Messrs. Creed, Gibbs, Eaton, Niccol, and Ms. Skeans, would have been entitled to
$7,159,368, $2,196,790, $2,156,295, $2,156,295, and $1,249,836, respectively, assuming target performance.
Pension Benefits.
The Pension
Benefits Table on page 60 describes the general terms of each pension plan in which the NEOs participate, the years of credited service and the present value of the annuity payable to each NEO assuming termination of employment as of
December 31, 2017. The table on page 61 provides the present value of the lump sum benefit payable to each NEO when they attain eligibility for Early Retirement (i.e., age 55 with 10 years of service) under the plans.
Life Insurance Benefits.
For a description of the supplemental life insurance plans that provide coverage to the NEOs, see the All Other
Compensation Table on page 54. If the NEOs had died on December 31, 2017, the survivors of Messrs. Creed, Gibbs, Eaton, Niccol, and Ms. Skeans would have received Company-paid life insurance of $3,000,000, $1,722,000, $1,650,000,
$1,670,000, and $1,120,000, respectively, under this arrangement. Executives and all other salaried employees can purchase additional life insurance benefits up to a maximum combined company paid and additional life insurance of $3.5 million.
This additional benefit is not paid or subsidized by the Company and, therefore, is not shown here.
Change in Control.
Change in control
severance agreements are in effect between YUM and certain key executives (including Messrs. Creed, Gibbs, Niccol, Eaton and Ms. Skeans). These agreements are general obligations of YUM, and provide, generally, that if, within two years
subsequent to a change in control of YUM, the employment of the executive is terminated (other than for cause, or for other limited reasons specified in the change in control severance agreements) or the executive terminates employment for Good
Reason (defined in the change in control severance agreements to include a diminution of duties and responsibilities or benefits), the executive will be entitled to receive the following:
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a proportionate annual incentive assuming achievement of target performance goals under the bonus plan or, if higher,
assuming continued achievement of actual Company performance until date of termination,
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a severance payment equal to two times the sum of the executives base salary and the target bonus or, if higher,
the actual bonus for the year preceding the change in control of the Company, and
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outplacement services for up to one year following termination.
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In March 2013, the Company eliminated excise tax
gross-ups
and implemented a best net
after-tax
method. See the Companys CD&A on page 50 for more detail.
The change in control severance
agreements have a three-year term and are automatically renewable each January 1 for another three-year term. An executive whose employment is not terminated within two years of a change in control will not be entitled to receive any severance
payments under the change in control severance agreements.
Generally, pursuant to the agreements, a change in control is deemed to occur:
(i)
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if any person acquires 20% or more of the Companys voting securities (other than securities acquired directly from the
Company or its affiliates);
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(ii)
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if a majority of the directors as of the date of the agreement are replaced other than in specific circumstances; or
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(iii)
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upon the consummation of a merger of the Company or any subsidiary of the Company other than (a) a merger where the
Companys directors immediately before the change in control constitute a majority of the directors of the resulting organization, or (b) a merger effected to implement a recapitalization of the Company in which no person is or becomes the
beneficial owner of securities of the Company representing 20% or more of the combined voting power of the Companys then-outstanding securities.
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In addition to the payments described above, upon a change in control:
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All outstanding SARs held by the executive and not otherwise exercisable will fully and immediately vest following a
change in control if the executive is employed on the date of the change in control of the Company and is involuntarily terminated (other than by the Company for cause) on or within two years following the change in control. See Companys
CD&A on page 32 for more detail.
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All RSUs under the Companys EID Program held by the executive will automatically vest.
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