Pizza Hut 2015 Annual Report Download - page 46

YUM! BRANDS, INC.-2016Proxy Statement32
Proxy Statement
MATTERS REQUIRING SHAREHOLDER ACTION
The Plan does not constitute a contract of employment or
continued service, and selection as a participant will not give
any participating employee or other individual the right to
be retained in the employ of us or a subsidiary or the right
to continue to provide services to us or a subsidiary, nor any
right or claim to any benefit under the Plan, unless such right
or claim has specifically accrued under the terms of the Plan.
Delivery of Stock Under the Plan
We shall have no liability to deliver any shares of stock under
the Plan or make any other distribution of benefits under
the Plan unless such delivery or distribution would comply
with all applicable laws and the applicable requirements of
any securities exchange or similar entity. To the extent that
the Plan provides for issuance of stock certificates to reflect
the issuance of shares of stock, the issuance may be effected
on a non-certificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange.
Misconduct and Recoupment
The Committee, in its discretion, may impose such restrictions
on shares of stock acquired pursuant to the Plan, whether
pursuant to the exercise of a stock option or SAR, settlement
of a Full Value Award or otherwise, as it determines to be
desirable, including, without limitation, restrictions relating
to disposition of the shares and forfeiture restrictions based
on service, performance, stock ownership by the participant,
conformity with our recoupment, compensation recovery,
or clawback policies and such other factors as the Committee
determines to be appropriate. Unless otherwise specified
by the Committee, any awards under the Plan and any
shares of stock issued pursuant to the Plan shall be subject
to our compensation recovery, clawback, and recoupment
policies as in effect from time to time.
If the Committee determines that a present or former
employee has (a)used for profit or disclosed to unauthorized
persons, confidential or trade secrets of us or (b)breached
any contract with or violated any fiduciary obligation to us,
the Committee may cause that employee to forfeit his or
her outstanding awards under the Plan. This provision does
not apply during any period where there is a potential change
in control in effect or following a change in control.
Amendment and Termination of the Plan
The Board may, at any time, amend or terminate the Plan
(and the Committee may amend any award agreement);
provided, however, that no amendment or termination of
the Plan or amendment of any award agreement may, in
the absence of written consent to the change by the affected
participant (or, if the participant is not then living, the affected
beneficiary), adversely affect the rights of any participant
or beneficiary under any award granted under the Plan prior
to the date such amendment is adopted. Adjustments
pursuant to corporate transactions and restructurings are
not subject to the foregoing limitations. In addition,
amendments to the provisions of the Plan that prohibit the
repricing of stock options and SARS, amendments expanding
the group of eligible individuals, or amendments increases
in the aggregate number of shares reserved under the Plan,
the shares that may be issued in the form of ISOs, limitations
on certain types of Full Value Awards and amendments of
the individual limits on awards and the limitations on awards
to Outside Directors will not be effective unless approved
by our shareholders. No amendment shall be made to the
Plan without the approval of our shareholders if such approval
is required by law or the rules of any stock exchange on
which the common stock is listed.
The Plan will continue in effect, until terminated by the Board;
provided, however, that no award may be granted under
the Plan on or after May 20, 2026, which is the ten-year
anniversary of May 20, 2016, the date shareholders will vote
whether to approve the Plan as amended. However, any
awards that are outstanding on or after the date of Plan
termination will remain subject to the terms of the Plan. If
shareholders do not approve the Plan as amended, no
awards may be granted under the Plan after May 15, 2018.
It is our intention that, to the extent that any provisions of
the Plan or any awards granted under the Plan are subject
to Code Section 409A, the Plan and the awards comply
with the requirements of Code Section 409A and that the
Board shall have the authority to amend the Plan as it
deems necessary or desirable to conform to Code Section
409A. Notwithstanding the foregoing, neither we nor our
Subsidiaries guarantee that awards under the Plan will
comply with Code Section 409A and the Committee is
under no obligation to make any changes to any award to
cause such compliance.
U.S. Federal Income Tax Implications of the Plan
The discussion that follows is a summary, based on U.S.
federal tax laws and regulations presently in effect, of some
significant U.S. federal income tax considerations relating
to awards under the Plan. The applicable laws and regulations
are subject to change, and the discussion does not purport
to be a complete description of the federal income tax
aspects of the Plan. This summary does not discuss state,
local or foreign laws.
Stock Options. The tax treatment of a stock option depends
on whether the option is a NQO or an ISO.
The grant of an NQO will not result in taxable income to the
participant. Except as described below, the participant will
realize ordinary income at the time of exercise in an amount
equal to the excess of the fair market value of the shares
of stock acquired over the exercise price for those shares
of common stock, and we will be entitled to a corresponding
deduction.