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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

Filed by the Registrant    ¨

Filed by a Party other than the Registrant    ¨

Check the appropriate box:

Kraft Foods Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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Dear Fellow Shareholder:

I am pleased to invite you to our 2012 Annual Meeting of Shareholders. We will hold the Annual Meeting at 9:00 a.m. CDT on Wednesday, May 23, 2012, at the North Shore Center for the Performing Arts in Skokie, Illinois. The Center will open to shareholders at 8:00 a.m. CDT.

We have prepared the following materials for the meeting:

We are once again mailing to our shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access these materials and vote online. We believe electronic delivery expedites the receipt of materials, while lowering costs and reducing the environmental impact of our Annual Meeting. If you receive a Notice of Internet Availability of Proxy Materials by mail, you will not receive paper copies of these materials unless you specifically request them. You may request paper copies to be sent to you in the mail by following the instructions on the Notice.

Whether or not you plan to attend the Annual Meeting, your vote is important and I encourage you to vote promptly. The Notice contains instructions on how to vote via the Internet or by calling a toll-free number. If you receive paper copies of the proxy materials by mail, you may also vote by signing, dating and mailing your proxy card or voting instruction form. You may also vote in person at the Annual Meeting.

Please register in advance if you would like to attend the Annual Meeting. The Proxy Statement contains advance registration instructions.

On behalf of the Board of Directors, thank you for your continued interest and support.

Sincerely,

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KRAFT FOODS INC.

Three Lakes Drive

Northfield, Illinois 60093

NOTICE OF 2012 ANNUAL MEETING OF SHAREHOLDERS

9501 Skokie Boulevard

Skokie, Illinois 60077

Carol J. Ward

Vice President and Corporate Secretary

April 2, 2012

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ITEM 1. ELECTION OF DIRECTORS

Process for Nominating Directors

The Governance, Membership and Public Affairs Committee of our Board of Directors, which we also refer to in this “Item 1. Election of Directors” section as the “Committee,” is responsible for identifying, evaluating and recommending to the Board nominees for election at the 2012 Annual Meeting of Shareholders (and any adjournments or postponements of the meeting) (the “Annual Meeting”). The Committee relies on nominee suggestions from the directors, shareholders, management and others. From time to time, the Committee retains executive search and board advisory firms to assist in identifying and evaluating potential nominees. During 2011, the Committee retained Heidrick & Struggles to assist in the search and recruitment of directors, resulting in the Board’s nomination of Terry J. Lundgren and Jorge S. Mesquita as director nominees at the Annual Meeting.

General Qualifications

The Board believes all directors should possess certain personal characteristics, including integrity, sound business judgment and vision, to serve on our Board. We believe these characteristics are necessary to establish a competent, ethical and well-functioning Board that best represents the interests of our business, shareholders, employees, business partners and consumers. Under our Corporate Governance Guidelines (the “Guidelines”), when evaluating the suitability of individuals for nomination, the Committee takes into account many factors. These include the individual’s general understanding of the varied disciplines relevant to the success of a large, publicly traded company in a global business environment, understanding of our global businesses and markets, professional expertise and education. The Committee also considers an individual’s ability to devote sufficient time and effort to fulfill his or her Kraft Foods’ responsibilities, taking into account the individual’s other commitments. In addition, the Board considers whether an individual meets various independence requirements, including whether his or her service on boards and committees of other organizations is consistent with our conflicts of interest policy.

When determining whether to recommend a director for re-election, the Committee also considers the director’s attendance at Board and committee meetings and participation in, and contributions to, Board and committee activities. In addition, under the Guidelines, the Committee generally will not recommend, and the Board will not approve, the nomination for re-election of an independent director who has reached the age of 75. However, if the Board determines that the director’s nomination for re-election is in our shareholders’ best interests, the Committee may recommend, and the Board may approve, the director’s nomination for re-election for up to two annual terms following his or her 75th birthday. An employee director must resign from the Board upon ceasing to be a Kraft Foods’ officer.

Diversity

The Guidelines provide that the Committee will consider factors that promote diversity of views and experience when evaluating the suitability of individuals for nomination. While we have no formal written policy regarding what specific factors would create a diversity of views and experience, the Committee recognizes diversity’s significant benefit to the Board and Kraft Foods, as varying viewpoints contribute to a more informed and effective decision-making process. The Committee seeks broad experience in relevant industries, professions and areas of expertise important to our operations, including global business, manufacturing, marketing, science, finance and accounting, academia, law and government. The Committee also recognizes the importance of having directors with significant international experiences and backgrounds given our global, multicultural business.

As shown below, our director nominees have varied experiences, backgrounds and personal characteristics, which ensure that the Board will have a diversity of viewpoints and enable it to effectively represent our business, shareholders, employees, business partners and consumers:

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Individual Skills and Experience

When evaluating potential director nominees, the Committee considers each individual’s professional expertise and educational background in addition to the general qualifications. The Committee evaluates each individual in the context of the Board as a whole. The Committee works with the Board to determine the appropriate mix of backgrounds and experiences that would establish and maintain a Board that is strong in its collective knowledge, allowing the Board to fulfill its responsibilities and best perpetuate our long-term success and represent our shareholders’ interests. To help the Committee determine whether director nominees qualify to serve on our Board and would contribute to the Board’s current and future needs, director nominees complete questionnaires regarding their backgrounds, qualifications, skills and potential conflicts of interest. Additionally, the Committee annually conducts evaluations of the Board, the Board’s committees and individual directors that assess the experience, skills, qualifications, diversity and contributions of each individual and of the group as a whole.

The Committee regularly communicates with the Board to identify characteristics, professional experience and areas of expertise that are particularly desirable for our directors to possess to help meet specific Board needs, including:

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The following table highlights each director nominee’s specific skills, knowledge and experiences that the Committee relied upon when determining whether to nominate the individual for election. A particular nominee may possess other skills, knowledge or experience even though they are not indicated below.

The Board believes that all the director nominees for election at the Annual Meeting are highly qualified. As the table shows, the nominees have significant leadership and professional experience, knowledge and skills that qualify them for service on our Board. As a group they represent diverse views, experiences and backgrounds. Each nominee other than the Chairman satisfies independence requirements. All director nominees satisfy the criteria set forth in our Guidelines and possess the personal characteristics that are essential for the proper and effective functioning of the Board. Each nominee’s biography below contains additional information regarding his or her professional experience, qualifications and skills.

Director Nominees

All Board members are subject to annual election. Our Board currently has 11 directors all of whom were elected at the 2011 Annual Meeting. Ajaypal S. Banga and Richard A. Lerner have declined to stand for re-election due to other commitments and will step down from the Board at the time of the Annual Meeting. The balance of our current directors are standing for re-election. Additionally, Terry J. Lundgren and Jorge S. Mesquita will stand for election.

In March 2012, the Committee recommended, and the Board nominated, each of the 11 director nominees listed below for election at the Annual Meeting, for a term ending at the 2013 Annual Meeting or until his or her successor has been duly elected and qualified. Each nominee has consented to his or her nomination for election to the Board. As we announced on August 4, 2011, our company is pursuing the creation of two independent public companies – a global snacks business and a North American grocery business – via a spin-off of the North American grocery business (the “Spin-off”) by year-end 2012. In connection with the Spin-off, we anticipate that some of our directors will become directors of the North American grocery company, to be known as Kraft Foods Group, Inc., and therefore will resign from our Board of Directors. The Spin-off is subject to various conditions precedent, including approval by our Board of Directors, and there can be no assurance that the transaction will be completed.

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The following table presents information regarding each director nominee as of March 23, 2012, including information about each nominee’s professional experience, educational background and qualifications that led the Board to nominate him or her for election. The following also includes information about all public company directorships each nominee currently holds and held during the past five years. In addition to the public company directorships listed below, the nominees also serve on the boards of various charitable, educational and cultural institutions.

The persons named as proxies in the proxy card or electronic voting form will vote the shares represented by the proxy card or electronic voting form FOR or AGAINST the director nominees or ABSTAIN from voting, as instructed in the proxy card or electronic voting form. If a director nominee should become unavailable to serve as a director, an event that we do not anticipate occurring, the persons named as proxies intend to vote the shares for the person whom the Board may designate to replace that nominee. In lieu of naming a substitute, the Board may reduce the number of directors on our Board.

The Board recommends shareholders vote FOR the election of each of these nominees.

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CORPORATE GOVERNANCE

We believe that a strong corporate governance framework is essential to the long-term success of our company. This section describes our governance policies, key governance practices, Board leadership structure and oversight functions.

Governance Guidelines and Codes of Conduct

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines that articulate our governance philosophy, practices and policies in a range of areas, including: the Board’s role and responsibilities; composition and structure of the Board; establishment and responsibilities of the committees of the Board; executive and director performance evaluations; and succession planning.

At least annually, the Board’s Governance, Membership and Public Affairs Committee reviews the Guidelines and recommends any changes to the Board. Shareholders and others can access the Guidelines on our website as described below.

Code of Business Conduct and Ethics for Non-Employee Directors and Code of Conduct for Employees

We have adopted a Code of Business Conduct and Ethics for Non-Employee Directors (the “Directors Ethics Code”). It fosters a culture of honesty and integrity, focuses on areas of ethical risk, guides non-employee directors in recognizing and handling ethical issues and provides mechanisms to report unethical conduct. Annually, each non-employee director must acknowledge in writing that he or she has received, reviewed and understands the Directors Ethics Code.

We also have a Code of Conduct that applies to all of our employees. It includes a set of employee policies that cover ethical and legal practices for nearly every aspect of our business. The Code of Conduct reflects our values, the foremost being trust, and contains important rules our employees must follow when conducting business to promote compliance and integrity. The Code of Conduct is part of our global compliance and integrity program that provides support and training throughout our company and encourages reporting of wrongdoing by offering anonymous reporting options and a non-retaliation policy. Shareholders and others can access our Code of Conduct on our website at www.kraftfoodscompany.com/responsibility/compliance-integrity.

We will disclose in the Corporate Governance section of our website (described below) any amendments to our Directors Ethics Code or Code of Conduct and any waiver granted to an executive officer or director under these codes.

Corporate Governance Materials Available on Our Website

We include the following documents in the Corporate Governance section of our website at www.kraftfoodscompany.com/investor/corporate-governance:

The information on our website is not, and will not be deemed to be, a part of this Proxy Statement or incorporated into any of our other filings with the U.S. Securities and Exchange Commission (“SEC”).

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Key Corporate Governance Practices

We have adopted several corporate governance practices that enhance the Board’s independent leadership, accountability and oversight:

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Board Leadership Structure

Our current Board leadership structure consists of:

Combined Chairman and CEO

Our By-Laws provide the Board flexibility in determining its leadership structure. The Guidelines currently provide that the Chief Executive Officer serves as Chairman of the Board and an independent director serves as Lead Director. Having one individual serve as both Chief Executive Officer and Chairman benefits Kraft Foods and our shareholders by contributing to the Board’s efficiency and effectiveness. The Board believes that the Chief Executive Officer is generally in the best position to inform our independent directors about our global operations and issues important to Kraft Foods. Combining these roles also allows timely communication between management and the Board on critical business matters given the complexity and global reach of our business and ensures alignment of our business and strategic plans. At the same time, as described below under “Independent Director Leadership and Oversight,” we believe that our governance practices ensure that skilled and experienced independent directors provide independent leadership.

Our By-Laws permit one person to hold one or more offices such as chief executive officer and chairman, and provide that the Board may appoint, and designate the duties of, a lead director. The Board periodically evaluates our leadership structure and determines whether combining the roles of Chief Executive Officer and Chairman is in our best interests based on circumstances existing at the time. When determining the leadership structure that will allow the Board to effectively carry out its responsibilities and best represent our shareholders’ interests, the Board considers various factors, including our specific business needs, our operating and financial performance, industry conditions, the economic and regulatory environment, Board and committee annual self-evaluations, advantages and disadvantages of alternative leadership structures and our corporate governance practices.

Ms. Rosenfeld has served as our Chief Executive Officer and a director since June 2006. In 2007, the Board concluded that Ms. Rosenfeld should also serve as Chairman because of her extensive knowledge of Kraft Foods, the food industry and the competitive environment, her leadership experience and her dedication to working closely with other members of the Board. The Board believes that this leadership structure best meets our needs at this time, as it has provided an effective balance of strong leadership and independent oversight during the last several years.

Independent Director Leadership and Oversight

Because the Board believes that independent Board leadership is important, it established the role of Lead Director for times when one individual serves as Chairman and Chief Executive Officer. The Lead Director is an independent director who serves as the principal liaison between the Chairman and the other independent directors and has similar responsibilities to those of the Chairman. The Board created the Lead Director position to increase the Board’s effectiveness and promote open communication among independent directors. The Lead Director works with the Chairman and other members of the Board to provide independent leadership of the Board’s affairs on behalf of our shareholders.

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Under the Guidelines, the Lead Director, in consultation with the other independent directors, is responsible for:

Our current Lead Director is Mark D. Ketchum, whom the Board appointed to that position in 2009. The Board believes that Mr. Ketchum is an effective Lead Director due to his independence, leadership and operating experience from formerly serving as president and chief executive officer of a global consumer products company and his corporate governance experience acquired while serving on public company boards.

Director Independence

The Guidelines require that at least 75% of the directors on our Board meet the New York Stock Exchange (“NYSE”) listing standards’ “independence” requirements. For a director to be considered independent, the Board must affirmatively determine, after reviewing all relevant information, that a director has no direct or indirect material relationship with Kraft Foods. To assist in this determination, the Board adopted categorical standards of director independence, including whether a director or a member of the director’s immediate family has any current or past employment or affiliation with Kraft Foods or our independent registered public accountants. These categorical standards are listed as Annex A to the Guidelines, which are available on our website at www.kraftfoodscompany.com/investor/corporate-governance.

The Board determined that, under our categorical standards and the NYSE listing standards, the following director nominees are independent: Myra M. Hart; Peter B. Henry; Lois D. Juliber; Mark D. Ketchum; Terry J. Lundgren; Mackey J. McDonald; Jorge S. Mesquita; John C. Pope; Fredric G. Reynolds and Jean-François M.L. van Boxmeer. Irene B. Rosenfeld is not independent because she is an executive officer of Kraft Foods.

Oversight of Risk Management

Our business faces various risks, including strategic, financial, legal, regulatory, operational, accounting and reputational risks. Management is responsible for the day-to-day management and mitigation of risk. Identifying, managing and mitigating our exposure to these risks and effectively overseeing this process are critical to our operational decision-making and annual planning processes. Our Board has ultimate responsibility for risk oversight, but it has delegated primary responsibility for overseeing risk assessment and management to the Audit Committee. As required by NYSE listing standards, the Audit Committee discusses guidelines and policies to govern the process by which management assesses and manages risk. In addition, pursuant to its charter, the Audit Committee reviews and discusses risk assessment and risk management guidelines, policies and processes utilized in our Enterprise Risk Management (“ERM”) approach. Our ERM approach is an ongoing process effected at all levels of our operations and across business units to identify, assess, monitor, manage and mitigate risk. The ERM approach facilitates open communication between management

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and the Board to advance the Board’s and committees’ understanding of our risk management process, how it is functioning, the participants in the process, key risks to our business and performance and the information gathered through the approach. The Audit Committee annually reviews the ERM approach, as well as the results of the annual ERM assessment, to assure the process continues to function effectively.

Annually, the Audit Committee allocates responsibility for overseeing the review and assessment of key risk exposures and management’s response to those exposures to the full Board or it retains those responsibilities as appropriate. Management provides reports to the Board and Audit Committee, in advance of meetings, regarding these key risks and the actions management has taken to monitor, control and mitigate these risks. Management also attends Board and Audit Committee meetings to discuss these reports and provide any updates. The Audit Committee reports key risk discussions to the Board following its meetings. Board members may also further discuss the risk management process directly with members of management.

In addition to the ERM approach, throughout the year, the Board and each committee review and assess risks related to our business and operations as follows:

The Board frequently discusses our strategic plans, issues and opportunities in light of circumstances in the food and beverage industry and the global economic environment. Additionally, the Board devotes several days each year to a highly focused review of our strategic plans, which includes discussion of strategic and operational risks.

The Board believes our current leadership structure enhances its oversight of risk management because our Chief Executive Officer, who is ultimately responsible for our risk management process, is also our Chairman, placing her in the best position to discuss with the Board these key risks and management’s response to them.

Review of Transactions with Related Persons

The Board has adopted a written policy regarding the review, approval or ratification of “related person transactions.” A related person transaction is one in which Kraft Foods Inc. is a participant, in which the amount involved exceeds $120,000 and in which any “related person” had, has or will have a direct or indirect material interest. In general, “related persons” are the following persons and their immediate family members: our directors, executive officers and shareholders beneficially owning more than 5% of our outstanding common stock. In accordance with this policy, the Committee reviews transactions that might qualify as related person transactions. If the Committee determines that a transaction qualifies as a related person transaction, then the Committee reviews, and approves, disapproves or ratifies the related person transaction. The Committee approves or ratifies

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only those related person transactions that are fair and reasonable to Kraft Foods and in our and our shareholders’ best interests. The chair of the Committee reviews and approves or ratifies potential related person transactions when it is not practicable or desirable to delay review of a transaction until a committee meeting. The chair reports to the Committee any transaction so approved or ratified. The Committee, in the course of its review and approval or ratification of a related person transaction under this policy, considers, among other things:

Any member of the Committee who is a related person with respect to a transaction under review may not participate in the deliberations or decisions regarding the transaction.

Pursuant to our policy, the Committee determined since the beginning of 2011, that no transaction submitted for its review was a related person transaction.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our executive officers, directors and persons who beneficially own more than 10% of our common stock to report to the SEC their ownership of our common stock and changes in that ownership. As a practical matter, our Office of the Corporate Secretary assists our directors and executive officers by monitoring their transactions and completing and filing Section 16(a) reports on their behalf.

We reviewed copies of reports filed pursuant to Section 16(a) of the Exchange Act and written representations from reporting persons that all reportable transactions were reported. Based solely on that review, we believe that during the fiscal year ended December 31, 2011, all required filings were timely made in accordance with Exchange Act requirements.

Communications with the Board

Information for shareholders and other parties interested in communicating with the Lead Director, the Board or our independent directors, individually or as a group, is available on our website at www.kraftfoodscompany.com/investor/corporate-governance/contact_bod. Our Corporate Secretary forwards communications relating to matters within the Board’s purview to the independent directors; communications relating to matters within a Board committee’s area of responsibility to the chair of the appropriate committee; and communications relating to ordinary business matters, such as suggestions, inquiries and consumer complaints, to the appropriate Kraft Foods executive or employee. Our Corporate Secretary does not forward solicitations, junk mail and obviously frivolous or inappropriate communications, but makes them available to any independent director who requests them.

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BOARD COMMITTEES AND MEMBERSHIP

Our Board designates the committee members and chairs based on the Governance, Membership and Public Affairs Committee’s recommendations. In 2011, the Board had four standing committees: Audit, Finance, Human Resources and Compensation, and Governance, Membership and Public Affairs. The Board has adopted a written charter for each committee. The charters define each committee’s roles and responsibilities. All committee charters are available on our website at www.kraftfoodscompany.com/investor/corporate-governance. Our current committee membership is listed in the table below.

Current Committee Membership*

Meeting Attendance

We expect directors to attend all Board meetings, the Annual Meeting and all meetings of the committees on which they serve. We understand, however, that occasionally a director may be unable to attend a meeting. The Board held 14 meetings in 2011. All incumbent directors who served as directors in 2011 attended more than 87% of the aggregate number of meetings of the Board and all committees on which they served. Additionally, all then-incumbent directors attended the 2011 Annual Meeting of Shareholders.

Special Committees Related to Strategic Alternatives and Spin-off

During 2011, the Board formed three special committees of the Board to address various matters related to Kraft Foods’ strategy and the Spin-off. The directors who served on one or more of these committees were Ajaypal S. Banga; Myra M. Hart; Peter B. Henry; Lois D. Juliber; Mark D. Ketchum; Mackey J. McDonald; John C. Pope; Fredric G. Reynolds and Irene B. Rosenfeld. These special committees held a total of 20 meetings in 2011.

Audit Committee

The Board established the Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The Board determined that all members of the Audit Committee are independent within the meaning of the NYSE listing standards and Rule 10A-3 of the Exchange Act. The Board also

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determined that all Audit Committee members are financially literate within the meaning of the NYSE listing standards and that Fredric G. Reynolds is an “audit committee financial expert” within the meaning of SEC regulations. No Audit Committee member received any payments in 2011 from us other than compensation for service as a director.

Under its charter, the Audit Committee is responsible for overseeing our accounting and financial reporting processes and audits of our financial statements. The Audit Committee is directly responsible for the appointment and oversight of our independent auditors, including review of their qualifications, independence and performance.

Among other duties, the Audit Committee also oversees:

The Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of any complaints we receive. We encourage employees and third-party individuals and organizations to report concerns about our accounting controls, auditing matters or anything else that appears to involve financial or other wrongdoing. To report such matters, please e-mail us at Kraft-FinancialIntegrity@kraft.com.

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Pre-Approval Policies

Our Audit Committee’s policy, which it reviews annually, is to pre-approve all audit and non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other permissible non-audit services. The pre-approval authority details the particular service or category of service that the independent auditors will perform and is subject to a specific engagement authorization by management within the pre-approved category spending limits. The Committee’s policy also requires management to report at Committee meetings throughout the year on the actual fees charged by the independent auditors for each category of service.

During the year, circumstances may arise when it may become necessary to engage the independent auditors for additional services not contemplated in the original pre-approval authority. In those instances, the Committee approves the services before we engage the independent auditors. If pre-approval is needed before a scheduled Committee meeting, the Committee delegated pre-approval authority to its chair. The chair must report on such pre-approval decisions at the Committee’s next regular meeting.

During 2011, the Audit Committee pre-approved all audit and non-audit services provided by the independent auditors.

Independent Auditors’ Fees

Aggregate fees for professional services rendered by our independent auditors, PricewaterhouseCoopers LLP, for 2011 and 2010 were:

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Finance Committee

The Finance Committee is responsible for considering and making recommendations to the Board on the management of our financial resources and major financial strategies and transactions as set forth in its charter. The Committee reviews and makes recommendations to the Board on financial matters, including:

Governance, Membership and Public Affairs Committee

The Board determined that all of the Governance, Membership and Public Affairs Committee members are independent within the meaning of the NYSE listing standards. The Committee’s responsibilities include, among others:

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The Governance, Membership and Public Affairs Committee will consider any candidate a shareholder properly presents for election to the Board in accordance with the procedures set forth in the By-Laws. The Committee uses the same criteria set forth in the Guidelines to evaluate a candidate suggested by a shareholder as the Committee uses to evaluate a candidate it identifies, as described above under “Item 1. Election of Directors – Process for Nominating Directors,” and makes a recommendation to the Board regarding the candidate’s appointment or nomination for election to the Board. After the Board’s consideration of the candidate suggested by a shareholder, our Corporate Secretary will notify that shareholder whether the Board decided to appoint or nominate the candidate.

For a description of how shareholders may nominate a candidate for election to the Board at an annual meeting of shareholders and have that nomination included in the proxy statement for that meeting, see “2013 Annual Meeting of Shareholders” in this Proxy Statement.

Human Resources and Compensation Committee

Compensation Committee Interlocks and Insider Participation

The Board has determined that all of the directors who served on the Human Resources and Compensation Committee during 2011 are independent within the meaning of the NYSE listing standards. None of the Committee’s members:

Responsibilities

The Human Resources and Compensation Committee’s responsibilities are set forth in its charter. The Committee’s responsibilities include, among other duties:

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Processes and Procedures

The Compensation Discussion and Analysis, included in this Proxy Statement, addresses the Committee’s primary processes for establishing and overseeing executive compensation. Additional processes and procedures include:

Independence of Compensation Consultant to the Committee

Compensation Advisory Partners has served as the Committee’s independent compensation consultant since September 2009. During 2011, Compensation Advisory Partners provided the Committee advice and services, including:

The Committee believes that its consultant should be able to advise the Committee independent of management’s influence. As discussed above, in September 2009, after an extensive selection and

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interview process, the Committee retained Compensation Advisory Partners as its compensation consultant. The Committee believed that it was in the best interests of the Committee and Kraft Foods to engage a compensation consulting firm that provides no other services to Kraft Foods. For the year ended December 31, 2011, Compensation Advisory Partners provided no services to Kraft Foods other than executive and director compensation consulting services to the Committee.

At least annually, the Committee reviews the types of advice and services provided by Compensation Advisory Partners and the fees charged for those services. The consultant reports directly to the Committee on all executive and director compensation matters; regularly meets separately with the Committee outside the presence of management; and, speaks separately with the Committee chair and other Committee members between meetings, as necessary or desired.

Analysis of Risk in the Compensation Architecture

In 2011, the Human Resources and Compensation Committee evaluated the current risk profile of our executive and broad-based compensation programs. In its evaluation, the Committee reviewed our executive compensation structure to determine whether our compensation policies and practices encourage our executive officers or employees to take unnecessary or excessive risks and whether these policies and practices properly mitigate risk. As described below under “Compensation Discussion and Analysis,” our compensation structure is designed to incentivize executives and employees to achieve company financial and strategic goals as well as individual performance goals that promote long-term shareholder returns. The compensation architecture balances this design with multiple elements intended to discourage excessive risk-taking by executives and employees to obtain short-term benefits that may be harmful to Kraft Foods and our shareholders in the long term. The Committee identified numerous safeguards that effectively manage or mitigate risk, including:

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The Committee also analyzed our overall enterprise risks and whether our compensation programs could impact individual behavior so as to exacerbate these enterprise risks. The Human Resources and Compensation Committee collaborated with the Audit Committee in this analysis.

In addition to the Committee’s evaluation, Compensation Advisory Partners also reviewed our executive and broad-based incentive plans and noted similar terms in our incentive plans that mitigate risk.

In light of these analyses, the Human Resources and Compensation Committee believes that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on Kraft Foods.

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COMPENSATION OF NON-EMPLOYEE DIRECTORS

Directors who are full-time Kraft Foods employees (currently only Irene Rosenfeld) receive no compensation for their services as directors.

We strive to provide competitive compensation to attract and retain highly qualified non-employee directors who will best represent our shareholders’ interests. With its compensation consultant’s assistance, the Human Resources and Compensation Committee periodically benchmarks non-employee director compensation against a compensation peer group and general industry data, considers the appropriateness of the form and amount of non-employee director compensation and makes recommendations to the Board concerning such compensation.

The table below summarizes the cash and equity compensation elements in place during 2011 for our non-employee directors.

We pay the non-employee directors their cash retainers quarterly. Non-employee directors can defer 25%, 50%, 75% or 100% of their cash retainers into accounts that mirror the funds in the Kraft Foods Inc. Thrift 401(k) Plan pursuant to the Kraft Foods Inc. 2001 Compensation Plan for Non-Employee Directors. Non-employee directors also receive an annual stock award that is granted at the Board meeting immediately following our annual meeting of shareholders. At the non-employee director’s election, he or she may receive the annual stock award in the form of (i) unrestricted shares of our common stock, subject to a holding period ending six months after the director no longer serves on the Board or (ii) vested deferred shares, delivery of which is deferred until six months after he or she no longer serves on the Board.

To further align our non-employee directors’ and shareholders’ interests, we require that they hold shares of our common stock in an amount equal to five times the annual Board retainer (equivalent to $550,000) within five years of becoming a director. If a non-employee director does not meet the stock ownership requirement within the timeline, the Lead Director will consider the director’s particular situation and may take any further action as he or she deems appropriate. As of March 1, 2012, all individuals who have served as our directors for five or more years satisfy the stock ownership requirement.

Non-employee directors may also participate in the Kraft Foods Foundation Matching Gift Program on the same terms as our employees. Under the program, the Kraft Foods Foundation matches up to $15,000 per director, per year, of contributions to 501(c)(3) non-profit organizations.

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2011 Non-Employee Director Compensation Table

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2011 Non-Employee Director Stock Awards Table

As of December 31, 2011, each non-employee director had an aggregate of 7,701 deferred stock awards outstanding, except for Mr. Henry who had 3,580 deferred stock awards outstanding. In addition, as of December 31, 2011, Mr. Pope held options to purchase 1,710 shares of our common stock.

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COMPENSATION DISCUSSION AND ANALYSIS

In our Compensation Discussion and Analysis, we:

This Compensation Discussion and Analysis presents compensation information for the following individuals (referred to as our “Named Executive Officers”):

The Named Executive Officers include Timothy McLevish who concluded his tenure as Chief Financial Officer effective May 9, 2011. He continues to serve as our Executive Vice President. David Brearton has served as our Executive Vice President and Chief Financial Officer since May 9, 2011.

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How the Committee Considered the Shareholder Advisory Vote on our 2010 Executive Compensation Program

The Committee believes that our executive compensation program is strongly aligned with delivering sustainable top-tier performance and reflects competitive practices for executive compensation. At our 2011 Annual Meeting of Shareholders, we held our first shareholder advisory vote on the compensation of our Named Executive Officers and our shareholders approved our fiscal year 2010 executive compensation program with 83.8% of votes cast. The Committee has considered the results of the vote on our 2010 executive compensation program and concluded that the program continues to provide a competitive pay-for-performance package that effectively incents our Named Executive Officers and encourages long-term shareholder value. Kraft Foods’ strong financial performance in fiscal year 2011 reinforces the Committee’s view that our executive compensation program is achieving its objectives, and the Committee made no significant changes to the program during the year. The Committee will continue to consider the results of future shareholder advisory votes as well as shareholder views about our core compensation principles, objectives and program design when determining executive compensation.

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Our Compensation Program Design

Our executive compensation program’s four primary goals are:

Our executive compensation program is designed to achieve these goals by using the following principles: