Pizza Hut 2013 Annual Report Download - page 79

YUM! BRANDS, INC.-2014Proxy Statement 57
Proxy Statement
EXECUTIVE COMPENSATION
assuming termination of employment as of December 31,
2013. The table on page 52 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 46. If the NEOs
had died on December 31, 2013, the survivors of Messrs.
Novak, Grismer, Su, Creed and Pant would have received
Company-paid life insurance of $3,360,000; $1,300,000;
$2,365,000; $1,500,000; and $1,500,000, 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. Novak, Grismer, Su, Creed and Pant).
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:
•
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,
•
a severance payment equal to two times the sum of the
executive’s base salary and the target bonus or, if higher,
the actual bonus for the year preceding the change in
control of the Company, and
•
outplacement services for up to one year following
termination.
In March 2013, the Company eliminated excise tax gross-
ups and implemented a best net after-tax method. See the
Company’s CD&A on page 42 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) if any person acquires 20% or more of the Company’s voting
securities (other than securities acquired directly from the
Company or its affiliates);
(ii) if a majority of the Directors as of the date of the agreement
are replaced other than in specific circumstances; or
(iii) upon the consummation of a merger of the Company or
any subsidiary of the Company other than (a) a merger
where the Company’s 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 Company’s
then-outstanding securities.
In addition to the payments described above, upon a
change in control:
•
All stock options and SARs held by the executive will
automatically vest and become exercisable, except that
for all stock options and SARs granted beginning in
2013, outstanding awards 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 Company’s CD&A on page 42 for more detail.
• All RSUs under the Company’s EID Program held by the
executive will automatically vest.
•
All PSU awards under the Company’s Performance Share
Plan awarded in the year in which the change in control
occurs will be paid out at target assuming a target level
performance had been achieved for the entire performance
period, subject to a pro rata reduction to reflect the portion
of the performance period after the change in control. All
PSUs awarded for performance periods that begin before
the year in which the change in control occurs will be paid
out assuming performance achieved for the performance
period was at the greater of target level performance or
projected level of performance at the time of the change in
control, subject to pro rata reduction to reflect the portion
of the performance period after the change in control,
except that for PSU awards granted beginning in 2013,
executives must be employed with the Company on the
date of the change in control and involuntarily terminated
upon or following the change in control and during the
performance period. See Company’s CD&A on page 42
for more detail.