committee’s subjective assessment of Mr. Creed’s performance against his goals which included the following items (without assigning a weight to any particular item):
YUM Adjusted Operating Profit Growth of approximately 11%
Worldwide system sales growth of 5%
Net new restaurant openings of 3,039; net unit growth of 7%
KFC’s and Taco Bell’s above target performance for Adjusted Operating Profit Growth
KFC’s, and Pizza Hut International’s above target performance for System Net New Units
Management of the Company during the second year of its transformation into a pure-play franchisor
Leadership during the strategic transactions involving Grubhub Inc., Telepizza and QuikOrder, Inc.
Development of leadership and leadership bench, and fostering customer-focused employee culture
2018 Committee Decisions
In January, Mr. Creed’s compensation was adjusted as follows:
Base salary was increased 3%;
Annual cash bonus target was increased to 175% of base salary; and
Grant value of long-term incentive equity awards were increased by 33% recognizing his performance in leading the Company in implementing its Recipe for Growth, time in role and impact on the business.
These decisions positioned Mr. Creed’s total target compensation to approximately the 50th percentile of the Company’s Executive Peer Group.
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
|
The graphics below illustrate Mr. Creed’s direct compensation:CEO Compensation
Other NEO 2018 Total Direct Compensation
David
|
20182021 Performance Summary
Our Board, under the leadership of the Committee Chair, approved Mr. Gibbs’ goals as our Chief Executive Officer at the beginning of the year and conducted a mid-year and year-end evaluation of his performance. These evaluations included a review of his leadership pertaining to the achievement of his goals which included business results, leadership in the development and implementation of Company strategies, and development of Company culture and talent. In addition, the Committee noted Mr. Gibbs’ continued leadership during the global pandemic.
The Committee determined that Mr. Gibbs’ overall performance for the year2021 merited a 135an individual performance factor. The Committee recognized Mr. Gibbs’ performance in the positionfactor of President and CFO of the Company, including driving shareholder value creation and returns through optimization of our capital structure, increasing restaurant development, driving YUM’s Adjusted Operating Profit Growth of 11%, leading the effort to refranchise a significant number of Company-owned restaurants, and in leading the continued implementation of the Company’s transformation strategy. Mr. Gibbs was also recognized for his leadership during the strategic transactions involving Grubhub Inc., Telepizza and QuikOrder, Inc. Mr. Gibbs’140. This individual performance factor was combined with aYUM’s awarded team factor of 115195 (discussed at page 44) to calculate his41) resulting in a significantly above target annual cash bonus. This determination was based on the Committee’s subjective assessment of Mr. Gibbs’ performance against his previously set goals which included the following items (without assigning a weight to any particular item):
Effective January 25, 2019, Mr. Gibbs was promoted
Driving Bold Restaurant Development and Returns. The Company opened 3,057 net-new units in 2021, resulting in the strongest year of development growth in Yum!’s history and a restaurant industry record;
Delivering on Shareholder Promises – strong system sales growth. Company system sales growth increased 13% over the prior year, supported by 10% same-store sales growth and 6% net unit growth, evidencing the health of our global system;
Developing Unmatched Operating Capability – including leading our continued pandemic response. This required: avoiding disruptions in supply chain as a result of the global pandemic; mitigating significant store-closure risks in various markets; supporting employees and communities in response to President, Chief Operating Officerthe pandemic;
Building Relevant, Easy and Chief Financial Officer.Distinctive Brands – bydriving increased digital sales. Lead the Company to record setting digital sales of $22 Billion, an approximate 25% increase over the prior year, by leveraging significant investments in technologies and new functions focused on analytics and innovation;
2018Driving our Recipe for Good – including fostering the Company’s Unlocking Opportunity Initiative supporting equity and inclusion and social justice. Accomplished through the development of governance and brand strategies, the establishment of the Yum! Center for Global Franchise Excellence with the University of Louisville and a joint M.B.A. Accelerator Program between Howard University and the University of Louisville, as well as the launching of social impact programs in the U.S. and in various international markets. Achieved meaningful progress towards commitment to eliminate non-recyclable or non-recoverable plastics from customer-facing packaging by 2025 and continued innovations and expansion of plant-based offerings.
Fostering Unrivaled Culture and Talent– bydeveloping leadership. Evidenced by the recruitment of Aaron Powell as CEO of the Pizza Hut Division and the promotion of Sabir Sami as CEO of the KFC Division, as well as fostering a customer-focused employee culture.
2021 Committee Decisions
In January, Mr. Gibbs’ compensation was adjusted as follows:
Base salary was increased 7%;remained at $1,200,000;
Annual cash bonus target remained unchanged at 105%percentage was increased to 165% of base salary; and
Grant value of annual long-term incentive equity awards was increased to $10,000,000;
These adjustments were increased by 25%to recognize his performance in successfully leading the Company through a very challenging economic climate and to better align with market compensation norms and internal peer equity, as well as to reflect performance and time in role.norms.
These decisions regarding the components of the Company’s ongoing executive compensation program positioned Mr. Gibbs’ total target direct compensation betweenat around the 50th and 75th percentile of the Company’s Executive Peer Group (defined at page 54)50).
The Committee also approved a special one-time performance-based Accelerating Profitable Growth award for his position.Mr. Gibbs, intended to drive bold new unit development, with a grant value of $5,000,000. The design and purpose of this special award is described in detail above at page 43.
YUM! BRANDS, INC.- |
|
|
2018 Performance Summary
The Committee determined Mr. Eaton’s performance as the CEO, KFC Division, merited a 125 individual performance factor. Under Mr. Eaton’s leadership, KFC achieved significantly above-target net new unit growth, as well as above-target Adjusted Operating Profit Growth. Mr. Eaton was also recognized for increasing KFC delivery capabilities to over 10,000 restaurants, driving compliance with food safety, information security and Foreign Corrupt Practices Act (“FCPA”) standards, and providing leadership in the refranchising of a significant number of restaurants. Mr. Eaton’s individual performance factor was combined with a team factor of 126 (discussed at page 44) to calculate his annual cash bonus.
2018 Committee Decisions
In January, Mr. Eaton’s compensation was adjusted as follows:
Base salary was increased 3% percent;
Annual cash bonus target remained unchanged at 100% of base salary; and
Grant value of long-term incentive equity awards remained unchanged from previous year.
These decisions positioned Mr. Eaton’s total direct compensation between the 50th and 75th percentile of the Executive Peer Group (defined at page 54) for his position.
|
2018 Performance Summary
The Committee determined that Ms. Skeans’ performance merited a 125 individual performance factor. The Committee recognized Ms. Skeans for providing strategic leadership in the organizational transformation of the Company, as well as her efforts in cultivating the Company’s culture and talent. Ms. Skeans was also recognized for driving compliance with food safety, information security and FCPA standards and improving brand protection and crisis communications protocols. Ms. Skeans’ individual factor was combined with a team factor of 115 (discussed at page 44) to calculate her annual cash bonus.
2018 Committee Decisions
In January, Ms. Skeans’ compensation was adjusted as follows:
Base salary was increased 12%;
Annual cash bonus target remained unchanged at 85% of base salary; and
Grant value of long-term incentive equity awards was increased by 14% to better align with market compensation norms and internal peer equity, as well as to reflect performance and her time in the role.
Ms. Skeans also received a CEO Award SARs grant of $1,000,000, recognizing her leadership for accelerating diversity & inclusion initiatives, championing the use of repeatable models around the globe, and developing and implementing talent and leadership programs that drove attraction, retention andbest-in-class engagement scores.
These decisions positioned Ms. Skeans’ total direct compensation at slightly above the 50th percentile of the Executive Peer Group (defined at page 54) for her position.
|
|
2018 Performance Summary
The Committee determined Mr. Russell’s performance for the year merited a 140 individual performance factor. The Committee recognized Mr. Russell’s performance in leading the effort to implement a new financial management system and in supporting the Company’s transformation strategy. Mr. Russell was also recognized for his leadership during the strategic transactions involving Grubhub Inc., Telepizza and QuikOrder, Inc. Mr. Russell’s individual performance factor was combined with a team factor of 120 (discussed at page 44) to calculate his annual cash bonus.
2018 Committee Decisions
In January, Mr. Russell’s compensation was adjusted as follows:
Base salary was increased 3%;
Annual cash bonus target remained unchanged at 65% of base salary; and
Target grant value of long-term incentive equity awards remained unchanged.
These decisions positioned Mr. Russell’s total direct compensation between the 50th and 75th percentile of the Executive Peer Group (defined at page 54) for his position.
|
2018 Performance Summary
Mr. Kesselman was the Company’s General Counsel, Corporate Secretary and Chief Government Affairs Officer through June 30, 2018, and is no longer an employee of YUM. He is included in the Summary Compensation Table as required by SEC rules because his compensation while an employee of YUM was at a level that would have required disclosure had he been an executive officer at the end of 2018.
The Committee approved a 100 individual performance factor for Mr. Kesselman, in connection with his departure from the Company.
2018 Committee Decisions
In January, Mr. Kesselman’s compensation was adjusted as follows:
Base salary was increased 2%;
Annual cash bonus target remained unchanged at 85% of base salary; and
Grant value of long-term incentive equity awards remained unchanged from previous year.
These decisions positioned Mr. Kesselman’s total direct compensation at approximately the 50th percentile of the Executive Peer Group (defined at page 54) for his position.
EXECUTIVE COMPENSATION
|
The graphicgraphics below illustrates the 2018 totalillustrate Mr. Gibbs’ direct compensation of our Named Executive Officers, other than Mr. Creed and Mr. Kesselman:compensation:
Other NEO 2021 Total Direct Compensation
Neo Compensation Summary
Chris Turner Chief Financial Officer |
2021 Performance Summary
The Committee determined that Mr. Turner’s performance merited a 140 individual performance factor. The Committee recognized Mr. Turner’s leadership in driving an increase in Company system sales growth of 13%, supported by 10% same-store sales growth and 6% net unit growth. He was also recognized for leading the Company’s development initiative, which resulted in the opening of approximately 3,057 net-new units, resulting in the strongest year of development growth in Yum!’s history and a restaurant industry record. The Committee also noted Mr. Turner’s leadership in Developing Unmatched Operating Capability, in part by completing several significant strategic technology acquisitions designed to significantly enhance capabilities in end-to-end customer experience, operations, data and analytics strategy. Mr. Turner’s individual factor was combined with an awarded team factor of 195 (discussed at page 41) to calculate his annual cash bonus.
2021 Committee Decisions
In January, Mr. Turner’s compensation was adjusted as follows:
Base salary remained at $850,000;
Annual cash bonus target was increased to 110% of base salary;
Grant value of annual long-term incentive equity awards was increased to $2,250,000;
These adjustments were to recognize his performance in successfully leading the Company through a very challenging economic climate and to better align with market compensation norms and internal peer equity.
These adjustments positioned Mr. Turner’s 2021 total direct compensation at the median percentile of the Company’s Executive Peer Group (defined at page 50) for his position.
The Committee also approved a special one-time performance-based Accelerating Profitable Growth award for Mr. Turner, intended to drive bold new unit development, with a grant value of $2,250,000. The design and purpose of this special award is described in detail above at page 43.
YUM! BRANDS, INC. - 2022 Proxy Statement | 45 |
EXECUTIVE COMPENSATION |
Tracy L. Skeans Chief Operating Officer and Chief People Officer |
2021 Performance Summary
The Committee determined that Ms. Skeans’ performance merited a 140 individual performance factor. The Committee recognized Ms. Skeans for providing strategic leadership in the Company’s efforts to open 4,180 gross units in 2021 (including 3,057 in net-new units), resulting in the strongest year of development growth in Yum!’s history and a restaurant industry record. In addition, the Committee recognized Ms. Skeans for her leadership in driving the Company to a system sales growth increase of 13%, including 10% same-store sales growth and 6% net unit growth.
The committee also commended Ms. Skeans for Fostering Unrivaled Culture and Talent by hiring and developing leaders, achieving best ever employee engagement results in a pandemic environment; and building a culture which promotes diversity and inclusion and our Recipe for Good through key internal and external initiatives, such as the Unlocking Opportunity Initiative and the Women’s Foodservice Forum. Ms. Skeans’ individual factor was combined with a team factor of 195 (discussed at page 41) to calculate her annual cash bonus.
2021 Committee Decisions
In January, Ms. Skeans’ compensation was adjusted as follows:
Base salary was increased to $850,000;
Annual cash bonus target increased to 110% of base salary;
Grant value of annual long-term incentive equity awards was increased to $2,500,000;
These adjustments were to recognize her performance in successfully leading the Company through a very challenging economic climate and to better align with market compensation norms and internal peer equity.
These decisions positioned Ms. Skeans’ total direct compensation at the median percentile of the Company’s Executive Peer Group (defined at page 50) for her position.
The Committee also approved a special one-time performance-based Accelerating Profitable Growth award for Ms. Skeans, intended to drive bold new unit development, with a grant value of $2,500,000. The design and purpose of this special award is described in detail above at page 43.
Mark King Chief Executive Officer, Taco Bell Division |
2021 Performance Summary
The Committee determined that Mr. King’s performance merited a 140 individual performance factor. The Committee recognized Mr. King’s leadership in driving net-new unit development. In addition, the Committee recognized Mr. King’s performance in Building Relevant, Easy and Distinctive Brands – by driving increased digital sales, which lead to over 10% in same-store sales growth at Taco Bell (with increased digital sales making up over 20% of overall sales). Mr. King was also recognized for Driving our Recipe for Good, through Taco Bell reaching its goal to award $21 million in Live Mas Scholarships by the end of 2021. Mr. King’s individual factor was combined with a team factor of 199 (discussed at page 41) to calculate his annual cash bonus.
2021 Committee Decisions
In January, Mr. King’s compensation was adjusted as follows:
Base salary remained at $925,000;
Annual cash bonus target increased to 110% of base salary;
Grant value of annual long-term incentive equity awards was set at $1,750,000;
These adjustments were to recognize his performance in successfully leading the Company through a very challenging economic climate and to align with market compensation norms and internal peer equity, reflecting his years of experience as a senior executive.
Mr. King’s 2021 total direct compensation was around the 75th percentile of the Executive Peer Group (defined at page 50) for his position.
46 | YUM! BRANDS, INC.- 2022 Proxy Statement |
EXECUTIVE COMPENSATION |
The Committee also approved a special one-time performance-based Accelerating Profitable Growth award for Mr King, intended to drive bold new unit
development, with a grant value of $1,750,000. The design and purpose of this special award is described in detail above at page 43.
Tony Lowings Retired Chief Executive Officer, KFC Division |
2021 Performance Summary
The Committee determined that Mr. Lowings’ performance merited a 140 individual performance factor. The Committee recognized Mr. Lowings’ leadership in Driving Bold Restaurant Development and Returns, noting that KFC delivered over 1,900 net-new units. In addition, the Committee recognized Mr. Lowings’ performance in delivering above target same-store sales growth and advancements in food safety compliance. Mr. Lowings’ individual factor was combined with a team factor of 180 (discussed at page 41) to calculate his annual cash bonus.
2021 Committee Decisions
In January, Mr. Lowings’ compensation was adjusted as follows:
Base salary remained at $750,000;
Annual cash bonus target percentage increased to 110% of base salary;
Grant value of annual long-term incentive equity awards was increased to $2,000,000;
These adjustments were to recognize his performance in successfully leading the Company through a very challenging economic climate and to better align with market compensation norms and internal peer equity.
These decisions positioned Mr. Lowings’ total direct compensation at the median percentile of the Executive Peer Group (defined at page 50) for his position.
The Committee also approved a special one-time performance-based Accelerating Profitable Growth award for Mr Lowings, intended to drive bold new unit development, with a grant value of $2,000,000. The design and purpose of this special award is described in detail above at page 43.
IV. | Retirement and Other Benefits |
Retirement Benefits
We offer several types of competitive retirement benefits.
The YUM! Brands Retirement Plan (“Retirement Plan”) is a broad-based qualified plan designed to provide a retirement income based on years of service with the Company and average annual earnings. The plan is U.S.-based and was closed to new entrants in 2001. Mr. Gibbs and Ms. Skeans and Mr. Russell are active participants in the Retirement Plan and Mr. Creed maintains a balance in the Retirement Plan from the years that he was a participant.Plan.
For executives hired orre-hired after September 30, 2001, the Company implemented the Leadership Retirement Plan (“LRP”). This is an unfunded, unsecured account-based retirement plan which allocates a percentage of pay to an account payable to the executive following the later to occur of the executive’s separation of employment from the Company or attainment of age 55.Company. For 2018, Mr. Kesselman was2021, Messrs. Turner and King were eligible for the LRP. Under the
LRP, Mr. KesselmanMessrs. Turner and King received an annual allocation to his accounttheir accounts equal to 8%4% of his base salary and target bonus and will receive an annual earnings credit of 5%that is equivalent to the Moody’s Aa Corporate Bond Yield Average for maturities 20 years and above (currently 2.91%) on the balance.
The Company provides retirement benefits for certain international employees through the Third Country National Plan (“TCN”). The TCN is an unfunded, unsecured account-based retirement plan that provides an annual contribution between 7.5% and 15% of salary and target bonus and an annual earnings credit of 5% on the balance. The level of contribution is based on the participants’ role and their home country retirement plan. Messrs. Creed and Eaton areMr. Lowings is the only NEOsNEO who participateparticipates in the TCN. UnderPrior to 2021, under this plan, Messrs. Creed and Eaton each receiveMr. Lowings received an annual contribution equal to 15% of base salary and target bonus and an annual earnings credit of 5%.
Benefits payable under these plans are described in more detail beginning on page 66.
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
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an annual earnings credit of 5%. Beginning in 2021, he only received the 5% annual earnings credit (as he now participates in a superannuation plan in his home country of Australia.
Benefits payable under these plans are described in more detail beginning on page 60
Medical, Dental, Life Insurance and Disability Coverage
We also provide other benefits such as medical, dental, life insurance and disability coverage to each NEO through benefit plans, which are also provided to all eligible U.S.-based salaried employees. Eligible employees can purchase additional life, dependent life
and accidental death and dismemberment coverage as part of their employee benefits package. Our broad-based employee disability plan limits the annual benefit coverage to $300,000.
Perquisites
The Company provides very limited number of perquisites.perquisites to our NEOs. The CEO and his spouse were required to use charter or approved commercial aircraft for personal as well as business travel pursuant to the Company’s executive security program established by the Board of Directors. Our program provides that upon the CEO reaching $200,000 inany costs for his personal use, any costs forthe CEO’s personal aircraft use of
above $200,000$300,000 will be reimbursed to the Company in accordance with the requirements of the Federal Aviation Administration regulations. We do not provide taxgross-ups on the personal use of the
charter or approved commercial aircraft. For 2018,2021, the incremental cost of Mr. Creed’sGibbs personal use of charter or commercial aircraft was $134,043.$225,498. Following the onset of the pandemic in 2020, the Committee authorized the CEO to approve personal travel on Company-provided aircraft by the other NEOs, in recognition of the importance of their safety and availability throughout the pandemic. In 2021, the NEO personal travel resulted in incremental costs of $49,020 for Ms. Skeans and $78,672 for Mr. King.
How Compensation Decisions Are Made |
Shareholder Outreach, Engagement and 20182021 Vote on NEO Compensation
At our 20182021 Annual Meeting of Shareholders, 95%83% of votes cast on our annual advisory vote on NEO compensation were in favor of our NEOs’ compensation program, as disclosed in our 20182021 proxy statement. During 2018,2021, 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 that served to reinforce our open dooropen-door policy. The efforts included:
Contacting our largest 35 shareholders, representing ownership of approximately 50% of our sharesshares;
Dialogue with proxy advisory firmsfirms;
Investor road shows and conferencesconferences; and
Presenting shareholder feedback to the Committee
Considering letters from shareholdersCommittee.
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 20182021 voting results on NEO compensation, has influenced and reinforced a number of compensation design changes over the years, including:
Continued benchmarking of CEO compensation at near market median.median;
Continued adjustment of CEO long-term equity incentive mix from a mix comprised of 75% SARs and 25% PSUs in 2016 to a mix comprised of 50% SARs and 50% PSUs in 2017 and 2018.
MovingMoved to two performance metrics under our PSUs – TSRannual PSU awards (TSR and EPS, beginning with PSU grants in 2017.EPS); and
Changed PSU award metrics to include the Company’s3-year average TSR relative to the companies in the S&P 500 Consumer Discretionary Index, rather than the average relative to the entire S&P 500.
Beginning in 2022, changing our equity mix for NEOs to 50% PSUs, 25% SARs and 25% RSUs, to better align with business objectives, shareholder preferences and market practice.
The Company and the Committee appreciate the feedback from our shareholders and plan to continue these engagement efforts.
YUM! BRANDS, INC.- |
EXECUTIVE COMPENSATION
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Role of the Committee
Compensation decisions are ultimately made by the Committee using its judgment, focusing primarily on each NEO’s performance against his or her financial and strategic objectives, qualitative factors and the Company’s overall performance. The Committee considers the target total direct 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:below, but adds additional meetings when necessary in order to address important business considerations, such as the pandemic.
COMMITTEE ANNUAL COMPENSATION PROCESS
COMMITTEE ANNUAL COMPENSATION PROCESS NOVEMBER JANUARY MARCH AUGESTReviews competitive analysis/benchmarking for CEO and direct reports Reviews bonus and performance share plan metrics, targets, and leverage recommendations for the following year Reviews market recommendations to Board Reviews Compensation trends Mid-Year update to full Board on CEOs progress against goalsEvaluates feedback from shareholders and proxy advisors Evaluates and approves CEO and direct reports performance against pre-established goals and compensation decisions Approves bonus and performance share plan results for the prior year Approves bonus and performance share plan metrics, targets and leverage for the current year Reviews tally sheets Confirms CEO and CEOs direct reports meet ownership guidelines Completes compensation risk assessment Conducts independence analysis of compensation consultant retaining sole authority to continue or terminate its relationship with outside advisors, including consultant Review and approves inclusion of CD&A in proxy statement
Role of the Independent Consultant
The Committee’s charter states the Committee may retain outside compensation consultants, lawyers or other advisors. The Committee retains an independent consultant, Meridian Compensation Partners, LLC (“Meridian”), to advise it on certain compensation matters. The Committee has instructed Meridian that:
it is to act independently of management and at the direction of the Committee;
its ongoing engagement will be determined by the Committee;
it is to inform the Committee of relevant trends and regulatory developments;
it is to provide compensation comparisons based on information that is derived from comparable businesses of a similar size to the Company for the NEOs; and
it is to assist the Committee in its determination of the annual compensation package for our CEO and other NEOs.
The Committee considered the following factors, among others, in determining that Meridian is independent of management and its provision of services to the Committee did not give rise to a conflict of interest:
Meridian did not provide any services to the Company unrelated to executive compensation.compensation;
Meridian has no business or personal relationship with any member of the Committee or management.management; and
Meridian’s partners and employees who provide services to the Committee are prohibited from owning YUM stock per Meridian’s firm policy.
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
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Comparator Compensation Data
Our Committee uses an evaluation of how our NEO total target direct compensation levels compare to those of similarly situated executives at companies that comprise our Executive Peer Group (defined below) as one of the factors in setting executive compensation. The Executive Peer Group is made up of retail, hospitality, food, nondurable consumer goods companies, specialty eatery and quick service
restaurants, as these represent the sectors with which the Company is most likely to compete for executive talent. The companies selected from these sectors must also be reflective of the overall market characteristics of our executive talent market, relative leadership position in their sector, size as measured by revenues, complexity of their business, and in somemany cases global reach.
Executive Peer Group
The Committee establishedperiodically reviews the current peer group of companiesto ensure it reflects desired comparisons and appropriate size range. In August 2019, the Committee approved the peer group to be used for NEO pay determinations beginning in 2020 (the “Executive Peer Group”) for all NEOs at the end of 2016 for pay determinations beginning in 2017.. The composition ofupdates to the Executive Peer Group was updated at that timewere made to allow for more relevant comparisons followingbetter align the separation of Yum China Holdings, Inc. in October 2016, given the reduced size of the Companypeer group companies with YUM and the current complexitiesinclude companies in relevant industry sectors. Many of its business. Thisthese companies have a global reach and multiple brands. The Executive Peer Group used for 2021 pay determinations for all NEOs is comprised of the following companies:
AutoZone Inc. Domino's Pizza, Inc. General Mills, Inc. L Brands Inc. Sherwin-William Co. Dr. Pepper Snapple Bloom1n' Brands, Inc. Hershey Co. Marriott lnt'l, Inc. VF Corp. Group, Inc. Hilton Worldwide Brinker Int'l. Inc. Estee Lauder Cos. Inc McDonald's Corporation Wendy's Co Holdings Colgate Palmolive Wyndham Worldwide Foot Locker, Inc. Hyatt Hotels Corp. Mondelez lnt'l., Inc. Company Corp. Penske Automotive Darden Restaurants, Inc. Gap, Inc. Kimberly-Clark Corp. Group, Inc.
At the time the benchmarking analysis was prepared in November 2020, the Executive Peer Group’s median annual revenues were $9.3$11.3 billion, while YUM equivalent annual revenues were estimated at $14.4$14.3 billion (calculated as described below).
For companies with significant and global franchise operations, measuring size can be complex. Management responsibilities encompass more than just the revenues and operations directly owned and operated by the company. There arecompany and include responsibilities for managing the relationships arrangements,with franchisees and overall scopedeveloping and implementing global growth strategies. Specific responsibilities include managing and implementing product introductions, and product specifications and supply, management of vendors, marketing, technological innovations and implementations, payment collections, risk management, including setting and monitoring food safety standards, protection of the franchising enterprise, in particular, managing product introductions, marketing, promotingCompany’s trademarks and other intellectual property, new unit development, and customer satisfaction and overall operations improvements across the entire franchise system. Accordingly,As a result of accelerating growth in recent years, the Company’s leadership now oversees approximate 290 brand-country combinations and
approximately 1,500 franchisees. To appropriately reflect this complexity in calibrating the size of our
organization and underlying operating divisions during the 20172020 benchmarking process, our philosophy was to add 25% of franchisee and licensee sales to the Company’sGAAP-reported Company sales to establish an appropriate revenue benchmark. The reason for this approach was twofold:
• | Market-competitive compensation opportunities are related to scope of responsibility, often measured by company size,i.e., revenues; and |
Scope of responsibility for a franchising organization lies between corporate-reported revenues and system widesystem-wide sales.
Peer groups of other globally prominent companies similarly include companies where the median revenue scope of those peers are materially above the reported corporate revenue. This likely reflects the same assessments of complexity and reach and accordingly appropriate company size profiles. We believe this approach is measured and reasoned in its approach to calibrating market competitive compensation opportunities without using organizations unduly larger than the Company.
Competitive Positioning and Setting Compensation
At the beginning of 2018, the Committee considered Executive Peer Group compensation data as a frame of reference for establishing compensation targets for
base salary, annual bonus and long-term incentives for each NEO. In making compensation decisions, the Committee considers market data for comparable
YUM! BRANDS, INC.- |
EXECUTIVE COMPENSATION
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Competitive Positioning and Setting Compensation
At the beginning of 2021, the Committee considered Executive Peer Group compensation data as a frame of reference for establishing compensation targets for base salary, annual bonus and long-term incentives for each NEO. In making compensation decisions, the Committee considers market data for comparable positions to each of our NEO roles. The Committee reviews market data and makes a decision for each
NEO, most often in a range around market median for each element of compensation, including base salary, target bonus and long-term incentive target. In addition
to the market data, the Committee takes into account the role, level of responsibility, experience, individual performance and potential of each NEO. The Committee reviews the NEOs’ compensation and performance annually.
VI. | Compensation Policies and Practices |
Below are compensation and governance best practices we employ that provide a foundation for ourpay-for-performance program and align our program with Company and shareholder interests.
We Do | We Don’t Do | |||||
✓ |
Have an 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 | |||
✓ |
Have executive ownership guidelines that are reviewed annually against Company guidelines |
✗ |
Grants of SARs with exercise price less than fair market value of common stock on date of grant | |||
✓ |
Have a “clawback” policy under which the Company may recoup 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 | |||
✓ |
Have double-trigger vesting of equity awards upon a change in control |
✗ |
Excise taxgross-ups upon change in control | |||
✓ |
Utilize an independent Compensation Consultant |
✗ |
Excessive executive perquisites, such as country club memberships | |||
✓ |
Incorporate comprehensive risk mitigation into plan design |
|
| |||
✓ |
Periodically review our 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 |
YUM’s Executive Stock Ownership Guidelines
The Committee has established stock ownership guidelines for approximately 190165 of our senior employees, including the NEOs. If a NEO or other executive does not meet his or her ownership guidelines, he or she is not eligible for a long-term equity incentive award. In 2018,2021, all NEOs and all other employees subject to guidelines met or exceeded their ownership guidelines.
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
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NEO | Ownership Guidelines | Shares Owned(1) | Value of Shares(2) | Multiple of Salary | ||||||||||||
Creed
|
|
7x base salary
|
|
|
825,179
|
|
|
$75,850,454
|
|
|
60.7
|
| ||||
Gibbs
|
|
3x base salary
|
|
|
285,316
|
|
|
$26,226,247
|
|
|
29.1
|
| ||||
Eaton
|
|
3x base salary
|
|
|
270,147
|
|
|
$24,831,912
|
|
|
29.2
|
| ||||
Skeans
|
|
2x base salary
|
|
|
67,655
|
|
|
$ 6,218,848
|
|
|
9.2
|
| ||||
Russell
|
|
1x base salary
|
|
|
88,602
|
|
|
$ 8,144,296
|
|
|
19.8
|
| ||||
Kesselman |
|
2x base salary |
|
|
15,360 |
|
|
$ 1,411,891 |
|
|
2.3 |
|
NEO | Ownership Guidelines | Shares Owned(1) | Value of Shares(2) | Multiple of Salary | ||||||||||||
Gibbs |
|
7x base salary |
|
|
357,348 |
|
$ |
49,621,343 |
|
|
41.4 |
| ||||
Turner(3) |
|
3x base salary |
|
|
9,708 |
|
$ |
1,348,053 |
|
|
1.6 |
| ||||
Skeans |
|
2x base salary |
|
|
45,832 |
|
$ |
6,364,232 |
|
|
7.5 |
| ||||
King(3) |
|
3x base salary |
|
|
10,666 |
|
$ |
1,481,081 |
|
|
1.6 |
| ||||
Lowings |
|
3x base salary |
|
|
162,635 |
|
$ |
22,583,496 |
|
|
30.1 |
|
(1) | Calculated as of December 31, |
(2) | Based on YUM closing stock price of |
(3) | Messrs. Turner and King both joined the Company in 2019 and have up to five years to reach the target levels of ownership set forth in our Ownership Guidelines. |
Payments upon Termination of Employment
The Company does not have agreements with its executives concerning payments upon termination of employment except in the case of a change in control of the Company. The Committee believes these are appropriate agreements for retaining NEOs and other executive officers to preserve shareholder value in case of a potential change in control. The Committee periodically reviews these agreements and other aspects of the Company’schange-in-control program.
The Company’schange-in-control agreements, in general, entitle executives who are direct reports to our CEO and are terminated other than for cause within two years of the change in control, to receive a benefit of two times salary and bonus. The terms of thesechange-in-control agreements are described beginning on page 71.65.
The Company does not provide taxgross-ups for executives, including the NEOs, for any excise tax due under Section 4999 of the Internal Revenue Code and has implemented a “best netafter-tax” approach to address any potential excise tax imposed on executives. If any excise tax is due, the Company will not make agross-up payment, but instead will reduce payments to an executive if the reduction will provide the NEO the best netafter-tax result. If full payment to
a NEO will result in the best netafter-tax result, the full amount will be paid, but the NEO will be solely responsible for any potential excise tax payment. Also, the Company has implemented “double trigger” vesting for equity awards, pursuant to which outstanding awards will fully and immediately vest only if the executive is employed on the date of a change in control of the Company and is involuntarily terminated (other than by the Company for cause) on or within two years following the change in control.
In case of retirement, the Company provides retirement benefits described above, life insurance benefits (to employees eligible under the Retirement Plan), the continued ability to exercise vested SARs and to vest in SARs granted at least one year prior to retirement, and the ability to vest in performance share awards on apro-rata basis.
With respect to consideration of how these benefits fit into the overall compensation policy, thechange-in-control benefits are reviewed from time to time by the Committee (most recently in 2020) for competitiveness. The Committee believes the benefits provided in case of a change in control are appropriate, support shareholder interests and are consistent with the policy of attracting and retaining highly qualified employees.
YUM’s SARsEquity Award Granting Practices
Historically, we have made annual SARs grants annually at the Committee’s January meeting. This meeting date is set by the Board of Directors more than six months prior to the actual meeting. The Committee sets the annual grant date as the second business day after our fourth quarter earnings release. The exercise price of these awards is set as the closing price on the date of grants. We ordinarily make grants at the same time
other elements of annual compensation are determined so that we can consider all elements of compensation in making the grants. We do not backdate or make grants
retroactively. In addition, we do not time such grants in coordination with our possession or release of material,non-public or other information. All equity awards are granted under our shareholder approved LTIP.
Grants may also be made on other dates the Board of Directors meets. These grants generally are CEO Awards, which are awards to individual employees (subject to Committee approval) in recognition of superlative performance and extraordinary impact on business results.
YUM! BRANDS, INC.- |
EXECUTIVE COMPENSATION
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Grants may also be made on other dates the Board of Directors meets. These grants generally are CEO Awards, which are awards to individual employees (subject to Committee approval) in recognition of superlative performance and extraordinary impact on business results. These awards are currently made as RSUs which vest after three years. Historically, CEO Awards were made using SARs.
Management recommends the awards be made pursuant to our LTIP to the Committee, however, the Committee determines whether and to whom it will
issue grants and determines the amount of the grant. The Board of Directors has delegated to our CEO and our Chief People Officer, the ability to make grants to
employees who are not executive officers and whose
grant is less than approximately 30,000 SARs$500,000 in economic value annually. In the case of these grants, the Committee sets all the terms of each award, except the actual number of SARs,SARs/RSUs, which is determined by our CEO and our Chief People Officer pursuant to guidelines approved by the Committee in January of each year.
Limits on Future Severance Agreement Policy
The Committee has adopted a policy to limit future severance agreements with our NEOs and our other executives. The policy requires the Company to seek shareholder approval for future severance payments to a NEO if such payments would exceed 2.99 times the sum of (a) the NEO’s annual base salary as in effect immediately prior to termination of employment; and (b) the highest annual bonus awarded to the NEO by the Company in any of the Company’s three full fiscal
years immediately preceding the fiscal year in which termination of employment occurs or, if higher, the executive’s target bonus. Certain types of payments are excluded from this policy, such as amounts payable under arrangements that apply to classes of employees other than the NEOs or that predate the implementation of the policy, as well as any payment the Committee determines is a reasonable settlement of a claim that could be made by the NEO.
Compensation Recovery Policy
Pursuant to the Company’s Compensation Recovery Policy (i.e., “clawback”), the Committee may require executive officers (including the NEOs) to return compensation paid or may cancel any award or bonuses not yet vested or earned if the executive officers engaged in misconduct or violation of Company policy that resulted in significant financial or reputational harm or violation of Company policy, or
contributed to the use of inaccurate metrics in the calculation of incentive compensation. Under this policy, when the Board determines that recovery of compensation is appropriate, the Company could require repayment of all or a portion of any bonus, incentive payment, equity-based award or other compensation, and cancellation of an award or bonus to the fullest extent permitted by law.
Hedging and Pledging of Company Stock
Under our Code of Conduct, no employee or director is permitted to engage in securities transactions that would allow them either to insulate themselves from, or profit from, a decline in the Company stock price. Similarly, no employee or director may enter into hedging transactions in the Company’s stock. Such
transactions include (without limitation) short sales as well as any hedging transactions in derivative securities (e.g. puts, calls, swaps, or collars) or other speculative transactions related to YUM’s stock. Pledging of Company stock is also prohibited.
Deductibility of Executive Compensation
The provisions of Section 162(m) of the Internal Revenue Code limit the tax deduction for compensation in excess of $1 million paid to certain NEOs. The Committee believes that thepre-2018 SARs, RSU and PSU awards satisfy the requirements for exemption under Internal Revenue Code Section 162(m).
The provisions of Section 162(m) of the Internal Revenue code limit the deductibility of all annual compensation in excess of $1 million paid to certain
executive officers. The exception for performance-based compensation does not apply, except with respect to compensation that is subject to a transition rule because it is paid pursuant to a binding contract that was in place on November 2, 2017 and not materially modified after that date. The Committee believes that shareholder interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation awards will result innon-deductible compensation
|
expenses. Therefore, the Committee has approved salaries and other awards for executive officers that were not fully deductible because of Section 162(m) and, in light of the repeal of the performance-based
compensation exception to Section 162(m), expects in the future to approve additional compensation that is not deductible for income tax purposes.
Management Planning and Development Committee Report
The Management Planning and Development Committee of the Board of Directors reports that it has reviewed and discussed with management the section of this proxy statement titled “Compensation Discussion and Analysis” and, on the basis of that
review and discussion, recommended to the Board that the section be incorporated by reference into the Company’s Annual Report onForm 10-K and included in this proxy statement.
THE MANAGEMENT PLANNING AND DEVELOPMENT COMMITTEE
Christopher M. Connor,Chair
Keith Barr
Brian C. Cornell
Michael J. Cavanagh
Mirian M. Graddick-Weir
Robert D. WalterThomas C. Nelson
|
The following tables provide information on the compensation of the Named Executive Officers (“NEOs”) for our 2018 fiscal year. The Company’s NEOs are our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers for our 2018 fiscal year determined in accordance with SEC rules and one former executive officer who was no longer serving as an executive officer as of the end of the year.
Name and
| Year
| Salary ($)(1)
| Bonus ($)
| Stock Awards ($)(2)
| Option/ SAR Awards ($)(3)
| Non-Equity Incentive Plan Compensation ($)(4)
| Change in Value and Nonqualified Deferred Compensation Earnings ($)(5)
| All Other Compensation ($)(6)
| Total ($)
| |||||||||||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (f)
| (g)
| (h)
| (i)
| ||||||||||||||||||||||||||||
Greg Creed | 2018 | 1,244,615 | — | 4,450,008 | 4,450,009 | 3,144,531 | 21,348 | 696,527 | 14,007,038 | |||||||||||||||||||||||||||
Chief Executive Officer of YUM
| 2017 | 1,208,846 | — | 3,350,020 | 3,350,007 | 3,814,493 | 66,286 | 578,955 | 12,368,607 | |||||||||||||||||||||||||||
2016 | 1,188,942 | — | 5,500,066 | 4,500,008 | 3,591,094 | 56,100 | 544,472 | 15,380,682 | ||||||||||||||||||||||||||||
David W. Gibbs | 2018 | 890,769 | — | 1,375,001 | 1,375,009 | 1,467,113 | 1,870,004 | 19,101 | 6,996,997 | |||||||||||||||||||||||||||
President and Chief Financial Officer of YUM
| 2017 | 833,846 | — | 1,100,036 | 1,100,003 | 1,917,027 | 2,564,062 | 19,346 | 7,534,320 | |||||||||||||||||||||||||||
2016 | 792,115 | — | 1,875,052 | 1,625,020 | 1,751,680 | 577,153 | 6,969 | 6,627,989 | ||||||||||||||||||||||||||||
Roger G. Eaton | 2018 | 846,154 | — | 1,000,008 | 1,000,006 | 1,338,750 | 20,114 | 320,433 | 4,525,465 | |||||||||||||||||||||||||||
Retired Chief Executive Officer of KFC Division
| 2017 | 821,154 | — | 1,000,008 | 1,000,007 | 1,986,600 | 30,388 | 301,007 | 5,139,164 | |||||||||||||||||||||||||||
2016 | 812,500 | — | 1,875,052 | 1,125,009 | 1,113,600 | 30,853 | 288,290 | 5,245,304 | ||||||||||||||||||||||||||||
Tracy L. Skeans | 2018 | 664,231 | — | 625,015 | 1,625,010 | 824,766 | 325,022 | 8,665 | 4,072,709 | |||||||||||||||||||||||||||
Chief Transformation and People Officer of YUM(7)
| 2017 | 600,385 | — | 550,052 | 550,009 | 1,076,325 | 776,398 | 8,413 | 3,561,582 | |||||||||||||||||||||||||||
David E. Russell | 2018 | 410,154 | — | 449,904 | 297,644 | 112,476 | 93,860 | 37,676 | 1,701,714 | |||||||||||||||||||||||||||
Senior Vice President, Finance and Corporate Controller of YUM | | 2017 2016 |
| | 396,154 476,867 | | | — 180,000 |
| | 544,180 397,313 |
| | 328,915 496,870 |
| | 136,045 297,984 |
| | 494,542 162,407 |
| | 32,838 33,236 |
| | 1,932,674 2,044,677 |
| |||||||||
Marc L. Kesselman | 2018 | 603,462 | — | 625,015 | 625,004 | 514,250 | 1,734 | 560,623 | 2,930,088 | |||||||||||||||||||||||||||
Former General Counsel, Corporate Secretary and Chief Government Affairs Officer | 2017 | 591,923 | — | 625,056 | 625,013 | 814,258 | 1,435 | 91,304 | 2,748,989 | |||||||||||||||||||||||||||
2016 | 530,769 | 500,000 | 2,300,083 | 1,400,006 | 916,162 | — | 83,606 | 5,730,626 | ||||||||||||||||||||||||||||
�� |
|
|
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
|
The following tables provide information on the compensation of the Named Executive Officers (“NEOs”) for our 2021 fiscal year. The Company’s NEOs are our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers for our 2021 fiscal year, determined in accordance with SEC rules.
Name and
| Year
| Salary ($)(1)
| Bonus ($)(2)
| Stock Awards ($)(3)
| Option/ SAR Awards ($)(4)
| Non-Equity Incentive Plan Compensation ($)(5)
| Change in Value and Nonqualified Deferred Compensation Earnings ($)(6)
| All Other Compensation ($)(7)
| Total ($)
| |||||||||||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (f)
| (g)
| (h)
| (i)
| ||||||||||||||||||||||||||||
David W. Gibbs | 2021 | 1,200,000 | — | 10,936,620 | 5,000,003 | 5,405,400 | 4,789,314 | 247,322 | 27,578,659 | |||||||||||||||||||||||||||
Chief Executive Officer of YUM
| 2020 | 303,077 | 1,404,000 | 4,646,430 | 3,500,016 | — | 4,517,703 | 260,225 | 14,631,451 | |||||||||||||||||||||||||||
2019 | 984,615 | — | 7,393,577 | 2,225,003 | 2,399,800 | 3,988,755 | 151,402 | 17,143,152 | ||||||||||||||||||||||||||||
Chris Turner | 2021 | 850,000 | — | 3,585,851 | 1,125,013 | 2,552,550 | 716 | 124,727 | 8,238,857 | |||||||||||||||||||||||||||
Chief Financial Officer of YUM
| 2020 | 848,077 | 714,000 | 1,075,610 | 1,000,015 | — | 404 | 167,796 | 3,805,902 | |||||||||||||||||||||||||||
2019 | 283,846 | 500,000 | 1,500,009 | — | 463,021 | — | 54,290 | 2,801,166 | ||||||||||||||||||||||||||||
Tracy L. Skeans | 2021 | 834,615 | — | 3,984,248 | 1,250,017 | 2,552,550 | 815,000 | 61,304 | 9,497,735 | |||||||||||||||||||||||||||
Chief Operating Officer and Chief People Officer of YUM
| | 2020 2019 |
| | 749,731 708,846 |
| | 567,000 — |
| | 1,761,429 1,075,731 |
| | 800,001 1,000,017 |
| | — 1,165,057 |
| | 1,852,419 1,433,369 |
| | 42,396 51,529 |
| | 5,772,976 5,434,549 |
| |||||||||
Mark King | 2021 | 925,000 | 500,000 | 2,789,040 | 875,005 | 2,834,755 | 788 | 173,483 | 8,098,071 | |||||||||||||||||||||||||||
Chief Executive Officer of Taco Bell Division
| 2020 | 921,154 | 1,134,550 | 806,652 | 750,011 | 271,950 | 466 | 134,567 | 4,019,350 | |||||||||||||||||||||||||||
2019 | 370,385 | 500,000 | 2,500,015 | — | 591,189 | — | 33,021 | 3,994,610 | ||||||||||||||||||||||||||||
Tony Lowings | 2021 | 915,995 | — | 3,187,332 | 1,000,009 | 2,186,047 | 25,857 | 73,771 | 7,389,011 | |||||||||||||||||||||||||||
Retired Chief Executive Officer of KFC Division
| | 2020 2019 |
| | 753,846 699,789 |
| | 562,500 — |
| | 860,421 806,874 |
| | 800,001 1,750,030 |
| | — 1,464,120 |
| | 23,908 11,975 |
| | 578,915 262,690 |
| | 3,579,591 4,995,478 |
| |||||||||
(1) |
|
(2) | Amounts in this |
(3) | For Messrs. Gibbs, Turner, King and Lowings and for Ms. Skeans, amounts shown in this column represent the grant date fair values for performance share units (PSUs) granted in 2021, 2020 and 2019. Further information regarding the 2021 awards is included in the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Year-End” tables later in this proxy statement. For 2021, these amounts include both the annual PSU grants and the Accelerating Profitable Growth PSU (“APG”) grant, as described in detail on page 43 of the CD&A. The grant date fair value of the PSUs reflected in this column is the target payout based on the probable outcome of the performance condition, determined as of the grant date. The maximum potential values of the February 2021 annual PSUs is 200% of target (125% of target for the APG grant). For 2021, Mr. Gibbs’ annual PSU maximum value at grant date fair value would be $11,873,160 and his APG maximum value at grant date fair value would be $6,250,050; Mr. Turner’s’ annual PSU maximum value at grant date fair value would be $2,671,614 and his APG maximum value at grant date fair value would be $2,812,555; Ms. Skeans’ annual PSU maximum value at grant date fair value would be $2,968,352 and her APG maximum value at grant date fair value would be $3,125,090; Mr. King’s’ annual PSU maximum value at grant date fair value would be $2,077,896 and his APG maximum value at grant date fair value would be $2,187,614; and Mr. Lowings’ annual PSU maximum value at grant date fair value would be $2,374,632 and his APG maximum value at grant date fair value would be $2,500,020. |
(4) | The amounts shown in this column represent the grant date fair values of the stock appreciation rights (SARs) awarded in |
54 | YUM! BRANDS, INC.- 2022 Proxy Statement |
EXECUTIVE COMPENSATION |
Amounts in this column reflect the annual incentive awards earned for the |
Amounts in this column represent |
Amounts in this column are explained in the All Other Compensation Table and footnotes to that table, which follows. |
|
The following table contains a breakdown of the compensation and benefits included under All Other Compensation in the Summary Compensation Table above for 2018.2021.
Name
| Perquisites and other personal benefits ($)(1)
| Tax Reimbursements ($)(2)
| Insurance premiums
| LRP/TCN Contributions ($)(4)
| Total ($)
| Perquisites and other personal benefits ($)(1)
| Tax Reimbursements ($)
| Insurance premiums
| LRP/TCN Contributions ($)(3)
| Other ($)
| Total ($)
| |||||||||||||||||||||||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
| |||||||||||||||||||||||||||||||||||||||||
Creed |
| 153,794 |
|
| — |
|
| 27,108 |
|
| 515,625 |
|
| 696,527 |
| |||||||||||||||||||||||||||||||||||||
Gibbs |
| 7,657 |
|
| — |
|
| 11,444 |
|
| — |
|
| 19,101 |
|
| 225,498 |
|
| — |
|
| 18,692 |
|
| — |
|
| 3,132 |
|
| 247,322 | ||||||||||||||||||||
Eaton |
| 34,555 |
|
| 20,292 |
|
| 10,586 |
|
| 255,000 |
|
| 320,433 |
| |||||||||||||||||||||||||||||||||||||
Turner |
| 25,313 |
|
| — |
|
| 5,247 |
|
| 88,800 |
|
| 5,367 |
|
| 124,727 | |||||||||||||||||||||||||||||||||||
Skeans |
| 5,009 |
|
| — |
|
| 3,656 |
|
| — |
|
| 8,665 |
|
| 49,020 |
|
| — |
|
| 4,529 |
|
| — |
|
| 7,755 |
|
| 61,304 | ||||||||||||||||||||
Russell |
| 35,705 |
|
| — |
|
| 1,971 |
|
| — |
|
| 37,676 |
| |||||||||||||||||||||||||||||||||||||
Kesselman |
| 467,768 |
|
| — |
|
| 3,315 |
|
| 89,540 |
|
| 560,623 |
| |||||||||||||||||||||||||||||||||||||
King |
| 78,672 |
|
| — |
|
| 16,734 |
|
| 77,700 |
|
| 377 |
|
| 173,483 | |||||||||||||||||||||||||||||||||||
Lowings |
|
| 48,825 |
|
| — |
|
| — |
|
| 19,427 |
|
| 5,519 |
|
| 73,771 |
(1) |
|
|
|
These amounts reflect the income each executive was deemed to receive from IRS tables related to Company-provided life insurance in excess of $50,000. The Company provides every salaried employee with life insurance coverage up to one times the employee’s base salary plus target bonus. |
For Messrs. |
YUM! BRANDS, INC. - 2022 Proxy Statement | 55 |
EXECUTIVE COMPENSATION |
The following table provides information on SARs, RSUs, PSUs and PSUsother equity awards granted in 20182021 to each of the Company’s NEOs. The full grant date fair value of these awards is shown in the Summary Compensation Table at page 59.54.
Estimated Future Payouts UnderNon-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Number (#) | All Other SAR Number of Securities Underlying Options (#)(3) | Exercise SAR Awards ($/Sh)(4) | Grant Date Fair Value ($)(5) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock Units (#) | All Other Option/ SAR Awards; Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option/ SAR Awards ($/Sh)(4) | Grant Date Fair Value ($)(5) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date |
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Grant Date |
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)
| (k)
| (l)
| (b)
| (c)
| (d)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)
| (k)
| (l)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Creed |
| 2/12/2018 |
|
| 0 |
|
| 2,187,500 |
|
| 6,562,500 |
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2018 |
|
| 271,342 |
|
| 78.07 |
|
| 4,450,009 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/23/2018 |
|
| — |
|
| 54,481 |
|
| 108,962 |
|
| 81.68 |
|
| 4,450,008 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gibbs |
| 2/12/2018 |
|
| 0 |
|
| 945,000 |
|
| 2,835,000 |
|
|
|
|
| 2/8/2021 |
|
| 0 |
|
| 1,980,000 |
|
| 5,940,000 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2018 |
|
| 83,842 |
|
| 78.07 |
|
| 1,375,009 |
|
| 2/8/2021 |
|
| 235,073 |
|
| 103.36 |
|
| 5,000,003�� | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/23/2018 |
|
| — |
|
| 16,834 |
|
| 33,668 |
|
| 81.68 |
|
| 1,375,001 |
|
| 2/8/2021 |
|
| — |
|
| 48,375 |
|
| 96,750 |
|
| 103.36 |
|
| 5,936,580 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eaton |
| 2/12/2018 |
|
| 0 |
|
| 850,000 |
|
| 2,550,000 |
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/8/2021 |
|
| — |
|
| 48,375 |
|
| 60,469 |
|
| 103.36 |
|
| 5,000,040 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Turner |
| 2/8/2021 |
|
| 0 |
|
| 935,000 |
|
| 2,805,000 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/8/2021 |
|
| 52,892 |
|
| 103.36 |
|
| 1,125,013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2018 |
|
| 60,976 |
|
| 78.07 |
|
| 1,000,006 |
|
| 2/8/2021 |
|
| 10,885 |
|
| 21,770 |
|
| 103.36 |
|
| 1,335,807 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/23/2018 |
|
| — |
|
| 12,243 |
|
| 24,486 |
|
| 81.68 |
|
| 1,000,008 |
|
| 2/8/2021 |
|
| 21,769 |
|
| 27,211 |
|
| 103.36 |
|
| 2,250,044 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Skeans |
| 2/12/2018 |
|
| 0 |
|
| 573,750 |
|
| 1,721,250 |
|
|
|
|
| 2/8/2021 |
|
| 0 |
|
| 935,000 |
|
| 2,805,000 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2018 |
|
| 38,110 |
|
| 78.07 |
|
| 625,004 |
|
| 2/8/2021 |
|
| 58,769 |
|
| 103.36 |
|
| 1,250,017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2018 |
|
| 60,976 |
|
| 78.07 |
|
| 1,000,006 |
|
| 2/8/2021 |
|
| — |
|
| 12,094 |
|
| 24,188 |
|
| 103.36 |
|
| 1,484,176 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/23/2018 |
|
| — |
|
| 7,652 |
|
| 15,304 |
|
| 81.68 |
|
| 625,015 |
|
| 2/8/2021 |
|
| — |
|
| 24,188 |
|
| 30,235 |
|
| 103.36 |
|
| 2,500,072 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Russell |
| 2/12/2018 |
|
| 0 |
|
| 267,800 |
|
| 803,400 |
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
King |
| 2/8/2021 |
|
| 0 |
|
| 1,017,500 |
|
| 3,052,500 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2018 |
|
| 18,149 |
|
| 78.07 |
|
| 297,644 |
|
| 2/8/2021 |
|
| 41,138 |
|
| 103.36 |
|
| 875,005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2/8/2021 |
|
| 8,466 |
|
| 16,932 |
|
| 103.36 |
|
| 1,038,948 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kesselman |
| 2/12/2018 |
|
| 0 |
|
| 514,250 |
|
| 1,542,750 |
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/8/2021 |
|
| 16,932 |
|
| 21,165 |
|
| 103.36 |
|
| 1,750,092 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lowings |
| 2/8/2021 |
|
| 0 |
|
| 867,479 |
|
| 2,602,437 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2018 |
|
| 38,110 |
|
| 78.07 |
|
| 625,004 |
|
| 2/8/2021 |
|
| 47,015 |
|
| 103.36 |
|
| 1,000,009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/23/2018 |
|
| — |
|
| 7,652 |
|
| 15,304 |
|
| 81.68 |
|
| 625,015 |
|
| 2/8/2021 |
|
| 9,675 |
|
| 19,350 |
|
| 103.36 |
|
| 1,187,316 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/8/2021 |
|
| — |
|
| 19,350 |
|
| 24,188 |
|
| 103.36 |
|
| 2,000,016 |
(1) | Amounts in columns (c), (d) and (e) provide the minimum amount, target amount and maximum amount payable as annual incentive compensation under the Yum Leaders’ Bonus Program based on the Company’s performance and on each executive’s individual performance during |
(2) | Reflects grants of PSU awards subject to performance-based vesting conditions in |
|
for 100% weighting for the PSU payout with respect to this factor; if less than 30% TSR percentile ranking is achieved, this factor would provide for 0% weighting for the PSU payout with respect to this factor; if the Company’s TSR percentile ranking is 75% or higher, it would provide for 200% of target weighting for the PSU payout with respect to this factor. |
56 | YUM! BRANDS, INC.- 2022 Proxy Statement |
EXECUTIVE COMPENSATION |
(3) | Amounts in this column reflect the number of SARs granted to executives during the Company’s |
The terms of each SAR grant provide that, in case of a change in control, if an executive is employed on the date of a change in control and is involuntarily terminated on or within two years following the change in control (other than by the Company for cause) then all outstanding awards become exercisable immediately. |
Executives who have attained age 55 with 10 years of service or 65 with 5 years of service who retire at least one year following the grant date will continue to vest following retirement through the fourth anniversary of the grant date. The SARs that vest in retirement must be exercised before the earlier of (i) the five year anniversary of the executive’s retirement or (ii) the expiration dates of the SARs (generally 10 years from the grant date). Unvested SARs of executives who die will immediately vest and may be exercised by the executive’s beneficiary before the earlier of (i) the five year anniversary of the executive’s death or (ii) the expiration dates of the SARs (generally 10 years from the grant date). If an executive’s employment is terminated due to gross misconduct, the entire award is forfeited. For other employment terminations, all vested or previously exercisable SARs as of the last day of employment must be exercised within 90 days following termination of employment. |
(4) | The exercise price of the SARs granted in |
(5) | Amounts in this column reflect the full grant date fair value of the PSU awards shown in column (g) and the SARs shown in column (j). The grant date fair value is the amount that the Company is expensing in its financial statements over the award’s vesting schedule. |
|
Outstanding Equity Awards atYear-End
The following table shows the number of shares covered by exercisable and unexercisable SARs, and unvested RSUs and PSUs held by the Company’s NEOs on December 31, 2018.
Option/SAR Awards(1) | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options/ SARs (#) Exercisable | Number of Securities Underlying Unexercised Options/ SARs (#) Unexercisable | Option/ SAR Exercise Price ($) | Option/ SAR Expiration Date | Number Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity incentive plan awards: Number of unearned shares, or other that vested(4) | Equity plan market or payout shares, or other | |||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||||||
Creed | 2/5/2010 | * | 169,793 | — | $ | 23.48 | 2/5/2020 | |||||||||||||||||||||||||||||||||
2/4/2011 | * | 120,564 | — | $ | 35.10 | 2/4/2021 | ||||||||||||||||||||||||||||||||||
2/8/2012 | * | 81,670 | — | $ | 45.88 | 2/8/2022 | ||||||||||||||||||||||||||||||||||
2/6/2013 | * | 89,755 | — | $ | 44.81 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | 77,025 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | — | 67,864 | (i) | $ | 50.22 | 2/5/2024 | |||||||||||||||||||||||||||||||||
2/6/2015 | * | 144,447 | 48,150 | (ii) | $ | 52.64 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | * | 155,755 | 155,756 | (iii) | $ | 49.66 | 2/5/2026 | |||||||||||||||||||||||||||||||||
2/10/2017 | * | 58,979 | 176,937 | (iv) | $ | 68.00 | 2/10/2027 | |||||||||||||||||||||||||||||||||
2/12/2018 | * | — | 271,342 | (v) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/5/2014 | ** | — | 67,972 | (i) | $ | 21.30 | 2/5/2024 | |||||||||||||||||||||||||||||||||
2/6/2015 | ** | — | 48,165 | (ii) | $ | 22.32 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | ** | — | 155,912 | (iii) | $ | 21.06 | 2/5/2026 | |||||||||||||||||||||||||||||||||
| —
|
|
| —
|
|
| 239,745
|
|
| 22,037,360
|
| |||||||||||||||||||||||||||||
Gibbs | 2/5/2009 | * | 8,343 | — | $ | 20.85 | 2/5/2019 | |||||||||||||||||||||||||||||||||
2/5/2010 | * | 31,128 | — | $ | 23.48 | 2/5/2020 | ||||||||||||||||||||||||||||||||||
5/20/2010 | * | 24,161 | — | $ | 28.22 | 5/20/2020 | ||||||||||||||||||||||||||||||||||
2/4/2011 | * | 30,141 | — | $ | 35.10 | 2/4/2021 | ||||||||||||||||||||||||||||||||||
2/8/2012 | * | 24,501 | — | $ | 45.88 | 2/8/2022 | ||||||||||||||||||||||||||||||||||
2/6/2013 | * | 37,398 | — | $ | 44.81 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/6/2013 | * | 37,398 | — | $ | 44.81 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | 40,718 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | — | 33,932 | (i) | $ | 50.22 | 2/5/2024 | |||||||||||||||||||||||||||||||||
2/6/2015 | * | 46,476 | 15,492 | (ii) | $ | 52.64 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | * | 38,938 | 38,940 | (iii) | $ | 49.66 | 2/5/2026 | |||||||||||||||||||||||||||||||||
5/20/2016 | * | 15,918 | 15,920 | (vi) | $ | 56.67 | 5/20/2026 | |||||||||||||||||||||||||||||||||
2/10/2017 | * | 19,366 | 58,099 | (iv) | $ | 68.00 | 2/10/2027 | |||||||||||||||||||||||||||||||||
2/12/2018 | * | — | 83,842 | (v) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/5/2010 | ** | 31,143 | — | $ | 9.96 | 2/5/2020 | ||||||||||||||||||||||||||||||||||
5/20/2010 | ** | 24,174 | — | $ | 11.97 | 5/20/2020 | ||||||||||||||||||||||||||||||||||
2/4/2011 | ** | 30,140 | — | $ | 14.88 | 2/4/2021 | ||||||||||||||||||||||||||||||||||
2/8/2012 | ** | 24,531 | — | $ | 19.46 | 2/8/2022 | ||||||||||||||||||||||||||||||||||
2/6/2013 | ** | 37,408 | — | $ | 19.00 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/6/2013 | ** | 37,408 | — | $ | 19.00 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/5/2014 | ** | 40,783 | — | $ | 21.30 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/5/2014 | ** | — | 33,986 | (i) | $ | 21.30 | 2/5/2024 | |||||||||||||||||||||||||||||||||
2/6/2015 | ** | 46,491 | 15,497 | (ii) | $ | 22.32 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | ** | 38,978 | 38,978 | (iii) | $ | 21.06 | 2/5/2026 | |||||||||||||||||||||||||||||||||
5/20/2016 | ** | 15,935 | 15,936 | (vi) | $ | 24.03 | 5/20/2026 | |||||||||||||||||||||||||||||||||
| —
|
|
| —
|
|
| 78,117
|
|
| 7,180,515
|
| |||||||||||||||||||||||||||||
Eaton | 2/8/2012 | * | 73,503 | — | $ | 45.88 | 2/8/2022 | |||||||||||||||||||||||||||||||||
2/6/2013 | * | 67,317 | — | $ | 44.81 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | 64,132 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/6/2015 | * | 50,751 | 16,918 | (ii) | $ | 52.64 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | * | 38,938 | 38,940 | (iii) | $ | 49.66 | 2/5/2026 | |||||||||||||||||||||||||||||||||
2/10/2017 | * | 17,605 | 52,818 | (iv) | $ | 68.00 | 2/10/2027 | |||||||||||||||||||||||||||||||||
2/12/2018 | * | — | 60,976 | (v) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/8/2012 | ** | 73,593 | — | $ | 19.46 | 2/8/2022 | ||||||||||||||||||||||||||||||||||
2/6/2013 | ** | 67,335 | — | $ | 19.00 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/5/2014 | ** | 64,233 | — | $ | 21.30 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/6/2015 | ** | 50,767 | 16,923 | (ii) | $ | 22.32 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | ** | 38,978 | 38,978 | (iii) | $ | 21.06 | 2/5/2026 | |||||||||||||||||||||||||||||||||
| —
|
|
| —
|
|
| 65,993
|
|
| 6,066,077
|
|
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
|
Option/SAR Awards(1) | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options/ SARs (#) Exercisable | Number of Securities Underlying Unexercised Options/ SARs (#) Unexercisable | Option/ SAR Exercise Price ($) | Option/ SAR Expiration Date | Number Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity incentive plan awards: Number of unearned shares, or other that vested(4) | Equity plan market or payout shares, or other | |||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||||||
Skeans | 2/5/2010 | * | 1,627 | — | $ | 23.48 | 2/5/2020 | |||||||||||||||||||||||||||||||||
2/5/2010 | * | 6,068 | — | $ | 23.48 | 2/5/2020 | ||||||||||||||||||||||||||||||||||
2/4/2011 | * | 6,732 | — | $ | 35.10 | 2/4/2021 | ||||||||||||||||||||||||||||||||||
2/8/2012 | * | 9,065 | — | $ | 45.88 | 2/8/2022 | ||||||||||||||||||||||||||||||||||
2/6/2013 | * | 11,295 | — | $ | 44.81 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | 11,537 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | 13,573 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/6/2015 | * | 12,681 | 4,228 | (ii) | $ | 52.64 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | * | 19,452 | 19,452 | (iii) | $ | 49.66 | 2/5/2026 | |||||||||||||||||||||||||||||||||
2/5/2016 | * | — | 17,306 | (vii) | $ | 49.66 | 2/5/2026 | |||||||||||||||||||||||||||||||||
2/10/2017 | * | 9,683 | 29,050 | (iv) | $ | 68.00 | 2/10/2027 | |||||||||||||||||||||||||||||||||
2/12/2018 | * | — | 38,110 | (v) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/12/2018 | * | — | 60,976 | (viii) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/5/2014 | ** | 2,889 | — | $ | 21.30 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/5/2014 | ** | 13,595 | — | $ | 21.30 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/6/2015 | ** | 4,229 | 4,229 | (ii) | $ | 22.32 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | ** | 9,736 | 19,472 | (iii) | $ | 21.06 | 2/5/2026 | |||||||||||||||||||||||||||||||||
2/5/2016 | ** | — | 17,323 | ((vii) | $ | 21.06 | 2/5/2026 | |||||||||||||||||||||||||||||||||
| —
|
|
| —
|
|
| 39,546
|
|
| 3,635,068
|
| |||||||||||||||||||||||||||||
Russell | 2/5/2010 | * | 12,876 | — | $ | 23.48 | 2/5/2020 | |||||||||||||||||||||||||||||||||
2/4/2011 | * | 12,961 | — | $ | 35.10 | 2/4/2021 | ||||||||||||||||||||||||||||||||||
2/4/2011 | * | 10,047 | — | $ | 35.10 | 2/4/2021 | ||||||||||||||||||||||||||||||||||
2/8/2012 | * | 11,434 | — | $ | 45.88 | 2/8/2022 | ||||||||||||||||||||||||||||||||||
2/6/2013 | * | 11,220 | — | $ | 44.81 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | 13,573 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/6/2015 | * | 10,145 | 3,382 | (ii) | $ | 52.64 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/6/2015 | * | — | 13,527 | (ix) | $ | 52.64 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | * | 8,598 | 8,599 | (iii) | $ | 49.66 | 2/5/2026 | |||||||||||||||||||||||||||||||||
2/5/2016 | * | — | 17,197 | (x) | $ | 49.66 | 2/5/2026 | |||||||||||||||||||||||||||||||||
2/10/2017 | * | 5,790 | 17,373 | (iv) | $ | 68.00 | 2/10/2027 | |||||||||||||||||||||||||||||||||
2/12/2018 | * | — | 18,149 | (v) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/5/2010 | ** | 12,882 | — | $ | 9.96 | 2/5/2020 | ||||||||||||||||||||||||||||||||||
2/4/2011 | ** | 12,960 | — | $ | 14.88 | 2/4/2021 | ||||||||||||||||||||||||||||||||||
2/4/2011 | ** | 10,047 | — | $ | 14.88 | 2/4/2021 | ||||||||||||||||||||||||||||||||||
2/8/2012 | ** | 11,448 | — | $ | 19.46 | 2/8/2022 | ||||||||||||||||||||||||||||||||||
2/6/2013 | ** | 11,223 | — | $ | 19.00 | 2/6/2023 | ||||||||||||||||||||||||||||||||||
2/5/2014 | ** | 13,595 | — | $ | 21.30 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/6/2015 | ** | 10,148 | 3,383 | (ii) | $ | 22.32 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/6/2015 | ** | — | 13,531 | (ix) | $ | 22.32 | 2/6/2025 | |||||||||||||||||||||||||||||||||
2/5/2016 | ** | 8,607 | 8,608 | (iii) | $ | 21.06 | 2/5/2026 | |||||||||||||||||||||||||||||||||
2/5/2016 | ** | — | 17,215 | (x) | $ | 21.06 | 2/5/2026 | |||||||||||||||||||||||||||||||||
| 12,811
|
|
| 1,177,587
|
|
| —
|
|
| —
|
| |||||||||||||||||||||||||||||
Kesselman | 2/5/2016 | * | — | 48,458 | (iii) | $ | 49.66 | 2/5/2026 | ||||||||||||||||||||||||||||||||
2/10/2017 | * | — | 33,012 | (iv) | $ | 68.00 | 2/10/2027 | |||||||||||||||||||||||||||||||||
2/12/2018 | * | — | 38,110 | (v) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/5/2016 | ** | 48,505 | 48,506 | (iii) | $ | 21.06 | 2/5/2026 | |||||||||||||||||||||||||||||||||
5,036 | * | 462,941 | * | 41,752 | 3,837,844 | |||||||||||||||||||||||||||||||||||
4,898 | ** | 164,216 | ** |
|
|
|
|
|
|
|
|
|
|
|
Outstanding Equity Awards at Year-End
The following table shows the number of shares covered by exercisable and unexercisable SARs, and unvested RSUs and PSUs held by the Company’s NEOs on December 31, 2021.
Option/SAR Awards(1) | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options/ SARs (#) Exercisable | Number of Securities Underlying Unexercised Options/ SARs (#) Unexercisable | Option/ SAR Exercise Price ($) | Option/ SAR Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested(4) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested | |||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||||||
Gibbs | 2/8/2012 | * | 2,227 | — | $ | 45.88 | 2/8/2022 | |||||||||||||||||||||||||||||||||
2/5/2014 | * | 40,718 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | 33,932 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/6/2015 | * | 61,968 | — | $ | 52.64 | 2/6/2025 | ||||||||||||||||||||||||||||||||||
2/5/2016 | * | 77,878 | — | $ | 49.66 | 2/5/2026 | ||||||||||||||||||||||||||||||||||
5/20/2016 | * | 31,838 | — | $ | 56.67 | 5/20/2026 | ||||||||||||||||||||||||||||||||||
2/10/2017 | * | 77,465 | — | $ | 68.00 | 2/10/2027 | ||||||||||||||||||||||||||||||||||
2/12/2018 | * | 62,881 | 20,961 | (i) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/11/2019 | * | 55,989 | 55,989 | (ii) | $ | 93.26 | 2/11/2029 | |||||||||||||||||||||||||||||||||
2/10/2020 | * | 47,400 | 142,200 | (iii) | $ | 102.87 | 2/10/2030 | |||||||||||||||||||||||||||||||||
2/8/2021 | * | — | 235,073 | (iv) | $ | 103.36 | 2/8/2031 | |||||||||||||||||||||||||||||||||
2/5/2014 | ** | 40,783 | — | $ | 21.30 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/5/2014 | ** | 33,986 | — | $ | 21.30 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/6/2015 | ** | 61,988 | — | $ | 22.32 | 2/6/2025 | ||||||||||||||||||||||||||||||||||
2/5/2016 | ** | 77,956 | — | $ | 21.06 | 2/5/2026 | ||||||||||||||||||||||||||||||||||
5/20/2016 | ** | 31,871 | — | $ | 24.03 | 5/20/2026 | ||||||||||||||||||||||||||||||||||
| 56,494
|
|
| 7,844,749
|
|
| 130,774
|
|
| 18,159,278
|
| |||||||||||||||||||||||||||||
Turner | 2/10/2020 | * | 13,543 | 40,629 | (iii) | $ | 102.87 | 2/10/2030 | ||||||||||||||||||||||||||||||||
2/8/2021 | * | — | 52,892 | (iv) | $ | 103.36 | 2/8/2031 | |||||||||||||||||||||||||||||||||
| 4,391
|
|
| 609,751
|
|
| 42,376
|
|
| 5,884,331
|
| |||||||||||||||||||||||||||||
Skeans | 2/10/2017 | * | 22,552 | — | $ | 68.00 | 2/10/2027 | |||||||||||||||||||||||||||||||||
2/12/2018 | * | 18,675 | 7,985 | (i) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/12/2018 | * | — | 51,106 | (v) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/11/2019 | * | 22,347 | 24,069 | (ii) | $ | 93.26 | 2/11/2029 | |||||||||||||||||||||||||||||||||
2/10/2020 | * | 10,834 | 32,503 | (iii) | $ | 102.87 | 2/10/2030 | |||||||||||||||||||||||||||||||||
2/8/2021 | * | — | 58,769 | (iv) | $ | 103.36 | 2/8/2031 | |||||||||||||||||||||||||||||||||
2/5/2016 | ** | 5,701 | — | $ | 21.06 | 2/5/2026 | ||||||||||||||||||||||||||||||||||
2/5/2016 | ** | 10,144 | — | $ | 21.06 | 2/5/2026 | ||||||||||||||||||||||||||||||||||
5,041 | 700,011 | 44,059 | 6,118,033 | |||||||||||||||||||||||||||||||||||||
King | 2/10/2020 | * | 10,157 | 30,472 | (iii) | $ | 102.87 | 2/10/2030 | ||||||||||||||||||||||||||||||||
2/8/2021 | * | — | 41,138 | (iv) | $ | 103.36 | 2/8/2031 | |||||||||||||||||||||||||||||||||
| 7,318
|
|
| 1,016,204
|
|
| 32,689
|
|
| 4,539,195
|
| |||||||||||||||||||||||||||||
Lowings | 2/6/2013 | * | 15,978 | — | $ | 44.81 | 2/6/2023 | |||||||||||||||||||||||||||||||||
2/5/2014 | * | 19,329 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/5/2014 | * | 19,329 | — | $ | 50.22 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
2/6/2015 | * | 19,264 | — | $ | 52.64 | 2/6/2025 | ||||||||||||||||||||||||||||||||||
2/6/2015 | * | 19,264 | — | $ | 52.64 | 2/6/2025 | ||||||||||||||||||||||||||||||||||
2/5/2016 | * | 34,288 | — | $ | 49.66 | 2/5/2026 | ||||||||||||||||||||||||||||||||||
2/10/2017 | * | 30,884 | — | $ | 68.00 | 2/10/2027 | ||||||||||||||||||||||||||||||||||
2/12/2018 | * | 18,149 | 6,050 | (i) | $ | 78.07 | 2/12/2028 | |||||||||||||||||||||||||||||||||
2/11/2019 | * | 18,873 | 18,873 | (ii) | $ | 93.26 | 2/11/2029 | |||||||||||||||||||||||||||||||||
2/11/2019 | * | — | 50,328 | (vi) | $ | 93.26 | 2/11/2029 | |||||||||||||||||||||||||||||||||
2/10/2020 | * | 10,834 | 32,503 | (iii) | $ | 102.87 | 2/10/2030 | |||||||||||||||||||||||||||||||||
2/8/2021 | * | — | 47,015 | (iv) | $ | 103.36 | 2/8/2031 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 36,802
|
|
| 5,110,326
|
|
YUM! BRANDS, INC.- |
EXECUTIVE COMPENSATION
|
* | YUM Awards |
** | YUM China Awards |
(1) | The actual vesting dates for unexercisable awards are as follows: |
Remainder of unexercisable award will vest on February 12, 2022. |
(ii) | One-half of the unexercisable award will vest on each of February 11, 2022 and 2023. |
(iii) | One-third of the unexercisable award will vest on each of February 10, 2022, 2023 and 2024. |
(iv) | One-fourth of the unexercisable award will vest on each of February 8, 2022, 2023, 2024 and 2025. |
(v) | Unexercisable award will vest on February |
Unexercisable award will vest on February |
(2) | For |
(3) | The market value of the YUM awards are calculated by multiplying the number of shares covered by the award by |
(4) | The awards reflected in this column are unvested performance-based PSU awards with three-year performance periods that are scheduled to vest on December 31, |
Option Exercises and Stock Vested
The table below shows the number of shares of YUM and Yum China common stock acquired during 20182021 upon exercise of stock option and SAR awards and vesting of stock awards in the form of RSUs and PSUs, each including accumulated dividends and before payment of applicable withholding taxes and broker commissions.
Option/SAR Awards
| Stock Awards
| Option/SAR Awards
| Stock Awards
| |||||||||||||||||||||||||||||||||||||
Name
| Number of Shares Acquired on Exercise (#)
| Value Realized on Exercise ($)
| Number of Shares Acquired on Vesting (#)
| Value realized on Vesting ($)
| Number of Shares Acquired on Exercise (#)
| Value Realized on Exercise ($)
| Number of Shares Acquired on Vesting (#)(1)
| Value realized on Vesting
($) | ||||||||||||||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
| (b)
| (c)
| (d)
| (e)
| ||||||||||||||||||||||||||||||||
Creed |
| 547,080 |
|
| 24,895,096 |
|
| 96,849 | (1) |
| 8,902,360 |
| ||||||||||||||||||||||||||||
Gibbs |
| 57,565 |
|
| 3,499,064 |
|
| 28,380 | (1) |
| 2,608,690 |
|
| 132,225 |
|
| 11,865,703 |
|
| 22,123 |
|
| 3,072,000 |
| ||||||||||||||||
Eaton |
| 355,462 |
|
| 22,324,918 |
|
| 28,380 | (1) |
| 2,608,690 |
| ||||||||||||||||||||||||||||
Turner |
| — |
|
| — |
|
| 4,357 |
|
| 580,378 |
| ||||||||||||||||||||||||||||
Skeans |
| 636 |
|
| 55,961 |
|
| 20,454 | (1)(2) |
| 1,829,621 |
|
| 51,747 |
|
| 5,849,074 |
|
| 9,943 |
|
| 1,380,685 |
| ||||||||||||||||
Russell |
| 11,665 |
|
| 1,049,904 |
|
| 1,349 | (2) |
| 107,650 |
| ||||||||||||||||||||||||||||
Kesselman |
| 24,188 |
|
| 2,167,204 |
|
| 30,829 | (1)(3) |
| 2,543,403 |
| ||||||||||||||||||||||||||||
King |
| — |
|
| — |
|
| 7,261 |
|
| 967,204 |
| ||||||||||||||||||||||||||||
Lowings
|
| 13,293
|
|
| 1,677,958
|
|
| 7,458
|
|
| 1,035,622
|
|
(1) | For each of |
2022. For Messrs. |
|
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
|
The table below shows the present value of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each NEO, under the YUM! Brands Retirement Plan (“Retirement Plan”), and the YUM! Brands Pension Equalization Plan (“PEP”) determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements.
Name | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During ($) | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (b) | (c) | (d) | (e) | ||||||||||||||||||||||||
Creed(i) |
| Qualified Retirement Plan |
|
| 2 |
|
| 193,610 |
|
| — |
| ||||||||||||||||||||
|
| PEP |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||
Gibbs |
| Qualified Retirement Plan |
|
| 30 |
|
| 1,220,964 |
|
| — |
|
| Qualified Retirement Plan |
|
| 33 |
|
| 1,943,716 |
|
| — |
| ||||||||
|
| PEP |
|
| 30 |
|
| 7,076,064 |
|
| — |
| ||||||||||||||||||||
Russell |
| Qualified Retirement Plan |
|
| 20 |
|
| 568,314 |
|
| — |
| ||||||||||||||||||||
|
| PEP |
|
| 20 |
|
| 973,426 |
|
| — |
|
| PEP |
|
| 33 |
|
| 19,649,084 |
|
| — |
| ||||||||
Skeans |
| Qualified Retirement Plan |
|
| 18 |
|
| 446,922 |
|
| — |
|
| Qualified Retirement Plan |
|
| 21 |
|
| 916,761 |
|
| — |
| ||||||||
|
| PEP |
|
| 18 |
|
| 1,450,049 |
|
| PEP |
|
| 21 |
|
| 5,080,998 |
|
| — |
| |||||||||||
Kesselman(ii) |
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||
Eaton(ii) |
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||
Turner(i) | — | — | — | — | ||||||||||||||||||||||||||||
King(i) |
| — |
| — | — | — | ||||||||||||||||||||||||||
Lowings(i) |
| — |
|
| — |
|
| — |
|
| — |
|
(i) |
|
|
(1) YUM! Brands Retirement Plan
The Retirement Plan provides an integrated program of retirement benefits for salaried employees who were hired by the Company prior to October 1, 2001. The Retirement Plan replaces the same level ofpre-retirement pensionable earnings for all similarly situated participants. The Retirement Plan is a tax qualified plan, and it is designed to provide the maximum possible portion of this integrated benefit on a tax qualified and funded basis.
Benefit Formula
Benefits under the Retirement Plan are based on a participant’s final average earnings (subject to the limits under Internal Revenue Code Section 401(a)(17)) and service under the plan. Upon termination of employment, a participant’s monthly normal retirement benefit from the plan is equal to
A. | 3% of Final Average Earnings times Projected Service up to 10 years of service, plus |
B. | 1% of Final Average Earnings times Projected Service in excess of 10 years of service, minus |
C. | 0.43% of Final Average Earnings up to Social Security covered compensation multiplied by Projected Service up to 35 years of service |
the result of which is multiplied by a fraction, the numerator of which is actual service as of date of termination, and the denominator of which is the participant’s Projected Service.
Projected Service is the service that the participant would have earned if he had remained employed with the Company until his normal retirement age (generally age 65).
If a participant leaves employment after becoming eligible for early or normal retirement, benefits are calculated using the formula above except that actual service attained at the participant’s retirement date is used in place of Projected Service.
|
Final Average Earnings
A participant’s final average earnings“Final Average Earnings” is determined based on his or her highest five consecutive years of pensionable earnings. Pensionable earnings is the sum of the participant’s base pay and annual incentive compensation from the Company, including amounts under the Yum Leaders’ Bonus Program. In general, base pay includes salary, vacation pay, sick pay and short-term disability payments. Extraordinary bonuses and lump sum payments made in connection with a participant’s termination of employment are not included.
60 | YUM! BRANDS, INC.- 2022 Proxy Statement |
EXECUTIVE COMPENSATION |
Vesting
A participant receives a year of vesting service for each year of employment with the Company. A participant is 0% vested until he or she has been credited with at least five
years of vesting service. Upon attaining five years of vesting service, a participant becomes 100% vested. All NEOs eligible for the Retirement Plan are 100% vested.
Normal Retirement Eligibility
A participant is eligible for normal retirement following the later of age 65 orand 5 years of vesting service.
Early Retirement Eligibility and Reductions
A participant is eligible for early retirement upon reaching age 55 with 10 years of vesting service. A participant who has met the requirements for early retirement and who elects to begin receiving payments from the plan prior to age 62 will receive a reduction of 1/12 of 4% for each month benefits begin before age 62. Benefits are unreduced at age 62.
The table below shows when each of the NEOs becomes eligible for early retirement and the estimated lump sum value of the benefit each participant would receive from YUM plans (both qualified andnon-qualified) if he or she retired from the Company on December 31, 20182021 and received a lump sum payment.
Name | Earliest Retirement Date | Estimated Lump Sum from a Qualified Plan(1) | Estimated Lump Sum from a Non- Qualified Plan(2) | Total Estimated Lump Sums | Earliest Retirement Date | Estimated Lump Sum from a Qualified Plan(1) | Estimated Lump Sum from a Non- Qualified Plan(2) | Total Estimated Lump Sums | ||||||||||||||||||||||||
Greg Creed |
| January 1, 2019 |
| $ | 206,406 |
|
| — |
| $ | 206,406 |
| ||||||||||||||||||||
David W. Gibbs |
| January 1, 2019 |
| $ | 1,466,770 |
| $ | 8,577,230 |
| $ | 10,044,000 |
|
| January 1, 2021 |
| $ | 2,143,881 |
| $ | 21,667,499 |
| $ | 23,811,380 |
| ||||||||
Tracy L. Skeans
|
|
February 1, 2028
|
|
$
|
1,409,109
|
|
$
|
4,289,618
|
|
$
|
5,698,727
|
|
| February 1, 2028 |
| $ | 1,868,407 |
| $ | 9,218,787 |
| $ | 11,087,194 |
| ||||||||
David E. Russell
|
|
September 1, 2024
|
|
$
|
1,137,849
|
|
$
|
2,133,953
|
|
$
|
3,501,802
|
|
(1) | The Retirement Plan |
(2) | PEP |
The estimated lump sum values in the table above are calculated assuming no increase in the participant’s Final Average Earnings. The lump sums are estimated using the mortality table and interest rate assumptions in the Retirement Plan for participants who would actually commence benefits on January 1, 2019.2022. Actual lump sums may be higher or lower depending on the mortality table and interest rate in effect at the time of distribution and the participant’s Final Average Earnings at his date of retirement.
Lump Sum Availability
Lump sum payments are available to participants who meet the requirements for early or normal retirement. Participants who leave the Company prior to meeting the requirements for Early or Normal Retirement must
take their benefits in the form of a monthly annuity and no lump sum is available. When a lump sum is paid from the plan, it is calculated based on actuarial assumptions for lump sums required by Internal Revenue Code Section 417(e)(3).
(2) PEP
The PEP is an unfunded,non-qualified plan that complements the Retirement Plan by providing benefits that federal tax law bars providing under the Retirement Plan. Benefits are generally determined and payable under the same terms and conditions as the Retirement Plan (except as noted below) without regard to federal tax limitations on amounts of includible compensation and maximum benefits. Benefits paid are reduced by the value of benefits payable under the Retirement Plan. Participants who earned at least $75,000 during calendar year 1989 are eligible to receive benefits calculated under the Retirement Plan’s pre-1989 formula, if this calculation results in a larger benefit from the PEP. This formula is similar to the formula described above under the Retirement Plan except that part C of the formula is calculated as follows:
12/3% of an estimated primary Social Security amount multiplied by Projected Service up to 30 years
PEP retirement distributions are always paid in the form of a lump sum. In the case of a participant whose benefits are payable based on the pre-1989 formula,
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
|
payable under the Retirement Plan. Participants who earned at least $75,000 during calendar year 1989 are eligible to receive benefits calculated under the Retirement Plan’spre-1989 formula, if this calculation results in a larger benefit from the PEP. Mr. Gibbs qualifies for benefits under this formula. This formula is similar to the formula described above under the Retirement Plan except that part C of the formula is calculated as follows:
1-2/3% of an estimated primary Social Security amount multiplied by Projected Service up to 30 years
PEP retirement distributions are always paid in the form of a lump sum. In the case of a participant whose benefits are payable based on thepre-1989 formula, the lump sum value is calculated as the actuarial equivalent to the participant’s 50% Joint and Survivor Annuity with no reduction for survivor coverage. In all
other cases, lump sums are calculated as the actuarial equivalent of the participant’s life only annuity. Participants who terminate employment prior to meeting eligibility for Early or Normal Retirement must take their benefits from this plan in the form of a monthly annuity.
(3) Present Value of Accumulated Benefits
For all plans, the Present Valuepresent value of Accumulated Benefitsaccumulated benefits (determined as of December 31, 2018)2021) is calculated assuming that each participant is eligible to receive an unreduced benefit payable in the form of a single lump sum at age 62. This is consistent with the methodologies used in financial accounting calculations. In addition, the economic assumptions for the lump sum interest rate, post retirement mortality, and discount rate are also consistent with those used in financial accounting calculations at each measurement date.
Nonqualified Deferred Compensation
Amounts reflected in the Nonqualified Deferred Compensation table below are provided for under the Company’s EID, LRP and TCN plans. These plans are unfunded, unsecured deferred, account-based compensation plans. For each calendar year, participants are permitted under the EID Program to defer up to 85% of their base pay and up to 100% of their annual incentive award.
EID Program
Deferred Investments under theEID Program. Amounts deferred under the EID Program may be invested in the following phantom investment alternatives (12 month(12-month investment returns, as of December 31, 2018,2021, are shown in parentheses, except for the YUM China Stock Fund, which was removed as an investment option as of October 31, 2018, and thus a 10 month investment return is shown)parentheses):
YUM! Stock Fund (14.60%(30.05%*)
YUM! Matching Stock Fund (14.60%(30.05%*)
S&P 500 Index Fund(-4.46% (28.60%)
Bond Market Index Fund(-0.04%(-1.69%)
Stable Value Fund (2.20%(1.30%)
|
All of the phantom investment alternatives offered under the EID Program are designed to match the performance of actual investments; that is, they provide market rate returns and do not provide for preferential earnings. The S&P 500 index fund, bond market index fund and stable value fund are designed to track the investment return of like-named funds offered under the Company’s 401(k) Plan. The YUM! Stock Fund and YUM! Matching Stock Fund track the investment return of the Company’s common stock. Participants may transfer funds between the
investment alternatives on a quarterly basis except (1) funds invested in the YUM! Stock Fund or YUM! Matching Stock Fund may not be transferred once invested in these funds and (2) a participant may only elect to invest into the YUM! Matching Stock Fund at the time the annual incentive deferral election is made. In the case of the Matching Stock Fund, participants
|
|
who defer their annual incentive into this fund acquire additional phantom shares (RSUs) equal to 33% of the RSUs received with respect to the deferral of their annual incentive into the YUM! Matching Stock Fund (the additional RSUs are referred to as “matching contributions”). The RSUs attributable to the matching contributions are allocated on the same day the RSUs attributable to the annual incentive are allocated, which is the same day we make our annual stock appreciation right grants. Eligible amounts attributable to the matching contribution under the YUM! Matching Stock Fund are included in column (c) below as contributions by the Company (and represent amounts actually credited to the NEO’s account during 2018)2021).
Beginning with their 2009 annual incentive award, those who are eligible for annual PSU awards are no longer eligible to participate in the Matching Stock Fund. Following the separation of Yum China Holdings, Inc., in October of 2016, the Yum China Stock Fund was made available as an investment option under the EID Program, but only with respect to invested amounts that resulted from the conversion of YUM shares into Yum China shares at separation. Funds could be transferred out of this fund, but the fund did not allow for additional investment. The Yum China Stock Fund was removed as an investment option as of October 31, 2018.
RSUs attributable to annual incentive deferrals into the YUM! Matching Stock Fund and matching contributions vest on the second anniversary of the grant (or upon a change of control of the Company, if earlier) and are payable as shares of YUM common stock pursuant to the participant’s deferral election. Unvested RSUs held in a participant’s YUM! Matching
* | Assumes dividends are reinvested. |
62 | YUM! BRANDS, INC.- 2022 Proxy Statement |
EXECUTIVE COMPENSATION |
Stock Fund account are forfeited if the participant voluntarily terminates employment with the Company within two years of the deferral date. If a participant terminates employment involuntarily, the portion of the account attributable to the matching contributions is forfeited and the participant will receive an amount equal to the amount of the original amount deferred. If a participant dies or becomes disabled during the restricted period, the participant fully vests in the RSUs. Dividend equivalents are accrued during the restricted period but are only paid if the RSUs vest. In the case of a participant who has attained age 55 with 10 years of service, or age 65 with five years of service, RSUs attributable to bonus deferrals into the YUM! Matching Stock Fund vest immediately and RSUs
attributable to the matching contribution vest on the second anniversary of the deferral date.
Distributions under EID Program. When participants elect to defer amounts into the EID Program, they also select when the amounts ultimately will be distributed to them. Distributions may either be made in a specific year –whether– whether or not employment has then ended – or at a time that begins at or after the executive’s retirement, separation or termination of employment. Distributions can be made in a lump sum or quarterly or annual installments for up to 20 years. Initial deferrals are subject to a minimum two yeartwo-year deferral. In general, with respect to amounts deferred after 2005 or not fully vested as of January 1, 2005, participants may change their distribution schedule, provided the new elections satisfy the requirements of Section 409A of the Internal Revenue Code. In general, Section 409A requires that:
Distribution schedules cannot be accelerated (other than for a hardship)
To delay a previously scheduled distribution,
– | A participant must make an election at least one year before the distribution otherwise would be made, and
| |||
– | The new distribution cannot begin earlier than five years after it would have begun without the election tore-defer. |
With respect to amounts deferred prior to 2005, to delay a distribution the new distribution cannot begin until two years after it would have begun without the election tore-defer.
Investments in the YUM! Stock Fund and YUM! Matching Stock Fund are only distributed in shares of Company stock.
LRP
LRP Account Returns. The LRP provides an annual earnings credit to each participant’s account based on the value of participant’s account at the end of each year. Under the LRP, Mr. Kesselman receivedMessrs. King and Turner will receive an annual earnings credit equal to 5%the Moody’s Aa Corporate Bond Yield Average for maturities 20 years and above (currently 2.91%) of histheir account balance, while he was employed with the Company.balances. The Company’s contribution (“Employer Credit”) for 20182021 was equal to 8%4% of salary plus target bonus for Mr. Kesselman.Messrs. Turner and King.
Distributions under LRP. Under the LRP, participants who became eligible to participate in the plan before January 1, 2019 and are age 55 or older are entitled to a lump sum distribution
|
of their account balance in the quarter following their separation of employment. ParticipantsAlternatively, these participants may elect to be paid in 5 or 10-year installments following the attainment of age 55. If these participants are under age 55 with a vested LRP benefit that, combined with any other deferred compensation benefits covered under Code Section 409A exceeds $15,000,$19,500, they will not receive a distribution until the calendar quarter that follows the participant’s 55th birthday. Participants who become eligible to participate in LRP after January 1, 2019 (including Messrs. Turner and King) will receive a lump sum distribution following separation from employment.
TCN
TCN Account Returns. The TCN provides an annual earnings credit to each participant’s account based on the value of each participant’s account at the end of
each year. Under the TCN, Messrs. Creed and Eaton receiveMr. Lowings receives an annual earnings credit equal to 5%. For Messrs. Creed and Eaton,Mr. Lowings, the Employer Credit for 20182021 was equal to 15% of their salaries plus target bonuses.0%, because he instead participated in the Australian superannuation retirement plan.
Distributions under TCN. Under the TCN, participants age 55 or older with a balance of $15,000$19,500 or more, are entitled to a lump sum distribution of their account balance in the quarter following their separation of employment. Participants under age 55 who separate employment with the Company will receive interest annually and their account balance will be distributed in the quarter following their 55th birthday.
Name | Plan Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($)(4) | Aggregate Balance at Last FYE ($)(5) | ||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||||||
Creed |
| EID |
|
| — |
|
| — |
|
| 699,884 |
| 232,306 |
|
| 12,945,177 |
| |||||||
| TCN |
|
| — |
|
| 515,625 |
|
| 137,469 |
| 19,233 |
|
| 3,383,245 |
| ||||||||
| Total |
|
| — |
|
| 515,625 |
|
| 837,353 |
| 251,539 |
|
| 16,328,422 |
| ||||||||
Gibbs |
| EID |
|
| — |
|
| — |
|
| 103,561 |
| 83,043 |
|
| 3,732,617 |
| |||||||
| Total |
|
| — |
|
| — |
|
| 103,561 |
| 83,043 |
|
| 3,732,617 |
| ||||||||
Eaton |
| EID |
|
| — |
|
| — |
|
| 507,147 |
| — |
|
| 9,207,724 |
| |||||||
| TCN |
|
| — |
|
| 255,000 |
|
| 98,598 |
| 9,512 |
|
| 2,316,046 |
| ||||||||
| Total |
|
| — |
|
| 255,000 |
|
| 605,745 |
| 9,512 |
|
| 11,523,770 |
| ||||||||
Skeans |
| EID |
|
| — |
|
| — |
|
| 25,636 |
| 331,761 |
|
| 359,754 |
| |||||||
| Total |
|
| — |
|
| — |
|
| 25,636 |
| 331,761 |
|
| 359,754 |
| ||||||||
Russell |
| EID |
|
| 408,135 |
|
| 136,045 |
|
| 194,512 |
| 218,965 |
|
| 1,428,480 |
| |||||||
| Total |
|
| 408,135 |
|
| 136,045 |
|
| 194,512 |
| 218,965 |
|
| 1,428,480 |
| ||||||||
Kesselman |
| EID |
|
| 203,565 |
|
| — |
|
| (26,890 | ) |
| — |
|
| 675,763 |
| ||||||
| LRP |
|
| — |
|
| 89,540 |
|
| 8,498 |
| — |
|
| 268,007 |
| ||||||||
| Total |
|
| 203,565 |
|
| 89,540 |
|
| (18,392 | ) |
| — |
|
| 943,770 |
|
YUM! BRANDS, INC. - 2022 Proxy Statement | 63 |
EXECUTIVE COMPENSATION |
Name | Plan Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($)(4) | Aggregate Balance at Last FYE ($)(5) | ||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||||||
Gibbs |
| EID |
|
| — |
|
| — |
|
| 996,029 |
|
| — |
|
| 4,779,899 |
| ||||||
| Total |
|
| — |
|
| — |
|
| 996,029 |
|
| — |
|
| 4,779,899 |
| |||||||
Turner |
| EID |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||
| LRP |
|
| — |
|
| 71,400 |
|
| 2,637 |
|
| — |
|
| 158,288 |
| |||||||
| Total |
|
| — |
|
| 71,400 |
|
| 2,637 |
|
| — |
|
| 158,288 |
| |||||||
Skeans |
| EID |
|
| — |
|
| — |
|
| 127,587 |
|
| — |
|
| 592,719 |
| ||||||
| Total |
|
| — |
|
| — |
|
| 127,587 |
|
| — |
|
| 592,719 |
| |||||||
King |
| EID |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||
| LRP |
|
| — |
|
| 77,700 |
|
| 2,903 |
|
| — |
|
| 173,354 |
| |||||||
| Total |
|
| — |
|
| 77,700 |
|
| 2,903 |
|
| — |
|
| 173,354 |
| |||||||
Lowings |
| EID |
|
| — |
|
| — |
|
| 66,192 |
|
| — |
|
| 326,774 |
| ||||||
| TCN |
|
| — |
|
| — |
|
| 47,531 |
|
| — |
|
| 998,160 |
| |||||||
| Total |
|
| — |
|
| — |
|
| 113,723 |
|
| — |
|
| 1,324,934 |
|
(1) | Amounts in column (b) reflect deferred amounts that were also reported as compensation in our Summary Compensation Table filed last year or, would have been reported as compensation in our Summary Compensation Table last year if the executive were a NEO, and deferrals of base salary into the EID Program. |
(2) | Amounts in column (c) reflect Company contributions for EID, LRP and/or TCN allocation. See footnote |
(3) | Amounts in column (d) reflect earnings during the last fiscal year on deferred amounts. All earnings are based on the investment alternatives offered under the EID Program or the earnings credit provided under the LRP or the TCN described in the narrative above this table. The EID Program earnings are market based returns and, therefore, are not reported in the Summary Compensation Table. For |
(4) | All amounts shown in column (e) were distributed in accordance with the executive’s deferral election, except in the case of the following amounts distributed to pay payroll taxes due upon their account balance under the EID Program, LRP or TCN for |
| ||||
Gibbs | — | |||
| ||||
Lowings | — | |||
King | — | |||
Skeans | ||||
| ||||
| — |
(5) | Amounts reflected in column (f) are the year-end balances for each executive under the EID Program, TCN and the LRP. As required under SEC rules, below is the portion of the year-end balance for each executive which has previously been reported as compensation to the executive in the Company’s Summary Compensation Table for 2021 and prior years. |
Gibbs | — | |||
Turner | $ | 163,920 | ||
Skeans | — | |||
King | $ | 182,955 | ||
Lowings | $ | 490,929 |
YUM! BRANDS, INC.- |
EXECUTIVE COMPENSATION
|
|
| ||||
| ||||
| ||||
| ||||
| ||||
|
Potential Payments Upon Termination or Change in Control
The information below describes and quantifies certain compensation that would become payable under existing plans and arrangements if the NEO’s employment had terminated on December 31, 2018,2021, given the NEO’s compensation and service levels as of such date and, if applicable, based on the Company’s closing stock price on that date. These benefits are in addition to benefits available generally to salaried employees, such as distributions under the Company’s 401(k) Plan, retiree medical benefits, disability benefits and accrued vacation pay.
Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event, the Company’s stock price and the executive’s age.
SAR Awards. If one or more NEOs terminated employment for any reason other than retirement, death, disability or following a change in control as of December 31, 2018,2021, they could exercise the SARs that were exercisable on that date as shown at the Outstanding Equity Awards atYear-End table on page 63,58, otherwise all SARs, pursuant to their terms, would have been forfeited and cancelled after that date. If the NEO had retired, died or become disabled as of December 31, 2018,2021, exercisable SARs would remain exercisable through the term of the award.award and unvested shares would continue to vest if the award was granted at least one year before retirement and vesting would be accelerated for all SARs granted in 2019, 2020 or 2021 in the event of death. Except in the case of a change in control or death, no SARs become exercisable on an accelerated basis. Benefits aIn the case of an involuntary termination of employment as of December 31, 2021, each NEO maywould receive on a change of control are discussed below.the following: Mr. Gibbs $17,290,187, Mr. Turner $3,339,904, Ms. Skeans $8,689,499, Mr. King $2,557,086 and Mr. Lowings $6,362,161.
Executive Income Deferral Program. As described in more detail beginning at page 68,62, the NEOs participate in the EID Program, which permits the deferral of salary and annual incentive compensation. The last column of the Nonqualified Deferred Compensation Table on page 7064 includes each NEO’s
aggregate balance at December 31, 2018.2021. The NEOs are entitled to receive their vested amount under the EID Program in case of voluntary termination of employment. In the case of involuntary termination of employment, they are entitled to receive their vested benefit and the amount of the unvested benefit that corresponds to their deferral. In the case of death, disability or retirement after age 65, they or their beneficiaries are entitled to their entire account balance as shown in the last column of the Nonqualified Deferred Compensation table on page 70.64.
In the case of an involuntary termination of employment as of December 31, 2018,2021, each NEO would receive the following: Mr. Creed $12,945,177,Gibbs $4,779,899, Mr. Gibbs $3,732,617, Mr. Eaton $9,207,724,Turner $0, Ms. Skeans $359,754,$592,719, Mr. King $0 and Mr. Russell $1,428,480.Lowings $326,774. As discussed at page 68,65, these amounts reflect base salary or bonuses previously deferred by the executive and appreciation on these deferred amounts (see page 6862 for discussion of investment alternatives available under the EID). Thus, these EID account balances represent deferred base salary or bonuses (earned in prior years) and appreciation of their accounts based primarily on the performance of the Company’s stock.
Leadership Retirement Plan. Under the LRP, participants who became eligible to participate in the plan before January 1, 2019 and are age 55 or older are entitled to a lump sum distribution of their account balance in the quarter following their terminationseparation of employment. ParticipantsAlternatively, these participants may elect to be paid in 5- or 10-year installments following the attainment of age 55. If these participants are under age 55 with a vested LRP benefit that, combined with any other deferred compensation benefits covered under Code Section 409A exceeds $19,500, they will not receive a distribution until the calendar quarter that follows the participant’s 55th birthday. Participants who terminate with more than five years of servicebecome eligible to participate in LRP after January 1, 2019 (including Messrs. Turner and King) will receive their account balance at their 55th birthday.a lump sum distribution following separation from employment unless they elect to be paid in 5 or 10-year installments after attaining age 54. In case of termination of employment as of December 31, 2021, Mr. Turner would have received $158,288 and Mr. King would have received $173,354.
YUM! BRANDS, INC. - |
EXECUTIVE COMPENSATION
|
Third Country National Plan. Under the TCN, participants age 55 or older are entitled to a lump sum distribution of their account balance in the quarter following their termination of employment. Participants under age 55 who terminate will receive interest annually and their account balance will be distributed in the quarter following their 55th birthday. In case of termination of employment as of December 31, 2018,2021, Mr. CreedLowings would have received $3,383,245 and Mr. Eaton would have received $2,316,046.$998,160.
Performance Share Unit Awards. If one or more NEOs terminated employment for any reason other than retirement or death or following a change in control and prior to achievement of the performance criteria and vesting period, then the award would be cancelled and forfeited. If the NEO had retired or died or been involuntarily terminated following a change in control, as of December 31, 2018,2021, the PSU award would be paid out based on actual performance for the performance period, subject to a pro rata reduction reflecting the portion of the performance period not worked by the NEO. If any of these payouts had occurred on December 31, 2018,2021, Messrs. Creed, Gibbs, Turner, King and EatonLowings and Ms. Skeans would have been entitled to $9,992,278, $3,345,817, $3,017,885,$7,819,161, $2,469,936, $1,895,109, $2,112,440 and $1,779,827,$2,453,930, respectively, assuming target performance.
Pension Benefits. The Pension Benefits Table on page 6660 describes the general terms of each pension plan in which the NEOs participate, the years of credited service and the present value of the annuity payable to each NEO assuming termination of employment as of December 31, 2018.2021. The table on page 6761 provides the present value of the lump sum benefit payable to each NEO when they attain eligibility for Early Retirement (i.e., age 55 with 10 years of service) under the plans.
Life Insurance Benefits. For a description of the supplemental life insurance plans that provide coverage to the NEOs, see the All Other Compensation Table on page 60.55. If the NEOs had died on December 31, 2018,2021, the survivors of Messrs. Creed, Gibbs, Eaton,Turner, King and Lowings and Ms. Skeans and Mr. Russell would have received Company-paid life insurance of $3,000,000, $1,722,000, $1,650,000, $1,120,000$2,050,000, $1,500,000, $1,500,000, $0 and $660,000,$1,323,000, respectively, under this arrangement. Executives and all other salaried employees can purchase additional life insurance benefits up to a maximum combined company paid and additional life insurance of $3.5 million. This additional benefit is not paid or
paid or subsidized by the Company and, therefore, is not shown here.
Change in Control. Change in control severance agreements are in effect between YUM and certain key executives (including Messrs. Creed, Gibbs, EatonTurner, King and Lowings and Ms. Skeans). These agreements are general obligations of YUM, and provide, generally, that if, within two years subsequent to a change in control of YUM, the employment of the executive is terminated (other than for cause, or for other limited reasons specified in the change in control severance agreements) or the executive terminates employment for Good Reason (defined in the change in control severance agreements to include a diminution of duties and responsibilities or benefits), the executive will be entitled to receive the following:
a proportionate annual incentive assuming achievement of target performance goals under the bonus plan or, if higher, assuming continued achievement of actual Company performance until date of termination,termination;
a severance payment equal to two times the sum of the executive’s base salary and the target bonus or, if higher, the actual bonus for the year preceding the change in control of the Company,Company; and
outplacement services for up to one year following termination.
In March 2013, the Company eliminated excise taxgross-ups and implemented a best netafter-tax method. See the Company’s CD&A on page 3934 for more detail.
The change in control severance agreements have a three-year term and are automatically renewable each January 1 for another three-year term. An executive whose employment is not terminated within two years of a change in control will not be entitled to receive any severance payments under the change in control severance agreements.
Generally, pursuant to the agreements, a change in control is deemed to occur:
(i) | if any person acquires 20% or more of the Company’s voting securities (other than securities acquired directly from the Company or its affiliates); |
(ii) | if a majority of the directors as of the date of the agreement are replaced other than in specific circumstances; or |
YUM! BRANDS, INC.- |
EXECUTIVE COMPENSATION
|
(iii) | upon the consummation of a merger of the Company or any subsidiary of the Company other than (a) a merger where the Company’s directors immediately before the change in control constitute a majority of the directors of the resulting organization, or (b) a merger effected to implement a recapitalization of the Company in which no person is or becomes the beneficial owner of securities of the Company representing 20% or more of the combined voting power of the Company’s then-outstanding securities. |
In addition to the payments described above, upon a change in control:
All outstanding SARs held by the executive and not otherwise exercisable will fully and immediately vest following a change in control if the executive is employed on the date of the change in control of the Company and is involuntarily terminated (other than by the Company for cause) on or within two years following the change in control. See Company’s CD&A on page 3934 for more detail.detail;
All RSUs under the Company’s EID Program or otherwise held by the executive will automatically vest.vest; and
Pursuant to the Company’s Performance Share Plan under the LTIP, all PSU awards awarded in the year in which the change in control occurs, will be paid out at target assuming a target level performance had been achieved for the entire performance period, subject to a pro rata reduction to reflect the portion of the performance period after the change in control. All PSUs awarded for performance periods that began before the year in which the change in control occurs will be paid out assuming performance achieved for the performance period was at the greater of target level performance or projected level of performance at the time of the change in control, subject to pro rata reduction to reflect the portion of the performance period after the change in control. In all cases, executives must be employed with the Company on the date of the change in control and involuntarily terminated upon or following the change in control and during the performance period. See Company’s CD&A on page 3934 for more detail.
If a change in control and each NEO’s involuntary termination had occurred as of December 31, 2018,2021, the following payments or other benefits would have been made or become available.
Creed $ | Gibbs $ | Eaton $ | Skeans $ | Russel(1) $ | ||||||||||||||||
Severance Payment |
| 10,128,986 |
|
| 5,634,054 |
|
| 5,673,200 |
|
| 3,502,650 |
|
| — |
| |||||
Annual Incentive |
| 3,144,531 |
|
| 1,467,113 |
|
| 1,338,750 |
|
| 824,766 |
|
| — |
| |||||
Accelerated Vesting of SARs |
| 22,609,379 |
|
| 8,008,032 |
|
| 5,093,830 |
|
| 4,292,927 |
|
| 2,932,869 |
| |||||
Accelerated Vesting of RSUs |
| — |
|
| — |
|
| — |
|
| — |
|
| 1,199,286 |
| |||||
Acceleration of PSU Performance/Vesting |
| 9,992,278 |
|
| 3,345,817 |
|
| 3,017,885 |
|
| 1,779,827 |
|
| — |
| |||||
Outplacement |
| 25,000 |
|
| 25,000 |
|
| 25,000 |
|
| 25,000 |
|
| — |
| |||||
TOTAL |
| 45,900,174 |
|
| 18,480,016 |
|
| 15,148,665 |
|
| 10,425,170 |
|
| 4,132,155 |
|
|
In connection with his departure from the Company, Mr. Kesselman received payments from the Company totaling $442,768.
Gibbs $ | Turner $ | Skeans $ | King $ | Lowings $ | ||||||||||||||||
Severance Payment |
| 6,360,000 |
|
| 3,570,000 |
|
| 3,570,000 |
|
| 3,885,000 |
|
| 3,312,192 |
| |||||
Annual Incentive |
| 5,405,400 |
|
| 2,552,550 |
|
| 2,552,550 |
|
| 2,834,755 |
|
| 2,186,047 |
| |||||
Accelerated Vesting of SARs |
| 17,290,187 |
|
| 3,339,904 |
|
| 8,689,499 |
|
| 2,557,086 |
|
| 6,362,161 |
| |||||
Accelerated Vesting of RSUs |
| 7,844,749 |
|
| 609,751 |
|
| 700,011 |
|
| 1,016,204 |
|
| — |
| |||||
Acceleration of PSU Performance/Vesting |
| 7,819,161 |
|
| 2,469,936 |
|
| 2,453,930 |
|
| 1,895,109 |
|
| 2,112,440 |
| |||||
Outplacement |
| 25,000 |
|
| 25,000 |
|
| 25,000 |
|
| 25,000 |
|
| 25,000 |
| |||||
TOTAL |
| 44,744,497 |
|
| 12,567,141 |
|
| 17,990,991 |
|
| 12,213,154 |
|
| 13,997,840 |
|
Each year Yum! Brandsthe Company and our franchisees around the world create thousands of restaurant jobs, which are part-time, entry-level opportunities to grow careers at our KFC, Pizza Hut, Taco Bell and Taco Bell. Wherever we operate, our employee compensation practices comply with local regulations and are designed to attract and retainThe Habit Burger Grill brands. As evidence of the best talent. We’re proud thatopportunities these positions create, approximately 80% of our
Company-owned restaurant general managersRestaurant General Managers (“RGMs”) located in the U.S. began as hourly employeeshave been promoted from other positions in our restaurants and such RGMs often earn competitive pay greater than the average American household income. Approximately In the United States, approximately
90% of our Company-owned restaurant employees are part-time. Atpart-time and at least 60%50% have been employed by the Company for less than a year.
|
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and applicable SEC rules, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Creed,Gibbs, our Chief Executive Officer (our “CEO”).
YUM! BRANDS, INC. - 2022 Proxy Statement | 67 |
EXECUTIVE COMPENSATION |
The employee that was used for purposes of calculating the ratio below was similarly situated to the employee (the “2020 median employee”) that was identified as the median employee for purposes of the CEO pay ratio disclosure included in the proxy statement for our 2021 annual meeting of stockholders (the “2020 Pay Ratio Disclosure”) because there has been no change in our employee population or employee compensation arrangements since the 2020 median employee was identified that we believe would significantly impact our pay ratio disclosure. However, because the 2020 median employee is no longer an employee, as permitted by SEC rules, we substituted another employee, whose total compensation was substantially similar to the 2020 median employee’s total compensation based on the compensation measure used to select the median employee for purposes of the 2021 Pay Ratio Disclosure, as the median employee for purposes of this disclosure.
To identify the 2020 median employee, we used the December 20182020 base wages or base salary information for all employees who were employed by us on December 31, 2018,2020, excluding our CEO. We included all full-time and part-time employees and annualized the employees’ base salary or base wages to reflect their compensation for 2018.2020. We believe the use of base wages or base salary for all employees is a consistently applied compensation measure.
As of December 31, 2018,2020, our global workforce used for determining the pay ratio was estimated to be 32,076approximately 38,000 employees (16,480(23,000 in the U.S. and 15,59615,000 internationally).
After calculating employee compensation, our median employee was identified as a part-time Taco BellKFC restaurant employee in the United States.States (for which we have substituted a similarly situated employee, a part-time Taco Bell employee in the United States, as described above). After identifying the median employee, we calculated total
annual compensation in accordance with the requirements of the Summary Compensation Table.
For 2018,2021, the total compensation of our CEO, as reported in the Summary Compensation Table at page 59,54, was $14,007,038.$ 27,578,659. The total compensation of our median employee was estimated to be $11,865.$13,082. As a result, we estimate that our CEO to median employee pay ratio is 1181:2,108:1.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
YUM! BRANDS, INC.- |
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes, as of December 31, 2018,2021, the equity compensation plans under which we may issue shares of stock to our directors, officers, current employees and former employees. Those plans include the Long Term Incentive Plan (the “LTIP”) and the Restaurant General Manager Stock Option Plan (“RGM Plan”).
Plan Category | Number of Securities To be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | Number of Securities To be Issued Upon Exercise of Outstanding Options, Warrants and Rights
| Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights
| Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
| ||||||||||||||||||
(a) | (b) | (c) | (a)
| (b)
| (c)
| |||||||||||||||||||
Equity compensation plans approved by security holders
|
|
9,748,812
|
(1)
|
|
51.88
|
(2)
|
|
28,326,263
|
(3)
|
|
7,669,611
|
(1)
|
|
80.24
|
(2)
|
|
23,908,068
|
(3)
| ||||||
Equity compensation plans not approved by security holders
|
|
170,937
|
(4)
|
|
50.33
|
(2)
|
|
—
|
|
|
76,377
|
(4)
|
|
52.39
|
(2)
|
|
—
|
| ||||||
TOTAL
|
|
9,919,749
|
(1)
|
|
51.84
|
(2)
|
|
28,326,263
|
(3)
|
|
7,745,988
|
(1)
|
|
79.96
|
(2)
|
|
23,908,068
|
(3)
|
(1) | Includes |
(2) | Weighted average exercise price of outstanding Options and SARs only. |
(3) | Includes |
(4) | Awards are made under the RGM Plan. |
What are the key features of the LTIP?
The LTIP provides for the issuance of up to 92,600,000 shares of stock asnon-qualified stock options, incentive stock options, SARs, restricted stock, restricted stock units, performance shares or performance units. Only our employees and directors are eligible to receive awards under the LTIP. The purpose of the LTIP is to motivate participants to achieve long range goals, attract and retain eligible employees, provide incentives competitive with other similar companies and align the interest of employees and directors with those of our shareholders. The LTIP is administered by the Management Planning and
Development Committee of the Board of Directors (the
“Committee” “Committee”). The exercise price of a stock option grant or SAR under the LTIP may not be less than the average market price of our stock on the date of grant for years prior to 2008 or the closing price of our stock on the date of the grant, beginning in 2008, and no options or SARs may have a term of more than ten years. The options and SARs that are currently outstanding under the LTIP generally vest over a one to four yearone-to-four-year period and expire ten years from the date of the grant. Our shareholders approved the LTIP in 1999, and the plan as amended in 2003, 2008 and 2016. The performance measures of the LTIP werere-approved by our shareholders in 2013 and in 2016.
What are the key features of the RGM Plan?
Effective May 20, 2016, we canceled the remaining shares available for issuance under the RGM Plan, except for the approximately 220,000 shares necessary to satisfy then outstanding awards. No future awards will be made under the RGM Plan. The RGM Plan has provided for the issuance shares of
common stock at a price equal to or greater than the closing price of our stock on the date of grant. The RGM Plan allowed us to awardnon-qualified stock options, SARs, restricted stock and RSUs. Employees, other than executive officers, have been eligible to receive awards under the RGM Plan. The purpose of
YUM! BRANDS, INC. - |
EQUITY COMPENSATION PLAN INFORMATION
|
the RGM Plan was (i) to give restaurant general managers (“RGMs”) the opportunity to become
owners of stock, (ii) to align the interests of RGMs with those of YUM’s other shareholders, (iii) to emphasize that the RGM is YUM’s #1 leader, and (iv) to reward the performance of RGMs. In addition, the Plan provides incentives to Area Coaches, Franchise Business Leaders and other supervisory field operation positions that support RGMs and have profit and loss
responsibilities within a defined region or area. While all
non-executive officer employees have been eligible to receive awards under the RGM plan, all awards granted have been to RGMs or their direct supervisors in the field. Grants to RGMs generally have four yearfour-year vesting and expire after ten years. The RGM Plan is administered by the Committee, and the Committee has delegated its responsibilities to the Chief People Officer of the Company. The Board of Directors approved the RGM Plan on January 20, 1998.
YUM! BRANDS, INC.- |
Who serves on the Audit Committee of the Board of Directors?
The members of the Audit Committee (for purposes of this report, the “Committee”) are Paget L. Alves, Tanya L. Domier, Lauren R. Hobart, P. Justin Skala, Elane B. Stock and Thomas C. Nelson, Chair.Annie Young-Scrivner. Mr. Alves serves as chair of the Committee.
The Board of Directors has determined that all of the members of the Audit Committee are independent within the meaning of applicable SEC regulations and
the listing standards of the NYSE and that Mr. Nelson,Alves, the chair of the Committee, is qualified as an audit
committee financial expert within the meaning of SEC regulations. The Board has also determined that Mr. NelsonAlves has accounting and related financial management expertise within the meaning of the listing standards of the NYSE and that each member of the Committee is financially literate within the meaning of the NYSE listing standards.
What document governs the activities of the Audit Committee?
The Audit Committee operates under a written charter adopted by the Board of Directors. The Committee’s responsibilities are set forth in this charter, which was amended and restated effective November 22, 2013.12, 2021. The charter is reviewed by management at least
annually, and any recommended changes are presented to the Audit Committee for review and approval. The charter is available on our Web site at www.investors.yum.com/corporate-governance/committee-composition-and-chartershttp://investors.yum.com/committee-composition-and-charters..
What are the responsibilities of the Audit Committee?
The Audit Committee assists the Board in fulfilling its responsibilities for general oversight of the integrity of the Company’s financial statements, the adequacy of the Company’s system of internal controls and procedures and disclosure controls and procedures, the Company’s risk management, the Company’s compliance with legal and regulatory requirements, the independent auditors’ qualifications and independence and the performance of the Company’s internal audit function and independent auditors. The Committee has the authority to obtain advice and assistance from outside legal, accounting or other advisors as the Committee deems necessary to carry out its duties and receive appropriate funding, as determined by the Committee, from the Company for such advice and assistance.
The Committee has sole authority over the selection of the Company’s independent auditors and manages the Company’s relationship with its independent auditors (who report directly to the Committee). KPMG LLP has served as the Company’s independent auditors since 1997. Each year, the Committee
evaluates the performance, qualifications and independence of the independent auditors. The Committee is also involved
in the selection of the lead audit partner. In evaluating the Company’s independent auditors, the Committee considers the quality of the services provided, as well as the independent auditors’ and lead partner’s capabilities and technical expertise and knowledge of the Company’s operations and industry.
The Committee met 89 times during 2018.2021. The Committee schedules its meetings with a view to ensuring that it devotes appropriate attention to all of its tasks. The Committee’s meetings generally include private sessions with the Company’s independent auditors and with the Company’s internal auditors, in each case without the presence of the Company’s management, as well as executive sessions consisting of only Committee members. In addition to the scheduled meetings, senior management confers with the Committee or its Chair from time to time, as senior management deems advisable or appropriate, in connection with issues or concerns that arise throughout the year.
Management is responsible for the Company’s financial reporting process, including its system of internal control over financial reporting, and for the preparation of
YUM! BRANDS, INC. - |
AUDIT COMMITTEE REPORT
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Management is responsible for the Company’s financial reporting process, including its system of internal control over financial reporting, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the U.S. The Company’s independent auditors are responsible for auditing those financial statements in accordance with professional standards and expressing an opinion as to their material conformity with U.S. generally accepted accounting principles and for auditing the effectiveness of the Company’s internal control over financial reporting. The Committee’s responsibility is to monitor and review the Company’s financial reporting process and discuss management’s report on the Company’s
internal control over financial reporting. It is not the Committee’s duty or responsibility to conduct audits or
accounting reviews or procedures. The Committee has relied, without independent verification, on management’s representations that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the U.S. and that the Company’s internal control over financial reporting is effective. The Committee has also relied, without independent verification, on the opinion of the independent auditors included in their report regarding the Company’s financial statements and effectiveness of internal control over financial reporting.
What matters have members of the Audit Committee discussed with management and the independent auditors?
As part of its oversight of the Company’s financial statements, the Committee reviews and discusses with both management and the Company’s independent auditors all annual and quarterly financial statements prior to their issuance. With respect to each 20182021 fiscal reporting period, management advised the Committee that each set of financial statements reviewed had been prepared in accordance with accounting principles generally accepted in the U.S., and reviewed significant accounting and disclosure issues with the Committee. These reviews included discussions with the independent auditors of matters required to be discussed pursuant to Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301 (Communication(Communication with Audit Committees)Committees), including the quality (not merely the acceptability) of the Company’s accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the financial statements and disclosures related to critical accounting practices. The Committee has also discussed with KPMG LLP matters relating to its independence, including a review of audit andnon-audit fees and the written disclosures and letter
received from KPMG LLP required by applicable
requirements of the PCAOB regarding KPMG LLP’s communications with the Committee concerning independence. The Committee also considered whethernon-audit services provided by the independent auditors are compatible with the independent auditors’ independence. The Committee also received regular updates, and written summaries as required by the PCAOB rules (for tax and other services), on the amount of fees and scope of audit, audit-related, tax and other services provided.
In addition, the Committee reviewed key initiatives and programs aimed at strengthening the effectiveness of the Company’s internal and disclosure control structure. As part of this process, the Committee continued to monitor the scope and adequacy of the Company’s internal auditing program, reviewing staffing levels and steps taken to implement recommended improvements in internal procedures and controls. The Committee also reviews and discusses legal and compliance matters with management, and, as necessary or advisable, the Company’s independent auditors.
72 | YUM! BRANDS, INC.- 2022 Proxy Statement |
AUDIT COMMITTEE REPORT |
Has the Audit Committee made a recommendation regarding the audited financial statements for fiscal 2018?2021?
Based on the Committee’s discussions with management and the independent auditors and the Committee’s review of the representations of management and the report of the independent auditors to the Board of Directors and shareholders, and subject to the limitations on the Committee’s role
and responsibilities referred to above and in the Audit Committee Charter, the Committee recommended to the Board of Directors that it include the audited consolidated financial statements in the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 20182021 for filing with the SEC.
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Who prepared this report?
This report has been furnished by the members of the Audit Committee:
Thomas C. Nelson,Chair
Paget L. Alves, Chairperson
Tanya L. Domier
Lauren R. Hobart
P. Justin Skala
Elane B. Stock
Annie Young-Scrivner
YUM! BRANDS, INC. - |
Who pays the expenses incurred in connection with the solicitation of proxies?
Expenses in connection with the solicitation of proxies will be paid by us.the Company. Proxies are being solicited principally by mail, by telephone and through the Internet. In addition, our directors, officers and regular employees, without additional compensation,
may solicit proxies
personally, bye-mail, telephone, fax or special letter. We will reimburse brokerage firms and others for their expenses in forwarding proxy materials to the beneficial owners of our shares.
How may I elect to receive shareholder materials electronically and discontinue my receipt of paper copies?
YUM shareholders with shares registered directly in their name who received shareholder materials in the mail may elect to receive future annual reports and proxy statements from us and to vote their shares through the Internet instead of receiving copies through the mail. We are offering this service to provide shareholders with added convenience, to reduce our environmental impact and to reduce Annual Report printing and mailing costs.
To take advantage of this option, shareholders must subscribe to one of the various commercial services that offer access to the Internet. Costs normally associated with electronic access, such as usage and telephone charges, will be borne by the shareholder.
To elect this option, go towww.computershare.com, click on Shareholder Account Access, log in and locate
locate the option to receive Company mailing viae-mail. Shareholders who elect this option will be notified by mail how to access the proxy materials and how to vote their shares on the Internet or by phone.
If you consent to receive future proxy materials electronically, your consent will remain in effect unless it is withdrawn by writing our Transfer Agent, Computershare, Inc., 462 South 4th Street, Suite 1600, Louisville, Kentucky 40202 or by logging onto our Transfer Agent’s website atwww.computershare.com and following the applicable instructions. Also, while this consent is in effect, if you decide you would like to receive a hard copy of the proxy materials, you may call, write ore-mail Computershare, Inc.
I share an address with another shareholder and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
The Company has adopted a procedure called “householding” which has been approved by the SEC. The Company and some brokers household proxy materials, delivering a single Notice and, if applicable, this proxy statement and Annual Report, to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders or they participate in electronic delivery of proxy materials. Shareholders who participate in householding will continue to access and receive separate proxy cards. This process will help reduce our printing and postage fees, as well as save natural
resources. If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account or us if you hold registered shares. You can notify us by sending a written request to YUM! Brands, Inc., Investor Relations, 1441 Gardiner Lane, Louisville, KY 40213 or by calling Investor Relations at1 (888) 298-6986 or by sending ane-mail toyum.investor@yum.com.
YUM! BRANDS, INC.- |
ADDITIONAL INFORMATION
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May I propose actions for consideration at next year’s Annual Meeting of Shareholders or nominate individuals to serve as directors?
Under the rules of the SEC, if a shareholder wants us to include a proposal in our proxy statement and proxy card for presentation at our 20202023 Annual Meeting of Shareholders, the proposal must be received by us at our principal executive offices at YUM! Brands, Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213 by December 7, 2019.9, 2022. The proposal should be sent to the attention of the Corporate Secretary.
Under our bylaws, certain procedures are provided that a shareholder must follow to nominate persons for election as directors or to introduce an item of business at an Annual Meeting of Shareholders that is not included in our proxy statement. These procedures provide that nominations for director nominees and/or an item of business to be introduced at an Annual Meeting of Shareholders must be submitted in writing to our Corporate Secretary at our principal executive offices and you must include information set forth in our bylaws. We must receive the notice of your intention to introduce a nomination or to propose an item of business at our 20202023 Annual Meeting no later than the date specified in our bylaws. If the 20202023 Annual Meeting is not held within 30 days before or after the anniversary of the date of this year’s Annual Meeting, then the nomination or item of business must be received by the tenth day following the earlier of the date of mailing of the notice of the meeting or the public disclosure of the date of the meeting. Assuming that our 20202023 Annual Meeting is held within 30 days of the anniversary of this Annual Meeting, we must receive notice of your intention to introduce a nomination or other item of business at that meeting by February 16, 2020.18, 2023.
In addition, our bylaws provide for proxy access for director nominations by shareholders (as described at page 18)20). A shareholder, or group of up to 20 shareholders, owning continuously for at least three years shares of YUM common stock representing an aggregate of at least 3% of our outstanding shares, may nominate, and include in YUM’s proxy materials, director nominees constituting up to 20% of YUM’s Board, provided that the shareholder(s) and nominee(s) satisfy the requirements in YUM’s bylaws. Notice of proxy access director nominees must be received no earlier than November 7, 2019,9, 2022, and no later than December 7, 2019.9, 2022.
The Board is not aware of any matters that are expected to come before the 20192022 Annual Meeting other than those referred to in this proxy statement. If any other matter should come before the Annual Meeting, the individuals named on the form of proxy intend to vote the proxies in accordance with their best judgment.
The chairmanchairperson of the Annual Meeting may refuse to allow the transaction of any business, or to acknowledge the nomination of any person, not made in compliance with the foregoing procedures.
Bylaw Provisions. You may contact YUM’s Corporate Secretary at the address mentioned above for a copy of the relevant bylaw provisions regarding the requirements for making shareholder proposals and nominating director candidates.candidates
YUM! BRANDS, INC. - |
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The Company usesnon-GAAP Adjusted Operating Profit Growth as a key performance measure of results of operations for the purpose of evaluating performance against targets set under our YUM Leaders’ Bonus Program. Adjusted Operating Profit Growth is the calculated growth rate from our prior year’snon-GAAP Adjusted Base Operating Profit to the current fiscal year’snon-GAAP Adjusted Base Operating Profit. Adjusted Operating Profit Growth includes adjustments to our GAAP Operating Profit that we believe are necessary to ensure that growth rates for bonus purposes are indicative of underlying business performance. General and administrative expense reductions expected to be realized in 2018 related to YUM’s Strategic Transformation Initiatives were incorporated into our targets for KFC and YUM Adjusted Operating Profit Growth during the target-setting process and are thus not included in the reconciliation below.
Reconciliation of GAAP Operating Profit to Adjusted Base Operating Profit
KFC
| YUM
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2017 GAAP Operating Profit
| $
| 981
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| $
| 2,761
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Special Items (Income) Expense — Operating Profit(a)
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| (1,001
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Impact of Pizza Hut U.S. Transformation Agreement(d)
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| 25
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Impact of Refranchising(e)
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| (75
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| (122
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Other
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| 1
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| 19
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2017 Adjusted Base Operating Profit
| $
| 907
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| $
| 1,682
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2018 GAAP Operating Profit
| $
| 959
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| $
| 2,296
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Special Items (Income) Expense — Operating Profit(a)
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| (530
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Impact of Revenue Recognition Standard(c)
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| 36
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| 41
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Impact of Pizza Hut U.S. Transformation Agreement(d)
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| 13
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Impact of Refranchising(e)
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| 20
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| 42
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Other
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| 8
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| 13
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Foreign Currency Impact on Reported Operating Profit(b)
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| (1
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2018 Adjusted Base Operating Profit
| $ | 1,023 | $ | 1,874 | ||||
Adjusted Operating Profit Growth
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| 12.8
| %
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| 11.4
| %
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YUM! BRANDS, INC.
1441 GARDINER LANE
LOUISVILLE, KY 40213
ADMISSION TICKET
Your Vote is important. Please vote immediately.
VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Daylight Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Daylight Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, Yum! Brands, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
If you are voting by Internet or telephone,
please DO NOT mail your proxy card.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E72135-P19158 KEEP THIS PORTION FOR YOUR RECORDS
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YUM! BRANDS, INC.
ANNUAL MEETING
May 16, 2019
9:00 A.M., EDT
YUM! Brands, Inc.
Yum! Conference Center
1900 Colonel Sanders Lane
Louisville, Kentucky 40213
ADMISSION TICKET
Your Vote is important. Please vote immediately.
VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Daylight Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Daylight Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, Yum! Brands, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
If you are voting by Internet or telephone, please DO NOT mail your proxy card.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D75452-P68459 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
YUM! BRANDS, INC.
The Board of Directors recommends a vote FOR items
1, 2 and 3.
1. | Election of Directors. | |||||||||
Nominees: | For | Against | Abstain | |||||||
1a. | Paget L. Alves | ☐ | ☐ | ☐ | ||||||
1b. | Keith Barr | ☐ | ☐ | ☐ | ||||||
1c. | Christopher M. Connor | ☐ | ☐ | ☐ | ||||||
1d. | Brian C. Cornell | ☐ | ☐ | ☐ | ||||||
1e. | Tanya L. Domier | ☐ | ☐ | ☐ | ||||||
1f. | David W. Gibbs | ☐ | ☐ | ☐ | ||||||
1g. | Mirian M. Graddick-Weir | ☐ | ☐ | ☐ | ||||||
1h. | Lauren R. Hobart | ☐ | ☐ | ☐ | ||||||
1i. | Thomas C. Nelson | ☐ | ☐ | ☐ | ||||||
1j. | P. Justin Skala | ☐ | ☐ | ☐ | ||||||
1k. | Elane B. Stock | ☐ | ☐ | ☐ | ||||||
1l. | Annie Young-Scrivner | ☐ | ☐ | ☐ |
For | Against | Abstain | ||||||
2. | Ratification of Independent Auditors. | ☐ | ☐ | ☐ | ||||
3. | Advisory Vote on Executive Compensation. | ☐ | ☐ | ☐ | ||||
Please indicate if you plan to attend this meeting. | ☐ | ☐ | ||||||
Yes | No |
NOTE: Please sign exactly as the name(s) appear(s) hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. | ||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
YUM! BRANDS, INC.
ANNUAL MEETING
May 19, 2022
9:00 A.M., CDT
YUM! Brands Center of Restaurant Excellence
7100 Corporate Drive
Plano, Texas 75024
ADMISSION TICKET
YUM! BRANDS, INC.’S 20192022 ANNUAL SHAREHOLDERS MEETING WILL BE HELD AT 9:00 A.M. (EASTERN(CENTRAL DAYLIGHT TIME) ON THURSDAY, MAY 16, 2019,19, 2022, at the Yum! ConferenceYUM! Brands Center at 1900 Colonel Sanders Lane in Louisville, Kentucky. of Restaurant Excellence, 7100 Corporate Drive, Plano, Texas 75024.
If you plan to attend the Annual Shareholders Meeting in person, please tear off and keep the upper portion of this form as your ticket for admission to the Meeting. YOUR VOTE IS IMPORTANT. The proxy voting instruction card on the reverse side covers the voting of all shares of Common Stockcommon stock of YUM! Brands, Inc., which you are entitled to vote or to direct the voting of, including those shares in the YUM! Brands 401(k) Plan.
If you plan to vote by mail, please date and sign the proxy card and return it promptly in the enclosed business reply envelope. If you plan to vote by mail and do not sign and return a proxy, the shares cannot be voted. You may also vote by Internet or phone as described on the reverse side or by attending the Annual Meeting.
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting:
The Notice, Proxy Statement and Annual Report are available at www.proxyvote.com
(PLEASE DETACH PROXY CARD AT PERFORATION)
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E72136-P19158D75453-P68459
YUM! BRANDS, INC.
This proxy is solicited on behalf of the Board of Directors | ||||
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The undersigned hereby appoints Scott A. Catlett, Carson T. Stewart and Lawrence Derenge III, as Proxies with full power of substitution, to vote, as designated on the reverse side, for director substitutes if any nominee becomes unavailable, and in their discretion, on matters properly brought before the Meeting and on matters incident to the conduct of the Meeting, all of the shares of common stock of YUM! Brands, Inc. which the undersigned has power to vote at the Annual Shareholders Meeting to be held on May 19, 2022 at 9:00 a.m. CDT, or any adjournment thereof.
NOMINEES FOR DIRECTOR:
Paget L. Alves, Keith Barr, Christopher M. Connor, Brian C. Cornell, Tanya L. Domier, David W. Gibbs, Mirian M. Graddick-Weir, Lauren R. Hobart, Thomas C. Nelson, P. Justin Skala, Elane B. Stock and Annie Young-Scrivner.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 and 3.
NOMINEES FOR DIRECTOR:
Paget L. Alves, Michael J. Cavanagh, Christopher M. Connor, Brian C. Cornell, Greg Creed, Tanya L. Domier, Mirian M. Graddick-Weir, Thomas C. Nelson,P. Justin Skala, Elane B. Stock and Robert D. Walter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR ITEMS 1, 2 and 3, andAGAINST ITEMS 4, 5 and 6.
This Proxy, when properly executed, will be voted as directed; if no direction is indicated, it will be voted as follows:
FOR (1) the Election of All Nominees for Director FOR (2) the Ratification of Independent Auditors FOR (3) the Advisory Vote on Executive Compensation |
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This card also provides voting instructions to the Administrator or Trustee for shares beneficially owned under the YUM! Brands 401(k) Plan. |
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(CONTINUEDand To Be Signed and Dated onREVERSE SIDE) |