Yum! 2010 Annual Report

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Who are this year’s nominees? MATTERS REQUIRING SHAREHOLDER ACTION ITEM 1: ELECTION OF DIRECTORS (Item 1 on the Proxy Card) The twelve (12) nominees recommended by the Nominating and Governance Committee of the Board of Directors for election this year to hold office until the 2012 Annual Meeting and until their respective successors are elected and qualified are provided below. The biographies of each of the nominees below contains information regarding the person’s service as a director, business experience, 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 below 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. Information about the number of shares of common stock beneficially owned by each director appears on page 27 under the heading ‘‘Stock Ownership Information.’’ See also ‘‘Certain Relationships and Related Transactions.’’ There are no family relationships among any of the directors and executive officers of the Company. Director ages are as of the Annual Meeting date. Director Bios David W. Dorman David W. Dorman is the Non-Executive Chairman of the Board of Age 57 Motorola Solutions, Inc. (formerly known as Motorola Inc.), a Director since 2005 leading provider of business and mission critical communication Non-Executive Chairman, products and services for enterprise and government customers. He Motorola Solutions, Inc. served as Non-Executive Chairman of the Board of Motorola, Inc. from May 2008 until the separation of its mobile devices and home businesses in January, 2011. From October 2006 to May 2008, he was Senior Advisor and Managing Director to Warburg Pincus, a global private equity firm. From November 2005 until January 2006, he was President of AT&T Inc., a company that provides Internet and transaction-based voice and data services (formerly known as SBC Communications). He was Chairman of the Board and Chief Executive Officer of the company previously known as AT&T Corp. from November 2002 until November 2005. Prior to this, he was President of AT&T Corp. from 2000 to 2002 and the Chief Executive Officer of Concert, a former global venture created by AT&T Corp. and British Telecommunications plc, from 1999 to 2000. Mr. Dorman serves on the board of CVS Caremark Corporation. He served as a director of AT&T Corp. from 2002 to 2006 and Georgia Tech Foundation from 2002 to 2010. 15 Proxy Statement 9MAR201101
Proxy Statement 9MAR201101440694 Specific qualifications, experience, skills and expertise: Operating and management experience, including as chief executive officer of global telecommunications-related businesses Expertise in finance, strategic planning and public company executive compensation Public company directorship and committee experience Independent of Company Massimo Ferragamo Massimo Ferragamo is Chairman of Ferragamo USA, Inc., a Age 53 subsidiary of Salvatore Ferragamo Italia, which controls sales and Director since 1997 distribution of Ferragamo products in North America. Chairman, Ferragamo USA, Inc. Mr. Ferragamo has held this position since 1985. Mr. Ferragamo has served as a director of Birks & Mayors, Inc. from 2005 until 2007. Specific qualifications, experience, skills and expertise: Operating and management experience, including as chairman of an international sales and distribution business Expertise in branding, marketing, sales and international business development Public company directorship and committee experience Independent of Company J. David Grissom J. David Grissom is Chairman of Mayfair Capital, Inc., a private Age 72 investment firm formed by Mr. Grissom in 1989. In addition, Director since 2003 Mr. Grissom has been Chairman of The Glenview Trust Company, Chairman, Mayfair Capital, Inc. a private trust and investment management company, since 2001. Chairman, The Glenview Trust From 1973 to 1989, he held various senior positions, including Company Chairman and CEO of Citizens Fidelity Bank & Trust and Vice Chairman of its successor, PNC Financial Corp. He is also a director of United Metro Media, Inc. He served as a director of Churchill Downs Incorporated from 1979 to 2010. Specific qualifications, experience, skills and expertise: Operating and management experience, including as chairman of private investment firms and chief executive officer of a financial institution Expertise in finance, accounting and public company leadership Public company directorship and committee experience Independent of Company 16
Page 1 and 2: On The Ground Floor of Global Growt
Page 3 and 4: Dear Partners, I’m especially ple
Page 5 and 6: Building dynamic, vibrant brands ev
Page 7 and 8: Our outstanding and experienced loc
Page 9 and 10: Yum! Restaurants International, whi
Page 11 and 12: In the US, we grew same store sales
Page 13: I’d like to thank our franchise p
Page 18 and 19: Time: 9:00 a.m. on Thursday, May 19
Page 20 and 21: YUM! BRANDS, INC. 1441 Gardiner Lan
Page 22 and 23: prior to the meeting. Directions su
Page 24 and 25: of the outstanding shares of YUM co
Page 26 and 27: For a shareholder to submit a candi
Page 28 and 29: What access do the Board and Board
Page 30 and 31: Governance Committee copies of all
Page 32 and 33: Name of Committee Number of Meeting
Page 36 and 37: Bonnie G. Hill Bonnie G. Hill is Pr
Page 38 and 39: David C. Novak David C. Novak becam
Page 40 and 41: What am I voting on? ITEM 2: RATIFI
Page 42 and 43: What am I voting on? ITEM 3: ADVISO
Page 44 and 45: ITEM 5: PROPOSAL TO APPROVE AN AMEN
Page 46 and 47: Who are our largest shareholders? S
Page 48 and 49: (7) This amount includes 6,000 shar
Page 50 and 51: eward and retain the talented leade
Page 52 and 53: nondurable consumer products compan
Page 54 and 55: Our Named Executive Officers (NEOs)
Page 56 and 57: Meridian going forward as its indep
Page 58 and 59: 2010 Executive Compensation Decisio
Page 60 and 61: 2010 Annual Incentive Compensation
Page 62 and 63: Long-term Incentive Compensation Th
Page 64 and 65: he should receive a long-term incen
Page 66 and 67: In the case of Mr. Su, he receives
Page 68 and 69: providing employees with the same o
Page 70 and 71: MANAGEMENT PLANNING AND DEVELOPMENT
Page 72 and 73: (3) The amounts shown in this colum
Page 74 and 75: GRANTS OF PLAN-BASED AWARDS The fol
Page 76 and 77: OUTSTANDING EQUITY AWARDS AT FISCAL
Page 78 and 79: OPTION EXERCISES AND STOCK VESTED T
Page 80 and 81: Early Retirement Eligibility and Re
Page 82 and 83: NONQUALIFIED DEFERRED COMPENSATION
Page 84 and 85:
(3) All amounts shown were distribu
Page 86 and 87:
actual performance for the performa
Page 88 and 89:
DIRECTOR COMPENSATION As described
Page 90 and 91:
EQUITY COMPENSATION PLAN INFORMATIO
Page 92 and 93:
AUDIT COMMITTEE REPORT Who serves o
Page 94 and 95:
ADDITIONAL INFORMATION Who pays the
Page 96 and 97:
APPENDIX A PROPOSED AMENDMENT TO AR
Page 98 and 99:
UNITED STATES SECURITIES AND EXCHAN
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Item 1. Business. PART I YUM! Brand
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• Traditional KFC restaurants in
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Supply and Distribution The Company
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Research and Development (“R&D”
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Our China operations subject us to
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If our franchisees incur too much d
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We are also subject to increasing e
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Franchising A substantial number of
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Roger Eaton, 50, is Chief Executive
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Issuer Purchases of Equity Securiti
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Item 6. Selected Financial Data. Se
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Item 7. Management’s Discussion a
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Drive Industry-Leading, Long-Term S
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Results of Operations Amount % B/(W
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U.S. Business Transformation Measur
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Under the equity method of accounti
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The following table summarizes the
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Restaurant Unit Activity Unconsolid
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Multibrand restaurants are included
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YRI 2010 vs. 2009 Income / (Expense
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Franchise and license fees and inco
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Worldwide Other (Income) Expense 20
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Unallocated impairment expense in 2
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Other. This item primarily includes
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During the year ended December 25,
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We sponsor noncontributory defined
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Impairment of Goodwill We evaluate
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Self-Insured Property and Casualty
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Income Taxes At December 25, 2010,
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Item 8. Financial Statements and Su
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Consolidated Statements of Income Y
Page 162 and 163:
Consolidated Balance Sheets YUM! Br
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Notes to Consolidated Financial Sta
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We participate in various advertisi
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For purposes of impairment testing
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Fair Value Measurements. Fair value
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If we record goodwill upon acquisit
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Note 4 - Items Affecting Comparabil
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Under the equity method of accounti
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(a) Refranchising (gain) loss is no
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The following table summarizes the
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Note 9 - Goodwill and Intangible As
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Note 10 - Short-term Borrowings and
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The annual maturities of short-term
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Note 12 - Derivative Instruments Th
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The following tables present the fa
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Amounts recognized in the Consolida
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The estimated net loss for the U.S.
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Benefit Payments The benefits expec
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Potential awards to employees and n
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Award Activity Stock Options and SA
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Note 16 - Shareholders’ Equity Un
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In 2008, the benefit was positively
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At December 25, 2010, the Company h
Page 208 and 209:
Note 18 - Reportable Operating Segm
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(e) 2010, 2009 and 2008 include app
Page 212 and 213:
Due to the inherent volatility of a
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On August 4, 2006, a putative class
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On October 14, 2008, a putative cla
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On March 14, 2007, a lawsuit styled
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Note 21 - Subsequent Event Subseque
Page 222 and 223:
Item 9. Changes In and Disagreement
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PART IV Item 15. Exhibits and Finan
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s/ Robert Holland, Jr. Robert Holla
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(viii) 3.875% Senior Notes due Nove
Page 230 and 231:
10.20† Severance Agreement (in th
Page 232 and 233:
Shareholder Information LONG TERM I
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Yum! brands, Inc. 2010 annual custo
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Alone we’re delicious. Together w
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Yum! 2010 Annual Report

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