Pizza Hut 2015 Annual Report Download - page 87

YUM! BRANDS, INC.-2016Proxy Statement 73
Proxy Statement
EXECUTIVE COMPENSATION
of employment. Participants under age 55 who terminate
will receive interest annually and their account balance will
be distributed in the quarter following their 55
th
birthday. In
case of termination of employment as of December31,
2015, Mr.Creed would have received $1,693,271.
Performance Share Unit Awards. If one or more NEOs
terminated employment for any reason other than retirement
or death or following a change in control and prior to
achievement of the performance criteria and vesting period,
then the award would be cancelled and forfeited. If the NEO
had retired, or died as of December31, 2015, the PSU
award would be paid out based on actual performance for
the performance period, subject to a pro rata reduction
reflecting the portion of the performance period not worked
by the NEO. If any of these terminations had occurred on
December31, 2015, Messrs. Creed, Grismer, Novak, Pant,
Niccol and Su would have been entitled to $592,442,
$391,229, $1,629,718, $369,464, $83,643, and $475,906,
respectively, assuming target performance.
Pension Benets. The Pension Benefits Table on page67
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, 2015. The
table on page69 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63. If the NEOs
had died on December31, 2015, the survivors of
Messrs.Creed, Grismer, Novak, Pant, Niccol and Su would
have received Company-paid life insurance of $2,750,000;
$1,640,000; $2,000,000; $2,043,000; $1,330,000 and
$2,365,000, 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, Grismer, Novak, Pant and Niccol).
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43 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 granted prior to 2013 and
held by the executive will automatically vest and become
exercisable. 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39
for more detail.