| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Change in Control Severance Plan
On September 27, 2019, the Board of Directors (the “
”) of Yum China Holdings, Inc. (the “
”) adopted the Yum China Holdings, Inc. Change in Control Severance Plan (the “
”), effective immediately.
The Plan provides severance benefits to certain key management employees of the Company and its affiliates who are selected by the Board or the Compensation Committee of the Board (the “
”) to participate in the Plan (each, a “
”), and whose employment is terminated by the Company without Cause (as defined in the Plan) or by the Participant due to Good Reason (as defined in the Plan), in each case, within 24 months following the consummation of a Change in Control (as defined in the Plan) (a “
”). Participation in the Plan is conditioned upon the Participant’s execution of a Participation and Restrictive Covenant Agreement, which contains certain restrictive covenants relating to
non-competition,
non-solicitation,
confidentiality and
non-disparagement.
On September 27, 2019, Joey Wat, the Chief Executive Officer of the Company (the “
”), Ka Wai Andy Yeung, the Chief Financial Officer-Designate of the Company, Johnson Huang, General Manager, KFC, and Danny Tan, Chief Supply Chain Officer of the Company were each designated as Participants under the Plan.
If a Participant’s employment terminates in a Qualifying Termination, he or she will 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 Participant’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 Participant’s target annual cash bonus for the calendar year in which the Qualifying Termination occurs and the most recent annual cash bonus paid to the Participant, with such amounts payable over the 12-month period following the Participant’s termination of employment. The Severance Multiple is 30 for the CEO and 24 for Messrs. Yeung, Huang and Tan; |
| | • | any accrued, but unpaid as of the date of the Qualifying Termination, annual cash bonus for any completed fiscal year preceding a Qualifying Termination, to be paid within 60 days of the Qualifying Termination; |
| | • | accrued 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 at active employee rates, through the earlier of the one-year anniversary of the Participant’s termination of employment and the Participant becoming eligible for health insurance coverage under another employer’s plan; and |
| | • | outplacement services, in an aggregate cost to the Company not to exceed $25,000, for a one-year period (or, if earlier, until the Participant accepts an offer of employment). |
Upon at least three months’ prior written notice to all Participants, the Plan may be terminated or amended by the Committee, provided that (i) any termination or amendment of the Plan may not materially impair the rights of a Participant whose Qualifying Termination occurs prior to such termination or amendment and (ii) no termination or amendment of the Plan or removal of an employee from participation in the Plan, without an impacted Participant’s consent, may occur (x) after steps have been taken, and continue to be taken, that could lead to a Change in Control or (y) within 24 months after a Change in Control.
The foregoing summary is qualified in its entirety by reference to the Yum China Holdings, Inc. Change in Control Severance Plan attached hereto as Exhibit 10.1 and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
