Yum! 2010 Annual Report

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eward and retain the talented leaders necessary to enable our Company to succeed in the highly competitive market for talent, while maximizing shareholder returns. We believe that our management team has been a key driver in YUM’s strong performance over both the long and short term. Therefore, we intend to continue to provide a competitive compensation package to our executives, tie a significant portion of pay to performance and utilize components that best align the interests of our executives with those of our shareholders. The following is a summary of important aspects of our executive compensation program discussed later in this CD&A: Key elements. The key elements of our program are: Base salary, Annual performance-based cash incentives, and Long-term equity compensation consisting of stock-settled stock appreciation rights (‘‘SARs’’) and Performance Share Units (‘‘PSUs’’). Pay for Performance. We emphasize pay-for-performance in order to align executive compensation with our business strategy and the creation of long-term shareholder value. At Risk Pay. While we emphasize ‘‘at risk’’ pay tied to performance, we believe our program does not encourage excessive risk taking by our NEOs or other executives. Share Ownership Guidelines. Our executives are subject to share ownership guidelines and are prohibited from hedging against the economic risk of such ownership. No Employment Agreements or Guaranteed Bonuses. Our executives do not have employment agreements or guaranteed bonuses. Compensation Recovery Policy. We have a compensation recovery policy that gives the Board discretion to recover incentive compensation paid to senior management in the event of a restatement of our financial statements due to misconduct. Future Severance Policy. We have a future severance policy that limits any future severance agreements with an executive. Change in Control Agreements. We have change in control agreements with our executives to ensure continuity of management in the event of a prospective change in control of the Company. 31 Proxy Statement 9MAR201101
Proxy Statement 9MAR201101440694 Significant Majority of Executive Officer Pay Tied to Performance Our annual compensation program has three primary elements: base salary, annual cash performancebased incentives and long-term equity performance-based incentives. As the graph below shows, the performance-based incentives constitute by far the largest portion of target compensation for our NEOs: Long Term Equity 63% Long Term Equity 48% 2010 Compensation Program/Decisions CEO Target Pay Mix—2010 Salary 14% Annual Incentive 23% Salary % All Other NEOs Target Pay Mix—2010 Salary 26% Annual Incentive 27% Annual Incentive % Long Term Equity % 14MAR201107295096 Salary % Annual Incentive % Long Term Equity % 14MAR201107295253 For 2010, we highlighted four major growth strategies as drivers for earnings growth. The Company has communicated these same strategies to investors for several years. These strategies are: Build Leading Brands in China in Every Significant Category Drive Aggressive International Expansion and Build Strong Brands Everywhere Improve U.S. Brand Positions, Consistency and Returns Provide Long-Term Shareholder and Franchisee Value Our compensation program is designed to support these strategies. For our annual bonus program, the Committee sets performance measures and targets it believes will help the Company continue to execute against these strategies. The Company’s 2010 results measured against the 2010 targets are used by the Committee when evaluating our NEOs’ performance and determining the NEOs’ annual incentive bonus (the performance measures, targets and results are discussed beginning at page 39). The Company believes this compensation program, which as noted above has been in place for many years, is an important factor in driving our NEOs’ performance to achieve long term EPS growth and total shareholder return (‘‘TSR’’). The success of our strategy is evidenced by our one, three and five year results for TSR as compared to our compensation peer group (made up of the retail, hospitality and 32
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 34 and 35: Who are this year’s nominees? MAT
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 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
Page 100 and 101:
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
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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
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Note 18 - Reportable Operating Segm
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(e) 2010, 2009 and 2008 include app
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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
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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
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10.20† Severance Agreement (in th
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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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