UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Yum China Holdings, Inc.
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Yum China Holdings, Inc.
7100 Corporate Drive
Plano, Texas 75024
United States of America |
Yum China Building
20 Tian Yao Qiao Road
Shanghai 200030
People’s Republic of China |
March 30, 2018
Dear Fellow Stockholders:
We are pleased to invite you to attend the 2018 Annual Meeting of Stockholders of Yum China Holdings, Inc. The Annual Meeting will be held Friday, May 11, 2018, at 8:30 a.m. local time, at Mandarin Oriental Hong Kong, 5 Connaught Road, Central, Hong Kong.
The attached notice and proxy statement contain details of the business to be conducted at the Annual Meeting. In addition, the Company’s 2017 annual report, which is being made available to you along with the proxy statement, contains information about the Company and its performance.
Your vote is important. We encourage you to vote promptly, whether or not you plan to attend the Annual Meeting. You may vote your shares over the Internet or via telephone. If you received a paper copy of the proxy materials, you may complete, sign, date and mail the proxy card in the postage-paid envelope provided.
If you plan to attend the meeting, you may also vote in person. If you hold your shares through a bank, broker or other nominee, you will be required to show the notice or voting instructions form you received from your bank, broker or other nominee or a copy of a statement (such as a brokerage statement) from your bank, broker or other nominee reflecting your stock ownership as of March 13, 2018 in order to be admitted to the meeting. All attendees must bring valid photo identification to gain admission to the meeting. Whether or not you attend the meeting, we encourage you to consider the matters presented in the proxy statement and vote as soon as possible.
Sincerely,
Joey Wat
Chief Executive Officer
Yum China Holdings, Inc.
Notice Of Annual Meeting
Of Stockholders
Time and Date: |
8:30 a.m. (local time) on Friday, May 11, 2018. |
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Place: |
Mandarin Oriental Hong Kong, 5 Connaught Road, Central, Hong Kong. |
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Items of Business: |
(1) To elect the four Class II director nominees named in the accompanying proxy statement to serve until the 2019 annual meeting of the Company’s stockholders. |
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(2) To ratify the appointment of KPMG Huazhen LLP as the Company’s independent auditor for 2018. |
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(3) To approve, on an advisory basis, the Company’s named executive officer compensation. |
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(4) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
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Who Can Vote: |
You can vote if you were a stockholder of record as of the close of business on March 13, 2018. |
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How to Vote: |
You may vote over the Internet or via telephone by following the instructions set forth in the accompanying proxy statement. If you received a paper copy of the proxy materials, you may also vote by completing, signing, dating and returning the proxy card. If you attend the Annual Meeting, you may vote in person. Your vote is important. Whether or not you plan to attend the Annual Meeting, please vote promptly. |
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Date of Mailing: |
This notice, the accompanying proxy statement and the form of proxy are first being mailed to stockholders on or about March 30, 2018. |
By Order of the Board of Directors,
Shella Ng
Chief Legal Officer and Corporate Secretary
PROXY STATEMENT – TABLE OF CONTENTS
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PROXY STATEMENT SUMMARY | 1 | |||||
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING | 5 | |||||
GOVERNANCE OF THE COMPANY | 10 | |||||
10 | ||||||
11 | ||||||
11 | ||||||
11 | ||||||
12 | ||||||
12 | ||||||
12 | ||||||
13 | ||||||
15 | ||||||
16 | ||||||
16 | ||||||
17 | ||||||
18 | ||||||
20 | ||||||
21 | ||||||
21 | ||||||
MATTERS REQUIRING STOCKHOLDER ACTION | 22 | |||||
22 | ||||||
29 | ||||||
Advisory Vote on Named Executive Officer Compensation | 31 | |||||
STOCK OWNERSHIP INFORMATION | 32 | |||||
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 34 | |||||
EXECUTIVE COMPENSATION | 35 | |||||
35 | ||||||
35 |
36 | ||||||
36 | ||||||
37 | ||||||
38 | ||||||
2017 Named Executive Officer Compensation and Performance Summary |
40 | |||||
45 | ||||||
46 | ||||||
48 | ||||||
49 | ||||||
49 | ||||||
59 | ||||||
2017 DIRECTOR COMPENSATION | 60 | |||||
EQUITY COMPENSATION PLAN INFORMATION | 62 | |||||
AUDIT COMMITTEE REPORT | 63 | |||||
ADDITIONAL INFORMATION | 65 |
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This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
MEETING INFORMATION
Date: May 11, 2018
Time: 8:30 a.m. (local time)
Record Date: March 13, 2018 |
Location: Mandarin Oriental Hong Kong 5 Connaught Road, Central Hong Kong |
HOW TO VOTE
ITEMS OF BUSINESS
Proposal | Board Voting Recommendation |
Page Reference |
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1.Election of Four Class II Director Nominees to Serve for a One-Year Term |
FOR each nominee | 22 | ||||
2.Ratification of the Appointment of KPMG Huazhen LLP as the Company’s Independent Auditor for 2018 |
FOR | 29 | ||||
3.Advisory Vote on Named Executive Officer Compensation |
FOR | 31 |
YUM CHINA – 2018 Proxy Statement | 1 |
PROXY STATEMENT SUMMARY
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COMPANY OVERVIEW
SUMMARY INFORMATION REGARDING DIRECTORS
The following table provides summary information about the composition of our board of directors (the “Board of Directors” or the “Board”).
Name | Age | Director Since |
Class; Year Term |
Primary Occupation | Independent | Board Committee Membership as of March 30, 2018 | ||||||||||||
A | C | G | F | |||||||||||||||
Fred Hu (Chairman) |
54 | 2016 | III – 2019 | Chairman and founder of Primavera Capital Group | ✓ | CC | ||||||||||||
Joey Wat |
46 | 2017 | I – 2019 | Chief Executive Officer of the Company | ||||||||||||||
Muktesh “Micky” Pant |
63 | 2016 | II – 2018 | Vice Chairman and Senior Advisor to the Company | ||||||||||||||
Peter A. Bassi |
68 | 2016 | I – 2019 | Former Chairman of Yum! Restaurants International | ✓ | X | X | |||||||||||
Christian L. Campbell |
67 | 2016 | III – 2019 | Owner of Christian L. Campbell Consulting LLC | X | |||||||||||||
Ed Yiu-Cheong Chan |
55 | 2016 | I – 2019 | Former Vice Chairman of Charoen Pokphand Group Company Limited | ✓ | X | ||||||||||||
Edouard Ettedgui |
66 | 2016 | I – 2019 | Non-Executive Chairman of Alliance Française, Hong Kong | ✓ | CC | ||||||||||||
Louis T. Hsieh |
53 | 2016 | II – 2018 | Chief Financial Officer of NIO Inc. | ✓ | CC | ||||||||||||
Jonathan S. Linen |
74 | 2016 | II – 2018 | Former Vice Chairman of American Express Company | ✓ | X | X | |||||||||||
Ruby Lu |
47 | 2016 | III – 2019 | Independent venture capitalist | ✓ | X | X | |||||||||||
Zili Shao |
58 | 2016 | III – 2019 | Non-executive Chairman of Fangda Partners | ✓ | CC | ||||||||||||
William Wang |
43 | 2017 | II – 2018 | Partner of Primavera Capital Group | ✓ | X |
A – Audit Committee; C – Compensation Committee; G – Nominating and Governance Committee; F – Food Safety Committee; CC – Committee Chair
2 | YUM CHINA – 2018 Proxy Statement |
PROXY STATEMENT SUMMARY
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GOVERNANCE HIGHLIGHTS
The Board believes that good corporate governance is a critical factor in achieving business success and in fulfilling the Board’s responsibilities to stockholders. The Board believes that its principles and practices align management and stockholder interests. Highlights include:
Director Independence |
• Independent Board Chairman
• 9 of 12 directors are independent | |
Director Elections and Attendance | • Declassified Board to be effective as of the 2019 annual meeting of the Company’s stockholders
• Majority voting policy for elections of directors in uncontested elections
• Proxy access for director nominees by stockholders
• 100% director attendance at Board and committee meetings in 2017
• 100% director attendance at the 2017 annual meeting of the Company’s stockholders | |
Board Refreshment and Diversity | • Directors with experience, qualifications and skills across a wide range of public and private companies
• Average director age of 58
• Independent and non-management directors may generally not stand for re-election after age 75 | |
Other Governance Practices | • Shareholder rights plan expired in 2017 and was not renewed
• Director and executive officer stock ownership policies
• Policy prohibiting hedging or other speculative trading of Company stock
• Policy regarding resignation if any director experiences a significant change in professional roles and responsibilities
• Board access to senior management and independent advisors |
YUM CHINA – 2018 Proxy Statement | 3 |
PROXY STATEMENT SUMMARY
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
4 | YUM CHINA – 2018 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
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What is the purpose of the Annual Meeting?
Why am I receiving these materials?
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
YUM CHINA – 2018 Proxy Statement | 5 |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
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Who may attend the Annual Meeting?
May stockholders ask questions?
Yes. Representatives of the Company will answer stockholders’ questions of general interest following the Annual Meeting.
Who may vote?
What am I voting on?
How does the Board of Directors recommend that I vote?
6 | YUM CHINA – 2018 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
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How do I vote before the Annual Meeting?
Can I vote at the Annual Meeting?
Can I change my mind after I vote?
Who will count the votes?
Representatives of American Stock Transfer and Trust Company, LLC will count the votes and will serve as the independent inspector of election.
YUM CHINA – 2018 Proxy Statement | 7 |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
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What if I return my proxy card but do not provide voting instructions?
What does it mean if I receive more than one Notice or proxy card?
Will my shares be voted if I do not provide my proxy?
How many votes must be present to hold the Annual Meeting?
8 | YUM CHINA – 2018 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
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How many votes are needed to elect directors?
How many votes are needed to approve the other 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 with the SEC within four business days of the Annual Meeting.
What if other matters are presented for consideration at the Annual Meeting?
YUM CHINA – 2018 Proxy Statement | 9 |
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Highlights of our corporate governance policies and practices are described below.
Director Independence |
• Independent Board Chairman
• 9 of 12 directors are independent | |
Director Elections and Attendance |
• Declassified Board to be
effective as of the 2019 annual meeting of the
• Majority voting policy for elections of directors in uncontested elections
• Proxy access for director nominees by stockholders
• 100% director attendance at Board and committee meetings in 2017
• 100% director attendance at the 2017 annual meeting
of the Company’s | |
Board Refreshment and Diversity |
• Directors with experience,
qualifications and skills across a wide range of
• Average director age of 58
• Independent and non-management directors may generally not stand for re-election after age 75 | |
Other Governance Practices |
• Shareholder rights plan expired in 2017 and was not renewed
• Director and executive officer stock ownership policies
• Policy prohibiting hedging or other speculative trading of Company stock
• Policy regarding resignation if any director experiences a significant change in professional roles and responsibilities
• Board access to senior management and independent advisors |
10 | YUM CHINA – 2018 Proxy Statement |
GOVERNANCE OF THE COMPANY
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What is the composition of the Board of Directors and how often are members elected?
How often did the Board meet in 2017?
What is the Board’s policy regarding director attendance at the Annual Meeting?
All directors are encouraged to attend the Annual Meeting. All of the directors then serving on our Board attended the 2017 annual meeting of the Company’s stockholders.
How are director nominees selected?
YUM CHINA – 2018 Proxy Statement | 11 |
GOVERNANCE OF THE COMPANY
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What is the Board’s role in risk oversight?
14 | YUM CHINA – 2018 Proxy Statement |
GOVERNANCE OF THE COMPANY
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What are the Committees of the Board?
The Board of Directors has standing Audit, Compensation, Nominating and Governance and Food Safety Committees. Set forth below is a summary of the functions of each committee, the members of each committee and the number of meetings each committee held in 2017.
Audit Committee
Louis T. Hsieh, Chair Peter A. Bassi Ed Yiu-Cheong Chan Ruby Lu
Number of meetings held in 2017: 8 |
• Possesses sole authority regarding the selection and retention of the independent auditor • Reviews and has oversight over the Company’s internal audit function • Reviews and approves all auditing services, internal control-related services and permitted non-audit services to be performed for the Company by the independent auditor • Reviews the independence, qualification and performance of the independent auditor • Reviews and discusses with management and the independent auditor any major issues as to the adequacy of the Company’s internal controls, any special steps adopted in light of material control deficiencies and the adequacy of disclosures about changes in internal control over financial reporting • Reviews and discusses with management and the independent auditor the annual audited financial statements, results of the review of the Company’s quarterly financial statements and significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements • Reviews the Company’s accounting and financial reporting principles and practices, including any significant changes thereto • Advises the Board with respect to Company policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Conduct • Discusses with management the Company’s major risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. 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?”. |
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. Hsieh, the Chairperson of the Committee, is qualified as an audit committee financial expert within the meaning of SEC regulations. The Board has also determined that Mr. Hsieh 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.
18 | YUM CHINA – 2018 Proxy Statement |
GOVERNANCE OF THE COMPANY
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Compensation Committee
Edouard Ettedgui, Chair Jonathan S. Linen William Wang
Number of meetings held in 2017: 7 |
• Oversees the Company’s executive compensation plans and programs and reviews and recommends changes to these plans and programs • Monitors the performance of the Chief Executive Officer and other senior executives in light of corporate goals set by the Committee • Reviews and approves the corporate goals and objectives relevant to the Chief Executive Officer’s and other senior executives’ compensation and evaluates their performance in light of those goals and objectives • Determines and approves the compensation level of the Chief Executive Officer and other senior executive officers based on this evaluation • Reviews the Company’s compensation plans, policies and programs to assess the extent to which they encourage excessive or inappropriate risk-taking or earnings manipulation • Reviews management succession planning and makes recommendations to the Board |
The Board has determined that all of the members of the Compensation Committee are independent within the meaning of the listing standards of the NYSE.
Nominating and Governance Committee
Fred Hu, Chair Jonathan S. Linen Ruby Lu
Number of meetings held in 2017: 4 |
• Identifies and proposes to the Board individuals qualified to become Board members and recommends to the Board director nominees for each committee • Advises the Board on matters of corporate governance • Reviews and reassesses from time to time the adequacy of the Company’s Corporate Governance Principles and recommends any proposed changes to the Board for approval • Receives comments from all directors and reports annually to the Board with assessment of the Board’s performance • Reviews annually and makes recommendations to the Board with respect to the compensation and benefits of directors |
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.
Food Safety Committee
Zili Shao, Chair Peter A. Bassi Christian L. Campbell |
• Reviews, evaluates and advises the Board regarding the practices, procedures, strategies and initiatives to protect food safety • Reviews, evaluates and advises the Board regarding trends, issues and concerns which affect or could affect the Company’s food safety practices, and the risks arising therefrom, in light of the Company’s overall efforts related to food safety • Reviews and evaluates any corrective action taken by management to address any food safety related risks or incident, if any, and advises the Board regarding any proposed action in relation thereto |
The Food Safety Committee was established in December 2017 and did not hold any meetings in 2017.
YUM CHINA – 2018 Proxy Statement | 19 |
GOVERNANCE OF THE COMPANY
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Does the Company require stock ownership by directors?
Does the Company require stock ownership by executive officers?
How many shares of Company common stock do the directors and executive officers own?
Stock ownership information for our directors and executive officers is shown under “Stock Ownership Information.”
Does the Company have a policy on hedging or other speculative trading in Company common stock?
Directors and executive officers are prohibited from speculative trading in Company common stock, including trading in puts, calls or other hedging or monetization transactions.
How are directors compensated?
YUM CHINA – 2018 Proxy Statement | 21 |
MATTERS REQUIRING STOCKHOLDER ACTION
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Nominees for Class II Directors Whose Terms, if Elected, Will Expire in 2019
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Louis T. Hsieh Age 53 Director Since 2016 | |
Louis T. Hsieh has served as the Chief Financial Officer of NextEV (NIO Inc.), a developer of electric, autonomous vehicles, since May 2017. Mr. Hsieh also has served as a Senior Adviser to the Chief Executive Officer since 2016 and as a director since 2007 of New Oriental Education & Technology Group, a provider of private educational services in China. Prior to his current role, Mr. Hsieh served as that company’s Chief Financial Officer from 2005 to 2015 and President from 2009 to 2016. In addition, Mr. Hsieh serves as an independent director, member of the corporate governance committee and Chairman of the audit committee for JD.com, Inc. Previously, Mr. Hsieh served as an independent director and Chairman of the audit committee for Nord Anglia Education, Inc. He also served as an independent director, member of the corporate governance committee and Chairman of the audit committee for Perfect World Co., Ltd. and China Digital TV Holding Co., Ltd. Mr. Hsieh brings to our Board corporate leadership and public company board experience as well as his extensive financial and international business experience. |
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Jonathan S. Linen Age 74 Director Since 2016 | |
Jonathan S. Linen has been a member of the board of directors of Modern Bank, N.A. since 2005. Mr. Linen served as advisor to the Chairman of American Express Company, a financial services company, from January 2006 to July 2016. Prior to his role as advisor to the Chairman, Mr. Linen served as the Vice Chairman of American Express Company since August 1993. Mr. Linen served on the board of directors of YUM from 2005 to 2016 and of The Intercontinental Hotels Group from 2005 to 2015. In addition, Mr. Linen is a former director of Bausch & Lomb. Mr. Linen brings to our Board operating and management experience, expertise in finance, marketing and international business development and public company board and committee experience. |
YUM CHINA – 2018 Proxy Statement | 23 |
MATTERS REQUIRING STOCKHOLDER ACTION
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Micky Pant Age 63 Director Since 2016 | |
Micky Pant has served as the Vice Chairman of the Board and Senior Advisor to the Company since March 2018. Mr. Pant served as the Chief Executive Officer of the Company from October 2016 to February 2018. He also served as the Chief Executive Officer of the YUM China Division of YUM from August 2015 to October 2016. Commencing in 2006, Mr. Pant held a number of leadership positions at YUM, including the Chief Executive Officer of the KFC Division, CEO of YRI, President of Global Branding for YUM, President of YRI, Chief Marketing Officer of YUM, Global Chief Concept Officer for YUM and President of Taco Bell International. Before joining YUM, Mr. Pant built a foundation in marketing and international business with 15 years at Unilever in India and the U.K. and worked at PepsiCo, Inc. and Reebok International Limited. Since December 2014, Mr. Pant has served as an independent director on the board of Pinnacle Foods, Inc., where he also serves on the audit committee and the nominating and governance committee. Mr. Pant brings to our Board his vast knowledge of KFC and Pizza Hut best practices from around the globe and strategic, brand building expertise. In addition, Mr. Pant brings to our Board his corporate leadership knowledge and public company board experience. | ||
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William Wang Age 43 Director Since 2017 | |
William Wang is one of the founding partners of Primavera Capital Group, a China-based global investment firm (“Primavera”). Prior to Primavera, Mr. Wang served as a Managing Director of Goldman Sachs Merchant Banking/Principal Investment Area (“GS”), where he led significant successful investments in China for the group. Prior to GS, Mr. Wang worked in Investment Banking Division and Private Equity Group of China International Capital Corporation Limited (CICC). Mr. Wang currently serves as a director on the board of Geely Automobile Holdings Limited, a Hong Kong listed company, in addition to directorships at Primavera’s portfolio companies. Mr. Wang brings to our Board deep knowledge and investment insights of the Chinese market. |
24 | YUM CHINA – 2018 Proxy Statement |
Continuing Class I Directors Whose Terms Will Expire in 2019
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Peter A. Bassi Age 68 Director Since 2016 | |
Peter A. Bassi served as Chairman of Yum! Restaurants International (“YRI”) from 2003 to 2005 and as its President from 1997 to 2003. Prior to that position, Mr. Bassi spent 25 years in a wide range of financial and general management positions at PepsiCo, Inc., Pepsi-Cola International, Pizza Hut (U.S. and International), Frito-Lay and Taco Bell. Mr. Bassi currently serves as lead director and Chairman of the nominating and governance committee of BJ’s Restaurant, where he also serves on the audit committee and compensation committee, and as the Chairman of the board and the Chairman of the nominating and governance committee of Potbelly Sandwich Works. He has been a member of each board of directors since 2004 and 2009, respectively. In addition, Mr. Bassi serves on the Value Optimization Board for the private equity firm Mekong Capital, based in Vietnam. Mr. Bassi served on the board of The Pep Boys—Manny, Moe & Jack from 2002 to 2009, and served on the board of Amrest Holdings (Poland) from 2012 to 2015. Mr. Bassi brings to our Board knowledge of the quick-service restaurant industry and global franchising. In addition, he brings to our Board extensive public company board and corporate governance experience. |
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Ed Yiu-Cheong Chan Age 55 Director Since 2016 | |
Ed Yiu-Cheong Chan served as Vice Chairman of Charoen Pokphand Group Company Limited and as an Executive Director and Vice Chairman of C.P. Lotus Corporation from 2012 to February 2018. Mr. Chan was Regional Director of North Asia of the Dairy Farm Group and a director of Dairy Farm Management Services Limited from November 2001 to November 2006. Mr. Chan was the President and Chief Executive Officer of Walmart China from November 2006 to October 2011. Mr. Chan is a non-executive director of Treasury Wine Estates Limited, a company listed on the Australian Securities Exchange, and an independent non-executive director of Link Real Estate Investment Trust, which is listed on the Stock Exchange of Hong Kong Limited. Mr. Chan brings to our Board knowledge of the food and beverage industry in Asia and extensive public company board and corporate governance experience. |
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Edouard Ettedgui Age 66 Director Since 2016 | |
Edouard Ettedgui has served as the non-executive Chairman of Alliance Française, Hong Kong since 2016. He also serves as a non-executive director of Mandarin Oriental International Limited, the company for which he was the Group Chief Executive from 1998 to 2016. Prior to his time at Mandarin Oriental International, Mr. Ettedgui was the Chief Financial Officer for Dairy Farm International Holdings, and he served in various roles for British American Tobacco, including Business Development Director, Group Finance Controller and Group Head of Finance. Mr. Ettedgui has also held senior finance positions in seven countries at Philips International. Mr. Ettedgui brings to our Board senior management experience in various international consumer-product industries, extensive financial expertise and public company board experience. |
YUM CHINA – 2018 Proxy Statement | 25 |
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Joey Wat Age 46 Director Since 2017 | |
Joey Wat has served as the Chief Executive Officer of the Company since March 2018. Ms. Wat served as President and Chief Operating Officer of Yum China from February 2017 to February 2018 and the Chief Executive Officer, KFC from October 2016 to February 2017, a position she held at Yum! Restaurants China from August 2015 to October 2016. Ms. Wat joined Yum! Restaurants China in September 2014 as President of KFC China and was promoted to Chief Executive Officer for KFC China in August 2015. Before joining YUM, Ms. Wat served in both management and strategy positions at AS Watson of Hutchison Group (“Watson”), an international health, beauty and lifestyle retailer, in the U.K. from 2004 to 2014. Her last position at Watson was Managing Director of Watson U.K., which operates Superdrug and Savers, two retail chains specializing in the sale of pharmacy and health and beauty products, from 2012 to 2014. She made the transition from Head of Strategy of Watson in Europe to Managing Director of Savers in 2007. Before joining Watson, Ms. Wat spent seven years in management consulting including with McKinsey & Company’s Hong Kong office from 2000 to 2003. Ms. Wat brings to our Board extensive knowledge of the Company’s business and her industry acumen acquired in the course of a career that included several leadership roles in retail companies. |
26 | YUM CHINA – 2018 Proxy Statement |
Continuing Class III Directors Whose Term Will Expire in 2019
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Christian L. Campbell Age 67 Director Since 2016 | |
Christian L. Campbell owns Christian L. Campbell Consulting LLC, which specializes in global corporate governance and compliance, and he has served as the owner of that entity since February 2016. Mr. Campbell previously served as Senior Vice President, General Counsel and Secretary of YUM from its formation in 1997 until his retirement in February 2016. In 2001, Mr. Campbell’s role was expanded to include Chief Franchise Policy Officer. In these positions, Mr. Campbell oversaw all legal matters at YUM and was responsible for the oversight of YUM purchasing as a director of YUM’s purchasing cooperative with its franchisees. Prior to joining YUM, Mr. Campbell was a Senior Vice President and General Counsel at Owens Corning, a leading global producer of fiberglass insulation and composite building materials. Prior to Owens Corning, he was Vice President and General Counsel for Nalco Chemical Company. In addition, Mr. Campbell was a founding director of Restaurant Supply Chain Solutions, Inc. (“RSCS”), a purchasing cooperative for YUM’s U.S. franchising partners, and he served on RSCS’s board of directors from its formation in 2001 until 2015. Mr. Campbell brings to our Board expertise in corporate governance and corporate compliance of publicly traded companies. In addition, Mr. Campbell brings to our Board extensive knowledge of the quick-service restaurant industry, global franchising and corporate leadership. |
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Fred Hu Age 54 Director Since 2016 | |
Fred Hu is Chairman and founder of Primavera. Dr. Hu has served as Chairman of Primavera since its inception in 2010. Prior to Primavera, Dr. Hu served in various roles at Goldman Sachs from 1997 to 2010, including serving as Chairman of Greater China at Goldman Sachs Group, Inc. From 1991 to 1996, Dr. Hu served as an economist at the International Monetary Fund (IMF) in Washington D.C., where he engaged in macroeconomic research, policy consultations and technical assistance for member country governments including China. Dr. Hu also served as director of the National Center for Economic Research and professor at Tsinghua University. He is the author of several books and other publications in the areas of economics and finance and on China and Asian economies. Dr. Hu has advised the Chinese government on financial and pension reform, state-owned enterprise (SOE) restructuring and macroeconomic policies. Dr. Hu is a trustee of China Medical Board and the Co-Chairman of the Nature Conservatory’s Asia Pacific Council. Dr. Hu brings to our Board extensive expertise in international affairs and the Chinese economy. In addition, Dr. Hu brings valuable business, strategic development and corporate leadership experience as well as expertise in economics, finance and global capital markets. |
YUM CHINA – 2018 Proxy Statement | 27 |
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Ruby Lu Age 47 Director Since 2016 | |
Ruby Lu is an independent venture capitalist investing in technology start-ups in the U.S. and China. In 2006, she co-founded DCM China, an early-stage venture capital firm. During her more than 12-year tenure at DCM, she invested in and served as a board member for many leading technology companies including BitAuto Holdings Limited, E-Commerce China Dangdang Inc. and Pactera Technology International Ltd. She also served as an independent director and Chairman of the special committee for iDreamSky Technologies Limited before it was taken private. She is currently an independent director on the board of iKang Healthcare Group, Inc., where she also serves on the audit committee. Prior to joining DCM in 2003, Ms. Lu was a Vice President in the technology, media and telecommunications investment banking group of Goldman Sachs & Co. in Menlo Park, California. Ms. Lu brings to our Board public company board experience as well as extensive financial and global market experience. |
|
Zili Shao Age 58 Director Since 2016 | |
Zili Shao has served as the non-executive Chairman of Fangda Partners, a leading PRC law firm, since June 2017. Mr. Shao served as Co-Chairman and Partner at King & Wood Mallesons China, a law firm, from April 2015 to May 2017. From 2009 to 2015, Mr. Shao held various positions with JPMorgan Chase & Co., a financial services company, including Chairman and Chief Executive Officer of JPMorgan China, Vice Chairman of JPMorgan Asia Pacific and Chairman of JPMorgan Chase Bank (China) Company Limited. Prior to JPMorgan, he was a partner with Linklaters LLP, a global law firm. He held positions as Greater China managing partner and managing partner of Asia Pacific. Mr. Shao is currently a director on the board of Elife Holdings Limited, a Hong Kong listed company, and a member of the audit committee of Bank of Montreal (China) Co., Ltd. Mr. Shao brings to our Board extensive professional experience in Asia and public company board and corporate governance experience. |
28 | YUM CHINA – 2018 Proxy Statement |
MATTERS REQUIRING STOCKHOLDER ACTION
|
30 | YUM CHINA – 2018 Proxy Statement |
|
Who are our largest stockholders?
Name of Beneficial Owner | Number of Shares Beneficially Owned |
Percent
of Shares(1) |
||||||
More than 5% owners |
||||||||
Standard Life Aberdeen plc |
31,105,955 | (2) | 8.1 | % | ||||
30 Lothian Rd |
||||||||
Edinburgh, UK EH1 2DH |
||||||||
Primavera Capital Management Ltd. |
30,982,892 | (3) | 7.7 | % | ||||
28 Hennessy Road, 28th Floor |
||||||||
Hong Kong |
||||||||
BlackRock, Inc. |
26,705,056 | (4) | 6.9 | % | ||||
55 East 52nd Street |
||||||||
New York, NY 10055 |
||||||||
|
||||||||
Named Executive Officers |
||||||||
Micky Pant |
765,135 | (5) | * | |||||
Jacky Lo |
2,259 | (6) | * | |||||
Joey Wat |
51,802 | (7) | * | |||||
Shella Ng |
49,586 | (8) | * | |||||
Johnson Huang |
36,256 | (9) | * | |||||
Ted Stedem |
77,908 | (10) | * | |||||
|
||||||||
Non-Employee Directors |
||||||||
Peter A. Bassi |
49,093 | * | ||||||
Christian L. Campbell |
127,604 | (11) | * | |||||
Ed Yiu-Cheong Chan |
13,979 | * | ||||||
Edouard Ettedgui |
10,741 | * | ||||||
Louis T. Hsieh |
45,221 | * | ||||||
Fred Hu |
14,601 | * | ||||||
Jonathan S. Linen |
69,242 | (12) | * | |||||
Ruby Lu |
13,979 | * | ||||||
Zili Shao |
9,912 | * | ||||||
William Wang |
7,695 | * | ||||||
|
||||||||
Ownership of all directors and executive officers as a group (23 total) |
1,438,896 | (13) | * | |||||
|
* | Represents less than one percent |
(1) | Percentage ownership is determined based on a total of 385,926,528 shares of Company common stock outstanding as of March 13, 2018. |
32 | YUM CHINA – 2018 Proxy Statement |
STOCK OWNERSHIP INFORMATION
|
(2) | Based on Amendment No. 1 to the Schedule 13G filed by Standard Life Aberdeen plc on February 6, 2018, which indicated that, as of December 29, 2017, Standard Life Aberdeen plc had shared voting power over 23,644,417 shares of Company common stock and shared dispositive power over 31,105,955 shares of Company common stock. |
3) | Based on Amendment No. 2 to the Schedule 13D filed by Primavera Capital Management Ltd. on July 6, 2017, which indicated that, as of June 30, 2017, Primavera Capital Management Ltd. had sole voting and dispositive power over 30,982,892 shares of Company common stock, Pollos Investment GP Ltd. shared voting and dispositive control over 16,364,778 shares of Company common stock and Pollos L.L.C. shared voting and dispositive control over 14,618,114 shares of Company common stock. Such amounts include 14,618,114 shares underlying outstanding Warrants. |
(4) | Based on Amendment No. 1 to the Schedule 13G filed by BlackRock, Inc. on January 23, 2018, which indicated that, as of December 31, 2017, BlackRock, Inc. had sole voting power over 23,791,883 shares of Company common stock and sole dispositive power over 26,705,056 shares of Company common stock. |
(5) | Includes 589,993 shares issuable upon the exercise of vested stock appreciation rights (“SARs”). |
(6) | Includes 1,825 shares issuable upon the exercise of vested SARs. |
(7) | Includes 43,805 shares issuable upon the exercise of vested SARs. |
(8) | Includes 35,535 shares issuable upon the exercise of vested SARs. |
(9) | Includes 30,144 shares issuable upon the exercise of vested SARs. |
(10) | Reflects the amount of vested SARs held by Mr. Stedem as of June 1, 2017, the date on which he resigned from the Company. |
(11) | Includes 86,028 shares issuable upon the exercise of vested SARs. Also includes 80 shares held by Mr. Campbell’s spouse. |
(12) | Includes 14,006 shares issuable upon the exercise of vested SARs. Also includes 10,000 shares held in a trust for which Mr. Linen is a trustee and 4,000 shares held by Mr. Linen’s spouse. |
(13) | Includes 956,820 shares issuable upon the exercise of vested SARs. |
YUM CHINA – 2018 Proxy Statement | 33 |
EXECUTIVE COMPENSATION
|
36 | YUM CHINA – 2018 Proxy Statement |
EXECUTIVE COMPENSATION
|
Objective | Base Salary |
Annual Performance- Based Cash Bonuses |
Long-Term Equity |
|||||||||
Attract and retain the right talent to achieve superior stockholder results — Competitive total reward program structure that enables pay to vary based on role, responsibility, experience, market value and future potential of talent in order to drive superior results year over year.
|
X | X | X | |||||||||
Reward performance — Motivate both short-term and long-term performance through annual and long-term equity programs. A significant portion of NEO pay is performance-based or variable and, therefore, at-risk.
|
X | X | ||||||||||
Emphasize long-term value creation — The Company’s belief is simple: if it creates long-term value for stockholders, then it shares a portion of that value with those responsible for the results. Stock Appreciation Rights (“SARs”) reward value creation generated from sustained results and the favorable expectations of the Company’s stockholders. Restricted Stock Units (“RSUs”) and, beginning in 2018, PSUs focus on the long-term performance of the Company and directly align the interests of the recipients with those of the Company’s stockholders.
|
X | |||||||||||
Drive ownership mentality — We require executives to invest in the Company’s success by owning a substantial amount of Company stock.
|
X |
YUM CHINA – 2018 Proxy Statement | 37 |
EXECUTIVE COMPENSATION
|
COMPANY
Team Performance Measures | Target | Actual | |
Earned As a % of Target |
Weighting | |
Final Team Performance |
| ||||||||||||
Adjusted Operating Profit Growth* |
18 | % | 25 | % | 167 | 50 | % | 84 | ||||||||||||
Same Store Sales Growth** |
3.4 | % | 4.2 | % | 152 | 25 | % | 38 | ||||||||||||
System Gross New Builds |
600 | 691 | 200 | 15 | % | 30 | ||||||||||||||
System Customer Satisfaction*** |
— | — | 200 | 10 | % | 20 | ||||||||||||||
|
|
|||||||||||||||||||
FINAL COMPANY TEAM FACTOR |
172 | |||||||||||||||||||
|
|
KFC China
Team Performance Measures | Target | Actual | |
Earned As a % of Target |
Weighting | |
Final Team Performance |
| ||||||||||||
Adjusted Operating Profit Growth* |
18 | % | 29 | % | 200 | 50 | % | 100 | ||||||||||||
Adjusted Same Store Sales Growth** |
3.5 | % | 5.3 | % | 200 | 25 | % | 50 | ||||||||||||
System Gross New Builds |
325 | 408 | 200 | 15 | % | 30 | ||||||||||||||
System Customer Satisfaction*** |
81 | % | 85 | % | 200 | 10 | % | 20 | ||||||||||||
|
|
|||||||||||||||||||
FINAL KFC China TEAM FACTOR |
200 | |||||||||||||||||||
|
|
* | Adjusted Operating Profit Growth is the reported operating profit growth, excluding items that we believe are not directly relating to or impacted by the performance of the executives, such as operating results of the newly acquired business during 2017. |
** | Adjusted Same Store Sales Growth is the Same Stores Sales Growth disclosed in the Annual Report on Form 10-K, but adjusted for items to reflect how we evaluate same store sales growth for our brands internally. |
*** | System Customer Satisfaction target for the Company is measured, starting in 2017, based on feedback obtained from real customers through online customer surveys to better gauge customer satisfaction. |
Based on Company performance, each of the NEOs other than Mr. Huang was assigned a Final Team Factor of 172% since the portion of their bonus tied to the Team Performance Factor was based entirely on Company performance. Mr. Huang was assigned a Final Team Factor of 193%, reflecting the weighting of his Team Performance Factor of 25% Company performance and 75% KFC China. The Compensation Committee then assessed individual performance and assigned an individual performance factor for the NEOs ranging from 120% to 150%, as described below under “2017 Named Executive Officer Compensation and Performance Summary.”
YUM CHINA – 2018 Proxy Statement | 39 |
EXECUTIVE COMPENSATION
|
Jacky Lo Chief Financial Officer and Treasurer |
YUM CHINA – 2018 Proxy Statement | 41 |
EXECUTIVE COMPENSATION
|
Joey Wat President and Chief Operating Officer |
42 | YUM CHINA – 2018 Proxy Statement |
EXECUTIVE COMPENSATION
|
Shella Ng Chief Legal Officer and Corporate Secretary |
YUM CHINA – 2018 Proxy Statement | 43 |
EXECUTIVE COMPENSATION
|
Johnson Huang General Manager, KFC |
Ted Stedem Former Chief Financial Officer |
44 | YUM CHINA – 2018 Proxy Statement |
EXECUTIVE COMPENSATION
|
Having considered the peer group selection criteria above and the comparability of each of the peer companies in terms of business size, industry, regulatory environment and source of executive talent, the Compensation Committee approved the following two peer groups of companies to be used for purposes of evaluating 2017 executive compensation decisions:
Greater China Peer Group | U.S. Peer Group | |
Cathay Pacific Airways Limited China Mengniu Dairy Co. Ltd. Chow Tai Fook Jewellery Group Ltd. CLP Holdings Ltd. Dah Chong Hong Holdings Limited Esprit Holdings Limited Inner Mongolia Yili Industrial Group Co., Ltd MGM China Holdings Limited Sands China Ltd. Shangri-La Asia Limited SJM Holdings Limited Swire Pacific Limited Swire Properties Limited Techtronic Industries Company Limited Want China Holdings Ltd. WH Group Limited Wilmar International Limited Wynn Macau Ltd. |
AutoZone, Inc. Avon Products, Inc.* Bloomin’ Brands, Inc. Brinker International, Inc. Campbell Soup Company* Colgate-Palmolive Company Conagra Brands, Inc.* Constellation Brands, Inc. Darden Restaurants, Inc. Dean Foods Company* Domino’s Pizza, Inc. Dr Pepper Snapple Group, Inc. General Mills, Inc. Hilton Worldwide Holdings Inc. Hormel Foods Corporation* Hyatt Hotels Corporation Kellogg Company* Kimberly-Clark Corporation L Brands, Inc.* Marriott International, Inc. McCormick & Company, Incorporated* McDonald’s Corporation MGM Resorts, International* Molson Coors Brewing Company Starbucks Corporation* The Clorox Company* The Gap, Inc.* The Hershey Company The J.M. Smucker Company* The Wendy’s Company Wyndham Worldwide Corporation Yum! Brands, Inc. |
* | Added to the peer group in September 2017 to provide a more robust group of peers based on the criteria noted above with respect to publicly listed U.S. companies. |
The Company’s revenue size falls at or about the median of each of the peer groups.
YUM CHINA – 2018 Proxy Statement | 47 |
EXECUTIVE COMPENSATION
|
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management.
Based on such review and discussion with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
Compensation Committee:
Edouard Ettedgui (Chair)
Jonathan S. Linen
William Wang
2017 SUMMARY COMPENSATION TABLE
The following table and footnotes summarize the total compensation awarded to, earned by or paid to the NEOs for fiscal year 2017 and, to the extent required by SEC executive compensation disclosure rules, fiscal years 2016 and 2015. The Company’s NEOs are its Chief Executive Officer, Chief Financial Officer, former Chief Financial Officer and the three other most highly compensated executive officers for the 2017 fiscal year.
Name and Principal Position |
Year | Salary ($) |
Bonus ($)(1) |
Stock Awards ($)(2) |
Option/ Awards ($)(3) |
Non-Equity Incentive Plan Compensation ($)(4) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) |
All Other Compensation ($)(6) |
Total ($)(7) |
|||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||||||
Micky Pant | 2017 | 1,100,000 | — | — | 4,000,008 | 3,689,400 | 62,098 | 719,511 | 9,571,017 | |||||||||||||||||||||||||||
Chief Executive Officer | 2016 | 1,013,645 | — | 1,500,007 | 4,500,017 | 2,470,417 | 63,974 | 881,776 | 10,429,836 | |||||||||||||||||||||||||||
2015 | 849,038 | — | 355,012 | 1,419,011 | 1,473,548 | 42,979 | 950,622 | 5,090,210 | ||||||||||||||||||||||||||||
Jacky Lo | 2017 | 407,917 | — | — | 208,848 | 657,261 | — | 291,305 | 1,565,331 | |||||||||||||||||||||||||||
Chief Financial Officer and Treasurer | ||||||||||||||||||||||||||||||||||||
Joey Wat | 2017 | 739,858 | 200,000 | 2,000,021 | 1,139,167 | 1,904,782 | — | 1,583,655 | 7,567,483 | |||||||||||||||||||||||||||
President and Chief Operating Officer |
2016 | 626,775 | — | 899,486 | 1,096,251 | 1,231,175 | — | 979,262 | 4,832,949 | |||||||||||||||||||||||||||
2015 | 590,000 | — | — | 1,059,813 | 518,500 | — | 1,560,728 | 3,729,041 | ||||||||||||||||||||||||||||
Shella Ng | 2017 | 396,058 | 179,663 | 1,007,342 | 379,722 | 553,331 | — | 1,240,914 | 3,757,030 | |||||||||||||||||||||||||||
Chief Legal Officer and Corporate Secretary | 2016 | 369,408 | — | 649,489 | 418,935 | 425,112 | — | 854,506 | 2,717,450 | |||||||||||||||||||||||||||
2015 | 359,243 | — | — | 185,558 | 135,147 | — | 900,935 | 1,580,883 | ||||||||||||||||||||||||||||
Johnson Huang | 2017 | 443,158 | 165,000 | 805,898 | 379,722 | 975,762 | — | 280,672 | 3,050,212 | |||||||||||||||||||||||||||
General Manager, KFC | ||||||||||||||||||||||||||||||||||||
Ted Stedem | 2017 | 246,635 | — | 1,139,167 | 286,571 | 690 | 213,354 | 1,886,417 | ||||||||||||||||||||||||||||
Former Chief Financial Officer | 2016 | 439,931 | — | 500,020 | 649,072 | 400,712 | 229 | 829,754 | 2,819,718 | |||||||||||||||||||||||||||
2015 | 356,280 | — | — | 120,076 | 160,867 | — | 514,250 | 1,151,473 |
YUM CHINA – 2018 Proxy Statement | 49 |
EXECUTIVE COMPENSATION
|
(1) | The amounts reported in this column for Ms. Wat, Ms. Ng and Mr. Huang represent Founder’s cash retention awards approved by YUM in January 2016, in connection with the spin-off, the payment of which was subject to the executive’s continued employment through January 31, 2017. |
(2) | The amounts reported in this column for 2017 represent the grant date fair value of the February RSU awards granted to Ms. Wat and the November RSU awards granted to Ms. Ng and Mr. Huang, calculated in accordance with Accounting Standards Codification Topic 718 (“ASC 718”), Compensation-Stock Compensation. See Note 15 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2017 (the “Audited Financial Statements”). |
(3) | The amounts reported in this column for 2017 represent the grant date fair value of the annual SAR awards granted to each of the NEOs, calculated in accordance with ASC 718. See Note 15 to the Company’s Audited Financial Statements for a discussion of the relevant assumptions used in calculating these amounts. |
(4) | Amounts in this column reflect the annual incentive awards earned for the applicable fiscal year performance periods under the annual bonus program, which is described further in our Compensation Discussion and Analysis under the heading “Annual Performance-Based Cash Bonuses.” |
(5) | Pursuant to SEC disclosure rules, the amounts reported for Messrs. Pant and Stedem represent above-market earnings credited under the YCHLRP that exceed 120% of the applicable federal long-term rate. Please see the narrative accompanying the “2017 Nonqualified Deferred Compensation” table for further information regarding the YCHLRP. |
(6) | The amounts in this column for 2017 are explained in the All Other Compensation Table and footnotes to that table, which follow. |
(7) | Certain compensation included in the All Other Compensation column was denominated in Chinese Renminbi. Mr. Lo and Ms. Ng’s salaries and 2017 bonus awards were denominated in Hong Kong dollars. Compensation paid in Chinese Renminbi or Hong Kong dollars were converted to U.S. dollars using an exchange rate of 6.7423 and 7.7923, respectively, for disclosure purposes. |
50 | YUM CHINA – 2018 Proxy Statement |
EXECUTIVE COMPENSATION
|
2017 ALL OTHER COMPENSATION TABLE
The following table and footnotes summarize the compensation and benefits included under the “All Other Compensation” column in the 2017 Summary Compensation Table that were awarded to, earned by or paid to the Company’s NEOs, for the fiscal year ending December 31, 2017.
Name |
Perquisites and other personal benefits ($)(1) |
Tax Reimbursements ($)(2) |
Insurance premiums ($)(3) |
Retirement Scheme Contributions ($)(4) |
Other ($)(5) |
Total ($) |
||||||||||||||||||
(a) |
(b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||
Mr. Pant |
137,555 | — | 17,684 | 521,857 | 42,415 | 719,511 | ||||||||||||||||||
Mr. Lo |
88,893 | 143,304 | — | 20,396 | 38,712 | 291,305 | ||||||||||||||||||
Ms. Wat |
148,295 | 1,278,568 | — | 36,975 | 119,817 | 1,583,655 | ||||||||||||||||||
Ms. Ng |
91,660 | 1,070,682 | — | 39,606 | 38,966 | 1,240,914 | ||||||||||||||||||
Mr. Huang |
111,264 | 92,004 | — | 44,307 | 33,097 | 280,672 | ||||||||||||||||||
Mr. Stedem |
68,244 | — | 562 | 40,411 | 104,137 | 213,354 |
(1) | Amounts in this column represent: for Messrs. Pant, Lo, and Huang and Ms. Ng, a housing reimbursement; for Ms. Wat, an education reimbursement ($26,111) and housing reimbursement ($122,184); and for Mr. Stedem, an education reimbursement ($12,412) and housing reimbursement ($55,832). Such amounts are valued based on the amounts paid directly to these NEOs or the service provider, as applicable. |
(2) | Amounts in this column represent tax reimbursements for salary and expenditure/housing allowances. These tax reimbursements as well as the other overseas assignment allowances provided are intended to ensure that our executives serving on overseas assignments are in the same approximate financial position as they would have been if they have remained in their home country during their time on overseas assignment. As noted in the Compensation Discussion and Analysis, pursuant to her CEO letter agreement, Ms. Wat will no longer receive tax reimbursements, other than in connection with certain grandfathered benefits. Tax equalization benefits for Messrs. Lo and Huang were also eliminated, other than certain grandfathered tax equalization benefits. |
(3) | These amounts reflect the income each NEO was deemed to receive from IRS tables related to Company provided life insurance in excess of $50,000. |
(4) | This column represents allocations to the YCHLRP for Messrs. Pant and Stedem and contributions to the Bai Sheng Restaurants (Hong Kong) Limited Retirement Scheme for Mr. Lo, Ms. Wat, Ms. Ng and Mr. Huang. |
(5) | This column reports the total amount of other benefits provided. Other than for certain benefits described below, none of the other benefits individually exceeded the greater of $25,000 or 10% of the total amount of these other benefits and the perquisites and other personal benefits shown in column (b) for the NEO. These other benefits consist of amounts paid for utilities, home leave expenses, transportation expenses, club memberships and executive physicals. In 2017, Mr. Pant received car expense reimbursement of $35,698, Mr. Stedem received home leave reimbursement of $39,133 and a repatriation expense reimbursement of $35,775, Mr. Lo received an additional cash payment of $30,030 for his service as interim CFO during 2017, and Ms. Wat received mobility premiums of $60,000. These amounts were valued based on the amounts paid directly to the NEO or the service provider, as applicable. |
YUM CHINA – 2018 Proxy Statement | 51 |
EXECUTIVE COMPENSATION
|
2017 GRANTS OF PLAN-BASED AWARDS
The following table provides information on the annual incentive program that the Company’s NEOs participated in during 2017 and the SARs and RSUs granted in 2017 to the Company’s NEOs. The per share value of each award is determined based on the Company’s stock price on the date of grant.
Name |
Estimated Possible
Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All Other Stock Awards; Number of Shares of Stock or Units (#)(2) |
All Other Option/ SAR Awards; Number of Securities Underlying Options (#)(3) |
Exercise or Base Price Option/SAR Awards ($/Sh)(4) |
Grant Date Fair Value ($)(5) |
||||||||||||||||||||||||||||||||||||||||||
Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
||||||||||||||||||||||||||||||||||||||||||
(a) |
(b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | |||||||||||||||||||||||||||||||||||||
Mr. Pant |
— | — | 1,430,000 | 4,290,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
2/10/2017 | — | — | — | — | — | — | — | 392,477 | 26.56 | 4,000,008 | ||||||||||||||||||||||||||||||||||||||
Mr. Lo |
— | — | 318,440 | 955,320 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
2/10/2017 | — | — | — | — | — | — | — | 20,492 | 26.56 | 208,848 | ||||||||||||||||||||||||||||||||||||||
Ms. Wat |
— | — | 738,288 | 2,214,863 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
2/10/2017 | — | — | — | — | — | — | — | 111,774 | 26.56 | 1,139,167 | ||||||||||||||||||||||||||||||||||||||
2/10/2017 | — | — | — | — | — | — | 75,302 | — | — | 2,000,021 | ||||||||||||||||||||||||||||||||||||||
Ms. Ng |
— | — | 257,363 | 772,090 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
2/10/2017 | — | — | — | — | — | — | — | 37,258 | 26.56 | 379,722 | ||||||||||||||||||||||||||||||||||||||
11/1/2017 | — | — | — | — | — | — | 25,253 | — | — | 1,007,342 | ||||||||||||||||||||||||||||||||||||||
Mr. Huang |
— | — | 388,905 | 1,166,714 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
2/10/2017 | — | — | — | — | — | — | — | 37,258 | 26.56 | 379,722 | ||||||||||||||||||||||||||||||||||||||
11/1/2017 | — | — | — | — | — | — | 20,203 | — | — | 805,898 | ||||||||||||||||||||||||||||||||||||||
Mr. Stedem |
— | — | 400,086 | 1,200,257 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
2/10/2017 | — | — | — | — | — | — | — | 111,774 | 26.56 | 1,139,167 |
(1) | Amounts in columns (c), (d) and (e) provide the minimum amount, target amount and maximum amount payable as annual incentive compensation under the 2017 annual bonus program based on respective team performances and on individual performance during 2017. The actual amounts of annual incentive compensation awards paid for 2017 performance are shown in column (g) of the 2017 Summary Compensation Table. The performance measurements, performance targets and target bonus percentages are described in the Compensation Discussion and Analysis, beginning under the discussion of annual incentive compensation. |
(2) | RSUs allow the grantee to receive the number of shares of the underlying common stock subject to the award upon vesting. The RSUs granted to Ms. Wat on February 10, 2017 vest 100% on the fourth anniversary of the grant date, subject to Ms. Wat’s continued employment through the vesting date. The RSUs granted to Ms. Ng on November 1, 2017 vest 25% on the first, second, third and fourth anniversaries of the grant date, subject to Ms. Ng’s continued employment through the applicable vesting date. The RSUs granted to Mr. Huang on November 1, 2017 vest 100% on the fourth anniversary of the grant date, subject to Mr. Huang’s continued employment through the vesting date. During the vesting period, the RSUs will be adjusted to reflect the accrual of dividend equivalents, which will be distributed in additional Company shares at the same time and to the extent the underlying shares vest. |
(3) | SARs allow the grantee to receive, in cash or the number of shares of the underlying common stock that, in each case, is equal in value to the appreciation in the underlying common stock with respect to the number of SARs granted from the date of grant to the date of exercise. SARs become exercisable in equal installments on the first, |
52 | YUM CHINA – 2018 Proxy Statement |
EXECUTIVE COMPENSATION
|
second, third and fourth anniversaries of the grant date, subject to the recipient’s continued employment through the applicable vesting date. |
(4) | The exercise price of the SARs equals the closing price of the underlying common stock on the grant date. |
(5) | The amounts reported in this column for 2017 represent the grant date fair value of the annual SAR awards granted to each of the NEOs and the RSU awards granted to Ms. Wat, Ms. Ng and Mr. Huang, calculated in accordance with ASC 718. See Note 15 to the Company’s Audited Financial Statements for a discussion of the relevant assumptions used in calculating these amounts. |
YUM CHINA – 2018 Proxy Statement | 53 |
EXECUTIVE COMPENSATION
|
OUTSTANDING EQUITY AWARDS AT 2017 YEAR-END
The following table shows the number of Company shares covered by exercisable and unexercisable SARs, and RSUs held by the Company’s NEOs on December 31, 2017. This table excludes any Yum shares received by the NEOs upon conversion of their outstanding YUM equity awards in connection with the spin-off.
Option/SAR Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Name |
Grant Date |
Number of Securities Underlying Unexercised Options/ SARs (#) Exercisable |
Number of Securities Underlying Unexercised Options/ SARs (#) Unexercisable(1) |
Option/ SAR Exercise Price ($) |
Option/ SAR Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#)(2) |
Market Value of Shares or Units of Stock That Have Not Vested ($)(3) |
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) |
Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) |
|||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||||||
Mr. Pant |
||||||||||||||||||||||||||||||||||||||||
2/5/2009 | 133,503 | — | 8.84 | 2/5/2019 | — | — | — | — | ||||||||||||||||||||||||||||||||
2/5/2010 | 113,250 | — | 9.96 | 2/5/2020 | — | — | — | — | ||||||||||||||||||||||||||||||||
2/4/2011 | 100,468 | — | 14.88 | 2/4/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||
11/18/2011 | 93,672 | — | 16.25 | 11/18/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||
2/8/2012 | 114,478 | — | 19.46 | 2/8/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||
2/6/2013 | 89,779 | — | 19.00 | 2/6/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||
2/5/2014 | 62,703 | 20,902 | (i) | 21.30 | 2/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||
2/6/2015 | 43,980 | 43,980 | (ii) | 22.32 | 2/6/2025 | — | — | — | — | |||||||||||||||||||||||||||||||
2/5/2016 | 51,970 | 155,913 | (iii) | 21.06 | 2/5/2026 | — | — | — | — | |||||||||||||||||||||||||||||||
11/11/2016 | 36,634 | 109,904 | (iv) | 26.98 | 11/11/2026 | 55,732 | (i) | 2,230,407 | — | — | ||||||||||||||||||||||||||||||
2/10/2017 | — | 392,477 | (v) | 26.56 | 2/10/2027 | — | — | — | — | |||||||||||||||||||||||||||||||
Mr. Lo |
9/23/2016 | — | — | — | — | 873 | (ii) | 34,942 | — | — | ||||||||||||||||||||||||||||||
2/10/2017 | — | 20,492 | (v) | 26.56 | 2/10/2027 | — | — | — | — | |||||||||||||||||||||||||||||||
Ms. Wat |
2/6/2015 | 13,531 | 13,532 | (ii) | 22.32 | 2/6/2025 | — | — | — | — | ||||||||||||||||||||||||||||||
3/25/2015 | 16,154 | 16,155 | (vi) | 23.90 | 3/25/2025 | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2016 | — | — | — | — | 14,098 | (iii) | 564,211 | — | — | |||||||||||||||||||||||||||||||
2/5/2016 | 10,329 | 30,987 | (iii) | 21.06 | 2/5/2026 | — | — | — | — | |||||||||||||||||||||||||||||||
11/11/2016 | 12,211 | 36,635 | (iv) | 26.98 | 11/11/2026 | 18,578 | (i) | 743,496 | — | — | ||||||||||||||||||||||||||||||
2/10/2017 | — | 111,774 | (v) | 26.56 | 2/10/2027 | 75,485 | (iv) | 3,020,920 | — | — | ||||||||||||||||||||||||||||||
Ms. Ng |
2/8/2012 | 5,213 | — | 19.46 | 2/8/2022 | — | — | — | — | |||||||||||||||||||||||||||||||
2/8/2012 | 13,901 | — | 19.46 | 2/8/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||
2/6/2013 | 13,467 | — | 19.00 | 2/6/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||
2/5/2014 | 9,175 | 3,059 | (i) | 21.30 | 2/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||
2/6/2015 | 5,750 | 5,752 | (ii) | 22.32 | 2/6/2025 | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2016 | — | — | — | — | 14,098 | (iii) | 564,211 | — | — | |||||||||||||||||||||||||||||||
2/5/2016 | 2,926 | 8,780 | (iii) | 21.06 | 2/5/2026 | — | — | — | — | |||||||||||||||||||||||||||||||
11/11/2016 | 6,105 | 18,318 | (iv) | 26.98 | 11/11/2026 | 9,290 | (i) | 371,768 | — | — | ||||||||||||||||||||||||||||||
2/10/2017 | — | 37,258 | (v) | 26.56 | 2/10/2027 | — | — | — | — | |||||||||||||||||||||||||||||||
11/1/2017 | — | — | — | — | 25,314 | (v) | 1,013,085 | — | — | |||||||||||||||||||||||||||||||
Mr. Huang |
2/8/2012 | 8,994 | — | 19.46 | 2/8/2022 | — | — | — | — | |||||||||||||||||||||||||||||||
2/6/2013 | 9,652 | — | 19.00 | 2/6/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||
2/5/2014 | — | 6,797 | (vii) | 21.30 | 2/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||
2/5/2014 | 7,137 | 2,379 | (i) | 21.30 | 2/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||
2/6/2015 | 5,074 | 5,075 | (ii) | 22.32 | 2/6/2025 | — | — | — | — | |||||||||||||||||||||||||||||||
1/4/2016 | — | — | — | — | 14,098 | (iii) | 564,211 | — | — | |||||||||||||||||||||||||||||||
2/5/2016 | 3,443 | 10,329 | (iii) | 21.06 | 2/5/2026 | — | — | — | — | |||||||||||||||||||||||||||||||
11/11/2016 | 6,105 | 18,318 | (iv) | 26.98 | 11/11/2026 | 9,290 | (i) | 371,768 | — | — | ||||||||||||||||||||||||||||||
2/10/2017 | — | 37,258 | (v) | 26.56 | 2/10/2027 | — | — | — | — | |||||||||||||||||||||||||||||||
11/1/2017 | — | — | — | — | 20,252 | (vi) | 810,492 | — | — | |||||||||||||||||||||||||||||||
Mr. Stedem |
— | — | — | — | — | — | — | — | — |
54 | YUM CHINA – 2018 Proxy Statement |
EXECUTIVE COMPENSATION
|
(1) | The actual vesting dates for unexercisable SARs are as follows: |
(i) | Remainder of the unexercisable award vested on February 5, 2018. |
(ii) | One-half of the unexercisable award vested or will vest on each of February 6, 2018 and 2019. |
(iii) | One-third of the unexercisable award vested or will vest on each of February 5, 2018, 2019 and 2020. |
(iv) | One-third of the unexercisable award will vest on each of November 11, 2018, 2019 and 2020. |
(v) | One-fourth of the unexercisable award vested or will vest on each of February 10, 2018, 2019, 2020 and 2021. |
(vi) | One-half of the unexercisable award will vest on each of March 25, 2018 and 2019. |
(vii) | 100% of the unexercisable award will vest on February 5, 2018. |
(2) | The RSUs reported in this column include additional RSUs received with respect to dividends and which remain subject to the same underlying vesting conditions. The actual vesting dates for unvested RSUs are as follows: |
(i) | The RSUs vest one-half on each of November 11, 2018 and 2019. |
(ii) | The RSUs vest one-half on each of September 23, 2018 and 2019. |
(iii) | The RSUs vest one-third on January 4, 2018 and two-thirds on January 4, 2019. |
(iv) | The RSUs vest in full on February 10, 2021. |
(v) | The RSUs vest one-fourth on November 1, 2018, 2019, 2020 and 2021. |
(vi) | The RSUs vest in full on November 1, 2021. |
(3) | The market value of these awards are calculated by multiplying the number of shares covered by the award by $40.02, the closing price of the Company’s stock on the NYSE on December 29, 2017. |
YUM CHINA – 2018 Proxy Statement | 55 |
EXECUTIVE COMPENSATION
|
2017 OPTION/SAR EXERCISES AND STOCK VESTED
The table below shows the number of Company shares acquired during 2017 upon the exercise of Company SAR awards and the vesting of Company stock awards and before payment of applicable withholding taxes and broker commissions. This table does not include any shares acquired upon the exercise or vesting of outstanding YUM equity awards.
Option/SAR Awards | Stock Awards | |||||||||||||||||||
Name |
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
||||||||||||||||
(a) |
(b) | (c) | (d) | (e) | ||||||||||||||||
Mr. Pant |
59,409 | 2,081,701 | — | — | ||||||||||||||||
Mr. Lo |
— | — | 434 | 17,244 | ||||||||||||||||
Ms. Wat |
— | — | 4,687 | 124,771 | ||||||||||||||||
Ms. Ng |
— | — | 4,687 | 124,771 | ||||||||||||||||
Mr. Huang |
— | — | 4,687 | 124,771 | ||||||||||||||||
Mr. Stedem |
39,982 | 1,437,876 | — | — |
Nonqualified Deferred Compensation
56 | YUM CHINA – 2018 Proxy Statement |
EXECUTIVE COMPENSATION
|
2017 NONQUALIFIED DEFERRED COMPENSATION TABLE
Name |
Executive Contributions in Last Fiscal ($) |
Registrant Contributions in Last Fiscal ($)(1) |
Aggregate Earnings in Last Fiscal ($)(2) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at Last ($)(3) |
|||||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||||||
Mr. Pant |
— | 521,857 | 168,745 | — | 4,033,796 | |||||||||||||||
Mr. Lo |
— | 20,396 | — | — | 26,234 | (4) | ||||||||||||||
Ms. Wat |
— | 36,975 | — | — | 106,085 | (4) | ||||||||||||||
Ms. Ng |
— | 39,606 | — | — | 491,642 | (4) | ||||||||||||||
Mr. Huang |
— | 44,307 | — | — | 216,366 | (4) | ||||||||||||||
Mr. Stedem |
— | 40,411 | 1,875 | — | 77,835 |
(1) | Amounts in this column primarily reflect allocations to the YCHLRP for Messrs. Pant and Stedem and allocations to the Bai Sheng Restaurants (Hong Kong) Limited Retirement Scheme for Mr. Lo, Ms. Wat, Ms. Ng and Mr. Huang. |
(2) | Amounts in this column reflect earnings during the last fiscal year on amounts deferred under the YCHLRP. All earnings for Messrs. Pant and Stedem are based on the earnings credit provided under the YCHLRP described in the narrative above this table. For Messrs. Pant and Stedem, of the earnings reflected in this column, $62,098 and $690, respectively, was deemed above-market earnings accruing to their accounts under the YCHLRP. For above-market earnings on nonqualified deferred compensation, see the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the 2017 Summary Compensation Table. Under the Hong Kong Data Privacy Act, the administrator of the Bai Sheng Restaurants (Hong Kong) Limited Retirement Scheme is restricted from disclosing individual account balances under that plan and, accordingly, the Company is unable to compile earnings information with respect to this plan. Under the terms of the plan, participants may elect a variety of mutual funds in which to invest their account balances under the plan. |
(3) | The amounts reflected in this column are the year-end balances for Messrs. Pant and Stedem under the YCHLRP and the estimated year-end balances for Mr. Lo, Ms. Wat, Ms. Ng and Mr. Huang under the Bai Sheng Restaurants (Hong Kong) Limited Retirement Scheme. |
(4) | This amount represents the aggregate amount of the Company’s contributions, excluding investment returns. See note (2) to this table for further information regarding investment returns with respect to the Bai Sheng Restaurants (Hong Kong) Limited Retirement Scheme. This amount was denominated in Hong Kong dollars and was converted to U.S. dollars using an exchange rate of 7.7923 for disclosure purposes. |
Potential Payments upon a Termination or a Change in Control
YUM CHINA – 2018 Proxy Statement | 57 |
EXECUTIVE COMPENSATION
|
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 | |||||||||||||||
|
|
58 | YUM CHINA – 2018 Proxy Statement |
2017 DIRECTOR COMPENSATION
|
The table below summarizes compensation paid to each non-employee director during 2017.
Name | Fees Earned or Paid in Cash($)(1) |
Stock Awards ($)(2) |
Option/SAR Awards ($)(3) |
Total ($) |
||||||||||||
Peter A. Bassi |
112,510 | 112,490 | — | 225,000 | ||||||||||||
Christian L. Campbell |
20 | 224,980 | — | 225,000 | ||||||||||||
Ed Yiu-Cheong Chan |
20 | 224,980 | — | 225,000 | ||||||||||||
Edouard Ettedgui |
22 | 239,978 | — | 240,000 | ||||||||||||
Louis T. Hsieh |
36 | 244,964 | — | 245,000 | ||||||||||||
Fred Hu |
225,008 | 234,992 | — | 460,000 | ||||||||||||
Jonathan S. Linen |
20 | 224,980 | — | 225,000 | ||||||||||||
Ruby Lu |
20 | 224,980 | — | 225,000 | ||||||||||||
Zili Shao |
20 | 224,980 | — | 225,000 | ||||||||||||
William Wang |
33 | 299,967 | — | 300,000 |
(1) | Represents the portion of the annual retainer that the director elected to receive in cash rather than equity with respect to Mr. Bassi, cash fees received in lieu of fractional shares by Messrs. Campbell, Chan, Ettedgui, Hsieh, Linen, Shao and Wang and Ms. Lu and the annual cash retainer paid to Dr. Hu as Chairman of the Board. |
(2) | Represents the grant date fair value for annual stock retainer awards granted in 2017. Each director received shares of Company common stock determined by dividing the applicable annual retainer by the closing market price of a share of Company common stock on the date of grant, with any fractional shares paid in cash rather than equity. In connection with his appointment to the Board in July 2017, Mr. Wang also received an equity award based on the annual grant value of $225,000, prorated for his service on the Board in 2017. |
(3) | At December 31, 2017, the aggregate number of Company SARs outstanding for each non-employee director are set forth in the following table. These SARs were received by the applicable non-employee directors in connection with the adjustment of their outstanding YUM equity awards. |
Name | SARs | |||
Peter A. Bassi |
— | |||
Christian L. Campbell |
167,415 | |||
Ed Yiu-Cheong Chan |
— | |||
Edouard Ettedgui |
— | |||
Louis T. Hsieh |
— | |||
Fred Hu |
— | |||
Jonathan S. Linen |
— | |||
Ruby Lu |
22,943 | |||
Zili Shao |
— | |||
William Wang |
— |
YUM CHINA – 2018 Proxy Statement | 61 |
EQUITY COMPENSATION PLAN INFORMATION
|
The following table summarizes, as of December 31, 2017, the equity compensation we may issue to our directors, officers, employees and other persons under the Company’s Long Term Incentive Plan (the “LTIP”), which was approved by YUM as the Company’s sole stockholder prior to the spin-off.
Plan Category |
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights |
Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
|||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders |
23,565,936 | (1) | 18.96 | (2) | 14,651,155 | (3) | ||||||
Equity compensation plans not approved by security holders |
— | — | — | |||||||||
|
|
|||||||||||
TOTAL |
23,565,936 | 18.96 | 14,651,155 | |||||||||
|
|
(1) | Includes 1,970,287 shares issuable in respect of restricted stock units and executive income deferral awards. |
(2) | Restricted stock units and executive income deferral awards do not have an exercise price. Accordingly, this amount represents the weighted-average exercise price of outstanding stock appreciation rights. |
(3) | After the spin-off, full value awards granted to the Company’s employees under the LTIP, including restricted stock units and performance stock units, will reduce the number of shares available for issuance by two shares. Stock appreciation rights granted to the Company’s employees under the LTIP will reduce the number of shares available for issuance only by one share. |
62 | YUM CHINA – 2018 Proxy Statement |
AUDIT COMMITTEE REPORT
|
What matters have members of the Audit Committee discussed with management and the independent auditor?
Has the Audit Committee made a recommendation regarding the audited financial statements for fiscal 2017?
Who prepared this report?
This report has been furnished by the members of the Audit Committee:
Louis T. Hsieh, Chair
Peter A. Bassi
Ed Yiu-Cheong Chan
Ruby Lu
64 | YUM CHINA – 2018 Proxy Statement |
ADDITIONAL INFORMATION
|
I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
May I propose actions for consideration at next year’s annual meeting of the Company’s stockholders or nominate individuals to serve as directors?
66 | YUM CHINA – 2018 Proxy Statement |
ADDITIONAL INFORMATION
|
Is any other business expected to be conducted at the Annual Meeting?
YUM CHINA – 2018 Proxy Statement | 67 |
VOTE BY INTERNET - 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. Have your proxy card in hand when you access the web site 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 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. VOTE BY 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. 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-P02209 YUM CHINA HOLDINGS, INC. The Board of Directors recommends you vote FOR the following: 1. Election of Directors For Against Abstain Nominees: ! ! ! 1a. Louis T. Hsieh ! ! ! 1b. Jonathan S. Linen ! ! ! 1c. Muktesh “Micky” Pant ! ! ! 1d. William Wang For Against Abstain The Board of Directors recommends you vote FOR proposals 2 and 3. ! ! ! 2. Ratification of Independent Auditor ! ! ! 3. Advisory Vote to Approve Executive Compensation NOTE: The proxies are authorized to vote in their discretion upon such other business as may properly come before the meeting or any adjournment or postponement thereof. 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.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. E42344-P02209 YUM CHINA HOLDINGS, INC. Annual Meeting of Stockholders May 11, 2018 8:30 AM This proxy is solicited by the Board of Directors The undersigned stockholder(s) hereby appoint(s) Shella Ng and Jacky Lo, or either of them, as proxies, each with the power to appoint his/her substitute, revoking all proxies previously given, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this proxy, all of the shares of common stock of Yum China Holdings, Inc. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 8:30 a.m. local time, on May 11, 2018, atthe Mandarin Oriental Hong Kong, 5 Connaught Road, Central, Hong Kong, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Continued and to be signed on reverse side