Yum Brands Inc., the company that owns the KFC, Taco Bell and Pizza Hut chains, gave Chairman, President and CEO David Novak a pay package worth nearly $12.6 million in 2010, according to an Associated Press analysis of data filed with regulators.
That's 31 percent higher than $9.6 million compensation package he received for the 2009 fiscal year. The boost in pay came as Yum's business improved, with sales rising in the U.S. and as its chains rapidly expanded in key international markets such as China. The company's net income jumped more than 8 percent to $1.16 billion on revenue of $11.34 billion last year. And its stock surged 40 percent.
Novak said last month that 2010 was perhaps Yum's "best year as a public company."
Yum, based in Louisville, Ky., kept Novak's salary steady at $1.4 million. His stock awards were valued at $740,005 on the days they were granted, also about flat with the prior year. The bulk of the increase in his compensation came from a 20 percent bump in the value of his stock option grants to $5 million, and a 69 percent jump in his performance-based cash incentive to $5.1 million.
Novak also received perks worth $338,783, such as personal use of the company's aircraft, life insurance and disability insurance premiums, home security, and other items. The value of those benefits is up 41 percent from the prior year.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonus, performance-related bonus, perks, above-market returns on deferred compensation and the estimated value of grants of stock and stock options made during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.
(Copyright 2011 by The Associated Press. All Rights Reserved.)