Item 2.02. Results of Operations and Financial Condition.
On October 5, 2017, Yum China Holdings, Inc. (the "Company") issued a press
release announcing its unaudited results for the quarter ended August 31, 2017.
A copy of the press release is being furnished as Exhibit 99.1 to this Current
Report on Form 8-K.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
On September 29, 2017, Mr. Micky Pant notified the Board of Directors (the
"Board") of the Company that he would be stepping down from the office of Chief
Executive Officer of the Company, effective March 1, 2018, and the Board
appointed Ms. Joey Wat, who currently serves as the Company's President and
Chief Operating Officer, to the position of Chief Executive Officer of the
Company, effective March 1, 2018. Mr. Pant will continue to serve as a director,
and effective March 1, 2018, will serve as Vice Chairman of the Board.
In connection with his transition from the office of Chief Executive Officer of
the Company, the Company and Mr. Pant entered into a transition agreement
pursuant to which, effective March 1, 2018, Mr. Pant agreed to continue to
remain an employee of the Company, serving as Senior Advisor to the Company, for
a term of two years. As Senior Advisor to the Company, Mr. Pant has agreed to,
among other things, provide transition advice to Ms. Wat, assist in
communications with investors and analysts and advise and support the Company's
leadership team members. In consideration for his services, Mr. Pant will be
entitled to annual gross compensation of $1,000,000, payable in cash or, at Mr.
Pant's option, in Company common stock and will remain eligible to participate
in the Company's employee benefit plans and receive continued vesting of his
outstanding equity awards with the Company and Yum! Brands, Inc. ("YUM")
pursuant to the terms of his letter of understanding with the Company dated
October 28, 2016. Mr. Pant will not be eligible to participate in the Company's
annual incentive program or receive annual equity grants under the Company's
long-term incentive program during his term as Senior Advisor. Under the terms
of the transition agreement, Mr. Pant has agreed to be bound by certain
restrictive covenants, including covenants relating to non-competition,
non-solicitation and non-disclosure. The transition agreement between the
Company and Mr. Pant is filed as Exhibit 10.1 to this Current Report on Form 8-K
and is incorporated herein by reference.
Ms. Wat, age 46, has served as President and Chief Operating Officer of the
Company since February 2017 and she was appointed as a member of the Board in
July 2017. Ms. Wat joined Yum China in September 2014, first serving as
President of KFC China and she was then promoted to Chief Executive Officer of
KFC China in August 2015. Prior to that, Ms. Wat served in both management and
strategy positions at AS Watson of Hutchison Group ("Watson"), an international
health, beauty and lifestyle retailer, in the U.K. from 2004 to 2014, including
as Managing Director of Watson U.K., which operates Superdrug and Savers, two
retail chains specializing in the sale of pharmacy and health and beauty
products. Before joining Watson, Ms. Wat spent seven years in management
consulting, including with McKinsey & Company'sHong Kong office from 2000 to
In connection with the appointment of Ms. Wat as Chief Executive Officer of the
Company, effective March 1, 2018, the Compensation Committee of the Board
approved an increase in Ms. Wat's annual base salary from $750,000 to $1,100,000
and an increase in her annual performance-based bonus target from 100% to 130%
of her annual base salary. Pursuant to the Company's long-term incentive
program, in 2018, Ms. Wat will also be eligible to receive stock appreciation
rights and performance stock units, weighted 75% and 25%, respectively, with a
face value of $10,000,000. Ms. Wat remains eligible to receive expatriate
benefits in connection with her employment with the Company. Tax equalization
will no longer apply to Ms. Wat, except for previous grants and retirement
contribution. In addition, if Ms. Wat's employment is terminated by the Company
without "cause" prior to March 1, 2021, then Ms. Wat will be entitled to a
severance payment, payable in monthly installments, equal to two times her base
salary and annual bonus target, subject to Ms. Wat's execution of a
post-termination agreement that includes restrictive covenants relating to
non-solicitation, non-competition and non-disclosure. The letter of
understanding between the Company and Ms. Wat setting forth the terms of her
employment as Chief Executive Officer of the Company is filed as Exhibit 10.2 to
this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
A copy of the press release announcing the CEO succession plan described in Item
5.02 is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
The following exhibits are attached to this report:
Exhibit No. Exhibit Description
10.1 Transition Agreement, dated as of September 29, 2017, by and
between Yum China Holdings, Inc. and Micky Pant.
10.2 Letter of Understanding, dated as of September 29, 2017, by and
between Yum China Holdings, Inc. and Joey Wat.
99.1 Press Release of Yum China Holdings, Inc. issued on October 5, 2017
announcing its unaudited results for the quarter ended August 31,
99.2 Press Release of Yum China Holdings, Inc. issued on October 5, 2017
announcing its CEO succession plan.
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