Annual Meeting May 19

Yum! Brands CEO David Gibbs total compensation for 2021 was $ 27,578,659. It reflects a significant increase in salary that also fed into an increased annual cash bonus (more than $5 million). It also includes a $5 million special “Accelerating Profitable Growth Award” as well as a $10 million stock award. While the growth award does include some performance requirements, shareholders have already been vocal in their objection.

On April 27, SOC Investment Group, filed with the SEC an open letter to fellow shareholders calling on them to vote against the pay proposal at Yum. In the letter the SOC Investment outlines three reasons it finds the equity grant unreasonable:

“1.          Executives already have large amounts of vested and outstanding equity that reward them when the company’s shares appreciate.

2.            The special award is not necessary because it rewards executives for what should constitute their normal job duties.

3.            Special awards may not solve retention challenges and are a chief cause of executive overpay.

We strongly believe that executives at large companies like YUM are already well compensated without special equity awards—they already receive significant amounts of annual equity grants that appreciate when the company performs well.”

On May 4, Yum! Brands filed a supplementary proxy filing itself that responds to proxy advisors charges. For example, concerns that the company increased CEO’s regular LTI in the same year as a sizeable one-time Special Award are met with a discussion of factors considered. The company also attempts to justify other elements of the compensation package.

Finally, Yum! Brands reported one of the highest median worker to CEO pay ratios we have seen this year: 2,108:1. The parent company of restaurant chains including Habit Burger, KFC, Pizza Hut and Taco Bell, Yum notes that 90% of company-owned restaurant employees are part-time and at least 50% have been employed by the Company for less than a year. The wage for the median employees was $13,082.

Gibbs, having  been employed by the company and its subsidiaries for 33 years and holding 484,269 shares of stock and an accumulated pension value of over $20 million, seems among the employees least likely to leave the company. Perhaps given the turnover of more than half the staff each year and the costs entailed in bringing on board and training replacements, Yum might consider focusing its retention awards on the staff who directly serve the customers.