Pizza Hut 2013 Annual Report Download - page 49

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YUM! BRANDS, INC.-2014Proxy Statement 27
Proxy Statement
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE AND LEGAL
PROCEEDINGS
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our directors, executive officers and
persons who own more than 10% of the outstanding shares
of YUM common stock to file with the SEC reports of their
ownership and changes in their ownership of YUM common
stock. Directors, executive officers and greater-than-ten
percent shareholders are also required to furnish YUM with
copies of all ownership reports they file with the SEC. To
our knowledge, based solely on a review of the copies of
such reports furnished to YUM and representations that no
other reports were required, all of our directors and executive
officers complied with all Section 16(a) filing requirements
during fiscal 2013, except that the Form 4 filed on May 25,
2013 by Mr. Walter reported five late transactions.
In 2013, three shareholder derivative actions were filed (one
on May 9, 2013 in Jefferson Circuit Court, Commonwealth of
Kentucky, and one on each of May 21, 2013 and December
9, 2013 in the U.S. District Court for the Western District of
Kentucky) against certain current and former officers and
directors of the Company. Generally, the matters assert claims
of breach of fiduciary duty, waste of corporate assets and
unjust enrichment in connection with an alleged failure to
implement proper controls in the Company’s purchases of
poultry from suppliers to the Company’s China operations
and with an alleged scheme to mislead investors about the
Company’s growth prospects in China. The two actions in
the U.S. District Court for the Western District of Kentucky
have been consolidated. By agreement of the parties both
the consolidated federal court actions and the state court
action have been temporarily stayed pending the outcome
of a motion to dismiss a related securities class action suit
against the Company and certain executive officers. The
derivative actions and the securities class action suit are
more fully described in the Company’s Annual Report on
Form 10-K for the year ended December 28, 2013 in Part1,
Item 3, Legal Proceedings and Note 19, Contingencies, to
the Consolidated Financial Statements included in PartII,
Item 8, and in previous SEC filings.
Pursuant to North Carolina law, our Restated Articles of
Incorporation and indemnification agreements with our
Directors, the Company shall indemnify and may advance
and/or reimburse certain expenses of our current and former
officers and directors incurred in connection with defending
these actions. Each of the current and former officers and
directorsis required to provide an undertaking to repay
such expenses if it is ultimately determined that he or she
is not entitled to indemnification.