Severance andRestrictive Covenant Letter Agreement. In addition, in the event Ms. Wat became eligible for benefits under the Change in Control Arrangements.Severance Plan, such benefits would be paid in lieu of any amounts under her letter agreement.
As of December 31, 2017, Ms. Wat2020, Mr. Yeung was the only executiveparty to a letter agreement with whom the Company, had an agreementwhich provided that provided for severance payments upon termination of employment. However, Ms. Wat’s agreement did not provide for any enhancement of severance in connection with a change in control, nor was the Company a party to any other severance or change in control agreements that would entitle any of the NEOs to severance benefits upon a termination or a change in control. Under the terms of Ms. Wat’s letter agreement, if Ms. Wat’sMr. Yeung’s employment is terminated by the Company without “cause” prior to March 1, 2021, then Ms. Wat will be entitled to a severance payment, payable in monthly installments, equal to two times her base salary and annual bonus target ($5,060,000), subject to Ms. Wat’s execution of a post-termination agreement that includes restrictive covenants relating tonon-solicitation,non-competition andnon-disclosure.
In addition, Mr. Pant is subject to a letter of understanding with the Company that specifies thatany post-spin-off equity awards from“cause,” the Company will be eligiblepay Mr. Yeung a lump sum payment ($289,930) equal to five times his average monthly base salary during the 12-month period prior to termination. In return for continued vesting upon retirement, providedthis payment, Mr. Pant (i) is actively employedYeung must comply with certain non-competition restrictive covenants for at least one year following his termination of employment. The amount payable under Mr. Yeung’s letter agreement would be offset by the grant date, (ii) provides at least six months notificationamount paid pursuant to the Restrictive Covenant Letter Agreement.
The Company’s equity awards provide for pro-rata vesting for terminations due to death, retirement (age 55 and ten years of intention to retire,service or age 65 and (iii) signsnon-solicitation andnon-compete agreements. The letterfive years of understanding also provides that Mr. Pant’s unvested awards from YUM will continue to vest during his employment withservice) or involuntary termination by the Company without cause, with PSUs determined based on actual performance. Outstanding equity awards are forfeited upon a termination for cause. If the NEOs’ employment had terminated as of December 31, 2020 without cause or due to death, they would have been entitled to pro-rata vesting of their outstanding RSUs, SARs and upon his separation fromPSUs as follows: Ms. Wat, $14,323,412; Mr. Yeung, $1,237,918; Mr. Huang, $3,617,420; Mr. Tan, $2,233,000; and Mr. Yuen, $1,514,707, assuming target performance for purposes of this disclosure. As of December 31, 2020, Messrs. Huang and Yuen were retirement eligible.
Termination of Employment Following a Change in Control. As noted in the CD&A, the Company Mr. Pant will be treated asmaintains the Change in Control Severance Plan, which provides severance benefits to our NEOs in the event of a retiree from YUM, his vested SARs can be held untiltermination of employment by the term expires, and he willreceive pro-rated vesting of his unvested SARs. In connection with his stepping down as CEO and assumingCompany without “cause” or by the position of Senior Advisor effective March 1, 2018, the outstanding equity awards of Mr. Pant will be allowedNEO due to continue to vest under the terms of his letter of under-
standing dated October 28, 2016 and his transition agreement dated September 29, 2017 (estimated value of Company SARs of $10,841,731, YUM SARs of $6,905,175 and Company RSUs of $2,230,407,“good reason,” in each case based on the closing price of a Company or YUM share, as applicable, as reported on December 29, 2017).
In connection with Mr. Stedem’s separation from the Company, the Compensation Committee approved the payment of a pro rata 2017 annual cash bonus to Mr. Stedem, for his period of service from January 1, 2017 to June 1, 2017, subject to the achievement of at least target Company performance for 2017 and with such payment to be made on the same terms and at the same time as annual bonuses are payable to the Company’s other executive officers. For 2017, Mr. Stedem received a prorated annual bonus of $286,571. The Compensation Committee also approved the reimbursement of air travel for Mr. Stedem and his family to the United States and certain relocation expenses in connection with Mr. Stedem’s relocation to the United States of $35,775. In consideration for such payments, Mr. Stedem will be bound by certain confidentiality,non-disparagement,non-solicitation andnon-competition covenants.
Under the terms of our equity agreements, all outstanding stock options and/or SARs would fully and immediately vestwithin 24 months following a change in control if(a “Qualifying Termination”). Each NEO has executed a participation and restrictive covenant agreement to participate in the executive is employedChange in Control Severance Plan, which contains
restrictive covenants in favor of the Company relating to non-competition, non-solicitation, non-disclosure, and non-disparagement. In the event of a Qualifying Termination under the Change in Control Severance Plan, the NEO would receive, in lieu of any severance benefits under any other arrangement with the participant, the following severance benefits:
| • | | An amount equal to the “Severance Multiple” multiplied by the sum of (x) such NEO’s monthly base salary in effect immediately prior to a Qualifying Termination (or prior to any reduction for purposes of good reason) and (y) 1/12 of the greater of such NEO’s annual target cash bonus for the calendar year in which the Qualifying Termination occurs and the most recent annual cash bonus paid to the NEO, with such amounts payable over the 12-month period following the NEO’s termination of employment. The Severance Multiple is 30 for the CEO and 24 for each of the other participating NEOs. For purposes of the 2020 calculation, the severance calculation for each NEO other than Mr. Yeung was determined based on 2019 actual bonus, while Mr. Yeung’s severance calculation was determined based on 2020 target bonus. |
Any accrued, but unpaid as of the date of the change in controlQualifying Termination, annual cash bonus for any completed fiscal year preceding a Qualifying Termination, to be paid within 60 days of the Company and is involuntarily terminated (other than for cause) on or within two years following the change in control.
The below table shows the amount of payments and other benefits that each NEO would have received upon a change in control and involuntary termination on December 31, 2017.Qualifying Termination.
| | | | | | | | | | | | | | | | | | | | |
| | | Pant $ | | | Lo $ | | | Wat $ | | | Ng $ | | | Huang $ | |
Accelerated Vesting of SARs | | | 10,841,731 | | | | 275,822 | | | | 3,069,647 | | | | 1,065,903 | | | | 1,197,799 | |
Accelerated Vesting of RSUs | | | 2,230,407 | | | | 34,942 | | | | 4,328,627 | | | | 1,949,064 | | | | 1,746,471 | |
| | | | |
TOTAL | | | 13,072,138 | | | | 310,765 | | | | 7,398,274 | | | | 3,014,967 | | | | 2,944,270 | |
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In addition, if a change in controlAccrued benefits under any retirement plan or health or welfare plan.
If permitted by the terms of the Company’s health plan and applicable law, continued health insurance coverage, subsidized by the Company had occurred asat active employee rates, through the earlier of December 31, 2017, the NEOs would have been entitledone-year anniversary of the participant’s termination of employment and the participant becoming eligible for health insurance coverage under another employer’s plan.
Outplacement services, in an aggregate cost to receive the accelerated vestingCompany not to exceed $25,000, for a one-year period (or, if earlier, until the NEO accepts an offer of their equity awards with respect to YUM, with the value ofemployment).
such awards as follows: for Mr. Pant, $6,905,175; for Ms. Wat, $1,787,567; for Ms. Ng, $542,676; and for Mr. Huang, $764,313.
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5874 | | YUM CHINA– 20182021 Proxy Statement |
PROPOSED AMENDMENTS TO YUM CHINA’S AMENDED AND RESTATED BYLAWS
If the stockholders approve Proposal 4 at the Annual Meeting, the Board of Directors currently intends to amend Section 3 and 4 of Article 2 of the Company’s Bylaws as follows:
For the text of the proposed amendments, deletions are indicated by strikeouts and additions are indicated by underlining.
Section 3. Special Meetings.
(a) General. Special meetings of the Stockholders may be called exclusively: (ai) by the Board of Directors;or(bii) by the Chairman of the Board of Directors, the Corporation’s Chief Executive Officer or the Corporation’s Secretary, in each case with the concurrence of a majority of the Board of Directors;Special meetings of the Stockholders shall be held at such places, if any, and times as: or (iii) by the Corporation’s Secretary upon the written request (each such request, a “Special Meeting Request” and such meeting, a “Stockholder Requested Special Meeting”) of Stockholders of record representing not less than 25% of all outstanding shares of common stock, par value $0.01 per share, of the Corporation (“Common Stock”) entitled to vote on the matter or matters to be brought before the Stockholder Requested Special Meeting (such percentage, the “Requisite Percentage”) that have complied in full with the requirements set forth in this Section 3 and related provisions of these Bylaws; provided, that each such Stockholder of record, or beneficial owner directing such Stockholder of record, must have continuously held all of his, her or its shares included in such aggregate amount constituting the Requisite Percentage for at least one (1) year prior to the date such Special Meeting Request is delivered to the Corporation. Whether the Stockholders have submitted valid Special Meeting Requests representing the Requisite Percentage and complying with the requirements ofthis Section 3 and related provisions of these Bylaws (a“Valid Special Meeting Request”) shall be determined in good faith by the Board of Directors,in its discretionwhich determination shall be conclusive and binding on the Corporation and the Stockholders.
(b) Calling a Stockholder Requested Special Meeting. In order for a Stockholder Requested Special Meeting to be called, the Special Meeting Requests must be signed by Stockholders of record (or their duly authorized agents) representing in the aggregate not less than the Requisite Percentage, and be dated and delivered personally or by registered mail to the Corporation’s Secretary at the principal executive offices of the Corporation. Such Special Meeting Requests shall comply with Section 3 and shall include with particularity as to the Stockholders of record submitting the Special Meeting Requests and any Stockholder Associated Persons (as defined below)(collectively, the “Requesting Stockholders”): (i) a statement of the specific purpose or purposes of the Stockholder Requested Special Meeting, including a description of all intended proposals; (ii) except with respect to any Solicited Stockholders (as defined below), all information required to be set forth in a notice under Section 9(a)–(d) of this Article 2; (iii) documentary evidence that the Requisite Percentage of shares have been owned continuously for the one-year period by each Stockholder of record who signed a Special Meeting Request; provided, however, that if any Stockholders of record making a Special Meeting Request are not the beneficial owner of the shares of Common Stock representing the Requisite Percentage, then to be valid, each such Special Meeting Request must also include documentary evidence that the beneficial owners on whose behalf such Special Meeting Request is made beneficially owned, together with the Stockholders of record
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who are beneficial owners, the Requisite Percentage as of the date onwhich such Special Meeting Request is delivered tothe Corporation’s Secretary and for a minimum of one full year prior to the date of such delivery; (iv) an acknowledgment by each Requesting Stockholder and the beneficial owners, if any, on whose behalf a Special Meeting Request is being made (or their respective duly authorized agents) that any reduction in the number of shares owned by such Stockholders as of the date of delivery of the Special Meeting Request and prior to the record date for the proposed Stockholder Requested Special Meeting shall constitute a revocation of the Special Meeting Request to the extent of such reduction, and a commitment to promptly notify the Corporation of any such decrease; and (v) a representation that at least one Requesting Stockholder, or a qualified representative of at least one Requesting Stockholder, intends to appear in person to present each item of business to be brought before the Stockholder Requested Special Meeting. In addition, each Requesting Stockholder that is not a Solicited Stockholder shall promptly provide any other information reasonably requested by the Corporation in connection with the Special Meeting Request. If the Board of Directors determines that the Special Meeting Request complies with the provisions of these Bylaws and that the proposal to be considered or business to be conducted is a proper subject for Stockholder action under applicable law, the Board of Directors shall call and send notice of a Stockholder Requested Special Meeting for the purpose set forth in the Special Meeting Request in accordance with Section 4 of this Article 2.
In addition, to be considered timely, proper and valid, a Special Meeting Request shall further be updated, if necessary, so that the information provided or required to be provided in such Special Meeting Request shall be true and correct (x) as of the record date for the Stockholder Requested Special Meeting and (y) as of the date that is ten (10) business days prior to such meeting or any adjournment or postponement thereof (provided that such update shall be delivered to the Corporation’s Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting in the case of the update required to be made pursuant to the foregoing clause (x), and not later than eight (8) business days prior to the date for the meeting or any adjournment or postponement thereof in the case of theupdate required to be made pursuant to the foregoingclause (y)). For the avoidance of doubt, the obligation toupdate as set forth in this Section 3 or any other section of these Bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any Special Meeting Request or other notice provided by a Stockholder, extend any applicable deadlines hereunder to amend or update any proposal or nomination (or notice thereof) or to submit any new proposal or nomination (or notice thereof), including, without limitation, by changing or adding nominees, matters, business and/or resolutions proposed to be brought before a meeting of the Stockholders.
For the purposes of this Section 3, “Solicited Stockholder” shall mean any Stockholder that has provided a request to call a special meeting in response to a solicitation made pursuant to, and in accordance with, Section 14 of the Exchange Act; and “Stockholder Associated Person” shall mean (A) any person who is a member of a “group” (as such term is used in Rule 13d-5 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”) (or any successor provision at law)) with or otherwise acting in concert with such Stockholder providing notice, (B) any beneficial owner of Common Stock owned of record by such Stockholder (other than a Stockholder that is a depositary), (C) any affiliate or associate of such Stockholder or such Stockholder Associated Person, (D) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A, or any successor instructions) with such Stockholder or other Stockholder Associated Person in respect of any proposals or nominations, as applicable and (E) any person whom the Stockholder proposes to nominate for election or reelection as a director of the Corporation; provided, however, that in no case shall it mean a Solicited Stockholder.
(c) Multiple Special Meeting Requests. In determining whether Special Meeting Requests have met the requirements of this Section 3, multiple Special Meeting Requests will be considered together only if (i) each Special Meeting Request identifies the same or substantially the same purpose or purposes of the Stockholder Requested Special Meeting and the same or substantially the same items of business proposed to be brought before the Stockholder Requested Special Meeting (which, ifsuch purpose is the nominating of a person or persons forelection to the Board of Directors, will mean
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| 88 | | YUM CHINA– 2021 Proxy Statement |
that the exact same person or persons are nominated in each relevant Special Meeting Request), and (ii) such Special Meeting Requests have been dated and delivered to the Corporation’s Secretary within sixty (60) days of the delivery to the Corporation’s Secretary of the earliest dated Special Meeting Request relating to such item(s) of business. A Requesting Stockholder may revoke a Special Meeting Request at any time by written revocation delivered to the Corporation’s Secretary and if, following such revocation, there are outstanding un-revoked requests from Requesting Stockholders holding less than the Requisite Percentage, the Board of Directors may, in its discretion, cancel the Stockholder Requested Special Meeting.
(d) Valid Items of Business for a Stockholder Requested Special Meeting. Notwithstanding the foregoing provisions of this Section 3, a Stockholder Requested Special Meeting shall not be held if (i) the Special Meeting Request does not comply with these Bylaws; (ii) the Special Meeting Request relates to an item of business that is not a proper subject for Stockholder action under applicable law; (iii) the Special Meeting Request is received by the Corporation’s Secretary during the period commencing ninety (90) days prior to the anniversary date of the prior year’s annual meeting of Stockholders and ending on the date of the final adjournment of the next annual meeting of Stockholders; (iv) an identical or substantially similar item (a “Similar Item”) was presented at any meeting of Stockholders held not more than one hundred twenty (120) days prior to receipt by the Corporation’s Secretary of the Special Meeting Request; (v) the Board of Directors has called or calls for an annual or special meeting of Stockholders to be held within ninety (90) days after the Corporation’s Secretary receives the Special Meeting Request and the Board of Directors determines that the business of such meeting includes (among any other matters properly brought before the annual or special meeting) a Similar Item; or (vi) the Special Meeting Request was made in a manner that involved a violation of Regulation 14A under the Exchange Act, would violate an applicable law or regulation, or would cause the company to violate the law or other applicable law. For purposes of this Section 3(d), the nomination, election or removal of directors shall be deemed a “Similar Item” with respect to all items of business involvingthe nomination, election or removal of directors, thechanging of the size of the Board of Directors and the filling of vacancies and/or newly created directorships resulting from any increase in the authorized number of Directors. If none of the Requesting Stockholders appears or sends a qualified representative to present the item of business submitted by the Stockholder(s) for consideration at the Stockholder Requested Special Meeting, such item of business shall not be submitted for a vote of the Stockholders at such Stockholder Requested Special Meeting, notwithstanding that proxies in respect of such vote may have been received by the Corporation or such Stockholder(s). Whether the Requesting Stockholders have complied with the requirements of this Section 3 and related provisions of these Bylaws shall be determined in good faith by the Board of Directors, which determination shall be exclusive and binding on the Corporation and the Stockholders. Nothing contained in this Section 3 shall prohibit the Board of Directors from submitting matters to Stockholders at any Stockholder Requested Special Meeting.
(e) Holding a Special Meeting. Special meetings of Stockholders shall be held at such date, time and place as may be fixed by the Board of Directors; provided, however, that the date of any Stockholder Requested Special Meeting requested pursuant to a Valid Special Meeting Request shall be not more than ninety (90) days after the date on which a Valid Special Meeting Request has been delivered to the Corporation’s Secretary.
Section 4. Notice of Meetings. At least ten (10) and no more than sixty (60) days prior to any annual or special meeting of the Stockholders, the Corporation shall notify the Stockholders of the date, time and place, if any, and means of remote communication, if any, of the meeting and, in the case of a special meeting or where otherwise required by the Corporation’s Amended and Restated Certificate of Incorporation (the “Certificate”) or by statute, shall briefly describe the purpose or purposes of the meeting. Without limiting the manner by which notice otherwise may be given effectively to Stockholders, notice of meetings may be given to Stockholders by means of electronic transmission in accordance with applicable law. Only business within the purpose or purposes described in the notice may be conducted at a special meeting. Nothing contained herein shall prohibit theBoard of Directors from submitting matters to the Stockholders at
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| YUM CHINA – 2021 Proxy Statement | | 89 |
PRELIMINARY PROXY CARD YUM CHINA HOLDINGS, INC. 7100 CORPORATE DRIVE PLANO, TX 75024 VOTE BY INTERNET -Before The Meeting—Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until at 11:59 PM (local time) the day before the meeting date.p.m. Beijing/Hong Kong Time / 11:59 a.m. U.S. Eastern Time on May 27, 2021. Have your proxy card in hand when you access the web sitewebsite and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would likeDuring The Meeting—Go to reducewww.virtualshareholdermeeting.com/YUMC2021 You may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years.the box marked by the arrow available and follow the instructions. VOTE BY PHONE - PHONE—1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. (local time) the day before the meeting date.p.m. Beijing/Hong Kong Time / 11:59 a.m. U.S. Eastern Time on May 27, 2021. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. YUM CHINA HOLDINGS, INC. 7100 CORPORATE DRIVE PLANO, TX 75024 E42343-P02209ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D42388-P53537 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY YUM CHINA HOLDINGS, INC. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees: For Against Abstain Nominees: ! ! ! 1a. Louis T. Hsieh ! ! !Fred Hu 1b. Jonathan S. Linen ! ! ! 1c. Muktesh “Micky” Pant ! ! ! 1d. William Wang For Against AbstainJoey Wat The Board of Directors recommends you vote FOR For Against Abstain proposals 2, 3 and 3. ! ! !4. 1c. Peter A. Bassi 2. Ratification of the Appointment of KPMG Huazhen LLP as the Company’s Independent Auditor ! ! !1d. Edouard Ettedgui 3. Advisory Vote to Approve Executive Compensation 1e. Cyril Han 4. Amended Approval and of an Restated Amendment Certificate to of the Incorporation Company’s to Allow Stockholders Holding 25% of the Company’s 1f. Louis T. Hsieh Outstanding Shares the Right to Call Special Meetings 1g. Ruby Lu upon NOTE: such The other proxies business are authorized as may properly to vote in come their before discretion upon such other business as may properly come before the meeting or any adjournment or postponement thereof. 1h. Zili Shao 1i. William Wang 1j. Min (Jenny) Zhang Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
