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.)

 

 

LOGO  Filed by the Registrant

 

 

LOGO  Filed by a Party other than the Registrant

 

Check the appropriate box:
  
LOGO    Preliminary Proxy Statement
  
LOGO    CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BYRULE 14a-6(e)(2))
  
LOGO    Definitive Proxy Statement
  
LOGO    Definitive Additional Materials
  
LOGO    Soliciting Material under§240.14a-12

YUM! BRANDS, INC.

 

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(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

  

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No fee required.

 

  

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Fee computed on table below per Exchange ActRules 14a-6(i)(1) and0-11.

 

 

 

 

(1)  Titleof each class of securities to which transaction applies:

 

 

 

 

(2)  Aggregatenumber of securities to which transaction applies:

 

 

 

 

(3)  Per unit price or other underlying value of transaction computed pursuant to Exchange ActRule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)  Proposedmaximum aggregate value of transaction:

 

 

 

 

(5)  Totalfee paid:

 

  

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Fee paid previously with preliminary materials.

 

 

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Check box if any part of the fee is offset as provided by Exchange ActRule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

 

 

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(3)   FilingParty:

 

 

 

 

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LOGOLOGO

YUM! Brands, Inc.

1441 Gardiner Lane

Louisville, Kentucky 40213

April 6, 20181, 2021

Dear Fellow Shareholders:

On behalf of your Board of Directors, we are pleased to invite you to attend the 20182021 Annual Meeting of Shareholders of YUM! Brands, Inc. The Annual Meeting will be held Thursday,Tuesday, May 17, 2018,11, 2021, at 9:00 a.m., localcentral time, in the YUM! Brands Center of Restaurant Excellence at 7100 Corporate Drive in Plano, Texas.Texas or via live webcast at www.virtualshareholdermeeting.com/YUM2021.

Due to public health and safety concerns posed by the COVID-19 pandemic, shareholders are encouraged to attend via the webcast. We intend to hold our annual meeting in person and via webcast. 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, if then permitted under applicable law, 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. 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.

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 19, 201815, 2021 as well as a valid picture identification. Whether or not you attend the meeting in person or via live webcast, we encourage you to consider the matters presented in the proxy statement and vote as soon as possible.

Sincerely,

 

LOGO

LOGODavid Gibbs

Greg Creed

Chief Executive Officer

Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to Be Held on May 17, 2018—11, 2021—this notice and the proxy statement are available atwww.yum.com/investors/corporate-governance/proxy-statement. https://investors.yum.com/governance/governance-documents. The Annual Report on Form10-K is available atwww.yum.com/annualreport.https://investors.yum.com/financial-information/annual-reports/.

        

 

YUM! Brands, Inc.

1441 Gardiner Lane

Louisville, Kentucky 40213

 

Notice of Annual Meeting

of Shareholders

Thursday,Tuesday, May 17, 201811, 2021 9:00 a.m.

YUM! Brands Center of Restaurant Excellence, 7100 Corporate Drive, Plano, Texas 75024 or via live webcast at www.virtualshareholdermeeting.com/YUM2021.

ITEMS OF BUSINESS:

 

 

 (1)

To elect eleven (11)twelve (12) directors to serve until the 20192022 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified.

 

 (2)

To ratify the selection of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2018.2021.

 

 (3)

To consider and hold an advisory vote on executive compensation.

 

 (4)

To transact such other business as may properly come before the meeting.

WHO CAN VOTE:VOTE?:

 

You can vote if you were a shareholder of record as of the close of business on March 19, 2018.15, 2021.

ANNUAL REPORT:

 

A copy of our 20172020 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.yum.com/annualreport.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 6, 2018.

1, 2021.

By Order of the Board of Directors

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Marc L. KesselmanScott A. Catlett

General Counsel,Chief Legal & Franchise Officer & Corporate Secretary and Chief Government Affairs Officer

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 6, 2018,1, 2021, 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.

        

 

 

 

Table of Contents

 

 

 

PROXY STATEMENT   1 
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING   1 
GOVERNANCE OF THE COMPANY   67 

Director Biographies

   1012 

Director Compensation

   1517 
MATTERS REQUIRING SHAREHOLDER ACTION   2629 

 

ITEM 1

  

Election of Directors (Item 1 on the Proxy Card)

   2629 

ITEM 2

  

Ratification of Independent Auditors (Item 2 on the Proxy Card)

   2730 

ITEM 3

  

Advisory Vote on Executive Compensation (Item 3 on the Proxy Card)

   2831 
STOCK OWNERSHIP INFORMATION   3033 
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS   3235 
EXECUTIVE COMPENSATION   3235 

Compensation Discussion and Analysis

   3235 

Summary Compensation Table

53

All Other Compensation Table

54

Grants of Plan-Based Awards

   55 

Outstanding EquityAll Other Compensation Table

56
Grants of Plan-Based Awards atYear-End

   57 

Option Exercises and Stock VestedOutstanding Equity Awards at Year-End

   59 

Pension BenefitsOption Exercises and Stock Vested

   60 

Nonqualified Deferred CompensationPension Benefits

   6261 

Nonqualified Deferred Compensation

63
Potential Payments Upon Termination or Change in Control

   6566 

CEO Pay Ratio

   6768 
EQUITY COMPENSATION PLAN INFORMATION   6970 
AUDIT COMMITTEE REPORT   7172 
ADDITIONAL INFORMATION   74
APPENDIX A: Reconciliation of Adjusted Operating Profit GrowthA-175 

 

        

 

YUM! Brands, Inc.

1441 Gardiner Lane

Louisville, Kentucky 40213

PROXY STATEMENT

For Annual Meeting of Shareholders To Be Held On

May 17, 201811, 2021

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. (Central Time), on Thursday,Tuesday, May 17, 2018, in11, 2021, at the YUM! Brands Center of Restaurant Excellence at 7100 Corporate Drive in Plano, Texas. Texas 75024 or via live webcast at www.virtualshareholdermeeting.com/YUM2021.

Due to public health and safety concerns posed by the COVID-19 pandemic, shareholders are encouraged to attend via the webcast. We intend to hold our annual meeting in person and via webcast. 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, if then permitted under applicable law, 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.

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 2021 Annual Meeting of Shareholders (the “Annual Meeting”). The Annual Meeting is solicitingscheduled to be held on Tuesday, May 11, 2021 at 9:00 a.m. Central Time, at 7100 Corporate Drive, Plano,

Texas or via live webcast through the link set forth above. You will need the 16-digit control number provided on the Notice of Internet Availability of Proxy Materials or your proxy to vote your sharescard (see below). 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. - 2021 Proxy Statement1

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 6, 2018,1, 2021, 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.

 

 

YUM! BRANDS, INC. -2018 Proxy Statement1

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING   

Who may attend the Annual Meeting?

 

 

The Annual Meeting is open to all shareholders of record as of close of business on March 19, 2018,15, 2021, 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 In-Person?

 

What do I need to bring to attend the Annual Meeting?

 

 

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. 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 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 19, 2018. Each share of YUM common stock is entitled to one vote. As of March 19, 2018, YUM had 328.4 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 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, 2018; and

An advisory vote on executive compensation.

We will also consider other business that properly comes before the meeting.safety guidelines.

 

 

 

 

2      YUM! BRANDS, INC.-20182021 Proxy Statement

        

 

 

   QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

 

   

 

What will I need in order to attend the Annual Meeting Online?

You may also attend the Annual Meeting, vote and submit a question during the Annual Meeting by visiting www.virtualshareholdermeeting.com/YUM2021 and using your 16-digit control number (included on your Notice Regarding the Availability of Proxy Materials, Proxy Card, or Voter Instruction Form) to enter the meeting. If you are not a stockholder of record by holding shares as a beneficial owner in street name, you may be required to provide proof of beneficial ownership, such as your most recent

account statement as of the Record Date, a copy of the voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you will not be admitted to the virtual Annual Meeting. Online access will begin at 8:45 a.m. Eastern Time, and we encourage you to access the meeting prior to the start time. The meeting webcast will begin promptly at 9:00 a.m. Central Time on May 11, 2021.

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. If you

choose to attend the online meeting, you may submit a question during the Annual Meeting by visiting www.virtualshareholdermeeting.com/YUM2021 and using your 16-digit control number to enter the meeting.

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 15, 2021. Each share of YUM common stock is entitled to one vote. As of March 15, 2021, YUM had 298.6 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, 2021; 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.

 

 

YUM! BRANDS, INC. - 2021 Proxy Statement3

How do I vote before the Annual Meeting?QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING   

 

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.

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.

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 16, 2018.10, 2021. 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 15, 2018.9, 2021.

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 the directions 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 16, 2018.10, 2021.

 

 

Can I vote at the Annual Meeting?

 

 

Shares registered directly in your name as the shareholder of record may be voted in person or online 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.

 

 

Can I change my mind after I vote?

YUM! BRANDS, INC. -2018 Proxy Statement3

 

 

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING   

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 16, 2018;10, 2021;

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.

 

 

4     YUM! BRANDS, INC.- 2021 Proxy Statement

   QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

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 20182021 (Item 2); and

 

FOR the proposal regarding an advisory vote on executive compensation (Item 3).

 

 

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 20182021 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.”

 

 

How many votes must be present to hold the Annual Meeting?

4     YUM! BRANDS, INC.-2018 Proxy Statement

 

 

   QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

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 online 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

YUM common stock, as of March 19, 2018,15, 2021, 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.

 

 

YUM! BRANDS, INC. - 2021 Proxy Statement5

How many votes are needed to elect directors?QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING   

 

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.yum.com/investors/corporate-governance/governance-principals/https://investors.yum.com/governance/governance-documents/ and at page 1922 under “What other significant Board practices does the Company have? — Majority Voting Policy.”

 

 

How many votes are needed to approve the other proposals?

 

 

TheIn 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,

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.

 

 

 

6   YUM! BRANDS, INC. -20182021 Proxy Statement5

 

 

GOVERNANCE OF THE COMPANY

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”.

 

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6   YUM! BRANDS, INC. - -20182021 Proxy Statement7

 

 

 

GOVERNANCE OF THE COMPANY

 

  

 

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 3.365 years, with our longest- and shortest-tenured directors having served for 1215 years (Mr. Nelson) and for 4five months respectively (Ms. Domier).Hobart), respectively. Messrs. Walter and Cavanagh exited the Board in May and October of 2020, 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:

 

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How often did the Board meet in fiscal 2017?2020?

 

The Board of Directors met 58 times during fiscal 2017.2020. Each of the directors who served in 20172020 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 9 of the 10all persons then serving as directors attended the 20172020 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

 

 

 

 

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GOVERNANCE OF THE COMPANY

 

  

 

with which they are affiliated 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 committeeCommittee 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 2016 we launched several initiatives to transform the Company, centering on a new multi-year strategy to accelerate growth, reduce volatility and increase capital returns to shareholders. This transformation strategy isCommittee.

known asThe Company’s strategic vision is grounded in our “Recipe for Growth.Growth and Good.” FourOur Recipe for Growth focuses on four growth drivers form the basis of this strategyintended to accelerate same-store sales growth andnet-new restaurant development at KFC, Pizza Hut and Taco Bell around the world. The Company isremains focused on building the world’s most loved, trusted and fastest growing restaurant brands by:

 

 • 

BuildingGrowing Distinctive, RelevantUnrivaled Culture and Easy BrandsTalent, by increasing investment in consumer insights, core product innovation, digital excellence to leverage our culture and initiatives that strengthen the quality, conveniencepeople capability to fuel brand performance and appeal of the customer experience;franchise success;

 

 • 

DevelopingUnmatched Franchise Operating Capability, strengthening how we equipby recruiting and recruitequipping the best restaurant operators in the world to deliver great customer experiences, and build and protect our brands;experiences;

 

 • 

DrivingBuilding Bold Restaurant DevelopmentRelevant, Easy and Distinctive Brands through partnerships with growth-minded franchisees who can expand, by innovating and penetrate markets with modern restaurants, strong economicselevating iconic restaurant brands people trust and value;champion; and

 

 • 

GrowingAchievingUnrivaled Culture and TalentBold Restaurant Development to strengthen the customer experienceby driving market and franchise successexpansion withbest-in-class people capability and culture. strong economics.

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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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:

 

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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. By leveraging our Recipe for Good in 2020, we were able to launch our Unlocking Opportunity Initiative which focuses on equity and inclusion, education, and entrepreneurship and is supported by a $100 million investment over five years. Through the guiding principles that underlie our Recipe for Growth and Good, we are confident that we will continue to be successful in unlocking our potential.

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.

 

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10     YUM! BRANDS, INC.- 2021 Proxy Statement

   GOVERNANCE OF THE COMPANY

Lauren R. Hobart was appointed to the Board in November 2020 and will stand for election to the Board by our shareholders for the first time. Ms. Hobart was recommended to our Nominating and Governance Committee by our Non-Executive Chairperson. 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 75.76.

 

 

 

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Director Biographies

 

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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 sincebeginning 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 PLC, Synchrony Financial,PLC.

Specific Qualifications, Experience, Skills and Ariel Investments LLC.Expertise:

 

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:•

Mr. Alves brings to the Board significant corporate leadership, global business,  Operating, finance brandand management and technology experience, drawing from his various executive roles at large companies, including his service as the Chief Sales Officer of a large wireless and wireline communications company. Mr. Alves also provides the Board with the benefits of his significant experience in public company directorship and committee membership.

 

•  Global sales experience

Independent of Company•  Public company directorship and committee experience

Age 6366

 

Director since 2016

 

Former Chief SalesIndependent

Officer of Sprint

CorporationCommittees:

•  Audit, Chair

Favorite YUM! Brands Food:

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Chicken Chalupas

 

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Age 52LOGO

 

Director since 2012Keith Barr

 

Senior Executive

Vice President and

Chief Financial

Officer Comcast

Corporation

  

 

Background

Michael J. CavanaghKeith Barr is Senior Executive Vice President and Chief Financial Officer of Comcast Corporation, a global media and technology company. He has held this position since July 2015. From July 2014 to May 2015 he served asCo-President andCo-Chief Operating Officer for The Carlyle Group, a global investment firm, and he was also a member of the Executive Group and Management Committee of The Carlyle Group. Prior to this, Mr. Cavanagh was theCo-Chief Executive Officer of the Corporate & Investment Bank of JPMorgan Chase & Co. from 2012 until 2014. From 2010 to 2012, he was the Chief Executive Officer of JPMorgan ChaseInterContinental Hotels Group plc (IHG), a predominately franchised, global organization that includes brands such as InterContinental Hotels & Co.’s TreasuryResorts, Holiday Inn Family and Crowne Plaza Hotels & Securities Services business, one of the world’s largest cash management providers and a leading global custodian. From 2004 to 2010, Mr. Cavanagh was Chief Financial Officer of JPMorgan Chase & Co.

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:

As Senior Executive Vice President and Chief Financial Officer of a global media and technology company, Mr. Cavanagh brings significant experience to our BoardResorts. He has served in the areas of corporate leadership, global business, operations and technology. In addition, Mr. Cavanagh provides the Board with the benefits of his significant experience and expertise in finance, havingthis role since July 2017. He served as Chief OperatingCommercial Officer of a global investment firmIHG from 2013 to July 2017 and prior to that, as Chief FinancialExecutive Officer of IHG’s Greater China business. Prior to this position, Mr. Barr served IHG in a global medianumber of senior positions in IHG’s Americas and technology company.Asia, Middle East and Africa (AMEA) regions.

Specific Qualifications, Experience, Skills and Expertise:

 

•  IndependentOperating and management experience, including as Chief Executive Officer of Companya franchised, global company

•  Expertise in strategic planning, branding and corporate leadership

Age 50

Director since 2020

Independent

Committees:

•  Management Planning and Development

Favorite YUM! Brands Food:

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7 Layer Burrito

 

 

 

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Christopher M. Connor

  

Background

 

Christopher M. Connor served as Chairman and Chief Executive ChairmanOfficer 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 2015, and served as Executive Chairman during 2016. He currently serves on the boards of Eaton Corporation plc and International Paper Company.

 

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:Specific Qualifications, Experience, Skills and Expertise:

 

Through Mr. Connor’s public company board•  Operating and management experience, with domestic and international businesses, and his having servedincluding as the Executive Chairman and Chief Executive OfficerCEO of a Fortune 500 company he brings to the Board extensive experience in important areas including corporate leadership, global business, operations, marketing and brand management, and talent development. Mr. Connor also brings with him significant experience in public company board committee membership.

 

•  Expertise in marketing, human resources, talent development, public company executive compensation, planning and operational and financial processes

Independent of Company•  Public company directorship and committee experience

Age 6265

 

Director since 2017

 

Former ExecutiveIndependent

Chairman of The

Sherwin-WilliamsCommittees:

Company•  Management Planning and Development, Chair

Favorite YUM! Brands Food:

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Chicken Pot Pie

 

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Brian C. Cornell

  

Background

 

Brian C. Cornell joined the Yum! Brands Board in 2015 and has served as Non-Executive Chairman since November 2018. Mr. Cornell is ChairmanChairperson and Chief Executive Officer of Target Corporation, a general merchandise retailer. He has held this position since August 2014. Mr. Cornell served as the Chief Executive Officer of PepsiCo Americas Foods, a division of PepsiCo, Inc. from March 2012 to July 2014. From April 2009 to January 2012, Mr. Cornell served as the Chief Executive Officer and President of Sam’s Club, a division ofWal-Mart Stores, Inc. and as an Executive Vice President ofWal-Mart Stores, Inc. He has been a Director of Target Corporation since 2014. He has previously served as a Director of Home Depot, OfficeMax, Polaris Industries Inc., Centerplate, Inc. and Kirin-Tropicana, Inc.

 

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:Specific Qualifications, Experience, Skills and Expertise:

 

Through Mr. Cornell’s service•  Operating and management experience, including as Chairman and Chief Executive Officer of a large publicly traded merchandise retailer and his public company board experience with U.S. and international retailers, he brings extensive knowledge in important areas to our Board, including corporate leadership, global business experience, operations expertise and marketing and brand management experience. Mr. Cornell also provides our Board with expertise in strategic planning.

 

•  Expertise in strategic planning, retail business, branding and corporate leadership

•  Public company directorship experience and committee experience

Age 62

Director since 2015

Independent, of Company

Non-Executive Chairman

 

Committees:

•  Management Planning and Development

•  Nominating and Governance

Age 59Favorite YUM! Brands Food:

 

Director since 2015

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Chairman and ChiefClassic Bean Burrito

Executive Officer

Target Corporation

 

 

 

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GOVERNANCE OF THE COMPANY   

 

      

 

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Tanya L. Domier

  

 

Greg Creed is Chief Executive Officer of YUM. He has served in this position since January 2015. He served as Chief Executive Officer of Taco Bell Division from January 2014 to December 2014 and as Chief Executive Officer of Taco Bell U.S. from 2011 to December 2013. Prior to this position, Mr. Creed served as President and Chief Concept Officer of Taco Bell U.S., a position he held beginning in December 2006. Mr. Creed served as Chief Operating Officer of YUM from 2005 to 2006. He has served as a director of Whirlpool Corporation since 2017 and previously served as a director of International Games Technology from 2010 through 2014.Background

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:

Mr. Creed has served as the Company’s Chief Executive Officer since 2015 and he brings significant corporate leadership, global business, industry and operations and marketing and brand management experience to our Board, from his time in that role, and from his prior years of experience in various other roles within the Company, including as Chief Executive Officer of Taco Bell. Mr. Creed also brings with him significant experience in public company directorship and committee membership.

Age 60

Director since 2014

Chief Executive

Officer, YUM

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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 presidentPresident and chief operating officerChief Operating Officer from 2010 to 2013. Ms. Domier joined Advantage Solutions in 1990 from the J.M. Smucker Company and has held a number of executive level roles in sales, marketing and promotions. Ms. Domier has served as a director of Advantage Solutions since 2006 and currently also serves as a director of Nordstrom, Inc.

 

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:

Ms. Domier brings to the Board extensive experience in marketingSpecific Qualifications, Experience, Skills and in developing digital technology solutions, having served as Chief Executive Officer of a major provider of sales, marketing and business solutions. In addition, Ms. Domier also provides the Board with expertise in the areas of corporate leadership, global business and finance from her career as an executive and from her significant experience in public company directorship and committee membership.Expertise:

 

•  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 55

Director since 2018

Independent of Company

Committees:

•  Audit

Favorite YUM! Brands Food:

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Thin VeggieLover’sPizza

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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.

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 58

Director since 2019

 

Age 52Favorite YUM! Brands Food:

 

Director since 2018LOGO

 

Chief Executive Officer, Advantage Solutions, Inc.Award Winning

Charburger

 

 

 

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   GOVERNANCE OF THE COMPANY

 

   

 

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Mirian M. Graddick-Weir

  

Background

 

Mirian M. Graddick-Weir isretired as Executive Vice President of Human Resources for Merck & Co., Inc., a pharmaceutical company.company, in November, 2018. She hashad held thisthat 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 Harleysville GroupBooking Holdings, Inc. from 2000 until 2012.since June 2018.

Specific Qualifications, Experience, Skills and Expertise:

 

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:•

Through Ms. Graddick-Weir’s public company board  Management experience, and her senior leadership experienceincluding as the Executive Vice President of Human Resourceshuman resources for a major pharmaceutical company she is able to provide our Board extensive knowledge in the areas of talent development and corporate leadership. In addition, Ms. Graddick-Weir also brings expertise in corporate operations to the Board and provides the Board with expertise in public company board committee membership.

 

•  Independent of CompanyExpertise in global human resources, corporate governance and public company compensation

•  Public company directorship and committee experience

Age 6366

 

Director since 2012

 

Executive Vice President Human Resources,Independent

Merck & Co., Inc.

Committees:

•  Management Planning and Development

•  Nominating and Governance, Chair

Favorite YUM! Brands Food:

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Hot Wings

 

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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 52

Director since November 2020

Independent

Committees:

•  Audit

Favorite YUM! Brands Food:

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Chicken Quesadilla

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GOVERNANCE OF THE COMPANY   

  

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Thomas C. Nelson

Background

 

Thomas C. Nelson is President and Chief Executive Officer of National Gypsum Company, a building products manufacturer,manufacturer. He has held this position since 1999 and was elected Chairman of the Board in January 2005. From 1995 to 1999, Mr. Nelson served as the Vice Chairman and Chief Financial Officer of National Gypsum. Mr. Nelson previously worked for Morgan Stanley & Co. and in the United States Defense Department as Assistant to the Secretary and was a White House Fellow. He serves as Director of Carolinas Healthcare System and was a director of Belk, Inc. from 2003 to 2015. Since January 2015, Mr. NelsonAtrium Health and has served as a director for the Federal Reserve Bank of Richmond. His term with the Federal Reserve Bank of Richmond expired on December 31, 2020.

Specific Qualifications, Experience, Skills and Expertise:

 

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:•

Through Mr. Nelson’s public company board  Operational and management experience, including as President and his service as Chief Executive Officer of a major building products manufacturer Mr. Nelson brings significant corporate leadership, operations and finance

•  Senior government experience to our Board. In addition, Mr. Nelson also provides the Board with the benefits of his experience in government, having served as Assistant to the Secretary of the United States Defense Department and as a White House Fellow. Mr. Nelson also brings with him significant experience in public company board committee membership.Fellow

 

•  Independent of CompanyExpertise in finance, strategic planning, business development and retail business

•  Public company directorship and committee experience

Age 5558

 

Director since 2006

 

Chairman, ChiefIndependent

Executive Officer

Committees:

•  Management Planning and President,Development

National Gypsum•  Nominating and Governance

Company

Favorite YUM! Brands Food:

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Pepperoni Lover’s Pizza

 

YUM! BRANDS, INC. -2018 Proxy Statement13

 

 

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GOVERNANCE OF THE COMPANY   P. Justin Skala

 

  

 

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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 and Strategy Officer for the Colgate-Palmolive Company, from July 2018 until July 2019. From 2016 until 2018 he served as Chief Operating Officer, North America, Europe, Africa/Eurasia and Global Sustainability of thefor Colgate-Palmolive Company, a consumer products company. He has held this position since 2016.Company. From 2013 to 2016 he was President of Colgate-North America and Global Sustainability for Colgate-Palmolive Company. From 2010 to 2013 he was the President of Colgate - Latin America. From 2007 to 2010, he was presidentPresident of Colgate - Asia.

 

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:

Through Mr. Skala’s executive leadership at one of the world’s most renowned consumer products companies, including service in the roles of Chief Operating OfficerSpecific Qualifications, Experience, Skills and as a division President, he is able to bring considerable experience to our Board in the areas of corporate leadership, global business and finance. Mr. Skala also provides our Board with expertise in the areas of operations, brand management and talent development.Expertise:

 

•  Independent of Company

Age 58

Director since 2016

Global operating and management experience, including as Chief Operating

Executive Officer of North

America, Europe,

Africa/Eurasia

at a large international manufacturer and Global

Sustainability forColgate - Palmolive Company

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Elane B. Stock served as Group President of Kimberly-Clark International,major divisions of 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 from 2010, when she first joined Kimberly-Clark, to 2012. Ms. Stock was the National Vice President of Strategy for the American Cancer Society from 2008 to 2010. Ms. Stock serves on the Board of Equifax Inc.

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:

Ms. Stock brings significant corporate leadership, global business, operations and finance experience to our Board, having served in numerous corporate leadership positions, including as group President of a large consumer products company. In addition, Ms. Stock provides the Board with her expertise in marketing and brand management and her significant experience in public company directorship and committee membership.

 

•  Independent of CompanyExpertise in branding, marketing, finance, sales, strategic planning and international business development

Age 5361

 

Director since 20142016

 

Former Group President Kimberly-Clark InternationalIndependent

Committees:

•  Audit

Favorite YUM! Brands Food:

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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 Reckitt Benckiser.

Specific Qualifications, Experience, Skills and Expertise:

•  Global operating and management experience, including as group president of a consumer products company

•  Expertise in branding, marketing, finance, sales, strategic planning and international business development

•  Public company directorship experience and committee experience

Age 56

Director since 2014

Independent

Committees:

•  Audit

Favorite YUM! Brands Food:

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KFC Bucket of Original

Recipe Chicken

 

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Annie Young-Scrivner

  

 

Background

Robert D. WalterAnnie Young-Scrivner is the founder of Cardinal Health, Inc., a company that provides products and services supporting the health care industry. Mr. Walter retired from Cardinal Health in June 2008. Prior to his retirement from Cardinal Health, hehas served as Executive Director from November 2007 to June 2008. From April 2006 to November 2007, he served as Executive Chairman of the Board of Cardinal Health. From 1979 to April 2006, he served as Chairman and Chief Executive Officer of Cardinal Health. Mr. WalterWella Company, the parent of beauty brands, including Clairol and OPI, since 2020. Prior to this role, Ms. Young-Scrivner was Chief Executive Officer of Godiva Chocolatier, Inc., a manufacturer of Belgian chocolates. Prior to joining Godiva in August 2017, Ms. Young-Scrivner was Executive Vice President, Global Digital & Loyalty Development with Starbucks Corporation from 2015 until her departure in April 2017. At Starbucks, Ms. Young-Scrivner also servesserved as President, Teavana & Executive Vice President of Global Tea from 2014 to 2015, Global Chief Marketing Officer & President of Tazo Tea from 2009 to 2012, and President of Starbucks Canada from 2012 to 2014. Prior to joining Starbucks, Ms. Young-Scrivner held senior leadership positions at PepsiCo, Inc. in sales, marketing and general management, including her role as Region President of PepsiCo Foods Greater China from 2006 to 2008. She has been a director of Tiffany & Co. since 2018, and has previously served as a director of American Express Company and Nordstrom,Macy’s, Inc.

 

SPECIFIC QUALIFICATIONS, EXPERIENCE, SKILLS AND EXPERTISE:Specific Qualifications, Experience, Skills and Expertise:

 

Through Mr. Walter’s public company board•  Operating and management experience, and his prior serviceincluding as Chief Executive Officer of a global healthcare and service provider business, he is able to provide our Board with significant experience in the areas of corporate leadership, finance and operations. In addition, Mr. Walter brings to our board significant experience in publicconsumer goods company board committee membership.

 

•  Independent of CompanyPublic company directorship and committee experience

Age 7252

 

Director since 20082020

 

Non-ExecutiveIndependent

Chairman,

Founder andCommittees:

Retired Chairman/•  Audit

CEO Cardinal

Favorite YUM! Brands Food:

Health, Inc.

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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 20192022 Annual Meeting of Shareholders and until their respective successors have been elected and qualified.

Director Compensation

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 each director who is not an employee of YUMnon-employee Director is summarized in the table below and discussed in detail below.

The Company primarily uses stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. 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 For 2020, each element of director compensation at least every two years.

In November 2017, 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 48 as well as published survey data from the National Association of Corporate Directors for retailers in several industry

segments. Data for this review was prepared for the Committee by its independent consultant, Meridian Compensation Partners LLC. This data revealed that the Company’s director compensation was approximately at the 50th percentile measured against both benchmarks, that the retainer paid to ourNon-Executivenon-employee Chairman is below market, 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 consistent with market practice. Based on this data, the Committee did not recommend a change to the annual amount paid to the directors, Committee Chairpersons and to theNon-Executive Chairman. The directors’ annual compensation of $240,000 is paid entirely as a stock retainer and beginning in 2017, no portion is paid in SARs. Upon request, up to 50% can be paid in cash. Chairpersons of the Audit, Management Planning and Development, and Nominating and Governance Committees are paid additional stock retainers of $25,000, $20,000 and $15,000, respectively. OurNon-Executive Chairman also receives an additional stock retainer of $150,000 for performance of his duties.

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GOVERNANCE OF THE COMPANY   

                                                                                                                                                      
 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) 

 

 Alves, Paget L.

   —    220,000    —    —    220,000  

 

 Cavanagh, Michael J.

   —    240,000    —    —    240,000  

 

 Connor, Christopher M.

   —    125,000    —    —    125,000  

 

 Cornell, Brian C.

   —    253,333    —    —    253,333  

 

 Dorman, David W(4)

   —    240,000    —    10,000    250,000  

 

 Graddick-Weir, Mirian M.

   —    240,000    —    —    240,000  

 

 Meister, Keith(4)

   —    240,000    —    —    240,000  

 

 Nelson, Thomas C.

   —    265,000    —    —    265,000  

 

 Ryan, Thomas M.(4)

   —    245,000    —    —    245,000  

 

 Skala, P. Justin

   —    240,000    —    —    240,000  

 

 Stock, Elane B.

   —    253,333    —    —    253,333  

 

 Walter, Robert D.

   —    400,000    —    10,000    410,000  

(1)

Amounts in column (c) represent the grant date fair value for annual stock retainer awards, Committee Chairperson retainer awards andNon-Executive Chairman awards granted to directors in 2017. Retainer awards arepro-rated for partial years of service. For 2017, Messrs. Cornell and Walter receivedpro-rated stock retainer awards for serving as the Chairs of the Management Planning and Development Committee ($13,333) and the Nominating and Governance Committee ($10,000), respectively, because they each served in those roles for less than the entire year. Ms. Domier is not included in the table because she did not join the Board until January 1, 2018.

(2)

At December 31, 2017, the aggregate number of SARs awards outstanding for eachnon-management director was:

 NameSARs

 Alves, Paget L.

— 

 Cavanagh, Michael J.

18,531 

 Connor, Christopher M.

— 

 Cornell, Brian C.

6,491 

 Dorman, David W.

35,252 

 Graddick-Weir, Mirian M.

22,752 

 Meister, Keith

— 

 Nelson, Thomas C.

38,208 

 Ryan, Thomas M.

45,877 

 Skala, P. Justin

4,646 

 Stock, Elane B.

10,003 

 Walter, Robert D.

49,047 

(3)

Represents amount of matching charitable contributions made on behalf of the director under the Company’s matching gift program and/or the amount of charitable contribution made in the director’s name.

(4)

Messrs. Dorman, Meister and Ryan are former members of the Board of Directors, each of whom resigned from their position during 2017.

Non-Employee Directors Annual Compensation for 2017. Each director who was not an employee of YUMDirector 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 years.

YUM! BRANDS, INC. - 2021 Proxy Statement17

GOVERNANCE OF THE COMPANY   

ChairmanChairperson of the Board and Committee Chairperson Retainers. In recognition of their added duties, the ChairmanChairperson of the Board (Mr. WalterCornell in 2017)2020) receives an

additional $150,000$170,000 stock retainer annually and the Chairs of the Audit Committee (Mr. Nelson in 2017)2020), Management Planning and Development Committee (Mr. CornellConnor in 2017)2020) and the Nominating and Governance Committee (Mr. Walter(Ms. Graddick-Weir in 2017)2020) 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 2017.2020.

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.

Stock Ownership Requirements. Similar to executive officers, directors are subject to share ownership

16     YUM! BRANDS, INC.-2018 Proxy Statement

   GOVERNANCE OF THE COMPANY

requirements. The directors’ requirements provide that directors will not sell any of the Company’s common stock received as compensation for service on the Board until the director has ceased being a member of the Board for one year (sales are permitted to the extent necessary to pay income taxes attributable to any stock retainer payment or exercise of a stock option or SAR).

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 employees.Global Leadership 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 abovebelow as it is not considered compensation to the directors.

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 2020, 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 51. 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 at market median measured against this benchmark, that the retainer paid to our Non-Executive Chairperson is slightly above market median and that the retainers paid to the Chairpersons of the Audit Committee, Management Planning and Development Committee and Nominating and Governance Committee were generally consistent with market practice, but were approximately $5,000 below market median. Based on this data, the Committee recommended no changes to our director compensation program.

 

 

 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) 

 

Alves, Paget

   —    260,000    —    10,000    270,000  

Barr, Keith

   —    220,000    —    10,000    230,000  

Cavanagh, Michael

   —    260,000    —    —    260,000  

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

   —    25,000    —    —    25,000  

Nelson, Thomas

   —    285,000    —    —    285,000  

Skala, Justin

   —    260,000    —    —    260,000  

Stock, Elane

   —    260,000    —    —    260,000  

Walter, Robert

   —    260,000    —    10,000    270,000  

Young-Scrivner, Annie

   —    220,000    —    —    220,000  

(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 2020. Retainer awards are pro-rated for partial years of service.

18     YUM! BRANDS, INC.- 2021 Proxy Statement

   GOVERNANCE OF THE COMPANY

(2)

At December 31, 2020, the aggregate number of stock appreciation rights (“SARs”) awards outstanding for each non-employee director was:

 Name

SARs

Alves, Paget

— 

Barr, Keith

Cavanagh, Michael

18,531

Connor, Christopher

—

Cornell, Brian

6,491

Domier, Tanya

—

Hobart, Lauren

—

Graddick-Weir, Mirian

22,752

Nelson, Thomas

24,631

Skala, Justin

4,646

Stock, Elane

10,003

Young-Scrivner, Annie

—

Walter, Robert

24,631

(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 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 bepre-approved, even ifthough they will exceed $100,000. ThesePre-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 thethat other company.

 

 

Does the Company require stock ownership by directors?

 

 

Yes, the Company requires stock ownership by directors. The Board believes that the number of Directors expectsshares of the Company’s common stock owned by each non-management director is a personal decision; however, the Board strongly supports the position that non-management directors to holdshould own a meaningful number of shares ofin the Company and expects that each non-management director will (i) own Company common stock and expectsnon-management directors to retain shares acquired as compensation aswith a director untilvalue of at least 12 months following their departure fromfive 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.

YUM directors receive a significant portion Each director may sell enough shares to pay taxes in connection with the receipt of their annual compensation in stock. The Company believes thathis or her retainer or the emphasis onexercise of stock appreciation rights and the equity component of director compensation servesownership guideline will be adjusted to further alignreflect the interests of directors with those of our shareholders.sale to pay taxes.

 

 

 

 

YUM! BRANDS, INC. -20182021 Proxy Statement     1719

 

 

 

GOVERNANCE OF THE COMPANY   

 

      

 

How much YUM stock do the directors own?

 

Stock ownership information for each director is shown in the table on page 31.34.

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 50.52.

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.

 

 

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 20192022 Annual Meeting of Shareholders must be received by us no earlier than November 7, 2018,2, 2021, and no later than December 7, 2018.2, 2021.

Director nominations to be brought before the 20192022 Annual Meeting of Shareholders.

Director nominations that a shareholder intends to present at the 20192022 Annual Meeting of Shareholders, other than through the proxy access procedures described above, must have been received no later than February 16, 2019.10, 2022. These nominations must be submitted by a shareholder in accordance with the requirements specified in YUM’s bylaws.

Where to send director nominations for the 20192022 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?

 

 

On May 20, 2016, Robert D. WalterNovember 16, 2018, Brian C. Cornell assumed the position ofNon-Executive ChairmanChairperson of the Board. Applying our Corporate Governance Principles, the Board determined that based on Mr. Walter’sCornell’s independence, it would not appoint a Lead Director when Mr. WalterCornell 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 2017,2020, 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

 

 

 

 

1820      YUM! BRANDS, INC.-20182021 Proxy Statement

        

 

 

   GOVERNANCE OF THE COMPANY

 

   

 

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. WalterCornell is responsible for supporting the CEO on corporate strategy along with leadership development. Mr. WalterCornell 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.

 

 

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 atwww.yum.com/investors/corporate-governance/https://investors.yum.com/governance/committee-composition-and-charters/.

 

 • 

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 atwww.yum.com/investors/corporate-governance/governance-principles/https://investors.yum.com/governance/governance-documents/.

 

Ethical Guidelines. YUM’s WorldwideGlobal Code of Conduct was adopted to emphasize the Company’s commitment

  

commitment to the highest standards of business conduct. The Code of Conduct also sets forth information and procedures for employees to report misconduct, ethical or accounting concerns, or other violations of the Code of Conduct in a confidential manner. The Code of Conduct applies to the Board of Directors and all employees of the Company, including the principalchief executive officer, the principalchief financial officer and the principal accounting officer. Our directors and the senior-most employees in the Company are required to regularly complete a conflicts of interest questionnaire and certify in writing that they have read and understand the Code of Conduct. The Code of Conduct is available on the Company’s website atwww.yum.com/investors/corporate-governance/code-of-conduct/https://investors.yum.com/governance/governance-documents/. The Company intends to post amendments to or waivers from its Code (to the extent applicable to the Board of Directors or executive officers) on this website.

 

 

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. Walter Cornell

asNon-Executive Chairman.Chairperson. Since Mr. WalterCornell is independent, the Board determined that it

would not appoint a separate Lead Director upon Mr. Walter’sCornell’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 Chairman is not present, and advising the

 

 

 

 

YUM! BRANDS, INC. -20182021 Proxy Statement     1921

 

 

 

GOVERNANCE OF THE COMPANY   

 

      

 

(a)

ChairmanPresiding at all executive sessions of the Board and any other meeting of the Board at which the Chairperson is not present, and advising the Chairperson and CEO of any decisions reached or suggestions made at any executive session,

 

(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 ChairmanChairperson and the independent directors, and

 

(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.

 

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

  

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.

 

 

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

  

obtaining the approval of any officer of the Company in advance or otherwise. The Audit Committee has the sole authority to retain and terminate the independent auditor. The Nominating and Governance Committee has the sole authority to retain search firms to be used to identify director candidates. The Management Planning and Development Committee has the sole authority to retain compensation consultants for advice on executive compensation matters.

 

 

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.information and digital 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 risk management 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 managers responsible for these functional areas, as well as

 

 

 

 

2022      YUM! BRANDS, INC.-20182021 Proxy Statement

        

 

 

   GOVERNANCE OF THE COMPANY

 

   

 

The Audit Committee engages in substantive discussions of risk management at its regular committee meetings held during the year. At these meetings, it receives functional risk review reports covering significant areas of risk from the 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 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;

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.

YUM! BRANDS, INC. - 2021 Proxy Statement23

Has the Company conducted a risk assessment of its compensation policies and practices?GOVERNANCE OF THE COMPANY   

 

Has the Company conducted a risk assessment of its compensation policies and practices?

 

As stated in the Compensation Discussion and Analysis at page 32,35, 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 2021, 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 termshort-term and long term performancelong-term performance;

 

Long termLong-term Company performance is emphasized. The majority of incentive compensation for the toptop-level employees is associated with the long-term performance of the Company;

level employees is associated with the long term performance of the Company

 

Strong stock ownership guidelines in place for approximately 175200 senior employees are enforcedenforced;

 

The annual incentive and performance share plans both have caps oncap 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 Board

With 97% of our restaurants franchised, our franchisee performance overwhelmingly drives YUM performance — mitigating risk of the Company manipulating resultsBoard;

 

Compensation performance measures set for each Division are transparent and tied to multiple measurable factors, none of which exceed a 50% weighting. Theweighting; 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.

 

 

How does the Board determine which directors are considered independent?

YUM! BRANDS, INC. -2018 Proxy Statement21

 

 

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 (http:(https://www.yum.com/investors/corporate-governance/governance-principles/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.

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, Cavanagh,Barr, Connor, Dorman, Meister, Nelson, Ryan, 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 paragraph that Target Corporation, which employs Mr. Cornell, has a business relationship with the Company; however, as noted below, the Board

24     YUM! BRANDS, INC.- 2021 Proxy Statement

   GOVERNANCE OF THE COMPANY

determined that this relationship was not material to the directorMr. Cornell or Target Corporation, and therefore determined that Mr. Cornell was independent. In early 2020, the Board determined that Robert C. Walter, who served on the Board until May 2020, was also independent.

Brian C. Cornell is the Chairman and Chief Executive Officer of Target Corporation. During 2017,2020, the Company received approximately $11.3$5 million in license fees from Target Corporation in the normal course of business. Divisions of the Company paid Target Corporation approximately $2.2$1 million in rebates in 2017.2020. 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 arrangementlicensing relationship between the Company and Target Corporation was initially entered into before

Mr. Cornell joined the Board or became employed by Target Corporation. The

Michael J. Cavanagh, who served on the Board until October 2020, is the Senior Executive Vice President and Chief Financial Officer of Comcast Corporation. During 2019, the Company, its affiliates and their respective franchisees collectively paid approximately $42 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 $72 million in advertising from affiliates of Comcast. In early 2020, the Board determined that thisthese payments did not create a material relationship was not material tobetween the Company and Mr. CornellCavanagh or Target Corporation.the Company and Comcast Corporation as the payments represented less than 2% 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

22     YUM! BRANDS, INC.-2018 Proxy Statement

   GOVERNANCE OF THE COMPANY

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. - 2021 Proxy Statement25

What are the Company’s policies on reporting of concerns regarding accounting?GOVERNANCE OF THE COMPANY   

 

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, Marc L. Kesselman.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

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)(844) 241-5689.418-4423. 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.yum.com/investors/corporate-governance/
complaint-procedures/https://investors.yum.com/governance/governance-documents/.

 

 

 

 

26   YUM! BRANDS, INC. -20182021 Proxy Statement23

 

 

 

GOVERNANCE OF THE COMPANY

 

  

 

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 20172020 

 Audit:

    Thomas C. Nelson,Chair

Paget L. Alves,

    Christopher M. ConnorChair

    Tanya L. Domier*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 WorldwideGlobal Code of Conduct and Policy on Conflicts of Interest

•  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 20.22

  

8 

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.

*  Tanya L. Domier was appointed to the Audit Committee effective January 26, 2018.

 

 Name of Committee

 and Members

 Functions of the Committee  

Number of Meetings 

in Fiscal 20172020 

 Management Planning

 and Development:

    Brian C. Cornell,Christopher M. Connor, Chair

    Michael J. CavanaghKeith Barr

    Brian C. Cornell

    Mirian M. Graddick-Weir

    Robert D. Walter

    Elane B. StockThomas C. Nelson

 

•  Oversees the Company’s executive compensation plans and programs and reviews and recommends changes to these plans and programs

•  Monitors the performance of the chief executive officerChief Executive Officer and other senior executives in light of corporate goals set by the Committee

•  Reviews and approves the compensation of the chief executive officerChief Executive Officer and other senior executive officers

•  Reviews management succession planning

  4 

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.

 

 

 

24   YUM! BRANDS, INC. - -20182021 Proxy Statement27

 

 

 

GOVERNANCE OF THE COMPANY

 

  

 

 Name of Committee

 and Members

 Functions of the Committee  

Number of Meetings 

in Fiscal 20172020 

 Nominating and

 Governance:

    Robert D. Walter,Mirian M. Graddick-Weir,Chair

    Michael J. Cavanagh

    Brian C. Cornell

    Mirian M. Graddick-Weir

    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

  

54 

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.

 

 Name of Committee

 and Members

Functions of the Committee

 Executive/Finance:

    Robert D. Walter,Chair

    Greg Creed

    Brian C. Cornell

    Thomas C. Nelson

•  Exercises all of the powers of the Board in the management of the business and affairs of the Company consistent with applicable law while the Board is not in session

 

 

28   YUM! BRANDS, INC. -20182021 Proxy Statement25

    

 

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 20192022 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.

As noted above, Tanya Domier joined the Company’s Board, effective January 1, 2018 and she will stand for election to the Board by our shareholders for the first time. Ms. Domier is the Chief Executive Officer of Advantage Solutions, Inc., a North American provider of outsourced sales, marketing and business solutions to consumer goods manufacturers and retailers. Ms. Domier’s extensive sales and marketing background, along with her leadership experience and experience in developing digital technology solutions are strengths that the Board intends to leverage to help achieve the Company’s short- and long-term goals. Ms. Domier was recommended by ourNon-Executive Chairman.

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.yum.com/investors/corporate-governance/governance-principles/https://investors.yum.com/governance/governance-documents/ and at page 19 under “What other significant Board practices does the Company have? — Majority Voting Policy.”

 

 

 

26   YUM! BRANDS, INC. - -20182021 Proxy Statement29

 

 

 

MATTERS REQUIRING SHAREHOLDER ACTION

 

  

 

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 2018.2021. The Audit Committee of the Board of Directors has selected KPMG to audit our consolidated financial statements. During fiscal 2017,2020, 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 20172020 and 2016?2019?

 

The following table presents fees for professional services rendered by KPMG for the audit of the Company’s annual financial statements for 20172020 and 2016,2019, and fees billed for audit-related services, tax services and all other services rendered by KPMG for 20172020 and 2016.2019.

 

 2017 2016   2020 2019  

Audit fees(1)

 

 

$

 

 

6,332,000

 

 

 

 

 

 

$

 

 

9,305,000 

 

 

 

 

 

 

$

 

 

 

5,597,000

 

 

 

 

 

 

 

 

$

 

 

 

6,628,000 

 

 

 

 

 

 

Audit-related fees(2)

 

 

 

 

 

326,000

 

 

 

 

 

 

 

 

 

2,899,000 

 

 

 

 

 $

 

 

529,000

 

 

 

 

 

 $

 

 

405,000 

 

 

 

 

 

Tax fees(3)

 

 

 

 

 

482,000

 

 

 

 

 

 

 

 

 

285,000 

 

 

 

 

 $

 

 

511,000

 

 

 

 

 

 $

 

 

223,000 

 

 

 

 

 

All other fees(4)

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

326,000 

 

 

 

 

All other fees

 $

 

 

0

 

 

 

 

 

 $

 

 

0 

 

 

 

 

 

TOTAL FEES

 

 

$

 

 

        7,140,000

 

 

 

 

 

 

$

 

 

        12,815,000 

 

 

 

 

 $

 

6,637,000

 

 

 

 $

 

        7,256,000 

 

 

 

 

 (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, statutory audits and services rendered in connection with the Company’s securities offerings including comfort letters and consents.

 

 (2)

Audit-related fees include fees associated with the audit and reviews ofcarve-out financial statements of Yum China Holdings, Inc. (“Yum China”) for inclusion in the stand-alone SEC filings in connection with the separation of Yum China in 2016, as well as audits of financial statements and certain employee benefit plans, agreed upon procedures and other attestations.

 

 (3)

Tax fees consist principally of fees for international tax compliance, tax audit assistance, as well as value added tax and other tax advisory services.

 

(4)

Other fees consist of fees for due diligence assistance services related to the planned sale of Company restaurants.

 

 

30   YUM! BRANDS, INC. -20182021 Proxy Statement27

 

 

 

MATTERS REQUIRING SHAREHOLDER ACTION

 

  

 

What is the Company’s policy regarding the approval of audit and non-audit services?

What is the Company’s policy regarding the approval of audit andnon-audit services?

 

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 permitted non-audit services which are expected to exceed the relevant budgetary guideline must subsequently be pre-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. Any incremental audit or permittednon-audit services which are expected to exceed the relevant budgetary guideline must bepre-approved.

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 at www.yum.com/investors/corporate-governance/audit-committee-policy/https://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 longlong- and short term.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 32,35,

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.

 

 

 

 

28   YUM! BRANDS, INC. - -20182021 Proxy Statement31

 

 

 

MATTERS REQUIRING SHAREHOLDER ACTION

 

  

 

What vote is required to approve this proposal?

What vote is required to approve this proposal?

 

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

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 20192022 Annual Meeting of Shareholders.

 

 

What is the recommendation of the Board of Directors?

 

The Board of Directors recommends that you vote FOR approval of this proposal.

 

 

 

32   YUM! BRANDS, INC. -20182021 Proxy Statement29

 

 

STOCK OWNERSHIP INFORMATION

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, 2017,2020 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 

 T. Rowe Price Associates, Inc.

 100 E. Pratt Street,

 Baltimore, MD 21202

 

30,619,571(1)

 

 

33,033,765

(1)

9.8% 

10.1% 

 

The Vanguard Group

 100 Vanguard Blvd.

 Malvern, PA 19355

 

23,428,319(2)

 

 

23,125,244

(2)

6.86% 

7.77% 

 Blackrock Inc.

 55 East 52nd Street

 New York, NY 10055

 

17,892,450(3)

 

 

5.9% 

 Magellan Asset Management Limited

20,321,150 19 Martin Place

 

(3)Sydney, NSW, 2000, Australia

  

 

16,956.927(4)

 

6% 

5.62% 

 

 (1)

The filing indicates sole voting power for 10,651,6049,977,017 shares, shared voting power offor 0 shares, sole dispositive power of 33,033,765for 30,619,571 shares and shared dispositive power offor 0 shares.

 

 (2)

The filing indicates sole voting power for 478,2130 shares, shared voting power for 88,916494,666 shares, sole dispositive power for 22,565,214of 22,109,570 shares and shared dispositive power for 560,0301,318,749 shares.

 

 (3)

The filing indicates sole voting power for 17,528,73915,105,990 shares, shared voting power offor 0 shares, sole dispositive power of 20,321,150for 17,892,450 shares and shared dispositive power offor 0 shares.

 

(4)

How much YUM common stock is owned by our directorsThe filing indicates sole voting power for 13,666,472 shares, shared voting power for 0 shares, sole dispositive power for 16,956,927 shares and executive officers?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, 20172020 by

 

each of our directors,

 

each of the executive officers named in the Summary Compensation Table on page 53,55, 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 0.63%.

The table shows the number of shares of common stock and common stock equivalents beneficially owned as of December 31, 2017.2020. Included are shares that could have been acquired within 60 days of December 31, 20172020 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.

 

 

 

 

30   YUM! BRANDS, INC. - -20182021 Proxy Statement33

 

 

 

STOCK OWNERSHIP INFORMATION

 

  

 

   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  

 

 Greg Creed

   82,535    545,251    62,978    690,764    53,927    744,691  

 

 Paget L. Alves

   3,235    —    —    3,235    411    3,646  

 

 Michael J. Cavanagh

   10,000    3,575    —    13,575    13,774    27,349  

 

 Christopher M. Connor

   —    —    —    —    1,783    1,783  

 

 Brian C. Cornell

   196    1,269    —    1,465    6,883    8,348  

 

 Mirian M. Graddick-Weir

   —    4,501    —    4,501    16,076    20,577  

 

 Thomas C. Nelson

   10,506    9,536    —    20,042    43,099    63,141  

 

 P. Justin Skala

   2,150    918    —    3,068    3,887    6,955  

 

 Elane B. Stock

   4,019    1,881    —    5,900    5,360    11,260  

 

 Robert D. Walter(5)

   108,301    13,370    —    121,671    45,443    167,114  

 

 David W. Gibbs

   32,761    185,013    9,094    226,868    22,005    248,873  

 

 Tracy Skeans

   5,837    42,776    —    48,613    5,307    53,920  

 

 Brian R. Niccol

   8,839    95,797    32,151    136,787    16,508    153,295  

 

 Roger G. Eaton

   113,375    294,735    9,431    417,541    62,910    480,451  

 

 All Directors and Executive

 Officers as a Group (16 persons)

   395,924    1,276,842    118,929    1,791,695    311,101    2,102,796  
   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 

 Paget Alves

   6,309    —    —    6,309    5,725    12,034 

 Keith Barr

   —    —    —    —    2,133    2,133 

 Christopher Connor

   —    —    —    —    10,507    10,507 

 Brian C. Cornell

   452    1,746    —    2,198    19,853    22,051 

 Tanya Domier(5)

   4,957    —    —    4,957    5,620    10,577 

 Mirian M. Graddick-Weir

   —    6,158    —    6,158    29,773    35,931 

 Lauren Hobart

   —    —    —    —    243    243 

 Thomas C. Nelson

   15,360    6,895    —    22,255    67,967    90,222 

 Justin Skala

   5,224    1,257    —    6,481    9,344    15,825 

 Elane B. Stock

   4,019    2,633    —    6,652    15,889    22,541 

 Annie Young-Scrivner

   30    —    —    30    2,133    2,163 

 David Gibbs(5)

   76,940    246,203    20,470    343,613    70,836    414,449 

 Christopher Turner

   3,235    676    —    3,911    8,637    12,548 

 Tracy Skeans

   8,204    48,088    9,557    65,849    6,105    71,954 

 Mark King

   4,269    507    —    4,776    14,395    19,171 

 Anthony Lowings

   46,560    100,223    1,668    148,451    240    148,691 

 All Directors and Executive Officers as a Group (19 persons)

   198,890    542,897    40,752    782,539    310,081    1,092,620 

 

 (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:

        • Mr. Niccol, 6,679 and Ms. Skeans, 4,7922,651

• Mr. Lowings, 1,200

        • all relevant executive officers as a group, 12,4744,898 shares

•  Ms. Domier is not included in the table because she did not join the Board until January 1, 2018.

 

 (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.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) These

(5)

For Ms. Domier, these shares are held in a trust. For Mr. Gibbs, 65,893 of these shares are held in trusts.

 

 

 

34   YUM! BRANDS, INC. -20182021 Proxy Statement31

 

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 2017.2020.

EXECUTIVE COMPENSATION

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.

 

  

 

Table of Contents       

 

 

 

 

I.  Executive Summary

  3336 

A.  YUM 2017     A.YUM 2020 Performance

  3336 

B.  Named     B.Named Executive Officers

  3437 

C.  Compensation     C.Compensation Philosophy

  3437 

D.  Compensation     D.Compensation Overview

  3437 

E.  Relationship      E.Relationship between Company Pay and Performance for the CEO

  3538 

II.    Elements of Executive Compensation Program

  3840 

A.  Base   A.Base Salary

  3840 

B.  Annual   B.Annual Performance-Based Cash Bonuses

  3840 

C.  Long-Term   C.Long-Term Equity Performance-Based Incentives

  4043 

III.   20172020 Named Executive Officer Total Direct Compensation and Performance Summary

  4144 

IV. Retirement and Other Benefits

  4548 

V.  How Compensation Decisions Are Made

  4649 

VI. Compensation Policies and Practices

  4952 

 

 

 

YUM! BRANDS, INC. - 2021 Proxy Statement35

EXECUTIVE COMPENSATION   

I.     Executive Summary

A.    YUM 2020 Performance

2020 presented unprecedented challenges to our business that required the talents and diligence of the Company’s leadership, employees and franchisee partners to overcome. Despite these challenges, our results demonstrated the Company’s resilience and validated the strategies put in place during the transformation of YUM. We intensified our focus on leveraging our scale and reinforced our growth model, accelerating our investments in digital and technology to enhance the customer experience, off-premise capabilities and unit economics. In 2020, digital sales hit a record of $17 billion, about a 45% increase over the prior year, and exemplified the ability of our brands to quickly pivot to meet new consumer needs. In addition, we were able to complete the acquisition of The Habit Burger Grill in March, which added another exciting, growth-focused brand to our portfolio. As we have moved into 2021, we are more confident than ever in the ability of our teams and franchisees to compete and win in a rapidly changing world.

The Company’s 2020 performance reflects the impact of the COVID-19 pandemic, which had significant negative effects on our performance, particularly during the second and third quarters. For the year, our system sales declined 4% (excluding foreign currency translation), including a decline in same-store sales growth of 6%. During the year we were able to deliver development growth of 183 net-new units. Our core operating profit decreased by approximately 8% during 2020 (see pages 32 and 33 in Item 7 of YUM’s Form 10-K for the fiscal year ended on December 31,

2020 for a discussion of System Sales and Core Operating Profit).

Going forward, we will continue to rely on 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: (i) growing Unrivaled Culture and Talent to leverage our culture and people capability to fuel brand performance and franchise success; (ii) developing Unmatched Operating Capability by recruiting and equipping the best restaurant operators in the world to deliver great customer experiences; (iii) building Relevant, Easy and Distinctive Brands by innovating and elevating iconic restaurant brands people trust and champion; and (iv) 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 2021.

LOGO

36      YUM! BRANDS, INC.-20182021 Proxy Statement

        

 

 

   EXECUTIVE COMPENSATION

 

   

 

I.     Executive Summary

A.    YUM 2017 Performance

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 intend to own less than 1,000 restaurants (at least 98% franchised) and, in 2019, intend to have reduced annual capital expenditures to approximately $100 million and improved our efficiency by lowering general and administrative expenses as a percentage of system sales to 1.7%. The transformation strategy, our “Recipe for Growth”, requires that the Company be more focused, more franchised and more efficient as we strengthen and grow our KFC, Pizza Hut and Taco Bell brands around the world, creating significant long-term value for all of our stakeholders and creating a world with more Yum!.

Four growth drivers 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 is 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.

2017 was an exceptional year for the Company and its progress towards the transformation initiative. YUM operating profit increased 64% during 2017 and our system restaurant count grew by 1,407 units. 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. Strong brands are critical in our being able to deliver sustained growth and in our ability to create long-term shareholder value. The following performance highlights illustrate just how successful 2017 was:

LOGO

(1)

Note: All comparisons are versus the same period a year ago. System sales figures in this section exclude the impact of foreign currency translation and the 53rd week. See theNon-GAAP Items section in Item 7 of YUM’s Form10-K for the fiscal year ended on December 31, 2017 for a reconciliation of GAAP Company sales to System sales.

(2)

The Company uses 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. Refer to Appendix A: Reconciliation of Adjusted Operating Profit Growth, as shown above, to GAAP Operating Profit Growth.

(3)

Total shareholder return is calculated as the growth in YUM share price from the beginning of 2017 until theyear-end, and includes assumed reinvestment of dividends.

YUM! BRANDS, INC. -2018 Proxy Statement33

EXECUTIVE COMPENSATION   

B.    Named Executive Officers

The Company’s NEOs for 20172020 are as follows:

 

 Name

  

Title

 

 Greg CreedDavid W. Gibbs

 

  

 

Chief Executive Officer

 

 

 David W. GibbsChris Turner

 

  

 

President and Chief Financial Officer

 

 

 Roger G. EatonTracy L. Skeans(1)

Chief Operating Officer and Chief People Officer

 Mark King

Chief Executive Officer of Taco Bell Division

 Tony Lowings

 

  

 

Chief Executive Officer of KFC Division

 

 Brian R. Niccol(1)

Former Chief Executive Officer of Taco Bell Division

 Tracy L. Skeans

Chief Transformation and People Officer

 

 (1)

Mr. Niccol resigned from his position withEffective January 29, 2021, Ms. Skeans was appointed Chief Operating Officer and Chief People Officer of the Company in February 2018.Company. Prior to that she served as the Company’s Chief Transformation and People Officer.

C.    Compensation Philosophy

 

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.

 

 

               ✓

D.    Compensation Overview

 

20172020 Compensation Highlights

 

In January of 2017,2020, the Committee made the following decisions and took the following actions:

•

The Committee set our CEO target for total direct compensation levels below(base salary, annual cash bonus and annual long-term incentive award value at grant date) at a level between the median25th and 50th percentile of our Executive Peer Group (defined at page 48)51) for the CEO role, to reflect newness in role;

•The Committee set the equity mix for our Global Leadership Team’sNEOs’ long-term incentive awards at 50% stock appreciation rights (“SARs”) and 50% performance share units (“PSUs”); and

•

The Committee certified that our 20142017 PSU awards under our Performance Share Plan paid out at 71%152.5% of target in 20172020 based on the Company’s Total

Shareholder Return (“TSR”) at the 75th percentile compared to the S&P 500 Consumer Discretionary Index and Earnings Per Share (“EPS”) growth of 15.2%, for the 2014-20162017- 2019 performance cycle.cycle (see discussion of PSUs at page 40).43); and

YUM! BRANDS, INC. - 2021 Proxy Statement37

EXECUTIVE COMPENSATION   

The Committee certified that the 2016 Launch Grant PSU awards paid out at 100% of target in 2020 based on Company G&A expenses finishing at 1.7% of system sales as of year-end 2019 and the total number of company-owned units finishing at 856 as of the end of 2018.

 

At our May 20172020 Annual Meeting of Shareholders, shareholders approved our “Say on Pay” proposal in support of our executive compensation program, with 89%88% 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 20172020 that served to reinforce our openopen-door policy. The efforts included contacting our largest 35 shareholders, representing ownership of approximately 50% of our shares (discussed further on page 49).

COVID-Related Compensation Changes for 2020

CEO Compensation. In March 2020, the Company announced that Mr. Gibbs would forgo approximately $900,000 of his 2020 base salary so that this amount could be used to fund one-time bonuses for the Company’s nearly 1,200 restaurant general managers across the KFC, Pizza Hut, Taco Bell and The Habit Burger Grill businesses. The forgone salary was also used to help fund the Yum Brand’s Foundation’s Global Employee Medical Relief Fund. This fund provided financial hardship aid to those directly impacted by the COVID-19 pandemic, including company and franchisee restaurant employees.

Discretionary Adjustments. In recognition of business results achieved relative to the unforeseen impact that the COVID-19 pandemic had on our business, the Committee authorized certain discretionary adjustments to the team performance factor component of our bonus formula for most bonus-eligible employees, including the NEOs (discussed further on page 40). On the basis of similar considerations, the Committee also approved a one-time award of Company stock to Mr. Gibbs and Ms. Skeans (as discussed at page 44).

 

 

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 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 pay

mix for our CEO emphasizes our commitment to “at-risk” pay in order to tie pay to performance. The discussion in this section is limited to Mr. Gibbs, our CEO for 2020. Our other NEOs’ target compensation is subject to a substantially similar set of considerations, which are discussed in Section III, 2020 Named Executive Officer Total Direct Compensation and Performance Summary, found at pages 44 to 48 of this CD&A.

 

LOGO

 

3438      YUM! BRANDS, INC.-20182021 Proxy Statement

        

 

 

   EXECUTIVE COMPENSATION

 

   

 

door policy. The efforts included contacting our largest 30 shareholders, representing ownership of approximately 45% of our shares, and meeting with shareholders representing approximately 13% of our shares (discussed further on page 46).

2017 Changes to Compensation Program

Long Term Incentive Equity Mix for 2017. Following the Company’s 2016 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 long-term incentive awards. In response to this shareholder feedback, and in alignment with our business strategy and compensation philosophy, the Committee determined that beginning in 2017, the long-term award mix for members of the Global Leadership Team would be split 50% SARs and 50% PSUs.

Change in PSU Metrics. In response to shareholder feedback, and consistent with the Company’s overall business strategy, beginning in 2017, PSU grants are earned based on the Company’s TSR relative to that

of the S&P 500 Consumer Discretionary Index and on compound annual growth of the Company’s Earnings Per Share (“EPS”), with each factor accounting for 50% of performance measurement. PSU grants were previously earned based on the Company’s TSR relative to that of the S&P 500. 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. In addition, the change to incorporate the S&P 500 Consumer Discretionary Index provides for a more direct comparison of the Company against a diverse group of consumer products companies that is smaller than the S&P 500 and reflects performance against a more relevant data set.

Update to Executive Peer Group. The composition of the Executive Peer Group was updated to allow for more relevant comparisons following the separation of Yum China Holdings, Inc. in October 2016, recognizing the smaller size of the Company and the current complexities of its business (see page 48).

E.     Relationship between Company Pay and Performance

To focus on both the short-term and long-term success of the Company, approximately 90% of our CEO’s 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 pay mix

for our CEO emphasizes our commitment to“at-risk” pay in order to tie pay to performance. For purposes of this section, our discussion is limited to our CEO, Mr. Creed. Our other NEOs’ target compensation is subject to a substantially similar set of considerations, which are discussed in Section III, 2017 Named Executive Officer Total Direct Compensation and Performance Summary, found at pages 41 to 45 of this CD&A.

LOGO

YUM! BRANDS, INC. -2018 Proxy Statement35

EXECUTIVE COMPENSATION   

CEO Cash Compensation and Total Direct Compensation

 

OurThe Committee sets the CEO’s cash compensation (base salary and bonus) tracks Operating Profit (“OP”) growth, which is our primary business performance metric. As demonstrated below, our OP growth was markedly increased from the prior year in 2017 and was significantly above the target set by the Committee, resulting in our CEO’s actual cash compensation being above target.

Our CEO’s actualfor total direct compensation (base salary, annual cash bonus and annual long-term incentive award

value at grant date) reflects theevery year to align appropriately with market data of our Executive Peer Group, taking into account Company performance, of the Company. For 2015, the CEO’s actualperformance, time

in role and other job-related factors. In 2020, Mr. Gibbs’ target total direct compensation was below target, reflectingset between the below target performance of the Company. However, the CEO’s actual total direct compensation for 201625th and 2017 was above target, reflecting the Company’s above target performance.

For 2017, 58%50th percentiles of our Executive Peer Group, reflecting his newness in role. For 2020, 70% of our CEO’s target pay was in the form of long-term equity incentive compensation.

 

 

 

LOGO

36     YUM! BRANDS, INC.-2018 Proxy Statement

   EXECUTIVE COMPENSATION

LOGOLOGO

 

 (1)

Operating Profit for 2016 and 2015 has been recast to present the change in our reporting calendar and retroactively adopting a new accounting standard related to the presentation of net periodic pension cost and net periodic postretirement benefit cost (collectively, “Benefit Costs”). See Notes 2 and 5 to the Consolidated Financial Statements in Item 8 of YUM’s Form10-K for the fiscal year ended December 31, 2017 for a discussion related to adopting a new accounting standard on Benefit Costs and the change in our reporting calendar, respectively.

(2)

The Company usesnon-GAAP Adjusted Operating Profit Growth as a key performance measureMeasures of results of operations for the purpose of evaluating performance against targets set under our YUM Leaders’ Bonus Program.Program included Adjusted Operating Profit Growth includes adjustmentsin 2018 and, for among other things, Special Items,2020 and 2019, Core Operating Profit Growth excluding the impact of thea 53rd week in 2016, the loss of Division Operating Profit due to refranchising, incremental system advertising expense related to the Pizza Hut U.S. Transformation Agreement, forecasted cost savings due to strategic G&A initiatives and2019.

(2)

System sales growth excludes the impact of foreign currency translation. Refer to Appendix A: Reconciliationtranslation and, for 2020 and 2019, the impact of Adjusted Operating Profit Growth,a 53rd week in 2019.

(3)

Total shareholder return is calculated as shown above, to GAAP Operating Profit Growth.the change in YUM share price from the beginning of the respective year until the year-end, adjusted for dividends paid.

 

 

 

YUM! BRANDS, INC. -20182021 Proxy Statement     3739

 

 

 

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 compensation.compensation

 

  

Cash

  Annual Performance-Based Cash

  Bonuses

  

Motivate high performance and reward short-term Company, team and individual performance.performance

 

  

Cash

 

  Long-Term Equity Performance-Based

  Incentives

  

Align the interests of executives with shareholders and emphasize long-term results.results

 

  

SARs & PSUs     

 

  Retirement and Additional Benefits

  

Provide for long-term retirement income and basic health and welfare coverage.

coverage

  

Various

 

A.    Base Salary

 

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.    AnnualPerformance-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 announced at the end of 2016, theThe Committee carefully considered our new strategic direction to become a pure-play franchisor and established team performance measures, targets and weights in January 20172020 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. This process occurred prior to the onset of the COVID-19 pandemic in the United States and much of the world.

The performance targets were developed through the Company’s annual financial planning process, which takes into account DivisionKFC, Pizza Hut and Taco Bell (each, a “Division”) growth strategies, historical

performance, and the expected future operating environment offor each of KFC, Taco Bell and Pizza Hut (each, a “Division”).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.

38     YUM! BRANDS, INC.-2018 Proxy Statement

   EXECUTIVE COMPENSATION

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. paid, absent the use of discretion by the Committee in extraordinary circumstances.

40     YUM! BRANDS, INC.- 2021 Proxy Statement

   EXECUTIVE COMPENSATION

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.

In recognition of business results achieved relative to the unforeseen impact that the COVID-19 pandemic had on our business, the Committee authorized certain discretionary adjustments to the team performance factor component of our bonus formula for most bonus-eligible employees, including the NEOs. For the reasons discussed in the following paragraph, the Committee adjusted the team performance factor for those bonus-eligible employees otherwise receiving a “0,” including each NEO, to a 60, except with respect to Mr. King. As part

described further on page 42, Mr. King’s team performance factor was adjusted to 70 rather than the earned 21 from the Taco Bell Division. The Committee determined that the payment of a discretionary bonus to all bonus-eligible employees, including the NEOs, was appropriate given the results achieved in 2020 towards stabilizing the business and positioning it for success coming out of the 2017 target-setting process,pandemic.

These results can be seen in the Committee decidedmarked improvements made from the second quarter, when the pandemic had its greatest impact on our results. Same-store sales improved from a decline of 15% in Q2 to make certain adjustmentsnegative 1% in Q4, while core operating profit excluding special items improved from negative 25% to GAAP Operating Profit growth when determining performance against Operating Profit targets. These adjustments served to exclude YUM Special Items Income (which are not allocated to Division results), adjust for the loss of Division Operating Profit due to refranchising, include predetermined Division cost savings initiatives, excludenegative 5% (excluding the impact of the 53rda 53rd week in 20162019) during the same time period. Results benefitted in part by strong operations, including a pivot to contactless options, which helped enable temporary store closures to improve from highs of nearly 20% of our system to approximately 2% by year end. Management’s performance and excludethese results, some of which are described below, were beneficial to shareholders as reflected in our stock price rebounding from a low of $54.95 per share in the impact of foreign currency translation. Additionally,second quarter to $108.56 at year end. Key actions taken by management during the Committee decided at the end of 2017 to adjust the Pizza Hut and YUM Operating Profit Growth and System Net Build targets to reflect themid-year execution of YUM approved strategic decisions and investments. For further details, refer to Appendix A: Reconciliation of Adjusted Operating Profit Growth.

Detailed Breakdown of 2017 Team Performancepandemic included:

 

The team performance targets, actual results, weightsEnsuring Strong liquidity- Solidifying the balance sheet 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 store development. Accordingly, the Committee selected these performance measures formitigating liquidity risks through strong

the Company’s annual incentive plan and were included at both the corporate and divisional levels. For Divisions, the team performances are 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, 2

 

 

 

 

 

 

11%

 

 

 

 

 

 

 

 

 

15%

 

 

 

 

 

 

 

 

 

187

 

 

 

 

 

 

 

 

 

50%

 

 

 

 

 

 

 

 

 

94

 

 

 

 

 

  Gibbs

 

 

 

System Same-Store Sales Growth

 

 

 

 

 

 

2.9%

 

 

 

 

 

 

 

 

 

2.4%

 

 

 

 

 

 

 

 

 

87

 

 

 

 

 

 

 

 

 

25%

 

 

 

 

 

 

 

 

 

22

 

 

 

 

 

  Skeans  

 

 

 

System Net Builds3,4

 

 

 

 

 

 

1,263

 

 

 

 

 

 

 

 

 

1,465

 

 

 

 

 

 

 

 

 

181

 

 

 

 

 

 

 

 

 

25%

 

 

 

 

 

 

 

 

 

45

 

 

 

  

 

 

FINAL YUM TEAM FACTOR

                 

 

 

 

 

 

161

 

 

 

 

 

  Eaton

 

 

 

Adjusted Operating Profit Growth1

 

 

 

 

 

 

10%

 

 

 

 

 

 

 

 

 

14%

 

 

 

 

 

 

 

 

 

200

 

 

 

 

 

 

 

 

 

50%

 

 

 

 

 

 

 

 

 

100

 

 

 

 

 

 

System Same-Store Sales Growth

 

 

 

 

 

 

3.0%

 

 

 

 

 

 

 

 

 

3.1%

 

 

 

 

 

 

 

 

 

104

 

 

 

 

 

 

 

 

 

25%

 

 

 

 

 

 

 

 

 

26

 

 

 

 

 

 

System Net Builds3

 

 

 

 

 

 

715

 

 

 

 

 

 

 

 

 

883

 

 

 

 

 

 

 

 

 

200

 

 

 

 

 

 

 

 

 

25%

 

 

 

 

 

 

 

 

 

50

 

 

 

 

 

Total Weighted Team Performance — KFC (75%)

 

     

 

 

 

 

 

176

 

 

 

 

 

 

Total Weighted Team Performance — YUM (25%)

                 

 

 

 

 

 

161

 

 

 

  

 

 

FINAL KFC TEAM FACTOR

                 

 

 

 

 

 

172

 

 

 

 

 

  Niccol

 

 

 

Adjusted Operating Profit Growth1

 

 

 

 

 

 

7%

 

 

 

 

 

 

 

 

 

10%

 

 

 

 

 

 

 

 

 

170

 

 

 

 

 

 

 

 

 

50%

 

 

 

 

 

 

 

 

 

85

 

 

 

 

 

 

System Same-Store Sales Growth

 

 

 

 

 

 

3.5%

 

 

 

 

 

 

 

 

 

3.8%

 

 

 

 

 

 

 

 

 

115

 

 

 

 

 

 

 

 

 

25%

 

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

System Net Builds3

 

 

 

 

 

 

235

 

 

 

 

 

 

 

 

 

244

 

 

 

 

 

 

 

 

 

120

 

 

 

 

 

 

 

 

 

25%

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

Total Weighted Team Performance — TACO BELL (75%)

 

     

 

 

 

 

 

144

 

 

 

 

 

 

Total Weighted Team Performance — YUM (25%)

                 

 

 

 

 

 

161

 

 

 

  

 

 

FINAL TACO BELL TEAM FACTOR

                 

 

 

 

 

 

148

 

 

 

 (1)

Refer to Appendix A: Reconciliationcash management, including issuing $600 million in unsecured notes in April, 2020 (the first offering of Adjusted Operating Profit Growth, as shown above, to GAAP Operating Profit Growth.its kind following the onset of the pandemic in the United States) and refinancing approximately $1 billion in other debt;

Protecting franchise partners- Supporting our franchisees through strategic temporary deferral of certain payment obligations (the vast majority of which were repaid by year-end 2020) and capital commitment obligation deferrals, in addition to addressing franchisees at risk of financial distress or restructuring, including the restructuring of our largest franchisee in the U.S.;

Operational excellence- Overseeing flawless supply chain execution, which allowed us to maintain the ability to continue to safely serve menu items to our worldwide customers, while also sourcing critical personal protective equipment to protect frontline workers;

Customer focus- Adapting to new consumer expectations, enabling the rapid pivot to curbside pickup, delivery and other contactless options and operational adjustments to meet new safety standards;

Innovative technologies- Accelerating key digital and technology initiatives, including rapid growth in digital sales, which resulted in all-time digital sales records for the Company in each of Q2, Q3, and Q4;

Strategic growth- Completion of the acquisition and integration of The Habit Burger Grill, which added approximately 275 restaurant locations with exciting potential for global expansion;

Commitment to our people- Developing new policies and implementing additional operational safeguards to protect employee health and safety, strengthening our culture and increasing communication amidst a work from home environment to maintain employee morale; and

Community engagement- Supporting our communities by providing economic relief to restaurant employees who were adversely impacted by the pandemic and launching our Unlocking Opportunity Initiative to promote equity and inclusion, education, and entrepreneurship.

The adjustment to the team performance factor resulted in a bonus significantly below the target performance level (a 100% bonus payout) for each NEO. Nonetheless, it was intended to reward performance under unprecedented circumstances and

 

 

 

YUM! BRANDS, INC. -20182021 Proxy Statement     3941

 

 

 

EXECUTIVE COMPENSATION   

 

      

 

a rapid effective response to unforeseen events. This adjustment in the team performance factor was also extended equally to all of the Company’s bonus-eligible employees who did not otherwise earn a bonus under the formula set by the Committee in January 2020. This group of bonus-eligible employees includes a broad range of our employees, including those in junior positions and extending up through senior management.    The Committee noted that year-over-

year-bonus payouts for these employees under the YLB, including all the NEOs, were significantly lower and that the Company elected not to award merit salary increases for all employees for 2021. The Company believes this was the right balance of ensuring strong shareholder alignment and rewarding employees fairly for results described above. The team performance factor used for each NEO is more fully described in the table below.

 

Detailed Breakdown of 2020 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 restaurant development. Accordingly, prior to the onset of the COVID-19 pandemic, the Committee approved 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 were weighted 75% on Division operating measures and 25% on YUM team performance. The Committee’s discretionary adjustments to the Team Performance Factor component of our bonus formula are also set forth below.

Team Performance

 
  NEO Measures  Target   Actual   

Earned Award

as % of Target

   Weighting   

Earned
Team

Performance
Factor

   Discretionary
Team
Performance
Factor		 

 

  Gibbs   Skeans

  Turner

 

 

Core Operating Profit Growth1

 

  

 

 

 

 

 

$2,057MM

 

7.2%

 

 

 

 

 

 

  

 

 

 

 

$1,779MM

 

(7.2%)

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  

 

 

 

 

50%

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  
 

 

System Same-Store Sales Growth

 

  

 

 

 

 

2.6%

 

 

 

 

  

 

 

 

 

 

(6.2%)

 

 

 

  

 

 

 

 

0

 

 

 

 

  

 

 

 

 

25%

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  
 

 

 

System Net New Units

 

  

 

 

 

 

 

 

 

 

2,120

 

 

 

 

 

 

  

 

 

 

 

183

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  

 

 

 

 

25%

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  
  FINAL YUM TEAM FACTOR                      

 

 

 

 

0

 

 

 

 

  

 

 

 

60

 

 

 

 

 

  Lowings  

 

 

 

 

 

Core Operating Profit Growth1

  

 

 

 

 

$1,135MM

8.6%

 

 

 

 

 

  

 

 

 

 

$931MM

(10.8%)

 

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  

 

 

 

 

50%

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  
 

 

System Same-Store Sales Growth

 

  

 

 

 

 

3.0%

 

 

 

 

  

 

 

 

 

(8.6%)

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  

 

 

 

 

25%

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  
 

 

System Net New Units

 

  

 

 

 

 

1,500

 

 

 

 

  

 

 

 

 

896

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  

 

 

 

 

25%

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  
 

 

Total Weighted Team
Performance — KFC 75%

 

           0   
 

Total Weighted Team
Performance — YUM 25%

 

 

           0   
  

 

FINAL KFC TEAM FACTOR

 

                      

 

 

 

 

0

 

 

 

 

  

 

 

 

 

60

 

 

 

 

 

 

 

  King

 

 

 

 

 

Core Operating Profit Growth1

  

 

 

 

 

$717MM

7.0%

 

 

 

 

 

  

 

 

 

 

$696MM

3.9%

 

 

 

 

 

  

 

 

 

 

55

 

 

 

 

  

 

 

 

 

50%

 

 

 

 

  

 

 

 

 

55

 

 

 

 

  
 

 

System Same-Store Sales Growth

 

  

 

 

 

 

 

3.25%

 

 

 

  

 

 

 

 

(0.7%)

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  

 

 

 

 

25%

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  
 

 

System Net New Units

 

  

 

 

 

 

330

 

 

 

 

   

 

64

 

 

 

  

 

 

 

 

0

 

 

 

 

  

 

 

 

 

25%

 

 

 

 

  

 

 

 

 

0

 

 

 

 

  
 

 

Total Weighted Team
Performance — TB 75%

 

           28   
 

Total Weighted Team
Performance — YUM 25%

 

 

           0   
  

 

FINAL TACO BELL TEAM FACTOR

 

 

                 

 

 

 

 

21

 

 

 

 

  

 

 

 

 

60

 

 

 

 

 (2)(1)

AdjustedSee pages 33 and 38 in Item 7 of YUM’s Form 10-K for the fiscal year ended on December 31, 2020 for a discussion of Core Operating Profit in 2020. In this table, Core Operating Profit Growth target was modified to exclude $25 millionexcludes the impact of unplanned Pizza Hut expense related tomid-year execution of the U.S. Transformation Agreement with franchisees, which the Committee determined to be appropriate given the intent of the Agreement and its effect on YUM’s Operating Profit. This modification increased final YUM team performance by 18 points.a 53rd week in 2019.

 

42     YUM! BRANDS, INC.- 2021 Proxy Statement

 (3)

Effective January 1, 2017, YUM changed its fiscal year end from the last Saturday of December to a year beginning on January 1 and ending December 31 of each year. As part of this change we removed any reporting lags in our international businesses by shifting their fiscal year ends from on or near November 30 to on or near December 31. As a result of this change, System Net Build targets and actual results include fiscal 2017 net new unit openings of 1,407, plus 58 units in certain international businesses that had an extra period (i.e. December 2016) as a result of this calendar shift.

   EXECUTIVE COMPENSATION

 

(4)

System Net Builds target was adjusted for the unplanned acceleration of Pizza Hut store closures during 2017 related to themid-year execution of the U.S. Transformation Agreement with franchisees, which the Committee determined to be appropriate given the intent of the Agreement and its effect on YUM’s System Net Builds. This adjustment increased final YUM team performance by 9 points.

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.

The Committee’s determinations with respect to the individual performance of our NEOs is set forth below from pages 44 to 48.

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 2017,2020, 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 2017,2020, 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, the target grant value was split 50% SARs and 50% PSUs. For each NEO, the breakdown between SARs award values and PSU award values can be found under the Summary Compensation Table, page 5355 at columns e and f.

Stock Appreciation Rights Awards

The Committee believes that SARs reward value creationlong-term value-creation generated from sustained resultsresults. They are, therefore, strongly linked to and based on, the favorable expectationsperformance of our shareholders.Yum common stock. In 2017,2020, we granted to each of our NEOs SARs which haveten-year terms and vest over at least 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 PSU awards in 2017.2020. 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 compound annual3-year growth of the Company’s Earnings Per Share (“EPS”). Incorporating TSR and EPS into the annual PSU awards supports the Company’s

40     YUM! BRANDS, INC.-2018 Proxy Statement

   EXECUTIVE COMPENSATION

pay-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 55.57. 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 20172020 – 2019,2022, each NEO will earn a percentage of his or her target PSU award, with 50% of the payout based on the achieved TSR percentile ranking and the other 50% based on EPS growth,growth. Indicative payouts as a percentage of target are as set forth in the table below:

 

    Threshold Target Maximum     Threshold Target Maximum 

TSR Percentile Ranking

 

 

<30%

 

 

 

30%

 

 

 

  50%

 

 

 

  75%

 

 <30% 30%  50%  75% 

Payout as % of Target

 

 

    0%

 

 

 

35%

 

 

 

100%

 

 

 

200%

 

 0% 35%  100%  200% 

EPS Growth(3-year CAGR, ex foreign currency translation)

 

 

  <9%

 

 

 

  9%

 

 

 

  15%

 

   21% <6% 6%  10%  14% 

Payout as % of Target

 

 

    0%

 

 

 

35%

 

 

 

100%

 

 

 

200%

 

 0% 35%  100%  200% 

YUM! BRANDS, INC. - 2021 Proxy Statement43

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.

In December 2020, the Committee reviewed the projected results of the PSU awards Mr. Gibbs and Ms. Skeans received in 2018 (covering the 2018 through 2020 performance period). This award was designed to be earned based on two metrics: (i) the Company’s 3-year average TSR relative to the companies in the S&P 500 Consumer Discretionary Index and (ii) compound annual 3-year growth of the Company’s EPS. For this performance period, the award provided that Mr. Gibbs and Ms. Skeans could earn a percentage of their target PSU award, with 50% of the payout based on the achieved TSR percentile ranking and the other 50% based on EPS growth. When reviewing performance for this award, the Committee noted that despite strong performance towards the performance targets prior to the onset of the pandemic, which, as of December 31, 2019, would have resulted in a payout at approximately 93% for the EPS portion of the award, the impact of the pandemic had so adversely affected the EPS metric that the EPS portion of the award would pay out at 0%, as of year-end 2020.

The Committee determined that Mr. Gibbs and Ms. Skeans should be compensated for the

pre-pandemic performance with respect to the EPS metric of the award, given that the global disruption in 2020 could not have been reasonably accounted for when performance goals were set in 2018. The Committee felt this was appropriate in order to recognize Mr. Gibbs’ and Ms. Skeans’ dynamic leadership of the business through unprecedented turbulence, which was reflected in the Company’s quick turnaround in performance, and to prevent Mr. Gibbs and Ms. Skeans from being unfairly penalized by the unanticipated impact of the pandemic on the Company’s operating results. The Committee also took into the consideration that the Company’s stock price had rebounded from the lows of the pandemic, to a price roughly equivalent to the pre-pandemic trading price, which reduced negative impact on shareholders. In addition to rewarding past performance, the Committee further determined that making a one-time award of Company common stock would recognize Mr. Gibbs’ and Ms. Skeans’ leadership in a time of crisis (as reflected in the detailed discussion of performance results under Team Performance, above at page 40), while also appropriately incentivizing their efforts to lead the Company’s recovery and to be creative in navigating an evolving landscape, which the Committee believed would ultimately provide increased shareholder value. The shares received by Mr. Gibbs and Ms. Skeans were valued at $882,127 and $400,957, respectively (consistent with the payout that would have been received had performance as of December 31, 2019 been maintained).

 

III. 20172020 Named Executive Officer Total Direct Compensation and Performance Summary

 

 

Below is a summary of each of our NEOs’ total direct compensation – which generally includes base salary, annual cash bonus, and long termlong-term incentive awards – and an overview of their 20172020 performance relative to our annual and long-term incentive performance goals. The

The process the Committee used to determine each officer’s 20172020 compensation is described more fully in “How Compensation Decisions Are Made” beginning on page 46.49.

 

 

44     YUM! BRANDS, INC.- 2021 Proxy Statement

   EXECUTIVE COMPENSATION

CEO Compensation

 

 

 

  Greg CreedDavid Gibbs

  Chief Executive Officer

 

20172020 Performance Summary

Our Board, under the leadership of the Committee Chair, approved Mr. Creed’sGibbs’ goals for his first year as our Chief Executive Officer 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 thatwhich 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’ leadership during a global pandemic that significantly impacted restaurant and company operations worldwide.

The Committee determined that Mr. Creed’sGibbs’ overall performance for 20172020 merited an individual factor of 130. This individual factor was combined with YUM’s awarded team factor of 16160 (discussed at page 38) to calculate

his40) resulting in a below target annual cash bonus. This determination was based on the Committee’s subjective assessment of Mr. Creed’sGibbs’ performance against his previously set goals which included the following items and substantially reflect the impact of the pandemic (without assigning a weight to any particular item):

 

YUM Adjusted Operating Profit GrowthPivoting operations in the wake of operating limitations (e.g., dining room closures) to new channels that enabled continued sales without disruption (e.g., curbside pickup); produced record digital sales of $17 billion, approximately 15%a 45% increase over the prior year;

 

Worldwide system sales growth of 5%, excluding the impact of foreign currency translationDeveloping and the 53rd weekimplementing new policies and additional operational safeguards to protect employee health;

 

Net new restaurant openingsAvoiding potential disruptions in supply chain as a result of 1,407; net unit growth of 3%COVID-19 global pandemic;

 

KFC’sMitigating significant permanent store-closure risks arising from lockdowns and Taco Bell’s abovefull or partial closures or significant sales declines in various markets;

Supporting employees and communities in response to the pandemic and social justice movement by taking actions to bring the Company’s Recipe for Good to life;

Making significant investments in technologies and new functions focused on analytics and innovation through G&A reallocations;

Launching the Unlocking Opportunity initiative focused on equity and inclusion, education, and entrepreneurship, supported by a $100 million investment over five years; and

Developing leadership, including development of Tracy Skeans which led to her promotion to Chief Operating Officer and Chief People Officer in early 2021, as well as fostering customer-focused employee culture.

2020 Committee Decisions

In January, Mr. Gibbs’ compensation was adjusted as follows:

Base salary was increased to $1,200,000;

Annual cash bonus target percentage was increased to 150% of base salary; and

Grant value of long-term incentive equity awards was increased to $7,000,000, recognizing his promotion into his new role and prior performance as Chief Operating Officer and his impact on the business.

These decisions positioned Mr. Gibbs’ total target direct compensation at between the 25th and 50th percentiles of the Company’s Executive Peer Group (defined at page 51).

In March 2020, Mr. Gibbs voluntarily decided he would forgo approximately $900,000 of his 2020 base salary so that this amount could be used to fund one-time bonuses for Adjusted Operating Profit Growththe Company’s nearly 1,200 restaurant general managers across the businesses. His forgone salary was also used to help fund the Yum Brands Foundation’s Global Employee Medical Relief Fund, which provided financial hardship grants to those directly impacted by the COVID-19 pandemic, including company and franchise restaurant employees. The forgone salary will not be excluded from the calculation of Mr. Gibbs’ annual incentive for 2020 or in the overall calculation of his retirement benefits.

 

 

 

 

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EXECUTIVE COMPENSATION   

 

      

 

KFC’s, and Taco Bell’s above target performance for System Net Builds,

Management of the Company during the first full year of its transformation into a pure-play franchisor and in developing the transformation strategy.

Development of leadership and leadership bench, and fostering customer-focused employee culture

2017 Committee Decisions

In January 2017, the Committee set Mr. Creed’s 2017 compensation. Mr. Creed’s annual cash bonus target was set at 150% of his base salary and was unchanged from 2016. His salary was increased 3% for 2017 and his total long-term incentive equity award grant value was increased 12%, to bring him closer to the median of the Company’s Executive Peer Group, recognizing his performance in leading the Company during thespin-off of the China business, time in role and impact on the business. These increases brought his total target compensation to $9,738,000 for 2017, which is below the 50th percentile of the Company’s Executive Peer Group.

The graphics below illustrate Mr. Creed’sGibbs’ direct compensation:

 

LOGOLOGO  LOGO

LOGO

Other NEO 2020 Total Direct Compensation

Chris Turner

Chief Financial Officer

 

2018 Changes2020 Performance Summary

The Committee determined that Mr. Turner’s performance merited a 140 individual performance factor. The Committee recognized Mr. Turner’s leadership in supporting the Company’s technology teams in executing critical, rapid enhancements to CEO Compensationthe customer experience during the pandemic and enabling the Company to efficiently convert dine-in sales to off-premises. He was also recognized for leading a franchisee health initiative that supported franchisees throughout the pandemic and for successfully managing the Company’s liquidity and balance sheet strength throughout the pandemic. The Committee also noted Mr. Turner’s global responsibility for finance, corporate strategy, supply chain and information technology. Mr. Turner’s individual factor was combined with an awarded team factor of 60 (discussed at page 40) to calculate his annual cash bonus.

2020 Committee Decisions

In January 2018,November 2019, the Committee made several changesapproved adjustments to our CEO’sMr. Turner’s compensation for 2020 to reflect his performance and time in recognitionthe role. The adjustments are as follows:

Base salary was increased to $850,000;

Annual cash bonus target was increased to 100% of strong Companybase salary; and

Grant value of long-term incentive equity awards was increased to $2,000,000 to better align with market compensation norms and internal peer equity, as well as to reflect performance during 2017, our3-year TSR performance,and his time in role.

These adjustments positioned Mr. Turner’s 2020 total direct compensation at between the CEO role (beginning his 425thth year) and the Company’s substantial progress towards its transformation into a pure-play franchisor. Based on these factors, the Committee approved moving Mr. Creed’s 2018 total target compensation to

the median50th percentiles of the Company’s Executive Peer Group setting(defined at page 51) for his compensation as follows:position.

Base Salary: $1,250,000

Target Bonus: 175% of Base Salary

Long Term Incentive: $8,900,000 (economic value), with the following mix: 50% SARs; 50% PSUs

Total target compensation: approximately $12,400,000

 

 

 

 

4246      YUM! BRANDS, INC.-20182021 Proxy Statement

        

 

 

   EXECUTIVE COMPENSATION

 

   

 

Other NEO 2017 Total Direct Compensation

David W. GibbsTracy L. Skeans

PresidentChief Operating Officer and Chief FinancialPeople Officer

 

20172020 Performance Summary

The Committee determined Mr. Gibbs’that Ms. Skeans’ performance for the year merited a 135140 individual performance factor. The Committee recognized Mr. Gibbs’ performanceMs. Skeans for providing strategic leadership in the positionCompany’s efforts to create COVID-19 response policies and in executing upon those policies, as well as for the roll-out of Presidentcontactless delivery and CFOcontactless carryout across all of the Company’s brands. She was also recognized for her leadership in the successfully integrating and onboarding The Habit Burger Grill and for her efforts in cultivating the Company’s culture and talent.

In recognition of Ms. Skeans’ increasing leadership role within the Company and continued strong performance, she was promoted to Chief Operating Officer and Chief People Officer of the Company, including driving shareholder value creationeffective January 29, 2021. She now has global responsibility for leading cross-brand collaboration on operational execution, people capability and returns through optimization of our capital structure, increasing restaurant development, driving YUM’s Adjusted Operating Profit Growth of 15%, leadingcustomer experience imperatives intended to fuel same-store sales and net-new unit growth around the effort to refranchise a significant number of Company-owned restaurants,world. She also oversees business transformation, operations, food safety, human resources, equity and in leading the implementation ofinclusion and communications. Throughout 2020 she served as the Company’s transformation strategy. Mr. Gibbs’Chief Transformation and People Officer. Ms. Skeans’ individual performance factor was combined with aan awarded team factor of 16160 (discussed at page 38)40) to calculate hisher annual cash bonus.

20172020 Committee Decisions

In January, Mr. Gibbs’November 2019, the Committee approved adjustments to Ms. Skeans’ compensation was adjustedfor 2020 to reflect certain additional and non-traditional responsibilities of her role, including oversight of the Company’s food safety and communications teams, as well as to reflect her performance and time in the role. The adjustments are as follows:

 

Base salary was increased 5%;to $750,000;

 

Annual cash bonus target remained at 105%increased to 90% of base salary; and

 

Grant value of long-term incentive equity awards werewas increased by 47% to better align with market compensation norms and internal peer equity, as well as to reflect performance and time in role.$1,600,000.

These increases brought Mr. Gibbs’decisions positioned Ms. Skeans’ total direct compensation to aroundat between the 50thpercentile and 75th percentiles of the Company’s Executive Peer Group (defined at page 48)51) for his position.her position, reflecting her time in role and expanded responsibilities.

The Committee also approved a 2020 CEO Award RSU grant with an economic value of $500,000, recognizing her leadership for accelerating diversity and inclusion initiatives, championing the use of repeatable models around the globe, and developing and implementing talent and leadership programs that drove attraction, retention and best-in-class engagement scores.

 

 

Roger G. EatonMark King

Chief Executive Officer, of KFCTaco Bell Division

 

20172020 Performance Summary

The Committee determined that Mr. Eaton’sKing’s performance as the CEO, KFC Division, merited a 140 individual performance factor. UnderThe Committee recognized Mr. Eaton’sKing’s leadership KFC achieved significantly above-target Adjusted Operating Profit Growthin quickly pivoting the Taco Bell business during the pandemic to accelerate the digital and net new unit growth, as well ason-target same-store sales growth. Mr. Eatondelivery business. He was also recognized for codifying repeatable operating system frameworks, driving compliance with foodthe successful implementation of enhanced employee and customer safety information security and Foreign Corrupt Practices Act (“FCPA”) standards, and providing leadership inprotocols across the refranchising of a significant number of restaurants.business. Mr. Eaton’sKing’s individual performance factor was combined with a team factor of 17270 (discussed at page 38)40) to calculate his annual cash bonus.

bonus, a portion of which was earned based on Taco Bell performance in the absence of Committee discretion.

20172020 Committee Decisions

In January, Mr. Eaton’sKing’s compensation was adjusted as follows:

 

Base salary was increased 3% percent for 2017;to $925,000;

 

Annual cash bonus target remained at 100% of base salary; and

 

Grant value of long-term incentive equity awards was increased by 33%set at $1,500,000 to better align with market compensation norms and internal peer equity.equity, as well as to reflect performance and his time in role.

These increases positioned Mr. Eaton’sKing’s 2020 total direct compensation atwas between the 50th percentileand 75th percentiles of the Executive Peer Group (defined at page 48)51) for his position.

 

 

 

 

YUM! BRANDS, INC. -20182021 Proxy Statement     4347

 

 

 

EXECUTIVE COMPENSATION   

 

      

 

Brian R. NiccolTony Lowings

Former Chief Executive Officer, of Taco BellKFC Division

 

20172020 Performance Summary

The Committee determined that Mr. Niccol’sLowings’ performance as the CEO, Taco Bell Division, merited a 135125 individual performance factor. UnderThe Committee recognized Mr. Niccol’sLowings’ leadership Taco Bell Division’sin the pandemic, particularly in the acceleration of restaurant efficiency, set-up and agreed upon operating performance was very strong with above-target Operating Profit Growth, same-store sales growth and net new unit expansion. Mr. Niccolstandards. He was also recognized for providing leadership in implementing the refranchising plan for Taco Bell restaurantsKFC’s significant progress towards digital and for driving compliance with food safety and information security.technology advancements. Mr. Niccol’sLowings’ individual performance factor was combined with aan awarded team factor of 14860 (discussed at page 38)40) to calculate his annual cash bonus.

20172020 Committee Decisions

In January, Mr. Niccol’sLowings’ compensation was adjusted as follows:

 

Base salary was increased 4% percent for 2017;to $750,000;

 

Annual cash bonus target remained atpercentage increased to 100% of base salary; and

 

Grant value of long-term incentive equity awards was increased by 33% to better align with market compensation norms and internal peer equity.

These increases brought Mr. Niccol’s total direct compensation to between the 50th and 75th percentile of the Executive Peer Group (defined at page 48) for his position.

Tracy L. Skeans

Chief Transformation and People Officer

2017 Performance Summary

The Committee determined that Ms. Skeans’ performance merited a 130 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 improving internal and external communication strategies and for driving compliance with food safety, information security and FCPA standards. Ms. Skeans’ individual factor was combined with a team factor of 161 (discussed at page 38) to calculate her annual cash bonus.

2017 Committee Decisions

In January, Ms. Skeans’ compensation was adjusted as follows:

Base salary was increased 5%

Annual cash bonus target increased to 85% of base salary

Grant value of long-term incentive equity awards was increased by 47%$1,600,000 to better align with market compensation norms and internal peer equity, as well as to reflect performance and herhis time in the role.

These increases brought Ms. Skeans’decisions positioned Mr. Lowings’ total direct compensation to aroundat between the 25th and 50th percentilepercentiles of the Executive Peer Group (defined at page 48)51) for herhis position.

 

 

44     YUM! BRANDS, INC.-2018 Proxy Statement

   EXECUTIVE COMPENSATION

The graphic below illustrates the 2017 total direct compensation of our Named Executive Officers, other than Mr. Creed:

LOGO

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 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 2017, Mr. Niccol was2020, Messrs. Turner and King were eligible for the LRP. Under the LRP, heMessrs. Turner and King received an annual allocation to his accounttheir accounts equal to 9.5%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 2.47%) on the balance while he was employed by the Company.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. Under this plan, Messrs. CreedMr. Lowings receives an annual contribution equal to 15% of base salary and Eaton each receivetarget bonus and an annual earnings credit of 5%.

Benefits payable under these plans are described in more detail beginning on page 61.

 

 

 

 

48   YUM! BRANDS, INC. -20182021 Proxy Statement45

 

 

 

EXECUTIVE COMPENSATION

 

  

 

contribution equal to 15% of his 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 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 companyCompany provides very limited number of perquisites.perquisites to our NEOs. The only perquisite provided to all NEOs is a paid physical examination of approximately $2,800. In addition, the CEO wasand his spouse were required to use the Companycharter 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. In 2015,Our program provides that any costs for the Committee approved timeshare arrangements beginning in 2015 for Mr. Creed with respect to hisCEO’s personal aircraft use of aircraft. The arrangement provides that

upon the executive reaching $200,000 in incremental costs for his personal use, the executive’s timeshare agreements will be triggered and any incremental costs for personal use of corporate aircraft above $200,000$300,000 will be reimbursed to the Company in accordance with the requirements of the Federal Aviation Administration regulations and the time share agreements.regulations. We do not provide taxgross-ups on the personal use of the Companycharter or approved commercial aircraft. For 2020, the

incremental cost of Mr. Gibbs personal use of charter or commercial aircraft was $230,030. 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. The personal travel of the Non-CEO NEOs resulted in the following incremental costs in 2020: $34,350 for Ms. Skeans and $63,902 and $43,676 for Messrs. Turner and King, respectively.

 

 

V.

How Compensation Decisions Are Made

 

Shareholder Outreach, Engagement and 20172020 Vote on NEO Compensation

 

At our 20172020 Annual Meeting of Shareholders, 89%88% of votes cast on our annual advisory vote on NEO compensation were in favor of our NEOs’ compensation program, as disclosed in our 20172020 proxy statement. During 2017,2020, we continued our shareholder outreach program to better understand our investors’ opinions on our compensation practices and respond to their questions. Committee members and management team members from compensation, investor relations and legal continued to be directly involved in engagement efforts during 2017 that served to reinforce our open dooropen-door policy. The efforts included:

 

Contacting the top 30our largest 35 shareholders, representing ownership of approximately 45%50% of our shares

Meeting with shareholders representing 13% 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 20172020 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.

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.

The Company and the Committee appreciate the feedback from our shareholders and plan to continue these engagement efforts.

 

 

 

 

46   YUM! BRANDS, INC. - -20182021 Proxy Statement49

 

 

 

EXECUTIVE COMPENSATION

 

  

 

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

 

LOGOLOGO

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.

 

 

 

 

50   YUM! BRANDS, INC. -20182021 Proxy Statement47

 

 

 

EXECUTIVE COMPENSATION

 

  

 

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 in 2017.. The composition ofupdates to the Executive Peer Group was updatedwere 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.these companies have a global reach and multiple brands. The 2017 Executive Peer Group wasused for 2020 pay determinations for all NEOs (including those made in November 2019 for Messrs. Gibbs and Turner and Ms. Skeans) is comprised of the following companies:

 

LOGOLOGO

 

At the time the benchmarking analysis was prepared in August 2019, the Executive Peer Group’s median annual revenues were $9.3$13.2 billion, while YUM equivalent annual revenues were estimated at $14.4$13.8 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 approximately 290 brand-country combinations and approximately 2,000 franchisees. To appropriately reflect this complexity in calibrating the size of our

organization and underlying operating divisions during the 2019 benchmarking process, our philosophy iswas 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 iswas 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.

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.

 

 

 

 

48   YUM! BRANDS, INC. - -20182021 Proxy Statement51

 

 

 

EXECUTIVE COMPENSATION

 

  

 

Competitive Positioning and Setting Compensation

 

At the beginning of 2017,2020, 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! BRANDS, INC. -2018 Proxy Statement49

EXECUTIVE COMPENSATION   

YUM’s Executive Stock Ownership Guidelines

The Committee has established stock ownership guidelines for approximately 175200 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 2017,2020, all NEOs and all other employees subject to guidelines met or exceeded their ownership guidelines.

 

NEO

    Ownership Guidelines     Shares Owned(1)     Value of Shares(2)   Multiple of Salary   

 

 

Creed

 

    

 

 

 

 

7x base salary

 

 

 

 

    

 

 

 

 

707,555

 

 

 

 

    

 

 

 

 

$57,743,564

 

 

 

 

  

 

 

 

 

47.5  

 

 

 

 

 

 

Gibbs

 

    

 

 

 

 

3x base salary

 

 

 

 

    

 

 

 

 

240,236

 

 

 

 

    

 

 

 

 

$19,605,660

 

 

 

 

  

 

 

 

 

23.3  

 

 

 

 

 

 

Eaton

 

    

 

 

 

 

3x base salary

 

 

 

 

    

 

 

 

 

471,020

 

 

 

 

    

 

 

 

 

$38,439,942

 

 

 

 

  

 

 

 

 

46.6  

 

 

 

 

 

 

Niccol

 

    

 

 

 

 

3x base salary

 

 

 

 

    

 

 

 

 

144,658

 

 

 

 

    

 

 

 

 

$11,805,539

 

 

 

 

  

 

 

 

 

14.1  

 

 

 

 

 

 

Skeans

    

 

 

 

2x base salary

 

 

    

 

 

 

53,920

 

 

    

 

 

 

$  4,400,411

 

 

  

 

 

 

7.3  

 

 

 (1)  Calculated as of December 31, 2017 and represents shares owned outright, shares underlying vestedin-the-money SARs, and all RSUs awarded under the Company’s EID Program.

52     YUM! BRANDS, INC.- 2021 Proxy Statement

 (2)  Based on YUM closing stock price of $81.61 as of December 30, 2017.

   EXECUTIVE COMPENSATION

NEO

    Ownership Guidelines     Shares Owned(1)     Value of Shares(2)   Multiple of Salary   

 

 

Gibbs

 

    

 

 

 

 

7x base salary

 

 

 

 

    

 

 

 

 

341,216

 

 

 

 

    

 

 

 

 

$37,042,409

 

 

 

 

  

 

 

 

 

30.9  

 

 

 

 

 

 

Turner(3)

 

    

 

 

 

 

3x base salary

 

 

 

 

    

 

 

 

 

3,911

 

 

 

 

    

 

 

 

 

$     424,578

 

 

 

 

  

 

 

 

 

0.5  

 

 

 

 

 

 

Skeans

 

    

 

 

 

 

2x base salary

 

 

 

 

    

 

 

 

 

58,967

 

 

 

 

    

 

 

 

 

$  6,401,458

 

 

 

 

  

 

 

 

 

8.5  

 

 

 

 

 

 

King(3)

 

    

 

 

 

 

3x base salary

 

 

 

 

    

 

 

 

 

4,776

 

 

 

 

    

 

 

 

 

$     518,483

 

 

 

 

  

 

 

 

 

0.6  

 

 

 

 

 

 

Lowings

    

 

 

 

3x base salary

 

 

    

 

 

 

148,691

 

 

    

 

 

 

$16,141,895

 

 

  

 

 

 

21.5  

 

 

 (1)

Calculated as of December 31, 2020 and represents shares beneficially owned outright, shares underlying vested in-the-money SARs, and all RSUs awarded under the Company’s EID Program.

 (2)

Based on YUM closing stock price of $108.56 as of December 31, 2020.

 (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 65.67.

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 SARs Granting Practices

 

Historically, we have made 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 make grants at the same time other

50     YUM! BRANDS, INC.-2018 Proxy Statement

   EXECUTIVE COMPENSATION

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.

YUM! BRANDS, INC. - 2021 Proxy Statement53

EXECUTIVE COMPENSATION   

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.

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 annually. In the case of these grants, the Committee sets all the terms of each award, except the actual number of SARs, 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.

 

 

YUM! BRANDS, INC. -2018 Proxy Statement51

EXECUTIVE COMPENSATION   

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. Performance-based compensation, if earned prior to 2018 or paid pursuant to a binding contract that was in place on November 2, 2017, is excluded from the limit, however, so long as it meets certain requirements. The Committee intends that thepre-2018 annual bonus and SARs, RSU and PSU awards satisfy the requirements for exemption under Internal Revenue Code Section 162(m).

For 2017, the annual salary paid to Mr. Creed exceeded $1 million. The other NEOs were in each case paid salaries of $1 million or less. The 2017, annual bonuses were all paid pursuant to our annual bonus program and, therefore, we expect will be deductible. For 2017, the Committee set the maximum individual award opportunity based on a bonus pool for the CEO and the next three highest paid executive officers, other than Messrs. Creed and Gibbs. (Mr. Gibbs is not included for purposes of our pool since under IRS rules in effect prior to 2018, the CFO is not subject to these limits.) The bonus pool for 2017 was equal to 1.5% of Operating Profit (adjusted to exclude special items believed to be distortive of consolidated results on a year-over-year basis — these are the same items excluded in the Company’s annual earnings releases). The maximum payout opportunity for each executive was set at a fixed percentage of the pool. Based on the Company’s Operating Profit, before

special items of $1.8 billion, the bonus pool was set at approximately $26 million and the maximum 2017 award opportunity for each NEO was based on their applicable percentage of the pool (Mr. Creed=30%, Mr. Niccol=20%, Mr. Eaton=20% and Ms. Skeans=10%) (Under the terms of the shareholder approved plan no executive may earn a bonus in excess of $10 million for any year). The Committee then exercised its discretion in determining actual incentive awards based on team performance and individual performance measures as described above.

For 2018 and years thereafter, Section 162(m) limits the deductibility of all annual compensation in excess of $1 million paid to certain executive officers (the exception for performance-based compensation will 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 may 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 Chair

Michael J. Cavanagh

Mirian M. Graddick-Weir

Robert D. WalterThomas C. Nelson

 

 

 

5254      YUM! BRANDS, INC.-20182021 Proxy Statement

        

 

 

   EXECUTIVE COMPENSATION

 

   

 

The following tables provide information on the compensation of the Named Executive Officers (“NEOs”) for our 20172020 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 20172020 fiscal year, determined in accordance with SEC rules.

Summary Compensation Table

 

  Name and
  Principal Position

 

 

Year

 

  

Salary

($)(1)

 

  

Bonus

($)

 

  

Stock
Awards

($)(2)

 

  

Option/
SAR

Awards

($)(3)

 

  

Non-Equity

Incentive Plan

Compensation

($)(4)

 

  

Change in
Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($)(5)

 

  

All Other

Compensation

($)(6)

 

  

Total 

($) 

 

 

 

  (a)

 

 

 

(b)

 

  

 

(c)

 

  

 

(d)

 

  

 

(e)

 

  

 

(f)

 

  

 

(g)

 

  

 

(h)

 

  

 

(i)

 

     

 

  Greg Creed

 

 

 

 

2017

 

 

 

 

 

 

1,208,846

 

 

 

 

 

 

—

 

 

 

 

 

 

3,350,020

 

 

 

 

 

 

3,350,007

 

 

 

 

 

 

3,814,493

 

 

 

 

 

 

66,286

 

 

 

 

 

 

578,955

 

 

 

 

 

 

12,368,607 

 

 

  Chief Executive

  Officer of YUM

  2016   1,188,942   —   5,500,066   4,500,008   3,591,094   56,100   544,472   15,380,682  
  2015   1,104,615   —   1,075,016   3,108,013   787,050   25,294   1,393,388   7,493,376  

 

  David W. Gibbs

 

 

 

 

2017

 

 

 

 

 

 

833,846

 

 

 

 

 

 

—

 

 

 

 

 

 

1,100,036

 

 

 

 

 

 

1,100,003

 

 

 

 

 

 

1,917,027

 

 

 

 

 

 

2,564,062

 

 

 

 

 

 

19,346

 

 

 

 

 

 

7,534,320 

 

 

  President and Chief

  Financial Officer of YUM(7)

 

  2016   792,115   —   1,875,052   1,625,020   1,751,680   577,153   6,969   6,627,989  

 

  Roger G. Eaton

 

 

 

 

2017

 

 

 

 

 

 

821,154

 

 

 

 

 

 

—

 

 

 

 

 

 

1,000,008

 

 

 

 

 

 

1,000,007

 

 

 

 

 

 

1,986,600

 

 

 

 

 

 

30,388

 

 

 

 

 

 

301,007

 

 

 

 

 

 

5,139,164 

 

 

  Chief Executive Officer of

  KFC Division(7)

 

  2016   812,500   —   1,875,052   1,125,009   1,113,600   30,853   288,290   5,245,304  

 

  Brian R. Niccol

 

 

 

 

2017

 

 

 

 

 

 

829,615

 

 

 

 

 

 

—

 

 

 

 

 

 

1,000,008

 

 

 

 

 

 

1,000,007

 

 

 

 

 

 

1,668,330

 

 

 

 

 

 

13,804

 

 

 

 

 

 

164,852

 

 

 

 

 

 

4,676,616 

 

 

  Former Chief Executive

  Officer of Taco Bell

  Division

 

  2016   803,846   —   1,875,052   1,625,013   1,691,200   13,144   166,060   6,174,315  
  2015   697,688    250,031   2,091,503   1,512,000   8,123   180,361   4,739,706  
         

 

  Tracy L. Skeans

 

 

 

 

2017

 

 

 

 

 

 

600,385

 

 

 

 

 

 

—

 

 

 

 

 

 

550,052

 

 

 

 

 

 

550,009

 

 

 

 

 

 

1,076,325

 

 

 

 

 

 

776,398

 

 

 

 

 

 

8,413

 

 

 

 

 

 

3,561,582 

 

 

  Chief Transformation

  and People Officer of

  YUM(7)

 

                                    

  Name and
  Principal Position

 

 

Year

 

  

Salary

($)(1)

 

  

Bonus

($)(2)

 

  

Stock

Awards

($)(3)

 

  

Option/

SAR

Awards

($)(4)

 

  

Non-Equity

Incentive Plan

Compensation

($)(5)

 

  

Change in
Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($)(6)

 

  

All Other

Compensation

($)(7)

 

  

Total 

($) 

 

 

  (a)

 

 

(b)

 

  

(c)

 

  

(d)

 

  

(e)

 

  

(f)

 

  

(g)

 

  

(h)

 

  

(i)

 

     

  David W. Gibbs

  2020   303,077   1,404,000   4,646,430   3,500,016   —   4,517,703   260,225   14,631,451  

  Chief Executive

  Officer of YUM

 

  2019   984,615   —   7,393,577   2,225,003   2,399,800   3,988,755   151,402   17,143,152  
  2018   890,769   —   1,375,001   1,375,009   1,467,113   1,870,004   19,101   6,996,997  

  Chris Turner(8)

  2020   848,077   714,000   1,075,610   1,000,015   —   404   167,796   3,805,902  

  Chief Financial

  Officer of YUM

 

  2019   283,846   500,000   1,500,009   —   463,021   —   54,290   2,801,166  
         

  Tracy L. Skeans

  2020   749,731   567,000   1,761,429   800,001   —   1,852,419   42,396   5,772,976  

  Chief Operating

  Officer and Chief

  People Officer of YUM

 

  2019   708,846   —   1,075,731   1,000,017   1,165,057   1,433,369   51,529   5,434,549  
  2018   664,231   —   625,015   1,625,010   824,766   325,022   8,665   4,072,709  
         

  Mark King(8)

  2020   921,154   1,134,550   806,652   750,011   271,950   466   134,567   4,019,350  

  Chief Executive

  Officer of

  Taco Bell Division

 

  2019   370,385   500,000   2,500,015   —   591,189   —   33,021   3,994,610  
         
         

  Tony Lowings(8)

  2020   753,846   562,500   860,421   800,001   —   23,908   578,915   3,579,591  

  Chief Executive

  Officer of

  KFC Division

 

  2019   699,789   —   806,874   1,750,030   1,464,120   11,975   262,690   4,995,478  
         
                                    
 (1)

Amounts shown are not reduced to reflect the NEOs’ elections, if any, to defer receipt of salary into the Executive Income Deferral (“EID”) Program or into the Company’s 401(k) Plan.

 

 (2)

Amounts in this column for 2020 represent amounts paid to our NEOs under the Yum Leaders’ Bonus Program as a result of discretionary adjustments to the team performance factor, which are described further in our Compensation Discussion and Analysis (“CD&A”) at page 35.

(3)

For Messrs. Turner, King and Lowings, amounts shown in this column represent the grant date fair values for performance share units (PSUs) granted in 2017, 20162020, 2019 and/or 2018. For Mr. Gibbs and 2015.Ms. Skeans, amounts in this column represent the grant date fair values for performance share units (PSUs) granted in 2020, 2019 and 2018 and a discretionary stock award paid in December 2020, which is described further in CD&A at page 44. Further information regarding the 20172020 awards is included in the “Grants of Plan- BasedPlan-Based Awards” and “Outstanding Equity Awards atYear-End” tables later in this proxy statement. 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 20172020 PSUs is 200% of target. For 2017,2020, Mr. Creed’sGibbs’ PSU maximum value at grant date fair value would be $6,700,040;$7,528,606; Mr. Gibbs’Turner’s’ PSU maximum value would be $2,200,072; Mr. Eaton’s$2,151,220; Ms. Skeans’’ PSU maximum value would be $2,000,016$1,720,842; Mr. Niccol’sKing’s’ PSU maximum value would be $2,000,016;$1,613,304 and Ms. Skeans’Mr. Lowings’ PSU maximum value would be $1,100,104.$1,720,842. For Ms. Skeans, this amount also includes the February 2020 CEO RSU award with a grant date fair value of $500,051.

 

 (3)(4)

The amounts shown in this column represent the grant date fair values of the stock appreciation rights (SARs) awarded in 2017, 20162020, 2019 and 2015,2018, respectively. For a discussion of the assumptions and methodologies used to value the awards reported in column (e) and column (f), please see the discussion of stock awards and option awards contained at Note 1615 to the Consolidated Financial Statements in Item 8 of YUM’s Form10-K for the fiscal year ended December 31, 2017.2020. See the Grants of Plan-Based Awards table for details.

 

 (4)(5)

Amounts in this column reflect the annual incentive awards earned for the 2017, 20162020, 2019 and 20152018 fiscal year performance periods, which were awarded by our Management Planning and Development Committee (“Committee”) in January 2018,2021, January 20172020 and January 2016,2019, respectively, under the Yum Leaders’ Bonus Program, which is described further in our Compensation Discussion and Analysis (“CD&A”)&A beginning at page 3235 under the heading “Annual Performance-Based Cash Bonuses”.

(5)

Amounts in this column represent the above market earnings as established pursuant to SEC rules which have accrued under each of their accounts under the LRP for Mr. Niccol and the Third Country National Plan (“TCN”) for Messrs. Creed and Eaton which are described in more detail beginning at page 62 under the heading “Nonqualified Deferred Compensation”.

Also listed in this column for Messrs. Creed, Gibbs and Ms. Skeans are the amounts of aggregate change in actuarial present values of their accrued benefits under all actuarial pension plans during the 2017 fiscal year (using interest rate and

 

 

 

YUM! BRANDS, INC. -20182021 Proxy Statement     5355

 

 

 

EXECUTIVE COMPENSATION   

 

      

 

 (6)

Amounts in this column represent for Mr. Gibbs and Ms. Skeans the amounts of aggregate change in actuarial present values of their accrued benefits under all actuarial pension plans (using interest rate and mortality assumptions consistent with those used in the Company’s financial statements). Mr. Creed is not an active participant in the Retirement Plan but maintains a balance in the Retirement Plan from the two years (2002 and 2003) during which he was a participant and for 2017 the increase in actuarial value was $25,780. For Mr. Gibbs and Ms. Skeans, the actuarial present value of their benefits under the pension plan increased $231,037$270,282 and $126,089,$196,918, respectively, during the 20172020 fiscal year. In addition, for Mr. Gibbs and Ms. Skeans, the actuarial present value of their benefits under the Yum! Brands Pension Equalization Plan (“PEP”) increased $2,333,025$4,247,421 and $650,309,$1,655,501 respectively, during the 20172020 fiscal year. For Mr. Lowings, amounts in this column represent the above market earnings as established pursuant to SEC rules which have accrued to his account under the Third Country National Plan (“TCN”) which is described in more detail beginning at page 63 under the heading “Nonqualified Deferred Compensation”. For Messrs. NiccolTurner and EatonKing, amounts in this column represent the above market earnings as established pursuant to SEC rules which have accrued to his account under the Leadership Retirement Plan (“LRP”) which is described in more detail beginning at page 63 under the heading “Nonqualified Deferred Compensation”. Messrs. Turner and King were hired after September 30, 2001, and are ineligible for the Company’s actuarial pension plans. Mr. Lowings worked outside of the United States prior to September 30, 2001 and is ineligible for the Company’s actuarial pension plans. See the Pension Benefits Table at page 6061 for a detailed discussion of the Company’s pension benefits.

 

 (6)(7)

Amounts in this column are explained in the All Other Compensation Table and footnotes to that table, which follows.

 

 (7)(8)

Ms. Skeans became an NEO in 2017. No amounts are reported for her for 2016Messrs. Turner, Lowings and 2015 since she was not an NEO for those years. Mr. Gibbs and Mr. EatonKing became NEOs in 2016.2019. No amounts are reported for them for 20152018 since they were not NEOs for that year.those years.

All OtherCompensationOther Compensation Table

The following table contains a breakdown of the compensation and benefits included under All Other Compensation in the Summary Compensation Table above for 2017.2020.

 

Name

       

Perquisites and

other personal

benefits

($)(1)

 

   

Tax

Reimbursements

($)(2)

 

   

Insurance

premiums
($)(3)

 

   

LRP/TCN

Contributions

($)(4)

 

   

Total 

($) 

 

        

Perquisites and

other personal

benefits

($)(1)

 

   

Tax

Reimbursements

($)

 

   

Insurance

premiums
($)(2)

 

   

LRP/TCN

Contributions

($)(3)

 

   

Other

($)

 

   

Total 

($) 

 

 

(a)

       

(b)

 

   

(c)

 

   

(d)

 

   

(e)

 

   

(f) 

 

        

 

(b)

 

   

 

(c)

 

   

 

(d)

 

   

 

(e)

 

   

 

(f)

 

   

 

(g) 

 

 

Creed

     96,331    —    26,999    455,625    578,955  

Gibbs

     12,645    —    6,701    —    19,346      

 

242,910

 

  

 

—

 

  

 

17,315

 

  

 

—

 

  

 

—

 

  

 

260,225 

 

Eaton

     27,294    15,959    10,254    247,500    301,007  

Niccol

     2,200    —    4,002    158,650    164,852  

Turner

    

 

96,320

 

  

 

—

 

  

 

3,476

 

  

 

68,000

 

  

 

—

 

  

 

167,796 

 

Skeans

      5,792    —    2,621    —    8,413      

 

38,454

 

  

 

—

 

  

 

3,942

 

  

 

—

 

  

 

—

 

  

 

42,396 

 

King

    

 

44,073

 

  

 

—

 

  

 

16,494

 

  

 

74,000

 

  

 

—

 

  

 

134,567 

 

Lowings

   

 

  

 

334,574

 

  

 

—

 

  

 

12,535

 

  

 

230,288

 

  

 

1,518

 

  

 

578,915 

 

 (1)

Amounts in this column include executive physical examinations and charitable matching gifts. For Messrs. Gibbs, Turner, King and Ms. Skeans, amount in this column also includes personal use of Company aircraft, executive physical examinations, charitable matching giftscharter and tax preparation assistance, nonecommercial aircraft. None of whichthe amounts in this column individually exceeded the greater of $25,000 or 10% of the total amount of these perquisites and other personal benefits shown in this column for each NEO, except with respect to the incremental cost for theof personal use of Companycharter and commercial aircraft by Mr. CreedGibbs ($83,608) – we calculate the incremental cost to the Company of any213,566), Mr. Turner ($63,902), Ms. Skeans ($28,033) and Mr. King ($43,381) and a charitable matching gift by Mr. Turner ($30,000). Ms. Skeans’ and Messrs. Turner’s and King’s personal use of Companycharter aircraft basedwas approved by Mr. Gibbs and was necessitated by travel safety considerations brought on by the costonset of fuel, trip-related maintenance, crew travel,the COVID-19 pandemic. For Mr. Lowings these amounts include a mobility premium ($247,321), and expenses incurred on board catering, landingaccount of his relocation to his home country and license fees, “dead head” costs of flying planes to and from locations for personal use, and contract labor.home country leave ($76,812).

 

 (2)

Amounts in this column reflect payments to the executive of tax reimbursements. For Mr. Eaton, this amount represents a tax gross up related to home leave expenses.

(3)

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.

 

 (4)(3)

For Mr. NiccolMessrs. Turner and King, this column represents the Company’s annual allocations to the LRP, an unfunded, unsecured account based retirement plan. For Mr. Creed and Mr. Eaton,Lowings, this column represents the Company’s annual allocation to the TCN, an unfunded, unsecured account based retirement plan.

 

 

 

5456      YUM! BRANDS, INC.-20182021 Proxy Statement

        

 

 

   EXECUTIVE COMPENSATION

 

   

 

Grants of Plan-Based Awards

The following table provides information on SARs, RSUs, PSUs and PSUsother equity awards granted in 20172020 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 53.55.

 

    

Estimated Future Payouts

UnderNon-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) 

 

     

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

(#)(3)

 

All Other

Option/

SAR

Awards;

Number of

Securities

Underlying

Options

(#)(4)

 

Exercise

or Base

Price of

Option/

SAR

Awards

($/Sh)(5)

 

Grant 

Date Fair 

Value 

($)(6) 

 

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

 2/10/2017  0  1,822,500  5,467,500        
 

 

 

 

2/10/2017

 

 

        235,916  68.00  3,350,007  
 

 

 

 

2/10/2017

 

 

     —  49,265  98,530     3,350,020  

Gibbs

 2/10/2017  0  882,000  2,646,000         

 

2/10/2020

 

 

 

0

 

 

 

1,800,000

 

 

 

5,400,000

 

       
 

 

 

 

2/10/2017

 

 

        77,465  68.00  1,100,003   

 

2/10/2020

 

        

 

189,600

 

 

 

102.87

 

 

 

3,500,016 

 

 

 

 

 

2/10/2017

 

 

     —  16,177  32,354     1,100,036   

 

2/10/2020

 

    

 

—

 

 

 

17,012

 

 

 

34,024

 

   

 

102.87

 

 

 

1,750,024 

 

Eaton

 2/10/2017  0  825,000  2,475,000        
 

 

 

 

2/10/2017

 

 

        70,423  68.00  1,000,007   

 

2/10/2020

 

    

 

—

 

 

 

17,012

 

 

 

34,024

 

   

 

102.87

 

 

 

2,014,278 

 

 

 

 

 

2/10/2017

 

 

     —  14,706  29,412     1,000,008   

 

12/15/2020

 

       

 

8,215

 

  

 

107.38

 

 

 

882,127 

 

Niccol

 2/10/2017  0  835,000  2,505,000        

Turner

 

 

2/10/2020

 

 

 

0

 

 

 

850,000

 

 

 

2,550,000

 

       
 

 

2/10/2020

 

        

 

54,172

 

 

 

102.87

 

 

 

1,000,015 

 

 

 

 

 

2/10/2017

 

 

        70,423  68.00  1,000,007   

 

2/10/2020

 

     

 

4,861

 

 

 

9,722

 

   

 

102.87

 

 

 

500,051 

 

 

 

 

 

2/10/2017

 

 

     —  14,706  29,412     1,000,008   

 

2/10/2020

 

     

 

4,861

 

 

 

9,722

 

   

 

102.87

 

 

 

575,559 

 

Skeans

 2/10/2017  0  514,250  1,542,750         

 

2/10/2020

 

 

 

0

 

 

 

675,000

 

 

 

2,025,000

 

 

 

—

 

      
 

 

 

 

2/10/2017

 

 

        38,733  68.00  550,009   

 

2/10/2020

 

        

 

43,337

 

 

 

102.87

 

 

 

800,001 

 

 

 

 

 

2/10/2017

 

 

        —  8,089  16,178        550,052   

 

2/10/2020

 

       

 

4,861

 

  

 

102.87

 

 

 

500,051 

 

 

 

2/10/2020

 

    

 

—

 

 

 

3,889

 

 

 

7,777

 

   

 

102.87

 

 

 

400,010 

 

 

 

2/10/2020

 

    

 

—

 

 

 

3,889

 

 

 

7,777

 

   

 

102.87

 

 

 

460,412 

 

 

 

12/15/2020

 

       

 

3,734

 

  

 

107.38

 

 

 

400,957 

 

King

 

 

2/10/2020

 

 

 

0

 

 

 

925,000

 

 

 

2,775,000

 

     

 

40,629

 

 

 

102.87

 

 

 

750,011 

 

 

 

2/10/2020

 

     

 

3,646

 

 

 

7,291

 

   

 

102.87

 

 

 

375,013 

 

 

 

2/10/2020

 

     

 

3,646

 

 

 

7,291

 

   

 

102.87

 

 

 

431,639 

 

Lowings

 

 

2/10/2020

 

 

 

0

 

 

 

750,000

 

 

 

2,250,000

 

       
 

 

2/10/2020

 

        

 

43,337

 

 

 

102.87

 

 

 

800,001 

 

 

 

2/10/2020

 

     

 

3,889

 

 

 

7,777

 

   

 

102.87

 

 

 

400,010 

 

 

 

2/10/2020

 

       

 

—

 

 

 

3,889

 

 

 

7,777

 

     

 

102.87

 

 

 

460,412 

 

 (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 2017.2020. The actual amount of annual incentive compensation awards earned are shown in column (g) of the Summary Compensation Table on page 53.55. The performance measurements, performance targets, and target bonus percentages are described in the CD&A beginning on page 3235 under the discussion of annual incentive compensation.

 

 (2)

Reflects grants of PSU awards subject to performance-based vesting conditions in 2017.2020. The PSU awards granted February 10, 20172020 vest on December 31, 20192022 and PSU award payouts are weighted 50% on the Company’s achievement of specified relative total shareholder return (“TSR”) rankings against the S&P 500 Consumer Discretionary Index and 50% on compound annual growth of the Company’s Earnings Per Share (“EPS”) during the performance period ending on December 31, 2019.2022. With respect to the 50% weighted on a TSR percentile ranking for the Company, payouts are determined by comparing the Company’s relative TSR ranking against the S&P 500 Consumer Discretionary Index as measured at the end of the performance period; if a 50% TSR percentile ranking target is achieved, this factor would provide 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; and (ii) withfactor. With respect to the 50% weighted on the compound annual growth of the Company’s EPS measured at the end of the performance period;period, if EPS growth of 15%10% is achieved, this factor would provide for 100% weighting for the PSU payout with respect to this factor; if less than 9%6% EPS growth is achieved, this factor would provide for 0% weighting for the PSU payout with respect to this factor; if Company EPS growth of 21%14% or higher is achieved, it would provide for weighting of 200% of target for the PSU payout with respect to this factor. The terms of the PSU awards provide that in case of a change in control during the first

YUM! BRANDS, INC. - 2021 Proxy Statement57

EXECUTIVE COMPENSATION   

year of the award, shares will be distributed assuming target performance was achieved subject to reduction to reflect the portion of the performance period following the change in control. In case of a change in control after the first year of the award, shares will be distributed assuming performance at the greater of target level or projected level at the time of the change in control subject to reduction to reflect the portion of the performance period following the change in control.

 

YUM! BRANDS, INC. -2018 Proxy Statement 55(3)

For Ms. Skeans amounts in this column reflect an immediately vested discretionary stock award paid in December 2020, which is described further in the CD&A at page 44 and a CEO Award RSU grant ($500,051) which becomes 100% vested on the fourth anniversary of the grant date. For Mr. Gibbs, amounts in this column reflect an immediately vested discretionary stock award paid in December 2020, which is described further in the CD&A at page 44.

EXECUTIVE COMPENSATION   

 

 (3)(4)

Amounts in this column reflect the number of SARs granted to executives during the Company’s 20172020 fiscal year. SARs allow the grantee to receive the number of shares of YUM common stock that is equal in value to the appreciation in YUM common stock with respect to the number of SARs granted from the date of grant to the date of exercise. For each executive, grants were made on February 10, 2017. The2020. These SAR grants become exercisable in equal installments on the first, second, third and fourth anniversaries of the grant date. 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 who terminate employment may exerciseretire 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 were vested on their datevest in retirement must be exercised before the earlier of termination through(i) the five year anniversary of the executive’s retirement or (ii) the expiration dates of the SARs (generally 10 years from the tenth anniversary following the SARs grant dates)date). VestedUnvested SARs of granteesexecutives who die will immediately vest and may also be exercised by the grantee’sexecutive’s beneficiary throughbefore the earlier of (i) the five year anniversary of the executive’s death or (ii) the expiration dates of the vested SARs and(generally 10 years from the grantee’s unvested SARs expire on the grantee’s date of death.grant date). If a grantee’san 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)(5)

The exercise price of the SARs granted in 20172020 equals the closing price of YUM common stock on their grant date.

 

 (5)(6)

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. For eachThe fair values of PSU award,awards without market-based conditions are based on the closing price of our Common Stock on the date of grant. The fair value is calculated by multiplyingvalues of PSU awards with market-based conditions have been valued based on the per unit value of the award ($68.00) by the target number of units corresponding to the most probable outcome of performance conditions on the grant date.a Monte Carlo simulation. For SARs, fair value of $14.20$18.46 was calculated using the Black-Scholes method on the grant date. For additional information regarding valuation assumptions of SARs, see the discussion of stock awards and option awards contained at Note 16 to the Consolidated Financial Statements in Item 8 of YUM’s Form10-K for the fiscal year ended December 31, 2017.2020.

 

 

 

5658      YUM! BRANDS, INC.-20182021 Proxy Statement

        

 

 

   EXECUTIVE COMPENSATION

 

   

 

OutstandingEquityOutstanding 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, 2017.2020.

 

    Option/SAR Awards(1)     Stock Awards          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

  

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)  (b) (c) (d) (e) (f)    (g) (h) (i) (j) 

Creed

 2/5/2009*  166,849   —  $  20.85  2/5/2019      
 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*  57,768   19,257(i)  $50.22  2/5/2024      
 2/5/2014*   —   67,864(ii)  $50.22  2/5/2024      
 2/6/2015*  96,298   96,299(iii)  $52.64  2/6/2025      
 2/5/2016*  77,877   233,634(iv)  $49.66  2/5/2026      
 2/10/2017*   —   235,916(v)  $68.00  2/10/2027      
 2/5/2010**  169,875   —  $9.96  2/5/2020      
 2/4/2011**  120,562   —  $14.88  2/4/2021      
 2/8/2012**  81,771   —  $19.46  2/8/2022      
 2/6/2013**  89,779   —  $19.00  2/6/2023      
 2/5/2014**  57,860   19,287(i)  $21.30  2/5/2024      
 2/5/2014**   —   67,972(ii)  $21.30  2/5/2024      
 2/6/2015**  96,328   96,330(iii)  $22.32  2/6/2025      
 2/5/2016**  77,956   233,868(iv)  $21.06  2/5/2026      
        

 

—

 

 

 

  

 

—

 

 

 

  

 

224,106

 

 

 

  

 

18,289,291

 

 

 

Gibbs

 2/5/2009*  33,370   —  $20.85  2/5/2019       2/4/2011*  3,768   —  $35.10  2/4/2021      
 2/5/2009*  8,343   —  $20.85  2/5/2019       2/8/2012*  24,501   —  $45.88  2/8/2022      
 2/5/2010*  31,128   —  $23.48  2/5/2020       2/6/2013*  37,398   —  $44.81  2/6/2023      
 5/20/2010*  24,161   —  $28.22  5/20/2020       2/6/2013*  37,398   —  $44.81  2/6/2023      
 2/4/2011*  30,141   —  $35.10  2/4/2021       2/5/2014*  40,718   —  $50.22  2/5/2024      
 2/8/2012*  24,501   —  $45.88  2/8/2022       2/5/2014*  33,932   —  $50.22  2/5/2024      
 2/6/2013*  37,398   —  $44.81  2/6/2023       2/6/2015*  61,968   —  $52.64  2/6/2025      
 2/6/2013*  37,398   —  $44.81  2/6/2023       2/5/2016*  77,878   —  $49.66  2/5/2026      
 2/5/2014*  30,538   10,180(i)  $50.22  2/5/2024       5/20/2016*  31,838   —  $56.67  5/20/2026      
 2/5/2014*   —   33,932(ii)  $50.22  2/5/2024       2/10/2017*  58,098  19,367(i)  $68.00  2/10/2027      
 2/6/2015*  30,984   30,984(iii)  $52.64  2/6/2025       2/12/2018*  41,921  41,921(ii)  $78.07  2/12/2028      
 2/5/2016*  19,469   58,409(iv)  $49.66  2/5/2026       2/11/2019*  27,994  83,984(iii)  $93.26  2/11/2029      
 5/20/2016*  7,959   23,879(vi)  $56.67  5/20/2026       2/10/2020*   189,600(iv)  $102.87  2/10/2030      
 2/10/2017*   —   77,465(v)  $68.00  2/10/2027       2/8/2012**  24,531   —  $19.46  2/8/2022      
 2/5/2009**  33,376   —  $8.84  2/5/2019       2/6/2013**  37,408   —  $19.00  2/6/2023      
 2/5/2009**  8,344   —  $8.84  2/5/2019       2/6/2013**  37,408   —  $19.00  2/6/2023      
 2/5/2010**  31,143   —  $9.96  2/5/2020       2/5/2014**  40,783   —  $21.30  2/5/2024      
 5/20/2010**  24,174   —  $11.97  5/20/2020       2/5/2014**  33,986   —  $21.30  2/5/2024      
 2/4/2011**  30,140   —  $14.88  2/4/2021       2/6/2015**  61,988   —  $22.32  2/6/2025      
 2/8/2012**  24,531   —  $19.46  2/8/2022       2/5/2016**  77,956   —  $21.06  2/5/2026      
 2/6/2013**  37,408   —  $19.00  2/6/2023       5/20/2016**  31,871   —  $24.03  5/20/2026      
 2/6/2013**  37,408   —  $19.00  2/6/2023              

 

55,569

 

 

 

  

 

6,032,622

 

 

 

  

 

57,883

 

 

 

  

 

6,283,778

 

 

 

Turner

 2/10/2020*   54,172(iv)  $102.87  2/10/2030      
        

 

8,638

 

 

 

  

 

937,710

 

 

 

  

 

9,722

 

 

 

  

 

1,055,420

 

 

 

Skeans

 2/6/2013*  5,647   —  $44.81  2/6/2023      
 2/5/2014**  30,587   10,196(i)  $21.30  2/5/2024       2/5/2014*  5,769   —  $50.22  2/5/2024      
 2/5/2014**   —   33,986(ii)  $21.30  2/5/2024       2/5/2014*  6,786   —  $50.22  2/5/2024      
 2/6/2015**  30,994   30,994(iii)  $22.32  2/6/2025       2/6/2015*  8,455   —  $52.64  2/6/2025      
 2/5/2016**  19,489   58,467(iv)  $21.06  2/5/2026       2/5/2016*  20,283   —  $49.66  2/5/2026      
 5/20/2016**  7,967   23,904(vi)  $24.03  5/20/2026       2/5/2016*  10,134   —  $49.66  2/5/2026      
              —   —  71,812  5,860,577  2/10/2017*  15,652  6,900(i)  $68.00  2/10/2027      
 2/12/2018*  11,204  15,456(ii)  $78.07  2/12/2028      
 2/12/2018*   —  51,106(v)  $78.07  2/12/2028      
 2/11/2019*  10,703  35,713(iii)  $93.26  2/11/2029      
 2/10/2020*   —  43,337(iv)  $  102.87  2/10/2030      
 2/5/2016**  2,557   —  $21.06  2/5/2026      
 2/5/2016**  13,288   —  $21.06  2/5/2026      
       4,959  538,309  18,500  2,008,360 

King

 2/10/2020*   —  40,629(iv)  $102.87  2/10/2030      
        

 

14,395

 

 

 

  

 

1,562,741

 

 

 

  

 

7,291

 

 

 

  

 

791,511

 

 

 

Lowings

 2/8/2012*  20,935   —  $45.88  2/8/2022      
 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*  23,163  7,721(i)  $68.00  2/10/2027      
 2/12/2018*  12,099  12,100(ii)  $78.07  2/12/2028      
 2/11/2019*  9,436  28,310(iii)  $93.26  2/11/2029      
 2/11/2019*   —  50,328(vi)  $93.26  2/11/2029      
 2/10/2020*   —  43,337(iv)  $102.87  2/10/2030      

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

11,438

 

 

 

  

 

1,241,709

 

 

 

 

 

 

YUM! BRANDS, INC. -2018 Proxy Statement57

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
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) 

 

 Eaton

 

 

 

 

2/5/2010

 

* 

 

 

 

 

141,493

 

 

 

 

 

 

—

 

 

 

 

$

 

  23.48

 

 

 

 

 

 

2/5/2020

 

 

     
  2/4/2011*   120,564   —  $35.10   2/4/2021      
  2/8/2012*   73,503   —  $45.88   2/8/2022      
  2/6/2013*   67,317   —  $44.81   2/6/2023      
  2/5/2014*   48,099   16,033(i)  $50.22   2/5/2024      
  2/6/2015*   33,834   33,835(iii)  $52.64   2/6/2025      
  2/5/2016*   19,469   58,409(iv)  $49.66   2/5/2026      
  2/10/2017*   —   70,423(v)  $68.00   2/10/2027      
  2/5/2010**   141,562   —  $9.96   2/5/2020      
  2/4/2011**   120,562   —  $14.88   2/4/2021      
  2/8/2012**   73,593   —  $19.46   2/8/2022      
  2/6/2013**   67,335   —  $19.00   2/6/2023      
  2/5/2014**   48,174   16,059(i)  $21.30   2/5/2024      
  2/6/2015**   33,844   33,846(iii)  $22.32   2/6/2025      
  2/5/2016**   19,489   58,467(iv)  $21.06   2/5/2026      
        

 

—

 

 

 

  

 

—

 

 

 

  

 

68,870

 

 

 

  

 

5,620,481

 

 

 

 

 Niccol

 

 

 

 

2/4/2011

 

* 

 

 

 

 

23,443

 

 

 

 

 

 

—

 

 

 

 

$

 

35.10

 

 

 

 

 

 

2/4/2021

 

 

     
  2/8/2012*   32,668   —  $45.88   2/8/2022      
  2/6/2013*   37,398   —  $44.81   2/6/2023      
  5/15/2013*   —   36,084(vii)  $49.78   5/15/2023      
  2/5/2014*   30,538   10,180(i)  $50.22   2/5/2024      
  2/6/2015*   30,984   30,984(iii)  $52.64   2/6/2025      
  2/6/2015*   —   67,637(viii)  $52.64   2/6/2025      
  2/5/2016*   19,469   58,409(iv)  $49.66   2/5/2026      
  2/5/2016*   —   34,612(ix)  $49.66   2/5/2026      
  2/10/2017*   —   70,423(v)  $68.00   2/10/2027      
  5/20/2010**   60,436   —  $11.97   5/20/2020      
  2/4/2011**   40,188   —  $14.88   2/4/2021      
  2/8/2012**   32,708   —  $19.46   2/8/2022      
  2/6/2013**   37,408   —  $19.00   2/6/2023      
  5/15/2013**   —   36,114(vii)  $21.11   5/15/2023      
  2/5/2014**   30,587   10,196(i)  $21.30   2/5/2024      
  2/6/2015**   30,994   30,994(iii)  $22.32   2/6/2025      
  2/6/2015**   —   67,658(viii)  $22.32   2/6/2025      
  2/5/2016**   19,489   58,467(iv)  $21.06   2/5/2026      
  2/5/2016**   —   34,647(ix)  $21.06   2/5/2026      
        

 

—

 

 

 

  

 

—

 

 

 

  

 

68,870

 

 

 

  

 

5,620,481

 

 

 

 

 Skeans

 

 

 

 

2/5/2009

 

* 

 

 

 

 

834

 

 

 

 

 

 

—

 

 

 

 

$

 

20.85

 

 

 

 

 

 

2/5/2019

 

 

     
  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*   8,652   2,885(i)  $50.22   2/5/2024      
  2/5/2014*   —   13,573(x)  $50.22   2/5/2024      
  2/6/2015*   8,454   8,455(iii)  $52.64   2/6/2025      
  2/5/2016*   9,726   29,178(iv)  $49.66   2/5/2026      
  2/5/2016*   —   17,306(xi)  $49.66   2/5/2026      
  2/10/2017*   —   38,733(v)  $68.00   2/10/2027      
  2/5/2014**   —   2,889(i)  $21.30   2/5/2024      
  2/5/2014**   —   13,595(x)  $21.30   2/5/2024      
  2/6/2015**   —   8,458(iii)  $22.32   2/6/2025      
  2/5/2016**   —   29,208(iv)  $21.06   2/5/2026      
  2/5/2016**   —   17,323(xi)  $21.06   2/5/2026      
                           

 

4,160

 

 

 

  

 

339,498

 

 

 

  

 

39,959

 

 

 

  

 

3,261,054

 

 

 

 *

YUM Awards

 **

YUM China Awards

 (1)

The actual vesting dates for unexercisable awards are as follows:

(i)

Remainder of unexercisable awards will vest on February 5, 2018.

(ii)

Unexercisable award will vest on February 5, 2019.

(iii)

One-half of the unexercisable award will vest on each of February 6, 2018 and 2019.

58     YUM! BRANDS, INC.-2018 Proxy Statement

   EXECUTIVE COMPENSATION

(iv)

One-third of the unexercisable award will vest on each of February 5, 2018, 2019, and 2020.

(v)

One-fourth of the unexercisable award will vest on each of February 10, 2018, 2019, 2020 and 2021.

(vi)

One-third of the unexercisable award will vest on each of May 20, 2018, 2019, and 2020

(vii)

Unexercisable award will vest on May 15, 2018.

(viii)

Unexercisable award will vest on February 6, 2020.

(ix)

Unexercisable award will vest on February 5, 2021.

(x)

Unexercisable award will vest on February 5, 2018.

(xi)

Unexercisable award will vest on February 5, 2020.

 (2)

For Ms. Skeans, this amount represents deferrals of bonuses into the EID Program’s Matching Stock Fund. The amount represents the deferral of Ms. Skeans’ 2015 bonus

 (3)

The market value of the YUM awards are calculated by multiplying the number of shares covered by the award by $81.61, the closing price of YUM stock on the NYSE on December 29, 2017. The market value of the Yum China awards are calculated by multiplying the number of shares covered by the award by $40.02, the closing price of Yum China stock on the NYSE on December 29, 2017.

 (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, 2018 or December 31, 2019 if the performance targets are met. Also reflected in this column are the unvested performance-based Launch Grant PSU awards, which are scheduled to vest on December 31, 2018 and December 31, 2019, if the performance targets are met. The Launch Grants will pay out at the close of the performance period (December 31, 2019) if specified General and Administrative Expense reductions are made byyear-end 2019 and/or Company store ownership levels are reduced to meet applicable targets byyear-end 2018. The terms of the launch grant PSU awards provide that if a Change in Control occurs during the performance period and the award recipient is involuntarily terminated upon or following the Change in Control and during the performance period, then the award recipient will receive the number of shares that would have been received if the target level of performance had been achieved for the entire performance period, subject to a pro rata reduction to reflect the portion of the performance period following such recipient’s post-change in control termination. In accordance with SEC rules, the PSU awards are reported at their maximum payout value.

Option Exercises and Stock Vested

The table below shows the number of shares of YUM common stock acquired during 2017 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 

 Name

 

  

 

Number

of Shares

Acquired on

Exercise

(#)

 

   

Value

Realized on

Exercise

($)

 

      

 

Number

of Shares

Acquired on

Vesting

(#)

 

  

Value

realized on

Vesting

($)

 

 

 

 (a)

 

  

 

(b)

 

   

 

(c)

 

       

 

(d)

 

  

 

(e)

 

 

 

 Creed

 

  

 

 

 

 

245,619

 

 

 

 

  

 

 

 

 

9,782,649

 

 

 

 

   

 

 

 

 

37,136

 

 

(1) 

 

 

 

 

 

 

3,030,669

 

 

 

 

 

 Gibbs

 

  

 

 

 

 

58,775

 

 

 

 

  

 

 

 

 

3,059,186

 

 

 

 

   

 

 

 

 

12,965

 

 

(2) 

 

 

 

 

 

 

991,812

 

 

 

 

 

 Eaton

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

   

 

 

 

 

9,431

 

 

(1) 

 

 

 

 

 

 

769,664

 

 

 

 

 

 Niccol

 

  

 

 

 

 

45,106

 

 

 

 

  

 

 

 

 

3,222,782

 

 

 

 

   

 

 

 

 

20,713

 

 

(2) 

 

 

 

 

 

 

1,505,504

 

 

 

 

 

 Skeans

 

  

 

 

 

 

32,950

 

 

 

 

  

 

 

 

 

1,276,522

 

 

 

 

      

 

 

 

 

1,859

 

 

(2) 

 

 

 

 

 

 

123,252

 

 

 

 

(1)

For each of Messrs. Creed and Eaton this amount represents PSUs that vested on December 31, 2017 with respect to the 2015-2017 performance period and were paid out in 2018.

(2)

For each of Messrs. Gibbs and Niccol, and Ms. Skeans, this amount represents the deferral of the 2014 cash incentive award, which was deferred into RSUs under the EID program in 2015 and vested in 2017.

YUM! BRANDS, INC. -20182021 Proxy Statement     59

 

 

 

EXECUTIVE COMPENSATION   

 

      

 *

YUM Awards

 **

YUM China Awards

 (1)

The actual vesting dates for unexercisable awards are as follows:

(i)

Remainder of unexercisable award will vest on February 10, 2021.

(ii)

One-half of the unexercisable award will vest on each of February 12, 2021 and 2022.

(iii)

One-third of the unexercisable award will vest on each of February 11, 2021, 2022 and 2023.

(iv)

One-fourth of the unexercisable award will vest on each of February 10, 2021, 2022, 2023 and 2024.

(v)

Unexercisable award will vest on February 12, 2022

(vi)

Unexercisable award will vest on February 11, 2023.

 (2)

For Messrs. Turner and King this column represents sign-on RSU award grants that vest one-third each year over 3 years. For Mr. Gibbs, it represents an RSU grant he received in connection with his promotion to Chief Operating Officer that is subject to five-year cliff vesting. For Ms. Skeans it represents a CEO Award RSU grant that is subject to four-year cliff vesting.

 (3)

The market value of the YUM awards are calculated by multiplying the number of shares covered by the award by $108.56, the closing price of YUM stock on the NYSE on December 31, 2020.

 (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, 2021 and 2022 if the performance targets are met. In accordance with SEC rules, the PSU awards are reported at their target payout value.

Option Exercises and Stock Vested

The table below shows the number of shares of YUM and Yum China common stock acquired during 2020 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

 

 

 Name

 

  

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)

 

 

 Gibbs

  

 

79,150

 

  

 

5,333,046

 

    

 

14,838

 

  

 

1,610,813

 

 Turner

  

 

—

 

  

 

—

 

    

 

4,277

 

  

 

388,500

 

 Skeans

  

 

4,577

 

  

 

447,690

 

    

 

6,744

 

  

 

732,129

 

 King

  

 

—

 

  

 

—

 

    

 

7,130

 

  

 

647,591

 

 Lowings

 

  

 

 

24,809

 

 

 

  

 

 

2,317,081

 

 

 

       

 

 

—

 

 

 

  

 

 

—

 

 

 

(1)

For each of Mr. Gibbs and Ms. Skeans, this amount includes PSUs that vested on December 31, 2020 with respect to the 2018-2020 performance period and were paid out in 2021, as well as the one-time payment of Company common stock received by Mr. Gibbs and Ms. Skeans which is described at page 44 of the CD&A. For Messrs. Turner and King, this amount includes the vested portion of their sign-on RSU grants.

60     YUM! BRANDS, INC.- 2021 Proxy Statement

   EXECUTIVE COMPENSATION

 

Pension Benefits

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(3)

($)

 

Payments During
Last Fiscal Year

($)

   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(1)

 

 

 

 

2

 

 

 

 

 

 

200,306

 

 

 

 

 

 

—

 

 

  PEP(2)  —   —   — 

Gibbs

  

 

Qualified Retirement Plan(1)

 

 

 

 

29

 

 

 

 

 

 

1,124,232

 

 

 

 

 

 

—

 

 

  

 

Qualified Retirement Plan

 

  

 

32

 

  

 

1,837,905

 

  

 

—

 

  PEP(2) 29  5,302,792   —   

 

PEP

 

  

 

32

 

  

 

14,965,581

 

  

 

—

 

Skeans

  

 

Qualified Retirement Plan(1)

 

 

 

 

17

 

 

 

 

 

 

476,806

 

 

 

 

 

 

—

 

 

  

 

Qualified Retirement Plan

 

  

 

20

 

  

 

851,332

 

  

 

—

 

  PEP(2) 17  1,095,143   —   

 

PEP

 

  

 

20

 

  

 

4,331,427

 

  

 

—

 

Eaton(ii)

  

 

—

 

 

 

 

—

 

 

 

 

 

 

—

 

 

 

 

 

 

—

 

 

Niccol(ii)

  

 

—

 

 

 

 

—

 

 

 

 

 

 

—

 

 

 

 

 

 

—

 

 

Turner

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

King

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

Lowings

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

 

 (i)

Mr. Creed is not an active participant in the Retirement Plan but maintains a balance in the Retirement Plan for the two years (2002Messrs. Turner and 2003) during which he was a participant in the plan. As discussed at page 45, Mr. Creed participates in the Third Country National plan, an unfunded, unsecured deferred account-based retirement plan.

(ii)

Messrs. Eaton and Niccol are not accruing benefits under these plans because each wasKing were hired after September 30, 2001, and is thereforeare ineligible for these benefits.the Company’s actuarial pension plans. Mr. Lowings worked outside of the United States prior to September 30, 2001, and is ineligible for the Company’s actuarial pension plans. As discussed at page 45, they each48, Mr. Lowings participates in the TCN and Messrs. Turner and King participate in the LRP.

 

(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 termshort-term disability payments. Extraordinary bonuses

60     YUM! BRANDS, INC.-2018 Proxy Statement

   EXECUTIVE COMPENSATION

and lump sum payments made in connection with a participant’s termination of employment are not included.

YUM! BRANDS, INC. - 2021 Proxy Statement61

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 or 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, 20172020 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, 2018

 

 

 

 

  

 

$

 

 

212,522

 

 

 

 

  

 

 

 

 

—  

 

 

 

 

  

 

$

 

 

212,522

 

 

 

 

David W. Gibbs

  

 

 

 

 

April 1, 2018

 

 

 

 

  

 

$

 

 

1,476,603

 

 

 

 

  

 

$

 

 

6,919,900

 

 

 

 

  

 

$

 

 

8,396,503

 

 

 

 

 

 

January 1, 2021

 

 

$

2,049,734

 

 

$

16,842,892

 

 

$

18,892,626

 

Tracy L. Skeans

  

 

 

 

 

February 1,

2028

 

 

 

 

 

  

 

$

 

 

1,459,393

 

 

 

 

  

 

$

 

 

3,159,936

 

 

 

 

  

 

$

 

 

4,619,329

 

 

 

 

 

 

February 1, 2028

 

 

$

1,798,791

 

 

$

8,648,115

 

 

$

10,446,906

 

 

 (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, 2018.2021. 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’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%12⁄3% of an estimated primary Social Security amount multiplied by Projected Service up to 30 years

YUM! BRANDS, INC. -2018 Proxy Statement61

EXECUTIVE COMPENSATION   

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,

62     YUM! BRANDS, INC.- 2021 Proxy Statement

   EXECUTIVE COMPENSATION

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, 2017)2020) 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, 2017,2020, are shown in parentheses):

 

YUM! Stock Fund (30.99%*)

•

YUM! Stock Fund (7.77%*)

 

YUM! Matching Stock Fund (30.99%(7.77%*)

 

S&P 500 Index Fund (21.77%(18.30%)

 

Bond Market Index Fund (3.47%(7.59%)

 

Stable Value Fund (1.82%)

YUM China Stock Fund (53.60%*(2.04%)

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 2017)2020).

*

Assumes dividends are reinvested.

62     YUM! BRANDS, INC.-2018 Proxy Statement

   EXECUTIVE COMPENSATION

Beginning with their 2009 annual incentive award, those who are eligible for 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 has been made available as 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 may be transferred out of this fund, but the fund does not allow for additional investment. The Yum China Stock Fund will cease to be available as an investment option in October of 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.


YUM! BRANDS, INC. - 2021 Proxy Statement63

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 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 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. Niccol receivedMessrs. King and Turner will receive an annual earnings credit equal to 5% while he was employed with the Company.Moody’s Aa Corporate Bond Yield Average for maturities 20 years and above (currently 2.47%) of their account balances. The Company’s contribution (“Employer Credit”) for 20172020 was equal to 9.5%4% of salary plus target bonus for Mr. Niccol.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

YUM! BRANDS, INC. -2018 Proxy Statement63

EXECUTIVE COMPENSATION   

Messrs. Creed and Eaton, Mr. Lowings, the Employer Credit for 20172020 was equal to 15% of their salarieshis salary plus target bonuses.bonus.

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

($)

   

Registrant

Contributions

in Last FY

($)(1)

   

Aggregate

Earnings in

Last FY

($)(2)

   

Aggregate

Withdrawals/

Distributions

($)(3)

   

Aggregate

Balance at

Last FYE

($)(4)

 
(a)       (b)   (c)   (d)   (e)   (f) 

 

Creed

 

  

 

 

 

 

EID

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

2,951,628

 

 

 

 

  

 

 

 

 

202,364

 

 

 

 

  

 

 

 

 

12,477,599

 

 

 

 

  

 

 

 

 

TCN

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

455,625

 

 

 

 

  

 

 

 

 

110,071

 

 

 

 

  

 

 

 

 

17,727

 

 

 

 

  

 

 

 

 

2,749,384

 

 

 

 

  

 

 

 

 

Total

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

455,625

 

 

 

 

  

 

 

 

 

3,061,699

 

 

 

 

  

 

 

 

 

220,091

 

 

 

 

  

 

 

 

 

15,226,983

 

 

 

 

 

Gibbs

 

  

 

 

 

 

EID

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

863,223

 

 

 

 

  

 

 

 

 

51,132

 

 

 

 

  

 

 

 

 

3,712,099

 

 

 

 

  

 

 

 

 

Total

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

863,223

 

 

 

 

  

 

 

 

 

51,132

 

 

 

 

  

 

 

 

 

3,712,099

 

 

 

 

 

Eaton

 

  

 

 

 

 

EID

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

2,211,083

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

8,700,577

 

 

 

 

  

 

 

 

 

TCN

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

247,500

 

 

 

 

  

 

 

 

 

82,576

 

 

 

 

  

 

 

 

��

9,630

 

 

 

 

  

 

 

 

 

1,971,960

 

 

 

 

  

 

 

 

 

Total

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

247,500

 

 

 

 

  

 

 

 

 

2,293,659

 

 

 

 

  

 

 

 

 

9,630

 

 

 

 

  

 

 

 

 

10,672,537

 

 

 

 

 

Niccol

 

  

 

 

 

 

EID

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

1,407,745

 

 

 

 

  

 

 

 

 

160,754

 

 

 

 

  

 

 

 

 

5,170,049

 

 

 

 

  

 

 

 

 

LRP

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

158,650

 

 

 

 

  

 

 

 

 

37,511

 

 

 

 

  

 

 

 

 

7,431

 

 

 

 

  

 

 

 

 

938,943

 

 

 

 

  

 

 

 

 

Total

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

158,650

 

 

 

 

  

 

 

 

 

1,445,256

 

 

 

 

  

 

 

 

 

168,185

 

 

 

 

  

 

 

 

 

6,108,992

 

 

 

 

 

Skeans

 

  

 

 

 

 

EID

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

180,125

 

 

 

 

  

 

 

 

 

174,678

 

 

 

 

  

 

 

 

 

665,880

 

 

 

 

    

 

Total

 

 

 

   

 

—

 

 

 

   

 

—

 

 

 

   

 

180,125

 

 

 

   

 

174,678

 

 

 

   

 

665,880

 

 

 


64     YUM! BRANDS, INC.- 2021 Proxy Statement

   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

 

  

 

—

 

  

 

—

 

  

 

411,250

 

  

 

—

 

  

 

3,783,871

 

  

 

Total

 

  

 

—

 

  

 

—

 

  

 

411,250

 

  

 

—

 

  

 

3,783,871

 

Turner

  

 

EID

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

LRP

 

  

 

—

 

  

 

68,000

 

  

 

651

 

  

 

—

 

  

 

84,251

 

  

 

Total

 

  

 

—

 

  

 

68,000

 

  

 

651

 

  

 

—

 

  

 

84,251

 

Skeans

  

 

EID

 

  

 

—

 

  

 

—

 

  

 

48,328

 

  

 

—

 

  

 

465,132

 

  

 

Total

 

  

 

—

 

  

 

—

 

  

 

48,328

 

  

 

—

 

  

 

465,132

 

King

  

 

EID

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

LRP

 

  

 

—

 

  

 

74,000

 

  

 

751

 

  

 

—

 

  

 

92,751

 

  

 

Total

 

  

 

—

 

  

 

74,000

 

  

 

751

 

  

 

—

 

  

 

92,751

 

Lowings

  

 

EID

 

  

 

—

 

  

 

—

 

  

 

21,708

 

  

 

—

 

  

 

260,582

 

  

 

TCN

 

  

 

—

 

  

 

225,000

 

  

 

34,953

 

  

 

8,393

 

  

 

950,628

 

   

 

Total

 

  

 

—

 

  

 

225,000

 

  

 

56,662

 

  

 

8,393

 

  

 

1,211,210

 

 

 (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 56 of the Summary Compensation Table for more detail.

 

 (2)(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 Mr. Niccol, of his earnings reflected in this column, $13,804 was deemed above market earnings accruing to his account under the LRP. For Messrs. CreedLowings, King and Eaton,Turner, of their earnings reflected in this column, $40,506$23,908, $466 and $30,388,$404, respectively, were deemed above market earnings accruing to their accounts under the TCN.TCN or LRP. For above market earnings on nonqualified deferred compensation, see the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table.

 

 (3)(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 2017.2020.

 

 Creed

17,727

 Gibbs

11,100

 Eaton

9,630

 Niccol

40,210

 Skeans

7,640

 Gibbs

   — 

 Turner

   — 

 Lowings

  $8,393 

 King

   — 

 Skeans

   — 

 

 (4)(5)

Amounts reflected in column (f) are theyear-end balances for each executive under the EID Program, TCN and the LRP. As required under SEC rules, below is the portion of theyear-end balance for each executive which has previously been reported as compensation to the executive in the Company’s Summary Compensation Table for 20172020 and prior years.

 

 Creed

5,674,993

 Gibbs

—

 Eaton

548,741

 Niccol

1,364,911

 Skeans

—

 Gibbs

   — 

 Turner

  $91,804 

 Skeans

   — 

 King

  $104,466 

 Lowings

  $465,071 

 


 

64   YUM! BRANDS, INC. - -20182021 Proxy Statement65

 

 

 

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, 2017,2020, 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, 2017,2020, they could exercise the SARs that were exercisable on that date as shown at the Outstanding Equity Awards atYear-End table on page 57,59, 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, 2017,2020, 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 2018, 2019 or 2020 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, 2020, each NEO maywould receive on a change of control are discussed below.the following: Mr. Gibbs $4,427,476, Mr. Turner $308,239, Ms. Skeans $3,657,030, Mr. King $231,179 and Mr. Lowings $2,131,842.

Executive Income Deferral Program. As described in more detail beginning at page 62,63, 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 6465 includes each NEO’s

aggregate balance at December 31, 2017.2020. 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 64.65.

In the case of an involuntary termination of employment as of December 31, 2017,2020, each NEO would receive the following: Mr. Creed $12,477,599,Gibbs $3,783,871, Mr. Gibbs $3,712,099, Mr. Eaton $ 8,700,577, Mr. Niccol $5,170,049, andTurner $0, Ms. Skeans $665,880.$465,132, Mr. King $0 and Mr. Lowings $260,582. As discussed at page 62,66, these amounts reflect base salary or bonuses previously deferred by the executive and appreciation on these deferred amounts (see page 6263 for discussion of investment alternatives available under the EID). Thus, the NEOs’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, 2017,2020, Mr. NiccolTurner would receive $938,943 when he attains age 55.have received $84,251 and Mr. King would have received $92,751.


66     YUM! BRANDS, INC.- 2021 Proxy Statement

   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, 2017,2020, Mr. CreedLowings would have received $2,749,384 and Mr. Eaton would have received $1,971,960.$950,628.

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 as of December 31, 2017,2020, 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 terminationspayouts had occurred on December 31, 2017,

YUM! BRANDS, INC. -2018 Proxy Statement65

EXECUTIVE COMPENSATION   

2020, Messrs. Creed, Gibbs, Eaton, Niccol,Turner, King and Lowings and Ms. Skeans would have been entitled to $7,159,368, $2,196,790, $2,156,295, $2,156,295,$3,045,677, $358,872, $269,136, $890,404 and $1,249,836,$1,091,440, respectively, assuming target performance.

Pension Benefits. The Pension Benefits Table on page 6061 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, 2017.2020. The table on page 6162 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 54.56. If the NEOs had died on December 31, 2017,2020, the survivors of Messrs. Creed, Gibbs, Eaton, Niccol,Turner, King and Lowings and Ms. Skeans would have received Company-paid life insurance of $3,000,000, $1,722,000, $1,650,000, $1,670,000,$1,700,000, $1,500,000, $1,425,000 and $1,120,000,$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 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, Niccol, 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 5035 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. - 2021 Proxy Statement67

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 3235 for more detail.detail;

All RSUs under the Company’s EID Program or otherwise held by the executive will automatically vest.vest; and

 

66     YUM! BRANDS, INC.-2018 Proxy Statement

   EXECUTIVE COMPENSATION

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 35 for more detail.

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 32 for more detail.

 

 

If a change in control and each NEO’s involuntary termination had occurred as of December 31, 2017,2020, the following payments or other benefits would have been made or become available.

 

  

Creed

$

   

Gibbs

$

   

Eaton

$

   

Niccol

$

   

Skeans

$

   

Gibbs

$

   

Turner

$

   

Skeans

$

   

King

$

   

Lowings

$

 

Severance Payment

  

 

 

 

 

9,612,188

 

 

 

 

  

 

 

 

 

5,183,360

 

 

 

 

  

 

 

 

 

3,877,200

 

 

 

 

  

 

 

 

 

5,052,400

 

 

 

 

  

 

 

 

 

3,309,440

 

 

 

 

  

 

7,199,600

 

  

 

3,400,000

 

  

 

3,830,114

 

  

 

3,700,000

 

  

 

4,428,240

 

Annual Incentive

  

 

 

 

 

3,814,493

 

 

 

 

  

 

 

 

 

1,917,027

 

 

 

 

  

 

 

 

 

1,986,600

 

 

 

 

  

 

 

 

 

1,668,330

 

 

 

 

  

 

 

 

 

1,076,325

 

 

 

 

  

 

1,800,000

 

  

 

850,000

 

  

 

675,000

 

  

 

925,000

 

  

 

750,000

 

Accelerated Vesting of SARs

  

 

 

 

 

23,972,600

 

 

 

 

  

 

 

 

 

8,664,731

 

 

 

 

  

 

 

 

 

6,316,333

 

 

 

 

  

 

 

 

 

12,640,999

 

 

 

 

  

 

 

 

 

4,114,393

 

 

 

 

  

 

4,427,476

 

  

 

308,239

 

  

 

3,657,030

 

  

 

231,179

 

  

 

2,131,842

 

Accelerated Vesting of RSUs

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

—

 

 

 

 

  

 

 

 

 

350,688

 

 

 

 

  

 

6,032,622

 

  

 

937,710

 

  

 

538,309

 

  

 

1,562,741

 

  

 

—

 

Acceleration of PSU

Performance/Vesting

  

 

 

 

 

7,159,368

 

 

 

 

  

 

 

 

 

2,196,790

 

 

 

 

  

 

 

 

 

2,156,295

 

 

 

 

  

 

 

 

 

2,156,295

 

 

 

 

  

 

 

 

 

1,249,836

 

 

 

 

  

 

3,045,677

 

  

 

358,872

 

  

 

1,091,440

 

  

 

269,136

 

  

 

890,404

 

Outplacement

  

 

 

 

 

25,000

 

 

 

 

  

 

 

 

 

25,000

 

 

 

 

  

 

 

 

 

25,000

 

 

 

 

  

 

 

 

 

25,000

 

 

 

 

  

 

 

 

 

25,000

 

 

 

 

  

 

25,000

 

  

 

25,000

 

  

 

25,000

 

  

 

25,000

 

  

 

25,000

 

TOTAL

  

 

 

 

 

44,583,649

 

 

 

 

  

 

 

 

 

17,986,908

 

 

 

 

  

 

 

 

 

14,361,429

 

 

 

 

  

 

 

 

 

21,543,024

 

 

 

 

  

 

 

 

 

10,125,683

 

 

 

 

  

 

22,530,375

 

  

 

5,879,821

 

  

 

9,816,893

 

  

 

6,713,056

 

  

 

8,225,486

 

CEO Pay Ratio

 

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. A majority of our Company workforce is located outside the U.S. 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 90%In the United States, approximately

85% of our Company-owned restaurant employees are part-time. Atpart-time and at least 60%45% have been employed by the Company for less than a year and more than half are 22 years old or younger.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”).


68     YUM! BRANDS, INC.- 2021 Proxy Statement

   EXECUTIVE COMPENSATION

To identify the 2020 median employee, we used the 2017December 2020 base wages or base salary information for all employees who were employed by us on December 31, 2017,2020, 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 2017.2020. We believe the use of base wages or base salary for all employees is a consistently applied compensation measure.

As of December 31, 2017,2020, our global workforce used for determining the pay ratio was estimated to be 50,354approximately 38,000 employees (22,832(23,000 in the U.S. and 27,52215,000 internationally). SEC rules permit the exclusion of ade minimis number ofnon-U.S. employees. The excluded employees are located in the following countries: France (1,388 employees), Brazil (506 employees) and Canada (168 employees). In total, we excluded 2,062 international employees, or approximately 4%, of our total workforce from the identification of the median employee as permitted by SEC rules. After exclusions, our global workforce for purposes of calculating the pay ratio was estimated to be 48,292 employees (22,832 in the U.S. and 25,460 internationally).

YUM! BRANDS, INC. -2018 Proxy Statement67

EXECUTIVE COMPENSATION   

�� 

After calculating employee compensation, and excluding the employees listed above, our median employee was identified as a part-time Taco BellKFC restaurant employee in the U.S. who was employed by the Company for three months.United States. After identifying the median employee, we calculated total annual compensation in accordance with the requirements of the Summary Compensation Table.

For 2017,2020, the total compensation of our CEO, as reported in the Summary Compensation Table at page 53,55, was $12,368,607.$14,631,451. The total compensation of our median employee was estimated to be $9,111.$11,377. As a result, we estimate that our CEO to median employee pay ratio is 1,358:1286:1.

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.

 

 


 

68   YUM! BRANDS, INC. - -20182021 Proxy Statement69

        

 

EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes, as of December 31, 2017,2020, 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))

(a)(b)(c)

  Equity compensation plans approved by security holders

10,251,599

(1)

44.48

(2)

27,803,612

(3)

  Equity compensation plans not approved by security holders

215,636

(4)

49.80

(2)

—

  TOTAL

10,467,235

(1)

44.66

(2)

27,803,612

(3)

  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))

 

 
   

(a)

 

  

(b)

 

  

(c)

 

 

 

  Equity compensation plans approved by security holders

 

 

 

 

 

 

7,213,951

 

 

(1) 

 

 

 

 

 

 

74.78

 

 

(2) 

 

 

 

 

 

 

23,669,978

 

 

(3) 

 

 

  Equity compensation plans not approved by security holders

 

 

 

 

 

 

97,175

 

 

(4) 

 

 

 

 

 

 

51.59

 

 

(2) 

 

 

 

 

 

 

—

 

 

 

 

 

  TOTAL

 

 

 

 

 

 

7,311,126

 

 

(1) 

 

 

 

 

 

 

74.52

 

 

(2) 

 

 

 

 

 

 

23,669,978

 

 

(3) 

 

 

  (1)

Includes 2,443,7192,065,084 shares issuable in respect of RSUs, performance units and deferred units.

 

  (2)

Weighted average exercise price of outstanding Options and SARs only.

 

  (3)

Includes 13,901,80611,834,989 shares available for issuance of awards of stock units, restricted stock, restricted stock units and performance share unit awards under the LTIP Plan.

 

  (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 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,

YUM! BRANDS, INC. -2018 Proxy Statement69

EQUITY COMPENSATION PLAN INFORMATION   

other than executive officers, have been eligible to receive awards under the RGM Plan. The purpose of the RGM Plan was (i) to give restaurant general managers (“RGMs”) the opportunity to become


70     YUM! BRANDS, INC.- 2021 Proxy Statement

   EQUITY COMPENSATION PLAN INFORMATION

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 allnon-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 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.

 

 


 

70   YUM! BRANDS, INC. - -20182021 Proxy Statement71

        

 

AUDIT COMMITTEE REPORT

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, Christopher M. Connor, 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. 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.yum.com/investors/corporate-governance/
committee-composition-and-charters/http://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 8 times during 2017.2020. 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.

 

 


 

72   YUM! BRANDS, INC. -20182021 Proxy Statement71

 

 

 

AUDIT COMMITTEE REPORT

 

  

 

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 20172020 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.

 

 


YUM! BRANDS, INC. - 2021 Proxy Statement73

Has the Audit Committee made a recommendation regarding the audited financial statements for fiscal 2017?AUDIT COMMITTEE REPORT   

 

Has the Audit Committee made a recommendation regarding the audited financial statements for fiscal 2020?

 

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

72     YUM! BRANDS, INC.-2018 Proxy Statement

   AUDIT COMMITTEE REPORT

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, 20172020 for filing with the SEC.

 

Who prepared this report?

 

This report has been furnished by the members of the Audit Committee:

Thomas C. Nelson, Chairperson

Paget L. Alves,

Christopher M. Connor Chairperson

Tanya L. Domier

Lauren R. Hobart

P. Justin Skala

Elane B. Stock

Annie Young-Scrivner

 

 

 

74   YUM! BRANDS, INC. -20182021 Proxy Statement73

ADDITIONAL INFORMATION

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.

 

 

 

 

74   YUM! BRANDS, INC. - -20182021 Proxy Statement75

 

 

 

ADDITIONAL INFORMATION

 

  

 

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 20192022 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, 2018.2, 2021. 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 20192022 Annual Meeting no later than the date specified in our bylaws. If the 20192022 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 20192022 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, 2019.10, 2022.

In addition, we recently amended our bylaws to 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, 2018,2, 2021, and no later than December 7, 2018.2, 2021.

The Board is not aware of any matters that are expected to come before the 20182021 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.

 

 

 

 

YUM! BRANDS, INC. -2018 Proxy Statement75

APPENDIX A:Reconciliation of Adjusted Operating Profit Growth

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 ournon-GAAP Adjusted Base Operating Profit to the current fiscal year’snon-GAAP Core Operating Profit. Adjusted Base Operating Profit includes adjustments to our prior year GAAP Operating Profit that we believe are necessary to ensure that growth rates for bonus purposes are indicative of underlying business performance. Core Operating Profit excludes Special Items and the impact of foreign currency translation and we use Core Operating Profit for the purposes of evaluating performance internally. Refer to page 25 of YUM’s Form10-K for the fiscal year ended December 31, 2017 for further details related to Core Operating Profit.

Reconciliation of GAAP Operating Profit to Adjusted Base Operating Profit and Core Operating Profit

    KFC Taco Bell YUM

 

2016 GAAP Operating Profit

 

   

 

 

 

 

$871

 

 

 

  

 

 

 

 

$595

 

 

 

  

 

 

 

 

$1,682

 

 

 

 

Special Items (Income) Expense — Operating Profit(a)

 

       

 

 

 

 

(35

 

 

)

 

 

Impact of 53rd Week in 2016(b)

 

   

 

 

 

 

(11

 

 

)

 

  

 

 

 

 

(12

 

 

)

 

  

 

Impact of Pizza Hut U.S. Transformation Agreement(c)

 

       

 

 

 

 

(25

 

 

)

 

 

Impact of G&A Initiatives(d)

 

   

 

 

 

 

25

 

 

 

  

 

 

 

 

20

 

 

 

  

 

Impact of Refranchising (e)

 

   

 

 

 

 

(29

 

 

)

 

  

 

 

 

 

(42

 

 

)

 

  

 

 

 

 

(85

 

 

)

 

 

Other

 

   

 

 

 

 

1

 

 

 

  

 

 

 

 

4

 

 

 

   

 

 

(1

 

 

)

 

 

 

Adjusted Base Operating Profit

 

   

 

 

 

 

$857

 

 

 

  

 

 

 

 

$565

 

 

 

   

 

$1,536

 

 

 

2017 GAAP Operating Profit

 

   

 

 

 

 

$981

 

 

 

  

 

 

 

 

$619

 

 

 

  

 

 

 

 

$2,761

 

 

 

 

Special Items (Income) Expense — Operating Profit(a)

 

       

 

 

 

 

(1,001

 

 

)

 

 

Foreign Currency Impact on Reported Operating Profit(f)

 

   

 

 

 

 

(4

 

 

)

 

          

 

Core Operating Profit

 

   

 

 

 

 

$977

 

 

 

  

 

 

 

 

$619

 

 

 

  

 

 

 

 

$1,760

 

 

 

 

 

Adjusted Operating Profit Growth

 

   

 

 

 

 

14

 

 

%

 

  

 

 

 

 

10

 

 

%

 

  

 

 

 

 

15

 

 

%

 

a)   

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company providesnon-GAAP measurements which present operating results on a basis excluding Special Items. The Company uses earnings excluding Special Items as a key performance measure of results of operations for the purpose of evaluating performance internally. Thisnon-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of earnings from continuing operations excluding Special Items provides additional information to investors related to our internal performance metrics and to facilitate the comparison of past and present results, excluding items that the Company does not believe are indicative of our ongoing operations due to their size and/or nature. Special Items are not allocated to our Divisions and, thus, are not necessary to include as an adjustment when determining Adjusted Operating Profit Growth for our Divisions. Refer to page 29 of YUM’s Form10-K for further details related to these Special Items.

b)

Fiscal 2016 included a 53rd week for all of our U.S. businesses and certain of ournon-U.S. businesses that report 13 four-week periods versus 12 months. We exclude the 53rd week to further enhance the comparability of fiscal 2017 with fiscal 2016 when determining Adjusted Operating Profit Growth for our Divisions. The impact of the 53rd week was incorporated into our target for YUM and, thus, it is not necessary to include as an adjustment when determining Adjusted Base Operating Profit for YUM. Refer to page 25 of YUM’s Form10-K for further details related to the 53rd week in 2016.

c)

In May 2017, we reached an agreement with Pizza Hut U.S. franchisees that will improve brand marketing alignment, accelerate enhancements in operations and technology and includes a permanent commitment to incremental advertising and digital and technology contributions by franchisees. In connection with this agreement, we incurred $25 million of incremental system advertising expense which was excluded when determining Adjusted Base Operating Profit for Pizza Hut and YUM.

A-176      YUM! BRANDS, INC.-20182021 Proxy Statement

   APPENDIX A

d)

As part of our plans to become more efficient, we intend to reduce G&A to 1.7% of system sales in 2019. The impact of these forecasted strategic cost savings reductions for 2017 versus 2016 was excluded when determining Adjusted Operating Profit Growth for our Divisions. The impact of these cost savings reductions was incorporated into our target for YUM and, thus, it is not necessary to include as an adjustment when determining Adjusted Base Operating Profit for YUM.

e)

We have refranchised a significant number of Company-owned restaurants since the announcement of YUM’s Strategic Transformation Initiatives in October 2016. The impact on Operating Profit due to refranchising includes the loss of restaurant profit, which reflects the decrease in Company sales, and the increase in franchise fees from restaurants that have been refranchised. The Company excludes the actual loss of Operating Profit for 2017 versus 2016 due to refranchising when determining Adjusted Base Operating Profit for YUM and our Divisions.

f)

The Company excludes the impact of foreign currency translation from the calculation of Core Operating Profit. The foreign currency impact on reported Operating Profit is presented in relation only to the immediately preceding year presented.

YUM! BRANDS, INC. -2018 Proxy StatementA-2

LOGO

YUM! BRANDS, INC.

1441 GARDINER LANE

LOUISVILLE, KY 40213

ADMISSION TICKET

Your Vote is important. Please vote immediately.

VOTE BY INTERNET

Before The Meeting - Go to www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Central Daylightp.m. Eastern Time the day before thecut-off date or meeting date. Have your proxy card in hand when you access the websiteweb site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSDuring The Meeting - Go to www.virtualshareholdermeeting.com/YUM2021

If you would like to reduceYou may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years.the box marked by the arrow available and follow the instructions.

VOTE BY PHONE -1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Central Daylightp.m. Eastern Time the day before thecut-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:

E43305-P02188D45364-P51242                             KEEP THIS PORTION FOR YOUR RECORDS

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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.         DETACH AND RETURN THIS PORTION ONLY
 
 

 

YUM! BRANDS, INC.

 

The Board of Directors recommends a vote FOR items 1, 2 and 3.

1.

Election of Directors.

               

The Board of Directors recommends a vote FOR items1, 2 and 3.

1.Election of Directors.  
   Nominees:     For Against Abstain          
   

1a.   Paget L. Alves

     ☐     ☐     ☐      For Against Abstain 
   

1b.   Michael J. CavanaghKeith Barr

     ☐     ☐     ☐  2. Ratification of Independent Auditors. ☐    ☐    ☐
1c.    Christopher M. Connor☐    ☐    ☐3.Advisory Vote on Executive Compensation.  ☐     ☐     ☐ 
   

1c.   Christopher M. Connor

☐    ☐    ☐3.Advisory Vote on Executive Compensation.☐    ☐    ☐

1d.   Brian C. Cornell

     ☐     ☐     ☐         
   

1e.   Greg CreedTanya L. Domier

     ☐     ☐     ☐         
   

1f.    Tanya L. DomierDavid W. Gibbs

     ☐     ☐     ☐         
   

1g.   Mirian M. Graddick-Weir

     ☐     ☐     ☐         
   

1h.   Thomas C. NelsonLauren R. Hobart

     ☐     ☐     ☐         
   

1i.    P. Justin SkalaThomas C. Nelson

     ☐     ☐     ☐         
   

1j.    Elane B. StockP. Justin Skala

     ☐     ☐     ☐         
   

1k.   Robert D. WalterElane B. Stock

     ☐     ☐     ☐         

1l.    Annie Young-Scrivner

     

For address changes and/or comments, please check this box and write them on the back where indicated.

☐		    ☐     ☐ 
          Please indicate if you plan to attend this meeting.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  

LOGO

YUM! BRANDS, INC.

ANNUAL MEETING

May 17, 201811, 2021

9:00 A.M., CDT

YUM! Brands, Inc.

Yum! Brands Center of Restaurant Excellence

7100 Corporate Drive

Plano, Texas 75024

or live via the Internet at

www.virtualshareholdermeeting.com/YUM2021

ADMISSION TICKET

YUM! BRANDS, INC.’S 20182021 ANNUAL SHAREHOLDERS MEETING WILL BE HELD AT 9:00 A.M. (CENTRAL DAYLIGHT TIME) ON THURSDAY,TUESDAY, MAY 17, 2018, AT THE11, 2021, at the YUM! BRANDS CENTER OF RESTAURANT EXCELLENCE ATBrands Center of Restaurant Excellence, 7100 CORPORATE DRIVE IN PLANO, TEXAS. Corporate Drive, Plano, Texas 75024 and live via the Internet at www.virtualshareholdermeeting.com/YUM2021.

Due to health and safety concerns posed by the Covid-19 pandemic, it is possible that the Annual Meeting may be held solely via the internet, if permitted under applicable law.

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. If you plan to attend the Annual Shareholders Meeting via the Internet, have the information that is printed in the box marked by the arrow available. 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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E43306-P02188D45365-P51242            

 

 

LOGO

 

 

YUM! BRANDS, INC.

 

This proxy is solicited on behalf of the Board of Directors

 

The undersigned hereby appoints Marc L. Kesselman, Scott A. Catlett, and John P. Daly, and Carson T. Stewart, 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 17, 2018,11, 2021 at 9:00 a.m CDT, or any adjournment thereof.

NOMINEES FOR DIRECTOR:

Paget L. Alves, Michael J. Cavanagh,Keith Barr, Christopher M. Connor, Brian C. Cornell, Greg Creed, Tanya L. Domier, David W. Gibbs, Mirian M. Graddick-Weir, Lauren R. Hobart, Thomas C. Nelson, P. Justin Skala, Elane B. Stock and Robert D. Walter.Annie Young-Scrivner.

THE BOARD OF DIRECTORS RECOMMENDS A VOTEFORITEMS 1, 2 and 3.

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

This card also provides voting instructions to the Administrator or Trustee for shares beneficially owned under the YUM! Brands 401(k) Plan.

 

Address Changes/Comments:

  

(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)

SEE

REVERSE

SIDE

(CONTINUEDand To Be Signed and Dated onREVERSE SIDESIDE))