Third Country National Plan.
Under the TCN, participants age 55 or older are entitled to a lump sum
distribution of their account balance in the quarter following their termination 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, 2018, Mr. Creed would have received $3,383,245 and Mr. Eaton would have received $2,316,046.
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, 2018, 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 payouts had occurred on December 31, 2018, Messrs. Creed, Gibbs, and Eaton and
Ms. Skeans would have been entitled to $9,992,278, $3,345,817, $3,017,885, and $1,779,827, respectively, assuming target performance.
Pension Benefits.
The Pension Benefits Table on page 66 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, 2018. The table on page 67 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 60. If the NEOs had died on December 31, 2018, the survivors of Messrs. Creed, Gibbs, Eaton,
Ms. Skeans and Mr. Russell would have received Company-paid life insurance of $3,000,000, $1,722,000, $1,650,000, $1,120,000 and $660,000, 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, 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 39 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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