Yum! Brands Annual Report 2021

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FY2021 Annual Report · Yum! Brands

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Unlocking Opportunity for

YUM! BRANDS 2021 ANNUAL REPORT

FINANCIAL HIGHLIGHTS

(In millions, except for per share amounts)
Year-end

Company sales

Franchise and property revenues

Franchise contributions for advertising and other services

Total revenues

Operating Profit

Net Income

Reported Diluted Earnings Per Common Share

Special Items Diluted Earnings Per Common Share (a)

Diluted Earnings Per Common Share before Special Items (a)

Net Cash Provided by Operating Activities

(a) See our 2021 Form 10-K for further discussion of Special Items.

2021

$ 2,106

2,900

1,578

$ 6,584

$ 2,139

$ 1,575

5.21

.75

4.46

$ 1,706

2020

$ 1,810

2,510

1,332

$ 5,652

$ 1,503

904

$ 2.94

(0.68)

$ 3.62

$ 1,305

% B/(W) change

ABOUT THE PAPER USED FOR THIS REPORT

The inks used in the printing of this report contain an average of 25% - 35% vegetable oils from plant
derivatives, a renewable resource. They replace petroleum based inks as an effort to also reduce
volatile organic compounds (VOCs).

The cover and first page of this report were printed using FSC-certified paper made with 10% post-consumer waste.

investors.yum.com/annualreport

David Gibbs,
Chief Executive Officer
Yum! Brands, Inc.

UNLOCKING OPPORTUNITY
FOR GROWTH & GOOD

Dear Fellow Stakeholders:

At Yum!, we have a clear vision for building the world’s most loved, trusted and fastest growing
restaurant brands. It begins with our franchisees and restaurant team members who bring our
vision to life, one meal at a time. As the world’s largest restaurant company, our unified global
system of more than 53,000 restaurants in over 155 countries serves millions of customers
each day, provides opportunities for our team members and supports the communities in
which we operate.

Before looking back at last year’s accomplishments, I want to acknowledge that while we see a
bright future ahead for our global business in 2022 and beyond, our hearts are with the people
impacted by the crisis currently playing out in Ukraine. We hope for peace to be restored in the
region, and we are taking action to help ensure the safety of our people, support humanitarian
causes in the region and suspend key components of our operations in Russia.

Reflecting on 2021, I am incredibly proud of the collective accomplishments of our Yum! teams,
franchise partners and restaurant team members around the world. We maximized the structural
advantages of our diversified global portfolio by leveraging our unmatched global scale,
sophisticated supply chains, marketing and consumer insights expertise, and our growing digital
and technology capabilities to fuel growth and deliver strong results. Our 2021 results show that
our portfolio of iconic brands, run by the very best in the business and guided by our Recipe for
Growth & Good, can thrive and win in any environment. We’re entering 2022 in an enviable
position that’s underpinned by the resiliency of our highly-franchised business model and our
relevant, easy and distinctive brands.

2021 Highlights: We remain committed to advancing our Recipe for Growth. During 2021,
we opened nearly 4,200 restaurants in over 110 countries, resulting in 3,057 net-new units and
signaling that our development engine is diversified and stronger than ever. This accelerated
restaurant development is a testament to the health of our business. Our digital sales reached
new heights hitting $22 billion in 2021, an increase of approximately 25% year over year
and demonstrating a more permanent shift to these channels. We galvanized our digital
and technology strategy and advanced the development of our ecosystem with both internal
investments and the closing of the Kvantum, Tictuk and Dragontail acquisitions. Our investments
in digital and technology that enable Easy Experiences, Easy Operations and Easy Insights are
proving to both support and accelerate our growth.

We also continued to make progress on our Recipe for Good in 2021, focused on our three
priority pillars: People, Food and Planet. During the year, we invested in Yum!’s social purpose,
unlocking opportunities for our people and communities through initiatives like the launch of
the Yum! Center for Global Franchise Excellence at the University of Louisville, a first-of-its-kind
business program offering multiple levels of online education that emphasize the possibilities of
franchising as a pathway to entrepreneurship for underrepresented people of color and women.
We continue to introduce relevant and distinctive plant-based offerings through our partnership
with Beyond Meat. In addition, we announced science-based targets to reduce greenhouse gas
emissions nearly 50% by 2030 and pledged to achieve net-zero emissions by 2050.

To bring these accomplishments to life, let me share specific highlights from each of our brands:

KFC is “Always Original.” KFC expanded its presence across the globe with unprecedented new restaurant openings, coupled with
accelerated digital capabilities including increasing the number of restaurants offering delivery by more than 20% since 2020.
KFC successfully launched its chicken sandwich platform in the U.S. to match its globally successful sandwich offerings in multiple
international markets.

Taco Bell is truly a Category of One for Everyone, believing everyone deserves the right to Live Más. The brand spent 2021
advancing its digital capabilities and growing the Taco Bell Rewards loyalty program while also welcoming its morning customers
back with the national relaunch of the breakfast daypart. Additionally, Taco Bell reached a significant development milestone in its
international business as Spain became its first international market to surpass 100 units.

Pizza Hut is committed to ensuring every customer has a Hot, Fast and Reliable experience, as it continues to shift to digital
ordering and off-premises channels. The brand remains focused on providing customers with easy experiences and convenient
offerings. Pizza Hut’s intelligent coaching app, HutBot, is deployed in over 6,000 stores worldwide, enabling easy operations for
team members, while Dragontail allows the brand to streamline food preparation and optimize its delivery routes, ensuring the
customer receives the freshest product with each order.

The Habit Burger Grill is the spirit of Santa Barbara, California, and its commitment to quality is at the heart of everything it
does. In 2021, the Habit prioritized its restaurant team member experience, simplifying its operations, revitalizing its core menu
items and driving customer awareness through new access options and digital engagements.

Our Recipe for Growth’s four growth drivers are our foundation to build sustainable, long-term results. Outlined below, they drive
higher same-store sales and net-new unit growth and serve as our guiding principles across all business decisions.

Unrivaled Culture & Talent
Leveraging our people-first culture to fuel brand performance and franchisee success

Bold Restaurant Development
Driving market and franchise unit expansion with strong economics

Unmatched Operating Capability
Recruiting and equipping the best restaurant operators in the world to deliver great customer experiences

Relevant, Easy & Distinctive Brands
Innovating and elevating iconic restaurant brands that people trust and champion

Our Recipe for Good continues to reflect our priorities for social responsibility, risk management and sustainable stewardship of our
People, Food and Planet.

People: We Unlock Opportunity
We’re investing in Yum!’s social purpose to unlock opportunities for our people and communities with a special focus on
championing equity, inclusion and belonging, education and skills, and entrepreneurship across all aspects of our brands and
franchise business.

Food: We Serve Food People Trust
We have an unwavering commitment to serve food that people trust. That means going above and beyond when it comes to food
safety, listening and responding to customers’ evolving preferences, and improving the nutritional value of our menu items.

Planet: We Grow Sustainably
We remain committed to growing sustainably and using our scale to minimize our environmental impact with a focus on reducing
carbon emissions, plastic waste and land use across our restaurants and supply chain.

In closing, our record unit development during 2021 marked the strongest growth year in Yum!’s history. We’re entering 2022, which
marks Yum!’s 25th anniversary, stronger than ever, guided by our Recipe for Growth & Good strategies. I’m excited for the year ahead
as we continue our efforts to remain among the world’s most loved, trusted and fastest growing restaurant brands while delivering
lasting value for our stakeholders. Thank you to our shareholders, customers and Yum! family for your continued support.

David Gibbs, CEO

YUM! Brands, Inc.
1441 Gardiner Lane
Louisville, Kentucky 40213

April 8, 2022

Dear Fellow Shareholders:

On behalf of your Board of Directors, we are pleased to invite you to attend the 2022 Annual Meeting of
Shareholders of YUM! Brands, Inc. The Annual Meeting will be held Thursday, May 19, 2022, at 9:00 a.m., central
time, in the YUM! Brands Center of Restaurant Excellence at 7100 Corporate Drive in Plano, Texas.

We intend to hold our annual meeting in person. 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 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.

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 this e-proxy process
expedites shareholders’ receipt of proxy materials, lowers the costs of delivery and helps reduce 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 14, 2022, as well as valid picture identification. Whether or
not you plan to attend, we encourage you to consider the matters presented in the proxy statement and vote as
soon as possible.

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Sincerely,

David Gibbs
Chief Executive Officer

Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to Be Held on
May 19, 2022—this notice and the proxy statement are available at https://investors.yum.com/governance/
governance-documents. The Annual Report on Form 10-K is available at https://investors.yum.com/
financial-information/annual-reports/.

YUM! Brands, Inc.
1441 Gardiner Lane
Louisville, Kentucky 40213

Notice of Annual Meeting
of Shareholders

Thursday, May 19, 2022 9:00 a.m.
YUM! Brands Center of Restaurant Excellence, 7100 Corporate Drive, Plano, Texas 75024.

ITEMS OF BUSINESS:

(1)

(2)

(3)

(4)

To elect twelve (12) directors to serve until the 2023 Annual Meeting of Shareholders and until their
respective successors are duly elected and qualified.

To ratify the selection of KPMG LLP as our independent auditors for the fiscal year ending December 31,
2022.

To consider and hold an advisory vote on executive compensation.

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

WHO CAN VOTE?:

You can vote if you were a shareholder of record as of the close of business on March 14, 2022.

ANNUAL REPORT:

A copy of our 2021 Annual Report on Form 10-K is included with this proxy statement.

WEBSITE:

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You may also read the Company’s Annual Report and this Notice and proxy statement on our website at
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 8, 2022.

By Order of the Board of Directors

Scott A. Catlett
Chief Legal & Franchise Officer & Corporate Secretary

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 8, 2022, 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

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

GOVERNANCE OF THE COMPANY

Director Biographies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MATTERS REQUIRING SHAREHOLDER ACTION

ITEM 1 Election of Directors (Item 1 on the Proxy Card) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2 Ratification of Independent Auditors (Item 2 on the Proxy Card) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .
ITEM 3 Advisory Vote on Executive Compensation (Item 3 on the Proxy Card)

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STOCK OWNERSHIP INFORMATION

DELINQUENT SECTION 16(a) REPORTS

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grants of Plan-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding Equity Awards at Year-End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Option Exercises and Stock Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonqualified Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential Payments Upon Termination or Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CEO Pay Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EQUITY COMPENSATION PLAN INFORMATION

AUDIT COMMITTEE REPORT

ADDITIONAL INFORMATION

12
18

28
29
30

34
54
55
56
58
59
60
62
65
67

YUM! Brands, Inc.
1441 Gardiner Lane
Louisville, Kentucky 40213

PROXY STATEMENT

For Annual Meeting of Shareholders To Be Held On

May 19, 2022

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, May 19, 2022, at the YUM! Brands Center of
Restaurant Excellence at 7100 Corporate Drive in Plano, Texas.

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.

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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?

The Board has made these materials available to you over
the internet, or has delivered printed versions of these
materials to you by mail, in connection with the Board’s
solicitation of proxies for use at the 2022 Annual Meeting
of Shareholders (the “Annual Meeting”). The Annual

Meeting is scheduled to be held on Thursday, May 19,
2022 at 9:00 a.m. Central Time, at 7100 Corporate Drive,
Plano, Texas. This solicitation is for proxies for use at the
Annual Meeting or at any reconvened meeting after an
adjournment or postponement of the Annual Meeting.

YUM! BRANDS, INC. - 2022 Proxy Statement 1

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

Why did I receive a one-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 8,
2022, 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.

Who may attend the Annual Meeting?

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The Annual Meeting is open to all shareholders of record as of close of business on March 14, 2022, or their duly
appointed proxies.

What do I need to bring to attend the Annual Meeting In-Person?

You will need 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 in order
to vote at
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

the meeting.

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 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.

sound or

Please note that cellular and smart phones/devices,
video recording
computers, cameras,
equipment, and other similar devices,
large bags,
briefcases and packages will not be allowed in the
meeting room. Seating is limited and admission is on a
first-come, first-served basis. Seating may be further
limited if necessary
to comply with applicable
COVID-19 safety guidelines.

2 YUM! BRANDS, INC. - 2022 Proxy Statement

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

May shareholders ask questions?

the Company will answer
Yes. Representatives of
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

Who may vote?

question and no repetitive or follow-up questions will
be permitted.

Questions will be answered as time allows.

You may vote if you owned YUM common stock as of the close of business on the record date, March 14, 2022.
Each share of YUM common stock is entitled to one vote. As of March 14, 2022, YUM had 288.2 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:

(cid:129) 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;

(cid:129) The ratification of the selection of KPMG LLP as our
the fiscal year ending

independent auditors for
December 31, 2022; and

(cid:129) An advisory vote on executive compensation.

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

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How does the Board of Directors recommend that I vote?

Our Board of Directors recommends that you vote
your shares:

(cid:129) FOR the ratification of the selection of KPMG LLP as

our independent auditors; and

(cid:129) FOR each of the nominees named in this proxy

(cid:129) FOR the proposal regarding an advisory vote on

statement for election to the Board;

executive compensation.

How do I vote before the Annual Meeting?

There are three ways to vote before the meeting:

(cid:129) By Internet — If you have Internet access, we
encourage you to vote on www.proxyvote.com by
following instructions on the Notice or proxy card;

(cid:129) 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

(cid:129) 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 (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.

YUM! BRANDS, INC. - 2022 Proxy Statement 3

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

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Proxies submitted through the Internet or by telephone
as described above must be received by 11:59 p.m.,
Eastern Time, on May 18, 2022. 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 Time, on May 17, 2022.

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

Can I vote at the Annual Meeting?

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

Can I change my mind after I vote?

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
submitted
through the Internet or by telephone through the
Broadridge program must be received by 11:59 p.m.,
Eastern Time, on May 18, 2022.

(www.proxyvote.com).

Votes

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.

You may change your vote at any time before the polls
close at the Annual Meeting. You may do this by:

(cid:129) Giving written notice to the Corporate Secretary of

the Company prior to the Annual Meeting; or

(cid:129) Signing another proxy card with a later date and

returning it to us prior to the Annual Meeting;

(cid:129) Voting again by telephone or through the Internet
prior to 11:59 p.m., Eastern Time, on May 18, 2022;

(cid:129) 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.

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:

(cid:129) FOR the election of the twelve (12) nominees for

director named in this proxy statement (Item 1);

4 YUM! BRANDS, INC. - 2022 Proxy Statement

(cid:129) FOR the ratification of the selection of KPMG LLP as
our independent auditors for the fiscal year 2022
(Item 2); and

(cid:129) FOR the proposal regarding an advisory vote on

executive compensation (Item 3).

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

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
to consolidate as many
and/or our

transfer agent

the same name and
accounts as possible under
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
fiscal year 2022 is
considered a routine matter for which brokerage firms

independent auditors for

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 “broker non-vote.”

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
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

stock, as of March 14, 2022, must be present or
represented by proxy at the Annual Meeting. This is
referred to as a quorum. Abstentions and broker
non-votes will be counted for purposes of establishing
a quorum at the Annual Meeting.

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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, 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
“AGAINST” votes. Abstentions will be
number of

counted as present but not voted. Abstentions and
broker non-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 https://investors.yum.com/
governance/governance-documents/ and at page 21
under “What other significant Board practices does the
Company have? — Majority Voting Policy.”

YUM! BRANDS, INC. - 2022 Proxy Statement 5

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

How many votes are needed to approve the other proposals?

in person or

In order to be approved, the other proposals must
receive the “FOR” vote of a majority of the shares,
present
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. Broker non-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, broker non-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 Form 8-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.

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6 YUM! BRANDS, INC. - 2022 Proxy Statement

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 Global 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,
https://investors.yum.com/governance/governance-documents/.

CORPORATE GOVERNANCE

Governance Highlights
SHAREHOLDER RIGHTS

COMPENSATION

12 Director Nominees

Annual Election of Directors

11 Independent Nominees

Majority Voting of Directors

Proxy Access

Shareholder Communication
Process for communicating with
Board

Active Shareholder Engagement
Program

Directors with experience,
qualification and skills across a
wide range of public and private
companies

Board access to Senior
Management and Independent
Advisors

Independent Non-Executive
Chairperson

Independent Board Committees

Executive Sessions of
Independent Directors at every
regular Board and Committee
meeting

Risk Oversight by Board and its
Committees

Annual Board and Committee
Self-Evaluations

All Directors Attended at least
75% of Meetings Held

YUM’s Global Code of Conduct

Political Contributions and U.S.
Government Advocacy Policy

Audit Committee Complaint
Procedures Policy regarding
Accounting Matters

No Hedging or Pledging of
Company Stock

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Independent Management
Planning and Development
Committee

Independent Compensation
Consultant

Executive Compensation is Highly
Performance Based to Align with
Shareholder Interests and
Promote Company Business
Strategy

At Risk Pay Tied to Performance

Strong Stock Ownership
Guidelines

No Employment Agreements or
Guaranteed Bonuses

Compensation Recovery Policy
(Clawback) applies to Equity and
Bonus Awards

Double trigger vesting upon
Change in Control

No excise tax gross up

YUM! BRANDS, INC. - 2022 Proxy Statement 7

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 12 directors whose terms expire at this Annual Meeting. Our directors
are elected annually. The average director tenure is 6 years, with our longest- and shortest-tenured directors having
served for 16 years (Mr. Nelson) and for 2 years (Mr. Barr and Mmes. Hobart and Young-Scrivner), respectively.

As discussed in more detail later in this section, the Board has determined that 11 of the 12 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:

6 Directors

4 Directors

2 Directors

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How often did the Board meet in 2021?

The Board of Directors met 6 times during 2021. Each of the directors who served in 2021 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 Directors’ policy is that all directors should attend the Annual Meeting and all persons then serving as
directors attended the 2021 Annual Meeting.

How does the Board select nominees for the Board?

candidates

and Governance Committee
The Nominating
considers
Board membership
for
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

8 YUM! BRANDS, INC. - 2022 Proxy Statement

the Board

and management.

and are selected based upon contributions they can
make
The
Committee’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. While the Board does not have a
specific policy
the
Committee believes that its nominees should reflect a
diversity of experience, gender, race, ethnicity and
age. The Committee also considers such other
relevant factors as it deems appropriate, including the
the balance of
current composition of
management and independent directors, the need for
Audit Committee expertise and the evaluations of
other prospective nominees, if any.

regarding director diversity,

the Board,

In connection with this evaluation, it is expected that
the Nominating and Governance
each member of
Committee will
interview the prospective nominee
before the prospective nominee is presented to the full
Board for
completing this
evaluation and interview process, the Committee 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.

consideration. After

GOVERNANCE OF THE COMPANY

The Company’s strategic vision is grounded in our
“Recipe for Growth and Good.” Our Recipe for Growth
focuses on four growth drivers intended to accelerate
same-store sales growth and net-new restaurant
development at KFC, Pizza Hut and Taco Bell around
the world. The Company remains focused on building
the world’s most loved, trusted and fastest growing
restaurant brands by:

(cid:129) Growing Unrivaled Culture and Talent to leverage
our culture and people capability to fuel brand
performance and franchise success;

(cid:129) Developing Unmatched Operating Capability, by
recruiting and equipping the best
restaurant
operators in the world to deliver great customer
experiences;

(cid:129) Building Relevant, Easy and Distinctive Brands, by
innovating and elevating iconic restaurant brands
people trust and champion; and

(cid:129) Achieving Bold Restaurant Development by driving
expansion with strong

and franchise

market
economics and value.

We look for director candidates who 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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YUM! BRANDS, INC. - 2022 Proxy Statement 9

GOVERNANCE OF THE COMPANY

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:

Yum!’s Recipe for Growth

Relevant Skills our Board Collectively Possesses

Growing Unrivaled Culture and Talent, by leveraging our
culture and people capability to fuel brand performance and
franchise success

Talent Development. Experience building the knowledge, skills, and
abilities of employees and helping them develop and achieve their
potential within an organization.

Leadership Experience. Experience as executive ofﬁcer level
business leader who demonstrates strong abilities to motivate and
manage others and to effectively manage organizations.

Developing Unmatched Operating Capability, by recruiting
and equipping the best restaurant operators in the world to
deliver great customer experiences

Industry/Operations. Experience and understanding of operational
and strategic issues facing large restaurant or consumer service driven
companies.

Building Relevant, Easy and Distinctive Brands, by
innovating and elevating iconic restaurant brands people trust
and champion

Achieving Bold Restaurant Development, by driving market
and franchise expansion with strong economics

Marketing/Brand Management. Experience marketing and managing
well-known brands or the types of products and experiences we sell.

Technology or Digital. Experience in leadership and understanding of
technology, digital platforms and new media, data security, and data
analytics.

Global Experience. Experience at multinational companies or in
international markets, which provides useful business and cultural
perspectives.

Finance. Experience in public company management and ﬁnancial
stewardship.

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. In 2020 we announced our Unlocking Opportunity Initiative, which focuses on
equity and inclusion, education, and entrepreneurship and is supported by a $100 million investment over five years
(beginning in 2020).

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10 YUM! BRANDS, INC. - 2022 Proxy Statement

GOVERNANCE OF THE COMPANY

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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Experience/Background
Leadership Experience

Global Experience

Finance

Industry/Operations

Marketing/Brand management

Talent Development

Technology or Digital

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.

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YUM! BRANDS, INC. - 2022 Proxy Statement 11

GOVERNANCE OF THE COMPANY

Director Biographies

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 beginning 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.

Specific Qualifications, Experience, Skills and Expertise:
(cid:129) Operating, finance and management experience, including as Chief Sales Officer of a wireless

and wireline communications company

(cid:129) Global sales experience

(cid:129) Public company directorship and committee experience

Background
Keith Barr is the Chief Executive Officer of InterContinental Hotels Group plc (IHG), a predominately
franchised, global organization that includes brands such as InterContinental Hotels & Resorts,
Holiday Inn Family and Crowne Plaza Hotels & Resorts. He has served in this role since July 2017.
He served as Chief Commercial Officer of IHG from 2013 to July 2017 and prior to that, as Chief
Executive Officer of IHG’s Greater China business. Prior to this position, Mr. Barr served IHG in a
number of senior positions in IHG’s Americas and Asia, Middle East and Africa (AMEA) regions.

Specific Qualifications, Experience, Skills and Expertise:
(cid:129) Operating and management experience, including as Chief Executive Officer of a franchised,

global company

(cid:129) Expertise in strategic planning, branding and corporate leadership

Paget L. Alves

Age 67
Director since 2016
Independent

Committees:
(cid:129) Audit, Chair

Favorite YUM! Brands Food:

Chicken Chalupas

Keith Barr

Age 51
Director since 2020
Independent

Committees:
(cid:129) Management Planning and

Development

Favorite YUM! Brands Food:

7 Layer Burrito

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GOVERNANCE OF THE COMPANY

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

Specific Qualifications, Experience, Skills and Expertise:
(cid:129) Operating and management experience, including as Chairman and CEO of a Fortune 500

company

(cid:129) Expertise in marketing, human resources,

talent development, public company executive

compensation, planning and operational and financial processes

(cid:129) Public company directorship and committee experience

Background
Brian C. Cornell joined the Yum! Brands Board in 2015 and has served as Non-Executive Chairman
since November 2018. Mr. Cornell is Chairperson 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 of Wal-Mart Stores, Inc. and as an Executive Vice President
of Wal-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:
(cid:129) Operating and management experience, including as Chairman and Chief Executive Officer of a

merchandise retailer

(cid:129) Expertise in strategic planning, retail business, branding and corporate leadership

(cid:129) Public company directorship experience and committee experience

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Christopher M. Connor

Age 66

Director since 2017

Independent

Committees:
(cid:129) Management Planning and

Development, Chair

Favorite YUM! Brands Food:

Chicken Pot Pie

Brian C. Cornell

Age 63
Director since 2015
Independent,

Non-Executive Chairman

Committees:
(cid:129) Management Planning and

Development

(cid:129) Nominating and Governance

Favorite YUM! Brands Food:

Classic Bean Burrito

YUM! BRANDS, INC. - 2022 Proxy Statement 13

GOVERNANCE OF THE COMPANY

Background
Tanya L. Domier is 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 President
and Chief 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:
(cid:129) Operating and management experience as Chief Executive Officer

(cid:129) Expertise in strategic planning, finance, global commerce and corporate leadership

(cid:129) Public company directorship and committee experience

Tanya L. Domier

Age 56
Director since 2018
Independent

Committees:
(cid:129) Audit

Favorite YUM! Brands Food:

Thin Veggie Lover’s Pizza

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David W. Gibbs

Age 59
Director since 2019

Favorite YUM! Brands Food:

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. Mr. Gibbs has served as a director of Under Armour since September 2021.

Specific Qualifications, Experience, Skills and Expertise:
(cid:129) Operational and global management experience,

including as Chief Executive Officer, Chief

Operating Officer and Chief Financial Officer of the Company

(cid:129) Expertise in finance, strategic planning, global branding, franchising and corporate leadership

Award Winning
Charburger

(cid:129) Public company directorship and committee experience

14 YUM! BRANDS, INC. - 2022 Proxy Statement

GOVERNANCE OF THE COMPANY

Background
Mirian M. Graddick-Weir retired as Executive Vice President of Human Resources for Merck & Co.,
Inc., a pharmaceutical company, in November, 2018. She had held that 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 Booking Holdings, Inc. since June 2018.

Specific Qualifications, Experience, Skills and Expertise:
(cid:129) Management experience,
pharmaceutical company

including as Executive Vice President of human resources for a

(cid:129) Expertise in global human resources, corporate governance and public company compensation

(cid:129) Public company directorship and committee experience

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:
(cid:129) Operating, marketing and management experience, including as President of a merchandise

retailer

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(cid:129) Expertise in technology, finance, strategic planning and marketing

(cid:129) Public company directorship experience

Mirian M. Graddick-Weir

Age 67

Director since 2012

Independent

Committees:
(cid:129) Management Planning and

Development

(cid:129) Nominating and Governance,

Chair

Favorite YUM! Brands Food:

Hot Wings

Lauren R. Hobart

Age 53
Director since 2020
Independent

Committees:
(cid:129) Audit

Favorite YUM! Brands Food:

Chicken Quesadilla

YUM! BRANDS, INC. - 2022 Proxy Statement 15

GOVERNANCE OF THE COMPANY

Background
Thomas C. Nelson is President and Chief Executive Officer of National Gypsum Company, a
building products 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 a director of Atrium 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:
(cid:129) Operational and management experience, including as President and Chief Executive Officer of a

building products manufacturer

(cid:129) Senior government experience as Assistant to the Secretary of the United States Defense

Department and as a White House Fellow

(cid:129) Expertise in finance, strategic planning, business development and retail business

(cid:129) Public company directorship and committee experience

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 for Colgate-Palmolive 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 President of
Colgate - Asia.

Specific Qualifications, Experience, Skills and Expertise:
(cid:129) Global operating and management experience, including as Chief Executive Officer at a large
international manufacturer and as President of major divisions of a consumer products company

(cid:129) Expertise in branding, marketing, finance, sales, strategic planning and international business

development

Thomas C. Nelson

Age 59
Director since 2006
Independent

Committees:
(cid:129) Management Planning and

Development

(cid:129) Nominating and Governance

Favorite YUM! Brands Food:

Pepperoni Lover’s Pizza

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P. Justin Skala

Age 62
Director since 2016
Independent

Committees:
(cid:129) Audit

Favorite YUM! Brands Food:

KFC Bucket of Original
Recipe Chicken

16 YUM! BRANDS, INC. - 2022 Proxy Statement

GOVERNANCE OF THE COMPANY

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 PLC.

Specific Qualifications, Experience, Skills and Expertise:
(cid:129) Global operating and management experience, including as group president of a consumer

products company

(cid:129) Expertise in branding, marketing, finance, sales, strategic planning and international business

development

Elane B. Stock

Age 57
Director since 2014
Independent

Committees:
(cid:129) Audit

Favorite YUM! Brands Food:

(cid:129) Public company directorship experience and committee experience

KFC Bucket of Original
Recipe Chicken

Annie Young-Scrivner

Age 53
Director since 2020
Independent

Committees:
(cid:129) Audit

Favorite YUM! Brands Food:

Pan Pepperoni
Pizza with Crushed Red Pepper

Background
Annie Young-Scrivner has served as the Chief Executive Officer of Wella 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 served as President, Teavana & Executive Vice President of
Global Tea from 2014 to 2015, Global Chief Marketing Officer & President of Tazo Tea from 2009 to
to joining Starbucks,
2012, and President of Starbucks Canada from 2012 to 2014. Prior
Ms. Young-Scrivner held senior leadership positions at PepsiCo,
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 Macy’s, Inc.

Inc.

Specific Qualifications, Experience, Skills and Expertise:
(cid:129) Operating and management experience, including as Chief Executive Officer of consumer goods

company

(cid:129) Public company directorship and committee experience

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If elected, we expect that all of the aforementioned nominees will serve as directors and hold office until the 2023
Annual Meeting of Shareholders and until their respective successors have been elected and qualified.

YUM! BRANDS, INC. - 2022 Proxy Statement 17

GOVERNANCE OF THE COMPANY

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 non-employee Director
is summarized in the table below. For 2021, each
non-employee Director received an annual stock grant
retainer with a fair market value of $260,000. Directors
may request to receive up to one-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
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.

pursuant

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the Board (Mr. Cornell

Chairperson of the Board and Committee Chairperson
In recognition of their added duties, the
Retainers.
Chairperson of
in 2021)
receives an additional $170,000 stock retainer annually
and the Chairs of the Audit Committee (Mr. Alves in
2021), Management Planning and Development
Committee (Mr. Connor in 2021) and the Nominating
and Governance Committee (Ms. Graddick-Weir
in
2021) each receive an additional $25,000, $20,000
and $20,000 annual stock retainer, respectively. These
committee chairperson retainers were paid in February
of 2021.

Initial Stock Grant upon Joining Board. Non-employee
directors also receive a one-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.

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 executive team.
Under this program, the YUM! Brands Foundation will

18 YUM! BRANDS, INC. - 2022 Proxy Statement

match up to $10,000 a year in contributions by the
director to a charitable institution approved by the
YUM! Brands Foundation. At
the
Foundation may match
contributions
exceeding $10,000.

its discretion,

director

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 below 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 2021, 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 50. Data for
this review was prepared for the Committee by its
consultant, Meridian Compensation
independent
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
Committee,
Management Planning and Development Committee
and Nominating and Governance Committee were
generally consistent with market practice, although the
Audit Committee chair
retainer was approximately
$2,500 below market median. Based on this data, the
Committee recommended no changes to our director
compensation program.

Chairpersons

Audit

the

GOVERNANCE OF THE COMPANY

Fees Earned or
Paid in Cash
($)
(b)

—

Stock
Awards
($)(1)
(c)

282,917

260,000

280,000

430,000

260,000

280,000

238,333

262,083

260,000

Option/SAR
Awards
($)(2)
(d)

All Other
Compensation
($)(3)
(e)

—

10,000

—

10,000

Total
($)
(f)

292,917

270,000

280,000

430,000

260,000

280,000

238,333

262,083

260,000

270,000

Name
(a)

Alves, Paget

Barr, Keith

Connor, Christopher

Cornell, Brian

Domier, Tanya

Graddick-Weir, Mirian

Hobart, Lauren

Nelson, Thomas

Skala, Justin

Stock, Elane

Young-Scrivner, Annie

(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 2021. Retainer awards are pro-rated for partial years of
service.

(2) At December 31, 2021,

the aggregate number of stock appreciation rights (“SARs”) awards outstanding for each

non-employee director was:

Name

Alves, Paget

Barr, Keith

Connor, Christopher

Cornell, Brian

Domier, Tanya

Hobart, Lauren

Graddick-Weir, Mirian

Nelson, Thomas

Skala, Justin

Stock, Elane

Young-Scrivner, Annie

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—

6,491

—

18,964

4,646

10,003

—

(3) Amounts in this column represent charitable matching gifts.

What are the Company’s policies and procedures with respect to related
person transactions?

they are in the best

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
interests of our
determine if
shareholders
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’s review. Any member of

the Company.

and

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,
daughters-in-law,
sons-in-law and any person, other than a tenant or

stepchildren,

siblings,

YUM! BRANDS, INC. - 2022 Proxy Statement 19

GOVERNANCE OF THE COMPANY

domestic employee, who resides in the household of a
director, director nominee, executive officer or holder
of 5% or more of our voting stock.

its review,

After
the Nominating and Governance
Committee may approve the transaction. The related
person transaction policies and procedures provide
be
that

transactions

deemed

certain

are

officers,

pre-approved, even though they exceed $100,000.
Pre-approved transactions include employment of
executive
and
director
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 that other company.

compensation,

Does the Company require stock ownership by directors?

stock

owned

common

The Board believes that the number of shares of the
Company’s
each
is a personal decision;
non-management director
however, the Board strongly supports the position that
non-management directors should own a meaningful
number of shares in the Company and expects that
each non-management director will (i) own Company
common shares with a value of at least five 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. Each director may sell
enough shares to pay taxes in connection with the
receipt of his or her retainer or the exercise of stock
appreciation rights and the ownership guideline will be
adjusted to reflect the sale to pay taxes.

How much YUM stock do the directors own?

Stock ownership information for each director is shown in the table on page 33.

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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 51.

The Company has maintained an ownership culture
among its executive and senior managers since its
formation. Substantially all executive officers and
in
members of senior management hold stock well
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 2023 Annual Meeting of Shareholders must be

received by us no earlier than November 9, 2022, and
no later than December 9, 2022.

Director nominations to be brought before the
2023 Annual Meeting of Shareholders. Director
nominations that a shareholder intends to present at
the 2023 Annual Meeting of Shareholders, other than
through the proxy access procedures described
above, must have been received no later
than
February 18, 2023. These nominations must be
submitted by a shareholder in accordance with the
requirements specified in YUM’s bylaws.

20 YUM! BRANDS, INC. - 2022 Proxy Statement

GOVERNANCE OF THE COMPANY

Where to send director nominations for the 2023
Shareholders.
Annual Meeting
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?

In November 2018, Brian C. Cornell assumed the
position of Non-Executive Chairperson of the Board.
Applying our Corporate Governance Principles,
the
Board determined that based on Mr. Cornell’s
independence, it would not appoint a Lead Director
when Mr. Cornell became Non-Executive 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
as
Chief Executive Officer
Chairperson of the Board. These Principles also provide
for an independent Lead Director when the CEO is
serving as Chairperson. During 2021, our CEO did not

(“CEO”) may

serve

serve as Chairperson. Our Board believes that Board
independence and oversight of management are
effectively maintained through a strong independent
Chairperson or Lead Director and through the Board’s
composition, committee system and policy of having
regular executive sessions of non-employee directors,
all of which are discussed below. As Non-Executive
Chairperson, Mr. Cornell
is responsible for supporting
the CEO on corporate strategy along with leadership
development. Mr. Cornell also works with the CEO in
setting the agenda and schedule for meetings of the
Board, in addition to performing the duties that would
otherwise be performed by a Lead Director, as
described below.

As CEO, Mr. Gibbs is responsible for
leading the
Company’s strategies, organization design, people
development and culture, and for providing the
day-to-day leadership over operations.

To ensure effective independent oversight, the Board
has adopted a number of governance practices
discussed below.

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What are the Company’s governance policies and ethical guidelines?

(cid:129) 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
https://investors.yum.com/governance/
committee-composition-and-charters/.

(cid:129) 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 at https://investors.yum.com/
governance/governance-documents/.

(cid:129) Ethical Guidelines. YUM’s Global Code of Conduct
was adopted to emphasize the Company’s 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 principal executive officer,
the principal 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
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.

YUM! BRANDS, INC. - 2022 Proxy Statement 21

GOVERNANCE OF THE COMPANY

What other significant Board practices does the Company have?

(cid:129) Private Executive Sessions. Our non-management
directors meet in executive session at each regular
Board meeting. The executive sessions are attended
only by the non-management directors and are
presided over by
the Lead Director or our
Non-Executive Chairperson, as applicable. Our
independent directors meet in executive session at
least once per year.

(cid:129) 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
Chairperson.

The Board currently does not have a Lead Director, and
the duties of the Lead Director are fulfilled by Mr. Cornell
as Non-Executive Chairperson. Since Mr. Cornell
is
independent, the Board determined that it would not
appoint a separate Lead Director upon Mr. Cornell’s
appointment as Non-Executive Chairperson.

The Lead Director position is structured so that one
is empowered with
independent Board member
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,
has
determined that the Lead Director, when appointed, is
responsible for:

the Board

(a) Presiding 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
is
Board meetings and the information that
provided to directors,

(c)

If requested by major shareholders, being available
for consultations and direct communication,

(d) Serving as a liaison between the Chairperson and

the independent directors, and

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(e) Calling special meetings of

the independent

directors.

(cid:129) Advance Materials. Information and data important
to the directors’ understanding of the business or
matters to be considered at a Board or Board
committee meeting are,
to the extent practical,
distributed to the directors sufficiently in advance of
the meeting to allow careful
to the
meeting.

review prior

(cid:129) 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
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 member of the Board, the results of which
are summarized and discussed in an executive
the Audit, Management
session.
Planning and Development and Nominating and
Governance Committees also each conduct similar
annual self-evaluations.

In addition,

(cid:129) 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
through a process managed by the
Board will,
Nominating
and
and Governance Committee
excluding the nominee in question, accept or reject
the resignation within 90 days after
the Board
receives the resignation.
the Board rejects the
resignation, the reason for the Board’s decision will
be publicly disclosed.

22 YUM! BRANDS, INC. - 2022 Proxy Statement

What access do the Board and Board committees have to management and
to outside advisors?

GOVERNANCE OF THE COMPANY

(cid:129) 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
the results, plans and
present
operations of
the business within their areas of
responsibility.

information about

(cid:129) Access to Outside Advisors. The Board and its
committees may retain counsel or consultants
without 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.
and
Development Committee has the sole authority to
retain compensation consultants for advice on
executive compensation matters.

The Management

Planning

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 digital/information security. In
furtherance of
the Board has
delegated specific risk-related responsibilities to the
Audit Committee and to the Management Planning and
Development Committee.

responsibility,

its

engages

The Audit Committee
substantive
discussions of enterprise risk management and
its regular committee meetings held
processes at
during the year. At
receives
functional risk review reports covering significant areas
these
of
functional areas, as well as receiving reports from the
Internal
Chief Legal Officer and the Vice President,
reports
Internal Audit
Audit. Our Vice President,

risk from the employees responsible for

these meetings,

directly to the Chairperson of the Audit Committee and
(“CFO”). The Audit
our Chief Financial Officer
Committee also receives reports at each regular
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.

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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:

(cid:129) Information security and privacy modules included in
our mandatory onboarding and annual compliance
training for restaurant support center employees, as
targeted specialized training for any
well as
employees that routinely have access to personal
data;

(cid:129) Regular

testing, both by internal and external

resources, of our information security defenses;

YUM! BRANDS, INC. - 2022 Proxy Statement 23

GOVERNANCE OF THE COMPANY

(cid:129) Periodic phishing drills with all restaurant support

center employees;

(cid:129) Global security and privacy policies; and

In addition,
the Company maintains an information
security risk insurance policy that provides coverage
for data security breaches.

(cid:129) Table-top exercises with senior

leaders covering
third-party data security

ransomware and other
threats.

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
the Chief
the operational
Committee. At

level,

and Public Affairs Officer

is
Communications
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.

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

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As stated in the Compensation Discussion and Analysis
at page 34,
the philosophy of our compensation
programs is to reward performance by designing pay
team and individual
programs
performance, and shareholder return; emphasize long-
term incentives; drive ownership mentality; and require
executives to personally invest in Company stock.

incorporate

that

In early 2022, 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:

(cid:129) Our Compensation system is balanced, rewarding

both short-term and long-term performance;

24 YUM! BRANDS, INC. - 2022 Proxy Statement

(cid:129) Long-term Company performance is emphasized.
The majority of
the
top-level employees is associated with the long-term
performance of the Company;

incentive compensation for

(cid:129) Strong stock ownership guidelines in place for
approximately 165 senior employees are enforced;

(cid:129) The annual

incentive and performance share plans
both cap the level of performance over which no
additional rewards are paid, thereby mitigating any
incentive to take unreasonable risk;

(cid:129) 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;

(cid:129) Compensation performance measures in our annual
incentive plans are transparent and tied to multiple
measurable factors, none of which exceed a 50%
weighting; measures
to
both
are
shareholders and drivers of returns;

apparent

(cid:129) The performance which determines employee
the Audit

closely monitored by

rewards
Committee and the full Board; and

(cid:129) The Company has a recoupment (clawback) policy.

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 (https://investors.yum.com/
governance/governance-documents/).

Pursuant
the Board
to the Governance Principles,
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.

this review,

the Board affirmatively
As a result of
determined that all of the directors are independent of
the Company and its management under NYSE rules,
with the exception of David Gibbs, who is not
considered independent because of his employment
by the Company.

In determining that the other directors did not have a
the Board
material
determined that Messrs. Alves, Barr, Connor, Nelson,

relationship with the Company,

Skala and Mmes. Domier, Graddick-Weir, Hobart,
Stock and Young-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
determined that this relationship was not material to
Mr. Cornell or Target Corporation, and therefore
determined that Mr. Cornell was independent.

is the Chairman and Chief Executive
Brian C. Cornell
Officer of Target Corporation. During 2021,
the
Company received approximately $6 million in license
fees from Target Corporation in the normal course of
business. Divisions of
the Company paid Target
Corporation approximately $1 million in rebates in
2021. 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 than 2%
the
of Target Corporation’s revenues. Furthermore,
licensing relationship between the Company and
Target Corporation was initially entered into before
joined the Board or became employed by
Mr. Cornell
Target Corporation.

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How do shareholders communicate with the Board?

and

other

parties

interested

Shareholders
in
communicating directly with individual directors, the
non-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
that
members of
process,
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)

the Corporate Secretary of

the Board. Under

the Board or

any

director

the Nominating

such
from shareholders

and a summary of all such correspondence. The
designated
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
the Board and request
addressed to members of
correspondence. Written
copies
correspondence
to
accounting, internal controls or auditing matters are
immediately brought to the attention of the Company’s
Audit Committee Chair and to the internal audit
department
accordance with
procedures established by the Audit Committee with
below).
respect
Correspondence
to
Management Planning and Development Committee
matters are referred to the Chair of the Management
Planning and Development Committee.

from shareholders

such matters

(described

handled

relating

and

YUM! BRANDS, INC. - 2022 Proxy Statement 25

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
our non-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 Chief Legal Officer,
Scott A. Catlett. If any person believes that he or she
should communicate with our Audit Committee Chair,
Paget Alves, he or she may do so by writing him at
c/o YUM! Brands, Inc., 1441 Gardiner Lane, Louisville,

the conduct of

KY 40213. In addition, a person who has such a concern
about
the Company or any of our
employees may discuss that concern on a confidential or
anonymous basis by contacting The Network at
1 (844) 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 at https://investors.yum.com/
governance/governance-documents/.

What are the Committees of the Board?

The Board of Directors has standing Audit, Management Planning and Development and Nominating and
Governance Committees.

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Name of Committee
and Members
Audit:

Paget L. Alves, Chair
Tanya L. Domier
Lauren Hobart
P. Justin Skala
Elane B. Stock
Annie Young-Scrivner

Number of Meetings
in Fiscal 2021
9

Functions of the Committee
(cid:129) Possesses sole authority regarding the selection and retention

of independent auditors

(cid:129) Reviews and has oversight over the Company’s internal audit

function

(cid:129) Reviews and approves the cost and scope of audit and
non-audit services provided by the independent auditors
(cid:129) Reviews the independence, qualification and performance of

the independent auditors

(cid:129) Reviews the adequacy of the Company’s internal systems of

accounting and financial control

(cid:129) Reviews the annual audited financial statements and results of

the audit with management and the independent auditors
(cid:129) Reviews the Company’s accounting and financial reporting
principles and practices including any significant changes
(cid:129) Advises the Board with respect to Company policies and

procedures regarding compliance with applicable laws and
regulations and the Company’s Global Code of Conduct and
Policy on Conflicts of Interest

(cid:129) 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 23

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. 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. Alves 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.

26 YUM! BRANDS, INC. - 2022 Proxy Statement

GOVERNANCE OF THE COMPANY

Name of Committee
and Members
Management Planning
and Development:

Christopher M. Connor, Chair
Keith Barr
Brian C. Cornell
Mirian M. Graddick-Weir
Thomas C. Nelson

Functions of the Committee
(cid:129) Oversees the Company’s executive compensation plans and
programs and associated risks and reviews and recommends
changes to these plans and programs

(cid:129) Monitors the performance of the Chief Executive Officer and
other senior executives in light of corporate goals set by the
Committee

(cid:129) Reviews and approves the compensation of the Chief
Executive Officer and other senior executive officers

(cid:129) Reviews management succession planning

Number of Meetings
in Fiscal 2021

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.

Name of Committee
and Members
Nominating and
Governance:

Mirian M. Graddick-Weir, Chair
Brian C. Cornell
Thomas C. Nelson

Functions of the Committee
(cid:129) Identifies and proposes to the Board suitable candidates for

Board membership

(cid:129) Advises the Board on matters of corporate governance
(cid:129) Reviews and reassesses from time to time the adequacy of the

Company’s Corporate Governance Principles

(cid:129) Receives comments from all directors and reports annually to

the Board with assessment of the Board’s performance

(cid:129) Prepares and supervises the Board’s annual review of director

independence

Number of Meetings
in Fiscal 2021
4

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.

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YUM! BRANDS, INC. - 2022 Proxy Statement 27

MATTERS REQUIRING SHAREHOLDER ACTION

ITEM 1

Election of Directors (Item 1 on the Proxy
Card)

Who are this year’s nominees?

There are twelve (12) nominees recommended by the Nominating and Governance Committee of the Board of
Directors for election this year to hold office until the 2023 Annual Meeting and until their respective successors are
elected and qualified. Their biographies are provided above at pages 12 to 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.

What is the recommendation of the Board of Directors?

The Board of Directors recommends that you vote FOR the election of these nominees.

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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 at https://
investors.yum.com/governance/governance-documents/ and at page 22 under “What other significant Board
practices does the Company have? — Majority Voting Policy.”

28 YUM! BRANDS, INC. - 2022 Proxy Statement

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 2022. The
Audit Committee of the Board of Directors has selected KPMG to audit our consolidated financial statements.
During fiscal 2021, KPMG served as our independent auditors and also provided other audit-related and non-audit
services.

Will a representative of KPMG be present at the meeting?

Representatives of KPMG will attend 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 2021
and 2020?

The following table presents fees for professional services rendered by KPMG for the audit of the Company’s
annual financial statements for 2021 and 2020, and fees billed for audit-related services, tax services and all other
services rendered by KPMG for 2021 and 2020.

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Audit fees(1)
Audit-related fees(2)
Tax fees(3)
All other fees
TOTAL FEES

2021

2020
$6,466,000 $5,597,000
$ 541,000 $ 529,000
$ 707,000 $ 511,000
0
0 $
$
$7,714,000 $6,637,000

(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, and statutory audits.

(2) Audit-related fees include fees associated with audits of financial statements and certain employee benefit plans, agreed
upon procedures, other attestations, and services rendered in connection with the Company’s securities offerings including
comfort letters and consents.

(3) Tax fees consist principally of fees for international tax compliance, tax audit assistance, value added tax services, and other

tax advisory services.

YUM! BRANDS, INC. - 2022 Proxy Statement 29

MATTERS REQUIRING SHAREHOLDER ACTION

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

The Audit Committee has implemented a policy for the
pre-approval of all audit and permitted non-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 a case-by-case basis or pre-approve
engagements pursuant
to the Audit Committee’s
pre-approval policy. The Audit Committee may
delegate pre-approval
its
independent members and has currently delegated
pre-approval authority up to certain amounts to its
Chair.

to one of

authority

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
In considering
must subsequently be pre-approved.

reviews

the Audit Committee
a
pre-approvals,
the scope of services falling within
description of
pre-designated
specific
budgetary guidelines. Pre-approvals of designated
services are generally effective for
the succeeding
12 months.

imposes

services

and

The Corporate Controller monitors services provided
by the independent auditors and overall compliance
with the pre-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
the
pre-approval policy
the Audit
Committee. The complete policy is available on the
Company’s website at https://investors.yum.com/
governance/committee-composition-and-charters/.

non-compliance with

to the Chair of

report

any

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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 a non-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 long-
and short-term. We believe that our compensation
program has attracted and retained strong leaders and
our
closely
is
shareholders.

aligned with

interests

the

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 34,

30 YUM! BRANDS, INC. - 2022 Proxy Statement

which discusses in detail how our compensation
policies and procedures operate and are designed to
meet
and how our
Management Planning and Development Committee
makes compensation decisions under our programs.

compensation

goals

our

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.

MATTERS REQUIRING SHAREHOLDER ACTION

What vote is required to approve this proposal?

Approval of this proposal requires the affirmative vote
in person or
of a majority of shares present
represented by proxy and entitled to vote at
the
Annual Meeting. While this vote is advisory and
non-binding on the Company, the Board of Directors
and the Management Planning and Development
Committee will review the voting results and consider

shareholder concerns in their continuing evaluation of
the Company’s compensation program. Unless the
Board of Directors modifies its policy on the frequency
the next advisory vote on
of
the 2023
executive compensation will be held at
Annual Meeting of Shareholders.

this advisory vote,

What is the recommendation of the Board of Directors?

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

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YUM! BRANDS, INC. - 2022 Proxy Statement 31

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, 2021 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
T. Rowe Price Associates, Inc.

100 E. Pratt Street,
Baltimore, MD 21202

Blackrock Inc.

55 East 52nd Street
New York, NY 10055

The Vanguard Group

100 Vanguard Blvd.
Malvern, PA 19355

Magellan Asset Management Limited

19 Martin Place
Sydney, NSW, 2000, Australia

Number of Shares
Beneficially Owned

Percent
of Class

34,105,072(1)

11.6%

24,554,583(2)

8.4%

22,770,049(3)

7.77%

15,431,704(4)

5.26%

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(1) The filing indicates sole voting power for 10,805,859 shares, shared voting power for 0 shares, sole dispositive power for

34,105,072 shares and shared dispositive power for 0 shares.

(2) The filing indicates sole voting power for 16,304,205 shares, shared voting power for 0 shares, sole dispositive power for

24,554,583 shares and shared dispositive power for 0 shares.

(3) The filing indicates sole voting power for 0 shares, shared voting power for 465,798 shares, sole dispositive power of

21,580,878 shares and shared dispositive power for 1,189,171 shares.

(4) The filing indicates sole voting power for 10,359,192 shares, shared voting power for 0 shares, sole dispositive power for

15,431,704 shares and 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, 2021 by

(cid:129) each of our directors,

(cid:129) each of

the executive officers named in the

Summary Compensation Table on page 54, and

(cid:129) all directors and relevant executive officers as a

group.

the following
Unless we note otherwise, each of
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
five
concerning beneficial ownership by holders of
percent or more of YUM’s common stock.

32 YUM! BRANDS, INC. - 2022 Proxy Statement

stock

from the

appreciation

The table shows the number of shares of common
stock and common stock equivalents beneficially
owned as of December 31, 2021. Included are shares
that could have been acquired within 60 days of
December 31, 2021 through the exercise of stock
or
options,
deferred
distributions
compensation
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.

rights
Company’s
together with

(“SARs”)

plans,

STOCK OWNERSHIP INFORMATION

Number
of Shares
Beneficially
Owned(1)
6,309
—
—
452
4,957
1,233
—
17,396
8,753
4,019
2,042
85,059
6,198
13,329
8,034
46,574

Beneficial Ownership
Options/
SARs
Exercisable
within
60 Days(2)
—
—
—
2,076
—
6,022
—
6,022
1,491
3.154
—
299,504
10,410
66,221
7,901
125,751

Deferral
Plans Stock
Units(3)
—
—
—
—
—
—
—
—
—
—
—
29,880
—
12,827
—
10,143

Total
Beneficial
Ownership
6,309
—
—
2,528
4,957
7,255
—
23,418
10,244
7,173
2,042
414,443
16,608
92,377
15,935
182,468

Additional
Underlying
Stock
Units(4)
8,462
4,648
13,215
24,012
8,135
32,481
2,548
70,502
8,330
18,404
2,636
69,826
4,391
6,188
7,318
240

Total
14,771
4,648
13,215
26,540
13,092
39,736
2,548
93,920
18,574
25,577
4,678
484,269
20,999
98,565
23,253
182,708

222,302

647,576

58,824

928,702

325,454

1,254,156

Name
Paget Alves
Keith Barr
Christopher Connor
Brian C. Cornell
Tanya Domier(5)
Mirian M. Graddick-Weir
Lauren Hobart
Thomas C. Nelson
Justin Skala
Elane B. Stock
Annie Young-Scrivner
David Gibbs(5)
Christopher Turner
Tracy Skeans
Mark King
Anthony Lowings(5)
All Directors and Executive

Officers as a Group
(19 persons)

(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:
(cid:129) Ms. Skeans, 2,734
(cid:129) Mr. Lowings, 1,214
(cid:129) all relevant executive officers as a group, 5,008 shares

(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 at year-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 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) For Ms. Domier, these shares are held in a trust. For Mr. Gibbs and Mr. Lowings, 65,893 and 3,750 of these shares are held

in trusts, respectively.

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YUM! BRANDS, INC. - 2022 Proxy Statement 33

DELINQUENT SECTION 16(a) REPORTS

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 and greater-
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 2021, except that one late Form 4 filed on behalf Mr. Skala reported
one transaction (the distribution of shares from the Directors Deferred Compensation Plan), due to an administrative
error.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

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This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation philosophy and
program,
the Management Planning and Development Committee (the
“Committee”) for our named executive officers (“NEOs”) and factors considered in making those decisions.

the compensation decisions of

Table of Contents

I. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

A. YUM 2021 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
B. Named Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
C. Compensation Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
D. Compensation Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
E. Relationship between Company Pay and Performance for the CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

II. Elements of Executive Compensation Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

A. Base Salary
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
B. Annual Performance-Based Cash Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
C. Long-Term Equity Performance-Based Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

III. 2021 Named Executive Officer Total Direct Compensation and Performance

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

IV. Retirement and Other Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

V. How Compensation Decisions Are Made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

VI. Compensation Policies and Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

34 YUM! BRANDS, INC. - 2022 Proxy Statement

Executive Summary

same-store

A. YUM 2021 Performance
The company’s 2021 performance was incredibly
strong,
resulting in system sales growth of 13%,
underpinned by 10% same-store sales growth and 6%
four global Brands
net unit growth. Each of our
contributed to the strength we saw in 2021 with
positive
net-new unit
sales
development. This diversified strength illustrates the
health of our global system, driven by iconic Brands,
strong unit economics and the unmatched operating
capability of our capable, committed, and well-
capitalized franchise partners, who are experiencing
strong unit economics and profit growth. In 2021, we
opened 4,180 gross units, marking the strongest
development year in Yum!’s history and setting an
industry record for unit development, demonstrating
that our development engine is reignited.

and

investments and the closing of

Additionally,
the Company reached new heights in
digital, leading to over $22 billion in digital sales, an
year-over-year. We
approximately 25% increase
galvanized our digital and technology strategy and
accelerated the development of our ecosystem with
both internal
the
Kvantum, Tictuk and Dragontail acquisitions. Now more
than ever, we’ve leaned into the structural advantages
of our diversified global portfolio by leveraging our
unmatched global scale, sophisticated supply chains,
marketing and consumer insights expertise, and our
growing digital and technology capabilities to fuel
growth and deliver consistently strong results.

As we move into 2022, which marks the 25th
anniversary of Yum, we are confident
that we will
continue to build the world’s most loved and trusted
our
brands while

delivering

lasting

value

for

EXECUTIVE COMPENSATION

stakeholders. To accomplish these goals, we will
continue to rely on and elevate 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:

(cid:129) growing Unrivaled Culture and Talent to leverage our
to fuel brand

culture
performance and franchise success;

and people

capability

(cid:129) developing Unmatched Operating Capability by
recruiting and equipping the best restaurant operators
in the world to deliver great customer experiences;

(cid:129) building Relevant, Easy and Distinctive Brands by
innovating and elevating iconic restaurant brands
people trust and champion; and

(cid:129) achieving Bold Restaurant Development by driving
expansion with strong

and franchise

market
economics.

food and planet,

By leveraging our Recipe for Good — our roadmap for
socially responsible and sustainable stewardship of
people,
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
in our business
we operate. We remain confident
model and in the strength of our iconic brands as we
look to accelerate growth in 2022.

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Gross New Builds

4,180

The most in
Yum!’s history

Digital Sales

$22 billion

approximately 25%
increase over prior year

System Sales Growth

13%

Same Store
Sales Growth

10%

GAAP Operating
Proﬁt Growth

42%

Core Operating
Proﬁt Growth

18%

(1) See pages 29, 33 and 35 in Item 7 of YUM’s Form 10-K for the fiscal year ended on December 31, 2021 for a discussion of

Core Operating Profit in 2021. System Sales Growth excludes impact of foreign currency translation.

YUM! BRANDS, INC. - 2022 Proxy Statement 35

EXECUTIVE COMPENSATION

B. Named Executive Officers

The Company’s NEOs for 2021 are as follows:

Name

David W. Gibbs

Chris Turner

Tracy L. Skeans

Mark King

Tony Lowings1

Title

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer and Chief People Officer

Chief Executive Officer of Taco Bell Division

Retired Chief Executive Officer of KFC Division

(1) Effective January 1, 2022, Mr. Lowings retired from the position of Chief Executive Officer of the KFC Division.

C. Compensation Philosophy

The business performance of the Company is of the
importance in how our executives are
utmost
compensated. Our compensation program is designed
to both support our long-term growth model and hold

our executives accountable to achieve key annual
compensation
results
philosophy for the NEOs is reviewed annually by the
Committee and has the following objectives:

year. YUM’s

after

year

Base Salary

✓

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Objective

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.

Pay Element
Annual
Performance-Based
Cash Bonuses

Long-Term Equity
Performance-
Based Incentives

✓

D. Compensation Overview

2021 Compensation Highlights

(cid:129) In January of 2021,

the Committee made the

following decisions and took the following actions:

(cid:129) The Committee set our CEO target for total direct
compensation (base salary, annual cash bonus
and annual
long-term incentive award value at
grant date) at a level around the 50th percentile of
our Executive Peer Group (defined at page 50) for
the CEO role;

36 YUM! BRANDS, INC. - 2022 Proxy Statement

(cid:129) The Committee set the equity mix for our NEOs’
long-term incentive awards at 50% stock
50%
(“SARs”)

annual
appreciation
rights
performance share units (“PSUs”); and

and

target

(cid:129) The Committee certified that our 2018 PSU
awards under our Performance Share Plan paid
out at 84% of
in 2021 based on the
Company’s Total Shareholder Return (“TSR”) at
the 67th percentile compared to the S&P 500
Consumer Discretionary Index and Earnings Per
Share (“EPS”) growth of 5%, for the 2018- 2020
performance cycle (see discussion of PSUs at
page 42).

(cid:129) Say on Pay. At our May 2021 Annual Meeting of
Shareholders, shareholders approved our “Say on
Pay” proposal
executive
compensation program, with 83% of votes cast in
favor of the proposal.

support of our

(cid:129) Shareholder Outreach. We

continued

management

our
shareholder outreach program to better understand
investors’ opinions on our compensation
our
practices and respond to their questions. Committee
and
from
compensation, sustainability, investor relations and
in
be
legal
engagement efforts during 2021 that served to
reinforce our open-door policy. The efforts included
contacting our largest 35 shareholders, representing
ownership of approximately 50% of our shares
(discussed further on page 48).

continued

members

involved

directly

team

(cid:129) Change in PSU Metrics. Because the continuing
pandemic-influenced operating environment makes
it difficult to set long-term targets which incorporate
operating metrics or the previously used EPS metric,
our annual PSU grants made in 2021 will be earned
based completely on how the Company’s TSR
performs relative to the S&P 500 Consumer
Discretionary Index.

this

determined

The Committee
change was
consistent with the Company’s overall business
strategy and realities of the current marketplace. Given
that pandemic-related uncertainties are lessening, the
Committee has determined to reintroduce operating
metrics into the PSU design beginning in 2022.

(cid:129) Accelerating Profitable Growth PSU Award.

In
January,
the Committee approved a one-time
Accelerating Profitable Growth PSU award for
approximately 500 of the Company’s leaders, which
is intended to generate shareholder value by
accelerating growth by aggressively restarting the
Company’s development engine and motivating
leaders
to deliver breakthrough development,
without losing focus on the other growth drivers of

EXECUTIVE COMPENSATION

the Company’s business. These PSU awards are
designed to pay out only if bold net-new unit
development targets are met. Further details of the
Accelerating Profitable Growth PSU award are set
forth beginning at page 43.

2022 Changes to Compensation Program

Shareholders,

(cid:129) Long Term Incentive Equity Mix for 2022. As
following the Company’s 2021
mentioned above,
Annual Meeting
significant
of
shareholder engagement was undertaken by the
Company in order to receive feedback on, among
other things, the Company’s equity mix for annual
long-term incentive awards.
In response to this
shareholder feedback, and in alignment with our
business strategy and compensation philosophy, the
Committee has determined that beginning in 2022,
the annual
long-term incentive award mix for the
Company’s executive officers will be split as follows:
25% SARs, 25% Restricted Stock Units (“RSUs”)
and 50% PSUs.

(cid:129) Change

response

in PSU Metrics.

to
shareholder
feedback, and consistent with the
Company’s overall business strategy, beginning in
2022, annual PSU grants made to our executive
officers will be earned based on 50% System Sales
Growth and 50% Core Operating Profit Growth, with
a positive or negative modifier based on the
Company’s TSR performance relative to the S&P
500 Consumer Discretionary Index.

(cid:129) Updated

Executive

the Company’s

Peer
Group. In August 2021, the Committee approved a
revised peer group to be used for NEO pay
determinations beginning in 2022. The changes to
the Executive Peer Group were made to better align
the size of the peer group companies with YUM, and
to include companies in relevant industry sectors.
Many of
the included companies have a global
reach, franchised operations, multiple brands and a
significant digital presence.

YUM! BRANDS, INC. - 2022 Proxy Statement 37

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EXECUTIVE COMPENSATION

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 annual target compensation is “at-risk” pay,
with the compensation paid based on Company
If short-term and long-term financial and
results.
operational
then
target goals are not achieved,
If
performance-related compensation will decrease.
target goals are exceeded, then performance-related
increase. As demonstrated below,
compensation will

our target annual 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 2021. Our other NEOs’
target
a
substantially similar set of considerations, which are
discussed in Section III, 2021 Named Executive Officer
Total
Performance
Summary, found at pages 43 to 47 of this CD&A.

Direct Compensation

compensation

subject

annual

and

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Base

Annual
Bonus
15 %

Long-Term
Equity Incentive
76%

At Risk
91%

In 2021, Mr. Gibbs’

the most dramatic and difficult part of

2021,
the
pandemic had been successfully weathered due to his
total direct
leadership.
compensation was set around the 50th percentile of
our Executive Peer Group. For 2021, 76% of our
CEO’s target pay was in the form of long-term equity
incentive compensation.

target

CEO Total Direct Compensation

The Committee sets the CEO’s target for total direct
compensation (base salary, annual cash bonus and
long-term incentive award value at grant date)
annual
taking into account Company performance, the CEO’s
performance, time in role, other job-related factors and
the range of market practices of our Peer Group. The
Committee was highly satisfied with Company results
and the exemplary leadership of Mr. Gibbs, as by early

38 YUM! BRANDS, INC. - 2022 Proxy Statement

Core Operating
Proﬁt Growth1

System Sales
Growth2

Total Shareholder
Return3

($MM)

$18

$16

$14

$12

$10

EXECUTIVE COMPENSATION

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Base

Bonus

Stock

SARs

PSUs

APG PSU

Target Total Direct Compensation

(1) A measure of results of operations for the purpose of evaluating performance against targets set under our YUM Leaders’
Bonus Program included Core Operating Profit Growth excluding the impact of a 53rd week in 2019. See pages 29, 33 and
35 in Item 7 of YUM’s Form 10-K for the fiscal year ended on December 31, 2021 for a discussion of Core Operating Profit
in 2021.

(2) System sales growth excludes the impact of foreign currency translation and, for 2020 and 2019, the impact of a 53rd week

in 2019.

(3) Total shareholder return is calculated as the change in YUM share price from the beginning of the respective year until the

year-end, adjusted for dividends paid.

(4) Greg Creed was the Company’s Chief Executive Officer until December 31, 2019.

YUM! BRANDS, INC. - 2022 Proxy Statement 39

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

Base salary

Objective

Attract and retain high-caliber talent and provide a fixed level
of cash compensation

Annual Performance-Based Cash
Bonuses

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

Form

Cash

Long-Term Equity Performance-Based
Incentives

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

SARs & PSUs

Retirement and Additional Benefits

Provide for long-term retirement income and basic health and
welfare 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
responsibility,
varies based on the role,

level of

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.

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B. Annual Performance-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

Target Bonus
Percentage

Team Performance
(0 – 200%)

Individual Performance
(0 – 150%)

Bonus Payout
(0 – 300%)

Team Performance

The Committee carefully established final
team
performance measures, targets and weights in May
2021, following an extensive review of these items in
in March, after
January and a preliminary approval
receiving
from
management. The team performance targets were
also reviewed by the Committee to ensure that the
strategic
goals
objectives.

the Company’s overall

recommendations

support

input

and

The performance targets were developed through the
Company’s annual financial planning process, which
takes into account KFC, Pizza Hut, Taco Bell and The
Habit (each, a “Division”) growth strategies, historical
performance, and the expected future operating
environment for each Division.

40 YUM! BRANDS, INC. - 2022 Proxy Statement

specific

for
each
the Company

team
When
setting targets
performance measure,
takes into
account overall business goals and structures targets
of desired
designed to motivate
performance consistent with our growth commitment
to shareholders.

achievement

the

impact

potential

A leverage formula for each team performance
measure magnifies
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, absent the use of discretion by the
Committee in extraordinary circumstances.

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 certain pre-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

the 2021 target-setting process,

Company’s underlying business performance. As part
of
the Committee
decided that KFC, Pizza Hut, Taco Bell and/or YUM
Operating Profit growth performance for 2021 annual
incentive purposes should be measured adjusting for
certain factors that were not considered indicative of
underlying business performance for the year. These
factors included amounts associated with Special
Items (as defined in our Form 10-K at page 29) and
foreign currency translation.

Detailed Breakdown of 2021 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 unit development. Accordingly, 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.

NEO

Measures

Min

Target

Max

Actual

Earned Award
as % of Target Weighting

Final Team
Performance

Team Performance

Gibbs
Skeans
Turner

Core Operating Profit Growth1

$1,868MM $1,957MM $2,045MM $2,094MM

System Same-Store Sales
Growth

3.25%

8.5%

10.5%

10.1%

System Net New Units

1,470

1,850

2,525

3,057

FINAL YUM TEAM FACTOR

Lowings Core Operating Profit Growth1

$1,039MM $1,115MM $1,144MM $1,185MM

System Same-Store Sales
Growth

5.25%

11.25%

13.25%

11.2%

System Net New Units

990

1,325

1,525

1,928

Total Weighted Team
Performance — KFC (75%)

Total Weighted Team
Performance — YUM (25%)

FINAL KFC TEAM FACTOR

King

Core Operating Profit Growth1

$721MM

$742MM

$754MM

$757MM

0.75%

4.75%

6.75%

10.5%

225

300

360

364

System Same-Store Sales
Growth

System Net New Units

Total Weighted Team
Performance — TB (75%)

Total Weighted Team
Performance — YUM (25%)

FINAL TACO BELL TEAM FACTOR

200

179

200

50%

25%

50%

25%

50%

25%

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195

100

175

195

180

100

200

195

199

(1) See pages 29, 33 and 35 in Item 7 of YUM’s Form 10-K for the fiscal year ended on December 31, 2021 for a discussion of

Core Operating Profit in 2021.

YUM! BRANDS, INC. - 2022 Proxy Statement 41

EXECUTIVE COMPENSATION

Individual Performance

its

the Committee based upon

Each NEO’s individual performance factor is determined
subjective
by
determination of the NEO’s individual performance for
the year, including consideration of specific objective
individual performance goals set at the beginning of the
the
year. Performance categories considered by
Committee include the NEO’s performance in: Fostering
Unrivaled Culture and Talent; Driving Bold Restaurant
Development and Returns; Building Relevant, Easy and
Distinctive Brands; Developing Unmatched Operating
Capability; Implementation of our Recipe for Good –
focusing on People, Food and Planet; and Delivering on
Shareholder Promises. The Committee’s determinations
with respect to the individual performance of our NEOs
is set forth below from pages 43 to 47.

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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):

(cid:129) Prior year individual and team performance

(cid:129) Expected contribution in future years

(cid:129) Consideration of

the
executive’s role compared with similar roles in
our Executive Peer Group

the market value of

(cid:129) Achievement of stock ownership guidelines

Equity Mix

Each year, the Committee reviews the mix of long-
term incentives. For 2021, 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.

TSR Percentile Ranking
Payout as % of Target

42 YUM! BRANDS, INC. - 2022 Proxy Statement

At the beginning of 2021, the Committee determined a
target grant value for each NEO (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 54 at
columns e and f.

Stock Appreciation Rights Awards

The Committee believes that SARs reward long-term
value-creation generated from sustained results. They
are, therefore, strongly linked to and based on, the
In 2021, we
performance of Yum common stock.
granted to each of our NEOs SARs which have
ten-year terms and vest over 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 2021. These PSU awards are
earned based on the Company’s 3-year average TSR
relative to the companies in the S&P 500 Consumer
Discretionary Index. Using TSR in the annual PSU
awards supports the Company’s pay-for-performance
philosophy while diversifying performance criteria by
using measures not used in the annual bonus plan and
reward with the creation of
aligning our NEOs’
shareholder value. The target, threshold and maximum
number of shares that may be paid under
these
awards for each NEO are described at page 56. 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 2021 – 2023, each NEO
will earn a percentage of his or her target PSU award,
with 100% of the payout based on the achieved TSR
percentile ranking against
the S&P 500 Consumer
Discretionary Index. Indicative payouts as a percentage
of target are as set forth in the table below:

Threshold Target Maximum

<30%
0%

30%
35%

50%
100%

75%
200%

during

accrue

equivalents will

Dividend
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
(“EID”)
Program.

Income Deferral

Executive

Accelerating Profitable Growth Award – A
One-Time Performance-Based Award to
Drive Bold Net-New Unit Development

In January 2021,
the Committee approved the
Accelerating Profitable Growth award, an incremental
specifically designed to rapidly
one-time grant
accelerate growth through net-new unit development
and to foster retention of a broad-based group of
approximately 500 Company leaders,
including the
NEOs. The Committee viewed a rapid, but well-
considered, expansion in net-new unit development as
essential for the Company in accelerating its growth in
furtherance of its strategic model as we move beyond
the pandemic. When designing the award,
the
Committee intended that the award would address
vital strategic objectives including, but not limited to,
the following:

(cid:129) Shareholder value – Generating shareholder value by
accelerating growth and aggressively restarting the
Company’s development engine – designed to
maintain strong alignment with, and support from,
the Company’s shareholders, who the Committee
intends will ultimately benefit
the Company is
if
successful
in meeting the bold unit development
targets set forth in the award;

(cid:129) Breakthrough Growth – Incentivizing a broad group
of Company leaders to ensure the delivery of
breakthrough development, without
losing
their
focus on the Company’s other growth drivers;

(cid:129) Retention – Retaining our leaders at varying levels
within the Company in an economically challenging

EXECUTIVE COMPENSATION

environment
of
competition for our unrivaled talent; and

face

and

the

increased

(cid:129) Simplicity and Clarity – Creating an award that is
simple for employees to understand and likely to
allow them to coalesce around a unified goal.

The performance metrics of the Accelerating Profitable
Growth Award are reflective of the key emphasis the
Company has placed on unit development, as
described above. These PSUs may be earned based
on the Company’s performance against the following
objective and subject to the following terms:

(a) Performance/Reward

Performance
requirements and corresponding incentive opportunities
under the plan are as follows:

Structure.

Structure

Net-New Units

Threshold Target Maximum

3,800

4,500

5,200

Incentive as % of Target

75% 100% 125%

(b) Notably,

the number of net-new units necessary to
satisfy threshold performance under
this award is
approximately equal to the Company’s highest historical
two-year net-new unit development performance,
the threshold development
excluding acquisitions.
target is not reached, the award will not pay out.

(c) Performance Period. The performance period over
which the award may be earned is January 1, 2021 to
the
December 31, 2022 (if performance against
net-new unit target is below threshold for the period of
January 1, 2021 through December 31, 2022 and the
World Health Organization has declared a global
pandemic which remains in effect after December 31,
2021,
become
January 1, 2022 to December 31, 2023, excluding any
net-new units developed during 2021).

period would

performance

the

recipients of

this award must

remain
Generally,
employed with the Company through December 31,
2023 to vest in this award. Pro rata vesting is available
in the event an award recipient’s employment
is
to that date by reason of death,
terminated prior
disability, retirement, or involuntary termination by the
Company due to a job elimination or without cause.

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III. 2021 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-term incentive awards –
and an overview of their 2021 performance relative to
our annual and long-term incentive performance goals.

The process the Committee used to determine each
officer’s 2021 compensation is described more fully in
“How Compensation Decisions Are Made” beginning
on page 48.

YUM! BRANDS, INC. - 2022 Proxy Statement 43

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CEO Compensation

David Gibbs
Chief Executive Officer

2021 Performance Summary

Our Board, under the leadership of the Committee
Chair, approved Mr. Gibbs’ goals as our Chief
Executive Officer at the beginning of the year and
conducted a mid-year and year-end evaluation of his
performance. These evaluations included a review of
his leadership pertaining to the achievement of his
goals which 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’
continued leadership during the global pandemic.

The Committee determined that Mr. Gibbs’ overall
performance for 2021 merited an individual factor of
140. This individual factor was combined with YUM’s
awarded team factor of 195 (discussed at page 41)
resulting in a significantly above target annual cash
bonus. This determination was based on the
Committee’s subjective assessment of Mr. Gibbs’
performance against his previously set goals which
included the following items (without assigning a
weight to any particular item):

(cid:129) Driving Bold Restaurant Development and
Returns. The Company opened 3,057 net-new units
year of
resulting in the strongest
in 2021,
development growth in Yum!’s history and a
restaurant industry record;

(cid:129) Delivering on Shareholder Promises – strong
system sales growth. Company system sales
growth increased 13% over the prior year, supported
by 10% same-store sales growth and 6% net unit
growth, evidencing the health of our global system;

(cid:129) Developing Unmatched Operating Capability –
including leading our
continued pandemic
response. This required: avoiding disruptions in
supply chain as a result of the global pandemic;
mitigating significant store-closure risks in various
markets; supporting employees and communities in
response to the pandemic;

(cid:129) Building Relevant, Easy and Distinctive Brands –
by driving increased digital sales. Lead the
Company to record setting digital sales of $22 Billion,
an approximate 25% increase over the prior year, by
leveraging significant investments in technologies and
new functions focused on analytics and innovation;

44 YUM! BRANDS, INC. - 2022 Proxy Statement

the

through

development

(cid:129) Driving our Recipe for Good – including fostering
the Company’s Unlocking Opportunity Initiative
supporting equity and inclusion and social justice.
Accomplished
of
governance and brand strategies, the establishment
of the Yum! Center for Global Franchise Excellence
with the University of Louisville and a joint M.B.A.
Accelerator Program between Howard University and
the University of Louisville, as well as the launching of
social
impact programs in the U.S. and in various
international markets. Achieved meaningful progress
towards commitment to eliminate non-recyclable or
non-recoverable
from customer-facing
packaging by 2025 and continued innovations and
expansion of plant-based offerings.

plastics

leadership.

(cid:129) Fostering Unrivaled Culture and Talent – by
developing
the
recruitment of Aaron Powell as CEO of the Pizza Hut
Division and the promotion of Sabir Sami as CEO of
the KFC Division, as well as fostering a customer-
focused employee culture.

Evidenced

2021 Committee Decisions

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

(cid:129) Base salary remained at $1,200,000;

(cid:129) Annual cash bonus target percentage was increased

to 165% of base salary;

(cid:129) Grant value of annual

long-term incentive equity

awards was increased to $10,000,000;

(cid:129) These

adjustments were

his
performance in successfully leading the Company
through a very challenging economic climate and
to better align with market compensation norms.

to recognize

These decisions regarding the components of
the
Company’s ongoing executive compensation program
positioned Mr. Gibbs’ total target direct compensation
at around the 50th percentile of
the Company’s
Executive Peer Group (defined at page 50).

The Committee also approved a special one-time
performance-based Accelerating Profitable Growth
award for Mr. Gibbs, intended to drive bold new unit
development, with a grant value of $5,000,000. The
design and purpose of this special award is described
in detail above at page 43.

The graphics below illustrate Mr. Gibbs’ direct compensation:

EXECUTIVE COMPENSATION

5%
Base

22%
Accelerating
Proﬁtable
Growth
PSU

24%
Bonus

26%
PSUs

23%
SARs

95%
Performance-based compensation

Total: $22,542,023

$5,000,040
Accelerating
Proﬁtable
Growth PSU

$5,936,580
PSUs

$5,000,003
SARs

$5,405,400
Annual Bonus

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Fixed

$1,200,000 Salary

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L

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Other NEO 2021 Total Direct Compensation

Chris Turner
Chief Financial Officer

2021 Performance Summary

2021 Committee Decisions

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the

resulted

opening

that Mr.

determined

The Committee
Turner’s
performance merited a 140 individual performance
factor. The Committee recognized Mr. Turner’s
leadership in driving an increase in Company system
sales growth of 13%, supported by 10% same-store
sales growth and 6% net unit growth. He was also
recognized for leading the Company’s development
of
initiative, which
approximately 3,057 net-new units, resulting in the
strongest year of development growth in Yum!’s
history and a restaurant
record. The
Committee also noted Mr. Turner’s leadership in
Developing Unmatched Operating Capability, in part
by completing several significant strategic technology
enhance
to
acquisitions
capabilities
experience,
in end-to-end customer
operations, data and analytics strategy. Mr. Turner’s
individual factor was combined with an awarded team
factor of 195 (discussed at page 41) to calculate his
annual cash bonus.

significantly

designed

industry

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

(cid:129) Base salary remained at $850,000;

(cid:129) Annual cash bonus target was increased to 110% of

base salary;

(cid:129) Grant value of annual

long-term incentive equity

awards was increased to $2,250,000;

(cid:129) These

to recognize

adjustments were

his
performance in successfully leading the Company
through a very challenging economic climate and
to better align with market compensation norms
and internal peer equity.

These adjustments positioned Mr. Turner’s 2021 total
direct compensation at the median percentile of the
Company’s Executive Peer Group (defined at page 50)
for his position.

The Committee also approved a special one-time
performance-based Accelerating Profitable Growth
award for Mr. Turner, intended to drive bold new unit
development, with a grant value of $2,250,000. The
design and purpose of this special award is described
in detail above at page 43.

YUM! BRANDS, INC. - 2022 Proxy Statement 45

EXECUTIVE COMPENSATION

Tracy L. Skeans
Chief Operating Officer and Chief People Officer

2021 Performance Summary

2021 Committee Decisions

determined

The Committee
that Ms. Skeans’
performance merited a 140 individual performance
factor. The Committee recognized Ms. Skeans for
providing strategic leadership in the Company’s efforts
to open 4,180 gross units in 2021 (including 3,057 in
net-new units),
resulting in the strongest year of
development growth in Yum!’s history and a restaurant
industry record. In addition, the Committee recognized
Ms. Skeans for her leadership in driving the Company to
a system sales growth increase of 13%, including 10%
same-store sales growth and 6% net unit growth.

The committee also commended Ms. Skeans for
Fostering Unrivaled Culture and Talent by hiring and
developing leaders, achieving best ever employee
engagement results in a pandemic environment; and
building a culture which promotes diversity and
inclusion and our Recipe for Good through key internal
the Unlocking
and external
Opportunity Initiative and the Women’s Foodservice
Forum. Ms. Skeans’
factor was combined
individual
with a team factor of 195 (discussed at page 41) to
calculate her annual cash bonus.

such as

initiatives,

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

(cid:129) Base salary was increased to $850,000;

(cid:129) Annual cash bonus target increased to 110% of

base salary;

(cid:129) Grant value of annual

long-term incentive equity

awards was increased to $2,500,000;

(cid:129) These

adjustments were

to recognize her
performance in successfully leading the Company
through a very challenging economic climate and
to better align with market compensation norms
and internal peer equity.

These decisions positioned Ms. Skeans’ total direct
the
compensation at
Company’s Executive Peer Group (defined at page 50)
for her position.

the median percentile of

The Committee also approved a special one-time
performance-based Accelerating Profitable Growth
award for Ms. Skeans, intended to drive bold new unit
development, with a grant value of $2,500,000. The
design and purpose of this special award is described
in detail above at page 43.

Mark King
Chief Executive Officer, Taco Bell Division

2021 Performance Summary

2021 Committee Decisions

that Mr.

The Committee

The Committee
King’s
determined
performance merited a 140 individual performance
recognized Mr. King’s
factor.
leadership in driving net-new unit development.
In
addition,
the Committee recognized Mr. King’s
performance in Building Relevant, Easy and Distinctive
Brands – by driving increased digital sales, which lead
to over 10% in same-store sales growth at Taco Bell
(with increased digital sales making up over 20% of
overall sales). Mr. King was also recognized for Driving
our Recipe for Good, through Taco Bell reaching its
goal to award $21 million in Live Mas Scholarships by
the end of 2021. Mr. King’s individual
factor was
combined with a team factor of 199 (discussed at
page 41) to calculate his annual cash bonus.

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

(cid:129) Base salary remained at $925,000;

(cid:129) Annual cash bonus target increased to 110% of

base salary;

(cid:129) Grant value of annual

long-term incentive equity

awards was set at $1,750,000;

(cid:129) These

to recognize

adjustments were

his
performance in successfully leading the Company
through a very challenging economic climate and
to align with market compensation norms and
reflecting his years of
internal peer equity,
experience as a senior executive.

46 YUM! BRANDS, INC. - 2022 Proxy Statement

Mr. King’s 2021 total direct compensation was around
the Executive Peer Group
the 75th percentile of
(defined at page 50) for his position.

EXECUTIVE COMPENSATION

The Committee also approved a special one-time
performance-based Accelerating Profitable Growth
award for Mr King, intended to drive bold new unit

development, with a grant value of $1,750,000. The
design and purpose of this special award is described
in detail above at page 43.

Tony Lowings
Retired Chief Executive Officer, KFC Division

2021 Performance Summary

The Committee determined that Mr.
Lowings’
performance merited a 140 individual performance
factor. The Committee recognized Mr. Lowings’
leadership in Driving Bold Restaurant Development
and Returns, noting that KFC delivered over 1,900
net-new units. In addition, the Committee recognized
Mr. Lowings’ performance in delivering above target
same-store sales growth and advancements in food
safety compliance. Mr. Lowings’ individual factor was
combined with a team factor of 180 (discussed at
page 41) to calculate his annual cash bonus.

2021 Committee Decisions

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

(cid:129) Base salary remained at $750,000;

(cid:129) Annual cash bonus target percentage increased to

110% of base salary;

IV. Retirement and Other Benefits

Retirement Benefits

We offer several
benefits.

types of competitive retirement

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.

For executives hired or re-hired after September 30,
the Company implemented the Leadership
2001,
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 executive’s separation of
employment from the Company. For 2021, Messrs.
Turner and King were eligible for the LRP. Under the

(cid:129) Grant value of annual

long-term incentive equity

awards was increased to $2,000,000;

(cid:129) These

to recognize

adjustments were

his
performance in successfully leading the Company
through a very challenging economic climate and
to better align with market compensation norms
and internal peer equity.

These decisions positioned Mr. Lowings’ total direct
the
compensation at
Executive Peer Group (defined at page 50)
for his
position.

the median percentile of

The Committee also approved a special one-time
performance-based Accelerating Profitable Growth
award for Mr Lowings, intended to drive bold new unit
development, with a grant value of $2,000,000. The
design and purpose of this special award is described
in detail above at page 43.

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LRP, Messrs. Turner and King received an annual
allocation to their accounts equal to 4% of base salary
and target bonus and will receive an annual earnings
credit that is equivalent to the Moody’s Aa Corporate
Bond Yield Average for maturities 20 years and above
(currently 2.91%) on the balance.

plan

retirement

account-based

The Company provides retirement benefits for certain
international employees through the Third Country
National Plan (“TCN”). The TCN is an unfunded,
unsecured
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. Mr. Lowings is the only
NEO who participates in the TCN. Prior to 2021, under
this plan, Mr. Lowings received an annual contribution
equal to 15% of base salary and target bonus and

YUM! BRANDS, INC. - 2022 Proxy Statement 47

EXECUTIVE COMPENSATION

an annual earnings credit of 5%. Beginning in 2021, he
only received the 5% annual earnings credit (as he
now participates in a superannuation plan in his home
country of Australia.

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

Perquisites

The Company provides very limited number of
perquisites to our NEOs. The CEO and his spouse
were required to use charter or approved commercial
aircraft for personal as well as business travel pursuant
to the Company’s
security program
established by the Board of Directors. Our program
provides that any costs for the CEO’s personal aircraft
use of above $300,000 will be reimbursed to the
Company in accordance with the requirements of the
Federal Aviation Administration regulations. We do not
the
provide tax gross-ups on the personal use of

executive

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.

the pandemic in 2020,

charter or approved commercial aircraft. For 2021, the
incremental cost of Mr. Gibbs personal use of charter
or commercial aircraft was $225,498. Following the
the Committee
onset of
travel on
authorized the CEO to approve personal
in
Company-provided aircraft by the other NEOs,
recognition of
their safety and
the importance of
availability throughout the pandemic. In 2021, the NEO
personal
resulted in incremental costs of
$49,020 for Ms. Skeans and $78,672 for Mr. King.

travel

V. How Compensation Decisions Are Made

Shareholder Outreach, Engagement and 2021 Vote on NEO Compensation

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favor

At our 2021 Annual Meeting of Shareholders, 83% of
votes cast on our annual advisory vote on NEO
compensation were
our NEOs’
compensation program, as disclosed in our 2021
proxy statement. During 2021, 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 that served to reinforce
our open-door policy. The efforts included:

(cid:129) Contacting our largest 35 shareholders, representing

ownership of approximately 50% of our shares;

(cid:129) Dialogue with proxy advisory firms;

(cid:129) Investor road shows and conferences; and

(cid:129) Presenting shareholder feedback to the Committee.

annual

engagement

Our
allow many
shareholders the opportunity to provide feedback. The
Committee carefully considers shareholder and advisor
factors discussed in this
feedback, among other

efforts

48 YUM! BRANDS, INC. - 2022 Proxy Statement

feedback,

in making its

compensation decisions.
CD&A,
including the 2021 voting
Shareholder
results on NEO compensation, has influenced and
reinforced a number of compensation design changes
over the years, including:

(cid:129) Continued benchmarking of CEO compensation at

near market median;

(cid:129) Moved to two performance metrics under our annual

PSU awards (TSR and EPS); and

(cid:129) Changed PSU award metrics to include the
Company’s 3-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.

(cid:129) Beginning in 2022, changing our equity mix for
NEOs to 50% PSUs, 25% SARs and 25% RSUs, to
better align with business objectives, shareholder
preferences and market practice.

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

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,
but adds additional meetings when necessary in order
to address important business considerations, such as
the pandemic.

COMMITTEE ANNUAL COMPENSATION PROCESS

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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
to advise it on certain compensation
(“Meridian”),
matters. The Committee has instructed Meridian that:

(cid:129) it is to act independently of management and at the

direction of the Committee;

(cid:129) 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:

(cid:129) its ongoing engagement will be determined by the

(cid:129) Meridian did not provide any services to the

Committee;

(cid:129) it is to inform the Committee of relevant trends and

regulatory developments;

(cid:129) 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

Company unrelated to executive compensation;

(cid:129) Meridian has no business or personal relationship
with any member of the Committee or management;
and

(cid:129) Meridian’s partners and employees who provide
services to the Committee are prohibited from
owning YUM stock per Meridian’s firm policy.

YUM! BRANDS, INC. - 2022 Proxy Statement 49

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
service
eatery
companies,

and quick

specialty

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 many
cases global reach.

Executive Peer Group
The Committee periodically reviews the peer group to 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”). The updates to the Executive Peer Group were made to better align the size
of the peer group companies with YUM and include companies in relevant industry sectors. Many of these
companies have a global reach and multiple brands. The Executive Peer Group used for 2021 pay determinations
for all NEOs is comprised of the following companies:

Chipotle Mexican Grill, Inc. Gap, Inc.

Keurig Dr Pepper

McDonald’s Corporation

Starbucks Corporation

Colgate-Palmolive Company General Mills, Inc.

Kimberly-Clark Corp.

Mondelez Int’l., Inc.

V.F. Corp.

Darden Restaurants, Inc.

Hertz Global Holdings, Inc.

L Brands, Inc.

Ralph Lauren Corporation

Wyndham Worldwide, Inc.

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Domino’s Pizza, Inc.

Hilton Worldwide Holdings

Lululemon Athletica

Estée Lauder Cos, Inc.

Kellogg Company

Marriott Int’l., Inc.

Restaurant Brands
International Inc.

The Sherwin-Williams
Company

At the time the benchmarking analysis was prepared in
November 2020, the Executive Peer Group’s median
revenues were $11.3 billion, while YUM
annual
estimated at
equivalent
$14.3 billion (calculated as described below).

revenues were

annual

size

responsibilities

include managing

franchise
For companies with significant and global
complex.
can
operations, measuring
Management
responsibilities encompass more than
just the revenues and operations directly owned and
operated by the company and include responsibilities
for managing relationships with franchisees and
developing and implementing global growth strategies.
Specific
and
implementing product
introductions, and product
specifications and supply, management of vendors,
and
marketing,
implementations,
risk
including setting and monitoring food
management,
safety
the Company’s
trademarks and other intellectual property, new unit
development, and customer satisfaction and overall
operations improvements across the entire franchise
system. As a result of accelerating growth in recent
the Company’s leadership now oversees
years,
approximate 290 brand-country combinations and

standards, protection of

innovations
collections,

technological

payment

approximately 1,500 franchisees. To appropriately
reflect this complexity in calibrating the size of our
organization and underlying operating divisions during
the 2020 benchmarking process, our philosophy was
to add 25% of franchisee and licensee sales to the
GAAP-reported Company
to establish an
appropriate revenue benchmark. The reason for this
approach was twofold:

sales

(cid:129) Market-competitive compensation opportunities are
related to scope of responsibility, often measured by
company size, i.e., revenues; and

(cid:129) Scope of responsibility for a franchising organization
lies between corporate-reported revenues and
system-wide sales.

Peer groups of other globally prominent companies
similarly include companies where the median revenue
scope of those peers are materially above the reported
corporate revenue. This likely reflects the same
assessments of complexity and reach and accordingly
appropriate company size profiles. We believe this
approach is measured and reasoned in its approach
to calibrating market
compensation
opportunities without using organizations unduly larger
than the Company.

competitive

50 YUM! BRANDS, INC. - 2022 Proxy Statement

EXECUTIVE COMPENSATION

Competitive Positioning and Setting Compensation

At the beginning of 2021, 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 our
pay-for-performance program and align our program with Company and shareholder interests.

We Don’t Do

Employment agreements

Re-pricing of SARs

Grants of SARs with exercise price less than fair market
value of common stock on date of grant

Permit executives to hedge or pledge Company stock

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Payment of dividends or dividend equivalents on PSUs
unless or until they vest

Excise tax gross-ups upon change in control

Excessive executive perquisites, such as country club
memberships

✗

We Do

✓

Have an independent compensation committee
(Management Planning & Development Committee),
which oversees the Company’s compensation
policies and strategic direction

Directly link Company performance to pay outcomes

Have executive ownership guidelines that are
reviewed annually against Company guidelines

Have a “clawback” policy under which the Company
may recoup compensation if executive’s conduct
results in significant financial or reputational harm to
Company

✓ Make a substantial portion of NEO target pay “at risk”

✓

Have double-trigger vesting of equity awards upon a
change in control

Utilize an independent Compensation Consultant

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’s Executive Stock Ownership Guidelines

The Committee has established stock ownership guidelines for approximately 165 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 2021, all NEOs subject to guidelines met or exceeded their
ownership guidelines.

YUM! BRANDS, INC. - 2022 Proxy Statement 51

EXECUTIVE COMPENSATION

NEO

Gibbs

Turner(3)

Skeans

King(3)

Lowings

Ownership Guidelines

Shares Owned(1)

Value of Shares(2) Multiple of Salary

7x base salary

3x base salary

2x base salary

3x base salary

357,348

9,708

45,832

10,666

162,635

$49,621,343

$ 1,348,053

$ 6,364,232

$ 1,481,081

$22,583,496

41.4

1.6

7.5

1.6

30.1

(1) Calculated as of December 31, 2021 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 $138.86 as of December 31, 2021.
(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.

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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’s change-in-control program.

The Company’s change-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
these change-in-control agreements are described
beginning on page 65.

The Company does not provide tax gross-ups for
executives, including the NEOs, for any excise tax due
under Section 4999 of the Internal Revenue Code and
has implemented a “best net after-tax” approach to
address any potential excise tax
imposed on
executives. If any excise tax is due, the Company will
not make a gross-up payment, but instead will reduce
payments to an executive if the reduction will provide
the NEO the best net after-tax result. If full payment to

YUM’s Equity Award Granting Practices

Historically, we have made annual SARs grants 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 ordinarily make grants at the same time

52 YUM! BRANDS, INC. - 2022 Proxy Statement

a NEO will result in the best net after-tax result, the full
the NEO will be solely
amount will be paid, but
responsible for any potential excise tax payment. Also,
the Company has implemented “double trigger”
vesting for
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.

awards, pursuant

equity

retirement,

the Company provides
In case of
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 a pro-rata basis.

the

overall

policy,

compensation

With respect to consideration of how these benefits fit
into
the
change-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
interests and are
appropriate, support shareholder
consistent with the policy of attracting and retaining
highly qualified employees.

elements

compensation

other
are
annual
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.

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
in recognition of
(subject
superlative performance and extraordinary impact on
business results. These awards are currently made as
RSUs which vest after three years. Historically, CEO
Awards were made using SARs.

to Committee approval)

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 $500,000 in economic value
annually. In the case of these grants, the Committee
sets all the terms of each award, except the actual
number of SARs/RSUs, 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

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

incentive compensation. Under

inaccurate metrics in the
contributed to the use of
calculation of
this
policy, when the Board determines that recovery of
the Company could
compensation is appropriate,
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.

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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.

Management Planning and Development Committee Report
The Management
and Development
Planning
Committee of the Board of Directors reports that it has
reviewed and discussed with management the section
of
“Compensation
Discussion and Analysis” and, on the basis of that

statement

proxy

titled

this

review and discussion, recommended to the Board
that the section be incorporated by reference into the
Company’s Annual Report on Form 10-K and included
in this proxy statement.

THE MANAGEMENT PLANNING AND DEVELOPMENT COMMITTEE

Christopher M. Connor, Chair
Keith Barr
Brian C. Cornell
Mirian M. Graddick-Weir
Thomas C. Nelson

YUM! BRANDS, INC. - 2022 Proxy Statement 53

EXECUTIVE COMPENSATION

The following tables provide information on the compensation of the Named Executive Officers (“NEOs”) for our
2021 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 2021 fiscal year, determined in accordance with SEC rules.

Summary Compensation Table

Name and
Principal Position
(a)

Year
(b)

Salary
($)(1)
(c)

Bonus
($)(2)
(d)

Stock
Awards
($)(3)
(e)

Option/
SAR
Awards
($)(4)
(f)

Non-Equity
Incentive Plan
Compensation
($)(5)
(g)

David W. Gibbs
Chief Executive
Officer of YUM

Chris Turner

Chief Financial
Officer of YUM

Tracy L. Skeans
Chief Operating
Officer and Chief
People Officer of
YUM
Mark King

Chief Executive
Officer of
Taco Bell Division

Tony Lowings
Retired Chief
Executive
Officer of
KFC Division

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2021 1,200,000
2020
2019
2021
2020
2019

303,077 1,404,000
984,615
850,000
848,077
283,846

714,000
500,000

— 10,936,620 5,000,003
4,646,430 3,500,016
— 7,393,577 2,225,003
— 3,585,851 1,125,013
1,075,610 1,000,015
—
1,500,009

2021
2020
2019

834,615
749,731
708,846

— 3,984,248 1,250,017
800,001
1,000,017

1,761,429
1,075,731

567,000
—

2021
2020
2019

925,000
500,000
921,154 1,134,550
500,000
370,385

2,789,040
806,652
2,500,015

875,005
750,011
—

915,995
753,846
699,789

— 3,187,332 1,000,009
800,001
1,750,030

860,421
806,874

562,500
—

5,405,400
—
2,399,800
2,552,550
—
463,021

2,552,550
—
1,165,057

2,834,755
271,950
591,189

2,186,047
—
1,464,120

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(6)
(h)

4,789,314
4,517,703
3,988,755
716
404
—

815,000
1,852,419
1,433,369

788
466
—

25,857
23,908
11,975

All Other
Compensation
($)(7)
(i)

Total
($)

247,322 27,578,659
260,225 14,631,451
151,402 17,143,152
124,727 8,238,857
167,796 3,805,902
54,290 2,801,166

61,304 9,497,735
5,772,976
42,396
5,434,549
51,529

173,483 8,098,071
134,567 4,019,350
33,021 3,994,610

73,771 7,389,011
3,579,591
4,995,478

578,915
262,690

(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. For Mr. Lowings, because he is located in Australia and paid via
local payroll, his notional salary is AUD $1,050,000 (equal to USD 750k), but his flexible salary is AUD $1,235,000. Flexible
salary is an employee’s notional salary plus any cashed-out superannuation plan amounts (20% of notional salary less
$25,000 capped superannuation contribution which is not cashed-out). This cashed-out component is added to Mr.
Lowings’ notional salary, resulting in a flexible salary amount of AUD $1,235,000.

(2) Amounts in this column for 2021 represent a retention payment paid to Mark King in accordance with his sign-on agreement

in 2019.

(3) For Messrs. Gibbs, Turner, King and Lowings and for Ms. Skeans, amounts shown in this column represent the grant date
fair values for performance share units (PSUs) granted in 2021, 2020 and 2019. Further information regarding the 2021
awards is included in the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Year-End” tables later in this
proxy statement. For 2021, these amounts include both the annual PSU grants and the Accelerating Profitable Growth PSU
(“APG”) grant, as described in detail on page 43 of the CD&A. 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 2021 annual PSUs is 200% of target (125% of target for the APG grant). For
2021, Mr. Gibbs’ annual PSU maximum value at grant date fair value would be $11,873,160 and his APG maximum value at
grant date fair value would be $6,250,050; Mr. Turner’s’ annual PSU maximum value at grant date fair value would be
$2,671,614 and his APG maximum value at grant date fair value would be $2,812,555; Ms. Skeans’ annual PSU maximum
value at grant date fair value would be $2,968,352 and her APG maximum value at grant date fair value would be
$3,125,090; Mr. King’s’ annual PSU maximum value at grant date fair value would be $2,077,896 and his APG maximum
value at grant date fair value would be $2,187,614; and Mr. Lowings’ annual PSU maximum value at grant date fair value
would be $2,374,632 and his APG maximum value at grant date fair value would be $2,500,020.

(4) The amounts shown in this column represent the grant date fair values of the stock appreciation rights (SARs) awarded in
2021, 2020 and 2019, 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 15 to
the Consolidated Financial Statements in Item 8 of YUM’s Form 10-K for the fiscal year ended December 31, 2021. See the
Grants of Plan-Based Awards table for details.

54 YUM! BRANDS, INC. - 2022 Proxy Statement

EXECUTIVE COMPENSATION

(5) Amounts in this column reflect the annual

incentive awards earned for the 2021, 2020 and 2019 fiscal year performance
periods, which were awarded by our Management Planning and Development Committee (“Committee”) in January 2022,
January 2021 and January 2020, respectively, under the Yum Leaders’ Bonus Program, which is described further in our
CD&A beginning at page 40 under the heading “Annual Performance-Based Cash Bonuses”.

(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). For Mr. Gibbs and Ms. Skeans, the actuarial present value of their
benefits under the pension plan increased $105,811 and $65,429, respectively, during the 2021 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 $4,683,503 and $749,571 respectively, during the 2021 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 62 under the heading
“Nonqualified Deferred Compensation”. For Messrs. Turner and King, 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 62 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 60 for a detailed discussion of the Company’s pension benefits.

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

All Other Compensation Table

The following table contains a breakdown of
Compensation in the Summary Compensation Table above for 2021.

the compensation and benefits included under All Other

Name
(a)

Gibbs
Turner
Skeans
King
Lowings

Perquisites and
other personal
benefits
($)(1)
(b)

225,498
25,313
49,020
78,672
48,825

Tax
Reimbursements
($)
(c)

Insurance
premiums
($)(2)
(d)

LRP/TCN
Contributions
($)(3)
(e)

Other
($)
(f)

—
—
—
—
—

18,692
5,247
4,529
16,734
—

— 3,132
5,367
— 7,755
377
5,519

88,800

77,700
19,427

Total
($)
(g)

247,322
124,727
61,304
173,483
73,771

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(1) For Messrs. Gibbs and King and Ms. Skeans, amount in this column also includes personal use of charter and commercial
aircraft. None of the 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 cost of
personal use of charter and commercial aircraft by Mr. Gibbs ($225,498), Ms. Skeans ($49,020) and Mr. King ($78,672) and
a charitable matching gift on behalf of Mr. Turner ($25,000) and an employee recognition gift ($313). Ms. Skeans’ and
Mr. King’s personal use of charter aircraft was approved by Mr. Gibbs and was necessitated by travel safety considerations
brought on by the onset of the COVID-19 pandemic. For Mr. Lowings these amounts include expenses incurred on account
of his relocation to his home country ($48,825).

(2) 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.

(3) For Messrs. Turner and King, this column represents the Company’s annual allocations to the LRP, an unfunded, unsecured
account based retirement plan. For Mr. Turner, this column also includes a Company 401(k) matching contribution. For
Mr. Lowings, this column represents the Company’s annual allocation to the superannuation retirement plan in Australia, his
home country.

YUM! BRANDS, INC. - 2022 Proxy Statement 55

EXECUTIVE COMPENSATION

Grants of Plan-Based Awards

The following table provides information on SARs, RSUs, PSUs and other equity awards granted in 2021 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 54.

Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)

Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)

Grant
Date
(b)

Threshold
($)
(c)

Target
($)
(d)

Maximum
($)
(e)

Threshold
(#)
(f)

Target
(#)
(g)

Maximum
(#)
(h)

All Other
Stock
Awards:
Number
of Shares
of Stock
Units
(#)
(i)

All Other
Option/
SAR
Awards;
Number of
Securities
Underlying
Options
(#)(3)
(j)

Exercise
or Base
Price of
Option/
SAR
Awards
($/Sh)(4)
(k)

Grant
Date Fair
Value
($)(5)
(l)

0 1,980,000 5,940,000

935,000 2,805,000

0 1,017,500 3,052,500

867,479 2,602,437

2/8/2021
2/8/2021
2/8/2021
2/8/2021

2/8/2021
2/8/2021
2/8/2021
2/8/2021
2/8/2021
2/8/2021
2/8/2021
2/8/2021

2/8/2021
2/8/2021
2/8/2021
2/8/2021

— 48,375
— 48,375

96,750
60,469

10,885
21,769

21,770
27,211

— 12,094
— 24,188

24,188
30,235

8,466
16,932

16,932
21,165

9,675
— 19,350

19,350
24,188

235,073

52,892

58,769

41,138

47,015

103.36 5,000,003
103.36 5,936,580
103.36 5,000,040

103.36 1,125,013
103.36 1,335,807
103.36 2,250,044

103.36 1,250,017
103.36 1,484,176
103.36 2,500,072

103.36
875,005
103.36 1,038,948
103.36 1,750,092

103.36 1,000,009
103.36 1,187,316
103.36 2,000,016

Name
(a)
Gibbs

Turner

Skeans

King

Lowings

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(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 2021. The actual amount of annual
incentive compensation awards earned are
shown in column (g) of the Summary Compensation Table on page 54. The performance measurements, performance
targets, and target bonus percentages are described in the CD&A beginning on page 34 under the discussion of annual
incentive compensation.

(2) Reflects grants of PSU awards subject to performance-based vesting conditions in 2021. The annual PSU awards granted
February 8, 2021 vest on December 31, 2023 and PSU award payouts are weighted 100% on the Company’s achievement
of specified relative total shareholder return (“TSR”) rankings against the S&P 500 Consumer Discretionary Index during the
performance period ending on December 31, 2023. With respect to the 100% 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. The terms of the annual PSU awards provide that in case of a change in control during the first 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. The Accelerating
Profitable Growth PSU awards (described in detail on page 43) will pay out at the close of the vesting period (December 31,
2023) if specified net-new unit targets are met by year-end 2022.

56 YUM! BRANDS, INC. - 2022 Proxy Statement

EXECUTIVE COMPENSATION

(3) Amounts in this column reflect the number of SARs granted to executives during the Company’s 2021 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 8, 2021. 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 or 65 with 5 years of service who retire 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 vest in retirement must be exercised before the earlier of (i) the five year anniversary of the executive’s
retirement or (ii) the expiration dates of the SARs (generally 10 years from the grant date). Unvested SARs of executives who
die will immediately vest and may be exercised by the executive’s beneficiary before the earlier of (i) the five year anniversary
of the executive’s death or (ii) the expiration dates of the SARs (generally 10 years from the grant date). If an 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) The exercise price of the SARs granted in 2021 equals the closing price of YUM common stock on their grant date.
(5) 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. The fair values of PSU awards without market-based conditions are based on the closing price of our
Common Stock on the date of grant. The fair values of PSU awards with market-based conditions have been valued based
on the outcome of a Monte Carlo simulation. For SARs, fair value of $21.27 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 Form 10-K for the
fiscal year ended December 31, 2021.

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YUM! BRANDS, INC. - 2022 Proxy Statement 57

EXECUTIVE COMPENSATION

Outstanding Equity Awards at Year-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, 2021.

Option/SAR Awards(1)

Stock Awards

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Name
(a)
Gibbs

Turner

Skeans

King

Lowings

Number of
Securities
Underlying
Unexercised
Options/
SARs (#)
Exercisable
(c)
2,227
40,718
33,932
61,968
77,878
31,838
77,465
62,881
55,989
47,400
—
40,783
33,986
61,988
77,956
31,871

Grant
Date
(b)
2/8/2012*
2/5/2014*
2/5/2014*
2/6/2015*
2/5/2016*
5/20/2016*
2/10/2017*
2/12/2018*
2/11/2019*
2/10/2020*
2/8/2021*
2/5/2014**
2/5/2014**
2/6/2015**
2/5/2016**
5/20/2016**

Number of
Securities
Option/
Underlying
Option/
SAR
Unexercised
SAR
Exercise
Options/
Expiration
Price
SARs (#)
Date
($)
Unexercisable
(f)
(d)
(e)
2/8/2022
— $ 45.88
2/5/2024
— $ 50.22
2/5/2024
— $ 50.22
2/6/2025
— $ 52.64
— $ 49.66
2/5/2026
— $ 56.67 5/20/2026
— $ 68.00 2/10/2027
$ 78.07 2/12/2028
20,961(i)
55,989(ii) $ 93.26 2/11/2029
142,200(iii) $102.87 2/10/2030
2/8/2031
235,073(iv) $103.36
2/5/2024
— $ 21.30
2/5/2024
— $ 21.30
2/6/2025
— $ 22.32
— $ 21.06
2/5/2026
— $ 24.03 5/20/2026

2/10/2020*
2/8/2021*

2/10/2017*
2/12/2018*
2/12/2018*
2/11/2019*
2/10/2020*
2/8/2021*
2/5/2016**
2/5/2016**

2/10/2020*
2/8/2021*

2/6/2013*
2/5/2014*
2/5/2014*
2/6/2015*
2/6/2015*
2/5/2016*
2/10/2017*
2/12/2018*
2/11/2019*
2/11/2019*
2/10/2020*
2/8/2021*

13,543
—

22,552
18,675
—
22,347
10,834
—
5,701
10,144

10,157
—

15,978
19,329
19,329
19,264
19,264
34,288
30,884
18,149
18,873
—
10,834
—

40,629(iii) $102.87 2/10/2030
2/8/2031
52,892(iv) $103.36

7,985(i)

— $ 68.00 2/10/2027
$ 78.07 2/12/2028
51,106(v) $ 78.07 2/12/2028
24,069(ii) $ 93.26 2/11/2029
32,503(iii) $102.87 2/10/2030
2/8/2031
58,769(iv) $103.36
2/5/2026
— $ 21.06
2/5/2026
— $ 21.06

30,472(iii) $102.87 2/10/2030
2/8/2031
41,138(iv) $103.36

2/6/2023
— $ 44.81
2/5/2024
— $ 50.22
2/5/2024
— $ 50.22
2/6/2025
— $ 52.64
2/6/2025
— $ 52.64
— $ 49.66
2/5/2026
— $ 68.00 2/10/2027
$ 78.07 2/12/2028
18,873(ii) $ 93.26 2/11/2029
50,328(vi) $ 93.26 2/11/2029
32,503(iii) $102.87 2/10/2030
2/8/2031
47,015(iv) $103.36

6,050(i)

Equity
incentive
plan
awards:
Number of
unearned
shares,
units
or other
rights
that
have not
vested(4)
(i)

Equity
incentive
plan
awards:
market or
payout
value of
unearned
shares,
units
or other
rights that
have not
vested
(j)

Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)(2)
(g)

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3)
(h)

56,494

7,844,749

130,774 18,159,278

4,391

609,751

42,376

5,884,331

5,041

700,011

44,059

6,118,033

7,318

1,016,204

32,689

4,539,195

36,802

5,110,326

58 YUM! BRANDS, INC. - 2022 Proxy Statement

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 12, 2022.
(ii) One-half of the unexercisable award will vest on each of February 11, 2022 and 2023.
(iii) One-third of the unexercisable award will vest on each of February 10, 2022, 2023 and 2024.
(iv) One-fourth of the unexercisable award will vest on each of February 8, 2022, 2023, 2024 and 2025.
(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 $138.86,

the closing price of YUM stock on the NYSE on December 31, 2021.

(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, 2022 and 2023 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 2021 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.

Name
(a)
Gibbs
Turner
Skeans
King
Lowings

Option/SAR Awards

Stock Awards

Number
of Shares
Acquired on
Exercise
(#)
(b)
132,225
—
51,747
—
13,293

Value
Realized on
Exercise
($)
(c)
11,865,703
—
5,849,074
—
1,677,958

Number
of Shares
Acquired on
Vesting
(#)(1)
(d)

22,123
4,357
9,943
7,261
7,458

Value
realized on
Vesting
($)
(e)
3,072,000
580,378
1,380,685
967,204
1,035,622

(1) For each of Mr. Gibbs, Ms. Skeans and Mr. Lowings, this amount includes PSUs that vested on December 31, 2021 with
respect to the 2019-2021 performance period and were paid out in 2022. For Messrs. Turner and King, this amount
includes the vested portion of their sign-on RSU grants.

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YUM! BRANDS, INC. - 2022 Proxy Statement 59

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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
(a)
Gibbs

Skeans

Turner(i)

King(i)

Lowings(i)

Plan Name
(b)
Qualified Retirement Plan

PEP

Qualified Retirement Plan

PEP

—

Number of Years of
Credited Service
(#)
(c)
33

Present Value of
Accumulated Benefit
($)
(d)
1,943,716

Payments During
Last Fiscal Year
($)
(e)
—

—

19,649,084

916,761

5,080,998

—

(i) 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. As discussed at page 54, Mr. Lowings participates in an Australian superannuation plan (for 2021 only, prior
to 2021 he participated in the TCN and maintains an account balance in that plan), and Messrs. Turner and King participate
in 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
of
pre-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.

replaces

same

level

the

Benefit Formula

Benefits under the Retirement Plan are based on a
to the
participant’s final average earnings (subject
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

3% of Final Average Earnings times Projected Service
up to 10 years of service, plus

1% of Final Average Earnings times Projected Service in
excess of 10 years of service, minus

0.43% of Final Average Earnings up to Social Security
covered compensation multiplied by Projected Service
up to 35 years of service

60 YUM! BRANDS, INC. - 2022 Proxy Statement

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).

leaves employment after becoming
If a participant
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” 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
including amounts
compensation from the Company,
under the Yum Leaders’ Bonus Program. In general,
base pay includes salary, vacation pay, sick pay and
short-term disability payments. Extraordinary bonuses
and lump sum payments made in connection with a
participant’s termination of employment are not included.

EXECUTIVE COMPENSATION

Vesting

Early Retirement Eligibility and Reductions

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.

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.

Normal Retirement Eligibility

A participant is eligible for normal retirement following
the later of age 65 and 5 years of vesting service.

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 and non-qualified) if he or she
retired from the Company on December 31, 2021 and received a lump sum payment.

Earliest Retirement
Date

Estimated Lump
Sum from a
Qualified Plan(1)

Estimated Lump
Sum from a Non-
Qualified Plan(2)

January 1, 2021 $

2,143,881 $

21,667,499 $

Total Estimated
Lump Sums
23,811,380

February 1, 2028 $

1,868,407 $

9,218,787 $

11,087,194

Name
David W. Gibbs

Tracy L. Skeans

(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, 2022.
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
is calculated based on actuarial
from the plan,
it
assumptions for
lump sums required by Internal
Revenue Code Section 417(e)(3).

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(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
the
eligible to receive benefits calculated under
Retirement Plan’s pre-1989 formula, if this calculation
results in a larger benefit from the PEP. This formula is
similar
the
Retirement Plan except that part C of the formula is
calculated as follows:

to the formula described above under

12/3% of an estimated primary Social Security
amount multiplied by Projected Service up to 30
years

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 the pre-1989 formula,

YUM! BRANDS, INC. - 2022 Proxy Statement 61

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
the participant’s life only annuity.
equivalent of
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

the present value of accumulated
For all plans,
is
benefits (determined as of December 31, 2021)
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
accounting
in
methodologies
calculations. In addition, the economic assumptions
for
retirement
mortality, and discount rate are also consistent with
those used in financial accounting calculations at each
measurement date.

the lump sum interest

rate, post

financial

used

Nonqualified Deferred Compensation

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Amounts
reflected in the Nonqualified Deferred
Compensation table below are provided for under the
Company’s EID, LRP and TCN plans. These plans are
account-based
unfunded,
compensation plans.
year,
calendar
For
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.

deferred,
each

unsecured

EID Program

the EID Program.
under
Deferred Investments
Amounts deferred under the EID Program may be
following phantom investment
invested in
alternatives (12-month investment
returns, as of
December 31, 2021, are shown in parentheses):

the

(cid:129) YUM! Stock Fund (30.05%*)

(cid:129) YUM! Matching Stock Fund (30.05%*)

(cid:129) S&P 500 Index Fund (28.60%)

(cid:129) Bond Market Index Fund (-1.69%)

(cid:129) Stable Value Fund (1.30%)

is,

that

investments;

All of
the phantom investment alternatives offered
under the EID Program are designed to match the
they
performance of actual
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
like-named funds
to track the investment return of
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.
the
Participants may

between

transfer

funds

62 YUM! BRANDS, INC. - 2022 Proxy Statement

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
incentive into this fund acquire
who defer their annual
additional phantom shares (RSUs) equal to 33% of the
RSUs received with respect to the deferral of their
incentive into the YUM! Matching Stock Fund
annual
(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 2021).

incentive award,
Beginning with their 2009 annual
those who are eligible for annual PSU awards are no
longer eligible to participate in the Matching Stock
Fund.

Fund

Stock

RSUs attributable to annual incentive deferrals into the
YUM! Matching
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.

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,
fully vests in the
the participant
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
immediately and
YUM! Matching Stock Fund vest
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
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
In
general, Section 409A requires that:

installments for up to 20 years.

the Internal Revenue Code.

(cid:129) Distribution schedules cannot be accelerated (other

than for a hardship)

(cid:129) 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
the

it would have begun without

years after
election to re-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 to re-defer.

Investments in the YUM! Stock Fund and YUM!
Matching Stock Fund are only distributed in shares of
Company stock.

EXECUTIVE COMPENSATION

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, Messrs. King and Turner will
receive an annual earnings credit equal to the Moody’s
Aa Corporate Bond Yield Average for maturities 20
years and above (currently 2.91%) of their account
balances. The Company’s contribution (“Employer
Credit”) for 2021 was equal to 4% of salary plus target
bonus for 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.
Alternatively, 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 become
eligible to participate in LRP after January 1, 2019
(including Messrs. Turner and King) will receive a lump
sum
from
following
employment.

distribution

separation

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, Mr. Lowings receives an
annual earnings credit equal to 5%. For Mr. Lowings,
the Employer Credit for 2021 was 0%, because he
instead participated in the Australian superannuation
retirement plan.

Distributions under TCN. Under the TCN, participants
age 55 or older with a balance of $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.

YUM! BRANDS, INC. - 2022 Proxy Statement 63

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EXECUTIVE COMPENSATION

Name
(a)
Gibbs

Turner

Skeans

King

Lowings

Executive
Contributions
in Last FY
($)(1)
(b)
—

Registrant
Contributions
in Last FY
($)(2)
(c)
—

—

71,400

—

77,700

—

Aggregate
Earnings in
Last FY
($)(3)
(d)
996,029

996,029

—

2,637

127,587

—

2,903

66,192

47,531

113,723

Aggregate
Withdrawals/
Distributions
($)(4)
(e)
—

—

Aggregate
Balance at
Last FYE
($)(5)
(f)
4,779,899

4,779,899

—

158,288

592,719

—

173,354

326,774

998,160

1,324,934

Plan
Name

EID

Total

EID

LRP

Total

EID

Total

EID

LRP

Total

EID

TCN

Total

(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 6 of the Summary

Compensation Table for more detail.

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(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 Messrs. Lowings, King and Turner, of their earnings reflected in this column, $25,857,
$788 and $716, respectively, were deemed above market earnings accruing to their accounts under the 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.

(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 2021.

Gibbs

Turner

Lowings

King

Skeans

—

(5) Amounts reflected in column (f) are the year-end balances for each executive under the EID Program, TCN and the LRP. As
required under SEC rules, below is the portion of the year-end balance for each executive which has previously been
reported as compensation to the executive in the Company’s Summary Compensation Table for 2021 and prior years.

Gibbs

Turner

Skeans

King

Lowings

—

$163,920

—

$182,955

$490,929

64 YUM! BRANDS, INC. - 2022 Proxy Statement

Potential Payments Upon Termination or Change in Control

EXECUTIVE COMPENSATION

The information below describes and quantifies certain
compensation that would become payable under
existing plans and arrangements
the NEO’s
employment had terminated on December 31, 2021,
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
the
employees,
distributions
Company’s 401(k) Plan,
retiree medical benefits,
disability benefits and accrued vacation pay.

under

such

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.

for any reason other

SAR Awards.
If one or more NEOs terminated
than retirement,
employment
death, disability or following a change in control as of
December 31, 2021, they could exercise the SARs
that were exercisable on that date as shown at the
Outstanding Equity Awards at Year-End table on
page 58, 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, 2021, exercisable SARs would
remain exercisable through the term of the 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
2019, 2020 or 2021 in the event of death. Except in
the case of a change in control or death, no SARs
become exercisable on an accelerated basis. In the
case of an involuntary termination of employment as of
December 31, 2021, each NEO would receive the
following: Mr. Gibbs $17,290,187, Mr. Turner
$3,339,904, Ms. Skeans $8,689,499, Mr. King
$2,557,086 and Mr. Lowings $6,362,161.

Executive Income Deferral Program. As described in
the NEOs
more detail beginning at page 62,
participate in the EID Program, which permits the
incentive compensation.
deferral of salary and annual
The last column of
the Nonqualified Deferred
Compensation Table on page 64 includes each NEO’s

aggregate balance at December 31, 2021. 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
their
retirement after age 65,
beneficiaries are entitled to their entire account
balance as shown in the last column of
the
Nonqualified Deferred Compensation table on page
64.

they or

case of

an involuntary

In the
termination of
employment as of December 31, 2021, each NEO
would receive the following: Mr. Gibbs $4,779,899,
Mr. Turner $0, Ms. Skeans $592,719, Mr. King $0 and
Mr. Lowings $326,774. As discussed at page 65,
these amounts reflect base salary or bonuses
previously deferred by the executive and appreciation
on these deferred amounts (see page 62 for
discussion of
investment alternatives available under
the EID). Thus, 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.

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Leadership Retirement Plan. Under
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
these participants may
employment. Alternatively,
elect to be paid in 5- or 10-year installments following
If these participants are
the attainment of age 55.
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
to
birthday. Participants who become
participate in LRP after January 1, 2019 (including
Messrs. Turner and King) will receive a lump sum
distribution following separation from employment
to be paid in 5 or 10-year
unless they elect
installments after attaining age 54.
In case of
termination of employment as of December 31, 2021,
Mr. Turner would have received $158,288 and
Mr. King would have received $173,354.

eligible

YUM! BRANDS, INC. - 2022 Proxy Statement 65

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, 2021,
Mr. Lowings would have received $998,160.

for any reason other

Performance Share Unit Awards. If one or more NEOs
than
terminated employment
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
the NEO had retired or died or been
forfeited.
involuntarily terminated following a change in control, as
of December 31, 2021, 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.
these payouts had occurred on
December 31, 2021, Messrs. Gibbs, Turner, King and
Lowings and Ms. Skeans would have been entitled to
$7,819,161, $2,469,936, $1,895,109, $2,112,440 and
$2,453,930, respectively, assuming target performance.

If any of

Pension Benefits. The Pension Benefits Table on
page 60 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, 2021. The table on
page 61 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.

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see

insurance plans

life
the NEOs,

the
Life Insurance Benefits. For a description of
that provide
supplemental
coverage
the All Other
to
Compensation Table on page 55. If the NEOs had
died on December 31, 2021, the survivors of Messrs.
Gibbs, Turner, King and Lowings and Ms. Skeans
would have received Company-paid life insurance of
$2,050,000,
and
$1,323,000,
this arrangement.
Executives and all other salaried employees can
life insurance benefits up to a
purchase additional
maximum combined company paid and additional
life
insurance of $3.5 million. This additional benefit is not

$1,500,000,
respectively, under

$1,500,000,

66 YUM! BRANDS, INC. - 2022 Proxy Statement

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. Gibbs, Turner, 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:

(cid:129) a

annual

incentive

proportionate

assuming
achievement of target performance goals under the
bonus plan or,
if higher, assuming continued
achievement of actual Company performance until
date of termination;

(cid:129) 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; and

(cid:129) outplacement services for up to one year following

termination.

In March 2013, the Company eliminated excise tax
gross-ups and implemented a best net after-tax
method. See the Company’s CD&A on page 34 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)

(ii)

if any person acquires 20% or more of
the
Company’s voting securities (other than securities
its
acquired directly
affiliates);

from the Company or

if a majority of the directors as of the date of the
agreement are replaced other
than in specific
circumstances; or

(iii) upon the consummation of a merger of

change

the
Company or any subsidiary of the Company other
than (a) a merger where the Company’s directors
control
the
immediately before
constitute a majority 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.

the directors of

In addition to the payments described above, upon a
change in control:

(cid:129) All outstanding SARs held by the executive and not
otherwise exercisable will fully and immediately vest
following a change in control
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 34 for more detail;

EXECUTIVE COMPENSATION

(cid:129) RSUs under

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

(cid:129) 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
the entire performance
had been achieved for
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 34 for more detail.

If a change in control and each NEO’s involuntary termination had occurred as of December 31, 2021, the following
payments or other benefits would have been made or become available.

Severance Payment

Annual Incentive

Accelerated Vesting of SARs

Accelerated Vesting of RSUs

Acceleration of PSU
Performance/Vesting

Outplacement

TOTAL

CEO Pay Ratio

Gibbs
$
6,360,000

Turner
$
3,570,000

Skeans
$
3,570,000

King
$
3,885,000

Lowings
$
3,312,192

5,405,400

2,552,550

2,834,755

2,186,047

17,290,187

3,339,904

8,689,499

2,557,086

6,362,161

7,844,749

609,751

700,011

1,016,204

—

7,819,161

2,469,936

2,453,930

1,895,109

2,112,440

25,000

44,744,497 12,567,141 17,990,991 12,213,154 13,997,840

Each year the 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 The Habit Burger
Grill brands. As evidence of the opportunities these
positions create, approximately 80% of our Company-
owned Restaurant General Managers
(“RGMs”)
located in the U.S. have been promoted from other
positions in our restaurants and such RGMs often earn
competitive pay greater than the average American
household income. In the United States, approximately

90% of our Company-owned restaurant employees
are part-time and at least 50% have been employed
by the Company for less than a 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. Gibbs, our Chief Executive
Officer (our “CEO”).

YUM! BRANDS, INC. - 2022 Proxy Statement 67

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After calculating employee compensation, our median
employee was identified as a part-time KFC restaurant
employee in the United States (for which we have
substituted a similarly situated employee, a part-time
Taco Bell employee in the United States, as described
above). After
identifying the median employee, we
calculated total annual compensation in accordance
with the requirements of the Summary Compensation
Table.

the total compensation of our CEO, as
For 2021,
reported in the Summary Compensation Table at page
54, was $ 27,578,659. The total compensation of our
median employee was estimated to be $13,082. As a
result, we estimate that our CEO to median employee
pay ratio is 2,108:1.

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
total
pay ratio based on that employee’s annual
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,
and
estimates
assumptions in calculating their own pay ratios.

exclusions,

EXECUTIVE COMPENSATION

for

our

annual meeting

The employee that was used for purposes of
calculating the ratio below was similarly situated to the
employee (the “2020 median employee”)
that was
identified as the median employee for purposes of the
CEO pay ratio disclosure included in the proxy
statement
of
2021
stockholders
(the “2020 Pay Ratio Disclosure”)
because there has been no change in our employee
population or employee compensation arrangements
since the 2020 median employee was identified that
we believe would significantly impact our pay ratio
disclosure. However, because the 2020 median
employee is no longer an employee, as permitted by
SEC rules, we substituted another employee, whose
total compensation was substantially similar to the
2020 median employee’s total compensation based
on the compensation measure used to select
the
median employee for purposes of the 2021 Pay Ratio
Disclosure, as the median employee for purposes of
this disclosure.

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

As of December 31, 2020, our global workforce used
for determining the pay ratio was approximately
38,000 employees (23,000 in the U.S. and 15,000
internationally).

68 YUM! BRANDS, INC. - 2022 Proxy Statement

EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes, as of December 31, 2021, 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

Equity compensation plans approved by security
holders

Equity compensation plans not approved by security
holders

TOTAL

Number of
Securities To
be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a)

Weighted-
Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights
(b)

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))
(c)

7,669,611(1)

80.24(2)

23,908,068(3)

76,377(4)

7,745,988(1)

52.39(2)

79.96(2)

—

23,908,068(3)

Includes 2,327,774 shares issuable in respect of RSUs, performance units and deferred units.

(1)
(2) Weighted average exercise price of outstanding Options and SARs only.
(3)

Includes 11,954,034 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 as non-qualified stock
options,
restricted
incentive stock options, SARs,
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”). The exercise price of a stock option
grant or SAR under the LTIP may not be less than the
closing price of our stock on the date of the grant, 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.

What are the key features of the RGM Plan?

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Effective May 20, 2016, we canceled the remaining
shares available for issuance under the RGM Plan,
except
shares
approximately
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

220,000

the

for

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 award non-qualified stock
options, SARs, restricted stock and RSUs. Employees,
other than executive officers, have been eligible to
receive awards under the RGM Plan. The purpose of

YUM! BRANDS, INC. - 2022 Proxy Statement 69

EQUITY COMPENSATION PLAN INFORMATION

the RGM Plan was (i)
managers (“RGMs”) the opportunity to become

to give restaurant general

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.
the Plan
provides incentives to Area Coaches, Franchise
Business Leaders and other supervisory field operation
positions that support RGMs and have profit and loss

In addition,

responsibilities within a defined region or area. While all
non-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.

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70 YUM! BRANDS, INC. - 2022 Proxy Statement

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, Tanya
L. Domier, Lauren R. Hobart, P. Justin Skala, Elane B.
Stock and 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. 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. Alves has accounting and related financial
the
management expertise within the meaning of
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 12, 2021.
least
The charter

is reviewed by management at

and any

recommended changes

are
annually,
presented to the Audit Committee for
review and
approval. The charter is available on our Web site at
http://investors.yum.com/committee-composition-and-
charters.

What are the responsibilities of the Audit Committee?

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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
the Committee
auditors since 1997. Each year,

the

partner.

qualifications

performance,

and
evaluates
independence of
the independent auditors. The
Committee is also involved in the selection of the lead
audit
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.

evaluating

The Committee met 9 times during 2021. 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
In addition to the
of only Committee members.
scheduled meetings, senior management confers with
the Committee or its Chair from time to time, as senior
in
management deems advisable or appropriate,
that arise
connection with issues or concerns
throughout the year.

YUM! BRANDS, INC. - 2022 Proxy Statement 71

AUDIT COMMITTEE REPORT

responsible for

reporting process,

the Company’s
Management
financial
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
the
principles and for auditing the effectiveness of
Company’s internal control over
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

financial

that

independent

representations

relied, without

internal control over financial reporting. It is not the
Committee’s duty or responsibility to conduct audits or
accounting reviews or procedures. The Committee
verification, on
has
management’s
the financial
statements have been prepared with integrity and
objectivity and in conformity with accounting principles
the
generally accepted in the U.S. and that
Company’s internal control over financial reporting is
effective. The Committee has also relied, without
the
independent
independent auditors included in their report regarding
the Company’s financial statements and effectiveness
of internal control over financial reporting.

verification, on the opinion of

What matters have members of the Audit Committee discussed with
management and the independent auditors?

non-audit

received from KPMG LLP required by applicable
requirements of the PCAOB regarding KPMG LLP’s
communications with the Committee concerning
also considered
independence. The Committee
the
services
whether
independent
the
are
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.

by
compatible with

provided

auditors

internal

this process,

and disclosure

In addition, the Committee reviewed key initiatives and
programs aimed at strengthening the effectiveness of
control
the Company’s
structure. As part of
the Committee
continued to monitor the scope and adequacy of the
Company’s
reviewing
to implement
staffing levels
recommended improvements in internal procedures
and controls. The Committee also reviews and
compliance matters with
discusses
the
management, and, as necessary or advisable,
Company’s independent auditors.

auditing program,

and steps

internal

taken

legal

and

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and

been

reviews

reviewed

prepared

both management

As part of
its oversight of the Company’s financial
statements,
the Committee reviews and discusses
the Company’s
with
independent auditors all annual and quarterly financial
statements prior to their issuance. With respect
to
reporting period, management
each 2021 fiscal
financial
advised the Committee that each set of
statements
in
had
accordance with accounting principles generally
accepted in the U.S., and reviewed significant
accounting and disclosure issues with the Committee.
These
the
independent auditors of matters required to be
discussed pursuant to Public Company Accounting
Oversight Board
(“PCAOB”) Auditing Standard
No. 1301 (Communication with Audit Committees),
including the quality (not merely the acceptability) of
the
accounting
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 and
non-audit fees and the written disclosures and letter

discussions with

Company’s

principles,

included

72 YUM! BRANDS, INC. - 2022 Proxy Statement

Has the Audit Committee made a recommendation regarding the audited
financial statements for fiscal 2021?

AUDIT COMMITTEE REPORT

the Committee’s

Based
discussions with
management and the independent auditors and the
Committee’s
of
the independent
management and the report of
auditors to the Board of Directors and shareholders,
and subject to the limitations on the Committee’s role

representations

review of

the

and responsibilities referred to above and in the Audit
Committee Charter, the Committee recommended to
the Board of Directors that
include the audited
consolidated financial statements in the Company’s
Annual Report on Form 10-K for the fiscal year ended
December 31, 2021 for filing with the SEC.

Who prepared this report?

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

Paget L. Alves, Chairperson
Tanya L. Domier
Lauren R. Hobart
P. Justin Skala
Elane B. Stock
Annie Young-Scrivner

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YUM! BRANDS, INC. - 2022 Proxy Statement 73

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 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, by e-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?

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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
receiving copies
through the mail. We are offering this service to
to
provide shareholders with added convenience,
reduce our environmental
impact and to reduce
Annual Report printing and mailing costs.

instead of

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 to www.computershare.com,
log in and
click on Shareholder Account Access,

locate the option to receive Company mailing via
e-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
is withdrawn by writing our Transfer Agent,
it
Computershare,
Inc., 462 South 4th Street, Suite
1600, Louisville, Kentucky 40202 or by logging onto
at
Agent’s
our
www.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
you may call, write or e-mail
proxy materials,
Computershare, Inc.

Transfer

website

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
Investor
to YUM! Brands,
Relations, 1441 Gardiner Lane, Louisville, KY 40213 or
by calling Investor Relations at 1 (888) 298-6986 or by
sending an e-mail to yum.investor@yum.com.

Inc.,

74 YUM! BRANDS, INC. - 2022 Proxy Statement

May I propose actions for consideration at next year’s Annual Meeting of
Shareholders or nominate individuals to serve as directors?

ADDITIONAL INFORMATION

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 2023 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 9, 2022. 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
to introduce an item of
election as directors or
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
receive the notice of your
our bylaws. We must
intention to introduce a nomination or to propose an
item of business at our 2023 Annual Meeting no later
than the date specified in our bylaws.
If the 2023
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 2023 Annual Meeting is held within 30 days of
the anniversary of
this Annual Meeting, we must
intention to introduce a
receive notice of your
nomination or other item of business at that meeting
by February 18, 2023.

In addition, our bylaws provide for proxy access for
director nominations by shareholders (as described at
page 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,
and
nominee(s) satisfy the requirements in YUM’s bylaws.
Notice of proxy access director nominees must be
received no earlier than November 9, 2022, and no
later than December 9, 2022.

shareholder(s)

provided

that

the

The Board is not aware of any matters that are
expected to come before the 2022 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 chairperson of the Annual Meeting may refuse to
to
allow the transaction of any business, or
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
regarding the
requirements for making shareholder proposals and
nominating director candidates

the relevant bylaw provisions

P
r
o
x
y
S
t
a
t
e
m
e
n
t

YUM! BRANDS, INC. - 2022 Proxy Statement 75

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December 31, 2021
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

to
Commission file number 1-13163

YUM! BRANDS, INC.

(Exact name of registrant as specified in its charter)

North Carolina

13-3951308

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1441 Gardiner Lane, Louisville, Kentucky

(Address of principal executive offices)

40213

(Zip Code)

(502) 874-8300

Registrant’s telephone number, including area code:
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Trading Symbol(s)

Title of Each Class

Name of Each Exchange on
Which Registered
New York Stock Exchange

Common Stock, no par value

YUM

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None

Indicate by check mark

Yes

• if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

(cid:129) if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

(cid:129) whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

(cid:129) whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files).

(cid:129) whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in
Rule 12b-2 of the Exchange Act.

Large

Smaller

Emerging

Accelerated Filer

Non-accelerated Filer

Reporting Company

Growth Company

(cid:129) If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act.

(cid:129) whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report.

(cid:129) whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

The aggregate market value of the voting stock (which consists solely of shares of Common Stock) held by non-affiliates of the registrant as of
June 30, 2021, computed by reference to the closing price of the registrant’s Common Stock on the New York Stock Exchange Composite Tape on
such date was approximately $34.0 billion. All executive officers and directors of the registrant have been deemed, solely for the purpose of the
foregoing calculation, to be “affiliates” of the registrant. The number of shares outstanding of the registrant’s Common Stock as of February 15,
2022, was 288,980,982 shares.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement furnished to shareholders of the registrant in connection with the annual meeting of shareholders to be held
on May 19, 2022, are incorporated by reference into Part III.

Table of Contents

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity
Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

PART I

ITEM 1
ITEM 1A
ITEM 1B
ITEM 2
ITEM 3
ITEM 4

PART II

ITEM 5

ITEM 6
ITEM 7
ITEM 7A
ITEM 8
ITEM 9
ITEM 9A
ITEM 9B
ITEM 9C

PART III

ITEM 10
ITEM 11
ITEM 12
ITEM 13
ITEM 14

PART IV

ITEM 15

Exhibits and Financial Statement Schedules

2
6
18
18
19
19

20
21
22
42
43
85
85
85
85

86
86
86
86
86

Forward-Looking Statements

In this Form 10-K, as well as in other written reports and oral statements, we present “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend all
forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and we are
including this statement for purposes of complying with those safe harbor provisions.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-
looking words such as “expect,” “expectation,” “believe,” “anticipate,” “may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,”
“likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,” “outlook” or similar terminology. Forward-looking statements are based
on our current expectations, estimates, assumptions and/or projections, our perception of historical trends and current conditions, as well as
other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor
guarantees of
future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and
assumptions that could cause our actual results to differ materially from those indicated by those forward-looking statements. There can be no
assurance that our expectations, estimates, assumptions and/or projections will be achieved. Factors that could cause actual results and events
to differ materially from our expectations, estimates, assumptions, projections and/or forward-looking statements include (i) the risks and
uncertainties described in the Risk Factors included in Part I, Item 1A of this Form 10-K and (ii) the factors described in Management’s
Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of this Form 10-K. You should not place
undue reliance on forward-looking statements, which speak only as of the date they are made. The forward-looking statements included in this
Form 10-K are only made as of the date of this Form 10-K and we disclaim any obligation to publicly update any forward-looking statement to
reflect subsequent events or circumstances.

YUM! BRANDS, INC. - 2021 Form 10-K 1

PART I

ITEM 1. Business.

Yum! Brands, Inc. (referred to herein as “YUM”, the “Registrant” or
the “Company”), was incorporated under the laws of the state of
North Carolina in 1997. The principal executive offices of YUM are
located at 1441 Gardiner Lane, Louisville, Kentucky 40213, and the
telephone number at that location is (502) 874-8300. Our website
address is https://www.yum.com.

Overview of Business

YUM, together with its subsidiaries, is referred to in this Form 10-K
annual report (“Form 10-K”) as the Company. The terms “we,” “us”
and “our” are also used in the Form 10-K to refer to the Company.
Throughout this Form 10-K, the terms “restaurants,” “stores” and
“units” are used interchangeably. While YUM does not directly own
or operate any restaurants, throughout this document we may refer
to restaurants that are owned or operated by our subsidiaries as
being Company-owned.

YUM has over 53,000 restaurants in 157 countries and territories primarily operating under the four concepts of KFC, Taco Bell, Pizza Hut and
The Habit Burger Grill (the “Concepts”). The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style
food and pizza categories, respectively. The Habit Burger Grill, a concept we acquired in March 2020, is a fast-casual restaurant concept
specializing in made-to-order chargrilled burgers, sandwiches and more. At December 31, 2021, 98% of our Concepts’ units are operated by
independent franchisees or licensees under the terms of franchise or license agreements. The terms franchise or franchisee within this Form
10-K are meant to describe third parties that operate units under either franchise or license agreements.

The following is a summary of our Concepts’ operations and a brief description of each Concept as of and for the year ended December 31,
2021:

K
-
0
1
m
r
o
F

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger Grill Division

YUM

Number of
Units

% of Units
International

Number of
Countries and
Territories

%
Franchised

System Sales(a)
(in Millions)

26,934

7,791

18,381

318

53,424

85%

10%

64%

67%

149

111

157

99%

94%

99%

13%

98%

$31,365

13,280

12,955

588

$58,188

(a) Constitutes sales of all restaurants, both Company-owned and franchised. See further discussion of this performance metric within Part II, Item 7 of

this Form 10-K.

KFC
(cid:129) KFC was founded in Corbin, Kentucky, by Colonel Harland D.
Sanders, an early developer of the quick service food business and
franchise concept. The Colonel
a pioneer of
perfected his secret blend of 11 herbs and spices for Kentucky
Fried Chicken in 1939 and signed up his first franchisee in 1952.
KFC restaurants across the world offer fried and non-fried chicken
products such as sandwiches, chicken strips, chicken-on-the-bone
and other chicken products marketed under a variety of names.

the restaurant

Taco Bell
(cid:129) The first Taco Bell restaurant was opened in 1962 by Glen Bell in
Downey, California, and in 1964, the first Taco Bell franchise was

2 YUM! BRANDS, INC. - 2021 Form 10-K

sold. Taco Bell specializes in Mexican-style food products,
including various types of
tacos, burritos, quesadillas, salads,
nachos and other related items.

Pizza Hut

(cid:129) The first Pizza Hut restaurant was opened in 1958 in Wichita,
Kansas, and within a year, the first franchise unit was opened.
is the largest restaurant chain in the world
Today, Pizza Hut
specializing in the sale of ready-to-eat pizza products. Pizza Hut
operates in the delivery, carryout and casual dining segments
around the world.

Habit Burger Grill

(cid:129) The first Habit Burger Grill restaurant opened in 1969 in Santa
Barbara, California. The Habit Burger Grill restaurant concept is
built around a distinctive and diverse menu that
includes
chargrilled burgers and sandwiches made-to-order over an open
flame and topped with fresh ingredients.

Business Strategy
Through our Recipe for Growth and Good we intend to unlock the
growth potential of our Concepts and YUM, drive increased
collaboration across our Concepts and geographies and consistently
deliver better customer experiences, improved unit economics and
higher rates of growth. Key enablers include accelerated use of
technology and better leverage of our systemwide scale.

Our Recipe for Growth is based on four key drivers:

(cid:129) Unrivaled Culture and Talent: Leverage our culture and people

capability to fuel brand performance and franchise success

(cid:129) Unmatched Operating Capability: Recruit and equip the best
restaurant operators in the world to deliver great customer
experiences

(cid:129) Relevant, Easy and Distinctive Brands: Innovate and elevate iconic

restaurant brands people trust and champion

(cid:129) Bold Restaurant Development: Drive market and franchise

expansion with strong economics and value

Our global citizenship and sustainability strategy, called the Recipe
for Good, reflects our priorities for socially responsible growth, risk
management and sustainable stewardship of our people, food and
planet.

Information about Operating Segments
As of December 31, 2021, YUM consists of
segments:

four operating

(cid:129) The KFC Division which includes our worldwide operations of the

KFC concept

(cid:129) The Taco Bell Division which includes our worldwide operations of

the Taco Bell concept

(cid:129) The Pizza Hut Division which includes our worldwide operations of

the Pizza Hut concept

(cid:129) The Habit Burger Grill Division which includes our worldwide

operations of the Habit Burger Grill concept

Franchise Agreements
The franchise programs of the Company are designed to promote
consistency and quality, and the Company is selective in granting
franchises. The Company is focused on partnering with franchisees
who have the commitment, capability and capitalization to grow our
Concepts. Franchisees can range in size from individuals owning just
one restaurant to large publicly-traded companies. The Company
has franchise relationships that are particularly important
to our
business, such as our relationships with Yum China (defined below),
and our strategic alliance with Food Delivery Brands Group, S.A.
(previously named Telepizza Group S.A.), who is the master
franchisee of Pizza Hut in Latin America (excluding Brazil) as well as
portions of Europe and our relationships with certain other large
franchisees.

PART I
ITEM 1. Business.

franchise

term, by reinvesting in the business.

franchisees with whom we have franchise contracts. The Company
utilizes both store-level franchise and master franchise programs to
grow our businesses. Of our over 52,000 franchised units at
December 31, 2021, approximately 30% operate under our master
franchise programs, including nearly 10,800 units in mainland China.
franchise units operate under store-level
The remainder of our
franchise agreements. Under both types of
franchise programs,
franchisees supply capital by purchasing or leasing the land, building,
equipment, signs, seating, inventories and supplies and, over the
longer
In certain historical
the Company may have retained
refranchising transactions
ownership of land and building and continues to lease them to the
franchisee. Store-level
require
payment to the Company of certain upfront fees such as initial fees
paid upon opening of a store, fees paid to renew the term of the
franchise agreement and fees paid in the event
the franchise
agreement is transferred to another franchisee. Franchisees also pay
monthly continuing fees based on a percentage of their restaurants’
sales (typically between 4% to 6%) and are required to spend a
certain amount to advertise and promote the brand. Under master
franchise arrangements, the Company enters into agreements that
franchisees to operate restaurants as well as
allow master
sub-franchise restaurants within certain geographic territories. Master
franchisees are typically responsible for overseeing development
within their territories and performing certain other administrative
duties with regard to the oversight of sub-franchisees. In exchange,
master franchisees retain a certain percentage of fees payable by the
sub-franchisees under their franchise agreements and typically pay
lower fees for the restaurants they operate.

agreements

typically

On October 31, 2016, we completed the spin-off of our China
business into an independent, publicly-traded company under the
name of Yum China Holdings, Inc. (“Yum China”). As our largest
master franchisee, Yum China, pays the Company a continuing fee
of 3% on system sales of our Concepts in mainland China. The use
by Yum China of certain of our material trademarks and service
marks is governed by a master license agreement between Yum
Restaurants Consulting (Shanghai) Company Limited (“YCCL”), a
wholly-owned indirect subsidiary of Yum China, and YUM, through
YRI China Franchising LLC, a subsidiary of YUM.

The Company seeks to maintain strong and open relationships with
our franchisees and their representatives. To this end, the Company
invests a significant amount of time working with the franchisee
community and their representative organizations on key aspects of
the
operational
improvements and standards.

equipment,

products,

business,

including

Restaurant Operations
Through its Concepts, YUM develops, operates and franchises a
worldwide system of both traditional and non-traditional Quick
Service Restaurants (“QSR”). Traditional units can feature dine-in,
carryout, drive-thru and delivery services. Non-traditional units
include express units that have a more limited menu, usually
generate lower sales volumes and operate in non-traditional locations
like malls, airports, gasoline service stations, train stations, subways,
convenience stores, stadiums, amusement parks and colleges,
where a full-scale traditional outlet would not be practical or efficient.

Most restaurants in each Concept offer consumers the ability to dine
in, carryout food and/or have the Concepts’ food delivered either
through store-level or third-party delivery services. In addition, Taco
Bell and KFC offer a drive-thru option in many stores. Pizza Hut and
Habit Burger Grill offer a drive-thru option on a much more limited
basis.

F
o
r
m
1
0
-
K

The Company has successfully increased franchise restaurant
ownership in recent years, and currently has approximately 1,500

Restaurant management structure varies by Concept and unit
is led by a restaurant general
size. Generally, each restaurant

YUM! BRANDS, INC. - 2021 Form 10-K 3

PART I
ITEM 1. Business.

and

local

facility

product

standards

preparation

procedures,

including food safety and quality,

manager (“RGM”), together with one or more assistant managers,
depending on the operating complexity and sales volume of the
restaurant. Each Concept issues detailed manuals, which may then
be customized to meet
regulations and customs. These
manuals set forth standards and requirements for all aspects of
food
restaurant operations,
equipment
handling
maintenance,
control
procedures. The restaurant management teams are responsible for
the day-to-day operation of each unit and for ensuring compliance
with operating standards. CHAMPS – which stands for Cleanliness,
Hospitality, Accuracy, Maintenance, Product Quality and Speed of
Service – is our proprietary systemwide program for
training,
measuring and rewarding employee performance against key
customer measures. CHAMPS is intended to align the operating
processes of our entire system around one core set of standards.
including CHAMPS performance measures, are
RGMs’ efforts,
monitored by Area Coaches, where sufficient scale allows. Area
Coaches typically work with approximately six to twelve restaurants.

accounting

and

K
-
0
1
m
r
o
F

Our restaurant operations and results were significantly impacted by
a novel strain of coronavirus, COVID-19, beginning in 2020 and
continuing into 2021. As COVID-19 spread throughout the U.S. and
the rest of
the world, governmental authorities implemented
measures to reduce the spread of COVID-19. These measures
include restrictions on travel outside the home and have other
limitations on business and other activities as well as encouraging
social distancing. As a result of COVID-19, we and our franchisees
have experienced significant store closures and instances of reduced
store-level operations, including reduced operating hours and dining-
room closures. We and our
franchisees have also experienced
interruptions of food and other supplies as well as labor shortages
that have impacted restaurant operations.

The impact on our sales in each of our markets has been dependent
on the timing, severity and duration of
the outbreak, measures
implemented by government authorities to reduce the spread of
COVID-19, as well as our reliance on dine-in sales in the market. In
response, we accelerated our deployment of digital and technology
initiatives to enhance the customer experience and our off-premise
capabilities. This included increasing our focus on driving digital sales
where customers utilize ordering interaction that is primarily facilitated
by automated technology. For our
restaurants that prominently
feature drive-thru, carryout and delivery options, COVID-19 has in
many cases contributed to an increase in sales during 2020 and
2021. In 2021, our system restaurants generated digital sales of
$22 billion, which represented an approximate 25% increase over
2020. Additionally, the number of restaurants that now offer delivery
increased to over 45,000 restaurants, which represents over 85% of
our global system, more than a 25% increase over 2020.

Supply and Distribution
the Concepts are substantial
The Company and franchisees of
purchasers of a number of food and paper products, equipment and
other restaurant supplies. The principal
items purchased include
chicken, cheese, beef and pork products, paper and packaging
materials. Prices paid for these supplies fluctuate. When prices
increase, the Concepts may attempt to pass on such increases to
their customers, although there is no assurance that this can be
done in practice. The Company does not
typically experience
significant continuous shortages of supplies, and alternative sources
for most of these supplies are generally available.

In the U.S., the Company, along with the representatives of the
Company’s KFC, Taco Bell and Pizza Hut franchisee groups, are
members of Restaurant Supply Chain Solutions, LLC (“RSCS”), a
third party which is responsible for purchasing certain restaurant
products and equipment. Additionally, The Habit Burger Grill entered

4 YUM! BRANDS, INC. - 2021 Form 10-K

into a purchasing agreement with RSCS effective July 31, 2020. The
core mission of RSCS is to provide the lowest possible sustainable
store-delivered prices for restaurant products and equipment. This
arrangement combines the purchasing power of
the Company-
owned and franchisee restaurants, which the Company believes
leverages the system’s scale to drive cost savings and effectiveness
in the purchasing function. The Company also believes that RSCS
fosters closer alignment of interests and a stronger relationship with
our franchisee community.

Most food products, paper and packaging supplies, and equipment
used in restaurant operations are distributed to individual restaurant
units by third-party distribution companies.
In the U.S., McLane
Foodservice, Inc. is the exclusive distributor for the majority of items
used in Company-owned restaurants and for a substantial number of
franchisee restaurants. Outside the U.S., we and our Concepts’
franchisees primarily use decentralized sourcing and distribution
systems involving many different global, regional and local suppliers
and distributors. Our international franchisees generally select and
manage their own third-party suppliers and distributors, subject to
our internal standards. All suppliers and distributors are expected to
provide products and/or services that comply with all applicable
laws, rules and regulations in the state and/or country in which they
operate as well as comply with our internal standards.

their

Advertising and Promotional Programs
Company-owned and franchise restaurants are required to spend a
respective restaurants’ sales on advertising
percentage of
programs with the goal of
increasing sales and enhancing the
reputation of the Concepts. Advertising may be conducted nationally,
regionally and locally. When multiple franchisees operate in the same
country or region, the national and regional advertising spending is
typically conducted by a cooperative to which the franchisees and
Company-owned restaurants,
if any, contribute funds as a
percentage of restaurants’ sales. The contributions are primarily used
to pay for expenses relating to purchasing media for advertising,
market research, commercial production, talent payments and other
support functions for the respective Concepts. We have the right to
control the advertising activities of certain advertising cooperatives,
typically in markets where we have Company-owned restaurants,
through our majority voting rights.

Trademarks and Patents
The Company and its Concepts own numerous registered
trademarks and service marks. The Company believes that many of
these marks, including our Kentucky Fried Chicken®, KFC®, Taco
Bell®, Pizza Hut® and The Habit® marks, have significant value and
importance to our business. The Company’s policy is to
material
pursue registration of
important marks whenever feasible and to
oppose vigorously any infringement of our marks.

The use of certain of
these marks by franchisees has been
authorized in our franchise agreements. Under current law and with
proper use, the Company’s rights in our marks can generally last
indefinitely. The Company also has certain patents on restaurant
equipment which, while valuable, are not currently considered
material to our business.

Working Capital
is included in
Information about
MD&A in Part II, Item 7 and the Consolidated Statements of Cash
Flows in Part II, Item 8.

the Company’s working capital

Seasonal Operations
The Company does not consider its operations to be seasonal to any
material degree.

restaurants but may differ among jurisdictions. The restaurants
to tariffs and regulations on
outside the U.S. are also subject
imported commodities and equipment,
laws regulating foreign
investment and anti-bribery and anti-corruption laws.

PART I
ITEM 1. Business.

restaurant

Competition
The retail food industry, in which our Concepts compete, is made up
of supermarkets, supercenters, warehouse stores, convenience
stores, coffee shops, snack bars, delicatessens and restaurants
(including those in the QSR segment), and is intensely competitive
with respect to price and quality of
food products, new product
development, digital engagement, advertising levels and promotional
initiatives, customer service reputation,
location and
attractiveness and maintenance of properties. Competition has also
increased from and been enabled by delivery aggregators and other
food delivery services in recent years, particularly in urbanized areas,
which trend has accelerated following the onset of the COVID-19
pandemic. Our Concepts also face competition as a result of
convergence in grocery, convenience, deli and restaurant services,
including the offering by the grocery industry of convenient meals,
including pizzas and entrees with side dishes. The retail food industry
is often affected by: changes in consumer tastes; national, regional
or local economic conditions; currency fluctuations; demographic
trends; traffic patterns; the type, number and location of competing
food
purchasing
food industry, each of our Concepts
power. Within the retail
competes with international, national and regional chains as well as
locally-owned establishments, not only for customers, but also for
management and hourly personnel, suitable real estate sites and
qualified franchisees. Given the various types and vast number of
competitors, our Concepts do not constitute a significant portion of
the retail food industry in terms of number of system units or system
sales, either on a worldwide or individual country basis.

disposable

products;

retailers

and

Environmental Matters
local
The Company is not aware of any federal, state or
regulations that will materially affect our
environmental
laws or
earnings or competitive position, or
in material capital
expenditures. However, the Company cannot predict the effect on
legislation or
our operations due to possible future environmental
regulations. During 2021, there were no material capital expenditures
for environmental control facilities and no such material expenditures
are anticipated.

result

Government Regulation
U.S. Operations. The Company and its U.S. operations, as well as
our franchisees, are subject to various federal, state and local
laws
affecting our business, including laws and regulations concerning
labor and employment, health,
information security, privacy,
marketing,
food labeling, competition, public accommodation,
sanitation and safety. Each of our and our Concepts’ franchisees’
restaurants in the U.S. must comply with licensing requirements and
regulations promulgated by a number of governmental authorities,
which include health, sanitation, safety, fire and zoning agencies in
the state and/or municipality in which the restaurant is located. In
addition, each Concept must comply with various state and federal
laws that regulate the franchisor/franchisee relationship. To date, the
Company has not been materially adversely affected by such
licensing requirements and regulations or by any difficulty, delay or
failure to obtain required licenses or approvals.

franchisees’
International Operations. Our and our Concepts’
restaurants outside the U.S. are subject to national and local
laws
and regulations which have similarities to those affecting U.S.

See Item 1A “Risk Factors” of this Form 10-K for a discussion of risks
relating to federal, state, local and international regulation of our
business.

Human Capital Management
Overview

the Company and its subsidiaries
As of December 31, 2021,
employed approximately 36,000 persons,
including approximately
23,000 employees in the U.S. and approximately 13,000 employees
outside the U.S. Approximately 90% and 85% of our U.S. and
international employees, respectively, work in restaurants while the
remainder work in our
In the U.S.,
approximately 90% of our Company-owned restaurant employees
are part-time and approximately 50% have been employed by the
Company for less than a year. Some of our International employees
are subject to labor council relationships whose terms vary due to
the diverse countries in which the Company operates.

restaurant-support centers.

In addition to the persons employed by the Company and its
subsidiaries, our approximately 52,000 franchise restaurants around
the world are responsible for the employment of over an estimated
1 million people who work in and support those restaurants. Each
year YUM and our franchisees around the world create thousands of
restaurant jobs, which are part-time, entry-level opportunities to grow
careers at our KFC, Taco Bell, Pizza Hut and The Habit Burger Grill
brands. As evidence of the opportunities these positions create,
approximately 80% of our Company-owned Restaurant General
Managers (“RGMs”) located in the U.S. have been promoted from
restaurants and such RGMs often earn
other positions in our
competitive pay greater
than the average American household
income.

Human capital management considerations are integral
to our
Recipe for Growth and Good strategy, the drivers of which include
leveraging our culture and people capability
to fuel brand
performance and franchise success, as well as recruiting and
equipping the best restaurant operators in the world to deliver great
customer experiences. Our investment in people includes creating a
culture of engagement that attracts, retains and grows the best
people and creates high performance in our restaurants. We are also
highly focused on building an inclusive culture among our employees,
franchisees, suppliers and partners to reflect the diversity of our
customers and communities. Our commitments and progress
towards executing this strategy are reflected below.

Culture & Talent

We believe that our culture and talent provide us with a competitive
advantage with respect to the performance of our business. Our
areas of focus in this regard include the following:

(cid:129) Measuring YUM employee engagement regularly. For example,
every other year we conduct a global employee engagement
survey of all employees working in our restaurant support centers.
The most recent survey conducted was in 2021 and reflected an
engagement level among our employees significantly exceeding
the average engagement levels of benchmarked companies.

(cid:129) Providing YUM employees with training and development

that
builds world-class leaders and drives business results. We
promote these efforts through initiatives such as our leadership
development program (Heartstyles), our unconscious bias program

YUM! BRANDS, INC. - 2021 Form 10-K 5

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PART I
ITEM 1A. Risk Factors.

(Inclusive Leadership) and training programs with respect to our
compliance polices,
including our Code of Conduct. Our
Heartstyles program is also available to our franchisees so that
their employees may benefit as well.

(cid:129) Enabling a culture that fuels results and cross-brand collaboration
on operational execution, people capability and customer
experience initiatives throughout our system.

(cid:129) Assessing progress towards lowering turnover and increasing

retention rates, particularly at the restaurant-employee level.

Equity, Inclusion & Belonging
In connection with our focus on equity, inclusion and belonging, our
areas of focus include the following:

(cid:129) Continually building upon ongoing inclusion efforts to help ensure
our workplaces are environments where all people can be
successful.

(cid:129) Significantly increasing the number of women in our senior
leadership globally, with a goal of achieving gender parity by 2030.
leadership roles were
In 2020, approximately 45% of our global

held by women and approximately 55% of our global above-
restaurant workforce were women.

(cid:129) Increasing representation of Black and Latinx U.S. associates
among our executive and management ranks, franchisees and
the next 10 years to match the combined
suppliers over
demographics of those groups within the U.S. We intend to further
this goal
through an increased focus on coaching capability,
sponsorship programs and customized individual development
plans. Moreover, we have joined We Are All Human’s Hispanic
Promise, a national pledge to hire, promote, retain and celebrate
Hispanics in the workplace. We also plan to enhance our
relationship with the Consortium for Graduate Studies in
Management, which brings outstanding underrepresented talent of
color and companies like YUM together to fill critical organizational
roles.

(cid:129) Continuing to roll out Inclusive Leadership training and anti-racism
training across our system. We intend to expand our Inclusive
Leadership training to employees and franchisees around the
world and have started development of an online module of this
training program to help provide even greater access.

Available Information

The Company makes available,
through the Investor Relations
section of its internet website at https://www.yum.com, its annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as
reasonably practicable after electronically filing such material with the
Securities
at
https://www.sec.gov.

Commission

Exchange

(“SEC”)

and

ITEM 1A. Risk Factors.

factors that could cause our actual

You should carefully review the risks described below as they identify
results to differ
important
materially from our forward-looking statements, expectations and
historical trends. Any of the following risk factors, either by itself or
together with other risk factors, could materially adversely affect our
business, results of operations, cash flows and/or financial condition.

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Risks Related to COVID-19, Food
Safety and Catastrophic Events
The novel coronavirus (COVID-19)
global pandemic has had, and may
continue to have, an adverse effect on
our business and results of operations.
Developments related to COVID-19, which was declared a global
pandemic by the World Health Organization in March 2020, have
adversely impacted, and may continue to adversely impact our
business and results of operations. The impacts of COVID-19 have
included the loss of revenues due to store closures, reduced store-
level operations,
full or partial dining room closures and other
restrictions on our business and operations. During 2021, the overall
adverse impact of COVID-19 on our operations was less significant

6 YUM! BRANDS, INC. - 2021 Form 10-K

Our Corporate Governance Principles and our Code of Conduct are
also located within the Investor Relations section of the Company’s
website. The references to the Company’s website address in this
Form 10-K do not constitute incorporation by reference of
the
information contained on the website and should not be considered
part of this Form 10-K. These documents, as well as our SEC filings,
are available in print free of charge to any shareholder who requests
a copy from our Investor Relations Department.

than in 2020, but we continued to see negative impacts as of the
end of 2021 due to COVID-19 outbreaks and resulting government
restrictions limiting mobility in certain parts of the world, primarily in
Asia.

Conversely, for our restaurants that prominently feature drive-thru,
carryout and delivery options, the pandemic has in many cases
contributed to an increase in sales since the onset of the pandemic.
If the impact of the pandemic continues to recede and the restaurant
industry in general returns to more normal operations, the benefits to
sales experienced by certain of our restaurants, including our Pizza
Hut delivery restaurants, could wane and our
results could be
negatively impacted.

We and our franchisees have made operational changes intended to
safeguard employees and customers in response to COVID-19,
which have included increased cleaning and sanitization, installation
of counter screens and the purchase of personal protective
equipment. These operational changes have increased and may
continue to increase restaurant operating costs and impact
restaurant-level margins and return on invested capital. Our and our
franchisees’ restaurants have also experienced, and may continue to
experience, interruptions of food and other supplies as well as labor
shortages. In addition, the COVID-19 pandemic has required and
may continue to require us to implement certain precautionary
measures, such as in relation to vaccinations,
testing and face
coverings, which could adversely impact our operations, employee

retention and satisfaction, and the willingness of customers to visit
our restaurants.

Our success is heavily reliant on our Concepts’ franchisees, and the
COVID-19 pandemic has caused and may continue to cause
financial distress for certain franchisees, particularly those located in
areas most significantly impacted by the COVID-19 pandemic. As a
result of this distress, certain of our franchisees have been unable to,
or in the future may be unable to, meet their financial obligations to
us as they come due, including the payment of royalties, rent, or
other amounts due to the Company. Additionally, certain of our
franchisees have been unable to, or in the future may be unable to
make payments to landlords, distributors and key suppliers, as well
as payments to service any debt
they may have outstanding.
Franchisee financial distress has also led to, and may continue to
lead to, permanent store closures and delayed or reduced new
franchisee development, which may further harm our results and
liquidity.

We are unable to fully predict the impact that COVID-19 will have on
our and our franchisees’ operations going forward due to various
uncertainties, including the severity and duration of the pandemic,
the timing, availability acceptance and effectiveness of medical
treatments and vaccines, the spread of potentially more contagious
and/or virulent forms of COVID-19, including variants that may be
more resistant to currently available vaccines and treatments, the
extent to which COVID-19 may cause customers to continue to be
reluctant to return to in-restaurant dining or otherwise change their
consumption patterns (including after the COVID-19 pandemic has
ended), actions that may be taken by governmental authorities, and
the extent
to which ongoing governmental restrictions in certain
regions will be lifted, and the ongoing impact of the pandemic on
economic conditions in the U.S. and globally. Moreover, if conditions
related to the COVID-19 pandemic result in significant disruptions to
capital and financial markets, or negatively impact our credit ratings,
our cost of borrowing, our ability to access capital on favorable terms
and our overall
liquidity and capital structure could be adversely
impacted.

Food safety and food- or beverage-
borne illness concerns may have an
adverse effect on our business.
Food-borne illnesses,
such as E. coli, Listeria, Salmonella,
Cyclospora and Trichinosis, and food safety issues, such as food
tampering, contamination (including with respect to allergens) and
adulteration or food- or beverage-borne illness, occur or may occur
within our system from time to time. Furthermore, due to the
COVID-19 pandemic, there are now stricter health regulations and
guidelines and increased public concern over food safety standards
and controls. Any report or publicity linking us or one of our
Concepts’ restaurants, or linking our competitors or the retail food
industry generally, to instances of food- or beverage-borne illness or
food safety issues, could adversely affect us and possibly lead to
product
investigations or
actions, and damages. Moreover, the reliance of our Concepts’
restaurants on third-party food suppliers and distributors and
increasing reliance on food delivery aggregators increases the risk
that food- or beverage-borne illness incidents and food safety issues
could be caused by factors outside of our direct control.
If a
customer of one of our Concepts’ restaurants becomes ill from food
or beverage-borne illnesses or as a result of
food safety issues,
restaurants in our system may be temporarily closed, which could
disrupt our operations and materially and adversely affect our
business. In addition, instances or allegations of food or beverage-

litigation, governmental

liability claims,

PART I
ITEM 1A. Risk Factors.

borne illness or food safety issues, real or perceived, involving our
restaurants,
restaurants of competitors, or our suppliers or
distributors (regardless of whether we use or have used those
suppliers or distributors), or otherwise involving the types of food
served at our restaurants, could result in negative publicity that could
adversely affect either our or our Concepts’ franchisees’ revenues
and profits. The occurrence of food or beverage-borne illnesses or
food safety issues could also adversely affect
the price and
availability of affected ingredients, which could result in disruptions in
our supply chain and/or lower margins for us and our Concepts’
franchisees.

Our business may be adversely
affected by catastrophic or unforeseen
events, such as future health epidemics
or pandemics, natural disasters, and
events that lead to avoidance of public
places or restrictions on public
gatherings.
Our business could be materially and adversely impacted by various
future occurrences (which may be beyond our control), including
future health epidemics or pandemics, natural disasters, geopolitical
events, terrorism, political,
instability, boycotts,
social or civil unrest, workplace violence, or other events that lead to
avoidance of public places or restrictions on public gatherings such
as in our and our Concepts’ restaurants. For example, the outbreak
of a widespread future health epidemic or pandemic, including an
outbreak arising from various strains of avian flu or swine flu, such as
H1N1, particularly if
located in regions from which we derive a
significant amount of revenue or profit could materially and adversely
affect our business.

financial or social

In addition, our operations could be disrupted if any of our
employees or employees of our business partners were suspected of
having the avian flu or swine flu, or other illnesses such as hepatitis A
or norovirus, since this could require us or our business partners to
quarantine some or all of such employees or disinfect our restaurant
facilities. Prior outbreaks of avian flu have resulted in confirmed
human cases and it is possible that outbreaks could reach pandemic
levels. Public concern over avian flu generally may cause fear about
the consumption of chicken, eggs and other products derived from
poultry, which could cause customers to consume less poultry and
related products, which would adversely affect us as the result of the
fact that poultry is a menu offering for our Concepts’ restaurants.
Avian flu outbreaks could also adversely affect
the price and
availability of poultry, which could negatively impact profit margins
and revenues for us and our Concepts’ franchisees.

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traffic or

restaurant guest

Furthermore, other viruses may be transmitted through human
contact, and the risk of contracting viruses could cause employees
or guests to avoid gathering in public places, which could adversely
affect
the ability to adequately staff
restaurants. We could also be adversely affected if government
authorities impose mandatory closures, seek voluntary closures,
impose restrictions on operations of restaurants, or restrict the import
or export of products, or if suppliers issue mass recalls of products.
Even if such measures are not implemented and a virus or other
disease does not spread significantly, the perceived risk of infection
or health risk may adversely affect our business and operating
results.

YUM! BRANDS, INC. - 2021 Form 10-K 7

PART I
ITEM 1A. Risk Factors.

Risks Related to our Business
Strategy and reliance upon
Franchisees
Our operating results and growth
strategies are closely tied to the
success of our Concepts’ franchisees.
The vast majority (98%) of our restaurants are operated by our
Concepts’ franchisees. Our refranchising efforts have increased our
dependence on the financial success and cooperation of our
Concepts’ franchisees. In addition, our long-term growth depends on
maintaining the pace of our net system unit growth rate through our
franchisees. We also rely on master franchisees, who
Concepts’
have rights to license to sub-franchisees the right to develop and
operate restaurants,
to achieve our expectations for new unit
development. If our Concepts’ franchisees and master franchisees
do not meet our expectations for new unit development, we may not
achieve our desired growth.

We have limited control over how our Concepts’
franchisees’
businesses are run, and their inability to operate successfully could
adversely affect our operating results through decreased fees paid to
us for royalties, advertising funds contributions, and other discrete
services we may provide to our Concept’s franchisees (e.g.
management of e-commerce platforms). Our control is further limited
in markets where we utilize master franchise arrangements, which
require us to rely on our master franchisees to monitor and enforce
sub-franchisee compliance with our operating standards.
If our
Concepts’ franchisees fail to adequately capitalize their businesses or
incur too much debt, if their operating expenses or commodity prices
increase or if economic or sales trends deteriorate such that they are
unable to operate profitably or repay existing debt, it could result in
their financial distress, including insolvency or bankruptcy, or the
inability to meet development targets or obligations. If a significant
franchisee of one of our Concepts becomes, or a significant number
of our Concepts’ franchisees in the aggregate become, financially
distressed (which has occurred with certain of our franchisees as the
result of the COVID-19 pandemic), our operating results could be
impacted through reduced or delayed fee payments that cause us to
record bad debt expense, reduced advertising fund contributions,
and reduced new unit development.

lease

including

restaurant

agreements,

In addition, we are secondarily liable on certain of our Concepts’
franchisees’
lease
agreements that we have guaranteed or assigned to franchisees in
connection with the refranchising of certain Company-owned
restaurants. Our operating results could be impacted by any
increased rent obligations for such leased properties to the extent
our Concepts’
In
addition, the failure of our Concepts’ franchisees to attract and retain
quality personnel or adequately engage in succession planning may
adversely affect their restaurant operations and the development of
new restaurants, which in turn could hurt our business.

franchisees default on such lease agreements.

Our success also depends on the willingness and ability of our
Concepts’ franchisees to implement marketing programs and major
initiatives such as restaurant remodels or equipment or technology
upgrades, which may
such
require financial
franchisees. Our Concepts may be unable to successfully implement
strategies that we believe are necessary for further growth if their
franchisees do not participate, which in turn may harm the growth
prospects and financial condition of the Company.

investment by

Additionally, the failure of our Concepts’ franchisees to focus on key
elements of restaurant operations, such as compliance with our
operating standards addressing quality, service and cleanliness (even

8 YUM! BRANDS, INC. - 2021 Form 10-K

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if such failures do not rise to the level of breaching the related
franchise documents), may be attributed by guests to our Concepts’
entire brand and could have a negative impact on our business.
Moreover, franchisee noncompliance with the terms and conditions
of our franchise agreements may reduce the overall goodwill of our
Concepts’ brands, whether through the failure to meet health and
safety standards (including with respect
to additional sanitation
in connection with the COVID-19
protocols and guidelines
pandemic),
control or maintain product
consistency, or through the participation in improper or objectionable
business practices.

in quality

engage

We have franchise relationships that are particularly important to our
business, such as our relationship with Yum China. In connection
with the spin-off of our China business in 2016 into an independent
publicly-traded company (the “Separation” or “Yum China spin-off”),
we entered into a Master License Agreement pursuant to which Yum
China is the exclusive licensee of the KFC, Taco Bell and Pizza Hut
Concepts and their related marks and other intellectual property
rights for
restaurant services in mainland China. Following the
Separation, Yum China became, and continues to be, our largest
franchisee. Our financial results are significantly affected by Yum
China’s results as we are entitled to receive a 3% sales-based royalty
on all Yum China system sales related to these Concepts.

franchise
In addition to Yum China, we have other significant
relationships on which our success is dependent,
including our
strategic alliance with Food Delivery Brands Group, S.A. (previously
(“Telepizza”)), which is the master
named Telepizza Group S.A.
franchisee of Pizza Hut
in Latin America (excluding Brazil) and
portions of Europe, and our relationship with certain other large
franchisees. Any failure to realize the expected benefits of such
franchise relationships may adversely impact our business and
operating results.

We may not achieve our target
development goals, including as the
result of the COVID-19 pandemic, and
new restaurants may not be profitable.
Our growth strategy depends on our and our Concepts’ franchisees’
ability to increase the number of restaurants around the world. The
successful development of new units depends in large part on the
ability of our Concepts’ franchisees to open new restaurants and to
operate these restaurants profitably. Effectively managing growth can
be challenging, particularly as we expand into new markets
internationally, and we cannot guarantee that we, or our Concepts’
franchisees,
including Yum China, will be able to achieve our
expansion goals or that new restaurants will be operated profitably,
consistent with results of existing restaurants or consistent with our
or our franchisees’ expectations. Other risks that could impact our
ability to increase the number of our restaurants include prevailing
economic conditions and trade or economic policies or sanctions,
our ability to attract new franchisees, construction and development
costs of new restaurants, and our, or our Concepts’ franchisees’,
ability to obtain suitable restaurant locations, negotiate acceptable
lease or purchase terms for the locations, access capital on favorable
terms, obtain required permits and approvals in a timely manner, hire
and train qualified management teams and restaurant crews, and
meet construction schedules.

Expansion into markets could also be affected by our Concepts’
franchisees’ willingness to invest capital or ability to obtain financing
to construct and open new restaurants. If it becomes more difficult or
more expensive for our Concepts’ franchisees to obtain financing to
the perceived return on invested
develop new restaurants, or if

is not sufficiently attractive,

the expected growth of our
capital
system could slow and our future revenues and operating cash flows
could be adversely impacted.

In addition, the development of new restaurants could impact the
sales of our Concepts’ existing restaurants nearby. There can be no
assurance that sales cannibalization will not occur or become more
significant in the future as we increase our presence in existing
markets.

We may not realize the anticipated
benefits from past or potential future
acquisitions, investments or other
strategic transactions.
From time to time we evaluate and may complete mergers,
acquisitions, divestitures,
joint ventures, strategic partnerships,
minority investments (which may include minority investments in third
parties, such as franchisees or master
franchisees) and other
including our acquisition of Dragontail
strategic transactions,
Systems Limited completed in September 2021, and our acquisition
of The Habit Restaurants, Inc. completed in March 2020.

Past and potential future strategic transactions may involve various
inherent risks, including, without limitation:

(cid:129) expenses, delays or difficulties in integrating acquired companies,
joint venture operations, strategic partnerships or investments into
our organization, including the failure to realize expected synergies
and/or the inability to retain key personnel;

(cid:129) diversion of management’s attention from other initiatives and/or
day-to-day operations to effectively execute our growth strategy;

(cid:129) inability to generate sufficient revenue, profit, and cash flow from
joint ventures, strategic partnerships or

acquired companies,
investments;

(cid:129) the possibility that we have acquired substantial contingent or
unanticipated liabilities in connection with acquisitions or other
strategic transactions; and

(cid:129) the possibility that

investments we have made may decline
significantly in value, which could lead to the potential impairment
of
the carrying value of goodwill associated with acquired
businesses.

Past and potential future strategic transactions may not ultimately
create value for us and may harm our reputation and materially
adversely affect our business,
financial condition and results of
operations. In addition, we account for certain investments, including
our investment in Devyani
International Limited (“Devyani”), on a
mark-to-market basis and, as a result, changes in the fair value of
these investments impact our reported results. Changes in market
prices for equity securities are unpredictable, and our investment in
Devyani has caused, and could continue to cause, fluctuations in our
results of operations.

PART I
ITEM 1A. Risk Factors.

financial and social

Risks Related to Operating a Global
Business
We have significant exposure to the
Chinese market through our largest
franchisee, Yum China, which subjects
us to risks that could negatively affect
our business.
A significant portion of our total business, particularly with respect to
our KFC Concept,
is conducted in mainland China through our
largest franchisee, Yum China. Yum China’s business is exposed to
risks in mainland China, which include, among others, potential
instability, changes in economic
political,
conditions (including consumer spending, unemployment levels and
wage and commodity inflation), consumer preferences, the regulatory
environment (including uncertainties with respect to the interpretation
and enforcement of Chinese laws, rules and regulations), food safety
related matters (including compliance with food safety regulations
and ability to ensure product quality and safety), and the effect of the
COVID-19 pandemic and related restrictions in China. Any significant
or prolonged deterioration in U.S.–China relations, including as the
result of current U.S.–China tensions, could adversely affect our
Concepts in mainland China. Chinese law regulates Yum China’s
business conducted within mainland China. Our royalty income from
the Yum China business is therefore subject
to numerous
uncertainties based on Chinese laws, regulations and policies, as
they may change from time to time. If Yum China’s business is
harmed or development of our Concepts’ restaurants is slowed in
mainland China due to any of these factors,
it could negatively
impact the royalty paid by Yum China to us, which would negatively
impact our financial results or our growth prospects.

In addition,

if we are unable to enforce our

Our relationship with Yum China is governed primarily by a Master
License Agreement, which may be terminated upon the occurrence
of certain events, such as the insolvency or bankruptcy of Yum
China.
intellectual
property or contract rights in mainland China, if Yum China is unable
the Master License
or unwilling to satisfy its obligations under
is otherwise
Agreement, or
terminated, it could result in an interruption in the operation of our
brands that have been exclusively licensed to Yum China for use in
mainland China. Such interruption could cause a delay in, or loss of,
royalty income to us, which would negatively impact our financial
results.

the Master License Agreement

Our international operations subject us
to risks that could negatively affect our
business.
A significant portion of our Concepts’ restaurants are operated in
countries and territories outside of the U.S., including in emerging
markets, and we intend to continue expansion of our international
operations. As a result, our business and the businesses of our
Concepts’ franchisees are increasingly exposed to risks inherent in
international operations. These risks, which can vary substantially by
country, include political, financial or social
instability or conditions,
geopolitical events, corruption, anti-American sentiment, social and
ethnic unrest, military conflicts and terrorism, as well as changes in
economic conditions (including consumer spending, unemployment
levels and wage and commodity inflation), the regulatory environment
(including the risks of operating in developing or emerging markets in
which there are uncertainties regarding the interpretation and

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such

enforceability of legal requirements and the enforceability of contract
rights and intellectual property rights),
income and non-income
based tax rates and laws. Additional risks include the impact of
import restrictions or controls, sanctions, foreign exchange control
regimes (including restrictions on currency conversion), health
guidelines and safety protocols related to the COVID-19 pandemic,
labor costs and conditions, compliance with the U.S. Foreign Corrupt
Practices Act, the UK Bribery Act and other similar applicable laws
prohibiting bribery of government officials and other corrupt
practices, consumer preferences and the laws and policies that
in countries where our Concepts’
govern foreign investment
restaurants are operated. For example, we have been subject to a
regulatory enforcement action in India alleging violation of
foreign
exchange laws for failure to satisfy conditions of certain operating
approvals,
and store build
as minimum investment
requirements as well as limitations on the remittance of fees outside
of the country (see Note 20). In addition, escalating tensions between
Russia and Ukraine and any potential military incursion of Russia into
Ukraine could adversely impact macroeconomic conditions, give rise
to regional
instability and result in heightened economic sanctions
from the U.S. and the international community in a manner that
adversely affects us and our Concepts’ restaurants located in Russia
and Eastern Europe, including to the extent that any such sanctions
restrict our ability in this region to conduct business with certain
suppliers or vendors, and/or
to utilize the banking system and
repatriate cash. We and our franchisees do business in jurisdictions
that may be subject to trade or economic sanction regimes and such
sanctions could be expanded. Any failure to comply with such
sanction regimes or other similar laws or regulations could result in
the assessment of damages, the imposition of penalties, suspension
of business licenses, or a cessation of operations at our or our
franchisees’ businesses, as well as damage to our and our
Concepts’ brands’ images and reputations.

Foreign currency risks and foreign
exchange controls could adversely
affect our financial results.
Our results of operations and the value of our foreign assets are
affected by fluctuations in currency exchange rates, which may
adversely affect reported earnings. More specifically, an increase in
the value of the U.S. dollar, relative to other currencies, such as the
Chinese Renminbi (“RMB”), Australian Dollar, the British Pound and
the Euro, as well as currencies in certain other markets, such as the
Malaysian Ringgit and Russian Ruble, could have an adverse effect
on our reported earnings. Any significant fluctuation in the value of
currencies of countries in which we or our franchisees operate, and
in particular RMB in China, could materially impact the U.S. dollar
value of royalty payments made to us, which could result in lower
revenues. In addition, fluctuations in the value of currencies in which
we or our franchisees operate could lead to increased costs and
lower profitability to us or our franchisees and/or cause us or our
franchisees to increase prices to customers, which could negatively
impact sales in these markets and harm our financial condition and
operating results. There can be no assurance as to the future effect
of any such changes on our results of operations, financial condition
the governments in certain countries
or cash flows.
where our Concepts operate, including China, restrict the conversion
of local currency into foreign currencies and, in certain cases, the
remittance of currency out of
the country. Restrictions on the
conversion of RMB to U.S. dollars or further restrictions on the
remittance of currency out of China could result in delays in the
remittance of Yum China’s royalty, which could impact our liquidity.

In addition,

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10 YUM! BRANDS, INC. - 2021 Form 10-K

Risks Related to Technology, Data
Privacy and Intellectual Property
Any cybersecurity incident, including
the failure to protect the integrity and
security of personal information of our
customers and employees, or the
introduction of malware or
ransomware, could materially affect
our business and result in substantial
costs, litigation, reputational harm and
a loss of consumer confidence.
financial and other
We receive and maintain certain personal,
information about our
and
vendors
franchisees. In addition, our vendors and/or franchisees receive and
maintain certain personal, financial and other information about our
vendors, employees and customers. The use and handling, including
security, of this information is regulated by evolving and increasingly
demanding laws and regulations in various jurisdictions, as well as by
certain third-party contracts and industry standards.

customers, employees,

We have experienced cyber-attacks and security breaches from time
to time. The number and frequency of these cyber-attacks and/or
security breaches varies but could be exacerbated by an increase in
the use of our digital commerce platforms. Furthermore,
the
significant increase in remote working as the result of the COVID-19
pandemic, which may continue following the pandemic, could
increase the risks of cyber incidents and the improper dissemination
of personal or confidential information. If our security and information
systems or
those of businesses with which we interact are
compromised as a result of data corruption or loss, a cyber-attack or
franchisees or
a network security incident, or if our employees,
vendors fail to comply with applicable laws and regulations or fail to
industry standards and this information is obtained by
meet
unauthorized persons or used inappropriately,
in
liabilities and penalties, damage our brands and reputation, cause
interruption of normal business performance, cause us to incur
substantial costs, result in a loss of consumer confidence and sales
and disrupt our supply chain, business and plans. Additionally, such
events could result
in the release to the public of confidential
information about our operations and could subject us to litigation
and government enforcement actions, the losses associated with
which may not be covered by insurance. Moreover, any significant
cybersecurity events could require us
to devote significant
management resources to address the problems created by such
events,
important business
strategies and initiatives, and cause us to incur additional
expenditures, which could be material, including to investigate such
events, remedy cybersecurity problems, recover lost data, prevent
future compromises and adapt systems and practices in response to
such events. There is no assurance that any remedial actions will
meaningfully limit
future attempts to breach our
information technology systems.

interfere with the pursuit of other

the success of

it could result

Further, the standards for systems currently used for transmission
and approval of electronic payment transactions, and the technology
utilized in electronic payment
transactions, all of which can put
electronic payment data at risk, are determined and controlled by the
payment card industry, not by us. If we or our franchisees fail to
adequately control fraudulent credit card and debit card transactions
to comply with the Payment Card Industry Data Security
or
Standards, we or our franchisees may face civil
liability, diminished
public perception of our security measures, fines and assessments

from the card brands, and significantly higher credit card and debit
card related costs, any of which could adversely affect our business,
financial condition and results of operations.

The failure to maintain satisfactory
compliance with data privacy and data
protection legal requirements may
adversely affect our business and
subject us to penalties.
Data privacy is subject to frequently changing rules and regulations,
which sometimes conflict among the various jurisdictions and
countries where we, our Concepts and our Concepts’ franchisees do
business. For example, we are subject to numerous global
laws
including the General Data Protection Regulation (“GDPR”) applicable
to the processing of personal data in the European Union, which was
adopted by the European Union effective May 2018 and requires
companies to meet new requirements regarding the handling of
personal data and is subject to changing requirements, each of
which could increase Company and franchisee resources necessary
to comply. In addition, the State of California enacted the California
Consumer Privacy Act (the “CCPA”), which became effective January
2020, requiring companies that process information on California
things, provide new disclosures and
residents to, among other
options to consumers about data collection, use and sharing
practices. Further,
to revision and
amendments,
including significant modifications made by the
California Privacy Rights Act (“CPRA”), under which the majority of
requirements will take effect January 1, 2023. The updates and
modifications to the CCPA, as well as requirements under the GDPR,
and other newly enacted and evolving legal
requirements, may
require us and our
franchisees to modify our data processing
practices and policies and to incur substantial costs and expenses to
comply. Moreover, each of the GDPR and the CCPA confer a private
right-of-action to certain individuals and associations, and the CPRA
will fund the creation of a regulatory body enforcing its provisions.

the CCPA has been subject

In addition, several other states have introduced data privacy
legislation which may impose varying standards and requirements on
our data collection, use and processing activities. The Federal Trade
Commission and many state attorneys general are also interpreting
federal and state consumer protection laws to impose standards for
the collection, use, dissemination and security of data. The Federal
Trade Commission will also pursue privacy as a dedicated
enforcement priority, with specialized attorneys seeking violation of
US privacy laws including unfair or deceptive practices relating to
privacy policies, consumer data collection and processing consent,
and digital advertising practices. Furthermore,
various other
international jurisdictions, where our Concepts have operations, have
significantly strengthened their data privacy laws,
rules and
regulations. New cross-border data transfer requirements will require
us to incur costs and expenses in order to comply and may impact
the transfer of personal data throughout our organization and to third
parties.

The increasingly restrictive and evolving regulatory environment at the
international, federal and state level related to data privacy and data
protection may require significant effort and cost, require changes to
our business practices and impact our ability to obtain and use data
used to provide a personalized experience for customers of our
Concepts’ restaurants. In addition, failure to comply with applicable
requirements may subject us and our franchisees to fines, sanctions,
governmental
liability, as
well as reputational harm.

investigation, lawsuits and other potential

PART I
ITEM 1A. Risk Factors.

Unreliable or inefficient restaurant or
consumer-facing technology or the
failure to successfully implement
technology initiatives in the future
could adversely impact operating
results and the overall consumer
experience.
We and our Concepts’
franchisees rely heavily on information
technology systems in the conduct of our business, some of which
are managed, hosted, provided and/or used by third parties,
including, for example, point-of-sale processing in our restaurants,
management of our supply chain, and various other processes and
procedures. These systems are subject to damage, interruption or
failure due to theft, fire, power outages, telecommunications failure,
security breaches, malicious cyber-attacks
computer
including the introduction of malware or
ransomware or other
disruptive behavior by hackers, or other catastrophic events. Certain
inefficient, and
technology systems may also be unreliable or
technology vendors may limit or terminate product support and
maintenance, which could impact the reliability of critical systems’
operations.
information
technology systems are damaged or fail to function properly, we may
incur substantial costs to repair or replace them, and may experience
loss of critical data and interruptions or delays in our ability to
manage inventories or process transactions, which could result in
lost sales, customer or employee dissatisfaction, or negative publicity
that could adversely impact our reputation, results of operations and
financial condition.

If our or our Concepts’

franchisees’

viruses,

the

restaurant

operations

and improve

We and our Concepts’ franchisees rely on technology not only to
efficiently operate our restaurants but also to drive the customer
experience, sales growth and margin improvement. Our continued
growth will be dependent on our initiatives to implement proprietary
and third-party technology solutions and gather and leverage data to
enhance
customer
experience. It may be difficult to recruit and retain qualified individuals
for these efforts due to intense competition for qualified technology
systems’ developers necessary to innovate, develop and implement
new technologies for our growth initiatives, including increasing our
digital
relationship with customers. Our strategic digital and
technology initiatives may not be implemented in a timely manner or
may not achieve the desired results. Even if we effectively implement
and manage our technology initiatives, there is no guarantee that this
in sales growth or margin improvement. Additionally,
will
developing and implementing the evolving technology demands of
the consumer may place a significant financial burden on us and our
franchisees may have
Concepts’
franchisees, and our Concepts’
differing views on investment priorities. Moreover, our
failure to
to technological
in new technology or adapt
adequately invest
advancements and industry trends, particularly with respect to digital
commerce capabilities, could result
in a loss of customers and
related market share. If our Concepts’ digital commerce platforms do
not meet customers’ expectations in terms of security, speed,
attractiveness or ease of use, customers may be less inclined to
return to such digital commerce platforms, which could negatively
impact our business.

result

We cannot predict the impact that alternative methods of delivery,
including autonomous vehicle delivery, or changes in consumer
behavior facilitated by these alternative methods of delivery will have
on our business. Advances in alternative methods of delivery,
including advances in digital ordering technology, or certain changes
in consumer behavior driven by these or other technologies and
methods of delivery could have a negative effect on our business and
technology and consumer offerings
market position. Moreover,

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that new or enhanced
continue to develop, and we expect
technologies and consumer offerings will be available in the future.
We may pursue certain of
those technologies and consumer
offerings if we believe they offer a sustainable customer proposition
and can be successfully integrated into our business model.
However, we cannot predict consumer acceptance of these delivery
channels or their impact on our business.

There are risks associated with our
increasing dependence on digital
commerce platforms to maintain and
grow sales.
Customers are increasingly using e-commerce websites and apps,
both domestically and internationally, such as kfc.com, tacobell.com,
pizzahut.com, habitburger.com, KFC, Taco Bell, Pizza Hut and The
Habit Burger Grill apps, and apps owned by third-party delivery
aggregators and third-party mobile payment processors, to order
the COVID-19
and pay for our Concepts’ products. Moreover,
pandemic has resulted in an increase in the use of store-level or
third-party delivery services by our Concepts. Many restaurants in
each of our Concepts now offer consumers the ability to have the
Concept’s food delivered through third-party delivery services. As a
result, our Concepts and our Concepts’ franchisees are increasingly
reliant on digital ordering and payment as a sales channel and our
business could be negatively impacted if we are unable to
successfully implement, execute or maintain our consumer-facing
digital initiatives, such as curbside pick-up and mobile carryout. If the
third-party aggregators that we utilize for delivery,
including
their
marketplace and delivery as a service, cease or curtail
operations, fail to maintain sufficient labor force to satisfy demand,
materially change fees, access or visibility to our products or give
greater priority or promotions on their platforms to our competitors,
our business may be negatively impacted. These digital ordering and
payment platforms also could be damaged or interrupted by power
loss, technological failures, user errors, cyber-attacks, other forms of
sabotage, inclement weather or natural disasters. The digital ordering
platforms
relied upon by our Concepts have experienced
interruptions and could experience further interruptions, which could
limit or delay customers’ ability to order through such platforms or
make customers less inclined to return to such platforms. The rapid
acceleration in growth of digital sales has placed additional stress on
those platforms that are more reliant upon legacy technology, such
as certain platforms used by Pizza Hut, which may result in more
frequent and potentially more severe interruptions. Moreover, our
reliance on multiple digital commerce platforms to support our global
footprint, multiple Concepts and highly franchised business model
could increase our vulnerability to cyber-attacks and/or security
breaches and could necessitate additional expenditures as we
endeavor to consolidate and standardize such platforms.

largest

Yum China, our
franchisee, utilizes third-party mobile
payment apps such as Alipay and WeChat Pay as a means through
which to generate sales and process payments. Should customers
become unable to access mobile payment apps in China, should the
relationship between Yum China and one or more third-party mobile
payment processors become interrupted, or should Yum China’s
ability to use WeChat Pay, Alipay or other third-party mobile payment
apps in its operations be restricted, its business could be materially
and adversely affected, which could have a negative impact on the
royalty paid to us.

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Our inability or failure to recognize,
respond to and effectively manage the
increased impact of social media could
adversely impact our business.
In recent years, there has been a marked increase in the use of social
media platforms,
including blogs, chat platforms, social media
websites, and other forms of Internet-based communications which
allow individuals access to a broad audience of consumers and other
interested persons. The rising popularity of social media and other
consumer-oriented technologies has increased the speed and
accessibility of information dissemination and given users the ability
to more effectively organize collective actions such as boycotts and
other brand-damaging behaviors. Many social media platforms
immediately publish the content their subscribers and participants
post, often without filters or checks on accuracy of the content
posted. Information posted on such platforms at any time may be
adverse to our interests and/or may be inaccurate. The dissemination
of information online could harm our business, reputation, financial
condition, and results of operations, regardless of the information’s
accuracy. The damage may be immediate without affording us an
opportunity for redress or correction.

resources.

In addition,

In addition, social media is frequently used by our Concepts to
communicate with their
respective customers and the public in
general. Failure by our Concepts to use social media effectively or
appropriately, particularly as compared to our Concepts’ respective
competitors, could lead to a decline in brand value, customer visits
and revenue. Social media is also increasingly used to compel
companies to express public positions on issues and topics not
related to their core business, which could prove
directly
controversial or divisive to consumers and result in lost sales or a
misallocation of
laws and regulations,
including Federal Trade Commission enforcement, are rapidly
evolving to govern social media platforms and communications. A
failure of us, our employees, our franchisees or third parties acting at
our direction to abide by applicable laws and regulations in the use of
social media could adversely impact our Concepts’ brands, our
reputation and our business, or subject us or our franchisees to fines
or other penalties. Other risks associated with the use of social
media include improper disclosure of proprietary information,
negative comments about our Concepts’ brands, exposure of
personally identifiable information,
fraud, hoaxes or malicious
dissemination of false information. The inappropriate use of social
media by our customers or employees could increase our costs, lead
to litigation or result in negative publicity that could damage our
reputation and adversely affect our results of operations.

Failure to protect our trademarks or
other intellectual property could harm
our Concepts’ brands and overall
business.
We regard our registered trademarks (e.g., Yum®, KFC®, Taco Bell®,
Pizza Hut® and The Habit®) and unregistered trademarks, and other
trademarks related to our restaurant businesses, as having significant
value and being important to our marketing efforts. Our trademarks,
many of which are registered in the U.S. and foreign jurisdictions,
create brand awareness and help build goodwill among our
customers.

We rely on a combination of legal protections provided by trademark
registrations, contracts, copyrights, patents and common law rights,
such as unfair competition, passing off and trade secret laws to
infringement.
protect our

intellectual property

from potential

However, from time to time we become aware of other persons or
companies using names and marks that are identical or confusingly
similar to our brands’ names and marks. Although our policy is to
oppose infringements and other unauthorized uses of marks similar
or identical to our brands’ marks, certain or unknown unauthorized
uses or other misappropriation of our trademarks could diminish the
value of our Concepts’ brands and adversely affect our business and
goodwill.

In addition, effective intellectual property protection may not be
available in every country in which our Concepts have, or may in the
future open or franchise, a restaurant and the laws of some foreign
countries do not protect intellectual property rights to the same
extent as the laws of the U.S. There can be no assurance that the
steps we have taken to protect our intellectual property or the legal
protections that may be available will be adequate or that our
franchisees will maintain the quality of the goods and services offered
under our brands’ trademarks or always act in accordance with
guidelines we set for maintaining our brands’ intellectual property
rights and defending or enforcing our
trademarks and other
intellectual property could result
in the expenditure of significant
resources or result in significant harm to our business, reputation,
financial condition and results of operations.

recipes, or

Our brands may also be targets of infringement claims that could
interfere with the use of certain names or trademarks and/or the
proprietary know-how,
trade secrets used in our
business. Defending against such claims is costly, and as a result of
defending such claims, we may be prohibited from using such
proprietary information in the future or forced to pay damages,
royalties, or other fees for using such proprietary information, any of
which could negatively affect our business,
financial
condition, and results of operations.

reputation,

Risks Related to Our Supply Chain
and Employment
Shortages or interruptions in the
availability and delivery of food,
equipment and other supplies may
increase costs or reduce revenues.
The products sold or used by our Concepts and their franchisees are
sourced from a wide variety of domestic and international suppliers
although certain products and equipment have limited suppliers,
which increases our reliance on those suppliers. We, along with our
Concepts’
franchisees, are also dependent upon third parties to
make frequent deliveries of food products, equipment and supplies
that meet our specifications at competitive prices. Shortages or
interruptions in the supply of
food items, equipment and other
supplies to our Concepts’ restaurants have happened from time to
time and could reduce sales, harm our Concepts’ reputations and
delay the planned openings of new restaurants by us and our
Concepts’ franchisees. We are experiencing and have experienced
certain supply chain disruptions resulting from, among other things,
capacity, transportation, staffing, operational and COVID-19 related
challenges, which have and may continue to adversely affect our
business and results of operations. Future shortages or disruptions
could be caused by the factors noted above as well as factors such
as natural disasters, health epidemics and pandemics (including the
COVID-19 pandemic), social unrest, the impacts of climate change,
inaccurate forecasting of customer demand, problems in production
or distribution, restrictions on imports or exports including due to
trade disputes or restrictions, the inability of vendors to obtain credit,
instability in the countries in which the suppliers and
political
instability of suppliers and
distributors are located,

the financial

PART I
ITEM 1A. Risk Factors.

distributors, suppliers’ or distributors’ failure to meet our standards or
requirements, transitioning to new suppliers or distributors, product
quality issues or recalls, inflation, food safety warnings or advisories,
the cancellation of supply or distribution agreements or an inability to
renew such arrangements or to find replacements on commercially
reasonable terms.

In addition, in the U.S., the Company and the Company’s KFC, Taco
Bell and Pizza Hut franchisee groups are members of Restaurant
Supply Chain Solutions, LLC (“RSCS”), which is a third party
responsible
for purchasing certain restaurant products and
equipment. The Habit Burger Grill entered into a purchasing
agreement with RSCS in 2020. McLane Foodservice, Inc. (“McLane”)
serves as the largest distributor for the Company’s KFC, Taco Bell
and Pizza Hut Concepts in the U.S. Any failure or inability of our
significant suppliers or distributors, including RSCS or McLane to
meet their respective service requirements, could result in shortages
or interruptions in the availability of food and other supplies.

The loss of key personnel, labor
shortages or difficulty finding qualified
employees could slow our growth,
harm our business and reduce our
profitability.
Much of our future success depends on the continued availability
and service of senior management personnel. The loss of any of our
executive officers or other key senior management personnel could
harm our business.

In addition, our restaurant operations are highly service-oriented and
our success depends in part upon our and our Concepts’
franchisees’ ability to attract, retain and motivate a sufficient number
of qualified employees, including franchisee management, restaurant
for qualified
managers and other crew members. The market
employees in the retail food industry is very competitive. Our and our
franchisees are experiencing and may continue to
Concepts’
experience a shortage of
labor for positions in our restaurants,
including due to the current competitive labor market and concerns
around COVID-19.

Inability to recruit and retain a sufficient number of qualified
individuals may result in reduced operating hours or service levels,
delay our planned use, development or deployment of technology or
impact the planned openings of new restaurants by us and our
Concepts’ franchisees which could have a material adverse impact
on the operation of our Concepts’ existing restaurants. In addition,
strikes, work slowdown or other labor unrest may become more
common. In the event of a strike, work slowdown or other labor
unrest, the ability to adequately staff our Concepts’ restaurants could
be impaired, which could result in reduced revenue and customer
claims, and may distract our management from focusing on our
business and strategic priorities.

Changes in labor and other operating
costs could adversely affect our and
our franchisees’ results of operations.
An increase in the costs of employee wages, benefits and insurance
liability, property and
(including workers’ compensation, general
health) as well as other operating costs such as rent and energy
costs could adversely affect our and our franchisees’ operating
results. In particular, labor shortages and the current competitive
labor market have increased competition for qualified employees,

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ITEM 1A. Risk Factors.

to pay higher wages to attract or

which has compelled, and may continue to compel, us and our
franchisees,
retain qualified
employees (including franchisee management, restaurant managers
and other crew members). Such increases in costs may result from
general economic or competitive conditions or from government
imposition of higher minimum wages at the federal, state or local
level, including in connection with the increases in state minimum
wages that have recently been enacted by various states and (if
ultimately enacted) the potential
increase in the federal minimum
wage in the U.S. proposed by the current presidential administration.
Moreover, there may be a long-term trend toward higher wages in
developing markets. Any increase in such operating expenses could
adversely affect our and our Concepts’ franchisees’ profit margins.

large quantities of

(including potatoes

An increase in food prices may have an
adverse impact on our and our
Concepts’ franchisees’ profit margins.
Our and our Concepts’ franchisees’ businesses depend on reliable
raw materials such as proteins
sources of
(including poultry, pork, beef and seafood), cheese, oil, flour and
vegetables
and lettuce). Raw materials
purchased for use in our Concepts’ restaurants are subject to price
volatility caused by any fluctuation in aggregate supply and demand,
or other external conditions, such as weather and climate conditions,
energy costs or natural events or disasters that affect expected
harvests of such raw materials, taxes and tariffs (including as a result
of trade disputes),
labor
shortages, transportation issues, fuel costs, food safety concerns,
product recalls, governmental regulation and other factors, all of
which are beyond our control and in many instances are
unpredictable. We have recently experienced and may continue to
experience, an increase in the price of various raw materials
purchased by us as well as increased volatility in such prices, which
have and may continue to adversely affect our results of operations.
We cannot assure that we or our Concepts’ franchisees will continue
to be able to purchase raw materials at reasonable prices, or that the
cost of raw materials will remain stable in the future. In addition, a
significant increase in gasoline prices could result in the imposition of
fuel surcharges by our distributors.

industry demand, inflationary conditions,

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Because we and our Concepts’ franchisees provide competitively
priced food, we may not have the ability to pass through to our
customers the full amount of any commodity price increases. If we
and our Concepts’ franchisees are unable to manage the cost of raw
materials or to increase the prices of products proportionately, our
and our franchisees’ profit margins and return on invested capital
may be adversely impacted, which could impact our ability to meet
our new unit development targets.

Risks Related to our Concepts’
Brands and Reputation
Our success depends substantially on
our corporate reputation and on the
value and perception of our brands.
Our success depends in large part upon our ability and our
Concepts’ franchisees’ ability to maintain and enhance our corporate
reputation and the value and perception of our brands. Brand value
is based in part on consumer perceptions on a variety of subjective
qualities. Those perceptions are affected by a variety of
factors,
including the nutritional content and preparation of our food, the
food safety, and our business practices,
ingredients we use,

14 YUM! BRANDS, INC. - 2021 Form 10-K

and

social

evolve

and may

environmental

relative to available alternatives.

in which we source
to the manner
including with respect
commodities
sustainability
and
considerations. Consumer acceptance of our offerings is subject to
change for a variety of reasons, and some changes can occur
rapidly. For example, nutritional, health and other scientific studies
have
constantly
and conclusions, which
contradictory implications, drive popular opinion,
litigation and
regulation (including initiatives intended to drive consumer behavior)
in ways that may affect perceptions of our Concepts’ brands
generally or
the
restaurant industry globally has been subject to scrutiny and claims
the menus and practices of restaurant chains have led to
that
customer health issues, such as weight gain and other adverse
effects. Publicity about these matters (particularly directed at the
quick service and fast-casual segments of the retail food industry)
may harm our Concepts’
reputations and adversely affect our
business. Moreover, this scrutiny could lead to an increase in the
regulation of the content or marketing of our products, including
legislation or regulation seeking to tax and/or regulate high-fat foods,
foods with high sugar and salt content, or foods otherwise deemed
to be “unhealthy,” which could in turn increase costs of compliance
and remediation to us and our franchisees.

In addition,

reduce brand value

investigations. For example,

In addition, business or other incidents, whether isolated or recurring,
and whether originating from us, our Concepts’
restaurants,
franchisees, competitors, governments, suppliers or distributors, can
significantly
and consumer perception,
particularly if the incidents receive considerable publicity or result in
litigation or
the reputation of our
Concepts’ brands could be damaged by claims or perceptions about
the quality or safety of our products or the quality or reputation of our
suppliers, distributors or franchisees or by claims or perceptions that
we, founders of our Concepts, our Concepts’ franchisees or other
business partners have acted or are acting in an unethical, illegal,
racially-biased or socially irresponsible manner or are not fostering an
inclusive and diverse environment,
to the
service and treatment of customers at our Concepts’ restaurants,
and our or our franchisees’ treatment of employees, regardless of
whether such claims or perceptions are true. Our corporate
reputation could also suffer from negative publicity or consumer
sentiment regarding Company action or brand imagery, misconduct
by any of our or our franchisees’ employees, or a real or perceived
failure of corporate governance. Any such developments could cause
a decline directly or indirectly in consumer confidence in, or the
perception of, our Concepts’ brands and/or our products and reduce
consumer demand for our products, which would likely result in
lower revenues and profits.

including with respect

We cannot guarantee that franchisees or other third parties with
licenses to use our intellectual property will not take actions that may
harm the value of our intellectual property. Franchisee use of our
Concepts’ trademarks are governed through franchise agreements
and we monitor use of our trademarks by both franchisees and third
parties, but franchisees or other third parties may refer to or make
statements about our Concepts’ brands that do not make proper
use of our trademarks or required designations, that improperly alter
trademarks or branding, or that are critical of our Concepts’ brands
or place our Concepts’ brands in a context that may tarnish their
reputation. Moreover, unauthorized third parties,
including our
Concepts’ current and former franchisees, may use our intellectual
property to trade on the goodwill of our Concepts’ brands, resulting
in consumer confusion or brand dilution.

Our ability to reach consumers and drive results is heavily influenced
by brand marketing and advertising and our ability to adapt
to
evolving consumer preferences, including developing and launching
new and innovative products and offerings. Our marketing and
advertising programs may not be as successful, or may not be as
successful as our competitors, and thus, may adversely affect our
business and the strength of our brand.

public

authorities,

and U.S.

foreign
social

We may be adversely affected by
climate change and other social and
environmental sustainability matters,
including if we are unable to meet
goals and commitments that we
establish in relation to such matters.
There has been an increased focus, including from investors, the
and
and
general
governmental
and
nongovernmental
environmental
on
sustainability matters,
to climate change,
including with respect
greenhouse gases, packaging and waste, human rights, sustainable
supply chain practices, animal health and welfare, deforestation and
land, energy and water use. As the result of this heightened focus,
including from governmental and nongovernmental authorities, and
our commitment to social and environmental sustainability matters,
we may provide expanded disclosure, establish or expand goals,
commitments or targets, and take actions to meet such goals,
commitments and targets. Our ability to meet such goals,
commitments and targets is subject to risks and uncertainties, many
of which are outside of our control. If we are not effective, or are not
perceived to be effective, in addressing social and environmental
sustainability matters or meeting such goals, commitments and
targets, consumer trust in our brands may suffer. Moreover, these
matters and our efforts to address them could expose us to market,
operational, reputational and execution costs or risks.

We could also be affected by the physical effects of climate change,
and other environmental issues, to the extent such issues adversely
affect the general economy, adversely impact our supply chain or
food and other supplies needed for our
increase the costs of
operations. In addition, future U.S. and international
legislative and
regulatory efforts to combat climate change or other environmental
considerations could result in increased regulation, and additional
taxes and other expenses, in a manner that adversely affects our
business.

Risks Related to Government
Regulation and Litigation
We may be subject to litigation that
could adversely affect us by increasing
our expenses, diverting management
attention or subjecting us to significant
monetary damages and other
remedies.

tax,

foreign exchange,

We are regularly involved in legal proceedings, which include
regulatory claims or disputes by claimants such as franchisees,
suppliers, employees, customers, governments and others related to
franchise, contractual or
operational,
employment issues. These claims or disputes may relate to personal
injury, franchisees’ employment, real estate related, environmental,
tort, intellectual property, breach of contract, data privacy, securities,
derivative and other litigation matters. See the discussion of legal
proceedings in Note 20 to the Consolidated Financial Statements
included in Item 8 of this Form 10-K. Plaintiffs often seek recovery of
very large or indeterminate amounts, and lawsuits are subject to
inherent uncertainties (some of which are beyond the Company’s
control). Unfavorable rulings or developments may also occur in
cases we are not involved in. Moreover, regardless of whether any

PART I
ITEM 1A. Risk Factors.

such lawsuits have merit, or whether we are ultimately held liable or
settle, such litigation may be expensive to defend, may divert
resources and management attention away from our operations, and
may negatively impact our results of operations. With respect to
insured claims, a judgment for monetary damages in excess of any
insurance coverage could adversely affect our financial condition or
results of operations. Any adverse publicity resulting from these
allegations may also adversely affect our Concepts’ reputations,
which in turn could adversely affect our results of operations.

Changes in, or noncompliance with,
governmental regulations may
adversely affect our business
operations, growth prospects or
financial condition.

The Company, and our Concepts and their franchisees, are subject
to numerous laws and regulations around the world. These laws and
regulations change regularly and are increasingly complex. For
example, we are subject to:

(cid:129) The Americans with Disabilities Act in the U.S. and similar laws that
provide protection to individuals with disabilities in the context of
employment, public accommodations and other areas.

(cid:129) The U.S. Fair Labor Standards Act as well as a variety of similar
laws, which govern matters such as minimum wages, and
overtime, and the U.S. Family and Medical Leave Act as well as a
variety of similar laws which provide protected leave rights to
employees.

(cid:129) Employment

laws related to workplace health and safety,
non-discrimination, non-harassment, whistleblower protections,
and other terms and conditions of employment.

(cid:129) Laws and regulations in government-mandated health care
benefits such as the Patient Protection and Affordable Care Act in
the U.S.

(cid:129) Laws and regulations relating to nutritional content, nutritional
labeling, product safety, product marketing and menu labeling.

(cid:129) Laws relating to state and local licensing.

(cid:129) Laws relating to the relationship between franchisors and

franchisees.

(cid:129) Laws and regulations relating to health, sanitation, food, workplace
safety, child labor, including laws regulating the use of certain
“hazardous equipment”, building and zoning, and fire safety and
prevention.

(cid:129) Laws and regulations relating to union organizing rights and

activities.

(cid:129) Laws relating to information security, privacy (including the
European Union’s GDPR and California’s CCPA and CPRA),
cashless payments, and consumer protection.

(cid:129) Laws relating to currency conversion or exchange.

(cid:129) Laws relating to international trade and sanctions.

(cid:129) Tax laws and regulations.

(cid:129) Anti-bribery and anti-corruption laws, including the U.S. Foreign

Corrupt Practices Act and the UK Bribery Act.

(cid:129) Environmental

laws and regulations,

including with respect

climate change and greenhouse gas emissions.

(cid:129) Federal and state immigration laws and regulations in the U.S.

YUM! BRANDS, INC. - 2021 Form 10-K 15

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PART I
ITEM 1A. Risk Factors.

(cid:129) Regulations, health guidelines and safety protocols related to the

COVID-19 pandemic.

In addition,
if any governmental authority were to adopt and
implement a broader standard for determining when two or more
otherwise unrelated employers may be found to be a joint employer
of the same employees under laws such as the National Labor
Relations Act
in a manner that is applied generally to franchise
relationships (which broader standards in the past have been
adopted by U.S. governmental agencies such as the National Labor
Relations Board), this could cause us or our Concepts to be liable or
held responsible for unfair labor practices and other violations and
could subject our Concepts to other liabilities, and/or require our
Concepts to conduct collective bargaining negotiations, regarding
employees of totally separate, independent employers, most notably
our Concepts’ franchisees. Further, a California law enacted in 2019
to be used when
adopted an employment classification test
determining employee or
independent contractor status which
establishes a high threshold to obtain independent contractor status.
Moreover, other labor related laws enacted at the federal, state or
local
level could increase our and our franchisees’ labor costs and
decrease profitability or could cause employees of our franchisees to
be deemed employees of our Concepts.

required

licenses,

Any failure or alleged failure to comply with applicable laws or
regulations or related standards or guidelines could adversely affect
our reputation, international expansion efforts, growth prospects and
financial results or result in, among other things, litigation, revocation
of
governmental
investigations or proceedings, administrative enforcement actions,
liability. Publicity relating to any such
fines and civil and criminal
noncompliance could also harm our Concepts’
reputations and
In addition, the compliance costs
adversely affect our revenues.
associated with complying with new or existing legal requirements
could be substantial.

investigations,

internal

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Tax matters, including changes in tax
rates or laws, disagreements with
taxing authorities, imposition of new
taxes and our restructurings could
impact our results of operations and
financial condition.
We are subject to income taxes as well as non-income based taxes,
such as payroll, sales, use, value-added, net worth, property,
withholding and franchise taxes in both the U.S. and various foreign
jurisdictions. Our accruals for
tax liabilities are based on past
experience, interpretations of applicable law, and judgments about
potential actions by tax authorities, but such accruals require
in
significant
payments greater than the amounts accrued. If the Internal Revenue
Service (“IRS”) or another taxing authority disagrees with our tax
positions, we could face additional tax liabilities, including interest
and penalties, which could be material. In addition, public perception
that we are not paying a sufficient amount of taxes could damage
our Concepts’ reputations, which could harm our profitability. For
example, as disclosed in Note 20, as a result of an audit by the IRS
for
fiscal years 2013 through 2015, on October 13, 2021, we
received a Notice of Proposed Adjustment from the IRS for the 2014
fiscal year relating to a series of reorganizations we undertook during
in connection with the business realignment of our
that year
corporate and management reporting structure along brand lines.
While we disagree with the position of the IRS and intend to contest
it vigorously, an unfavorable resolution of this matter could have a
material, adverse impact on our Consolidated Financial Statements in
future periods.

judgment which may be incorrect and may result

16 YUM! BRANDS, INC. - 2021 Form 10-K

In addition, changes in laws, regulation or interpretation of existing
laws and regulations in the U.S. and other jurisdictions where we are
subject to taxation,
including potential changes in U.S. tax laws
supported by the current U.S. presidential administration, could
increase our taxes and have an adverse effect on our results of
operations and financial condition. For example, in January 2022, the
U.S. Treasury published new regulations impacting foreign tax credit
utilization beginning in the Company’s 2022 tax year. These
regulations make foreign taxes paid to certain countries no longer
creditable in the U.S. While our determination of which foreign taxes
that will no longer be creditable is not yet complete, we anticipate
that these regulations are likely to result in additional tax due in the
U.S. in future years. See Note 21 for further discussion. Moreover, if
significant jurisdictions in which we or our Concepts operate enact
tax legislation, modify tax treaties and/or increase audit scrutiny
based on the Action on Base Erosion and Profit Shifting guidance of
the Organisation for Economic Co-operation and Development, it
could increase our taxes and have a material adverse impact on our
results of operations and financial position. In addition, we have in
the past and may in the future adapt our entity and operating
structure in response to and in compliance with changes in tax laws,
regulations, or interpretation of existing laws and regulations. Such
tax costs
restructurings could result
associated with restructuring transactions or operations of
the
structure.

in material

incremental

Risks Related to the Yum China
Spin-Off
The Yum China spin-off and certain
related transactions could result in
substantial U.S. tax liability.
We received opinions of outside counsel substantially to the effect
income tax purposes, the Yum China spin-off
that, for U.S. federal
and certain related transactions qualified as generally tax-free under
Sections 355 and 361 of the U.S.
Internal Revenue Code. The
opinions relied on various facts and assumptions, as well as certain
representations as to factual matters and undertakings (including
with respect to future conduct) made by Yum China and us. If any of
these facts, assumptions,
representations or undertakings are
incorrect or not satisfied, we may not be able to rely on these
opinions of outside counsel. Accordingly, notwithstanding receipt of
the opinions of outside counsel, the conclusions reached in the tax
opinions may be challenged by the IRS. Because the opinions are
not binding on the IRS or the courts, there can be no assurance that
the IRS or the courts will not prevail in any such challenge.

the Yum China spin-off was taxable,

If, notwithstanding receipt of any opinion, the IRS were to conclude
that
in general, we would
recognize taxable gain as if we had sold the Yum China common
stock in a taxable sale for its fair market value. In addition, each U.S.
holder of our Common Stock who received shares of Yum China
common stock in connection with the spin-off transaction would
generally be treated as having received a taxable distribution of
property in an amount equal to the fair market value of the shares of
Yum China common stock received. That distribution would be
taxable to each such U.S. stockholder as a dividend to the extent of
our current and accumulated earnings and profits. For each such
U.S. stockholder, any amount that exceeded our earnings and profits
would be treated first as a non-taxable return of capital to the extent
of such stockholder’s tax basis in our shares of Common Stock with
any remaining amount being taxed as a capital gain.

The Yum China spin-off may be subject
to China indirect transfer tax.
the Chinese State Tax Administration (“STA”)
In February 2015,
issued the Bulletin on Several
Issues of Enterprise Income Tax on
Income Arising from Indirect Transfers of Property by Non-resident
Enterprises (“Bulletin 7”). Pursuant to Bulletin 7, an “indirect transfer”
of Chinese taxable assets,
including equity interests in a China
resident enterprise (“Chinese interests”), by a non-resident enterprise,
may be recharacterized and treated as a direct transfer of Chinese
if such arrangement does not have reasonable
taxable assets,
commercial purpose and the transferor has avoided payment of
Chinese enterprise income tax. Using general anti-tax avoidance
provisions, the STA may treat an indirect transfer as a direct transfer
of Chinese interests if the transfer has avoided Chinese tax by way of
an arrangement without reasonable commercial purpose. As a result,
gains derived from such indirect transfer may be subject to Chinese
enterprise income tax, and the transferee or other person who is
obligated to pay for the transfer would be obligated to withhold the
applicable taxes, currently at a rate of up to 10% of the capital gain in
the case of an indirect transfer of equity interests in a China resident
enterprise.

We evaluated the potential applicability of Bulletin 7 in connection
with the Separation in the form of a tax free restructuring and
continue to believe it is more likely than not that Bulletin 7 does not
apply and that the restructuring had reasonable commercial purpose.

are

there

significant uncertainties

However,
regarding what
constitutes a reasonable commercial purpose, how the safe harbor
provisions for group restructurings are to be interpreted and how the
Chinese tax authorities will ultimately view the spin-off. As a result,
our position could be challenged by the Chinese tax authorities
resulting in a tax at a rate of 10% assessed on the difference
between the fair market value and the tax basis of Yum China. As our
tax basis in Yum China was minimal, the amount of such a tax could
be significant and have a material adverse effect on our results of
operations and our financial condition.

Risks Related to Consumer
Discretionary Spending and
Macroeconomic Conditions
Our business may be adversely
impacted by changes in consumer
discretionary spending and economic
conditions in the U.S. and international
markets.
As a restaurant company dependent upon consumer discretionary
spending, we (and our franchisees) are sensitive to changes in or
uncertainty regarding macroeconomic conditions in the U.S. and in
other regions of
the world where our Concepts and Concepts’
franchisees operate. Some of the factors that impact discretionary
consumer spending include unemployment and underemployment
rates, fluctuations in the level of disposable income, the price of
gasoline, other inflationary pressures, stock market performance and
changes in the level of consumer confidence. These and other
macroeconomic factors could have an adverse effect on our or our
franchisees’ sales, profitability or development plans, which could
harm our financial condition and operating results. In this regard, we
and our franchisees have been adversely impacted by, and may
continue to be adversely impacted by, ongoing macroeconomic
challenges in the U.S. and other regions of the world where our

PART I
ITEM 1A. Risk Factors.

Concepts and Concepts’ franchisees operate arising in connection
with the COVID-19 pandemic, including recent labor, commodity and
other inflationary pressures, supply chain disruptions, and impacts
arising from governmental restrictions implemented in certain regions
to mitigate
negative
macroeconomic conditions or other adverse developments with
respect to our businesses may result in future asset impairment
charges, such as the goodwill
impairment charge we incurred with
respect to The Habit Burger Grill reporting unit in the first quarter of
2020.

pandemic.

addition,

against

the

service,

Risks Related to Competition
The retail food industry is highly
competitive.
Our Concepts’ restaurants compete with international, national and
regional restaurant chains as well as locally-owned restaurants, and
the retail
food industry in which our Concepts operate is highly
competitive with respect to price and quality of food products, new
product development, digital engagement, advertising levels and
promotional initiatives (including the frequent use by our competitors
of price discounting, such as through value meal menu options,
coupons and other methods), customer
reputation,
restaurant location, attractiveness and maintenance of properties,
management and hourly personnel and qualified franchisees.
if we are unable to successfully respond to changing
Moreover,
if our marketing efforts and/or
consumer or dietary preferences,
launch of new products are unsuccessful, or
if our Concepts’
restaurants are unable to compete successfully with other retail food
franchisees’
outlets in new and existing markets, our and our
businesses could be adversely affected. In addition, the COVID-19
pandemic has also resulted in a disruption of consumer routines, the
implementation of employer “work-from-home” policies,
reduced
business and recreational travel and changes in consumer behavior,
and it is difficult to fully assess the impacts of such developments on
us or our Concepts, or the extent to which any such consumer
patterns may continue after the COVID-19 pandemic has ended. We
also face growing competition as a result of convergence in grocery,
convenience, deli and restaurant services, including the offering by
including pizzas and
the grocery industry of convenient meals,
entrees with side dishes. Competition from delivery aggregators and
other food delivery services has increased in recent years, particularly
in urbanized areas, and this trend, which has accelerated following
the onset of the COVID-19 pandemic, is expected to continue to
increase. Finally, not all of our competitors may seek to establish
environmental or sustainability goals at a comparable level to ours,
which could result in lower supply chain or operating costs for our
competitors. Increased competition could have an adverse effect on
our business or development plans.

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YUM! BRANDS, INC. - 2021 Form 10-K 17

PART I

Risks Related to Our Indebtedness
Our substantial indebtedness makes us
more sensitive to adverse economic
conditions, may limit our ability to plan
for or respond to significant changes in
our business, and requires a significant
amount of cash to service our debt
payment obligations that we may be
unable to generate or obtain.
As of December 31, 2021, our
total outstanding short-term
borrowings and long-term debt was approximately $11.3 billion.
Subject to the limits contained in the agreements governing our
outstanding indebtedness, we may incur additional debt from time to
time, which would increase the risks related to our high level of
indebtedness.

Specifically, our high level of
potential consequences, including, but not limited to:

indebtedness could have important

(cid:129) increasing our vulnerability to, and reducing our flexibility to plan for
and respond to, adverse economic and industry conditions and
changes in our business and the competitive environment,
including developments arising from the COVID-19 pandemic;

(cid:129) requiring the dedication of a substantial portion of our cash flow
from operations to the payment of principal of, and interest on,
indebtedness, thereby reducing the availability of such cash flow to
fund working capital, capital expenditures, acquisitions, dividends,
share repurchases or other corporate purposes;

(cid:129) increasing our vulnerability to a downgrade of our credit rating,
which could adversely affect our cost of funds, liquidity and access
to capital markets;

(cid:129) restricting us from making strategic acquisitions or causing us to

make non-strategic divestitures;

(cid:129) placing us at a disadvantage compared to other less leveraged
competitors or competitors with comparable debt at more
favorable interest rates;

(cid:129) increasing our exposure to the risk of

increased interest rates
insofar as current and future borrowings are subject to variable
rates of interest;

(cid:129) increasing our exposure to the risk of discontinuance, replacement
or modification of certain reference rates, including as the result of
the upcoming discontinuance of LIBOR, which are used to
calculate applicable interest rates of our indebtedness and certain
derivative instruments that hedge interest rate risk;

(cid:129) making it more difficult for us to repay, refinance or satisfy our

obligations with respect to our debt;

(cid:129) limiting our ability to borrow additional

funds in the future and

increasing the cost of any such borrowing;

(cid:129) imposing restrictive covenants on our operations as the result of
the terms of our indebtedness, which, if not complied with, could
result in an event of default, which in turn, if not cured or waived,
could result in the acceleration of the applicable debt, and may
result in the acceleration of any other debt to which a cross-
acceleration or cross-default provision applies; and

(cid:129) increasing our exposure to risks related to fluctuations in foreign
currency as we earn profits in a variety of currencies around the
world and our debt is primarily denominated in U.S. dollars.

If our business does not generate sufficient cash flow from
operations or if future debt or equity financings are not available to us
on acceptable terms in amounts sufficient to pay our indebtedness
or to fund other liquidity needs, our financial condition and results of
operations may be adversely affected. As a result, we may need to
refinance all or a portion of our indebtedness on or before maturity.
There is no assurance that we will be able to refinance any of our
indebtedness on favorable terms, or at all. Any inability to generate
sufficient cash flow or refinance our indebtedness on favorable terms
could have a material adverse effect on our business and financial
condition.

ITEM 1B. Unresolved Staff Comments.

The Company has received no written comments regarding its periodic or current reports from the staff of the Securities and Exchange
Commission that were issued 180 days or more preceding the end of its 2021 fiscal year and that remain unresolved.

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ITEM 2. Properties.

As of year end 2021, the Company’s Concepts owned land, building
or both for 325 restaurants worldwide in connection with the
operation of our 1,051 Company-owned restaurants. These
restaurants are further detailed as follows:

Company-owned restaurants in the U.S. with leases are generally
leased for initial terms of 10 to 20 years and generally have renewal
options. Company-owned restaurants outside the U.S. with leases
have initial lease terms and renewal options that vary by country.

(cid:129) The KFC Division owned land, building or both for 70 restaurants.

(cid:129) The Taco Bell Division owned land, building or both for 253

restaurants.

(cid:129) The Pizza Hut Division owned land, building or both for 2

restaurants.

The Company currently also owns land, building or both related to
approximately 500 franchise restaurants that it leases to franchisees
and leases land, building or both related to approximately 300
franchise restaurants that it subleases to franchisees, principally in
the U.S., United Kingdom, Australia and Germany.

The KFC Division and Pizza Hut Division corporate headquarters and
a KFC and Pizza Hut research facility in Plano, Texas are owned by
Pizza Hut. Taco Bell Division leases its corporate headquarters and
research facility in Irvine, California. The YUM corporate headquarters
and a KFC research facility in Louisville, Kentucky are owned by
KFC. The Habit Burger Grill Division leases
its corporate
headquarters in Irvine, California. Additional
information about the
Company’s properties is included in the Consolidated Financial
Statements in Part II, Item 8.

The Company believes that
its properties are generally in good
operating condition and are suitable for the purposes for which they
are being used.

18 YUM! BRANDS, INC. - 2021 Form 10-K

ITEM 3. Legal Proceedings.

PART I

The Company is subject to various lawsuits covering a variety of
allegations. The Company believes that the ultimate liability, if any, in
excess of amounts already provided for
these matters in the
Consolidated Financial Statements, is not likely to have a material
adverse effect on the Company’s annual
results of operations,
financial condition or cash flows. Matters faced by the Company
include, but are not limited to, claims from franchisees, suppliers,
related to
employees,
operational,
franchise, contractual or
employment issues as well as claims that the Company has infringed

customers, governments
tax,
foreign exchange,

and others

on third-party intellectual property rights. In addition, the Company
brings claims from time-to-time relating to infringement of, or
challenges to, our intellectual property, including registered marks.
Finally, as a publicly-traded company, disputes arise from
time-to-time with our shareholders,
including allegations that the
Company breached federal securities laws or that officers and/or
directors breached fiduciary duties. Descriptions of significant current
specific claims and contingencies appear in Note 20, Contingencies,
to the Consolidated Financial Statements included in Part II, Item 8,
which is incorporated by reference into this item.

ITEM 4. Mine Safety Disclosures.

Not applicable.

Executive Officers of the Registrant.

The executive officers of the Company as of February 22, 2022, and
their ages and current positions as of that date are as follows:

David Gibbs, 58, is Chief Executive Officer of YUM a position he has
held since January 2020. Prior to that, he served as President and
Chief Operating Officer from August 2019 to December 2019, as
President, Chief Financial Officer and Chief Operating Officer from
January 2019 to August 2019 and as President and Chief Financial
Officer from May 2016 to December 2018. Prior to these positions,
he served as Chief Executive Officer of Pizza Hut Division from
January 2015 to April 2016. From January 2014 to December 2014,
Mr. Gibbs served as President of Pizza Hut U.S. Prior to this position,
Mr. Gibbs served as President and Chief Financial Officer of Yum!
Restaurants International,
from May 2012 through
December 2013. Mr. Gibbs served as Chief Financial Officer of YRI
from January 2011 to April 2012. He was Chief Financial Officer of
Pizza Hut U.S. from September 2005 to December 2010.

(“YRI”)

Inc.

Scott Catlett, 45, is Chief Legal and Franchise Officer and Corporate
Secretary of YUM. He has served in this position since July 2020.
Prior to that, he served as General Counsel and Corporate Secretary
of YUM from July 2018 to June 2020 and he served as Vice
President and Deputy General Counsel of YUM from November 2015
to June 2018. From September 2007 to October 2015 Mr. Catlett
held various YUM positions including Vice President & Associate
General Counsel.

Mark King, 62, is Chief Executive Officer of Taco Bell Division, a
position he has held since August 2019. Before joining YUM,
Mr. King served as President, adidas Group North America from
June 2014 to June 2018 and as Chief Executive Officer of
TaylorMade-adidas Golf from 2003 to 2014.

Aaron Powell, 50, is Chief Executive Officer of Pizza Hut Division, a
position he has held since September 2021. Before joining YUM,
Mr. Powell served in various positions at Kimberly-Clark from
September 2007 to August 2021. Prior to joining Kimberly-Clark, he
served in various positions at Bain & Company and Proctor &
Gamble.

David Russell, 52, is Senior Vice President, Finance and Corporate
Controller of YUM. He has served as YUM’s Corporate Controller
since February 2011 and as Senior Vice President, Finance since

February 2017. Prior to serving as Corporate Controller, Mr. Russell
in the YUM
served in various positions at the Vice President level
Finance Department, including Controller-Designate from November
2010 to February 2011 and Vice President, Assistant Controller from
January 2008 to December 2010.

Sabir Sami, 54, is Chief Executive Officer of KFC Division, a position
he has held since January 2022. From January 2020 to December
2021 he served in a dual role as KFC Division Chief Operating Officer
and Managing Director of KFC Asia. Prior to this, from April 2013 to
December 2019, he was Managing Director for the KFC Middle East,
North Africa, Pakistan and Turkey markets. Before joining YUM in
2009, Mr. Sami served in various leadership roles at Procter &
Gamble, the Coca-Cola Company and Reckitt Benckiser.

Tracy Skeans, 49,
is Chief Operating Officer and Chief People
Officer of YUM. She has served as Chief Operating Officer since
January 2021 and Chief People Officer since January 2016. She also
served as Chief Transformation Officer from November 2016 to
December 2020. From January 2015 to December 2015, she was
President of Pizza Hut International. Prior to this position, Ms. Skeans
served as Chief People Officer of Pizza Hut Division from December
2013 to December 2014 and Chief People Officer of Pizza Hut U.S.
from October 2011 to November 2013. From July 2009 to
September 2011, she served as Director of Human Resources for
Pizza Hut U.S and was on the Pizza Hut U.S. Finance team from
September 2000 to June 2009.

Christopher Turner, 47, is Chief Financial Officer of YUM, a position
he has held since August 2019. Before joining YUM, he served as
Senior Vice President and General Manager in PepsiCo’s retail and
e-commerce businesses with Walmart in the U.S. and more than 25
countries and across PepsiCo’s brands from December 2017 to July
2019. Prior to leading PepsiCo’s Walmart business, he served in
various positions including Senior Vice President of Transformation
for PepsiCo’s Frito-Lay North America business from July 2017 to
December 2017 and Senior Vice President of Strategy for Frito-Lay
from February 2016 to June 2017. Prior to joining PepsiCo, he was a
partner in the Dallas office of McKinsey & Company, a strategic
management consulting firm.

Executive officers are elected by and serve at the discretion of the
Board of Directors.

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YUM! BRANDS, INC. - 2021 Form 10-K 19

PART II

ITEM 5. Market for the Registrant’s Common

Stock, Related Stockholder Matters and
Issuer Purchases of Equity Securities.

Market Information and Dividend Policy

The Company’s Common Stock trades under the symbol YUM and is listed on the New York Stock Exchange (“NYSE”).

As of February 15, 2022, there were 37,439 registered holders of record of the Company’s Common Stock.

In 2021, the Company declared and paid four cash dividends of $0.50 per share. In February 2022, the Board of Directors declared a dividend
of $0.57 per share to be distributed March 11, 2022 to shareholders of record at the close of business on February 18, 2022. Future decisions
to pay cash dividends continue to be at the discretion of the Board of Directors and will be dependent on our operating performance, financial
condition, capital expenditure requirements and other factors that the Board of Directors considers relevant.

Issuer Purchases of Equity Securities

The following table provides information as of December 31, 2021, with respect to shares of Common Stock repurchased by the Company
during the quarter then ended.

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Fiscal Periods

10/1/21 – 10/31/21

11/1/21 – 11/30/21

12/1/21 – 12/31/21

Total

Total number
of shares
purchased
(thousands)

Average price
paid per share

Total number of shares purchased as
part of publicly announced plans or
programs (thousands)

Approximate dollar value of shares
that may yet be purchased under
the plans or programs (millions)

1,303

2,177

2,153

5,633

$ 124.89

$ 126.00

$ 131.22

$ 127.74

1,303

2,177

2,153

5,633

$ 1,507

$ 1,233

950

In May 2021, our Board of Directors authorized share repurchases from July 1, 2021 through December 31, 2022 of up to $2 billion (excluding
applicable transaction fees) of our outstanding Common Stock. As of December 31, 2021, we have remaining capacity to repurchase up to
$950 million of Common Stock under this authorization.

20 YUM! BRANDS, INC. - 2021 Form 10-K

PART II

Stock Performance Graph

This graph compares the cumulative total return of our Common Stock to the cumulative total return of the S&P 500 Index and the S&P 500
Consumer Discretionary Sector Index, a peer group that includes YUM, for the period from December 30, 2016 to December 31, 2021. The
graph assumes that the value of the investment in our Common Stock and each index was $100 at December 30, 2016, and that all cash
dividends were reinvested.

In $

300.00

250.00

200.00

150.00

100.00

50.00

2016

YUM

2017

2018

2019

2020

2021

S&P 500

S&P 500 Consumer Discretionary

YUM

S&P 500

S&P Consumer Discretionary

Source of total return data: Bloomberg

12/30/2016

12/29/2017

12/31/2018

12/31/2019

12/30/2020

12/31/2021

$ 100

$ 131

$ 122

$ 123

$ 150

$ 116

$ 124

$ 167

$ 153

$ 159

$ 184

$ 181

$ 211

$ 239

$ 233

$ 263

ITEM 6.

[Reserved]

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YUM! BRANDS, INC. - 2021 Form 10-K 21

PART II

ITEM 7. Management’s Discussion and Analysis

of Financial Condition and Results of
Operations.

Introduction and Overview

The following Management’s Discussion and Analysis (“MD&A”),
should be read in conjunction with the Consolidated Financial
Statements (“Financial Statements”)
in Item 8 and the Forward-
Looking Statements and the Risk Factors set forth in Item 1A. All
Note references herein refer to the Notes to the Financial Statements.
Tabular amounts are displayed in millions of U.S. dollars except per
share and unit count amounts, or as otherwise specifically identified.
Percentages may not recompute due to rounding.

Yum! Brands, Inc. and its subsidiaries (collectively referred to herein
as the “Company”, “YUM”, “we”, “us” or “our”) franchise or operate a
system of over 53,000 restaurants in 157 countries and territories,
primarily under the concepts of KFC, Taco Bell, Pizza Hut and The
Habit Burger Grill (collectively, the “Concepts”). The Company’s KFC,
leaders of the chicken,
Taco Bell and Pizza Hut brands are global
Mexican-style and pizza food categories, respectively. The Habit
Burger Grill, a concept we acquired in March 2020, is a fast-casual
restaurant concept specializing in made-to-order chargrilled burgers,
sandwiches and more. Of the over 53,000 restaurants, 98% are
operated by franchisees.

As of December 31, 2021, YUM consists of four operating segments:

(cid:129) The KFC Division which includes our worldwide operations of the

KFC concept

(cid:129) The Taco Bell Division which includes our worldwide operations of

the Taco Bell concept

(cid:129) The Pizza Hut Division which includes our worldwide operations of

the Pizza Hut concept

(cid:129) The Habit Burger Grill Division which includes our worldwide

operations of the Habit Burger Grill concept

Through our Recipe for Growth and Good we intend to unlock the
growth potential of our Concepts and YUM, drive increased
collaboration across our Concepts and geographies and consistently
deliver better customer experiences, improved unit economics and
higher rates of growth. Key enablers include accelerated use of
technology and better leverage of our systemwide scale.

Our Recipe for Growth is based on four key drivers:

(cid:129) Unrivaled Culture and Talent: Leverage our culture and people

capability to fuel brand performance and franchise success

(cid:129) Unmatched Operating Capability: Recruit and equip the best
restaurant operators in the world to deliver great customer
experiences

(cid:129) Relevant, Easy and Distinctive Brands: Innovate and elevate iconic

restaurant brands people trust and champion

(cid:129) Bold Restaurant Development: Drive market and franchise

expansion with strong economics and value

22 YUM! BRANDS, INC. - 2021 Form 10-K

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We intend to drive long-term growth and shareholder
returns
primarily through consistent same-store sales growth and new unit
development across all of our Concepts. We intend to support this
growth and development through a capital and operating structure
that:

(cid:129) Targets a capital structure of ~5.0x Earnings Before Interest,
Taxes, Depreciation and Amortization (“EBITDA”) consolidated net
leverage;

(cid:129) Invests capital

in a manner consistent with an asset

light,

franchisor model;

(cid:129) Allocates G&A in an efficient manner that provides leverage to
operating profit growth while at the same time opportunistically
investing in strategic growth initiatives; and

(cid:129) Pays a competitive dividend and returns excess cash to

shareholders through share repurchases.

in understanding our

We intend for this MD&A to provide the reader with information that
including
will assist
performance metrics that management uses to assess the
Company’s performance. Throughout
this MD&A, we commonly
discuss the following performance metrics:

results of operations,

(cid:129) Same-store sales growth is the estimated percentage change in
system sales of all restaurants that have been open and in the
YUM system for one year or more (except as noted below),
including those temporarily closed. From time-to-time restaurants
may be temporarily closed due to remodeling or
image
enhancement, rebuilding, natural disasters, health epidemic or
pandemic, landlord disputes or other issues. Throughout 2020 and
2021 we have had a significant number of restaurants that were
temporarily closed including restaurants closed due to government
and landlord restrictions as a result of COVID-19. The system
sales of restaurants we deem temporarily closed remain in our
base for purposes of determining same-store sales growth and the
restaurants remain in our unit count (see below). We believe same-
store sales growth is useful to investors because our results are
heavily dependent on the results of our Concepts’ existing store
base. Additionally, same-store sales growth is reflective of the
strength of our Brands, the effectiveness of our operational and
advertising initiatives and local economic and consumer trends. In
2021 and 2020, when calculating respective same-store sales
growth we also included in our prior year base the sales of stores
that were added as a result of our acquisition of The Habit
Restaurants, Inc. on March 18, 2020, and that were open for one
year or more. In 2019, when calculating same-store sales growth
we also included in our prior year base the sales of stores that
were added as a result of the Food Delivery Brands Group, S.A.
(previously named Telepizza Group S.A.
(“Telepizza”)) strategic
alliance in December 2018 and that were open for one year or
more. See additional discussion of the acquisition of The Habit
Restaurants, Inc. and Telepizza strategic alliance within this MD&A.

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(cid:129) Gross unit openings reflects new openings by us and our
franchisees. Net new unit growth reflects gross unit openings
offset by permanent store closures, by us and our franchisees. To
determine whether a restaurant meets the definition of a unit we
consider factors such as whether the restaurant has operations
that are ongoing and independent from another YUM unit, serves
the primary product of one of our Concepts, operates under a
separate franchise agreement (if operated by a franchisee) and has
substantial and sustainable sales. We believe gross unit openings
and net new unit growth are useful
to investors because we
depend on new units for a significant portion of our growth.
Additionally, gross unit openings and net new unit growth are
generally reflective of
the economic returns to us and our
franchisees from opening and operating our Concept restaurants.

(cid:129) System sales, System sales excluding the impacts of

the results of all

foreign
currency translation (“FX”), and System sales excluding FX and the
impact of the 53rd week in 2019 for our U.S. subsidiaries and
certain international subsidiaries that operate on a weekly period
calendar. System sales reflect
restaurants
regardless of ownership, including Company-owned and franchise
restaurants. Sales at
franchise restaurants typically generate
ongoing franchise and license fees for the Company at a rate of
3% to 6% of sales. Increasingly, customers are paying a fee to a
third party to deliver or facilitate the ordering of our Concepts’
products. We also include in System sales any portion of the
amount customers pay these third parties for which the third party
is obligated to pay us a license fee as a percentage of such
amount. Franchise restaurant sales and fees paid by customers to
third parties to deliver or facilitate the ordering of our Concepts’
products are not included in Company sales on the Consolidated
Statements of
Income; however, any resulting franchise and
license fees we receive are included in the Company’s revenues.
We believe System sales growth is useful
to investors as a
significant indicator of the overall strength of our business as it
incorporates our primary revenue drivers, Company and franchise
same-store sales as well as net unit growth.

In addition to the results provided in accordance with Generally
Accepted Accounting Principles in the United States of America
(“GAAP”),
non-GAAP
measurements.

the Company provides

following

the

(cid:129) Diluted Earnings Per Share excluding Special

Items (as defined

below);

(cid:129) Effective Tax Rate excluding Special Items;

(cid:129) Core Operating Profit and Core Operating Profit excluding the
impact of the 53rd week in 2019. Core Operating Profit excludes
Special
Items and FX and we use Core Operating Profit for the
purposes of evaluating performance internally;

(cid:129) Company restaurant profit and Company restaurant margin as a

percentage of sales (as defined below).

These non-GAAP measurements are not intended to replace the
results in accordance with GAAP.
presentation of our
these
the presentation of
Rather,
non-GAAP measurements provide additional information to investors
to facilitate the comparison of past and present operations.

the Company believes that

financial

Special Items are not included in any of our Division segment results
as the Company does not believe they are indicative of our ongoing
operations due to their size and/or nature. Our chief operating
decision maker does not consider the impact of Special Items when
assessing segment performance.

Company restaurant profit
is defined as Company sales less
Company restaurant expenses, both of which appear on the face of
Income. Company restaurant
our Consolidated Statements of
expenses include those expenses incurred directly by our Company-
owned restaurants in generating Company sales, including cost of
food and paper, cost of restaurant-level labor, rent, depreciation and
amortization of
restaurant-level assets and advertising expenses
incurred by and on behalf of that Company restaurant. Company
restaurant margin as a percentage of sales (“Company restaurant
margin %”)
is defined as Company restaurant profit divided by
Company sales. We use Company restaurant profit for the purposes
of
internally evaluating the performance of our Company-owned
restaurants and we believe Company restaurant profit provides useful
information to investors as to the profitability of our Company-owned
restaurants. In calculating Company restaurant profit, the Company
excludes revenues and expenses directly associated with our
franchise operations as well as non-restaurant-level costs included in
General and administrative expenses, some of which may support
Company-owned restaurant operations. The Company also excludes
impairment and closures expenses, which
restaurant-level asset
have historically not been significant,
from the determination of
Company restaurant profit as such expenses are not believed to be
indicative of ongoing operations. Company restaurant profit and
Company restaurant margin % as presented may not be comparable
to other similarly titled measures of other companies in the industry.

Certain performance metrics and non-GAAP measurements are
presented excluding the impact of FX. These amounts are derived by
translating current year results at prior year average exchange rates.
We believe the elimination of
the FX impact provides better
year-to-year comparability without the distortion of foreign currency
fluctuations.

For 2019 we provided Core Operating Profit excluding the impact of
the 53rd week and System sales excluding FX and the impact of the
53rd week to further enhance the comparability given the 53rd week
that was part of our fiscal calendar in 2019.

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YUM! BRANDS, INC. - 2021 Form 10-K 23

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

Summary
All comparisons within this summary are versus the same period a year ago and unless otherwise stated include the impact of a 53rd week in
2019. For discussion of our results of operations for 2020 compared to 2019, refer to the Management’s Discussion and Analysis of Financial
Condition and Results of Operations included in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC
on February 22, 2021.

For 2021, GAAP diluted EPS increased 77% to $5.21 per share, and diluted EPS, excluding Special Items, increased 23% to $4.46 per share.

2021 financial highlights:

KFC Division

Taco Bell Division

Pizza Hut Division

Worldwide

Additionally:

System Sales,
ex FX

Same-Store
Sales

% Change
Net
New Units

GAAP
Operating Profit

Core Operating
Profit

+16

+13

+11

+10

+33

+16

+42

+29

+13

+18

(cid:129) During the year, 4,180 gross units were opened contributing to the addition of 3,057 net new units

(cid:129) During the year, we repurchased 13 million shares totaling $1,580 million at an average price of $121.70.

(cid:129) Foreign currency translation favorably impacted Divisional Operating Profit for the year by $54 million.

Worldwide
GAAP Results

Company sales

Franchise and property revenues

Franchise contributions for advertising and other services

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Total revenues

Company restaurant expenses

G&A expenses

Franchise and property expenses

Franchise advertising and other services expense

Refranchising (gain) loss

Other (income) expense

Total costs and expenses, net

Operating Profit

Investment (income) expense, net

Other pension (income) expense

Interest expense, net

Income before income taxes

Income tax provision

Net Income

Diluted EPS(a)

Effective tax rate

(a) See Note 4 for the number of shares used in this calculation.

24 YUM! BRANDS, INC. - 2021 Form 10-K

2021

Amount
2020

% B/(W)

2019

2021

2020

$ 2,106

$ 1,810

$ 1,546

2,900

1,578

6,584

2,510

1,332

5,652

2,660

1,391

5,597

$ 1,725

$ 1,506

$ 1,235

1,060

117

1,576

(35)

4,445

2,139

(86)

544

1,674

$ 1,575

5.21

1,064

145

1,314

(34)

154

4,149

1,503

(74)

543

1,020

116

904

2.94

917

180

1,368

(37)

3,667

1,930

486

1,373

$ 1,294

4.14

(15)

—

(20)

(7)

—

(6)

(4)

(22)

(16)

(9)

(13)

(22)

211

(235)

(12)

(26)

(48)

(30)

(29)

5.9%

11.4%

5.7% 5.5 ppts.

(5.7) ppts.

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Performance Metrics

Unit Count

Franchise

Company-owned

Total

Same-Store Sales Growth (Decline) %

System Sales Growth (Decline) %, reported

System Sales Growth (Decline) %, excluding FX

System Sales Growth (Decline) %, excluding FX and 53rd week

2021

52,373

1,051

53,424

2020

49,255

1,098

50,353

2019

49,257

913

50,170

% Increase
(Decrease)

2021

2020

(4)

—

2021

2020

2019

N/A

(6)

(4)

(3)

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YUM! BRANDS, INC. - 2021 Form 10-K 25

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our system sales breakdown by Company and franchise sales was as follows:

Consolidated

Company sales(a)

Franchise sales

System sales

Foreign Currency Impact on System sales(b)

System sales, excluding FX

Impact of 53rd week

2021

Year

2020

2019

2,106

1,810

1,546

56,082

58,188

1,277

56,911

N/A

48,549

50,359

(199)

51,038

52,584

N/A

50,558

52,584

N/A

454

System sales, excluding FX and 53rd Week

$ 56,911

$ 50,558

$ 52,130

KFC Division

Company sales(a)

Franchise sales

System sales

Foreign Currency Impact on System sales(b)

System sales, excluding FX

Impact of 53rd week

596

506

571

30,769

31,365

1,000

30,365

N/A

25,783

26,289

(192)

27,329

27,900

N/A

26,481

27,900

N/A

167

System sales, excluding FX and 53rd Week

$ 30,365

$ 26,481

$ 27,733

Taco Bell Division

Company sales(a)

Franchise sales

System sales

Foreign Currency Impact on System sales(b)

System sales, excluding FX

Impact of 53rd week

944

882

921

12,336

13,280

10,863

11,745

(2)

10,863

11,784

N/A

13,263

11,747

11,784

N/A

184

System sales, excluding FX and 53rd Week

$ 13,263

$ 11,747

$ 11,600

Pizza Hut Division

Company sales(a)

Franchise sales

System sales

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Foreign Currency Impact on System sales(b)

System sales, excluding FX

Impact of 53rd week

System sales, excluding FX and 53rd Week

Habit Burger Grill Division(c)

Company sales(a)

Franchise sales

System sales

Foreign Currency Impact on System sales(b)

System sales, excluding FX

12,909

12,955

260

11,879

11,955

(5)

12,846

12,900

N/A

12,695

11,960

12,900

N/A

103

$ 12,695

$ 11,960

$ 12,797

520

588

—

588

346

370

—

370

N/A

(a) Company sales represents sales from our Company-operated stores as presented on our Consolidated Statements of Income.

(b) The foreign currency impact on System sales is presented in relation only to the immediately preceding year presented. When determining applicable
System sales growth percentages, the System sales excluding FX for the current year should be compared to the prior year System sales prior to
adjustment for the prior year FX impact.

26 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Non-GAAP Items

Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, are presented below.

Core Operating Profit Growth %

Core Operating Profit Growth %, excluding 53rd week

Diluted EPS Growth %, excluding Special Items

Effective Tax Rate excluding Special Items

Company restaurant profit

Company restaurant margin %

Detail of Special Items

Refranchising gain (loss)(a)

Costs associated with acquisition and integration of Habit Burger Grill (See Note 3)

Impairment of Habit Burger Grill goodwill (See Note 3)

Unlocking Opportunity Initiative contribution (See Note 5)

COVID-19 relief contribution (See Note 5)

Charges associated with resource optimization (See Note 5)

Costs associated with Pizza Hut U.S. Transformation Agreement(b)

Other Special Items Income (Expense)(c)

Special Items Income (Expense) – Operating Profit

Charges associated with resource optimization – Other pension (expense) income (See Note 5)

Interest expense, net(c) (d)

Special Items Income (Expense) before Income Taxes

Tax Benefit (Expense) on Special Items(e)

Tax Benefit – Intra-entity transfer of intellectual property (see Note 5)

Special Items Income (Expense), net of tax

Average diluted shares outstanding

Special Items diluted EPS

2021

2020

2019

N/A

(8)

(7)

21.4%

15.9%

19.8%

2021

2020

2019

381

304 $

311

18.1%

16.8%

20.1%

Year

2021

2020

2019

(4)

—

(9)

—

(9)

(34)

(42)

251

(9)

(144)

(50)

(25)

(36)

(5)

(6)

(267)

(2)

(34)

(303)

(1)

—

(13)

(9)

(11)

—

(2)

(13)

(30)

226

(210)

183

302

307

313

$ 0.75

$ (0.68)

$ 0.59

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(a) Due to their size and volatility we have reflected as Special Items those refranchising gains and losses that were recorded in connection with our
previously announced plans to have at least 98% franchise restaurant ownership by the end of 2018. As such, refranchising gains and losses
recorded during 2021, 2020 and 2019 as Special Items are directly associated with restaurants that were refranchised prior to the end of 2018.

During the years ended December 31, 2021, 2020 and 2019, we recorded net refranchising gains of $3 million, $8 million and $12 million,
respectively, that have been reflected as Special Items.

Additionally, during the years ended December 31, 2021, 2020 and 2019, we recorded net refranchising gains of $32 million, $26 million, and
$25 million, respectively, that have not been reflected as Special Items. These gains relate to refranchising of restaurants in 2021, 2020 and 2019
that were not part of our aforementioned plans to achieve 98% franchise ownership and that we believe are now more indicative of our expected
ongoing refranchising activity.

(b)

In May 2017, we reached an agreement with our Pizza Hut U.S. franchisees that improved brand marketing alignment, accelerated enhancements in
operations and technology and that included a permanent commitment to incremental advertising as well as digital and technology contributions by
franchisees. In connection with this agreement, we recognized charges of $5 million and $13 million in the years ended December 31, 2020 and
2019, respectively, related to operating investments required as part of this agreement. The majority of these costs were recorded within Franchise
and property expenses. Based on their nature and the significance in related spending in 2017, these charges have been reflected as Special Items.

(c) During the second quarter of 2019, we recorded charges of $8 million and $2 million to Other (income) expense and Interest expense, net,
respectively, related to cash payments in excess of our recorded liability to settle contingent consideration associated with our 2013 acquisition of
the KFC Turkey and Pizza Hut Turkey businesses. Consistent with prior adjustments to the recorded contingent consideration we have reflected this
as a Special Item.

YUM! BRANDS, INC. - 2021 Form 10-K 27

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(d) On June 1, 2021, certain subsidiaries of the Company redeemed $1,050 million aggregate principal amount of 5.25% Subsidiary Senior Unsecured
Notes due in 2026 (the “2026 Notes”). The redemption amount was equal to 102.625% of the $1,050 million aggregate principal amount redeemed,
reflecting a $28 million “call premium”. We recognized the call premium and the write-off of $6 million of unamortized debt issuance costs associated
with the 2026 Notes within Interest expense, net.

On September 9, 2020, KFC Holding Co., Pizza Hut Holdings, LLC and Taco Bell of America, LLC, each of which a wholly-owned subsidiary of the
Company, issued a notice of redemption for $1,050 million aggregate principal amount of 5.00% Subsidiary Senior Unsecured Notes due in 2024
(the “2024 Notes”). The redemption amount included a $26 million call premium plus accrued and unpaid interest to the date of redemption of
October 9, 2020. We recorded the call premium, $6 million of unamortized debt issuance costs associated with the 2024 Notes and $2 million of
accrued and unpaid interest associated with the period of time from prepayment of the 2024 Notes with the Trustee on September 25, 2020, to their
redemption date within Interest expense, net.

We reflected the call premiums and charges associated with the redemptions as Special Items due to their collective size and the fact that the
amounts are not indicative of our ongoing interest expense.

(e) Tax (Expense) Benefit on Special Items was determined based upon the impact of the nature, as well as the jurisdiction of the respective individual

components within Special Items.

During the year ended December 31, 2021, we recorded as a Special Item an $8 million tax benefit related to prior refranchisings for which the
associated pre-tax gain or loss was recorded as Special. Further, in the fourth quarter of 2019, we increased our Income tax provision by $34 million
to record a reserve against the tax recorded on a prior year divestiture, the effects of which were previously recorded as a Special Item.

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28 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Reconciliation of GAAP Operating Profit to Core Operating Profit and Core Operating
Profit, excluding 53rd Week

2021

2020

2019

Year

Consolidated

GAAP Operating Profit

Special Items Income (Expense) – Operating Profit

Foreign Currency Impact on Divisional Operating Profit(a)

Core Operating Profit

Impact of 53rd Week

Core Operating Profit, excluding 53rd Week

KFC Division

GAAP Operating Profit

Foreign Currency Impact on Divisional Operating Profit(a)

Core Operating Profit

Impact of 53rd Week

Core Operating Profit, excluding 53rd Week

Taco Bell Division

GAAP Operating Profit

Foreign Currency Impact on Divisional Operating Profit(a)

Core Operating Profit

Impact of 53rd Week

Core Operating Profit, excluding 53rd Week

Pizza Hut Division

GAAP Operating Profit

Foreign Currency Impact on Divisional Operating Profit(a)

Core Operating Profit

Impact of 53rd Week

Core Operating Profit, excluding 53rd Week

Habit Burger Grill Division

GAAP Operating Profit

Foreign Currency Impact on Divisional Operating Profit(a)

Core Operating Profit

Reconciliation of Diluted EPS to Diluted EPS excluding Special Items

Diluted EPS

Special Items Diluted EPS

Diluted EPS excluding Special Items

Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate, excluding Special Items

$ 2,139

$ 1,503

$ 1,930

(9)

2,094

N/A

(267)

(9)

1,779

N/A

(11)

N/A

1,941

$ 2,094

$ 1,779

$ 1,917

$ 1,230

922

$ 1,052

1,185

N/A

$ 1,185

758

757

N/A

757

387

379

N/A

379

—

5.21

0.75

4.46

N/A

1,052

$ 1,044

683

N/A

683

670

369

N/A

369

366

(9)

931

N/A

931

696

—

696

N/A

696

335

—

335

N/A

335

(22)

—

(22)

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N/A

4.14

0.59

3.55

2.94

(0.68)

3.62

GAAP Effective Tax Rate

Impact on Tax Rate as a result of Special Items

Effective Tax Rate excluding Special Items

5.9%

(15.5)%

21.4%

11.4%

(4.5)%

15.9%

5.7%

(14.1)%

19.8%

(a) The foreign currency impact on reported Operating Profit is presented in relation only to the immediately preceding year presented. When
determining applicable Core Operating Profit growth percentages, the Core Operating Profit for the current year should be compared to the prior
year GAAP Operating Profit adjusted only for any prior year Special Items Income (Expense).

YUM! BRANDS, INC. - 2021 Form 10-K 29

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Reconciliation of GAAP Operating Profit to Company Restaurant Profit

KFC
Division

Taco Bell
Division

Pizza Hut
Division

2021

Habit
Burger Grill
Division

Corporate
and
Unallocated

Consolidated

GAAP Operating Profit (Loss)

1,230

758

387

Less:

Franchise and property revenues

1,557

Franchise contributions for advertising
and other services

Add:

General and administrative expenses

Franchise and property expenses

Franchise advertising and other services
expense

Refranchising (gain) loss

Other (income) expense

Company restaurant profit

Company sales

640

377

627

—

(5)

106

596

742

552

174

553

—

225

944

597

385

201

395

—

(9)

Company restaurant margin %

17.7%

23.9%

6.8%

—

520

9.0%

$ (238)

2,139

—

260

(1)

—

(35)

$ —

N/A

2,900

1,578

1,060

117

1,576

(35)

381

2,106

18.1%

KFC
Division

Taco Bell
Division

Pizza
Hut
Division

2020

Habit
Burger Grill
Division

Corporate
and
Unallocated

Consolidated

GAAP Operating Profit (Loss)

922

696

335

(22)

$ (428)

1,503

Less:

Franchise and property revenues

1,295

Franchise contributions for advertising and
other services

Add:

General and administrative expenses

Franchise and property expenses

Franchise advertising and other services
expense

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Refranchising (gain) loss

Other (income) expense

Company restaurant profit

Company sales

Company restaurant margin %

471

346

465

—

506

13.2%

662

487

158

484

—

225

882

552

374

215

365

—

(3)

25.5%

5.1%

—

(1)

346

2.6%

—

312

—

(34)

146

$ —

N/A

2,510

1,332

1,064

145

1,314

(34)

154

304

1,810

16.8%

30 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

KFC
Division

Taco Bell
Division

Pizza Hut
Division

Corporate
and
Unallocated

Consolidated

2019

GAAP Operating Profit (Loss)

1,052

683

369

$ (174)

1,930

Less:

Franchise and property revenues

Franchise contributions for advertising and other services

Add:

General and administrative expenses

Franchise and property expenses

Franchise advertising and other services expense

Refranchising (gain) loss

Other (income) expense

Company restaurant profit

Company sales

Company restaurant margin %

1,390

530

346

520

—

571

15.3%

673

485

181

481

—

(4)

221

921

597

376

202

367

—

(1)

24.0%

4.2%

—

188

—

(37)

$ —

N/A

2,660

1,391

917

180

1,368

(37)

311

1,546

20.1%

Items Impacting Reported Results and/or Reasonably Likely to Impact Future Results
The following items impacted reported results in 2021 and/or 2020 and/or are reasonably likely to impact future results. See also the Detail of
Special Items section of this M&DA for other items similarly impacting results.

COVID-19

In late 2019, a novel strain of coronavirus, COVID-19, was first detected and in March 2020, the World Health Organization declared COVID-19
a global pandemic. Throughout 2020 and 2021, COVID-19 spread throughout the U.S. and the rest of the world and governmental authorities
have implemented measures to reduce the spread of COVID-19. These measures include restrictions on travel outside the home and other
limitations on business and other activities as well as encouraging social distancing. As a result of COVID-19, we and our franchisees have
experienced significant store closures and instances of reduced store-level operations, including reduced operating hours and dining-room
closures. The impact on our sales in each of our markets has been dependent on the timing, severity and duration of the outbreak, measures
implemented by government authorities to reduce the spread of COVID-19, as well as our reliance on dine-in sales in the market.

Our results were significantly impacted by the impacts of COVID-19 in the year ended December 31, 2020, as evidenced by our worldwide
same-store sales decline of 6%. Overall, our sales declines were primarily driven by temporary store closures, which peaked in early April 2020
at about 11,000 restaurants and ended 2020 at about 830 restaurants. In addition to the loss of sales due to restaurants being temporarily
closed, we also lost sales due to dining room closures or other limitations on access.

Beginning in 2020 and continuing throughout 2021 we were able to mitigate the loss of sales due to temporary unit closures, dining room
closures or other limitations on access through the strength of our off-premise channels, aided by increasing consumer access to our brands via
digital channels. As a result, each of our Concepts recorded positive same-store sales growth for the year, contributing to our worldwide same-
store sales increase of 10% in 2021 which was driven by strong performance in developed markets such as North America and the United
Kingdom. As we ended the year, COVID-19 outbreaks and resulting government restrictions limiting mobility continued to impact sales in a few
key markets, primarily in Asia. We also saw strong gross unit openings of 4,180 units for the year ended December 31, 2021, which we believe
is primarily a result of improving unit-level economics, our franchisees’ financial strength and commitment to our Concepts, the inherent
competitive advantages of the Quick Service Restaurant sector throughout the COVID-19 pandemic, our Concepts’ off-premise and digital
capabilities, as well as selective use of development incentives with certain franchisees.

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The COVID-19 situation is ongoing, and its dynamic nature makes it difficult to forecast any impacts on the Company’s 2022 results. The
ultimate pace of our recovery will
largely depend on the continuation of current sales trends, although we expect continuing adverse impacts
from COVID-19 in certain parts of the world. In addition, for our restaurants that prominently feature drive-thru, carryout and delivery options,
COVID-19 has in many cases contributed to an increase in sales during 2021 and 2020. If the impact of COVID-19 recedes, in-person dining
restrictions are lifted or lessened and the restaurant industry in general returns to more normal operations, the benefits to sales experienced by
certain of our restaurants, including our Pizza Hut delivery restaurants, could wane and our results could be negatively impacted.

Franchise Bad Debt Expense

We experienced significant quarterly fluctuations in franchise bad debt expense in 2021 and 2020 due in large part to the uncertainties
associated with COVID-19. During the year ended December 31, 2021, we recognized net bad debt recoveries of $8 million related to short-
term accounts receivable due from our franchisees for royalties, rent and other services we provide, which were primarily reflected within
Franchise and property expenses. These net bad debt recoveries of $8 million compared to $13 million of net bad debt expense recognized in
the year ended December 31, 2020, and thus positively impacted Operating Profit growth by $21 million year-over-year.

YUM! BRANDS, INC. - 2021 Form 10-K 31

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Investment in Devyani

In 2020, we received an approximate 5% minority interest in Devyani International Limited (“Devyani”), an entity that operates KFC and Pizza Hut
franchised units in India. The minority interest was received in lieu of cash proceeds upon the refranchising of approximately 60 KFC restaurants
in India. At the time of the refranchisings, the fair value of this minority interest was estimated to be approximately $31 million. On August 16,
2021, Devyani executed an initial public offering and subsequently the fair value of this investment became readily determinable. As a result,
concurrent with the initial public offering we began recording changes in fair value in Investment (income) expense, net in our Consolidated
Statements of Income and recognized pre-tax investment income of $87 million, in the year ended December 31, 2021.

Investment in Grubhub, Inc. (“Grubhub”)

In April of 2018 we purchased 2.8 million shares of Grubhub common stock for $200 million. In the quarter ended September 30, 2020, we sold
our entire investment in Grubhub and received proceeds of $206 million. While we held our investment in Grubhub common stock we
recognized changes in the fair value in our investment in our Consolidated Statements of Income. For the years ended December 31, 2020 and
2019, we recognized pre-tax investment income of $69 million and pre-tax investment expense of $77 million, respectively, related to changes in
fair value of our investment in Grubhub common stock.

Extra Week in 2019

Fiscal 2019 included a 53rd week for all of our U.S. and certain international subsidiaries that operate on a period calendar. See Note 2 for
additional details related to our fiscal calendar. The following table summarizes the estimated impact of the 53rd week on Revenues and
Operating Profit for the year ended December 31, 2019. The 53rd week in 2019 favorably impacted Diluted EPS by $0.05 per share.

Revenues

Company sales

Franchise and property revenues

Franchise contributions for advertising and other services

Total revenues

Operating Profit

Franchise and property revenues

Franchise contributions for advertising and other services

Restaurant profit

Franchise and property expenses

Franchise advertising and other services expenses

G&A expenses

Operating Profit

K
-
0
1
m
r
o
F

KFC
Division

Taco Bell
Division

Pizza Hut
Division

Total

—

(5)

(2)

—

(8)

(2)

—

(1)

(5)

(1)

(18)

(5)

32 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

KFC Division
The KFC Division has 26,934 units, 85% of which are located outside the U.S. Additionally, 99% of the KFC Division units were operated by
franchisees as of the end of 2021.

% B/(W)
2021

% B/(W)
2020

2021

2020

2019 Reported

Ex FX

Reported

Ex FX

N/A

(6)

(9)

(11)

(7)

(11)

(9)

(24)

(5)

N/A

(9)

(6)

(10)

(8)

(24)

Ex FX and
53rd Week
in 2019

(5)

N/A

(8)

(5)

(9)

(7)

(22)

System Sales

$ 31,365 $ 26,289 $ 27,900

Same-Store Sales Growth %

Company sales

596 $

506 $

571

Franchise and property revenues

1,557

1,295

1,390

Franchise contributions for
advertising and other services

Total revenues

Company restaurant profit

Company restaurant margin %

G&A expenses

640

471

530

2,793 $

2,272 $

2,491

106 $

67 $

17.7%

13.2%

15.3%

4.5ppts.

4.3 ppts.

(2.1) ppts.

(2.4) ppts.

Franchise and property expenses

377 $

346 $

346

Franchise advertising and other
services expense

627

465

520

Operating Profit

1,230 $

922 $

1,052

Unit Count

Franchise

Company-owned

Total

(9)

(35)

(7)

(29)

—

(2)

(12)

(1)

(2)

(12)

(1)

(3)

(11)

2021

26,643

291

26,934

2020

24,710

290

25,000

2019

23,759

345

24,104

% Increase
(Decrease)

2021

2020

—

(16)

Company sales and Company restaurant margin %

In 2021, the increase in Company sales, excluding the impacts of foreign currency translation, was driven by company same-store sales growth
of 17%, partially offset by refranchising.

In 2021, the increase in Company restaurant margin percentage was driven by company same-store sales growth, partially offset by higher
restaurant operating costs.

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Franchise and property revenues

In 2021, the increase in Franchise and property revenues, excluding the impacts of foreign currency translation, was driven by franchise same-
store sales growth of 11% and unit growth.

G&A

In 2021, the increase in G&A, excluding the impact of foreign currency translation, was driven by higher expenses related to our annual incentive
compensation program and higher professional fees, partially offset by lower share-based compensation.

Operating Profit

In 2021, the increase in Operating Profit, excluding the impacts of foreign currency translation, was driven by same-store sales growth, unit
growth, and current year net bad debt recoveries lapping prior year net bad debt expense for past due franchise receivables, partially offset by
higher G&A.

YUM! BRANDS, INC. - 2021 Form 10-K 33

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Taco Bell Division
The Taco Bell Division has 7,791 units, 90% of which are in the U.S. The Company owned 7% of the Taco Bell units in the U.S. as of the end of
2021.

% B/(W)
2021

% B/(W)
2020

2021

2020

2019 Reported

Ex FX

Reported

Ex FX

System Sales

$13,280 $11,745 $11,784

Same-Store Sales Growth %

Company sales

944 $

882 $

Franchise and property revenues

742

662

921

673

Franchise contributions for advertising
and other services

552

487

485

Total revenues

$ 2,238 $ 2,031 $ 2,079

Company restaurant profit

225 $

221

—

N/A

—

(1)

(4)

(2)

—

(2)

—

N/A

(4)

(2)

—

(2)

Ex FX and
53rd Week
in 2019

N/A

(3)

—

(1)

Company restaurant margin %

23.9% 25.5% 24.0%

(1.6) ppts.

1.5 ppts.

1.6 ppts.

G&A expenses

174 $

158 $

181

Franchise and property expenses

Franchise advertising and other
services expense

553

484

481

Operating Profit

758 $

696 $

683

(11)

(3)

(14)

(10)

(3)

(14)

(1)

(2)

Unit Count

Franchise

Company-owned

Total

2021

7,329

462

7,791

2020

6,952

475

7,427

2019

6,895

468

7,363

% Increase
(Decrease)

2021

2020

(3)

Company sales and Company restaurant margin %

K
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In 2021, the increase in Company sales was driven by same-store sales growth of 7% and unit growth partially offset by refranchising.

In 2021, the decrease in Company restaurant margin percentage was driven by higher restaurant operating costs, principally labor and
commodities, partially offset by same-store sales growth.

Franchise and property revenues

In 2021, the increase in Franchise and property revenues was driven by franchise same-store sales growth of 11% and unit growth.

G&A

In 2021, the increase in G&A, excluding the impacts of foreign currency translation, was driven by higher expenses related to our annual
incentive compensation programs, higher professional fees and higher charitable contributions, partially offset by lower headcount and lower
share-based compensation.

Operating Profit

In 2021, the increase in Operating Profit was driven by same-store sales growth and unit growth, partially offset by higher restaurant operating
costs and higher G&A costs.

Pizza Hut Division
The Pizza Hut Division has 18,381 units, 64% of which are located outside the U.S. Over 99% of the Pizza Hut Division units were operated by
franchisees as of the end of 2021. The Pizza Hut Division uses multiple distribution channels including delivery, dine-in and express (e.g. airports)
and includes units operating under both the Pizza Hut and Telepizza brands.

34 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

On December 30, 2018, the Company consummated a strategic alliance with Food Delivery Brands Group, S.A. (previously named Telepizza
Group S.A. (“Telepizza”)), to be the master franchisee of Pizza Hut in Latin America and portions of Europe, which added approximately 1,300
Telepizza units to our Pizza Hut Division unit count on December 30, 2018. The addition of the Telepizza units positively impacted 2019 Pizza
Hut Division system sales growth, excluding the impacts of foreign currency and 53rd week, by 5 percentage points. The impact to Operating
Profit for the year ended December 31, 2019, as a result of the strategic alliance was not significant.

% B/(W)
2021

% B/(W)
2020

2021

2020

2019 Reported

Ex FX

Reported

Ex FX

System Sales

$ 12,955 $ 11,955 $ 12,900

Same-Store Sales Growth
(Decline) %

Company sales

46 $

76 $

Franchise and property revenues

597

552

597

Franchise contributions for
advertising and other services

Total revenues

Company restaurant profit

385

374

376

1,028 $

1,002 $

1,027

(40)

N/A

(42)

3 $

(19)

(24)

(7)

(6)

(8)

(1)

(2)

(7)

N/A

(8)

(1)

(2)

Ex FX and
53rd Week
in 2019

(6)

N/A

(7)

(1)

Company restaurant margin %

6.8%

5.1%

4.2%

1.7 ppts.

1.5 ppts.

0.9 ppts.

0.7 ppts.

0.8 ppts.

G&A expenses

201 $

215 $

Franchise and property expenses

Franchise advertising and other
services expense

395

365

Operating Profit

387 $

335 $

202

367

369

(8)

(7)

—

(9)

(7)

—

(9)

(8)

(1)

(8)

Unit Count

Franchise

Company-owned

Total

Company sales

2021

18,359

2020

17,559

18,381

17,639

2019

18,603

100

18,703

% Increase
(Decrease)

2021

2020

(73)

(6)

(20)

(6)

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In 2021, the decrease in Company sales, excluding the impacts of foreign currency translation, was driven by the refranchising of stores in the
United Kingdom, partially offset by company same-store sales growth of 7%.

Franchise and property revenues

In 2021, the increase in Franchise and property revenues, excluding the impacts of foreign currency translation, was driven by franchise same-
store sales growth of 7%.

G&A

In 2021, the decrease in G&A, excluding the impacts of foreign currency translation, was driven by lower headcount and lower share-based
compensation, partially offset by higher expenses related to our annual incentive compensation programs.

Operating Profit

In 2021, the increase in Operating Profit, excluding the impacts of foreign currency translation, was driven by same-store sales growth, lower
G&A and current year net bad debt recoveries lapping prior year net bad debt expense for past due franchise receivables, partially offset by
higher Franchise advertising and other services expense primarily related to digital and technology expenses.

YUM! BRANDS, INC. - 2021 Form 10-K 35

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Habit Burger Grill Division
The Habit Burger Grill Division has 318 units, the vast majority of which are in the U.S. The Company owned 90% of the Habit Burger Grill units
in the U.S. as of December 31, 2021.

System Sales

Same-Store Sales Growth %

Total revenues

Operating Profit (Loss)

Unit Count

Franchise

Company-owned

Total

Corporate & Unallocated

2021

2020

Reported

Ex FX

% B/(W)
2021

$ 588

$ 370

$ 525

$ 347

(22)

2021

2020

276

318

253

287

111

N/A

111

% Increase
(Decrease)
2021

% B/(W)

(Expense)/Income

2021

2020

2019

2021

2020

Corporate and unallocated G&A

(260)

(312)

(188)

Unallocated Franchise and property expenses

Unallocated Refranchising gain (loss) (See Note 5)

Unallocated Other income (expense)

Investment income (expense), net (See Note 5)

Other pension income (expense) (See Note 15)

Interest expense, net

Income tax provision (See Note 18)

Effective tax rate (See Note 18)

Corporate and unallocated G&A

K
-
0
1
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r
o
F

(14)

(7)

(544)

(99)

5.9%

(4)

(146)

(14)

(543)

(116)

11.4%

(14)

(9)

(67)

(4)

(486)

(79)

5.7%

115

—

(66)

(9)

211

(235)

(12)

(48)

5.5 ppts.

(5.7) ppts.

In 2021, the decrease in Corporate and unallocated G&A expenses was driven by lapping higher prior year cost for charitable contributions
including $50 million related to our “Unlocking Opportunity Initiative” and $25 million related to COVID-19 relief (see Note 5). The decrease was
also driven by lapping prior year costs associated with a voluntary early retirement programs offered to our U.S. based employees and a
worldwide severance program (see Note 5), offset by higher current year expenses related to our annual incentive compensation programs and
increased headcount supporting our technology initiatives.

Unallocated Other income (expense)

Unallocated Other income (expense) for the year ended December 31, 2020, includes a charge of $144 million related to the impairment of Habit
Burger Grill goodwill (see Note 3).

Interest expense, net

The increase in Interest expense, net for 2021 was primarily driven by increased outstanding borrowings offset by a lower weighted average-
interest rate.

36 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Consolidated Cash Flows

Net cash provided by operating activities was $1,706 million
in 2021 versus $1,305 million in 2020. The increase was largely
Items, the
driven by an increase in Operating profit before Special
lapping of charitable contributions reflected as Special Items and an
increase in upfront fees received, partially offset by the timing of
accounts receivable collections and higher advertising spending.

Net cash used in investing activities was $173 million in 2021
versus $335 million in 2020. The change was primarily driven by the
lapping of our prior year acquisition of The Habit Restaurants, Inc.,

higher refranchising proceeds in the current year and the current year
sale of certain mutual fund investments, partially offset by the lapping
of prior year proceeds from the sale of our investment in Grubhub,
Inc. common stock,
the current year acquisition of Dragontail
Systems Limited and higher current year capital spending.

Net cash used in financing activities was $1,767 million in
2021 versus $738 million in 2020. The change was primarily driven
by higher share repurchases, partially offset by higher net
borrowings.

Liquidity and Capital Resources

We have historically generated substantial cash flows from our
extensive franchise operations, which require a limited YUM
investment, and from the operations of our Company-owned stores.
Our annual operating cash flows have been in excess of $1.3 billion
in each of the past three years and we expect that to continue to be
the case in 2022. It is our intent to use these operating cash flows to
continue to invest in growing our business and pay a competitive
dividend, with any remaining excess then returned to shareholders
through share repurchases. To the extent operating cash flows plus

other sources of cash do not cover our anticipated cash needs, we
maintain a $1.25 billion Revolving Facility under our Credit
Agreement (see Note 11) that was undrawn as of December 31,
2021. We believe that our ongoing cash from operations, cash on
hand, which was approximately $500 million at December 31, 2021,
and availability under our Revolving Facility will be sufficient to fund
our cash requirements over the next twelve months.

Our material cash requirements include the following contractual and
other obligations.

Debt Obligations and Interest Payments
As of December 31, 2021, approximately 93%, including the impact
of interest rate swaps, of our $11.3 billion of total debt outstanding,
excluding finance leases and debt issuance costs and discounts, is
fixed with an effective overall interest rate of approximately 4.2%. We
currently target a capital structure which reflects consolidated
leverage, net of available cash, of ~5.0x EBITDA and which we

believe provides an attractive balance between optimized interest
rates, duration and flexibility with diversified sources of liquidity and
maturities spread over multiple years. We have credit ratings of BB
(Standard & Poor’s)/Ba2 (Moody’s) with a balance sheet consistent
with highly-levered peer restaurant franchise companies.

The following table summarizes the future maturities of our outstanding long-term debt, excluding finance leases and debt issuance costs and
discounts, as of December 31, 2021.

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2037

2043

Total

Securitization
Notes

$ 39

$ 39 $ 39 $ 944 $ 875

$ 582

$ 565

$ 7 $ 682

Credit Agreement

662

1,398

Subsidiary Senior
Unsecured Notes

YUM Senior
Unsecured Notes

750

325

600

800

1,050

$ 1,100

$ 325

$ 275

4,475

Total

$ 68

$ 398

$ 87 $ 692 $ 1,606

$ 1,640

$ 1,980

$ 565

$ 807

$ 1,732

$ 1,100

$ 325

$ 275

$ 11,275

Interest payments on the outstanding long-term debt in the table
above total $3,384 million, with $464 million due within the next
twelve months on the outstanding amounts on a nominal basis. The
estimated interest payments related to the variable rate portion of our
debt are based on current LIBOR interest rates.

Operating and Finance Leases
Payments required under our operating and finance leases total
$1,252 million, of which $141 million is payable within the next 12
months. These amounts are on a nominal basis and include
payments related to lease renewal options we are reasonably certain

See Note 11 for details on the Securitization Notes,
the Credit
Agreement, Subsidiary Senior Unsecured Notes and YUM Senior
Unsecured Notes.

to exercise. These leases relate primarily to approximately 700
Company-owned restaurants
and approximately 300 leased
restaurants for which we sublease land, building or both to our
franchisees. See Note 12.

YUM! BRANDS, INC. - 2021 Form 10-K 37

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$ 3,811

2,239

750

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Capital Expenditures
We remain committed to maintaining our asset
franchisor
model that includes at least a 98% franchise mix. Our allocation
strategy for capital expenditures includes:

light,

(cid:129) Run-rate capital expenditures consisting of company restaurant
repairs, maintenance and remodels, support of our digital and
technology initiatives and project-specific capital expenditures,

(cid:129) Targeted new company unit development

to spur additional
growth that is largely funded through refranchising a comparable
number of existing company units, and

(cid:129) Strategic

that
shareholders and franchisees.

investments

create

incremental

value

for

that new store investments will exceed
In 2022, we expect
refranchising proceeds by $50 to $100 million, primarily driven by our
strategy to accelerate growth of the Habit Burger Grill equity estate.
in net capital expenditures of approximately
This will
$250 million,
reflecting up to $350 million of gross capital
expenditures and $100 million of refranchising proceeds.

result

Purchase Obligations
Our purchase obligations include agreements to purchase goods or
services that are enforceable and legally binding on us and that
specify all significant terms, including: fixed or minimum quantities to
be purchased; fixed, minimum or variable price provisions; and the
approximate timing of
the transaction. We have excluded
agreements that are cancellable without penalty. Our purchase
obligations relate primarily to marketing, information technology and
supply agreements. We have purchase obligations of approximately
$420 million at December 31, 2021, with approximately $240 million
due within the next 12 months.

In addition to our contractual and other obligations, we seek to pay a
competitive dividend and return excess cash to shareholders through
share repurchases. As discussed in Note 20, we are also subject to
claims and contingencies related to certain tax and legal matters that
may require future cash outlays.

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Dividends and Share Repurchases

In February 2022, our Board of Directors declared a dividend of
$0.57 per share of Common Stock, a 14% increase from the
quarterly dividend of $.50 per share of Common Stock paid in 2021.
This quarterly dividend will be distributed March 11, 2022 to
shareholders of record at the close of business on February 18,
2022, and will total approximately $165 million.

In May 2021, our Board of Directors authorized share repurchases
from July 1, 2021 through December 31, 2022 of up to $2 billion
(excluding applicable transaction fees) of our outstanding Common
Stock. As of December 31, 2021, we have remaining capacity to
repurchase up to $950 million of Common Stock under
this
authorization. This authorization does not obligate the Company to
acquire any specific number of shares.

along brand lines. The

Contingencies
As discussed in Note 20, as a result of an audit by the Internal
for fiscal years 2013 through 2015, on
Revenue Service (“IRS”)
October 13, 2021, we received a Notice of Proposed Adjustment
(“NPA”) from the IRS for the 2014 fiscal year relating to a series of
reorganizations we undertook during that year in connection with the
business realignment of our corporate and management reporting
structure
these
reorganizations involved taxable distributions of approximately
$6.0 billion. We expect to receive the final Revenue Agent’s Report
(“RAR”) including the IRS’s calculation of the tax assessment in early
2022. The amount of additional tax that may be asserted by the IRS
in the RAR cannot be quantified at this time; however, based on the
NPA, the amount of additional tax to be proposed is expected to be
material. We disagree with the IRS’s position as asserted in the NPA
and intend to contest it vigorously by filing a protest disputing on
multiple grounds any proposed taxes and proceeding to the IRS
Office of Appeals.

IRS asserts

that

Also, as discussed in Note 20, on January 29, 2020, we received an
order from the Special Director of the Directorate of Enforcement in
India imposing a penalty on Yum! Restaurants India Private Limited of
approximately Indian Rupee 11 billion, or approximately $150 million,
primarily relating to alleged violations of operating conditions
imposed in 1993 and 1994. We have been advised by external
counsel that the order is flawed and have filed a writ petition with the
Delhi High Court, which granted an interim stay of the penalty order
on March 5, 2020. The stay order remains in effect, and the next
hearing is scheduled for March 4, 2022. We deny liability and intend
to continue vigorously defending this matter. We do not consider the
risk of any significant loss arising from this order to be probable.

See the Lease Guarantees section of Note 20 for discussion of our
off-balance sheet arrangements.

New Accounting Pronouncements Not Yet Adopted

In March 2020, the Financial Accounting Standards Board issued
guidance related to reference rate reform. The pronouncement
provides temporary optional expedients and exceptions to the
current guidance on contract modifications and hedge accounting to
ease the financial reporting burdens related to the expected market
transition from LIBOR and other interbank offered rates to alternative
reference rates. The guidance was effective upon issuance and
generally can be applied to applicable contract modifications through

December 31, 2022. We are currently evaluating the impact of the
transition from LIBOR to alternative reference rates, including the
impact on our interest rate swaps. As of December 30, 2021, our
interest
rate swaps which expire in March 2025, had notional
amounts of $1.5 billion. These interest rate swaps are designated
cash flow hedges. We do not anticipate the impact of adopting this
standard will be material to our Financial Statements.

38 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Critical Accounting Policies and Estimates

Our reported results are impacted by the application of certain
accounting policies that require us to make subjective or complex
judgments. These judgments involve estimations of the effect of
matters that are inherently uncertain and may significantly impact our
quarterly
financial
operations
condition. Changes
in the estimates and judgments could
significantly affect our results of operations and financial condition
and cash flows in future years. A description of what we consider to
be our most significant critical accounting policies follows.

annual

results

Impairment or Disposal of Long-Lived
Assets
We review long-lived assets of restaurants we intend to continue
operating as Company restaurants (primarily PP&E,
right-of-use
operating lease assets and allocated intangible assets subject to
amortization) annually for impairment, or whenever events or changes
in circumstances indicate that the carrying amount of a restaurant
may not be recoverable. We evaluate recoverability based on the
restaurant’s forecasted undiscounted cash flows, which incorporate
our best estimate of sales growth and margin improvement based
upon our plans for
results at comparable
the unit and actual
restaurant assets that are deemed to not be
restaurants. For
recoverable, we write-down the impaired restaurant to its estimated
fair value. Key assumptions in the determination of fair value are the
future after-tax cash flows of the restaurant, which are reduced by
future royalties a franchisee would pay, and a discount rate. The
after-tax cash flows incorporate reasonable sales growth and margin
improvement assumptions that would be used by a franchisee in the
determination of a purchase price for the restaurant. Estimates of
future cash flows are highly subjective judgments and can be
significantly impacted by changes in the business or economic
conditions.

In each of the years ended December 31, 2021 and 2019 our
primary indicator of potential
impairment for our restaurant assets
was two consecutive years of operating losses. For the year ended
December 31, 2020, as a result of the impacts of the COVID-19
pandemic this indicator was expanded to include restaurants that
were open less than two years with cumulative operating losses for
the last year or cumulative operating losses since the store open date
if open less than one year.

We perform an impairment evaluation at a restaurant group level
when it is more likely than not that we will refranchise restaurants as
a group. Expected net sales proceeds are generally based on actual
if available, or anticipated bids given the
bids from the buyer,
discounted projected after-tax cash flows for
the group of
restaurants. Historically, these anticipated bids have been reasonably
the proceeds ultimately received. The
accurate estimations of
after-tax cash flows used in determining the anticipated bids
incorporate reasonable assumptions we believe a franchisee would
make such as sales growth and margin improvement as well as
expectations as to the useful
lives of the restaurant assets. These
after-tax cash flows also include a deduction for the anticipated,
future royalties we would receive under a franchise agreement with
terms substantially at market entered into simultaneously with the
refranchising transaction.

The discount rate used in the fair value calculations is our estimate of
the required rate of return that a franchisee would expect to receive
when purchasing a similar restaurant or groups of restaurants and
the related long-lived assets. The discount rate incorporates rates of

returns for historical
commensurate with the risks and uncertainty inherent
forecasted cash flows.

refranchising market

transactions and is
in the

We evaluate indefinite-lived intangible assets for impairment on an
annual basis as of the beginning of our fourth quarter or more often if
an event occurs or circumstances change that indicates impairment
might exist. Fair value is an estimate of the price a willing buyer
would pay for the intangible asset and is generally estimated by
discounting the expected future after-tax cash flows associated with
the intangible asset. Our most significant indefinite-lived intangible
asset is our Habit Burger Grill brand asset with a book value of
$96 million at December 31, 2021. As of our fourth quarter 2021
impairment testing date, the Habit Burger Grill’s forecasted
annual
results have improved from those used in determining the brand
asset fair value as part of the prior year impairment test. As such, the
fair values of all of our
indefinite-lived intangible assets at
December 31, 2021, were in excess of their respective carrying
values and no impairment was recorded.

Impairment of Goodwill
We evaluate goodwill for impairment on an annual basis as of the
beginning of our fourth quarter or more often if an event occurs or
circumstances change that
indicates impairment might exist.
Goodwill is evaluated for impairment by determining whether the fair
value of our
reporting units exceed their carrying values. Our
reporting units are our business units (which are aligned based on
geography) in our KFC, Taco Bell, Pizza Hut and Habit Burger Grill
Divisions. Fair value is the price a willing buyer would pay for the
reporting unit, and is generally estimated using discounted expected
future after-tax cash flows from franchise royalties and Company-
owned restaurant operations, if any. Future cash flow estimates and
the discount rate are the key assumptions when estimating the fair
value of a reporting unit.

Future cash flows are based on growth expectations relative to
recent historical performance and incorporate sales growth (from net
new units or same-store sales growth) and margin improvement (for
those reporting units which include Company-owned restaurant
operations) assumptions that we believe a third-party buyer would
the reporting
assume when determining a purchase price for
unit. Any margin improvement assumptions that
into the
discounted cash flows are highly correlated with sales growth as
cash flow growth can be achieved through various interrelated
strategies such as product pricing and restaurant productivity
initiatives. The discount rate is our estimate of the required rate of
return that a third-party buyer would expect
to receive when
purchasing a business from us that constitutes a reporting unit. We
believe the discount
rate is commensurate with the risks and
uncertainty inherent in the forecasted cash flows.

factor

testing date, with all but

The fair values of all our reporting units with goodwill balances were
in excess of their respective carrying values as of our fourth quarter
2021 goodwill
the Habit Burger Grill
reporting unit having fair values that were substantially in excess of
their respective carrying values as of the 2021 goodwill testing date.
As it relates to our Habit Burger Grill reporting unit, assumptions for
unit growth and same-store sales growth utilized in the fourth quarter
2021 annual impairment test improved as compared to the prior year
impairment test, due in large part to the continued recovery from the
impacts of COVID-19. As such, the fair value of the reporting unit
increased versus prior year.

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YUM! BRANDS, INC. - 2021 Form 10-K 39

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

the portion of

the reporting unit disposed of

When we refranchise restaurants, we include goodwill in the carrying
amount of the restaurants disposed of based on the relative fair
values of
in the
refranchising versus the portion of the reporting unit that will be
retained. The fair value of the portion of the reporting unit disposed of
in a refranchising is determined by reference to the discounted value
of the future cash flows expected to be generated by the restaurant
and retained by the franchisee, which include a deduction for the
anticipated, future royalties the franchisee will pay us associated with
the franchise agreement entered into simultaneously with the
refranchising transaction. Appropriate adjustments are made to the
fair value determinations if such franchise agreement is determined to
not be at prevailing market rates. When determining whether such
franchise agreement
rates our primary
is at prevailing market
consideration is consistency with the terms of our current franchise
agreements both within the country that the restaurants are being
refranchised in and around the world. The Company believes
consistency in royalty rates as a percentage of sales is appropriate
as the Company and franchisee share in the impact of near-term
fluctuations in sales results with the acknowledgment that over the
long-term the royalty rate represents an appropriate rate for both
parties.

The discounted value of
the future cash flows expected to be
generated by the restaurant and retained by the franchisee is
reduced by future royalties the franchisee will pay the Company. The
Company thus considers the fair value of
future royalties to be
received under the franchise agreement as fair value retained in its
determination
off when
refranchising. Others may consider the fair value of these future
royalties as fair value disposed of and thus would conclude that a
larger percentage of a reporting unit’s fair value is disposed of in a
refranchising transaction.

be written

goodwill

the

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During 2021, refranchising activity completed by the Company was
limited and the write-off of goodwill associated with these
transactions was approximately $3 million.

Pension Plans
Certain of our employees are covered under defined benefit pension
plans. Our two most significant plans are in the U.S. and combined
had a projected benefit obligation (“PBO”) of $1,069 million and a fair
value of plan assets of $1,010 million at December 31, 2021.

that consists of a hypothetical portfolio of

The PBO reflects the actuarial present value of all benefits earned to
date by employees and incorporates assumptions as to future
compensation levels. Due to the relatively long time frame over which
benefits earned to date are expected to be paid, our PBOs are highly
sensitive to changes in discount rates. For our U.S. plans, we
measured our PBOs using a discount rate of 3.00% at December 31,
2021. The primary basis for this discount rate determination is a
model
ten or more
instruments rated Aa or higher by Moody’s or
corporate debt
Standard & Poor’s (“S&P”) with cash flows that mirror our expected
benefit payment cash flows under the plans. We exclude from the
model those corporate debt instruments flagged by Moody’s or S&P
for a potential downgrade (if the potential downgrade would result in
a rating below Aa by both Moody’s and S&P) and bonds with yields
that were two standard deviations or more above the mean.
In
considering possible bond portfolios, the model allows the bond
cash flows for a particular year to exceed the expected benefit
payment cash flows for that year. Such excesses are assumed to be
reinvested at appropriate one-year forward rates and used to meet
the benefit payment cash flows in a future year. The weighted-
average yield of this hypothetical portfolio was used to arrive at an
rate. We also ensure that changes in the
appropriate discount

40 YUM! BRANDS, INC. - 2021 Form 10-K

discount rate as compared to the prior year are consistent with the
overall change in prevailing market rates and make adjustments as
necessary. A 50 basis-point increase in this discount rate would have
decreased these U.S. plans’ PBOs by approximately $65 million at
our measurement date. Conversely, a 50 basis-point decrease in this
rate would have increased our U.S. plans’ PBOs by
discount
approximately $72 million at our measurement date.

The net periodic benefit cost we will record in 2022 is also impacted
by the discount rate, as well as the long-term rates of return on plan
assets and mortality assumptions we selected at our measurement
date. We expect net periodic benefit cost for our U.S. plans to
decrease approximately $8 million in 2022. A 50 basis-point change
in our discount rate assumption at our 2021 measurement date
would impact our 2022 U.S. net periodic benefit cost by
approximately $6 million. The impacts of changes in net periodic
benefit costs are reflected primarily in Other pension (income)
expense.

Our estimated long-term rate of return on U.S. plan assets is based
upon the weighted-average of historical and expected future returns
for each asset category. Our expected long-term rate of return on
for purposes of determining 2022 pension
U.S. plan assets,
expense, at December 31, 2021, was 5.40%, net of administrative
and investment fees paid from plan assets. We believe this rate is
appropriate given the composition of our plan assets and historical
market returns thereon. A 100 basis point change in our expected
long-term rate of return on plan assets assumption would impact our
2022 U.S. net periodic benefit cost by approximately $9 million.
Additionally, every 100 basis point variation in actual return on plan
assets versus our expected return of 5.40% will
impact our
unrecognized pre-tax actuarial net loss by approximately $9 million.

A decrease in discount rates over time has largely contributed to an
unrecognized pre-tax actuarial net loss of $33 million included in
Accumulated other comprehensive income for these U.S. plans at
December 31, 2021. We will recognize approximately $11 million of
such loss in net periodic benefit cost in 2022 versus $14 million
recognized in 2021.

Income Taxes
At December 31, 2021, we had valuation allowances of $462 million
to reduce our $1,541 million of deferred tax assets to amounts that
are more likely than not to be realized. The net deferred tax assets
primarily relate to temporary differences in profitable U.S. federal,
state and foreign jurisdictions and net operating losses in certain
foreign jurisdictions, the majority of which do not expire. In evaluating
our ability to recover our deferred tax assets, we consider future
taxable income in the various jurisdictions, carryforward periods,
restrictions on usage and prudent and feasible tax planning
strategies. The estimation of
future taxable income in these
jurisdictions and our resulting ability to utilize deferred tax assets can
including our
significantly change based on future events,
determinations as to feasibility of certain tax planning strategies and
refranchising plans. Thus, recorded valuation allowances may be
subject to material future changes.

As a matter of course, we are regularly audited by federal, state and
foreign tax authorities. We recognize the benefit of positions taken or
expected to be taken in our tax returns in our Income tax provision
when it is more likely than not that the position would be sustained
upon examination by these tax authorities. A recognized tax position
is then measured at the largest amount of benefit that is greater than
fifty percent likely of being realized upon settlement. At December 31,
2021, we had $116 million of unrecognized tax benefits, $75 million
the effective tax rate if recognized. We
of which would impact

PART II
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

evaluate unrecognized tax benefits, including interest thereon, on a
quarterly basis to ensure that they have been appropriately adjusted
for events,
including audit settlements, which may impact our
ultimate payment for such exposures.

Repatriation of earnings generated after December 31, 2017, will
generally be eligible for the 100% dividends received deduction or
considered a distribution of previously taxed income and, therefore,
exempt from U.S. federal tax. Undistributed foreign earnings may still
be subject to certain state and foreign income and withholding taxes

upon repatriation. Subject to limited exceptions, we do not intend to
indefinitely reinvest our unremitted earnings outside the U.S. Thus,
we have provided taxes, including any U.S. federal and state income,
foreign income, or foreign withholding taxes on the majority of our
unremitted earnings.
In jurisdictions where we do intend to
indefinitely reinvest our unremitted earnings, we would be required to
accrue and pay applicable income taxes (if any) and foreign
withholding taxes
the funds were repatriated in taxable
transactions. We believe any such taxes would be immaterial.

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YUM! BRANDS, INC. - 2021 Form 10-K 41

PART II
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.

ITEM 7A. Quantitative and Qualitative Disclosures

About Market Risk.

The Company is exposed to financial market risks associated with interest rates, foreign currency exchange rates and commodity prices. In the
normal course of business and in accordance with our policies, we manage these risks through a variety of strategies, which may include the
use of financial and commodity derivative instruments to hedge our underlying exposures. Our policies prohibit the use of derivative instruments
for trading purposes, and we have processes in place to monitor and control their use.

Interest Rate Risk

risk exposure to changes in interest

rates,
We have a market
principally in the U.S. Our outstanding total debt, excluding finance
leases and debt
issuance costs and discounts, of $11.3 billion
includes 80% fixed-rate debt and 20% variable-rate debt. We have
attempted to minimize the interest rate risk from variable-rate debt
through the use of interest rate swaps that, as of December 31,
2021, result in a fixed interest rate on $1.5 billion of our variable-rate
debt. As a result, approximately 93% of our $11.3 billion of
outstanding debt at December 31, 2021,
is effectively fixed-rate
debt. See Note 11 for details on our outstanding debt and Note 13
for details related to interest rate swaps.

At December 31, 2021, a hypothetical 100 basis-point increase in
short-term interest rates would result, over the following twelve-
month period after consideration of the aforementioned interest rate
swaps, in an increase of approximately $7 million in Interest expense,

Foreign Currency Exchange Rate Risk

Changes in foreign currency exchange rates impact the translation of
our reported foreign currency denominated earnings, cash flows and
net investments in foreign operations and the fair value of our foreign
currency denominated financial
instruments. Historically, we have
chosen not to hedge foreign currency risks related to our foreign
currency denominated earnings and cash flows through the use of
to minimize the
financial
exposure
related to foreign currency denominated financial
instruments by purchasing goods and services from third parties in
local currencies when practical. Consequently,
foreign currency
denominated financial
instruments consist primarily of intercompany
receivables and payables. At times, we utilize forward contracts and
cross-currency swaps to reduce our exposure related to these
intercompany receivables and payables. The notional amount and

In addition, we attempt

instruments.

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net within our Consolidated Statement of Income. These estimated
amounts are based upon the current level of variable-rate debt that
has not been swapped to fixed and assume no changes in the
volume or composition of that debt and exclude any impact from
interest income related to cash and cash equivalents.

The fair value of our cumulative fixed-rate debt of $9.5 billion as of
December 31, 2021, would decrease approximately $565 million as
increase. At
a result of
the same hypothetical 100 basis-point
December 31, 2021, a hypothetical 100 basis-point
increase in
short-term interest rates would decrease the liability associated with
the fair value of our interest rate swaps by approximately $46 million.
Fair value was determined based on the present value of expected
future cash flows considering the risks involved and using discount
rates appropriate for the durations.

maturity dates of these contracts match those of the underlying
receivables or payables such that our foreign currency exchange risk
related to these instruments is minimized.

The Company’s foreign currency net asset exposure (defined as
foreign currency assets less foreign currency liabilities)
totaled
approximately $1.1 billion as of December 31, 2021. Operating in
international markets exposes the Company to movements in foreign
currency exchange rates. The Company’s primary exposures result
from our operations in Asia-Pacific, Europe and the Americas. For
the fiscal year ended December 31, 2021, Operating Profit would
have decreased approximately $145 million if all foreign currencies
had uniformly weakened 10% relative to the U.S. dollar. This
estimated reduction assumes no changes in sales volumes, local
currency sales or input prices.

Commodity Price Risk

We are subject to volatility in food costs at our Company-operated
restaurants as a result of market risk associated with commodity
prices. Our ability to recover increased costs through higher pricing

is, at times, limited by the competitive environment in which we
operate. We manage our exposure to this risk primarily through
pricing agreements with our vendors.

Equity Investment Risk

the National Stock Exchange of

YUM holds approximately 53 million shares of Devyani International
Limited (“Devyani”) common stock (See Note 5). As of December 31,
2021,
India Limited composite
closing sales price of Devyani was Indian Rupee 165.05. A
hypothetical 10% decline in the price of these shares would result in
a $12 million decrease in the fair value of these investments, which

would be reflected as a charge in Investment (income) expense, net
within our Consolidated Statements of
Income. The effects of
changes in market prices for equity securities are unpredictable,
which could cause significant fluctuations in our quarterly and annual
results.

42 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

ITEM 8. Financial Statements

and Supplementary Data.

Index to Financial Information

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Cash Flows

Consolidated Balance Sheets

Consolidated Statements of Shareholders’ Deficit

Notes to Consolidated Financial Statements

Financial Statement Schedules

Page
Reference

No schedules are required because either the required information is not present or not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the above-listed financial statements or notes thereto.

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YUM! BRANDS, INC. - 2021 Form 10-K 43

PART II
ITEM 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public
Accounting Firm

To the Shareholders and Board of Directors
Yum! Brands, Inc.:

Opinions on the Consolidated Financial Statements
and Internal Control Over Financial Reporting

for each of

Inc. and subsidiaries

We have audited the accompanying consolidated balance sheets of
(the Company) as of
Yum! Brands,
December 31, 2021 and 2020, the related consolidated statements
income, comprehensive income, cash flows and shareholders’
of
the years in the three-year period ended
deficit
December 31, 2021, and the related notes (collectively,
the
consolidated financial statements). We also have audited the
of
Company’s
December 31, 2021, based on criteria established in Internal
Control—Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.

reporting as

control over

financial

internal

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the consolidated financial statements referred to
In our opinion,
above present fairly, in all material respects, the financial position of
the Company as of December 31, 2021 and 2020, and the results of
its operations and its cash flows for each of the years in the three-
year period ended December 31, 2021,
in conformity with U.S.
generally accepted accounting principles. Also in our opinion, the
Company maintained,
respects, effective internal
control over financial reporting as of December 31, 2021 based on
criteria established in Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.

in all material

Basis for Opinions

The Company’s management is responsible for these consolidated
financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting in
the accompanying Item 9A. Our
responsibility is to express an
opinion on the Company’s consolidated financial statements and an
opinion on the Company’s internal control over financial reporting
based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the
the Securities and Exchange
applicable rules and regulations of
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the
the
audits
consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control
over financial reporting was maintained in all material respects.

to obtain reasonable assurance about whether

the consolidated financial statements included
Our audits of
performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or

44 YUM! BRANDS, INC. - 2021 Form 10-K

fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding
the amounts and disclosures
in the consolidated financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
the consolidated
well as evaluating the overall presentation of
financial statements. Our audit of
financial
reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in
the circumstances. We believe that our audits provide a reasonable
basis for our opinions.

internal control over

Definition and Limitations of Internal Control Over
Financial Reporting

A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of
financial statements for
external purposes in accordance with generally accepted accounting
financial
principles. A company’s internal control over
reporting
(1) pertain to the
includes those policies and procedures that
maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect
on the financial statements.

limitations,

its inherent

Because of
internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from
the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit
committee and that: (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way our
opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.

PART II
ITEM 8. Financial Statements and Supplementary Data.

Evaluation of unrecognized tax benefits

As discussed in Note 18 to the consolidated financial statements, the
Company has recorded unrecognized tax benefits, excluding
associated interest, of $116 million. Tax laws are complex and often
subject to different interpretations by taxpayers and the respective
taxing authorities.

We identified the evaluation of the Company’s unrecognized tax
benefits as a critical audit matter. Subjective and complex auditor
judgment was required to evaluate tax law and regulations, court
rulings and audit settlements in the related taxing jurisdictions to
determine the population of significant uncertain tax positions
identified by the Company arising from tax planning strategies.

The following are the primary procedures we performed to address
this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls over
the
Company’s process for identification of uncertain tax positions. This
included controls related to (1) identifying tax planning strategies that
create significant uncertain tax positions, (2) evaluating interpretations
of tax laws and court rulings, and (3) assessing which tax positions

may not be sustained upon examination by a taxing authority. We
involved tax professionals with specialized skills and knowledge who
assisted in:

(cid:129) Obtaining an understanding of

the Company’s tax planning

strategies;

(cid:129) Identifying tax positions created by tax planning strategies and
comparing the results to the Company’s identification of uncertain
tax positions;

(cid:129) Evaluating the Company’s interpretation of tax laws and court

rulings by developing an independent assessment; and

(cid:129) Performing an independent assessment to identify tax positions
that may not be sustained upon examination by the respective
taxing authority and comparing the results to the Company’s
assessment.

/s/ KPMG LLP

We have served as the Company’s auditor since 1997.

Louisville, Kentucky

February 22, 2022

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YUM! BRANDS, INC. - 2021 Form 10-K 45

PART II
ITEM 8. Financial Statements and Supplementary Data.

Consolidated Statements of Income

Yum! Brands, Inc. and Subsidiaries

Fiscal years ended December 31, 2021, 2020 and 2019

(in millions, except per share data)

2021

2020

2019

Revenues

Company sales

Franchise and property revenues

Franchise contributions for advertising and other services

Total revenues

Costs and Expenses, Net

Company restaurant expenses

General and administrative expenses

Franchise and property expenses

Franchise advertising and other services expense

Refranchising (gain) loss

Other (income) expense

Total costs and expenses, net

Operating Profit

Investment (income) expense, net

Other pension (income) expense

Interest expense, net

Income before income taxes

Income tax provision

Net Income

Basic Earnings Per Common Share

Diluted Earnings Per Common Share

Dividends Declared Per Common Share

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See accompanying Notes to Consolidated Financial Statements.

$ 2,106

$ 1,810

$ 1,546

2,900

1,578

6,584

1,725

1,060

117

1,576

(35)

4,445

2,139

(86)

544

1,674

$ 1,575

5.30

5.21

2.00

2,510

1,332

5,652

1,506

1,064

145

1,314

(34)

154

4,149

1,503

(74)

543

1,020

116

904

2.99

2.94

1.88

2,660

1,391

5,597

1,235

917

180

1,368

(37)

3,667

1,930

486

1,373

$ 1,294

4.23

4.14

1.68

46 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

Consolidated Statements of Comprehensive Income

Yum! Brands, Inc. and Subsidiaries

Fiscal years ended December 31, 2021, 2020 and 2019

(in millions)

Net Income

Other comprehensive income (loss), net of tax:

Translation adjustments and gains (losses) from intra-entity transactions of a long-term
investment nature

Adjustments and gains (losses) arising during the year

Reclassifications of adjustments and (gains) losses into Net Income

Tax (expense) benefit

Changes in pension and post-retirement benefits

Unrealized gains (losses) arising during the year

Reclassification of (gains) losses into Net Income

Tax (expense) benefit

Changes in derivative instruments

Unrealized gains (losses) arising during the year

Reclassification of (gains) losses into Net Income

Tax (expense) benefit

Other comprehensive income (loss), net of tax

Comprehensive Income

See accompanying Notes to Consolidated Financial Statements.

2021

2020

2019

1,575

904

1,294

(24)

—

(24)

—

(24)

(19)

(14)

—

(8)

(2)

(99)

(93)

(70)

(23)

—

(4)

(39)

(29)

(22)

(51)

(25)

(76)

(56)

(54)

1,661

881

1,240

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YUM! BRANDS, INC. - 2021 Form 10-K 47

PART II
ITEM 8. Financial Statements and Supplementary Data.

Consolidated Statements of Cash Flows

Yum! Brands, Inc. and Subsidiaries

Fiscal years ended December 31, 2021, 2020 and 2019

(in millions)

Cash Flows – Operating Activities

Net Income

Depreciation and amortization

Impairment and closure expense

Refranchising (gain) loss

Investment (income) expense, net

Deferred income taxes

Share-based compensation expense

Changes in accounts and notes receivable

Changes in prepaid expenses and other current assets

Changes in accounts payable and other current liabilities

Changes in income taxes payable

Other, net

Net Cash Provided by Operating Activities

Cash Flows – Investing Activities

Capital spending

Acquisition of The Habit Restaurants, Inc., net of cash acquired

Proceeds from sale of investment in Grubhub, Inc. common stock

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Proceeds from refranchising of restaurants

Other, net

Net Cash Used in Investing Activities

Cash Flows – Financing Activities

Proceeds from long-term debt

Repayments of long-term debt

Revolving credit facilities, three months or less, net

Short-term borrowings, by original maturity

More than three months – proceeds

More than three months – payments

Three months or less, net

Repurchase shares of Common Stock

Dividends paid on Common Stock

Debt issuance costs

Other, net

Net Cash Used in Financing Activities

Effect of Exchange Rate on Cash and Cash Equivalents

Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash
Equivalents

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents – Beginning of Year

2021

2020

2019

1,294

1,575

164

(35)

(86)

(200)

(46)

(33)

122

(41)

192

904

146

172

(34)

(74)

(65)

128

(110)

1,706

1,305

(230)

—

(28)

(173)

(160)

(408)

206

(335)

4,150

1,650

(3,657)

(1,517)

—

(1,591)

(592)

(37)

(40)

(1,767)

(19)

(253)

1,024

—

(100)

—

(239)

(566)

(20)

(41)

(738)

256

768

112

(37)

(232)

(56)

(8)

(36)

124

1,315

(196)

—

110

(2)

(88)

800

(331)

—

130

(126)

—

(815)

(511)

(10)

(75)

(938)

294

474

768

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents – End of Year

771

$ 1,024

See accompanying Notes to Consolidated Financial Statements.

48 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

Consolidated Balance Sheets

Yum! Brands, Inc. and Subsidiaries

December 31, 2021 and 2020

(in millions)

ASSETS

Current Assets

Cash and cash equivalents

Accounts and notes receivable, net

Prepaid expenses and other current assets

Total Current Assets

Property, plant and equipment, net

Goodwill

Intangible assets, net

Other assets

Deferred income taxes

Total Assets

LIABILITIES AND SHAREHOLDERS’ DEFICIT

Current Liabilities

Accounts payable and other current liabilities

Income taxes payable

Short-term borrowings

Total Current Liabilities

Long-term debt

Other liabilities and deferred credits

Total Liabilities

Shareholders’ Deficit

Common Stock, no par value, 750 shares authorized; 289 shares and 300 shares issued in 2021 and 2020,
respectively

Accumulated deficit

Accumulated other comprehensive loss

Total Shareholders’ Deficit

Total Liabilities and Shareholders’ Deficit

See accompanying Notes to Consolidated Financial Statements.

2021

2020

486

596

450

1,532

1,207

657

359

1,487

724

730

534

425

1,689

1,235

597

343

1,435

553

$ 5,966

$ 5,852

$ 1,334

$ 1,189

1,415

11,178

1,746

14,339

453

1,675

10,272

1,796

13,743

—

(8,048)

(325)

—

(7,480)

(411)

(8,373)

(7,891)

$ 5,966

$ 5,852

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YUM! BRANDS, INC. - 2021 Form 10-K 49

PART II
ITEM 8. Financial Statements and Supplementary Data.

Consolidated Statements of Shareholders’ Deficit

Yum! Brands, Inc. and Subsidiaries

Fiscal years ended December 31, 2021, 2020 and 2019

(in millions)

Balance at December 31, 2018

Net Income

Translation adjustments and gains (losses) from intra-entity transactions of a long-
term investment nature (net of tax impact of $4 million)

Pension and post-retirement benefit plans (net of tax impact of $7 million)

Net loss on derivative instruments (net of tax impact of $20 million)

Comprehensive Income

Dividends declared

Repurchase of shares of Common Stock

Employee share-based award exercises

Share-based compensation events

Adoption of accounting standards

Balance at December 31, 2019

Net Income

Translation adjustments and gains (losses) from intra-entity transactions of a
long-term investment nature

Pension and post-retirement benefit plans (net of tax impact of $2 million)

Net loss on derivative instruments (net of tax impact of $23 million)

Comprehensive Income

Dividends declared

Repurchase of shares of Common Stock

Employee share-based award exercises

Share-based compensation events

Adoption of accounting standards

Balance at December 31, 2020

Net Income

Translation adjustments and gains (losses) from intra-entity transactions of a long-
term investment nature

Pension and post-retirement benefit plans (net of tax impact of $19 million)

Net gain on derivative instruments (net of tax impact of $14 million)

Comprehensive Income

Dividends declared

Repurchase of shares of Common Stock

Employee share-based award exercises

Share-based compensation events

Balance at December 31, 2021

See accompanying Notes to Consolidated Financial Statements.

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Issued Common
Stock
Shares Amount

Accumulated
Deficit

Accumulated Other
Comprehensive
Income (Loss)

Total
Shareholders’
Deficit

306

$ —

$ (7,592)

$ (334)

$ (7,926)

1,294

(514)

(796)

(18)

(2)

(22)

(56)

1,294

(22)

(56)

1,240

(514)

(810)

(75)

(2)

(8)

(14)

(57)

300

$ —

$ (7,628)

$ (388)

$ (8,016)

904

(569)

(179)

(8)

(70)

904

(70)

881

(569)

(250)

(41)

112

(8)

(2)

(71)

(41)

112

300

$ —

$ (7,480)

$ (411)

$ (7,891)

1,575

(594)

(1,549)

(24)

1,575

(24)

1,661

(594)

(1,580)

(50)

(13)

(31)

(50)

289

$ —

$ (8,048)

$ (325)

$ (8,373)

50 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

Notes to Consolidated Financial Statements

(Tabular amounts in millions, except share data)

NOTE 1 – Description of Business

Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein
as the “Company,” “YUM,” “we,” “us” or “our”) franchise or operate a
system of over 53,000 restaurants in 157 countries and territories
primarily under the concepts of KFC, Taco Bell, Pizza Hut and The
Habit Burger Grill (collectively, the “Concepts”). The Company’s KFC,
Taco Bell and Pizza Hut brands are global
leaders of the chicken,
Mexican-style and pizza food categories. The Habit Burger Grill, a
is a fast-casual restaurant
concept we acquired in March 2020,
concept
burgers,
in made-to-order
sandwiches and more. At December 31, 2021, 98% of our
restaurants were owned and operated by franchisees.

specializing

chargrilled

Through our widely-recognized Concepts, we develop, operate or
franchise a system of both traditional and non-traditional restaurants.
The terms “franchise” or “franchisee” within these Consolidated
Financial Statements are meant to describe third parties that operate
units under either franchise or license agreements. Our traditional
restaurants feature dine-in, carryout and, in some instances, drive-
thru service. Non-traditional units include express units which have a
more limited menu and operate in non-traditional locations like malls,

service

gasoline

airports,
subways,
stations,
convenience stores, stadiums, amusement parks and colleges, where
a full-scale traditional outlet would not be practical or efficient. As of
December 31, 2021, over 45,000 of our restaurants are also currently
offering delivery. We also operate or franchise multibrand units, where
two or more of our Concepts are operated in a single unit.

stations,

train

As of December 31, 2021, YUM consisted of
segments:

four operating

(cid:129) The KFC Division which includes our worldwide operations of the

KFC concept

(cid:129) The Taco Bell Division which includes our worldwide operations of

the Taco Bell concept

(cid:129) The Pizza Hut Division which includes our worldwide operations of

the Pizza Hut concept

(cid:129) The Habit Burger Grill Division which includes our worldwide

operations of the Habit Burger Grill concept

NOTE 2 – Summary of Significant Accounting Policies

Our preparation of
the accompanying Consolidated Financial
Statements in conformity with Generally Accepted Accounting
Principles in the United States of America (“GAAP”) requires us to
make estimates and assumptions that affect reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at
the date of the Consolidated Financial Statements, and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.

Principles of Consolidation
and Basis of Preparation.
Intercompany accounts and transactions have been eliminated in
consolidation. We consolidate entities in which we have a controlling
interest, the usual condition of which is ownership of a
financial
majority voting interest. We also consider for consolidation an entity,
in which we have certain interests, where the controlling financial
interest may be achieved through arrangements that do not involve
voting interests. Such an entity, known as a variable interest entity
(“VIE”), is required to be consolidated by its primary beneficiary. The
primary beneficiary is the entity that possesses the power to direct
the activities of the VIE that most significantly impact its economic
performance and has the obligation to absorb losses or the right to
receive benefits from the VIE that are significant to it.

Our most significant variable interests are in certain entities that
operate restaurants under our Concepts’ franchise arrangements.
We do not typically provide significant financial support such as loans
or guarantees to our franchisees. Thus, our most significant variable
interests in franchisees result from real estate lease arrangements to
which we are a party. At the end of 2021, YUM has future lease
payments due from certain franchisees, on a nominal basis, of
approximately $1 billion, and we are secondarily liable on certain
other
lease agreements that have been assigned to certain
franchisees. See the Lease Guarantees section in Note 20. As our

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franchise arrangements provide our franchisee entities the power to
direct the activities that most significantly impact their economic
performance, we do not consider ourselves the primary beneficiary of
any such entity that might otherwise be considered a VIE.

in an entity, Devyani

for a minority interest

We do not have an equity interest in any of our franchisee businesses
except
International
Limited (“Devyani”), that owns our KFC India and Pizza Hut India
master franchisee rights, a minority interest in an entity that owns our
KFC Brazil and Pizza Hut Brazil master franchisee rights and a
minority interest in an entity that operates Taco Bell franchised units
in India. These minority interests do not give us the ability to
significantly influence these entities. We account for our investment in
Devyani and the entity that owns our KFC Brazil and Pizza Hut Brazil
master franchisee rights as equity securities. When the fair value of
these equity securities is readily determinable we record changes in
fair value in Investment (income) expense, net. When the fair value of
these equity securities is not readily determinable we apply the
measurement alternative in accordance with Accounting Standards
Codification (“ASC”) Topic 321 and, when applicable, record fair
value changes from observable prices as well as impairment
in
Investment (income) expense, net. We account for our investment in
the entity
in India as an
available-for-sale debt security. This available-for-sale debt security is
carried at fair value with unrealized gains and losses, net of tax,
included as a component of Other comprehensive income (loss), on
the Consolidated Statements of Comprehensive Income.

that operates Taco Bell units

We participate in various advertising cooperatives with our
franchisees, typically within a country where we have both Company-
owned restaurants and franchise restaurants, established to collect
and administer
funds contributed for use in advertising and
promotional programs designed to increase sales and enhance the

YUM! BRANDS, INC. - 2021 Form 10-K 51

PART II
ITEM 8. Financial Statements and Supplementary Data.

reputation of the Company and our Concepts. Contributions to the
advertising cooperatives are required for both Company-owned and
franchise restaurants and are generally based on a percentage of
restaurant sales. We maintain certain variable interests in these
cooperatives. As the cooperatives are required to spend all funds
collected on advertising and promotional programs, total equity at
risk is not sufficient
the cooperatives to finance their
activities without additional subordinated financial support. Therefore,
these cooperatives are VIEs. As a result of our voting rights, we
consolidate certain of
these cooperatives for which we are the
primary beneficiary.

to permit

Fiscal Year. YUM’s fiscal year begins on January 1 and ends
December 31 of each year, with each quarter comprised of three
months. The majority of our U.S. subsidiaries and certain
international subsidiaries operate on a weekly periodic calendar
where the first three quarters of each fiscal year consists of 12 weeks
and the fourth quarter consists of 16 weeks in fiscal years with 52
weeks and 17 weeks in fiscal years with 53 weeks. Our Habit Burger
Grill subsidiaries operate on a weekly periodic calendar where each
quarter consists of 13 weeks, except in fiscal years with 53 weeks
remaining
when the fourth quarter consists of 14 weeks. Our
international subsidiaries operate on a monthly calendar similar to
that on which YUM operates.

Fiscal year 2019 included 53 weeks for our U.S. businesses and for
our international subsidiaries that reported on a period calendar. The
53rd week added $66 million to Total revenues, $24 million to
Operating Profit and $17 million to Net
Income in our 2019
Consolidated Statement of Income.

Our next fiscal year scheduled to include a 53rd week for our period
calendar reporters is 2024.

Foreign Currency. The functional currency of our foreign entities is
the currency of the primary economic environment in which the entity
operates. Functional currency determinations are made based upon
a number of economic factors, including but not limited to cash flows
and financing transactions. The operations, assets and liabilities of
our entities outside the U.S. are initially measured using the functional
Income and expense accounts for our
currency of

that entity.

operations of these foreign entities are then translated into U.S.
dollars at the average exchange rates prevailing during the period.
Assets and liabilities of these foreign entities are then translated into
U.S. dollars at exchange rates in effect at the balance sheet date. As
of December 31, 2021, net cumulative translation adjustment losses
of $206 million are recorded in Accumulated other comprehensive
income (“AOCI”) in the Consolidated Balance Sheet.

The majority of our
foreign currency net asset exposure is in
countries where we have Company-owned restaurants. As we
manage and share resources at the individual brand level within a
country, cumulative translation adjustments are recorded and
tracked at the foreign-entity level that represents the operations of
our individual brands within that country. Translation adjustments
recorded in AOCI are subsequently recognized as income or
expense generally only upon sale of the related investment in a
foreign entity, or upon a sale of assets and liabilities within a foreign
entity that represents a complete or substantially complete liquidation
of that foreign entity. For purposes of determining whether a sale or
complete or substantially complete liquidation of an investment in a
foreign entity has occurred, we consider those same foreign entities
for which we record and track cumulative translation adjustments.

Gains and losses arising from the impact of
foreign currency
exchange rate fluctuations on transactions in foreign currency are
included in Other (income) expense in our Consolidated Statements
of Income.

Reclassifications. We have reclassified certain items in the
Consolidated Financial Statements
to be
comparable with the classification for
the fiscal year ended
December 31, 2021. These reclassifications had no effect on
previously reported Net Income.

for prior periods

Revenue Recognition. Below is a discussion of how our revenues
are earned, our accounting policies pertaining to revenue recognition
under ASC Topic 606, Revenue from Contracts with Customers
(“Topic 606”) and other required disclosures.

Taxes assessed by a governmental authority that are both imposed
on and concurrent with a specific revenue transaction and collected
from a customer are excluded from revenue.

Company Sales

Revenues from the sale of
food items by Company-owned
restaurants are recognized as Company sales when a customer

purchases the food, which is when our obligation to perform is
satisfied.

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Franchise and Property Revenues

Franchise Revenues

Our most significant source of revenues arises from the operation of
our Concepts’ stores by our franchisees. Franchise rights may be
franchise agreement or through a
granted through a store-level
master
the terms of our
that sets out
franchise agreement
arrangement with the franchisee. Our franchise agreements require
that the franchisee remit continuing fees to us as a percentage of the
applicable restaurant’s sales in exchange for the license of
the
intellectual property associated with our Concepts’ brands (the
“franchise right”). Our franchise agreements also typically require
certain, less significant, upfront franchise fees such as initial fees paid
upon opening of a store, fees paid to renew the term of the franchise
right and fees paid in the event the franchise agreement is transferred
to another franchisee.

fees

the
Continuing
consideration we
agreements.
Continuing fees are typically billed and paid monthly and are usually
franchise
4%-6% for store-level

substantial majority of
franchise

franchise agreements. Master

the
under our

represent
receive

agreements allow master franchisees to operate restaurants as well
as sub-franchise restaurants within certain geographic territories. The
percentage of sales that we receive for
restaurants owned or
sub-franchised by our master franchisees as a continuing fee is
restaurants
typically less than the percentage we receive for
operating under a store-level
franchise agreement. Based on the
application of the sales-based royalty exception within Topic 606
continuing fees are recognized as the related restaurant sales occur.

transferred to another

Upfront franchise fees are typically billed and paid when a new
franchise or sub-franchise agreement becomes effective or when an
existing agreement
franchisee or
sub-franchisee. We have determined that the services we provide in
exchange for upfront
franchise fees, which primarily relate to
pre-opening support, are highly interrelated with the franchise right
and are not individually distinct from the ongoing services we provide
to our franchisees. As a result, upfront franchise fees are recognized
as revenue over
the term of each respective franchise or
sub-franchise agreement. Revenues for these upfront franchise fees
are recognized on a straight-line basis, which is consistent with the

52 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

franchisee’s or sub-franchisee’s right to use and benefit from the
intellectual property.

Property Revenues

from time-to-time we provide

Additionally,
consideration to
franchisees in the form of cash (e.g. cash payments to offset new
build costs) or other incentives (e.g. free or subsidized equipment)
with the intent to drive new unit development or same-store sales
growth that will result in higher future revenues for the Company.
Such payments are capitalized and presented within Prepaid
expense and other current assets or Other assets. These assets are
being amortized as a reduction in Franchise and property revenues
the period of expected cash flows from the franchise
over
agreements to which the payment relates.

Franchise Contributions for Advertising and Other Services
Advertising Cooperatives

We have determined we act as a principal in the transactions entered
into by the advertising cooperatives we are required to consolidate
based on our responsibility to define the nature of the goods or
services provided and/or our commitment to pay for advertising
services in advance of
the related franchisee contributions.
Additionally, we have determined the advertising services provided to
franchisees are highly interrelated with the franchise right and
to these consolidated
therefore not distinct. Franchisees remit
restaurant sales as
advertising cooperatives a percentage of
consideration for providing the advertising services. As a result,
revenues for advertising services are recognized when the related
franchise restaurant sales occur based on the application of the
sales-based royalty exception within Topic 606. Revenues for these
services are typically billed and received on a monthly basis.

Other Goods or Services

On a much more limited basis, we provide goods or services to
certain franchisees that are individually distinct from the franchise
right because they do not require integration with other goods or
services we provide. Such arrangements typically
relate to
technology, supply chain and quality assurance services. The extent
to which we provide such goods or services varies by brand,
geographic region and, in some instances, franchisee. In instances
where we rely on third parties to provide goods or services to
franchisees at our direction, we have determined we act as a
principal in these transactions. These revenues are recognized as the
goods or services are transferred to the franchisee.

Franchise Support Costs. Certain direct costs of our franchise
operations are charged to Franchise and property expenses. These
costs include provisions for estimated uncollectible upfront and
continuing fees,
rent or depreciation expense associated with
restaurants we lease or sublease to franchisees, marketing funding
on behalf of franchisees, amortization expense for franchise-related
intangible assets, value added taxes on royalties and certain other
direct incremental franchise support costs.

The costs we incur to provide support services to our franchisees for
which we do not receive a reimbursement are charged to General and
administrative expenses (“G&A”) as incurred. Expenses related to the
provisioning of goods or services for which we receive reimbursement
for all or substantially all of the expense amount from a franchisee are
recorded in Franchise advertising and other services expense (the
associated revenue is recorded within Franchise contributions for
advertising and other services as described above). The majority of
these expenses relate to advertising and are incurred on behalf of
franchisees by the advertising cooperatives we are required to
consolidate. These expenses are accounted for as described in the
Advertising Costs policy below. For such expenses that do not relate
to advertising the expenses are recognized as incurred.

restaurant

the lease or sublease of

From time to time, we enter into rental agreements with franchisees
for
locations. These rental
agreements typically originate from refranchising transactions and
revenues related to the agreements are recognized as they are
earned. Amounts owed under the rental agreements are typically
billed and paid on a monthly basis. Related expenses are presented
as Franchise and property expenses within our Consolidated
Statements of Income and primarily include depreciation or, in the
case of a sublease, rental expense.

Advertising Costs. To the extent we participate in advertising
cooperatives, we, like our participating franchisees, are required to
make contributions. Our contributions are based on a percentage of
sales of our participating Company restaurants. These contributions
as well as direct marketing costs we may incur outside of a
cooperative related to Company restaurants are recorded within
Company restaurant expenses. Advertising expense included in
Company restaurant expenses totaled $84 million, $68 million and
$73 million in 2021, 2020 and 2019, respectively.

To the extent we consolidate advertising cooperatives, we incur
advertising expense as a result of our obligation to spend franchisee
contributions to those cooperatives (see above for our accounting for
these contributions). Such advertising expense is recorded in
Franchise advertising and other services expense and totaled
$1,264 million, $1,079 million and $1,133 million in 2021, 2020 and
the end of each fiscal year additional
2019,
advertising costs are accrued to the extent advertising revenues
exceed the related advertising expense to date, as we are obligated
to expend such amounts on advertising.

respectively. At

From time to time, we may make the decision to incur discretionary
advertising expenditures on behalf of franchised restaurants. Such
amounts are recorded within Franchise and property expenses and
totaled $11 million, $10 million and $10 million in 2021, 2020 and
2019, respectively.

the advertising cooperatives we are required to
To the extent
consolidate are unable to collect amounts due from franchisees they
incur bad debt expense. In 2021 and 2020 we recorded $6 million
and $7 million in net
respectively, and in 2019 we
recorded $19 million in net provisions, within Franchise advertising
and other services expense related to recoveries on and provisions for
uncollectible franchisee receivables. To the extent our consolidated
advertising cooperatives have a provision or recovery for bad debt
expense, the cooperative’s advertising spend obligation is adjusted
such that there is no net impact within our Financial Statements.

recoveries,

is recognized over

Share-Based Employee Compensation. We recognize ongoing
share-based payments to employees, including grants of employee
stock options and stock appreciation rights (“SARs”),
in the
Consolidated Financial Statements as compensation cost over the
service period based on their fair value on the date of grant. This
the service period on a
compensation cost
straight-line basis, net of an assumed forfeiture rate, for awards that
actually vest. Forfeiture rates are estimated at grant date based on
historical experience and compensation cost
is adjusted in
subsequent periods for differences in actual
forfeitures from the
previous estimates. We present this compensation cost consistent
with the other compensation costs for the employee recipient in
either Company restaurant expenses or G&A. See Note 16 for further
discussion of our share-based compensation plans.

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YUM! BRANDS, INC. - 2021 Form 10-K 53

PART II
ITEM 8. Financial Statements and Supplementary Data.

Legal Costs. Settlement costs are accrued when they are deemed
probable and reasonably estimable. Anticipated legal fees related to
self-insured workers’ compensation, employment practices liability,
general
liability and property
losses (collectively, “property and casualty losses”) are accrued when
deemed probable and reasonably estimable. Legal fees not related
to self-insured property and casualty losses are recognized as
incurred. See Note 20 for further discussion of our legal proceedings.

liability, automobile liability, product

agreements to be entered into with the franchisee simultaneous with
the refranchising are expected to contain terms, such as royalty rates
or rental payments, not at prevailing market rates, we consider the
off-market terms in our impairment evaluation. We recognize any
such impairment charges in Refranchising (gain) loss. We recognize
gains on restaurant refranchisings when the sale transaction closes
and control of the restaurant operations have transferred to the
franchisee.

Impairment or Disposal of Long-Lived Assets. Long-lived assets,
(“PP&E”) as well as
including Property, plant and equipment
impairment
right-of-use operating lease assets are tested for
whenever events or changes in circumstances indicate that
the
carrying value of the assets may not be recoverable. The assets are
not recoverable if their carrying value is less than the undiscounted
cash flows we expect to generate from such assets. If the assets are
not deemed to be recoverable, impairment is measured based on
the excess of their carrying value over their fair value.

restaurant

testing of

is the lowest

impairment testing for our restaurants, we have
For purposes of
concluded that an individual
level of
independent cash flows unless it is more likely than not that we will
refranchise restaurants as a group. We review our long-lived assets
of such individual restaurants (primarily PP&E, right-of-use operating
lease assets and allocated intangible assets subject to amortization)
that we intend to continue operating as Company restaurants
annually for
impairment, or whenever events or changes in
circumstances indicate that the carrying amount of a restaurant may
not be recoverable. We use two consecutive years of operating
losses as our primary indicator of potential impairment for our annual
impairment
these restaurant assets. We evaluate the
recoverability of these restaurant assets by comparing the estimated
undiscounted future cash flows, which are based on our entity-
specific assumptions,
to the carrying value of such assets. For
restaurant assets that are not deemed to be recoverable, we write-
down an impaired restaurant
to its estimated fair value, which
becomes its new cost basis. Fair value is an estimate of the price a
the restaurant and its related assets,
franchisee would pay for
including any right-of-use assets, and is determined by discounting
the estimated future after-tax cash flows of the restaurant, which
include a deduction for royalties we would receive under a franchise
agreement with terms substantially at market. The after-tax cash
flows incorporate reasonable assumptions we believe a franchisee
would make such as sales growth and margin improvement. The
discount rate used in the fair value calculation is our estimate of the
required rate of return that a franchisee would expect to receive
when purchasing a similar
restaurant and the related long-lived
assets. The discount rate incorporates rates of returns for historical
refranchising market transactions and is commensurate with the risks
Individual
and uncertainty inherent
restaurant-level
(income)
expense. Any right-of-use asset may alternatively be valued at the
amount we could receive for such right-of-use asset from a third-
party that is not a franchisee through a sublease if doing so would
result in less overall impairment of the restaurant assets in total.

in the forecasted cash flows.
is recorded within Other

impairment

In executing our refranchising initiatives, we most often offer groups
of restaurants for sale. When we believe it is more likely than not a
restaurant or groups of restaurants will be refranchised for a price
less than their carrying value, but do not believe the restaurant(s)
have met the criteria to be classified as held for sale, we review the
restaurants for impairment. We evaluate the recoverability of these
restaurant assets by comparing estimated sales proceeds plus
holding period cash flows,
the
if any,
restaurant or group of restaurants. For restaurant assets that are not
deemed to be recoverable, we recognize impairment for any excess
of carrying value over the fair value of the restaurants, which is based
on the expected net sales proceeds. To the extent ongoing

to the carrying value of

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When we decide to close a restaurant, it is reviewed for impairment,
which includes an estimate of sublease income that could be
reasonably obtained, if any, in relation to the right-of-use operating
lease asset. Additionally, depreciable lives are adjusted based on the
expected disposal date. Other costs incurred when closing a
restaurant such as costs of disposing of the assets as well as other
facility-related expenses from previously closed stores are generally
expensed as incurred. Any costs recorded upon store closure as well
as any subsequent adjustments to liabilities for remaining lease
obligations as a result of lease termination or changes in estimates of
sublease income are recorded in Other (income) expense. To the
extent we sell assets, primarily land, associated with a closed store,
any gain or loss upon that sale is also recorded in Other (income)
expense.

Management judgment is necessary to estimate future cash flows,
including cash flows from continuing use, terminal value, sublease
income and refranchising proceeds. Accordingly, actual results could
vary significantly from our estimates.

Guarantees. We recognize, at inception of a guarantee, a liability for
the fair value of certain obligations undertaken. Additionally, effective
January 1, 2020, we adopted the Financial Accounting Standards
Board’s Accounting Standards Update (“ASU”) No. 2016-13,
Instruments – Credit Losses (“Topic 326”) which required
Financial
that we also recognize as a liability the expected credit losses over
the life of such guarantees. As a result of the adoption of Topic 326,
we recorded a cumulative adjustment
to Accumulated deficit of
$8 million to establish such expected credit loss liability for our
outstanding guarantees.

The majority of our guarantees are issued as a result of assigning our
interest in obligations under operating leases as a condition to the
refranchising of certain Company restaurants. We recognize a liability
for such lease guarantees upon refranchising and upon subsequent
renewals of such leases when we remain secondarily liable. The
related expense and any subsequent changes are included in
Refranchising (gain) loss. Any expense and subsequent changes in
the guarantees for other franchise support guarantees not associated
with a refranchising transaction are included in Franchise and
property expenses.

Income Taxes. We record deferred tax assets and liabilities for the
future tax consequences attributable to temporary differences
between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases as well as operating loss,
capital
loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those differences or
carryforwards are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in our Income tax provision in the period that includes the
enactment date. Additionally, in determining the need for recording a
valuation allowance against
the carrying amount of deferred tax
assets, we consider the amount of taxable income and periods over
which it must be earned, actual
levels of past taxable income and
known trends and events or transactions that are expected to affect
future levels of taxable income. Where we determine that it is more
likely than not that all or a portion of an asset will not be realized, we
record a valuation allowance.

We recognize the benefit of positions taken or expected to be taken
in our tax returns in our Income tax provision when it is more likely
than not (i.e., a likelihood of more than fifty percent) that the position
would be sustained upon examination by tax authorities. A
recognized tax position is then measured at the largest amount of
benefit that is greater than fifty percent likely of being realized upon
settlement with the taxing authorities. We evaluate these amounts on
a quarterly basis to ensure that
they have been appropriately
adjusted for audit settlements and other events we believe may
impact the outcome. Changes in judgment that result in subsequent
recognition, derecognition or a change in measurement of a tax
position taken in a prior annual period (including any related interest
and penalties) are recognized as a discrete item in the interim period
in which the change occurs. We recognize accrued interest and
penalties related to unrecognized tax benefits as components of our
Income tax provision.

We do not record a deferred tax liability for unremitted earnings of
our foreign subsidiaries to the extent that the earnings meet the
indefinite reversal criteria. This criteria is met if the foreign subsidiary
has invested, or will invest, the earnings indefinitely. The decision as
to the amount of unremitted earnings that we intend to maintain in
non-U.S. subsidiaries considers items including, but not limited to,
forecasts and budgets of financial needs of cash for working capital,
liquidity plans and expected cash requirements in the U.S.

See Note 18 for a further discussion of our income taxes.

Fair Value Measurements. Fair value is the price we would receive
to sell an asset or pay to transfer a liability (exit price) in an orderly
transaction between market participants. For
those assets and
liabilities we record or disclose at fair value, we determine fair value
based upon the quoted market price, if available. If a quoted market
price is not available for identical assets, we determine fair value
based upon the quoted market price of similar assets or the present
value of expected future cash flows considering the risks involved,
including counterparty performance risk if appropriate, and using
discount
the duration. The fair values are
assigned a level within the fair value hierarchy, depending on the
source of the inputs into the calculation.

rates appropriate for

Level 1

Level 2

Inputs based upon quoted prices in active markets for
identical assets.

Inputs other than quoted prices included within Level 1
that are observable for the asset, either directly or
indirectly.

Level 3

Inputs that are unobservable for the asset.

Cash and Cash Equivalents. Cash equivalents represent funds we
have temporarily invested (with original maturities not exceeding
three months),
including short-term, highly liquid debt securities.
Cash and overdraft balances that meet the criteria for right of setoff
are presented net on our Consolidated Balance Sheet.

Receivables. The Company’s receivables are primarily generated
from ongoing business relationships with our franchisees as a result
of franchise agreements, including contributions due to advertising
cooperatives we consolidate. These receivables from franchisees are
generally due within 30 days of
the period in which the
corresponding sales occur and are classified as Accounts and notes
receivable, net on our Consolidated Balance Sheet. Effective with the
adoption of Topic 326 on January 1, 2020, our receivables are now
stated net of expected credit
to our net
receivables as a result of adopting the standard was not significant.
Expected credit
losses for uncollectible franchisee receivable
balances consider both current conditions and reasonable and
supportable forecasts of
future conditions. Current conditions we
consider include pre-defined aging criteria as well as specified events
that indicate we may not collect the balance due. Reasonable and

losses. The impact

PART II
ITEM 8. Financial Statements and Supplementary Data.

the ultimate recovery of

supportable forecasts used in determining the probability of future
collection consider publicly
available data regarding default
probability. While we use the best information available in making our
determination,
recorded receivables is
dependent upon future economic events and other conditions that
may be beyond our control. Receivables that are ultimately deemed
to be uncollectible, and for which collection efforts have been
exhausted, are written off against
the allowance for doubtful
accounts.

We recorded $8 million of net bad debt recoveries in 2021 and
$12 million and $24 million of net bad debt expense in 2020 and
2019, respectively, within Franchise and property expenses related
to continuing fees,
receivables from our
franchisees.

fees and rent

initial

Accounts and notes receivable as well as the Allowance for doubtful
accounts,
including balances attributable to our consolidated
advertising cooperatives, as of December 31, 2021 and 2020,
respectively, are as follows:

2021

2020

Accounts and notes receivable

$ 632

$ 579

Allowance for doubtful accounts

(36)

(45)

Accounts and notes receivable, net

$ 596

$ 534

Our financing receivables primarily consist of notes receivables and
direct financing leases with franchisees which we enter into from
time-to-time. As these receivables primarily relate to our ongoing
business agreements with franchisees, we consider such receivables
to have similar
risk characteristics and evaluate them as one
collective portfolio segment and class for determining the allowance
for doubtful accounts. Balances of notes receivable and direct
financing leases due within one year are included in Accounts and
notes receivable, net while amounts due beyond one year are
included in Other assets. Amounts included in Other assets totaled
$68 million (net of an allowance of less than $1 million) and $72
million (net of an allowance of less than $5 million) at December 31,
2021, and December 31, 2020, respectively. Financing receivables
that are ultimately deemed to be uncollectible, and for which
collection efforts have been exhausted, are written off against the
allowance for doubtful accounts.
income recorded on
financing receivables has historically been insignificant.

Interest

depreciation

Property, Plant and Equipment. PP&E is carried net of
calculate
accumulated
and
depreciation and amortization on a straight-line basis over
the
lives of the assets as follows: 5 to 25 years for
estimated useful
buildings and leasehold improvements and 3 to 20 years for
machinery
and
amortization on assets that are held for sale.

and equipment. We

suspend depreciation

amortization. We

Leases and Leasehold Improvements. We adopted ASU
No. 2016-02, Leases (“Topic 842”) as of the beginning of the year
ended December 31, 2019, using a modified retrospective transition
approach for leases existing at, or entered into after, the beginning of
2019. The cumulative effect of this transition was recorded as an
increase to Accumulated deficit of $2 million as of this date. We lease
land, buildings or both for certain of our Company-operated
restaurants and restaurant support centers worldwide. Rental
expense for leased Company-operated restaurants is presented in
our Consolidated Statements of Income within Company restaurant
expenses and rental expense for
restaurant support centers is
presented within G&A. The length of our lease terms, which vary by
country and often include renewal options, are an important factor in
determining the appropriate accounting for leases including the initial
classification of the lease as finance or operating as well as the timing

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PART II
ITEM 8. Financial Statements and Supplementary Data.

of recognition of rent expense over the duration of the lease. We
include renewal option periods in determining the term of our leases
when failure to renew the lease would impose a penalty on the
Company in such an amount
that a renewal appears to be
reasonably certain at the commencement of the lease. The primary
is the economic detriment
penalty to which we are subject
associated with the existence of leasehold improvements that might
be impaired if we choose not to continue the use of the leased
property. Leasehold improvements are amortized over the shorter of
their estimated useful
lives or the lease term. We generally do not
receive leasehold improvement incentives upon opening a store that
is subject to a lease. We expense rent associated with leased land or
buildings while a restaurant is being constructed whether rent is paid
or we are subject to a rent holiday. Our leasing activity for other
assets, including equipment, is not significant.

Right-of-use assets and liabilities are recognized upon lease
commencement
for operating and finance leases based on the
present value of lease payments over the lease term. Right-of-use
assets represent our right to use an underlying asset for the lease
term and lease liabilities represent our obligation to make lease
payments arising from the lease. Subsequent amortization of the
right-of-use asset and accretion of the lease liability for an operating
lease is recognized as a single lease cost, on a straight-line basis,
over the lease term. For finance leases, the right-of-use asset is
depreciated on a straight-line basis over the lesser of the useful life of
the leased asset or lease term. Interest on each finance lease liability
is determined as the amount that results in a constant periodic
discount rate on the remaining balance of the liability. As most of our
leases do not provide an implicit discount
rate, we use our
incremental secured borrowing rate based on the information
available at commencement date,
including the lease term and
currency, in determining the present value of lease payments for both
operating and finance leases. Leases with an initial
term of 12
months or less are not recorded in the Consolidated Balance Sheet;
we recognize lease expense for these leases on a straight-line basis
over the lease term.

Right-of-use assets are assessed for impairment in accordance with
our long-lived asset impairment policy, which is performed annually
for
restaurant-level assets or whenever events or changes in
circumstances indicate that the carrying amount of a restaurant may
not be recoverable. We reassess lease classification and remeasure
right-of-use assets and lease liabilities when a lease is modified and
that modification is not accounted for as a separate new lease or
upon certain other events that require reassessment. The difference
between operating lease rental expense recognized in our
Consolidated Statements of
Income and cash payments for
operating leases is recognized within Other, net within Net Cash
Provided by Operating Activities in our Consolidated Statements of
Cash Flows.

to use a restaurant as well as a license of

In certain instances, we lease or sublease certain restaurants to
franchisees. Our lessor and sublease portfolio primarily consists of
to
stores that have been leased to franchisees subsequent
refranchising transactions. Our most significant leases with lease and
non-lease components are leases with our franchisees that include
both the right
the
intellectual property associated with our Concepts’ brands. For these
leases, which are primarily classified as operating leases, we account
for the lease and non-lease components separately. Revenues from
rental agreements with franchisees are presented within Franchise
and property revenues in our Consolidated Statements of Income
and related expenses (e.g. depreciation and rent expense) are
presented within Franchise and property expenses.

Goodwill and Intangible Assets. From time-to-time, the Company
acquires restaurants from one of our Concept’s franchisees or
acquires another business. Goodwill
from these acquisitions
represents the excess of the cost of a business acquired over the net

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of the amounts assigned to assets acquired, including identifiable
intangible assets and liabilities assumed. Goodwill
is not amortized
and has been assigned to reporting units for purposes of impairment
testing. Our reporting units are our business units (which are aligned
based on geography) in our KFC, Taco Bell, Pizza Hut and Habit
Burger Grill Divisions.

We evaluate goodwill for impairment on an annual basis or more
often if an event occurs or circumstances change that
indicate
impairment might exist. We have selected the beginning of our fourth
quarter as the date on which to perform our ongoing annual
impairment test for goodwill. We may elect to perform a qualitative
assessment for our reporting units to determine whether it is more
likely than not that the fair value of the reporting unit is greater than
its carrying value. If a qualitative assessment is not performed, or if as
a result of a qualitative assessment it is not more likely than not that
the fair value of a reporting unit exceeds its carrying value, then the
reporting unit’s fair value is compared to its carrying value. Fair value
is the price a willing buyer would pay for a reporting unit, and is
generally estimated using discounted expected future after-tax cash
flows from Company-owned restaurant operations,
if any, and
franchise royalties. The discount rate is our estimate of the required
rate of return that a third-party buyer would expect to receive when
purchasing a business from us that constitutes a reporting unit. We
believe the discount
rate is commensurate with the risks and
uncertainty inherent in the forecasted cash flows. An impairment
charge is recognized based on the excess of a reporting unit’s
carrying amount over its fair value.

the reporting unit

to its acquisition, we include goodwill

If we record goodwill upon acquisition of a restaurant(s)
from a
franchisee and such restaurant(s) is then sold within two years of
acquisition, the goodwill associated with the acquired restaurant(s) is
written off in its entirety. If the restaurant is refranchised two years or
more subsequent
in the
carrying amount of the restaurants disposed of based on the relative
fair values of the portion of the reporting unit disposed of in the
refranchising and the portion of
that will be
retained. The fair value of the portion of the reporting unit disposed of
in a refranchising is determined by reference to the discounted value
of the future cash flows expected to be generated by the restaurant
and retained by the franchisee, which includes a deduction for the
anticipated, future royalties the franchisee will pay us associated with
the franchise agreement entered into simultaneously with the
refranchising transition. The fair value of the reporting unit retained is
based on the price a willing buyer would pay for the reporting unit
and includes the value of
franchise agreements. Appropriate
adjustments are made if a franchise agreement includes terms that
are determined to not be at prevailing market rates. As such, the fair
value of the reporting unit retained can include expected cash flows
from future royalties from those restaurants currently being
refranchised, future royalties from existing franchise businesses and
company restaurant operations. As a result, the percentage of a
reporting unit’s goodwill that will be written off
in a refranchising
transaction will be less than the percentage of the reporting unit’s
Company-owned restaurants that are refranchised in that transaction
and goodwill can be allocated to a reporting unit with only franchise
restaurants.

We evaluate the remaining useful life of an intangible asset that is not
being amortized each reporting period to determine whether events
and circumstances continue to support an indefinite useful life. If an
is not being amortized is subsequently
intangible asset
determined to have a finite useful
life, we amortize the intangible
asset prospectively over its estimated remaining useful life. Intangible
assets that are deemed to have a definite life are amortized on a
straight-line basis to their residual value.

that

We evaluate our indefinite-lived intangible assets for impairment on
an annual basis or more often if an event occurs or circumstances
change that indicate impairments might exist. We perform our annual

test for impairment of our indefinite-lived intangible assets at the
beginning of our fourth quarter. We may elect to perform a qualitative
assessment to determine whether it is more likely than not that the
fair value of an indefinite-lived intangible asset is greater than its
carrying value. If a qualitative assessment is not performed, or if as a
result of a qualitative assessment it is not more likely than not that the
fair value of an indefinite-lived intangible asset exceeds its carrying
value, then the asset’s fair value is compared to its carrying value.
Fair value is an estimate of the price a willing buyer would pay for the
intangible asset and is estimated by discounting the expected future
after-tax cash flows associated with the intangible asset.

Our definite-lived intangible assets that are not allocated to an
individual restaurant are evaluated for impairment whenever events or
changes in circumstances indicate that the carrying amount of the
intangible asset may not be recoverable. An intangible asset that is
deemed not recoverable on an undiscounted basis is written down to
its estimated fair value, which is our estimate of the price a willing
buyer would pay for
the intangible asset based on discounted
expected future after-tax cash flows. For purposes of our impairment
analysis, we update the cash flows that were initially used to value
the definite-lived intangible asset to reflect our current estimates and
assumptions over the asset’s future remaining life.

Capitalized Software. We state capitalized software at cost less
accumulated amortization within Intangible assets, net on our
Consolidated Balance Sheets. We calculate amortization on a
straight line basis over the estimated useful life of the software which
ranges from 3 to 7 years upon initial capitalization.

Derivative Financial Instruments. We use derivative instruments
primarily to hedge interest rate and foreign currency risks, and to
reduce our exposure to market-driven charges in certain of the
liabilities associated with employee compensation deferrals into our
Executive Income Deferral (“EID”) Plan. These derivative contracts are
entered into with financial
institutions. We do not use derivative
instruments for trading purposes and we have procedures in place to
monitor and control their use.

We record all derivative instruments on our Consolidated Balance
Sheet at fair value. For derivative instruments that are designated and
qualify as a cash flow hedge, gain or loss on the derivative instrument
is reported as a component of AOCI and reclassified into earnings in
the same period or periods during which the hedged transaction
affects earnings. For derivative instruments not designated as
hedging instruments, the gain or loss is recognized in the results of
operations immediately.

fail

to meet

the counterparties will

into contracts with carefully selected major

As a result of the use of derivative instruments, the Company is
their
exposed to risk that
contractual obligations. To mitigate the counterparty credit risk, we
only enter
financial
institutions based upon their credit ratings and other factors, and
continually assess the creditworthiness of counterparties. At
the
December 31, 2021 and December 31, 2020, all of
counterparties to our
rate swaps and foreign currency
forwards had investment grade ratings according to the three major
ratings agencies. To date, all counterparties have performed in
accordance with their contractual obligations.

interest

Common Stock Share Repurchases. From time-to-time, we
repurchase shares of our Common Stock under share repurchase
programs authorized by our Board of Directors. Shares repurchased
constitute authorized, but unissued shares under the North Carolina
laws under which we are incorporated. Additionally, our Common
Stock has no par or stated value. Accordingly, we record the full
value of share repurchases, or other deductions to Common Stock

PART II
ITEM 8. Financial Statements and Supplementary Data.

such as shares cancelled upon employee share-based award
exercises, upon the trade date, against Common Stock on our
Consolidated Balance Sheet except when to do so would result in a
negative balance in such Common Stock account. In such instances,
on a period basis, we record the cost of any further share
repurchases, or other deductions to Common Stock as an addition
to Accumulated deficit. Due to the large number of share
repurchases of our stock over the past several years, our Common
Stock
any
period. Accordingly, $1,549 million, $179 million and $796 million in
share repurchases in 2021, 2020 and 2019, respectively, were
recorded as an addition to Accumulated deficit. Additionally,
$18 million related to shares cancelled upon employee share-based
award exercises in 2019 were recorded as an addition to
Accumulated deficit. See Note 17 for additional
information on our
share repurchases.

frequently

balance

zero

end

the

Pension and Post-retirement Medical Benefits. We measure and
recognize the overfunded or underfunded status of our pension and
post-retirement plans as an asset or liability in our Consolidated
Balance Sheet as of our
fiscal year end. The funded status
represents the difference between the projected benefit obligations
and the fair value of plan assets, which is calculated on a
plan-by-plan basis. The projected benefit obligation and related
funded status are determined using assumptions as of the end of
each year. The projected benefit obligation is the present value of
benefits earned to date by plan participants, including the effect of
future salary increases, as applicable. The difference between the
projected benefit obligations and the fair value of plan assets that has
not previously been recognized in our Consolidated Statement of
Income is recorded as a component of AOCI.

The net periodic benefit costs associated with the Company’s
defined benefit pension and post-retirement medical plans are
determined using assumptions regarding the projected benefit
obligation and, for funded plans, the market-related value of plan
assets as of the beginning of each year, or remeasurement period if
applicable. We record the service cost component of net periodic
benefit costs in G&A. Non-service cost components are recorded in
Other pension (income) expense. We have elected to use a market-
related value of plan assets to calculate the expected return on
assets, net of administrative and investment fees paid from plan
assets, in net periodic benefit costs. For each individual plan we
amortize into pension expense the net amounts in AOCI, as adjusted
for the difference between the fair value and market-related value of
plan assets, to the extent that such amounts exceed 10% of the
greater of a plan’s projected benefit obligation or market-related
value of assets, over
the remaining service period of active
participants in the plan or, for plans with no active participants, over
the expected average life expectancy of the inactive participants in
the plan. The market-related value of plan assets is the fair value of
plan assets as of the beginning of each year adjusted for variances
between actual returns and expected returns. We attribute such
variances to the market-related value of plan assets evenly over five
years.

We record a curtailment when an event occurs that significantly
reduces the expected years of future service or eliminates the accrual
of defined benefits for the future services of a significant number of
employees. We record a curtailment gain when the employees who
are entitled to the benefits terminate their employment; we record a
curtailment loss when it becomes probable a loss will occur. We
recognize settlement gains or losses only when we have determined
that the cost of all settlements in a year will exceed the sum of the
service and interest costs within an individual plan.

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PART II
ITEM 8. Financial Statements and Supplementary Data.

NOTE 3 – Acquisitions

Habit Burger Grill Acquisition
On March 18, 2020, we completed the acquisition of all of the issued
and outstanding common shares of The Habit Restaurants, Inc. As
of the date of acquisition, The Habit Restaurants, Inc. operated 245
company-owned and 31 franchised Habit Burger Grill restaurants
across the U.S. and in China, offering a flavor-forward variety of
made-to-order items chargrilled over an open flame. We expect
Habit Burger Grill to benefit from the global scale and resources of
YUM and that the acquisition will accelerate and diversify YUM’s
growth.

Total Current Assets

Property, plant and equipment, net

Habit Burger Grill brand (included in Intangible assets, net)

Operating lease right-of-use assets (included in Other assets)

Other assets

Total Assets

Total Current Liabilities

Operating lease liabilities (included in Other liabilities and deferred credits)

Total Liabilities

Total identifiable net assets

Goodwill

Net consideration transferred

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During the first quarter of 2020, the operations of substantially all
Habit Burger Grill restaurants were impacted by COVID-19. As a
result, we performed an interim impairment test of the Habit Burger
Grill reporting unit goodwill as of March 31, 2020. This test of
impairment included comparing the estimated fair value of the Habit
Burger Grill reporting unit to its carrying value, including goodwill, as
originally determined through our preliminary purchase price
allocation. The fair value estimate of the Habit Burger Grill reporting
unit was based on the estimated price a willing buyer would pay for
the reporting unit and was determined using an income approach
through a discounted cash flow analysis using unobservable inputs
(Level 3). The most impactful of these inputs included future average
unit volumes of Habit Burger Grill restaurants as well as restaurant
unit counts. The fair value was determined based upon a probability-
weighted average of
three scenarios, which included assumed
recovery of Habit Burger Grill average unit volumes to a pre—
COVID-19 level over periods ranging from the beginning of 2021 to
the end of 2022. Factors impacting restaurant unit counts were near-
term unit closures as the result of COVID-19 as well as the pace of
expected new unit development. Unit counts assumed were
correlated with the expected recoveries in average unit volumes.
Based upon this fair value estimate, we determined that the carrying
value of our Habit Burger Grill reporting unit exceeded its fair value.
As a result, during the first quarter of 2020 we recorded a goodwill
impairment charge of $139 million to Other (income) expense and a
corresponding income tax benefit of $32 million. As we continued to
refine our preliminary purchase price allocation in the quarter ended
September 30, 2020, the impairment charge was adjusted upward
by $5 million, which resulted in a corresponding income tax benefit of
$1 million. Subsequent to these 2020 goodwill
impairment charges
and the finalization during the quarter ended March 31, 2021, of the
allocation of consideration to the net assets acquired (described
above), the Habit Burger Grill reporting unit goodwill was $60 million.
The pro forma impact on our results of operations if the acquisition

58 YUM! BRANDS, INC. - 2021 Form 10-K

Total cash consideration paid in connection with the acquisition was
$408 million, net of acquired cash of $20 million. The acquisition was
accounted for as a business combination using the acquisition
method of accounting. During the quarter ended March 31, 2021, we
finalized our estimate of the fair value of the net assets acquired,
which resulted in goodwill being reduced by $15 million compared to
the initial fair value estimate recorded in the quarter ended March 31,
2020 ($2 million of this reduction was recorded in the quarter ended
March 31, 2021). This final allocation of consideration to the net
tangible and intangible assets acquired upon the March 18, 2020
acquisition is presented in the table below.

111

196

442

(68)

(170)

(238)

204

$ 408

had been completed as of the beginning of 2019 would not have
been significant.

Dragontail Systems Acquisition
On September 7, 2021, we completed the acquisition of Dragontail
Systems Limited (“Dragontail”). The Dragontail acquisition advances
our digital capabilities and its AI-based integrated kitchen order
management and delivery technologies are intended to strengthen
store operations, enhance the customer experience and make it
easier
team members to run a restaurant. Total cash
consideration paid in connection with the acquisition was $66 million,
net of cash acquired of $3 million. This net consideration has been
classified within Other, net cash flows from investing activities within
our Consolidated Statements of Cash Flows.

for

The acquisition was accounted for as a business combination using
the acquisition method of accounting. The primary assets recorded
as a result of the preliminary purchase price allocation were goodwill
of $57 million and amortizable intangible assets of $11 million. The
amortizable intangible assets, which consist of software, have an
estimated weighted average useful
life of 7 years. The goodwill
recorded resulted from synergies expected to be achieved through
leveraging our scale and resources to enhance these technologies
and deploy them globally to our brands and franchisees over time.
Goodwill
is
non-deductible for tax purposes and has been allocated to our
reporting units within the Pizza Hut Division operating segment that
are expected to most benefit from the Dragontail acquisition. The
purchase price allocation for Dragontail is preliminary and subject to
completion of valuation analyses.

recognized

from the

acquisition

Dragontail

The financial
results of Dragontail have been included in our
Consolidated Financial Statements since the date of the acquisition

PART II
ITEM 8. Financial Statements and Supplementary Data.

the year ended
but did not significantly impact our
December 31, 2021. The pro forma impact on our
results of
operations if the acquisition had been completed as of the beginning

results for

of 2020 would not have been significant. The direct transaction costs
associated with the acquisition were also not material and were
expensed as incurred.

NOTE 4 – Earnings Per Common Share (“EPS”)

Net Income

Weighted-average common shares outstanding (for basic calculation)

Effect of dilutive share-based employee compensation

Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)

Basic EPS

Diluted EPS

2021

2020

2019

$ 1,575

$ 904

$ 1,294

297

302

307

5.30

$ 2.99

5.21

$ 2.94

306

313

4.23

4.14

Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted
EPS computation(a)

1.1

4.8

2.0

(a) These unexercised employee stock options and stock appreciation rights were not included in the computation of diluted EPS because to do so

would have been antidilutive for the periods presented.

NOTE 5 – Items Affecting Comparability of Net Income and Cash Flows

Refranchising (Gain) Loss
The Refranchising (gain) loss by our Divisional reportable segments is
refranchising
presented below. Given the size and volatility of
initiatives, our chief operating decision maker (“CODM”) does not
consider the impact of Refranchising (gain)
loss when assessing
Divisional segment performance. As such, we do not allocate such
gains and losses to our Divisional segments for performance
reporting purposes.

During the years ended December 31, 2021, 2020 and 2019, we
refranchised 83, 97 and 25 restaurants, respectively. Additionally,
during the years ended December 31, 2021, 2020 and 2019, we
sold certain restaurant assets associated with existing franchise

A summary of Refranchising (gain) loss is as follows:

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger Grill Division

Worldwide

five years to fight

the Yum! Brands,

Unlocking Opportunity Initiative
On June 24, 2020,
Inc. Board of Directors
approved the establishment of the Company’s new global “Unlocking
Opportunity Initiative” including a $100 million investment over the
next
inequality by unlocking opportunities for
employees,
team members and communities. The
Company contributed $50 million in the second quarter of 2020 to
(a stand-alone, not-for-profit
Yum! Brands Foundation,
organization that is not consolidated in the Company’s results) as
part of these efforts and investment. As a result of the size and
specific nature of
this contribution the associated General and
administrative expense was not allocated to any of our segment
operating results for performance reporting purposes.

restaurant

Inc.

the sales of

restaurants to the franchisee. We received $85 million, $19 million
and $110 million in pre-tax cash refranchising proceeds in 2021,
2020 and 2019, respectively, as a result of
these
In 2020, we also received as
restaurants and restaurant assets.
refranchising proceeds minority interests in Devyani
International
Limited (“Devyani”), as discussed further below. At the time of the
refranchisings, these minority interests had fair values estimated to
be $31 million. In 2019, we also received as refranchising proceeds a
minority interest in an entity that owns our KFC and Pizza Hut master
franchisee rights in Brazil. At the time of refranchising, the fair value of
this minority interest was estimated to be $6 million.

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Refranchising (gain) loss

2021

(1)

(29)

(6)

2020

$ (33)

(2)

—

2019

(6)

(31)

—

$ (35)

$ (34)

$ (37)

COVID-19 Relief
During the year ended December 31, 2020, we recorded a charge of
$25 million related to a contribution made to Yum! Brands
Foundation, Inc. expected to fund past and anticipated payments for
COVID-19 relief provided to restaurant-level employees within the
YUM system diagnosed with COVID-19 or acting as the primary
caregiver for someone diagnosed with COVID-19. As a result of the
size and specific nature of this contribution the associated General
and administrative expense was not allocated to any of our segment
operating results for performance reporting purposes.

YUM! BRANDS, INC. - 2021 Form 10-K 59

PART II
ITEM 8. Financial Statements and Supplementary Data.

Resource Optimization
During the year ended December 31, 2021, we recorded charges of
$7 million to General and administrative expenses and $2 million to
Other (income) expense and we recorded a credit of $1 million to
Other pension (income) expense related to a resource optimization
program initiated in the third quarter of 2020. During the year ended
December 31, 2020, we recorded charges of $36 million to General
and administrative expenses and $2 million to Other pension
(income) expense related to this resource optimization program.

The charges incurred as a result of this program were primarily
associated with a voluntary retirement program offered to our U.S.
based employees and a worldwide severance program. This
program is part of our efforts to optimize our resources, reallocating
them toward critical areas of
the business that will drive future
growth. These critical areas include accelerating our digital,
technology and innovation capabilities to deliver a modern, world-
class team member and customer experience and improve unit
economics. Due to their scope and size,
these costs were not
allocated to any of our segment operating results for performance
reporting purposes.

Investment in Devyani
In 2020, we received an approximate 5% minority interest in Devyani,
an entity that operates KFC and Pizza Hut franchised units in India.
The minority interest was received in lieu of cash proceeds upon the
refranchising of approximately 60 KFC restaurants in India. At the
time of the refranchisings, the fair value of this minority interest was
estimated to be approximately $31 million. On August 16, 2021,
Devyani executed an initial public offering and subsequently the fair
value of this investment became readily determinable. As a result,
concurrent with the initial public offering we began recording
changes in fair value in Investment (income) expense, net in our
Consolidated Statements of
Income and recognized pre-tax
investment income of $87 million, in the year ended December 31,
2021 (see Note 14).

Refinancing of Credit Agreement and
Redemption of Subsidiary Senior
Unsecured Notes
On March 15, 2021, certain subsidiaries of the Company completed
a refinancing of our Credit Agreement. As a result, fees expensed of
$4 million as well as previously recorded unamortized debt issuance
costs written off of $8 million were recognized within Interest
expense, net.

On April 23, 2021, certain subsidiaries of the Company issued a
notice of redemption for June 1, 2021, for $1,050 million aggregate
principal amount of 5.25% Subsidiary Senior Unsecured Notes due
in 2026. The redemption amount was equal to 102.625% of the
$1,050 million aggregate principal amount redeemed, reflecting a
$28 million “call premium”. We recognized the call premium and the
write-off of $6 million of unamortized debt issuance costs associated
with the notes within Interest expense, net.

On September 9, 2020, certain subsidiaries of the Company issued a
notice of redemption for $1,050 million aggregate principal amount of
5.00% Subsidiary Senior Unsecured Notes due in 2024. The
redemption amount included a $26 million call premium plus accrued
and unpaid interest to the date of redemption of October 9, 2020.
We recorded the call premium, $6 million of unamortized debt

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60 YUM! BRANDS, INC. - 2021 Form 10-K

issuance costs associated with the notes and $2 million of accrued
and unpaid interest associated with the period of
time from
prepayment of the notes with the trustee on September 25, 2020, to
their redemption date within Interest expense, net.

See Note 11 for further discussion of the Credit Agreement and
Subsidiary Senior Unsecured Notes.

Investment in Grubhub, Inc. (“Grubhub”)
In April of 2018 we purchased 2.8 million shares of Grubhub
common stock for $200 million. In the quarter ended September 30,
2020, we sold our entire investment
in Grubhub and received
proceeds of $206 million. While we held our investment in Grubhub
common stock we recognized changes in the fair value in our
investment in our Consolidated Statements of Income. For the years
ended December 31, 2020 and 2019, we recognized pre-tax
investment income of $69 million and pre-tax investment expense of
$77 million, respectively.

Income Tax Matters
In December of 2019, we completed intra-entity transfers of certain
intellectual property (“IP”) rights. As a result of the transfer of certain
of these rights, largely to subsidiaries in the United Kingdom (“UK”),
we received a step-up in tax basis to current
fair value under
applicable tax law. To the extent this step-up in tax basis was
amortizable against future taxable income, we recognized a one-time
deferred tax benefit of $226 million in the quarter ended
December 31, 2019. Additionally, we recognized a related deferred
tax benefit of $3 million in the year ended December 31, 2020.

On July 22, 2020, the UK Finance Act 2020 was enacted resulting in
an increase in the UK corporate tax rate from 17% to 19%. As a
result, in the year ended December 31, 2020, we remeasured the
related deferred tax assets originally recorded as described above
and recognized an additional $25 million deferred tax benefit.

On June 10, 2021, the UK Finance Act 2021 was enacted resulting
in an increase in the UK corporate income tax rate from 19% to 25%.
As a result, in the year ended December 31, 2021, we remeasured
the related deferred tax assets originally recorded as described
above and recognized an additional $64 million deferred tax benefit.

In July 2021, we concentrated management
responsibility for
European (excluding the UK) KFC franchise development, support
in Switzerland (the “KFC
operations and management oversight
Europe Reorganization”). Concurrent with
in
management responsibility, we have completed intra-entity transfers
of certain KFC IP rights from subsidiaries in the UK to subsidiaries in
Switzerland. With the transfers of these rights, we received a step-up
in amortizable tax basis to current fair value under applicable Swiss
tax law. As a result of this transfer, we recorded a net one-time
deferred tax benefit of $152 million in the year ended December 31,
2021.

change

this

In December 2021, we continued our KFC Europe Reorganization
and completed intra-entity transfers of additional European KFC IP
rights from subsidiaries in the U.S. to subsidiaries in Switzerland.
With the transfers of these additional rights, we received a step-up in
amortizable tax basis to current fair value under applicable Swiss tax
law. As a result of this transfer, we recorded a net one-time deferred
tax benefit of $35 million in the year ended December 31, 2021.

See Note 18.

PART II
ITEM 8. Financial Statements and Supplementary Data.

NOTE 6 – Revenue Recognition

Disaggregation of Total Revenues
The following tables disaggregate revenue by Concept, for our two most significant markets based on Operating Profit and for all other markets.
We believe this disaggregation best reflects the extent to which the nature, amount, timing and uncertainty of our revenues and cash flows are
impacted by economic factors.

U.S.

Company sales

Franchise revenues

Property revenues

Franchise contributions for advertising and other services

China

Franchise revenues

Other

Company sales

Franchise revenues

Property revenues

Franchise contributions for advertising and other services

U.S.

Company sales

Franchise revenues

Property revenues

Franchise contributions for advertising and other services

China

Franchise revenues

Other

Company sales

Franchise revenues

Property revenues

Franchise contributions for advertising and other services

KFC
Division

Taco Bell
Division

2021
Pizza Hut
Division

Habit Burger
Grill Division

Total

198

235

531

1,049

612

944

661

545

—

279

317

249

$ 520 $ 1,550

—

1,142

891

297

556

1,335

687

$ 2,793

$ 2,238

$ 1,028

$ 525 $ 6,584

KFC
Division

Taco Bell
Division

2020
Pizza Hut
Division

Habit Burger
Grill Division

Total

184

204

446

833

453

882

593

483

—

272

317

222

$ 346

$ 1,309

—

1,050

818

255

501

1,080

514

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$ 2,272

$ 2,031

$ 1,002

$ 347

$ 5,652

YUM! BRANDS, INC. - 2021 Form 10-K 61

PART II
ITEM 8. Financial Statements and Supplementary Data.

U.S.

Company sales

Franchise revenues

Property revenues

Franchise contributions for advertising and other services

China

Franchise revenues

Other

Company sales

Franchise revenues

Property revenues

Franchise contributions for advertising and other services

2019

KFC
Division

Taco Bell
Division

Pizza Hut
Division

Total

175

214

497

912

520

919

602

483

—

21 $ 1,014

282

1,059

318

811

274

246

532

1,185

580

$ 2,491

$ 2,079

$ 1,027 $ 5,597

Contract Liabilities
Our contract liabilities are comprised of unamortized upfront fees received from franchisees and are presented within Accounts payable and
other current liabilities and Other liabilities and deferred credits on our Consolidated Balance Sheet. A summary of significant changes to the
contract liability balance during 2021 and 2020 is presented below.

Balance at December 31, 2019

Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the
period

Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as
revenue during the period

Other(a)

Balance at December 31, 2020

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Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the
period

Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as
revenue during the period

Other(a)

Balance at December 31, 2021

Deferred
Franchise Fees

$ 441

(76)

(3)

$ 415

(74)

(7)

$ 421

(a)

Includes impact of foreign currency translation, as well as, in 2021, the recognition of deferred franchise fees into Refranchising (gain) loss upon the
modification of existing franchise agreements when entering into master franchise agreements.

We expect to recognize contract liabilities as revenue over the remaining term of the associated franchise agreement as follows:

Less than 1 year

1 - 2 years

2 - 3 years

3 - 4 years

4 - 5 years

Thereafter

Total

141

$ 421

We have applied the optional exemption, as provided for under Topic 606, which allows us to not disclose the transaction price allocated to
unsatisfied performance obligations when the transaction price is a sales-based royalty.

62 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

NOTE 7 – Supplemental Cash Flow Data

Cash Paid For:

Interest(a)

Income taxes

Significant Non-Cash Investing and Financing Activities:

Non-cash refranchising proceeds(b)

Reconciliation of Cash and cash equivalents to Consolidated Statements of Cash Flows:

2021

2020

2019

474

480

308

328

497

283

—

Cash and cash equivalents as presented in Consolidated Balance Sheets

486

730

Restricted cash included in Prepaid expenses and other current assets(c)

Restricted cash and restricted cash equivalents included in Other assets(d)

250

258

605

138

Cash, Cash Equivalents and Restricted Cash as presented in Consolidated Statements of Cash Flows

771

1,024

768

(a) Amounts exclude payments of $28 million in both 2021 and 2020 classified as Interest expense in our Consolidated Statements of Income which are

(b)

included in Repayments of long-term debt within financing activities in our Consolidated Statements of Cash Flows (see Note 11).
In 2020 we received as refranchising consideration a minority interest in an entity (Devyani) that operates KFC and Pizza Hut franchised units in India
(see Note 5) and in 2019 we received as refranchising consideration a minority interest in an entity that owns our KFC and Pizza Hut master
franchisee rights in Brazil.

(c) Restricted cash within Prepaid expenses and other current assets reflects the cash related to advertising cooperatives which we consolidate that can
only be used to settle obligations of the respective cooperatives and cash held in reserve for Taco Bell Securitization interest payments (see Note 11).

(d) Primarily trust accounts related to our self-insurance programs.

NOTE 8 – Other (Income) Expense

Foreign exchange net (gain) loss and other(a)

Impairment and closure expense(b)

Other (income) expense

2021

2020

2019

$ (14) $

(18) $ (1)

172

$ 154

(a) The year ended December 31, 2019, includes a charge of $8 million for the settlement of contingent consideration associated with our 2013

acquisition of the KFC Turkey and Pizza Hut Turkey businesses.

(b) The year ended December 31, 2020, includes a charge of $144 million related to the impairment of Habit Burger Grill goodwill (see Note 3). The year
ended December 31, 2020, also includes charges of $12 million related to the impairment of restaurant-level assets and charges of $11 million
related to the write-off of software no longer being used.

NOTE 9 – Supplemental Balance Sheet Information

Prepaid Expenses and Other Current Assets

Income tax receivable

Restricted cash

Assets held for sale(a)

Other prepaid expenses and current assets

Prepaid expenses and other current assets

Property, Plant and Equipment

Land

Buildings and improvements

Finance leases, primarily buildings

Machinery, equipment and other

Property, plant and equipment, gross

Accumulated depreciation and amortization

Property, plant and equipment, net

2021

2020

250

138

450

258

125

425

2021

2020

412

428

1,403

1,423

595

543

2,477

2,465

(1,270)

(1,230)

1,207

1,235

YUM! BRANDS, INC. - 2021 Form 10-K 63

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PART II
ITEM 8. Financial Statements and Supplementary Data.

Depreciation and amortization expense related to PP&E was $134 million, $132 million and $114 million in 2021, 2020 and 2019, respectively.

Other Assets

Operating lease right-of-use assets

Franchise incentives

Investment in Devyani International Limited

Other

Other assets

Accounts Payable and Other Current Liabilities

Accounts payable

Accrued compensation and benefits

Accrued advertising

Operating lease liabilities

Accrued interest

Other current liabilities

2021

2020

809

164

118

396

851

163

390

1,487

1,435

2021

2020

227

292

229

420

215

225

196

383

Accounts payable and other current liabilities

1,334

1,189

(a) Assets held for sale reflect the carrying value of restaurants we have offered for sale to franchisees and excess properties that we do not intend to

use for restaurant operations in the future.

NOTE 10 – Goodwill and Intangible Assets

The changes in the carrying amount of goodwill are as follows:

KFC Taco Bell Pizza Hut Habit Burger Grill Worldwide

Goodwill, net as of December 31, 2019(a)

Disposals and other, net(b)

Habit Burger Grill acquisition and impairment (See Note 3)

Goodwill, net as of December 31, 2020(a)

Acquisitions

Disposals and other, net(b)

Dragontail Systems acquisition (See Note 3)

233

—

235

—

(3)

—

Goodwill, net as of December 31, 2021(a)

232

—

199

$ —

530

—

202

—

(2)

257

—

(2)

—

597

(7)

657

(a) Goodwill, net includes $144 million of accumulated impairment loss recorded in the year ended December 31, 2020, related to our Habit Burger Grill

segment and $17 million of accumulated impairment losses for each year presented related to our Pizza Hut segment.

(b) Disposals and other, net

includes the impact of

foreign currency translation on existing balances and goodwill write-offs associated with

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refranchising.

Intangible assets, net for the years ended 2021 and 2020 are as follows:

Definite-lived intangible assets

Capitalized software costs

Reacquired franchise rights

Franchise contract rights

Other

Indefinite-lived intangible assets

KFC trademark

Habit Burger Grill brand asset

64 YUM! BRANDS, INC. - 2021 Form 10-K

2021

2020

Gross Carrying
Amount

Accumulated
Amortization

Gross Carrying
Amount

Accumulated
Amortization

409

(214)

335

(160)

(33)

(88)

(36)

(371)

100

603

127

(33)

(85)

(33)

(311)

100

527

127

PART II
ITEM 8. Financial Statements and Supplementary Data.

Amortization expense for all definite-lived intangible assets was $76 million in 2021, $63 million in 2020 and $52 million in 2019. Amortization
expense for definite-lived intangible assets is expected to approximate $82 million in 2022, $60 million in 2023, $46 million in 2024, $21 million in
2025 and $11 million in 2026.

NOTE 11 – Short-term Borrowings and Long-term Debt

Short-term Borrowings

Current maturities of long-term debt

Less current portion of debt issuance costs and discounts

Short-term borrowings

Long-term Debt

Securitization Notes

Subsidiary Senior Unsecured Notes

Term Loan A Facility

Term Loan B Facility

YUM Senior Unsecured Notes

Finance lease obligations (See Note 12)

Less debt issuance costs and discounts

Less current maturities of long-term debt

Long-term debt

2021

2020

(7)

3,811

750

1,489

4,475

463

(10)

453

2,869

1,800

431

1,916

3,725

11,339

10,813

(86)

(75)

(78)

(463)

11,178

10,272

Securitization Notes
Taco Bell Funding, LLC (the “Issuer”), a special purpose limited liability company and a direct, wholly-owned subsidiary of Taco Bell Corp.
(“TBC”) through a series of securitization transactions has issued fixed rate senior secured notes collectively referred to as the “Securitization
Notes”. The following table summarizes Securitization Notes outstanding at December 31, 2021:

Issuance Date

May 2016

November 2018

August 2021

Anticipated Repayment
Date(a)

Outstanding Principal
(in millions)

May 2026

November 2028

February 2027

February 2029

August 2031

$ 955

$ 606

$ 900

$ 600

$ 750

Interest Rate

Stated

4.970%

4.940%

1.946%

2.294%

2.542%

Effective(b)

5.14%

5.06%

2.11%

2.42%

2.64%

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(a) The legal final maturity dates of the Securitization Notes issued in 2016, 2018 and 2021 are May 2046, November 2048 and August 2051,
respectively. If the Issuer has not repaid or refinanced a series of Securitization Notes prior to its respective Anticipated Repayment Dates, rapid
amortization of principal on all Securitization Notes will occur and additional interest will accrue on the Securitization Notes.
Includes the effects of the amortization of any discount and debt issuance costs.

(b)

the “Securitization Entities”)

The Securitization Notes were issued in transactions pursuant to
which certain of TBC’s domestic assets, consisting principally of
franchise-related agreements and domestic intellectual property,
were contributed to the Issuer and the Issuer’s special purpose,
wholly-owned subsidiaries (the “Guarantors”, and collectively with the
Issuer,
to secure the Securitization
Notes. The Securitization Notes are secured by substantially all of the
assets of the Securitization Entities, and include a lien on all existing
and future U.S. Taco Bell franchise and license agreements and the
royalties payable thereunder, existing and future U.S. Taco Bell
intellectual property, certain transaction accounts and a pledge of the
equity interests in asset owning Securitization Entities. The remaining
U.S. Taco Bell assets that were excluded from the transfers to the
Securitization Entities continue to be held by Taco Bell of America,
LLC (“TBA”) and TBC. The Securitization Notes are not guaranteed

by the remaining U.S. Taco Bell assets, the Company, or any other
subsidiary of the Company.

On August 19, 2021, the Issuer completed a refinancing transaction
and issued $900 million of its Series 2021-1 1.946% Fixed Rate
Senior Secured Notes, Class A-2-I (the “2021 Class A-2-I Notes”),
$600 million of its Series 2021-1 2.294% Fixed Rate Senior Secured
Notes, Class A-2-II (the “2021 Class A-2-II Notes”) and $750 million
of
its Series 2021-1 2.542% Fixed Rate Senior Secured Notes,
Class A-2-III (the “2021 Class A-2-III Notes” and, together with the
2021 Class A-2-I Notes and the 2021 Class A-2-II Notes, the “2021
Class A-2 Notes”). The net proceeds from the issuance of the 2021
Class A-2 Notes were used to repay in full the 2016-1 Class A-2- II
Notes of $480 million and 2018-1 Class A-2-I Notes of $804 million.
The remaining net proceeds were distributed to TBC to pay certain
transaction-related expenses, for general corporate purposes and to
return capital to shareholders of the Company.

YUM! BRANDS, INC. - 2021 Form 10-K 65

PART II
ITEM 8. Financial Statements and Supplementary Data.

Payments of interest and principal on the Securitization Notes are
made from the continuing fees paid pursuant to the franchise and
license agreements with all U.S. Taco Bell restaurants, including both
company and franchise operated restaurants.
Interest on and
principal payments of the Securitization Notes are due on a quarterly
basis. In general, no amortization of principal of the Securitization
Notes is required prior to their anticipated repayment dates unless as
of any quarterly measurement date the consolidated leverage ratio
(the ratio of total debt to Net Cash Flow (as defined in the related
indenture))
the
Company and its subsidiaries or the Issuer and its subsidiaries
exceeds 5.0:1, in which case amortization payments of 1% per year
of the outstanding principal as of the closing of the Securitization
Notes are required. As of the most recent quarterly measurement
date the consolidated leverage ratio for both the Company and its
subsidiaries as well as the Issuer and its subsidiaries exceeded 5.0:1
and, as a result, amortization payments are required.

fiscal quarters of either

the preceding four

for

As a result of the issuance of the 2021 Class A-2 Notes, $19 million
of fees were capitalized as debt issuance costs. The debt issuance
costs are being amortized to Interest expense, net
through the
Anticipated Repayment Dates of the Securitization Notes utilizing the
effective interest rate method. Previously recorded unamortized debt
issuance costs written off totaling approximately $5 million were
recognized within Interest expense, net due to the extinguishment of
the 2016-1 Class A-2-II Notes and 2018-1 Class A-2-I Notes.

The Securitization Notes are subject to a series of covenants and
restrictions customary for transactions of this type, including (i) that
the Issuer maintains specified reserve accounts to be available to
make required interest payments in respect of the Securitization
Notes, (ii) provisions relating to optional and mandatory prepayments
and the related payment of specified amounts, including specified
make-whole payments in the case of the Securitization Notes under
certain circumstances, (iii) certain indemnification payments relating
to taxes, enforcement costs and other customary items and
(iv) covenants relating to recordkeeping, access to information and
similar matters. The Securitization Notes are also subject to rapid
amortization events provided for in the indenture, including events

tied to failure to maintain a stated debt service coverage ratio (as
defined in the related indenture) of at least 1.1:1, gross domestic
sales for U.S. Taco Bell restaurants being below certain levels on
certain measurement dates, a manager termination event, an event
of default and the failure to repay or refinance the Securitization
Notes on the Anticipated Repayment Date (subject to limited cure
rights). The Securitization Notes are also subject to certain customary
events of default,
including events relating to non-payment of
required interest or principal due on the Securitization Notes, failure
to comply with covenants within certain time frames, certain
bankruptcy events, breaches of specified representations and
warranties,
failure of security interests to be effective, certain
judgments and failure of the Securitization Entities to maintain a
stated debt service coverage ratio. As of December 31, 2021, we
were in compliance with all of our debt covenant requirements and
were not subject to any rapid amortization events.

In accordance with the indenture, certain cash accounts have been
established with the indenture trustee for the benefit of the note
holders, and are restricted in their use. The indenture requires a
certain amount of securitization cash flow collections to be allocated
on a weekly basis and maintained in a cash reserve account. As of
December 31, 2021, the Company had restricted cash of $84 million
primarily related to required interest reserves included in Prepaid
expenses and other current assets on the Consolidated Balance
Sheets. Once the required obligations are satisfied, there are no
further restrictions, including payment of dividends, on the cash flows
of the Securitization Entities.

Additional cash reserves are required if any of the rapid amortization
events occur, as noted above, or in the event that as of any quarterly
measurement date the Securitization Entities fail to maintain a debt
service coverage ratio (or the ratio of Net Cash Flow to all debt
service payments for the preceding four fiscal quarters) of at least
1.75:1. The amount of weekly securitization cash flow collections that
exceed the required weekly allocations is generally remitted to the
Company. During the most recent quarter ended December 31,
2021, the Securitization Entities maintained a debt service coverage
ratio significantly in excess of the 1.75:1 requirement.

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Term Loan Facilities, Revolving Facility and Subsidiary Senior Unsecured Notes
KFC Holding Co., Pizza Hut Holdings, LLC, and TBA, each of which
is a wholly-owned subsidiary of the Company, as co-borrowers (the
“Borrowers”) have entered into a credit agreement providing for
senior secured credit facilities and a $1.25 billion revolving facility (the
Revolving Facility”). The senior secured credit facilities, which include
a Term Loan A Facility and a Term Loan B Facility, and the Revolving
Facility are collectively referred to as the “Credit Agreement”.
Additionally, the Borrowers through a series of transactions have
issued Subsidiary Senior Unsecured Notes (collectively referred to as
the “Subsidiary Senior Unsecured Notes”).

As a result of this Credit Agreement refinancing, $8 million of fees
were capitalized as debt issuance costs, $3 million of which were
paid directly to lenders. The debt issuance costs will be amortized to
Interest expense, net through the contractual maturities of the Credit
Agreement using the effective interest method. During the quarter
fees expensed of $4 million as well as
ended March 31, 2021,
previously recorded unamortized debt issuance costs written off of
$8 million were recognized within Interest expense, net due to this
refinancing.

redemption amount was

On April 23, 2021, the Borrowers issued a notice of redemption for
June 1, 2021 for $1,050 million aggregate principal amount of 5.25%
Subsidiary Senior Unsecured Notes due in 2026 (the “2026 Notes”).
The
the
$1,050 million aggregate principal amount redeemed, reflecting a
$28 million “call premium”. We recognized the call premium and the
write-off of $6 million of unamortized debt issuance costs associated
with the 2026 Notes within Interest expense, net in the quarter ended
June 30, 2021.

to 102.625% of

equal

On March 15, 2021, the Borrowers completed the refinancing of the
then existing $1.9 billion term loan B facility, $431 million term loan A
facility and $1.0 billion revolving facility through the issuance of a
$1.5 billion term loan B facility maturing March 15, 2028 (the “Term
Loan B Facility”), a $750 million term loan A facility maturing
March 15, 2026 (the “Term Loan A Facility”) and a $1.25 billion
revolving facility maturing March 15, 2026 (the “Revolving Facility”)
pursuant
to the Credit Agreement. The
amendment reduced the interest rate currently applicable to the
refinanced Term Loan A Facility and for borrowings under
the
refinanced Revolving Facility by 25 basis points.

to an amendment

66 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

The following table summarizes borrowings outstanding under the Credit Agreement as well as our Subsidiary Senior Unsecured Notes as of
December 31, 2021. There are no outstanding borrowings under the Revolving Facility and $2.1 million of letters of credit outstanding as of
December 31, 2021.

Term Loan A Facility

Term Loan B Facility

Senior Note Due 2027

Issuance Date

Maturity Date

March 2021

June 2017

March 2026

March 2028

June 2027

Outstanding Principal
(in millions)

Interest Rate

Stated

Effective(b)

750

$ 1,489

(a)

750

4.75%

0.96%

4.99%

4.90%

(a) Subsequent to the refinance, the interest rates applicable to the Term Loan A Facility as well as the Revolving Facility range from 0.75% to 1.50%
plus LIBOR or from 0.00% to 0.50% plus the Base Rate (as defined in the Credit Agreement), at the Borrowers’ election, based upon the total
leverage ratio (as defined in the Credit Agreement). As of December 31, 2021, the interest rate spreads on the LIBOR and Base Rate applicable to
our Term Loan A Facility were 0.75% and 0.00%, respectively.
The interest rates applicable to the Term Loan B Facility are 1.75% plus LIBOR or 0.75% plus the Base Rate, at the Borrowers’ election.
Includes the effects of the amortization of any discount and debt issuance costs as well as the impact of the interest rate swaps on the Term Loan A
and Term Loan B Facilities (see Note 13). The effective rates related to our Term Loan A and B Facilities are based on LIBOR-based interest rates
through December 31, 2021.

(b)

The refinanced Term Loan A Facility is subject
to quarterly
amortization payments in an amount equal to 0.625% of the principal
amount of the facility as of the refinance date beginning with the
second quarter of 2022. The Term Loan A Facility quarterly
amortization payments increase to 1.25% of the principal amount of
the facility as of the refinance date beginning with the second quarter
of 2024 with the balance payable at maturity on March 15, 2026.

The Term Loan B Facility is subject
to quarterly amortization
payments in an amount equal to 0.25% of the initial principal amount
of the facility as of the refinance date with the balance now payable
at maturity on March 15, 2028. All other material provisions under the
Credit Agreement remained unchanged.

The Credit Agreement is unconditionally guaranteed by the Company
and certain of the Borrowers’ principal domestic subsidiaries and
excludes Taco Bell Funding LLC and its special purpose, wholly-
owned subsidiaries (see above). The Credit Agreement
is also
the
secured by first priority liens on substantially all assets of
Borrowers and each subsidiary guarantor, excluding the stock of
certain subsidiaries and certain real property, and subject to other
customary exceptions.

The Credit Agreement is subject to certain mandatory prepayments,
including an amount equal to 50% of excess cash flow (as defined in
the Credit Agreement) on an annual basis and the proceeds of
certain asset sales, casualty events and issuances of indebtedness,
subject to customary exceptions and reinvestment rights.

The Credit Agreement includes two financial maintenance covenants
leverage ratio
which require the Borrowers to maintain a total
(defined as the ratio of Consolidated Total Debt to Consolidated
EBITDA (as these terms are defined in the Credit Agreement)) of
5.0:1 or less and a fixed charge coverage ratio (defined as the ratio of
EBITDA minus capital expenditures to fixed charges (inclusive of
rental expense and scheduled amortization)) of at least 1.5:1, each
as of the last day of each fiscal quarter. The Credit Agreement
includes other affirmative and negative covenants and events of
this type. The Credit
default
Agreement contains, among other
limitations on certain
additional
indebtedness and liens, and certain other transactions
specified in the agreement. We were in compliance with all debt
covenants as of December 31, 2021.

that are customary for facilities of
things,

The Subsidiary Senior Unsecured Notes are guaranteed on a senior
unsecured basis by (i) the Company, (ii) the Specified Guarantors (as
defined in the Credit Agreement) and (iii) by each of the Borrower’s
and the Specified Guarantors’ domestic subsidiaries that guarantees
the Borrower’s obligations under the Credit Agreement, except for
any of the Company’s foreign subsidiaries. The indenture governing
the Subsidiary Senior Unsecured Notes contains covenants and
events of default that are customary for debt securities of this type.
We were in compliance with all debt covenants as of December 31,
2021.

YUM Senior Unsecured Notes
The majority of our remaining long-term debt primarily comprises YUM Senior Unsecured Notes. The following table summarizes all YUM Senior
Unsecured Notes issued that remain outstanding at December 31, 2021:

Issuance Date

October 2007

October 2013

September 2019

April 2020

September 2020

April 2021

Maturity Date

November 2037

November 2023

November 2043

January 2030

April 2025

March 2031

January 2032

Principal Amount
(in millions)

Interest Rate

Stated

Effective(a)

325

275

800

600

$ 1,050

$ 1,100

6.88%

3.88%

5.35%

4.75%

7.75%

3.63%

4.63%

7.45%

4.01%

5.42%

4.90%

8.05%

3.77%

4.77%

(a)

Includes the effects of the amortization of any (1) premium or discount; (2) debt issuance costs; and (3) gain or loss upon settlement of related
treasury locks and forward starting interest rate swaps utilized to hedge the interest rate risk prior to debt issuance.

YUM! BRANDS, INC. - 2021 Form 10-K 67

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PART II
ITEM 8. Financial Statements and Supplementary Data.

On April 1, 2021, Yum! Brands, Inc. issued $1.1 billion aggregate
principal amount of 4.625% YUM Senior Unsecured Notes due
January 31, 2032 (the “2032 Notes”). Interest on the 2032 Notes is
payable semi-annually in arrears on April 1 and October 1 of each
year, beginning on October 1, 2021. The Company paid debt
issuance costs of $13 million in connection with the 2032 Notes. The
debt issuance costs will be amortized to Interest expense, net over
the life of the 2032 Notes using the effective interest method. We
used the net proceeds from the 2032 Notes to fund the redemption
of the 2026 Notes discussed above.

On June 30, 2021, Yum! Brands, Inc. issued a notice of redemption
for $350 million aggregate principal amount of 3.75% YUM Senior
Unsecured Notes due November 1, 2021 (the “2021 Notes”). The
redemption, which occurred on August 2, 2021, was in an amount

equal to 100% of the principal amount of the 2021 Notes, plus
accrued interest to the date of redemption.

The YUM Senior Unsecured Notes represent senior, unsecured
obligations and rank equally in right of payment with all of our existing
and future unsecured unsubordinated indebtedness. Our YUM
Senior Unsecured Notes contain covenants and events of default
that are customary for debt securities of this type, including cross-
default provisions whereby the acceleration of the maturity of any of
our indebtedness in a principal amount in excess of $50 million
($100 million or more in the case of the YUM Senior Unsecured
Notes issued in 2019 and subsequent years) will constitute a default
under the YUM Senior Unsecured Notes unless such indebtedness is
discharged, or the acceleration of the maturity of that indebtedness is
annulled, within 30 days after notice.

The annual maturities of all Short-term borrowings and Long-term debt as of December 31, 2021, excluding finance lease obligations of
$64 million and debt issuance costs and discounts of $93 million are as follows:

Year ended:

2022

2023

2024

2025

2026

Thereafter

Total

398

692

1,606

8,424

11,275

Interest expense on Short-term borrowings and Long-term debt was $551 million, $558 million and $519 million in 2021, 2020 and 2019,
respectively.

NOTE 12 – Lease Accounting

Components of Lease Expense

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Operating lease cost

Finance lease cost

Amortization of right-of-use assets

Interest on lease liabilities

Total finance lease cost

Sublease income

Supplemental Cash Flow Information

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Right-of-use assets obtained in exchange for lease obligations

Operating leases(a)

Finance leases

Operating lease liabilities transferred through refranchising

Finance lease and other debt obligations transferred through refranchising

2021

2020

2019

145

137

115

(59)

(60)

(69)

2021

2020

2019

140

133

$ 104

119

(25)

(2)

296

(3)

(1)

(25)

(1)

(a) The year ended December 31, 2020, includes right-of-use assets acquired as part of the acquisition of Habit Burger Grill of $196 million (See

Note 3).

68 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

Supplemental Balance Sheet Information

2021

2020

Consolidated Balance Sheet

Assets

Operating lease right-of-use assets

Finance lease right-of-use assets

Total right-of-use assets(a)

Liabilities

Current

Operating

Finance

Non-current

Operating

Finance

809

846

793

851

891

823

Other assets

Property, plant and equipment, net

Accounts payable and other current liabilities

Short-term borrowings

Other liabilities and deferred credits

Long-term debt

Total lease liabilities(a)

945

992

Weighted-average Remaining Lease Term (in years)

Operating leases

Finance leases

Weighted-average Discount Rate

Operating leases

Finance leases

10.9

12.1

11.1

12.2

4.9%

6.4%

5.1%

6.5%

(a) U.S. operating lease right-of-use assets and liabilities totaled $516 million and $577 million, respectively, as of December 31, 2021, and $499 million
including
and $556 million, respectively, as of December 31, 2020. These amounts primarily related to Taco Bell U.S. and the Habit Burger Grill
leases related to Company-operated restaurants, leases related to franchise-operated restaurants we sublease and the Taco Bell restaurant support
center.

Maturity of Lease Payments and Receivables
Future minimum lease payments, including rental payments for lease renewal options we are reasonably certain to exercise, and amounts to be
received as lessor or sublessor as of December 31, 2021, were as follows:

2022

2023

2024

2025

2026

Thereafter

Total lease payments/receipts

Less imputed interest/unearned income

Total lease liabilities/receivables

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Commitments

Lease Receivables

Finance

Operating Direct Financing Operating

(25)

131

128

119

109

101

575

1,163

(282)

550

933

(14)

881

As of December 31, 2021, we have executed real estate leases that have not yet commenced with estimated future nominal lease payments of
approximately $125 million, which are not included in the tables above. These leases are expected to commence in 2022 and 2023 with lease
terms of up to 20 years.

YUM! BRANDS, INC. - 2021 Form 10-K 69

PART II
ITEM 8. Financial Statements and Supplementary Data.

NOTE 13 – Derivative Instruments

We use derivative instruments to manage certain of our market risks related to fluctuations in interest rates and foreign currency exchange rates.

Interest Rate Swaps
We have entered into interest rate swaps with the objective of
reducing our exposure to interest rate risk for a portion of our
variable-rate debt interest payments. On July 25, 2016, we agreed
with multiple counterparties to swap the variable LIBOR-based
component of
the interest payments related to $1.55 billion of
borrowings under our Term Loan B Facility. These interest rate
swaps expired in July 2021. Further, on May 14, 2018, we entered
into forward-starting interest rate swaps to fix the interest rate on
$1.5 billion of combined borrowings under our Term Loan A and
Term Loan B Facilities from the date the July 2016 swaps expired
through March 2025. The interest rate swaps executed in May 2018
result in fixed rates of 3.81% and 4.81% on the swapped portion of
the Term Loan A and Term Loan B Facilities, respectively, from July
2021 through March 2025. These interest rate swaps are designated
cash flow hedges as the changes in the future cash flows of the
swaps are expected to offset changes in expected future interest
payments on the related variable-rate debt. There were no other
interest rate swaps outstanding as of December 31, 2021.

losses on the interest

rate swaps are reported as a
Gains or
component of AOCI and reclassified into Interest expense, net in our
Consolidated Statements of Income in the same period or periods
during which the related hedged interest payments affect earnings.
Through December 31, 2021, the swaps were highly effective cash
flow hedges.

Foreign Currency Contracts
We have entered into foreign currency forward and swap contracts
with the objective of reducing our exposure to earnings volatility
arising from foreign currency fluctuations associated with certain

receivables and
foreign currency denominated intercompany
payables. The notional amount, maturity date, and currency of these
contracts match those of the underlying intercompany receivables or
payables. Our foreign currency contracts are designated cash flow
hedges as the future cash flows of the contracts are expected to
offset changes in intercompany receivables and payables due to
foreign currency exchange rate fluctuations.

foreign currency transaction gains or

Gains or losses on the foreign currency contracts are reported as a
component of AOCI. Amounts are reclassified from AOCI each
losses
to offset
quarter
recorded within Other
(income) expense when the related
intercompany receivables and payables affect earnings due to their
functional currency remeasurements. Through December 31, 2021,
all
foreign currency contracts related to intercompany receivables
and payables were highly effective cash flow hedges.

As of December 31, 2021 and 2020, foreign currency contracts
outstanding related to intercompany receivables and payables had
total notional amounts of $28 million and $39 million, respectively.
Our foreign currency forward contracts all have durations that expire
in 2022.

fail

to meet

As a result of the use of interest rate swaps and foreign currency
contracts, the Company is exposed to risk that the counterparties
will
their contractual obligations. To mitigate the
counterparty credit risk, we only enter into contracts with major
financial institutions carefully selected based upon their credit ratings
and other factors, and continually assess the creditworthiness of
counterparties. At December 31, 2021, all of the counterparties to
rate swaps and foreign currency contracts had
our
investment grade ratings according to the three major
ratings
agencies. To date, all counterparties have performed in accordance
with their contractual obligations.

interest

Gains and losses on derivative instruments designated as cash flow hedges recognized in OCI and reclassifications from AOCI into Net Income:

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Interest rate swaps

Foreign currency contracts

Income tax benefit/(expense)

Gains/(Losses)
Recognized in
OCI

2021

2020

2019

(Gains)/Losses
Reclassified from
AOCI into Net
Income
2020

2021

2019

—

(9)

(103) $

(71) $

$ (17)

(1)

(5)

(4)

(1)

(8)

As of December 31, 2021, the estimated net loss included in AOCI related to our cash flow hedges that will be reclassified into earnings in the
next 12 months is $38 million, based on current LIBOR interest rates.

Total Return Swaps
Beginning in 2021, we have entered into total return swap derivative
contracts, with the objective of reducing our exposure to market-
driven changes
the liabilities associated with
compensation deferrals into our EID plan. While these total return
swaps represent economic hedges, we have not designated them as
hedges for accounting purposes. As a result, the changes in the fair

in certain of

value of these derivatives are recognized immediately in earnings
within General and administrative expenses in our Consolidated
Statements of
Income largely offsetting the changes in the
associated EID liabilities. The fair value associated with the total
return swaps as of December 31, 2021, was not significant.

See Note 14 for the fair value of our derivative assets and liabilities.

70 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

NOTE 14 – Fair Value Disclosures

As of December 31, 2021, the carrying values of cash and cash equivalents, restricted cash, short-term investments, accounts receivable,
short-term borrowings and accounts payable approximated their fair values because of the short-term nature of these instruments. The fair value
of notes receivable net of allowances and lease guarantees less subsequent amortization approximates their carrying value. The following table
presents the carrying value and estimated fair value of the Company’s debt obligations:

Securitization Notes(a)

Subsidiary Senior Unsecured Notes(b)

Term Loan A Facility(b)

Term Loan B Facility(b)

YUM Senior Unsecured Notes(b)

2021

2020

Carrying
Value

Fair Value
(Level 2)

Carrying
Value

Fair Value
(Level 2)

3,811

3,872

2,869

3,015

750

1,489

4,475

784

748

1,490

4,845

1,800

431

1,916

3,725

1,890

428

1,907

4,094

(a) We estimated the fair value of the Securitization Notes using market quotes and calculations. The markets in which the Securitization Notes trade are

not considered active markets.

(b) We estimated the fair value of the YUM and Subsidiary Senior Unsecured Notes, Term Loan A Facility, and Term Loan B Facility using market quotes

and calculations based on market rates.

Recurring Fair Value Measurements
The Company has interest rate swaps, foreign currency contracts and other investments, all of which are required to be measured at fair value
on a recurring basis (see Note 13 for discussion regarding derivative instruments). The following table presents fair values for those assets and
liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall.

Consolidated Balance Sheet

Level

2021

2020

Fair Value

Assets

Foreign Currency Contracts

Prepaid expenses and other current assets

Other Investments

Liabilities

Interest Rate Swaps

Other assets

Accounts Payable and other current liabilities

Other liabilities and deferred credits

—

119

—

127

The fair value of the Company’s foreign currency contracts and interest rate swaps were determined based on the present value of expected
future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the duration based on
observable inputs.

The other investments as of December 31, 2021, primarily include our approximate 5% minority interest in Devyani with a fair value of
$118 million. On August 16, 2021, Devyani executed an initial public offering and subsequently the fair value of these equity securities became
readily determinable (see Note 5). Prior to the initial public offering the fair value of these equity securities was not readily determinable and we
applied the measurement alternative in accordance with ASC Topic 321, Investments – Equity Securities.

The other investments as of December 31, 2020, primarily include investments in mutual
funds, which were historically used to offset
fluctuations for a portion of our EID liabilities and whose fair values were determined based on the closing market prices of the respective mutual
funds. In the quarter ended March 31, 2021, upon entering into the total return swaps as disclosed in Note 13, we sold these investments in
mutual funds and received cash proceeds of $44 million. These proceeds have been classified within Other, net cash flows from investing
activities within our Consolidated Statements of Cash Flows.

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Non-Recurring Fair Value Measurements
During the year ended December 31, 2021, we recognized non-recurring fair value measurements of $6 million related to refranchising related
impairment. Refranchising related impairment results from writing down the assets of restaurants or restaurant groups offered for refranchising,
including certain instances where a decision has been made to refranchise restaurants that are deemed to be impaired. The fair value
measurements used in our impairment evaluation were based on actual bids received from potential buyers (Level 2). The remaining net book
value of these restaurants at December 31, 2021, was approximately $6 million.

During the years ended December 31, 2021 and 2020, we recognized non-recurring fair value measurements of $4 million and $12 million,
respectively, related to restaurant-level impairment. Restaurant-level impairment charges are recorded in Other (income) expense and resulted
primarily from our impairment evaluation of long-lived assets of individual restaurants that were being operated at the time of impairment and had

YUM! BRANDS, INC. - 2021 Form 10-K 71

PART II
ITEM 8. Financial Statements and Supplementary Data.

not been offered for refranchising. The fair value measurements used in these impairment evaluations were based on discounted cash flow
estimates using unobservable inputs (Level 3). These amounts exclude fair value measurements made for assets that were subsequently
disposed of prior to those respective year end dates. The remaining net book value of restaurant assets measured at fair value during the years
ended December 31, 2021 and 2020, was $16 million and $11 million, respectively. During the year ended December 31, 2020, we also
recognized impairment charges related to our Habit Burger Grill reporting unit. See Note 3.

NOTE 15 – Pension, Retiree Medical and Retiree Savings Plans

U.S. Pension Plans
We sponsor qualified and supplemental (non-qualified) noncontributory defined benefit plans covering certain full-time salaried and hourly U.S.
employees. The qualified plan meets the requirements of certain sections of the Internal Revenue Code and provides benefits to a broad group
of employees with restrictions on discriminating in favor of highly compensated employees with regard to coverage, benefits and contributions.
The supplemental plans provides additional benefits to certain employees. We fund our supplemental plans as benefits are paid.

The most significant of our U.S. plans is the YUM Retirement Plan (the “Plan”), which is a qualified plan. Our funding policy with respect to the
Plan is to contribute amounts necessary to satisfy minimum pension funding requirements, including requirements of the Pension Protection Act
of 2006, plus additional amounts from time-to-time as are determined to be necessary to improve the Plan’s funded status. We do not expect to
make any significant contributions to the Plan in 2022. Our two significant U.S. plans, including the Plan and a supplemental plan, were
previously amended such that any salaried employee hired or rehired by YUM after September 30, 2001, is not eligible to participate in those
plans.

We do not anticipate any plan assets being returned to the Company during 2022 for any U.S. plans.

Obligation and Funded Status at Measurement Date:

The following chart summarizes the balance sheet impact, as well as benefit obligations, assets, and funded status associated with our two
significant U.S. pension plans. The actuarial valuations for all plans reflect measurement dates coinciding with our fiscal year end.

Change in benefit obligation:

Benefit obligation at beginning of year

Service cost

Interest cost

Plan amendments

Special termination benefits

Benefits paid

Settlement payments

Actuarial (gain) loss

Benefit obligation at end of year

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2021

2020

$ 1,133

$ 1,015

—

(33)

(67)

(5)

(46)

—

118

$ 1,069

$ 1,133

A significant component of the overall decrease in the Company’s benefit obligation for the year ended December 31, 2021, was due to
settlement payments, which were primarily related to a resource optimization program initiated in the third quarter of 2020 (see Note 5).

A significant component of the overall
increase in the Company’s benefit obligation for the year ended December 31, 2020, was due to an
actuarial loss, which was primarily due to a decrease in the discount rate used to measure our benefit obligation from 3.50% at December 31,
2019, to 2.80% at December 31, 2020.

Change in plan assets:

Fair value of plan assets at beginning of year

Actual return on plan assets

Employer contributions

Benefits paid

Settlement payments

Fair value of plan assets at end of year

Funded status at end of year

72 YUM! BRANDS, INC. - 2021 Form 10-K

2021

2020

$ 1,014

(33)

(67)

886

168

(46)

—

$ 1,010

$ 1,014

(59) $

(119)

Amounts recognized in the Consolidated Balance Sheet:

Accrued benefit asset—non-current

Accrued benefit liability—current

Accrued benefit liability—non-current

PART II
ITEM 8. Financial Statements and Supplementary Data.

2021

2020

$ —

(7)

(95)

(9)

(110)

$ (59) $ (119)

The accumulated benefit obligation was $1,048 million and $1,111 million at December 31, 2021 and 2020, respectively.

The table below provides information for those pension plan(s) with an accumulated benefit obligation in excess of plan assets. The pension
plan(s) included also have a projected benefit obligation in excess of plan assets.

Projected benefit obligation

Accumulated benefit obligation

Fair value of plan assets

Components of net periodic benefit cost:

Service cost

Interest cost

Amortization of prior service cost(a)

Expected return on plan assets

Amortization of net loss

Net periodic benefit cost

Additional (gain) loss recognized due to:

Settlement charges(b)

Special termination benefits

2021

2020

$ 102

$ 1,133

—

1,111

1,014

2021

2020

2019

(43)

$ 17

$ 19

$ — $ — $

$ — $

$ —

(44)

(a) Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.
(b) Settlement losses result when benefit payments exceed the sum of the service cost and interest cost within a plan during the year. These losses

were recorded in Other pension (income) expense.

Pension gains (losses) in AOCI:

Beginning of year

Net actuarial gain (loss)

Curtailments

Amortization of net loss

Amortization of prior service cost

Prior service cost

End of year

Accumulated pre-tax losses recognized within AOCI:

Actuarial net loss

Prior service cost

Weighted-average assumptions used to determine benefit obligations at the measurement dates:

Discount rate

Rate of compensation increase

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2021

2020

$ (111)

$ (136)

—

(1)

(2)

(43)

$ (111)

2021

2020

$ (33)

(10)

(96)

(15)

$ (43)

$ (111)

2021

3.00%

2020

2.80%

3.00%

YUM! BRANDS, INC. - 2021 Form 10-K 73

PART II
ITEM 8. Financial Statements and Supplementary Data.

Weighted-average assumptions used to determine the net periodic benefit cost for fiscal years:

Discount rate

Long-term rate of return on plan assets

Rate of compensation increase

2021

2.80%

5.25%

3.00%

2020

3.50%

5.50%

3.00%

2019

4.60%

5.75%

3.00%

Our estimated long-term rate of return on plan assets represents the weighted-average of expected future returns on the asset categories
included in our target investment allocation based primarily on the historical returns for each asset category and future growth expectations.

Plan Assets

The fair values of our pension plan assets at December 31, 2021 and 2020 by asset category and level within the fair value hierarchy are as
follows:

2021

2020

Level 1:

Cash

Cash Equivalents(a)

Fixed Income Securities—U.S. Corporate(b)

Equity Securities—U.S.(b)

Equity Securities—Non-U.S.(b)

Level 2:

Fixed Income Securities—U.S. Corporate(c)

Fixed Income Securities—U.S. Government and Government Agencies(d)

Fixed Income Securities—Other(d)

Total assets in the fair value hierarchy

Investments measured at net asset value(e)

Equity Securities

Total fair value of plan assets(f)

237

—

175

612

456

164

409

102

148

354

1,226

—

$ 1,068

$ 1,226

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(a) Short-term investments in money market funds.
(b) Securities held in common or collective trusts.
(c)
(d)
(e)

Investments held directly by the Plan.
Includes securities held in common or collective trusts and investments held directly by the Plan.
Includes securities that have been measured at fair value using the net asset value per unit practical expedient due to the absence of readily available
market prices. Accordingly, these securities have not been classified in the fair value hierarchy.
(f) 2021 and 2020 exclude net unsettled trade payables of $58 million and $212 million, respectively.

Our primary objectives regarding the investment strategy for the Plan’s assets are to reduce interest rate and market risk and to provide
adequate liquidity to meet immediate and future payment requirements. To achieve these objectives, we are using a combination of active and
passive investment strategies. As of December 31, 2021, the Plan’s assets were in the process of being transitioned to the weighted-average
target allocation summarized as follows:

Asset Category

Fixed income

Equity securities

Real assets

Target
Allocation

49%

32%

19%

In addition to allocation differences between target percentages and actual plan assets at December 31, 2021, due to the transition described
above, allocations to each asset class may vary from target allocations due to periodic investment strategy changes, market value fluctuations,
the length of time it takes to fully implement investment allocation positions and the timing of benefit payments and contributions.

Fixed income securities at December 31, 2021, primarily consist of a diversified portfolio of long duration instruments that are intended to
mitigate interest rate risk or reduce the interest rate duration mismatch between the assets and liabilities of the Plan. A smaller allocation
(constituting 40% of the fixed income target allocation) is to diversified credit investments in a range of public and credit securities, including
below investment grade rated bonds and loans, securitized credit and emerging market debt.

Equity securities at December 31, 2021, consist primarily of investments in publicly traded common stocks and other equity-type securities
issued by companies throughout the world, including convertible securities, preferred stock, rights and warrants.

74 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 8. Financial Statements and Supplementary Data.

Real assets represent investments in real estate and infrastructure. These may take the form of debt or equity securities in public or private
funds. No amounts had yet to be invested in real assets at December 31, 2021, as part of the aforementioned transition.

A mutual fund held as an investment by the Plan includes shares of Common Stock valued at $0.2 million and $0.3 million at December 31,
2021 and 2020, respectively, (less than 1% of total plan assets in each instance).

Benefit Payments
The benefits expected to be paid in each of the next five years and in the aggregate for the five years thereafter are set forth below:

Year ended:

2022

2023

2024

2025

2026

2027 - 2031

293

Expected benefit payments are estimated based on the same assumptions used to measure our benefit obligation on the measurement date
and include benefits attributable to estimated future employee service.

International Pension Plans
We also sponsor various defined benefit plans covering certain of our
non-U.S. employees, the most significant of which are in the UK.
Both of our UK plans have previously been frozen such that they are
closed to new participants and existing participants can no longer
earn future service credits.

At the end of 2021 and 2020, the projected benefit obligations of
these UK plans totaled $351 million and $362 million, respectively
and plan assets totaled $446 million and $440 million, respectively.
These plans were both in a net overfunded position at the end of
2021 and 2020. Total actuarial pre-tax losses related to the UK plans
of $5 million and $18 million were recognized in AOCI at the end of
2021 and 2020, respectively. The total net periodic benefit income
recorded was less than $1 million in both 2021 and 2020, and
$2 million in 2019.

The funding rules for our pension plans outside of the U.S. vary from
country to country and depend on many factors including discount
rates, performance of plan assets, local laws and regulations. We do
not plan to make significant contributions to either of our UK plans in
2022.

Retiree Medical Benefits

Our post-retirement plan provides health care benefits, principally to
U.S. salaried retirees and their dependents, and includes retiree cost-
sharing provisions and a cap on our liability. This plan was previously
amended such that any salaried employee hired or rehired by YUM
after September 30, 2001,
is not eligible to participate in this
plan. Employees hired prior to September 30, 2001, are eligible for

benefits if they meet age and service requirements and qualify for
retirement benefits. We fund our post-retirement plan as benefits are
paid.

and

was

obligation

$42 million

At the end of 2021 and 2020, the accumulated post-retirement
benefit
$46 million,
respectively. Actuarial pre-tax gains of $6 million and $4 million were
recognized in AOCI at the end of 2021 and 2020, respectively. The
net periodic benefit cost recorded was $1 million in each of 2021,
2020 and 2019,
the majority of which is interest cost on the
accumulated post-retirement benefit obligation. The weighted-
average assumptions used to determine benefit obligations and net
periodic benefit cost for the post-retirement medical plan are identical
to those as shown for the U.S. pension plans.

The benefits expected to be paid in each of the next five years are
approximately $3 million and in aggregate for the five years thereafter
are $13 million.

for

Plan”)

eligible

U.S. Retiree Savings Plan
We sponsor a contributory plan to provide retirement benefits under
the provisions of Section 401(k) of the Internal Revenue Code (the
“401(k)
hourly
employees. Participants are able to elect to contribute up to 75% of
eligible compensation on a pre-tax basis. Participants may allocate
their contributions to one or any combination of multiple investment
options or a self-managed account within the 401(k) Plan. We match
100% of the participant’s contribution to the 401(k) Plan up to 6% of
eligible compensation. We recognized as compensation expense our
total matching contribution of $11 million in 2021, $10 million in 2020
and $11 million in 2019.

salaried

U.S.

and

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NOTE 16 – Share-based and Deferred Compensation Plans

Overview

At year end 2021, we had one stock award plan in effect: the Yum!
Brands, Inc. Long-Term Incentive Plan (the “LTIP”). Potential awards
to employees and non-employee directors under the LTIP include
stock options,
restricted stock,
incentive stock options, SARs,
restricted stock units (“RSUs”), performance restricted stock units,
performance share units (“PSUs”) and performance units. We have
issued only stock options, SARs, RSUs and PSUs under the LTIP.

Under the LTIP,
the exercise price of stock options and SARs
granted must be equal to or greater than the average market price or
the ending market price of the Company’s stock on the date of
the LTIP can have varying vesting
grant. While awards under
provisions and exercise periods, outstanding awards under the LTIP
vest in periods ranging from immediate to five years. Stock options
and SARs generally expire ten years after grant. At year end 2021,
approximately 24 million shares were available for future share-based
compensation grants under the LTIP.

YUM! BRANDS, INC. - 2021 Form 10-K 75

PART II
ITEM 8. Financial Statements and Supplementary Data.

the appreciation or

Our EID Plan allows participants to defer receipt of a portion of their
annual salary and all or a portion of their incentive compensation. As
defined by the EID Plan, we credit
the amounts deferred with
earnings based on the investment options selected by the
participants. These investment options are limited to cash, phantom
shares of our Common Stock, phantom shares of a Stock Index
Fund and phantom shares of a Bond Index Fund. Investments in
cash and phantom shares of both index funds will be distributed in
cash at a date as elected by the employee and therefore are
classified as a liability on our Consolidated Balance Sheets. We
the
recognize compensation expense for
depreciation, if any, of investments in cash and both of the index
funds. Deferrals into the phantom shares of our Common Stock will
be distributed in shares of our Common Stock, under the LTIP, at a
date as elected by the employee and therefore are classified in
Common Stock on our Consolidated Balance Sheets. We do not
the
recognize compensation expense for
depreciation,
investments in phantom shares of our
if any, of
Common Stock. Our EID plan also allows certain participants to
defer incentive compensation to purchase phantom shares of our
Common Stock and receive a 33% Company match on the amount
deferred. Deferrals receiving a match are similar to an RSU award in
that participants will generally forfeit both the match and incentive
compensation amounts deferred if they voluntarily separate from
employment during a vesting period that is two years from the date
of deferral. We expense the intrinsic value of the match and the
incentive compensation amount over the requisite service period
which includes the vesting period.

the appreciation or

Historically,
the Company has repurchased shares on the open
market in excess of the amount necessary to satisfy award exercises
and expects to continue to do so in 2022.

In connection with the 2016 spin-off of our China business into an
independent, publicly-traded company under
the name of Yum
China Holdings, Inc. (“Yum China”), under the provisions of our LTIP,
employee stock options, SARs, RSUs and PSUs outstanding at that
time were adjusted to maintain the pre-spin intrinsic value of the
awards. Depending on the tax laws of the country of employment,
awards were modified using either the shareholder method or the

employer method. Share-based compensation as recorded in Net
Income is based on the amortization of the fair value for both YUM
and Yum China awards held by YUM employees. The fair value of
Yum China awards held by YUM employees became fully amortized
in the year ended December 31, 2020. Share issuances for Yum
China awards held by YUM employees will be satisfied by Yum
China. Share issuances for YUM awards held by Yum China
employees are being satisfied by YUM.

Award Valuation
We estimated the fair value of each stock option and SAR award as
of the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions:

Risk-free interest rate

Expected term

Expected volatility

2021

0.5%

2020

1.0%

2019

2.5%

6.3 years

5.8 years

6.5 years

27.0%

24.0%

22.0%

Expected dividend yield

1.9%

1.8%

Grants made to executives typically have a graded vesting schedule
of 25% per year over four years and expire ten years after grant. We
use a single weighted-average term for our awards that have a
graded vesting schedule. Based on analysis of our historical exercise
and post-vesting termination behavior, we have determined that our
executives exercised the awards on average after 6.3 years.

When determining expected volatility, we consider both historical
volatility of our stock as well as implied volatility associated with our
publicly-traded options. The expected dividend yield is based on the
annual dividend yield at the time of grant.

The fair values of PSU awards without market-based conditions and
RSU awards are based on the closing price of our Common Stock
on the date of grant. The fair values of PSU awards with market-
based conditions have been valued based on the outcome of a
Monte Carlo simulation.

Award Activity

Stock Options and SARs

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Outstanding at the beginning of the year

Granted

Exercised

Forfeited or expired

Outstanding at the end of the year

Exercisable at the end of the year

Shares
(in thousands)

Weighted-Average
Exercise
Price

Weighted-Average
Remaining
Contractual Term
(years)

Aggregate
Intrinsic Value
(in millions)

15,562

757

(3,720)

(329)

12,270(a)

8,405

74.52

103.85

60.77

94.60

79.96

72.53

6.12

5.35

$ 723

$ 557

(a) Outstanding awards include 403 options and 11,867 SARs with weighted average exercise prices of $74.80 and $80.14, respectively. Outstanding

awards represent YUM awards held by employees of both YUM and Yum China.

76 YUM! BRANDS, INC. - 2021 Form 10-K

The weighted-average grant-date fair value of stock options and
SARs granted during 2021, 2020 and 2019 was $21.32, $18.83 and
$19.82, respectively. The total
intrinsic value of stock options and
SARs exercised during the years ended December 31, 2021,
December 31, 2020 and December 31, 2019, was $234 million,
$170 million and $204 million, respectively.

As of December 31, 2021, $30 million of unrecognized
compensation cost related to unvested stock options and SARs,
which will be reduced by any forfeitures that occur, is expected to be
recognized
of
approximately 1.5 years. The total fair value at grant date of awards
held by YUM employees (including Yum China awards as applicable)

remaining weighted-average

period

over

PART II
ITEM 8. Financial Statements and Supplementary Data.

that vested during 2021, 2020 and 2019 was $35 million, $70 million
and $31 million, respectively.

RSUs and PSUs

As of December 31, 2021, there was $81 million of unrecognized
compensation cost related to 1.4 million unvested RSUs and PSUs.
The majority of the unrecognized compensation cost is attributable to
PSUs granted in 2021 with a net new unit performance condition and
a three-year service vesting period. The total fair value at grant date
of awards that vested during 2021, 2020 and 2019 was $20 million,
$15 million and $14 million, respectively.

Impact on Net Income
The components of share-based compensation expense and the related income tax benefits are shown in the following table:

Options and SARs

Restricted Stock Units

Performance Share Units

Total Share-based Compensation Expense

Deferred Tax Benefit recognized

2021

$ 29

$ 75

$ 15

2020

$ 75

$ 97

$ 18

2019

$ 39

$ 59

Cash received from stock option exercises for 2021, 2020 and 2019 was $11 million, $10 million and $1 million, respectively. Tax benefits
realized on our tax returns from tax deductions associated with share-based compensation for 2021, 2020 and 2019 totaled $72 million,
$58 million and $66 million, respectively.

NOTE 17 – Shareholders’ Deficit

Under the authority of our Board of Directors, we repurchased shares of our Common Stock during 2021, 2020
and 2019. All amounts exclude applicable transaction fees.

Authorization Date

May 2021

November 2019

August 2018

Total

Shares Repurchased
(thousands)
2020

2021

2019

Dollar Value of Shares
Repurchased

2021

2020

2019

8,235

—

— $ 1,050

$ — $ —

4,746

2,419

—

— 7,788

530

—

250

—

810

12,981(a)

2,419(a)

7,788(b)

$ 1,580(a)

$ 250(a) $ 810(b)

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(a) 2021 amount excludes and 2020 amount includes the effect of $11 million in share repurchases (0.1 million shares) with trade dates on, or prior to,

December 31, 2020, but settlement dates subsequent to December 31, 2020.

(b) 2019 amount excludes the effect of $5 million in share repurchases (0.1 million shares) with trade dates on, or prior to, December 31, 2018, but

settlement dates subsequent to December 31, 2018.

In May 2021, our Board of Directors authorized share repurchases from July 1, 2021 through December 31, 2022, of up to $2 billion (excluding
applicable transaction fees) of our outstanding Common Stock. As of December 31, 2021, we have remaining capacity to repurchase up to
$950 million of Common Stock under this authorization. Unutilized share repurchase capacity of $1.2 billion under a November 2019
authorization expired on June 30, 2021.

YUM! BRANDS, INC. - 2021 Form 10-K 77

PART II
ITEM 8. Financial Statements and Supplementary Data.

Changes in AOCI are presented below.

Balance at December 31, 2019, net of tax

(221)

(104)

(63) $

(388)

Translation Adjustments
and Gains (Losses) From
Intra-Entity Transactions
of a Long-Term Nature

Pension and
Post-Retirement Benefits(a)

Derivative
Instruments(b)

Total

OCI, net of tax

Gains (losses) arising during the year classified
into AOCI, net of tax

(Gains) losses reclassified from AOCI, net of tax

—

(6)

(75)

(70)

(42)

(23)

Balance at December 31, 2020, net of tax

(182)

(96)

$ (133) $

(411)

OCI, net of tax

Gains (losses) arising during the year classified
into AOCI, net of tax

(Gains) losses reclassified from AOCI, net of tax

(24)

—

(24)

Balance at December 31, 2021, net of tax

(206)

(34)

(85) $

(325)

(a) Amounts reclassified from AOCI for pension and post-retirement benefit plans losses during 2021 include amortization of net losses of $12 million,
amortization of prior service cost of $5 million and related income tax benefit of $4 million. Amounts reclassified from AOCI for pension and post-
retirement benefit plans losses during 2020 include amortization of net losses of $14 million, amortization of prior service cost of $4 million and
related income tax benefit of $4 million. See Note 15.
(b) See Note 13 for details on amounts reclassified from AOCI.

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NOTE 18 – Income Taxes

U.S. and foreign income before taxes are set forth below:

U.S.

Foreign

The details of our income tax provision (benefit) are set forth below:

Current:

Deferred:

Federal

Foreign

State

Federal

Foreign

State

78 YUM! BRANDS, INC. - 2021 Form 10-K

2021

2020

2019

$ 1,062

684

612

336

466

907

$ 1,674

$ 1,020

$ 1,373

2021

2020

2019

45 $

37 $

214

121

129

166

299 $

181 $

311

21 $

(21) $

(16)

(227)

(29)

(15)

(213)

(3)

(200) $

(65) $

(232)

99 $

116 $

The reconciliation of income taxes calculated at the U.S. federal statutory rate to our effective tax rate is set forth below:

PART II
ITEM 8. Financial Statements and Supplementary Data.

U.S. federal statutory rate

State income tax, net of federal tax

Statutory rate differential attributable to foreign operations

Adjustments to reserves and prior years

Excess tax benefits from stock-based awards

Change in valuation allowances

Intercompany restructuring

Nondeductible interest

Impact of tax law changes

Other, net

Effective income tax rate

Statutory rate differential attributable to foreign operations. This item
includes local country taxes, withholding taxes, and shareholder-level
taxes, net of U.S. foreign tax credits. In 2021, this item was favorably
impacted by the ongoing effects of the KFC Europe Reorganization
(as described below). This was partially offset by the unfavorable
impact of recording deferred tax liabilities associated with unremitted
foreign earnings. In 2021 and 2020, this item was favorably impacted
by the ongoing effects of the 2019 Intercompany Restructuring (as
described below).

tax returns,

Adjustments to reserves and prior years. This item includes:
(1) changes in tax reserves, including interest thereon, established for
potential exposure we may incur if a taxing authority takes a position
on a matter contrary to our position; and (2) the effects of reconciling
income tax amounts recorded in our Consolidated Statements of
Income to amounts reflected on our
including any
adjustments to the Consolidated Balance Sheets. In 2021, this item
was unfavorably impacted by a $22 million reserve established due
to a challenge of a prior year filing position in a foreign jurisdiction. In
2020, this item was favorably impacted by $11 million of adjustments
made to current and deferred tax accounts in various jurisdictions to
align with balances supported by 2019 and prior
tax filings.
Additionally, in 2020 this item was favorably impacted by a $6 million
tax benefit associated with a state settlement. In 2019, this item was
unfavorably impacted by $34 million in reserves related to taxes
recorded associated with a prior year divestiture and $18 million of
tax expense related to the establishment of reserves associated with
the inclusion of stock based compensation in cost sharing
arrangements as well as other matters. This unfavorable impact was
partially offset by the reversal of a $20 million reserve established in
2018 due to the favorable resolution of an income tax rate dispute in
a foreign jurisdiction.

Excess tax benefits from stock-based awards. 2021, 2020 and 2019
includes $46 million, $35 million and $49 million, respectively, of
excess federal tax benefit related to share-based compensation.

Change in valuation allowances. This item relates to changes for
deferred tax assets generated or utilized during the current year and
changes in our judgment regarding the likelihood of using deferred
tax assets that existed at the beginning of the year. In 2021, this item
was favorably impacted by $15 million of tax benefit associated with
a valuation allowance release resulting from a change in
management’s judgment as to the realizability of foreign tax credit
carryforwards in the U.S. In 2020, this item was favorably impacted
by $22 million of tax benefit associated with a valuation allowance
release in a foreign jurisdiction resulting from a change in
management’s judgement as to realizability of indefinite lived tax loss
carryforwards in that jurisdiction.

2021

2020

2019

21.0%

1.8

(1.0)

1.1

(2.7)

(0.8)

(11.3)

1.4

(3.8)

0.2

1.0

(0.9)

(1.7)

(3.4)

(2.5)

(0.3)

—

(2.5)

0.7

0.9

2.3

(3.6)

(0.6)

(16.6)

—

1.4

5.9%

11.4%

5.7%

Intercompany Restructuring.
KFC Europe Reorganization – In July 2021, we concentrated
management responsibility for European (excluding the UK) KFC
franchise development,
support operations and management
oversight in Switzerland. Concurrent with this change in management
responsibility, we have completed intra-entity transfers of certain KFC
IP rights from subsidiaries in the UK to subsidiaries in Switzerland.
With the transfers of
these rights, we received a step-up in
amortizable tax basis to current fair value under applicable Swiss tax
law. As a result of this transfer, we recorded a one-time net deferred
tax benefit of $152 million.

2019 Intercompany Restructuring – In December 2019,
the
Company completed an intercompany restructuring that resulted in
the transfer of certain IP rights held by wholly owned foreign
subsidiaries primarily to the U.S. and the UK. The IP rights
transferred to the UK resulted in a step up in the tax basis for UK tax
purposes resulting in a deferred tax asset of $586 million. The
deferred tax asset was analyzed for realizability and a valuation
allowance of $366 million was established representing the portion of
the deferred tax asset not likely to be realized. The recognized tax
benefit of $220 million is amortizable for UK tax purposes over a
twenty-year period. The transfer of certain IP rights to other non-UK
jurisdictions in 2019 resulted in the recording of deferred tax assets
of $13 million and related valuation allowances of $7 million for
deferred tax assets that are not likely to be realized, for a net tax
benefit of $6 million.

Nondeductible Interest. As a result of the enactment of the Tax Cuts
and Jobs Act of 2017 (“Tax Act”) on December 22, 2017,
deductibility of U.S. interest expense was limited to 30% of U.S.
Earnings Before Interest, Taxes, Depreciation and Amortization in
2021. In 2021, the Company recorded $23 million of tax expense
interest expense. Although the
associated with disallowed U.S.
disallowed interest can be carried forward,
in management’s
judgment it is not expected to be realizable in the future. Due to
legislative relief provisions applicable to the 2019 and 2020 tax years
contained within the Coronavirus Aid, Relief, and Economic Security
Act (CARES Act), the Company was not impacted by the interest
expense limitation in 2019 or 2020. Beginning in 2022, deductibility

YUM! BRANDS, INC. - 2021 Form 10-K 79

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PART II
ITEM 8. Financial Statements and Supplementary Data.

of U.S. interest expense will be limited to 30% of U.S. Earnings
Before Interest and Taxes, which will unfavorably impact our effective
tax rate.

Impact of Tax Law Changes.
UK Tax Rate Change – On June 10, 2021, the UK Finance Act 2021
was enacted resulting in an increase in the UK corporate tax rate
from 19% to 25%. As such, the Company recognized a $64 million
tax benefit in the quarter ended June 30, 2021 associated with
remeasuring its deferred tax assets in the UK from 19% to 25%.
These deferred tax assets were primarily related to the step-up in tax
basis associated with the 2019 Intercompany Restructuring.

On July 22, 2020, the UK Finance Act 2020 was enacted resulting in
an increase in the UK corporate tax rate from 17% to 19%. As such,
the Company recognized a $25 million tax benefit in 2020 associated
with remeasuring its deferred tax assets in the UK from 17% to 19%.
These deferred tax assets were primarily related to the step-up in tax
basis associated with the 2019 Intercompany Restructuring.

Other. This item primarily includes the net impact of permanent
differences related to current year earnings, U.S. tax credits, and
other individually insignificant items impacting income tax expense.

to the Global

Intangible Low-Taxed Income
Companies subject
provision (GILTI) have the option to account for the GILTI tax as a
period cost if and when incurred, or to recognize deferred taxes for
outside basis temporary differences expected to reverse as GILTI.
The Company has elected to account for GILTI as a period cost.

The details of 2021 and 2020 deferred tax assets (liabilities) are set forth below:

Operating losses and interest deduction carryforwards

Capital losses

Tax credit carryforwards

Employee benefits

Share-based compensation

Lease-related liabilities

Accrued liabilities and other

Derivative instruments

Intangible assets

Property, plant and equipment

Deferred income

Gross deferred tax assets

Deferred tax asset valuation allowances

Net deferred tax assets

Intangible assets, including goodwill

Property, plant and equipment

Operating lease right-of-use assets

Employee benefits

Other

Gross deferred tax liabilities

Net deferred tax assets (liabilities)

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The details of the 2021 valuation allowance activity are set forth below:

Beginning of Year

Increases

Decreases

Other Adjustments

End of Year

80 YUM! BRANDS, INC. - 2021 Form 10-K

2021

2020

186

181

194

236

—

560

226

199

678

1,541

(462)

1,636

(789)

1,079

847

(3) $

(85)

(200)

(24)

(51)

(1)

(75)

(161)

(15)

(42)

(363) $

(294)

716

553

2021

2020

(789) $

(787)

(31)

355

(64)

(462) $

(789)

Reported in Consolidated Balance Sheets as:

Deferred income taxes

Other liabilities and deferred credits

PART II
ITEM 8. Financial Statements and Supplementary Data.

2021

2020

724

553

(8)

—

716

553

As of December 31, 2021, we had approximately $3.6 billion of
unremitted foreign retained earnings. The Tax Act imposed U.S.
federal tax on all post-1986 foreign Earnings and Profits accumulated
through December 31, 2017. Repatriation of earnings generated
after December 31, 2017, will generally be eligible for the 100%
dividends received deduction or considered a distribution of
previously taxed income and, therefore, exempt from U.S. federal
tax. Undistributed foreign earnings may still be subject to certain
state and foreign income and withholding taxes upon repatriation.

Subject to limited exceptions, we do not intend to indefinitely reinvest
our unremitted earnings outside the U.S. Thus, we have provided
taxes, including any U.S. federal and state income, foreign income,
foreign withholding taxes on the majority of our unremitted
or
earnings. In jurisdictions where we do intend to indefinitely reinvest
our unremitted earnings, we would be required to accrue and pay
applicable income taxes (if any) and foreign withholding taxes if the
funds were repatriated in taxable transactions. We believe any such
taxes would be immaterial.

Details of tax loss, credit carryforwards, and expiration dates along with valuation allowances as of December 31, 2021, are as follows:

Federal net operating losses

Federal net operating losses – Indefinite

Foreign net operating losses

Foreign net operating losses – Indefinite

State net operating losses

Foreign capital loss carryforward – Indefinite

Foreign tax credits

State tax credits

Federal interest deduction carryforward – Indefinite

State interest deduction carryforward – Indefinite

We recognize the benefit of positions taken or expected to be taken
in tax returns in the Consolidated Financial Statements when it is
more likely than not that the position would be sustained upon
examination by tax authorities. A recognized tax position is measured
at the largest amount of benefit that is greater than fifty percent likely
of being realized upon settlement.

Beginning of Year

Additions on tax positions – current year

Additions for tax positions – prior years

Reductions for tax positions – prior years

Reductions for settlements

Reductions due to statute expiration

Foreign currency translation adjustment

End of Year

The Company believes it is reasonably possible that its unrecognized
tax benefits as of December 31, 2021, may decrease by
approximately $3 million in the next 12 months due to settlements or
statute of limitations expirations.

During 2021, 2020, and 2019 the Company recognized $4 million,
$2 million and $13 million of net expense, respectively, for interest
Income as
and penalties in our Consolidated Statements of
components of its Income tax provision.

At December 31, 2021 and 2020,
$3 million and $1 million of net
associated with interest and penalties.

the Company has recorded
respectively,
tax receivables,

Gross
Amount

Deferred
Tax Asset

Valuation
Allowance Expiration

229

1,408

289

187

487

187

— 2036-2037

—

None

(11) 2022-2037

(35)

None

(43) 2022-2040

(72)

None

(172) 2026-2030

(5)

(8)

(21)

2023

None

$ 2,826

$ 452

$ (367)

At December 31, 2021, the Company had $116 million of gross
unrecognized tax benefits, $75 million of which would impact the
effective income tax rate if
the
beginning and ending unrecognized tax benefits follows:

recognized. A reconciliation of

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2021

2020

$ 175

$ 188

(110)

(3)

—

(22)

(30)

—

$ 116

$ 175

The Company’s income tax returns are subject to examination in the
jurisdiction and numerous U.S. state and foreign
federal
U.S.
jurisdictions.

The Company has settled audits with the IRS through fiscal year
2012 and is currently under IRS examination for 2013-2018. Our
operations
to
examination for tax years as far back as 2006, some of which years
are currently under audit by local tax authorities. See Note 20 for
discussion of an Internal Revenue Service Proposed Adjustment.

in certain foreign jurisdictions

remain subject

YUM! BRANDS, INC. - 2021 Form 10-K 81

PART II
ITEM 8. Financial Statements and Supplementary Data.

NOTE 19 – Reportable Operating Segments

See Note 1 for a description of our operating segments.

KFC Division(a)

Taco Bell Division(a)

Pizza Hut Division(a)

Habit Burger Grill Division(a)

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger Grill Division

Corporate and unallocated G&A expenses(b)(c)

Unallocated Franchise and property expenses(b)(d)

Unallocated Refranchising gain (loss)(b)

Unallocated Other income (expense)(b)(e)

Operating Profit

Investment income (expense), net(b)

Other pension income (expense)(b)

Interest expense, net(b)

Income before income taxes

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger Grill Division

Corporate

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KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger Grill Division

Corporate

82 YUM! BRANDS, INC. - 2021 Form 10-K

2021

Revenues
2020

2019

2,793

2,272

2,491

2,238

1,028

525

2,031

1,002

347

2,079

1,027

—

6,584

5,652

5,597

Operating Profit

2021

2020

2019

1,230

758

387

(260)

(14)

2,139

(7)

(544)

922

696

335

(22)

(312)

(4)

(146)

1,503

(14)

(543)

1,052

683

369

—

(188)

(14)

(9)

1,930

(67)

(4)

(486)

1,674

1,020

1,373

Depreciation and Amortization
2019

2020

2021

29 $

—

164

146 $

112

Capital Spending

2021

2020

2019

59 $

—

230

160 $

196

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger Grill Division

Corporate(f)

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger Grill Division

Corporate

PART II
ITEM 8. Financial Statements and Supplementary Data.

Identifiable Assets(g)

2021

2,313

1,397

850

586

820

2020

2,011

1,387

804

537

1,113

5,966

5,852

Long-Lived Assets(h)

2021

2020

1,069

1,160

904

423

516

120

925

415

458

3,032

3,026

(a) U.S. revenues included in the combined KFC, Taco Bell, Pizza Hut and Habit Burger Grill Divisions totaled $3.6 billion in 2021, $3.2 billion in 2020

and $3.0 billion in 2019.

(b) Amounts have not been allocated to any segment for performance reporting purposes.
(c) Amounts in 2020 include charitable contributions to Yum! Brands Foundation, Inc. of $50 million and $25 million related to our Unlocking Opportunity
Initiative and COVID-19 employee relief, respectively. Additionally, 2020 includes $36 million for charges associated with resource optimization (see
Note 5).

(d) Represents costs related to an agreement executed in May 2017 with our Pizza Hut U.S. franchisees to improve brand marketing alignment,
accelerate enhancements in operations and technology and that included a permanent commitment to incremental advertising as well as digital and
technology contributions by franchisees (the “Pizza Hut U.S. Transformation Agreement”).

(e) Unallocated Other income (expense) in 2020 includes a charge of $144 million related to the impairment of Habit Burger Grill goodwill (see Note 3).
(f) Primarily includes cash and deferred tax assets.
(g) U.S. identifiable assets included in the combined Corporate and KFC, Taco Bell, Pizza Hut, and Habit Burger Grill Divisions totaled $2.8 billion and

$3.0 billion in 2021 and 2020, respectively.
Includes PP&E, net, goodwill, intangible assets, net and Operating lease right-of-use assets.

(h)

NOTE 20 – Contingencies

Internal Revenue Service Proposed
Adjustment
As a result of an audit by the Internal Revenue Service (“IRS”) for
fiscal years 2013 through 2015, on October 13, 2021, we received a
Notice of Proposed Adjustment (“NPA”) from the IRS for the 2014
fiscal year relating to a series of reorganizations we undertook during
that year
in connection with the business realignment of our
corporate and management reporting structure along brand lines.
these reorganizations involved taxable
The IRS asserts that
distributions of approximately $6.0 billion. We expect to receive the
final Revenue Agent’s Report (“RAR”) including the IRS’s calculation
of the tax assessment in early 2022. The amount of additional tax
that may be asserted by the IRS in the RAR cannot be quantified at
this time; however, based on the NPA, the amount of additional tax
to be proposed is expected to be material. We disagree with the
IRS’s position as asserted in the NPA and intend to contest it
vigorously by filing a protest disputing on multiple grounds any
proposed taxes and proceeding to the IRS Office of Appeals.

The final resolution of this matter is uncertain, but the Company
believes that it is more likely than not the Company’s tax position will
be sustained; therefore no reserve is recorded with respect to this
matter. An unfavorable resolution of
this matter could have a
material, adverse impact on our Consolidated Financial Statements in
future periods.

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Lease Guarantees
As a result of having assigned our interest in obligations under real
estate leases as a condition to the refranchising of certain Company-
owned restaurants, and guaranteeing certain other leases, we are
frequently secondarily liable on lease agreements. These leases have
varying terms,
the latest of which expires in 2065. As of
December 31, 2021, the potential amount of undiscounted payments
we could be required to make in the event of non-payment by the
primary lessee was approximately $425 million. The present value of
these potential payments discounted at our pre-tax cost of debt at
December 31, 2021, was approximately $350 million. Our
franchisees are the primary lessees under the vast majority of these
leases. We generally have cross-default provisions with these
franchisees that would put
franchise
agreement in the event of non-payment under the lease. We believe
these cross-default provisions significantly reduce the risk that we will
be required to make payments under these leases, although such
risk may not be reduced in the context of a bankruptcy or other
similar restructuring of a large franchisee or group of franchisees.
Accordingly, the liability recorded for our expected exposure under
such leases at both December 31, 2021 and 2020 was not material.

them in default of

their

YUM! BRANDS, INC. - 2021 Form 10-K 83

PART II
ITEM 8. Financial Statements and Supplementary Data.

Insurance Programs
We are self-insured for a substantial portion of our current and prior
years’ coverage including property and casualty losses. To mitigate
the cost of our exposures for certain property and casualty losses,
loss up to defined maximum per
we self-insure the risks of
occurrence retentions on a line-by-line basis. The Company then

purchases insurance coverage, up to a certain limit, for losses that
exceed the self-insurance per occurrence retention. The insurers’
maximum aggregate loss limits are significantly above our actuarially
determined probable losses; therefore, we believe the likelihood of
losses exceeding the insurers’ maximum aggregate loss limits is
remote.

The following table summarizes the 2021 and 2020 activity related to our net self-insured property and casualty reserves as of December 31,
2021.

2021 Activity

2020 Activity

Beginning Balance Habit Acquisition(a) Expense Payments Ending Balance

$ 50

$ 54

—

(25)

(23)

$ 48

$ 50

(a) Represents self-insurance liabilities assumed as part of our acquisition of Habit Burger Grill. See Note 3.

Due to the inherent volatility of actuarially determined property and
casualty loss estimates,
is reasonably possible that we could
experience changes in estimated losses which could be material to
our growth in quarterly and annual Net Income. We believe that we
have recorded reserves for property and casualty losses at a level
which has substantially mitigated the potential negative impact of
adverse developments and/or volatility.

In the U.S. and in certain other countries, we are also self-insured for
healthcare claims and long-term disability for eligible participating
employees subject to certain deductibles and limitations. We have
accounted for our retained liabilities for property and casualty losses,
healthcare and long-term disability claims, including reported and
incurred but not reported claims, based on information provided by
independent actuaries.

Legal Proceedings
We are subject
to various claims and contingencies related to
lawsuits, real estate, environmental and other matters arising in the
normal course of business. An accrual
is recorded with respect to
claims or contingencies for which a loss is determined to be probable
and reasonably estimable.

Yum! Restaurants India Private Limited (“YRIPL”), a Yum subsidiary
that operates KFC and Pizza Hut restaurants in India, is the subject
of a regulatory enforcement action in India (the “Action”). The Action
alleges, among other things, that KFC International Holdings, Inc.
and Pizza Hut
failed to satisfy certain conditions
imposed by the Secretariat for Industrial Approval in 1993 and 1994
foreign
when those companies were granted permission for
investment and operation in India. The conditions at issue include an

International

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alleged minimum investment
and store build
requirements as well as limitations on the remittance of fees outside
of India.

commitment

The Action originated with a complaint and show cause notice filed in
2009 against YRIPL by the Deputy Director of the Directorate of
Enforcement (“DOE”) of the Indian Ministry of Finance following an
income tax audit for the years 2002 and 2003. The matter was
argued at various hearings in 2015, but no order was issued.
Following a change in the incumbent official holding the position of
Special Director of DOE (the “Special Director”), the matter resumed
in 2018 and several additional hearings were conducted.

On January 29, 2020, the Special Director issued an order imposing
a penalty on YRIPL and certain former directors of approximately
this
Indian Rupee 11 billion, or approximately $150 million. Of
amount, $145 million relates to the alleged failure to invest a total of
$80 million in India within an initial seven-year period. We have been
advised by external counsel that the order is flawed and have filed a
writ petition with the Delhi High Court, which granted an interim stay
of the penalty order on March 5, 2020. The stay order remains in
effect and the next hearing is now scheduled for March 4, 2022. We
deny liability and intend to continue vigorously defending this matter.
We do not consider the risk of any significant loss arising from this
order to be probable.

We are currently engaged in various other legal proceedings and
have certain unresolved claims pending,
the ultimate liability for
which, if any, cannot be determined at this time. However, based
upon consultation with legal counsel, we are of the opinion that such
proceedings and claims are not expected to have a material adverse
effect, individually or in the aggregate, on our Consolidated Financial
Statements.

NOTE 21 – Subsequent Event

In January 2022,
the U.S. Treasury published new regulations
impacting foreign tax credit utilization beginning in the Company’s
2022 tax year. These regulations make foreign taxes paid to certain
countries no longer creditable in the U.S. As discussed in Note 18,
we currently have foreign tax credit carryforwards of $187 million, on
which there is a $172 million valuation allowance. We anticipate that
these regulations will result in the utilization of some amount of our
existing prior year
foreign tax credit carryforwards and that a
corresponding amount of the existing valuation allowance will be

released in the first quarter of 2022. While our determination of which
foreign taxes that will no longer be creditable is not yet complete, we
anticipate that the amount of valuation allowance to be released
could be significant. Further, we anticipate that these regulations will
result in additional cash tax due in the U.S. in future years once all
existing foreign tax credit carryforwards have either been utilized or
have expired. Subject to finalizing our review, we estimate we could
be subject to incremental cash taxes as early as 2028.

84 YUM! BRANDS, INC. - 2021 Form 10-K

PART II
ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

ITEM 9. Changes In and Disagreements

with Accountants on Accounting
and Financial Disclosure.

None.

ITEM 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company has evaluated the effectiveness of the design and
operation of its disclosure controls and procedures pursuant to Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934
as of the end of the period covered by this report. Based on the
supervision and with the
the
evaluation, performed under

participation of the Company’s management,
including the Chief
Executive Officer (the “CEO”) and the Chief Financial Officer (the
“CFO”), the Company’s management, including the CEO and CFO,
concluded that the Company’s disclosure controls and procedures
were effective as of the end of the period covered by this report.

Management’s Report on Internal Control Over Financial Reporting

Our management
is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is
defined in Rules 13a-15(f) under the Securities Exchange Act of
1934. Under
the supervision and with the participation of our
management, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effectiveness of
our internal control over financial reporting based on the framework in
issued by the
Internal Control – Integrated Framework (2013)
Treadway
the
Committee

of Sponsoring Organizations

Commission. Based on our evaluation under
the framework in
Internal Control – Integrated Framework (2013), our management
reporting was
concluded that our
effective as of December 31, 2021.

internal control over

financial

KPMG LLP, an independent registered public accounting firm, has
audited the Consolidated Financial Statements included in this
Annual Report on Form 10-K and the effectiveness of our internal
control over financial reporting and has issued their report, included
herein.

Changes in Internal Control

There were no changes with respect to the Company’s internal
control over financial reporting or in other factors that materially
affected, or are reasonably likely to materially affect, internal control

over financial reporting during the quarter ended December 31,
2021.

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ITEM 9B. Other Information.

None.

ITEM 9C.Disclosure Regarding Foreign

Jurisdictions that Prevent Inspections.

Not applicable.

YUM! BRANDS, INC. - 2021 Form 10-K 85

PART III

ITEM 10.

Directors, Executive Officers and Corporate Governance.

Information regarding Section 16(a) compliance, the Audit Committee and the Audit Committee financial expert, the Company’s code of ethics
and background of the directors appearing under the captions “Stock Ownership Information,” “Governance of the Company,” “Executive
Compensation” and “Item 1: Election of Directors” is incorporated by reference from the Company’s definitive proxy statement which will be filed
with the Securities and Exchange Commission no later than 120 days after December 31, 2021.

Information regarding executive officers of the Company is included in Part I.

ITEM 11.

Executive Compensation.

Information regarding executive and director compensation and the Management Planning and Development Committee appearing under the
captions “Governance of the Company” and “Executive Compensation” is incorporated by reference from the Company’s definitive proxy
statement which will be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2021.

ITEM 12.

Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.

Information regarding equity compensation plans and security ownership of certain beneficial owners and management appearing under the
captions “Executive Compensation” and “Stock Ownership Information” is incorporated by reference from the Company’s definitive proxy
statement which will be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2021.

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ITEM 13.

Certain Relationships and Related Transactions, and Director
Independence.

Information regarding certain relationships and related transactions and information regarding director independence appearing under the
caption “Governance of the Company” is incorporated by reference from the Company’s definitive proxy statement which will be filed with the
Securities and Exchange Commission no later than 120 days after December 31, 2021.

ITEM 14.

Principal Accountant Fees and Services.

Our independent registered public accounting firm is KPMG, LLP, Louisville, Kentucky, Auditor Firm ID: 185.

Information regarding principal accountant fees and services and audit committee pre-approval policies and procedures appearing under the
caption “Item 2: Ratification of Independent Auditors” is incorporated by reference from the Company’s definitive proxy statement which will be
filed with the Securities and Exchange Commission no later than 120 days after December 31, 2021.

86 YUM! BRANDS, INC. - 2021 Form 10-K

PART IV

ITEM 15.

Exhibits and Financial Statement Schedules.

(a)

(1)

(2)

(3)

Financial Statements: Consolidated Financial Statements filed as part of this report are listed under Part II, Item 8 of this Form 10-K.

Financial Statement Schedules: No schedules are required because either the required information is not present or not present in
amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated
Financial Statements thereto filed as a part of this Form 10-K.

Exhibits: The exhibits listed in the accompanying Exhibit Index are filed as part of this Form 10-K. The Index to Exhibits specifically
identifies each management contract or compensatory plan required to be filed as an exhibit to this Form 10-K.

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YUM! BRANDS, INC. - 2021 Form 10-K 87

PART IV

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-K
annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:

February 22, 2022

YUM! BRANDS, INC.
By:

/s/ David W. Gibbs

Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed on February 22, 2022, by the following
persons on behalf of the registrant and in the capacities indicated.

Signature

Title

/s/ David W. Gibbs
David W. Gibbs

/s/ Chris Turner
Chris Turner

/s/ David E. Russell
David E. Russell

/s/ Paget L. Alves
Paget L. Alves

/s/ Keith Barr
Keith Barr

Chief Executive Officer (principal executive officer)

Chief Financial Officer (principal financial officer)

Senior Vice President, Finance and Corporate Controller (principal accounting officer)

Director

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/s/ Christopher M. Connor
Christopher M. Connor

Director

/s/ Brian C. Cornell
Brian C. Cornell

/s/ Tanya L. Domier
Tanya L. Domier

Director

/s/ Mirian M. Graddick-Weir
Mirian M. Graddick-Weir

Director

/s/ Lauren R. Hobart
Lauren R. Hobart

/s/ Thomas C. Nelson
Thomas C. Nelson

/s/ P. Justin Skala
P. Justin Skala

/s/ Elane B. Stock
Elane B. Stock

/s/ Annie Young-Scrivner
Annie Young-Scrivner

Director

88 YUM! BRANDS, INC. - 2021 Form 10-K

PART IV

Yum! Brands, Inc.
Exhibit Index (Item 15)

Exhibit
Number Description of Exhibits

2.1

3.1

3.2

4.1

4.2

4.2.1

4.2.2

4.3

10.1

10.1.1

10.1.2

10.1.3

10.1.4

Separation and Distribution Agreement, dated as of October 31, 2016, by and among YUM, Yum Restaurants Consulting
(Shanghai) Company Limited and Yum China Holdings, Inc., which is incorporated herein by reference from Exhibit 2.1 to YUM’s
Report on Form 8-K filed on November 3, 2016.

Restated Articles of Incorporation of YUM, effective May 26, 2011, which is incorporated herein by reference from Exhibit 3.1 to
YUM’s Report on Form 8-K filed on May 31, 2011.

Amended and restated Bylaws of YUM, effective November 12, 2021, which are incorporated herein by reference from Exhibit 3.2
to YUM’s Report on Form 8-K filed on November 17, 2021.

Indenture, dated as of May 1, 1998, between YUM and The Bank of New York Mellon Trust Company, N.A., successor in interest
to The First National Bank of Chicago, which is incorporated herein by reference from Exhibit 4.1 to YUM’s Report on Form 8-K filed
on May 13, 1998.

(i)

(ii)

(iii)

6.875% Senior Notes due November 15, 2037, issued under the forgoing May 1, 1998, indenture, which notes are
incorporated by reference from Exhibit 4.3 (included in Exhibit 4.1) to YUM’s Report on Form 8-K filed on October 22, 2007.

3.875% Senior Notes due November 1, 2023, issued under the forgoing May 1, 1998, indenture, which notes are
incorporated by reference from Exhibit 4.2 (included in Exhibit 4.1) to YUM’s Report on Form 8-K filed October 31, 2013.

5.350% Senior Notes due November 1, 2043, issued under the forgoing May 1, 1998, indenture, which notes are
incorporated by reference from Exhibit 4.3 (included in Exhibit 4.1) to YUM’s Report on Form 8-K filed October 31, 2013.

Indenture, dated as of September 25, 2020 by and between YUM and U.S. Bank National Association, as Trustee, which is
incorporated herein by reference from Exhibit 4.1 to YUM’s Report on Form 8-K filed on September 25, 2020.

First Supplemental Indenture, dated as of September 25, 2020 by and between YUM and U.S. Bank National Association, as
Trustee, relating to the 3.625% Notes due 2031, which is incorporated herein by reference from Exhibit 4.2 to YUM’s Report on
Form 8-K filed on September 25, 2020.

Second Supplemental Indenture, dated as of April 1, 2021, by and between the Company and U.S. Bank National Association, as
Trustee, which is incorporated herein by reference from Exhibit 4.1. to YUM’s Report on Form 8-K filed April 1, 2021.

Description of Securities registered under Section 12 of the Securities Exchange Act of 1934 (Common Stock), which is
incorporated herein by reference from Exhibit 4.2 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 31,
2019.

Credit Agreement, dated as of June 16, 2016, by and among Pizza Hut Holdings, LLC, KFC Holding Co., and Taco Bell of America,
LLC, as the borrowers, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent,
JPMorgan Chase Bank, N.A., Goldman Sachs Bank USA, Wells Fargo Securities, LLC, Citigroup Global Markets Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley Senior Funding, Inc., Fifth Third Bank and The Bank of Tokyo-Mitsubishi UFJ,
Ltd., as Joint Lead Arrangers and Joint Bookrunners, Barclays Bank PLC, The Bank of Nova Scotia, Cooperatieve Rabobank U.A.,
New York Branch, and Industrial and Commercial Bank of China Limited, New York Branch, as Co-Documentation Agents and
Co-Managers, which is incorporated herein by reference from Exhibit 4.1 to YUM’s Quarterly Report on Form 10-Q for the quarter
ended June 11, 2016.

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Refinancing Amendment, dated as of March 21, 2017, to Credit Agreement dated as of June 16, 2016, among Pizza Hut Holdings,
LLC, KFC Holding Co. and Taco Bell of America, LLC, as borrowers, the Lenders from time to time party thereto and JPMorgan
Chase Bank, N.A., as Collateral Agent, Swing Line Lender, an L/C Issuer and Administrative Agent for the Lenders, which is
incorporated herein by reference from Exhibit 10.1 to YUM’s Report on Form 8-K as filed on March 23, 2017.

Refinancing Amendment No. 2, dated as of June 7, 2017, to Credit Agreement dated as of June 16, 2016, as amended, among
Pizza Hut Holdings, LLC, KFC Holding Co. and Taco Bell of America, LLC, as borrowers, the Lenders from time to time party
thereto and JPMorgan Chase Bank, N.A., as Collateral Agent, Swing Line Lender, an L/C Issuer and Administrative Agent for the
Lenders, which is incorporated herein by reference from Exhibit 10.1 to YUM’s Report on Form 8-K as filed on June 8, 2017.

Refinancing Amendment No. 3, dated as of April 3, 2018, to Credit Agreement dated as of June 16, 2016, among Pizza Hut
Holdings, LLC, KFC Holding Co. and Taco Bell of America, LLC, as borrowers, the Lenders from time to time party thereto and
JPMorgan Chase Bank, N.A., as Collateral Agent, Swing Line Lender, an L/C Issuer and Administrative Agent for the Lenders,
which is incorporated herein by reference from Exhibit 10.1 to YUM’s Report on Form 8-K as filed on April 9, 2018.

Refinancing Amendment No. 4, dated as of March 15, 2021, to Credit Agreement dated as of June 16, 2016 among Pizza Hut
Holdings, LLC, KFC Holding Co. and Taco Bell of America, LLC, as borrowers, the Lenders from time to time party thereto and
JPMorgan Chase Bank, N.A., as Collateral Agent, Swing Line Lender, an L/C Issuer and Administrative Agent for the Lenders.,
which is incorporated herein by reference from Exhibit 10.1 to YUM’s Report on Form 8-K filed on March 18, 2021.

YUM! BRANDS, INC. - 2021 Form 10-K 89

PART IV
ITEM 15 Exhibit Index

Exhibit
Number Description of Exhibits

10.2†

10.2.1†

10.3†

10.4†

YUM Director Deferred Compensation Plan, as effective October 7, 1997, which is incorporated herein by reference from Exhibit
10.7 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 27, 1997.

YUM Director Deferred Compensation Plan, Plan Document for the 409A Program, as effective January 1, 2005, and as Amended
through November 14, 2008, which is incorporated by reference from Exhibit 10.7.1 to YUM’s Quarterly Report on Form 10-Q for
the quarter ended June 13, 2009.

YUM Executive Incentive Compensation Plan, as effective May 20, 2004, and as Amended through the Second Amendment, as
effective May 21, 2009, which is incorporated herein by reference from Exhibit A of YUM’s Definitive Proxy Statement on Form DEF
14A for the Annual Meeting of Shareholders held on May 21, 2009.

YUM Executive Income Deferral Program, as effective October 7, 1997, and as amended through May 16, 2002, which is
incorporated herein by reference from Exhibit 10.10 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 31,
2005.

10.4.1†

YUM! Brands Executive Income Deferral Program, Plan Document for the 409A Program, as effective January 1, 2005, and as
Amended and Restated as of January 1, 2021, as attached herein.

10.5†

YUM! Brands Pension Equalization Plan, Plan Document for the Pre-409A Program, as effective January 1, 2005, and as Amended
through December 31, 2010, which is incorporated by reference from Exhibit 10.7 to YUM’s Quarterly Report on Form 10-Q for the
quarter ended March 19, 2011.

10.5.1†

The Yum! Brands, Inc. Pension Equalization Plan, Restated Plan Document for the 409A Program effective January 1, 2005, and as
Amended and Restated as of January 1, 2021, as attached herein.

10.6†

10.7†

10.8†

10.9†

10.10†

10.11†

Form of Directors’ Indemnification Agreement, which is incorporated herein by reference from Exhibit 10.17 to YUM’s Annual Report
on Form 10-K for the fiscal year ended December 27, 1997.

Form of Yum! Brands, Inc. Change in Control Severance Agreement, which is incorporated herein by reference from Exhibit 10.1 to
YUM’s Report on Form 8-K filed on March 21, 2013.

YUM! Long Term Incentive Plan, as Amended and Restated effective as of May 20, 2016, as incorporated by reference from Form
DEF 14A filed on April 8, 2016.

YUM SharePower Plan, as effective October 7, 1997, and as amended through June 23, 2003, which is incorporated herein by
reference from Exhibit 10.23 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.

Form of YUM Director Stock Option Award Agreement, which is incorporated herein by reference from Exhibit 10.25 to YUM’s
Quarterly Report on Form 10-Q for the quarter ended September 4, 2004.

Form of YUM 1999 Long Term Incentive Plan Award Agreement, which is incorporated herein by reference from Exhibit 10.26 to
YUM’s Quarterly Report on Form 10-Q for the quarter ended September 4, 2004.

10.11.1† Form of YUM 1999 Long Term Incentive Plan Award Agreement (2013) (Stock Options), which is incorporated herein by reference

from Exhibit 10.15.1 to YUM’s Quarterly Report on Form 10-Q for the quarter ended March 23, 2013.

10.11.2† Form of YUM 1999 Long Term Incentive Plan Award Agreement (2015) (Stock Options), which is incorporated herein by reference

from Exhibit 10.15.2 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014.

10.11.3† Form of YUM Long Term Incentive Plan Global YUM! Non-Qualified Stock Option Agreement (2019), which is incorporated herein

by reference from Exhibit 10.11.3 to YUM’s Quarterly Report on Form 10-Q filed on May 8, 2019.

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10.12†

10.13†

Yum! Brands, Inc. International Retirement Plan, as in effect January 1, 2005, which is incorporated herein by reference from Exhibit
10.27 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 25, 2004.

Form of 1999 Long Term Incentive Plan Award Agreement (Stock Appreciation Rights) which is incorporated by reference from
Exhibit 99.1 to YUM’s Report on Form 8-K as filed on January 30, 2006.

10.13.1† Form of YUM 1999 Long Term Incentive Plan Award Agreement (2013) (Stock Appreciation Rights), which is incorporated by
reference from Exhibit 10.18.1 to YUM’s Quarterly Report on Form 10-Q for the quarter ended March 23, 2013.

10.13.2† Form of YUM 1999 Long Term Incentive Plan Award Agreement (2015) (Stock Appreciation Rights), which is incorporated herein by

reference from Exhibit 10.18.2 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014.

10.13.3† Yum! Brands, Inc. Long Term Incentive Plan Form of Global YUM! Stock Appreciation Rights Agreement (2019), which is

incorporated herein by reference from Exhibit 10.13.3 to YUM’s Quarterly Report on Form 10-Q filed on May 8, 2019.

10.13.4† Yum! Brands, Inc. Long Term Incentive Plan Form of Global Restricted Stock Unit Agreement (2019), which is incorporated herein

by reference from Exhibit 10.20 to YUM’s Quarterly Report on Form 10-Q filed on May 8, 2019.

10.14†

YUM! Brands Leadership Retirement Plan, as in effect January 1, 2005, which is incorporated herein by reference from Exhibit
10.32 to YUM’s Quarterly Report on Form 10-Q for the quarter ended March 24, 2007.

10.14.1† YUM! Brands Leadership Retirement Plan, Plan Document for the 409A Program, as effective January 1, 2005, and as Amended

and Restated as of January 1, 2021, as attached herein.

90 YUM! BRANDS, INC. - 2021 Form 10-K

PART IV
ITEM 15 Exhibit Index

Exhibit
Number Description of Exhibits

10.15†

10.16†

YUM! Performance Share Plan, as amended and restated January 1, 2013, which is incorporated by reference from Exhibit 10.1 to
YUM’s Quarterly Report on Form 10-Q for the quarter ended June 13, 2015.

YUM! Brands Third Country National Retirement Plan, as effective January 1, 2009, which is incorporated by reference from Exhibit
10.25 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 26, 2009.

10.16.1† YUM! Brands Third Country National Retirement Plan Amendment, as effective January 1, 2021, as attached herein.

10.17†

10.18†

10.20

10.21

10.21.1

10.21.2

10.21.3

10.21.4

10.21.5

10.21.6

10.22

10.23

10.23.1

10.23.2

10.23.3

10.24

10.25

2010 YUM! Brands Supplemental Long Term Disability Coverage Summary, as effective January 1, 2010, which is incorporated by
reference from Exhibit 10.26 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 26, 2009.

Yum! Brands, Inc. Compensation Recovery Policy, Amended and Restated January 1, 2015, which is incorporated herein by
reference from Exhibit 10.28 to YUM’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014.

Indenture, dated as of June 15, 2017, by and among KFC Holding Co., Pizza Hut Holdings, LLC and Taco Bell of America, LLC, as
issuers, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee, which is incorporated
herein by reference from Exhibit 4.1 to YUM’s Report on Form 8-K filed on June 16, 2017.

Base Indenture, dated as of May 11, 2016, between Taco Bell Funding, LLC, as issuer and Citibank, N.A., as trustee and securities
intermediary, which is incorporated herein by reference from Exhibit 4.1 to YUM’s Report on Form 8-K filed on May 16, 2016.

Series 2016-1 Supplement to Base Indenture dated as of May 11, 2016, by and between Taco Bell Funding, LLC, as issuer and
Citibank, N.A. as Trustee and Series 2016-1 securities intermediary, which is incorporated herein by reference from Exhibit 4.2 to
YUM’s Report on Form 8-K filed on May 16, 2016.

Series 2018-1 Supplement to Base Indenture, dated as of November 28, 2018, by and between the Issuer and Citibank, N.A. as
Trustee and Series 2018-1 securities intermediary, which is incorporated herein by reference from Exhibit 10.1 to YUM’s Report on
Form 8-K filed on December 3, 2018.

Series 2021-1 Supplement to Amended and Restated Base Indenture, dated as of August 19, 2021, by and between Taco Bell
Funding, LLC, as issuer, and Citibank, N.A. as trustee and Series 2021-1 securities intermediary, which is incorporated herein by
reference from Exhibit 10.2 to YUM’s Report on Form 8-K filed on August 25, 2021.

Amendment No. 1 to Base Indenture, dated as of August 23, 2016, by and between the Issuer and Citibank, N.A. as Trustee and
Series 2016-1 securities intermediary, which is incorporated herein by reference from Exhibit 10.22.3 to YUM’s Annual Report on
Form 10-K for fiscal year ended December 31, 2018.

Amendment No. 2 to Base Indenture, dated as of November 28, 2018, by and between the Issuer and Citibank, N.A. as Trustee
and the Series 2018-1 securities intermediary, which is incorporated herein by reference from Exhibit 10.2 to YUM’s Report on
Form 8-K filed on December 3, 2018.

Amended and Restated Base Indenture, dated as of August 19, 2021, by and between Taco Bell Funding, LLC, as issuer, and
Citibank, N.A. as trustee and the Series 2021-1 securities intermediary, which is incorporated herein by reference from Exhibit 10.1
to YUM’s Report on Form 8-K filed on August 25, 2021.

Guarantee and Collateral Agreement, dated as of May 11, 2016, by Taco Bell Franchise Holder 1, LLC, Taco Bell Franchisor, LLC,
Taco Bell IP Holder, LLC and Taco Bell Franchisor Holdings, LLC in favor of Citibank, N.A., which is incorporated herein by
reference from Exhibit 10.2 to YUM’s Report on Form 8-K filed on May 16, 2016.

Management Agreement, dated as of May 11, 2016, among Taco Bell Funding, LLC, as issuer, Taco Bell Franchise Holder 1, LLC,
Taco Bell Franchisor, LLC, Taco Bell IP Holder, LLC, Taco Bell Franchisor Holdings, LLC, Citibank, N.A. and Taco Bell Corp., as
manager, which is incorporated herein by reference from Exhibit 10.3 to YUM’s Report on Form 8-K filed on May 16, 2016.

Amendment No.1 to Management Agreement, dated as of August 24, 2016, among Taco Bell Funding, LLC, as issuer, Taco Bell
Franchise Holder 1, LLC, Taco Bell Franchisor, LLC, Taco Bell IP Holder, LLC, Taco Bell Franchisor Holdings, LLC and Taco Bell
Corp., as manager, which is incorporated herein by reference from Exhibit 10.25.1 to YUM’s Annual Report on Form 10-K for fiscal
year ended December 31, 2018.

Amendment No. 2 to Management Agreement, dated as of November 28, 2018, among Taco Bell Funding, LLC, as issuer, Taco
Bell Franchise Holder 1, LLC, Taco Bell Franchisor, LLC, Taco Bell IP Holder, LLC, Taco Bell Franchisor Holdings, LLC, Citibank,
N.A. and Taco Bell Corp., as manager, which is incorporated herein by reference from Exhibit 10.25.2 to YUM’s Annual Report on
Form 10-K for fiscal year ended December 31, 2018.

Amended and Restated Management Agreement, dated as of August 19, 2021, by and between Taco Bell Funding, LLC, as issuer,
Taco Bell Franchise Holder 1, LLC, Taco Bell Franchisor, LLC, Taco Bell IP Holder, LLC, Taco Bell Franchisor Holdings, LLC and
Taco Bell Corp., as manager, and Citibank, N.A. as trustee, which is incorporated herein by reference from Exhibit 10.3 to YUM’s
Report on Form 8-K filed on August 25, 2021.

Indenture, dated as of September 11, 2019, by and between Yum and The Bank of New York Mellon Trust Company, N.A., as
trustee, which is incorporated herein by reference from Exhibit 4.1 to YUM’s Report on Form 8-K filed on September 16, 2019.

Indenture, dated as of April 1, 2020 by and between Yum and the Bank of New York Mellon Trust Company, N.A, as Trustee, which
is incorporated herein by reference from Exhibit 4.1 to YUM’s Report on Form 8-K filed on April 6, 2020.

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YUM! BRANDS, INC. - 2021 Form 10-K 91

PART IV
ITEM 15 Exhibit Index

Exhibit
Number Description of Exhibits

10.26

10.26.1

10.27

10.28†

10.29†

10.30

21.1

23.1

31.1

31.2

32.1

32.2

Master License Agreement, dated as of October 31, 2016, by and between Yum! Restaurants Asia Pte. Ltd. and Yum Restaurants
Consulting (Shanghai) Company Limited, which is incorporated herein by reference from Exhibit 10.1 to YUM’s Report on Form 8-K
filed on November 3, 2016.

Confirmatory License Agreement, dated as of January 1, 2020, by and between YRI China Franchising, LLC and Yum Restaurants
Consulting (Shanghai) Company Limited, which is incorporated herein by reference from Exhibit 10.26.1 to YUM’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2020.

Tax Matters Agreement, dated as of October 31, 2016, by and among YUM, Yum China Holdings, Inc. and Yum Restaurants
Consulting (Shanghai) Company Limited, which is incorporated herein by reference from Exhibit 10.2 to YUM’s Report on Form 8-K
filed on November 3, 2016.

Offer Letter dated June 19, 2019, between the Company and Christopher Turner, which is incorporated herein by reference from
Exhibit 10.28 to YUM’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Offer Letter dated July 16, 2019, between the Company and Mark King, which is incorporated herein by reference from Exhibit 4.2
to YUM’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Yum! Brands, Inc. Long Term Incentive Plan Form of Global Performance Share Unit Agreement (2021), which is incorporated
herein by reference from Exhibit 10.20 to YUM’s Quarterly Report on Form 10-Q filed on May 5, 2021.

Active Subsidiaries of YUM.

Consent of KPMG LLP.

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.

101.INS

XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

†

Indicates a management contract or compensatory plan.

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92 YUM! BRANDS, INC. - 2021 Form 10-K

Cautionary Language Regarding
Forward-Looking Statements

“model,”

“ongoing,”

report may

the meaning

statements” within

contain
Forward-Looking Statements. This
of
“forward-looking
Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. We intend all forward-
looking statements to be covered by the safe harbor provisions
of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the
fact that they do not relate strictly to historical or current facts
and by the use of forward-looking words such as “expect,”
“expectation,” “believe,” “anticipate,” “may,” “could,” “intend,”
“belief,” “plan,” “estimate,” “target,” “predict,” “likely,” “seek,”
“project,”
“forecast,”
“outlook” or similar terminology. These statements are based
on
estimates,
current
assumptions and/or projections, our perception of historical
trends and current conditions, as well as other factors that we
the
believe
and
circumstances.
neither
Forward-looking
predictions nor guarantees of future events, circumstances or
performance and are inherently subject to known and unknown
risks, uncertainties and assumptions that could cause our
actual results to differ materially from those indicated by those
statements. There can be no assurance that our expectations,
estimates, assumptions and/or projections,
including with
to the future earnings and performance or capital
respect
structure of Yum! Brands, will prove to be correct or that any of
our expectations, estimates or projections will be achieved.

reasonable
statements

under
are

expectations,

appropriate

“should,”

reflect

“will,”

and

our

are

Numerous factors could cause our actual results and events to
differ materially from those expressed or implied by forward-
looking statements, including, without limitation: the severity
and duration of the COVID-19 pandemic; food safety and food
the occurrence of a significant health
borne-illness issues;
the success of our
epidemic or other catastrophic event;
franchisees and licensees; our significant exposure to the
Chinese market; changes in economic and political conditions
in, and other risks associated with countries and territories
outside of the U.S. where we operate; changes in currency
exchange rates; our ability to protect the integrity and security
of personal
information of our customers and employees, and
other cybersecurity risks; our ability to successfully implement
technology initiatives; our increasing dependence on multiple
digital commerce platforms; the impact of social media; our
ability to secure and maintain distribution and adequate supply
to our restaurants; the loss of key personnel, or labor shortages
or difficulty finding qualified employees; the success of our
development strategy, including in emerging markets; changes
in commodity, labor and other operating costs; the impact of
climate change and other environmental and sustainability
matters; pending or
future litigation and legal claims or
proceedings; changes in or noncompliance with government

tax matters,

indebtedness.

In addition, other

regulations, including data privacy laws, labor standards and
including
anti-bribery or anti-corruption laws;
changes in tax laws or disagreements with taxing authorities;
consumer preferences and perceptions of our brands and
corporate reputation; failure to protect our service marks or
other intellectual property; changes in consumer discretionary
spending and general economic conditions; competition within
the retail food industry; not realizing the anticipated benefits
from past or potential future acquisitions, investments or other
strategic transactions; and risks relating to our significant
risks and
amount of
uncertainties not presently known to us or that we currently
believe to be immaterial could affect the accuracy of any such
forward-looking statements. All
forward-looking statements
should be evaluated with the understanding of their inherent
uncertainty. The forward-looking statements included in this
report are only made as of the date of this report and we
disclaim any obligation to publicly update any forward-looking
statement to reflect subsequent events or circumstances. You
should consult our filings with the Securities and Exchange
Commission (including the information set
the
captions “Risk Factors” and “Forward-Looking Statements” in
our most recently filed Annual Report on Form 10-K and
Quarterly Report on Form 10-Q)
for additional detail about
factors that could affect our financial and other results.

forth under

Trademarks and Brands. We use “Yum! Brands” and the Yum!
logo as our trademarks, among others. Product names and
services appearing in this report are trademarks of Yum!
Brands, Inc. or its subsidiaries. This report also may refer to
brand names, trademarks, service marks and trade names of
other companies and organizations, and these brand names,
trademarks, service marks and trade names are the property
of their respective owners.

Market and Industry Data. Unless we indicate otherwise, we
base the information concerning our industry contained in this
report on our general knowledge of and expectations
concerning the industry. Our market position and market share
is based on our estimates using data from various industry
sources and assumptions that we believe to be reasonable
based on our knowledge of
the industry. We have not
independently verified the data obtained from these sources
accuracy or
and cannot
completeness.

the data’s

you of

assure

Non-GAAP Measures. This report includes certain non-GAAP
financial measures. Reconciliation of these non-GAAP financial
measures to the most directly comparable GAAP measures are
included on our website at http://www.investors.yum.com
Investors are urged to consider carefully the comparable GAAP
measures and reconciliations.

Shareholder Information

Inquiries Regarding Your YUM Holdings

REGISTERED SHAREHOLDERS (those who hold YUM shares
in their own names) should address communications concerning
statements, address changes,
lost certificates and other
administrative matters to:

BENEFICIAL SHAREHOLDERS (those who hold YUM shares in
the name of a bank or broker) should direct communications
about all administrative matters related to their accounts to their
stockbroker.

Computershare, Inc.
462 South 4th Street, Suite 1600
Louisville, KY 40202
Phone: (888) 439-4986
International: 1+ (781) 575-3100
www.computershare.com

In all correspondence or phone inquiries, please provide your
name and your YUM account number if you know it.

REGISTERED
accounts
and
at
www.computershare.com

SHAREHOLDERS
complete

the

the website of Computershare,

can
following
Inc.

access
functions

their
online
(“Computershare”):

(cid:129) Access account balance and other general account information

(cid:129) Change an account’s mailing address

(cid:129) View a detailed list of holdings represented by certificates and

the identifying certificate numbers

(cid:129) Request a certificate for shares held at Computershare

(cid:129) Replace a lost or stolen certificate

(cid:129) Retrieve a duplicate Form 1099-B, Form 1099-DIV

(cid:129) Purchase shares of YUM through the Company’s Direct Stock

Purchase Plan

(cid:129) Sell shares held at Computershare

Access accounts online at the following URL:
https://www-us.computershare.com/Investor/
Your account number and social security number are required. If
you do not know your account number, please call Computershare
at (888) 439-4986.

LONG TERM INCENTIVE PLAN (LTIP) PARTICIPANTS
(employees with rights
to LTIP and YUMBUCKS stock
appreciation rights grants) should address all questions regarding
their accounts, outstanding stock appreciation rights grants or
shares received through stock appreciation right exercises to:

Merrill Lynch
Equity Award Services
1400 American Blvd.
Mail Stop # NJ2-140-03-40
Pennington, NJ 08534
Phone: (888) 986-4321 (U.S., Puerto Rico and Canada)

(609) 818-8156 (all other locations)

In all correspondence, please provide the last 4 digits of your
account number, your address, your
telephone number and
indicate that your inquiry relates to YUM holdings. For telephone
inquiries, please have a copy of your most recent statement
available.

EMPLOYEE BENEFIT PLAN PARTICIPANTS
Capital Stock Purchase Program (888) 439-4986

401k Plan Customer Service Representative (888) 875-4015
401k Plan Customer Service Representative (904) 791-2005
(outside U.S.)

P.O. Box 5166
Boston, MA 02206-5166

Please have a copy of your most recent statement available when
calling. Press 0# for a customer service representative and give
the representative the name of the plan.

Shareholder Services

DIRECT STOCK PURCHASE PLAN

INDEPENDENT AUDITORS

KPMG, LLC
400 West Market Street, Suite 2600
Louisville, Kentucky 40202
Phone: (502) 587-0535

STOCK TRADING SYMBOL – YUM

The New York Stock Exchange is the principal market for YUM
Common Stock, which trades under the symbol YUM.

A prospectus and a brochure explaining this convenient plan are
available from our transfer agent:

Computershare, Inc.
462 South 4th Street, Suite 1600
Louisville, KY 40202
Phone: (888) 439-4986
International: 1+ (781) 575-3100

FINANCIAL AND OTHER INFORMATION

Securities analysts, portfolio managers,
representatives of
financial institutions and other individuals with questions regarding
YUM’s performance are invited to contact:

Ms. Jodi Dyer
Vice President, Investor Relations,
Yum! Brands, Inc.
1900 Colonel Sanders Lane
Louisville, KY 40213
Phone: (888) 298-6986

Franchise Inquiries

ONLINE FRANCHISE INFORMATION

Information about potential franchise opportunities is available at
https://www.yum.com/wps/portal/yumbrands/Yumbrands/
company/our-brands/franchising-and-real-estate

YUM’s Annual Report contains many of the valuable trademarks
owned and used by YUM and its subsidiaries and affiliates in the
United States and worldwide.

BOARD OF DIRECTORS

SENIOR OFFICERS

Paget L. Alves 67
Former Chief Sales Officer,
Sprint Corporation

Keith Barr 51
Chief Executive Officer,
InterContinental Hotels Group PLC

David W. Gibbs 59
Chief Executive Officer,
Yum! Brands, Inc.

Scott A. Catlett 46
Chief Legal and Franchise Officer and
Corporate Secretary, Yum! Brands, Inc.

Christopher M. Connor 66
Former Chairman and Chief Executive Officer,
Sherwin-Williams Company

Tracy L. Skeans 49
Chief Operating Officer and Chief People Officer,
Yum! Brands, Inc.

Brian C. Cornell 63
Chairman and Chief Executive Officer,
Target Corporation

Christopher Turner 47
Chief Financial Officer,
Yum! Brands, Inc.

David E. Russell 52
Senior Vice President, Finance and Corporate Controller,
Yum! Brands, Inc.

Jodi Dyer 34
Vice President, Investor Relations,
Yum! Brands, Inc.

Mark King 62
Chief Executive Officer,
Taco Bell Division

Aaron Powell 50
Chief Executive Officer
PH Division

Sabir Sami 55
Chief Executive Officer,
KFC Division

Russ Bendel 67
Chief Executive Officer,
Habit Restaurants Division

Tanya L. Domier 56
Chief Executive Officer,
Advantage Solutions, Inc.

David W. Gibbs 59
Chief Executive Officer,
Yum! Brands, Inc.

Mirian M. Graddick-Weir 67
Retired Executive Vice President Human Resources,
Merck & Co., Inc.

Lauren R. Hobart 53
President and Chief Executive Officer,
DICK’S Sporting Goods

Thomas C. Nelson 59
Chairman, Chief Executive Officer and President,
National Gypsum Company

P. Justin Skala 62
Chief Executive Officer,
BMI Group

Elane B. Stock 57
Chief Executive Officer,
ServiceMaster Brands, LLC

Annie Young-Scrivner 53
Chief Executive Officer,
Wella Company

Yum! Brands, Inc., trades under the symbol YUM and is proud to meet the listing requirements of the NYSE, the world’s leading equities market.