Exhibit 10.1

Yun China Holdings, Inc.

PERFORMANCE SHARE UNIT PLAN

(Effective as of January 1, 2018)

 

SECTION 1
GENERAL

1.1.

History and Purpose. The Yum China Holdings, Inc. Performance Share Unit Plan
(the “Plan”) was established by the Compensation Committee (the “Committee”) of
the Board of Directors of Yum China Holdings, Inc. (the “Company”) effective as
of January 1, 2018. The purpose of the Plan is to provide an incentive to
participating employees to increase shareholder value while providing the
participating employees with an opportunity for a highly leveraged award for
their role in delivering performance results. Shares of common stock of the
Company (“Stock”) granted under the Plan are granted under and pursuant to the
Yum China Holdings, Inc. Long Term Incentive Plan (the “LTIP”), effective
October 31, 2016, and are subject to the terms of the LTIP.

1.2.

Operation, Administration, and Definitions. The operation and administration of
the Plan shall be subject to the provisions of Section 5 (relating to operation
and administration). Capitalized terms in the Plan shall be defined as set forth
in the Plan (including the definition provisions of Section 7) or, if not
otherwise defined in the Plan, as defined in the LTIP.

1.3.

Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in the Committee, and the Committee
shall have all authority with respect to the Plan as it has with respect to the
LTIP.

 

SECTION 2
GRANT AND ADJUSTMENT OF PERFORMANCE UNITS

2.1.

Participation. Subject to the terms and conditions of the Plan, the Committee
shall determine and designate, from time to time, those persons who shall be
granted one or more Performance Units under the Plan, and thereby become
“Participants” in the Plan.

2.2.

Grant of Performance Units. Except as otherwise provided by the Committee, with
respect to each Performance Period, the Committee shall grant to each person
designated by the Committee as a Participant, a number of Performance Units
determined pursuant Exhibit A hereto, which form of Exhibit may be amended from
time to time.

2.3.

Adjustment for Dividends. As of each dividend record date for the Stock that
occurs during any Performance Period, the number of Performance Units allocated
to a Participant for that Performance Period (disregarding for this purpose any
Performance Units allocated to the Participant by reason of the payment of other
dividends during the Performance Period) shall be increased by a number of
Performance Units equal to (a) the dividend amount that would be payable with
respect to the number of shares of Stock equal to the number of Performance
Units allocated to the Participant on the dividend record date; divided by (b)
the Fair Market Value of a share of Stock on the date of payment of the
dividend.

2.4.

Adjustment for Transactions. The number of Performance Units allocated to a
Participant, including the determination of the Performance Multiplier, shall be
subject to adjustment in accordance with Section 4.2 of the LTIP for changes in
corporate capitalization or other events described in that section.

 

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SECTION 3
DETERMINATION OF EARNED PERFORMANCE UNITS

3.1.

Determination of Number of Performance Units Earned. Except as determined by the
Committee, for each Performance Period, the number of Performance Units earned
by the Participant shall be determined in accordance with Exhibit A hereto.

3.2.

Certification by Committee. No distribution of shares of Stock shall be made
with respect to a Performance Period unless, on or before the date of
distribution, the Committee has certified that the performance goals for the
Performance Period and any other material provisions with respect to the
distribution of shares have in fact been satisfied.  The Committee has complete
and absolute discretion to determine whether and to what extent the performance
goals have been satisfied and its decision shall be binding on all Participants.

3.3.

Employment Termination during Performance Period. If a Participant’s Date of
Termination occurs prior to the last day of a Performance Period, the
Participant shall forfeit all Performance Units (including any additional
Performance Units or dividend equivalents attributable to dividends allocated to
the Participant) granted with respect to that Performance Period; provided,
however, that if a Participant’s Date of Termination occurs by reason of the
Participant’s death, Disability or Retirement prior to the end of the
Performance Period, the Participant (or in the event of his death, his estate)
shall receive the number of shares of Stock with respect to that Performance
Period that the Participant would have received if the Date of Termination did
not occur during the Performance Period (and based on the actual performance for
the entire Performance Period), but subject to a pro rata reduction to reflect
the number of days remaining in the Performance Period after the Date of
Termination. Distribution of shares of Stock with respect to all Performance
Periods that have not ended prior to the Date of Termination shall be made at
the same time distribution would have been made with respect to such Performance
Periods determined as though the Date of Termination had not occurred.

3.4.

Change in Control during Performance Period. Notwithstanding the foregoing
provisions of this Section 3, if the Participant is involuntarily terminated
(other than by the Company or one of its affiliates for Cause) upon or within
two (2) years following such Change in Control and during the Performance
Period,  then performance shall be measured for each outstanding Performance
Period through the Date of Termination and Participant shall receive the number
of shares of Stock that the Participant would have received with respect to each
then outstanding Performance Period based on actual performance through the Date
of Termination, but the number of shares of Stock to be distributed shall be
subject to a pro rata reduction to reflect the number of days remaining in the
Performance Period after the Date of Termination.  Distribution of shares of
Stock under this subsection 3.4 with respect to all Performance Periods shall be
made within 30 days following the Participant’s Date of Termination.

3.5.

General.  Upon distribution with respect to any Performance Period in accordance
with subsection 3.3 or subsection 3.4, all further rights of the Participant
pursuant to Performance Units granted for that Performance Period shall be
canceled (without regard to the level of performance after that date).  In
addition, if the Participant is subject to U.S. taxes, then the timing of the
distribution of any shares pursuant to this Plan shall also be governed by the
Section 409A Addendum attached hereto.

 

SECTION 4
SETTLEMENT OF PERFORMANCE UNITS

 

4.1.

Settlement of Performance Units. As soon as practicable after the determination
of a Participant’s number of Performance Units earned for any Performance Period
and certification by the Committee under subsection 3.2 (but no later than the
fifteenth day of the third month of the calendar year following the year in
which the Performance Period ends), shares of Stock equal to the number of
Performance Units shall be distributed to the Participant, and such Performance
Units shall be canceled at the time of such distribution.

4.2.

Fractional Shares. In lieu of issuing a fraction of a share of Stock
attributable to a fractional Performance Unit or otherwise, the Company shall be
entitled to pay to the Participant in cash an amount equal to the Fair Market
Value of such fractional share.

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4.3.

Deferrals. The Committee may determine that the delivery of shares of Stock or
the payment of cash, or a combination thereof, upon the settlement of all or a
portion of the Performance Units granted hereunder shall be deferred, or the
Committee may, in its sole discretion, approve deferral elections made by
Participants.  Deferrals shall be for such periods and upon such terms as the
Committee may determine in its sole discretion, subject to the requirements of
applicable law (including, without limitation, Section 409A of the Code, if
applicable).

4.4.

Awards Subject to Clawback. The Performance Units granted under this Plan and
any shares of Stock or cash payment delivered pursuant to an award of
Performance Units are subject to forfeiture, recovery by the Company or other
action pursuant to the applicable award agreement or any clawback or recoupment
policy which the Company may adopt from time to time, including without
limitation the Yum China Holdings, Inc. Compensation Recovery Policy, adopted by
the Committee in November 2016, and any such policy which the Company may be
required to adopt under the Dodd-Frank Wall Street Reform and Consumer
Protection Act and implementing rules and regulations thereunder, or as
otherwise required by law.

 

SECTION 5
OPERATION AND ADMINISTRATION

5.1.

Effective Date and Duration.  

 

(a)

The Plan shall be effective as of January 1, 2018.

 

(b)

In the event of Plan termination, the terms of the Plan shall remain in effect
as long as any Performance Units under it are outstanding.

5.2.

Agreement with the Company. Any Performance Units granted under the Plan shall
be subject to such terms and conditions, not inconsistent with the Plan and the
LTIP, as the Committee shall, in its sole discretion, prescribe; provided that
to the extent that any such terms and conditions are not set forth in the Plan
or the LTIP, they shall be reflected in such form of written (including
electronic) document as is determined by the Committee. A copy of such document
shall be provided to the Participant, and the Committee may, but need not,
require that the Participant sign a copy of (or electronically accept) such
document.

5.3.

Tax Withholding. All distributions under the Plan are subject to withholding of
all applicable taxes, and the Committee may condition the distribution of any
benefits under the Plan on satisfaction of the applicable withholding
obligations.

5.4.

Transferability. Except as otherwise provided by the Committee, a Participant’s
rights under the Plan are not transferable except as designated by the
Participant by will or by the laws of descent and distribution.

5.5.

Voting Rights. The Participant shall not be entitled to vote any Performance
Units, but shall be entitled to vote shares of Stock with respect to record
dates occurring after the date such shares are distributed to the Participant.

5.6.

Regulatory Changes.  Notwithstanding anything herein to the contrary, the
implementation of the Plan (or any localized version of the Plan) is subject to
modifications for compliance with legal, regulatory and taxation restrictions
and requirements of all applicable jurisdictions, including the PRC, if and when
applicable. In particular, the Participant may be required to sign additional
documents and/or take additional actions required to complete/fulfill all
regulatory and tax filing/registration requirements/obligations under the PRC
laws and regulations, if and when applicable/mandated.

SECTION 6
AMENDMENT AND TERMINATION

The Committee (or a delegate authorized by the Committee) may, at any time,
amend or terminate the Plan.

 

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SECTION 7
DEFINITIONS

In addition to the other definitions contained herein, the following definitions
shall apply:

 

(a)

Cause.  The term “Cause” shall have the meaning set forth in the Participant’s
employment or letter agreement with the Company and, if no such agreement or the
term is not defined therein, means: (i)  the willful failure by the Participant
to perform the Participant’s duties with the Company or an affiliate (other than
any such failure resulting from Participant’s incapacity due to Disability; (ii)
Participant’s willful misconduct that is demonstrably and materially injurious
to the Company or any of its affiliates, monetarily or otherwise; (iii)
Participant’s commission of such acts of dishonesty, fraud, misrepresentation or
other acts of moral turpitude; (iv) Participant’s conviction or plea of no
contest to a felony (or equivalent crime in the PRC) or a crime of moral
turpitude; or (v) any terminable events under the Company’s Code of Conduct in
effect at the commencement of the Performance Period.  

 

(b)

Date of Termination. The term “Date of Termination” means the date of the
Participant’s termination of employment with the Company and its affiliates.

 

(c)

Disability.  The term “Disability” means that the Participant either (i) is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months or (ii) by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, is receiving income
replacement benefits for a period of not less than six (6) months under an
accident and health plan covering employees of the Company.

 

(d)

Performance Period. The term “Performance Period” means a three consecutive
calendar year period as designated by the Committee, or such other period
determined by the Committee.

 

(e)

Retirement. The term “Retirement” means termination of employment by the
Participant on or after the Participant’s attainment of age 55 and ten (10)
years of service or age 65 and five (5) years of service (and not for any other
reason).  Notwithstanding the definition of Retirement set forth immediately
above, if the Company receives an opinion of counsel that there has been a legal
judgment and/or legal development in the Participant’s jurisdiction that would
likely result in the favorable Retirement treatment that applies to this grant
under the Plan being deemed unlawful and/or discriminatory, then the Committee
will not apply the favorable Retirement treatment at the time of the
Participant’s termination of employment and the Participant’s award shall be
governed by the remaining provisions related to termination of the Participant’s
employment.

 

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EXHIBIT A

 

Determination of Number of Performance Units Granted and Earned

 

I.     Determination of Number of Performance Units to be Granted

Subject to the provisions of subsection 2.2 of the Plan, for each Performance
Period each Participant shall be granted a target number of Performance Units as
determined by the Committee.

If the target number of Performance Units is not a whole number, the number of
Performance Units shall be rounded up to the nearest whole number.

II.     Determination of Number of Performance Units to be Earned

Subject to Section 3 of the Plan, the number of Performance Units earned by the
Participant for any Performance Period shall be equal to:

 

(a)

the sum of the number of Performance Units granted to the Participant for the
Performance Period, plus the number of additional Performance Units attributable
to dividends allocated to the Participant for that Performance Period in
accordance with subsection 2.3; multiplied by

 

(b)

the Performance Multiplier for that Performance Period determined in accordance
with the schedule set forth below.

The Performance Multiplier shall be based on the Company’s relative Total
Shareholder Return (“TSR”) percentile ranking for the Performance Period against
the 149 constituents under MSCI International China Index (or such other peer
group designated by the Committee at the beginning of the Performance Period and
communicated to the Participant). As soon as practicable after the end of each
Performance Period, the Committee shall determine the level of achievement of
the TSR performance objective for that Performance Period in accordance with the
schedule set forth below.  The Committee has complete and absolute discretion to
determine whether and to what extent the performance goals have been satisfied
and its decision shall be binding on all Participants.

If the TSR Percentile Ranking for the

Performance Period is:

The Performance Multiplier will be:

85% or higher

200%

55%

100%

30%

35%

Less than 30%

0%

 

TSR shall be calculated for a company by dividing (A) the sum of (i) the
cumulative amount of dividends paid during the Performance Period, assuming
dividend reinvestment, and (ii) the increase or decrease in the Average Stock
Price from the first day of the Performance Period to the last day of the
Performance Period, by (B) the Average Stock Price determined as of the first
day of the Performance Period.  “Average Stock Price” means the average of the
closing sales prices of a share of common stock, as reported on the principal
national stock exchange on which such common stock is traded, for the 20
business days immediately preceding the date for which the Average Stock Price
is being determined; provided, however, for purposes of determining the Average
Stock Price as of the last day of the Performance Period, the 20 business day
average shall be calculated inclusive of the last day of the Performance
Period.  If the Company’s TSR is negative, payout shall be based on the relative
ranking from the schedule above but payout shall not exceed 100%. Companies that
leave the peer group during the Performance Period due to bankruptcy shall have
their TSR calculated based on the payments that the shareholders receive during
the Performance Period and through the bankruptcy.  In the event a peer group
company undergoes a merger, is acquired or experiences a similar transaction
during the Performance Period, if determined to be equitable and appropriate by
the Committee, such peer company shall have its TSR calculated based on the
payments that shareholders received during the Performance Period, as determined
in the sole discretion of the Committee. Notwithstanding anything herein to the
contrary, the Committee shall have authority to determine the extent to which
the performance goal has been satisfied and to make decisions regarding the Plan
in order to effectuate the purpose and intent of the Plan.  

A-1

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SECTION 409A ADDENDUM

This addendum is applicable to Participants subject to U.S. tax laws, including
Section 409A of the Code.  It is intended that any amounts payable under the
Plan shall either be exempt from or comply with Section 409A of the Code and all
regulations, guidance and other interpretive authority issued thereunder (“Code
Section 409A”) so as not to subject a Participant to payment of any additional
tax, penalty or interest imposed under Code Section 409A. The provisions of this
Plan shall be construed and interpreted to avoid the imputation of any such
additional tax, penalty or interest under Code Section 409A yet preserve (to the
nearest extent reasonably possible) the intended benefit payable to Participant;
provided, however, that the Company does not make any guarantee of the tax
treatment of benefits provided under the Plan. Notwithstanding the foregoing or
any other provision of the Plan to the contrary, if any payment or benefit
hereunder is subject to Code Section 409A:

 

(a)

if such payment or benefit is to be paid or provided on account of a
Participant’s Date of Termination (or other separation from service or
termination of employment) and if the Participant is a specified employee
(within the meaning of Code Section 409A(a)(2)(B)) and if any such payment or
benefit is required to be made or provided prior to the first day of the seventh
month following the Participant’s Date of Termination (or other separation from
service or termination of employment), such payment or benefit shall be delayed
until the first day of the seventh month following the Participant’s Date of
Termination (or other separation from service);

 

(b)

the determination as to whether a Participant has had a termination of
employment (or separation from service) shall be made in accordance with the
provisions of Code Section 409A and the guidance issued thereunder without
application of any alternative levels of reductions of bona fide services
permitted thereunder;

 

(c)

to the extent any such payment is conditioned upon the Participant’s execution
of a release and such payment is to be paid or provided during a designated
period that begins in one taxable year and ends in a second taxable year, such
payment shall be paid or provided in the later of the two taxable years; and

 

(d)

in the event the Participant becomes entitled to shares under Section 3.4, such
shares shall be paid at the time set forth in Section 3.4 only if the Change in
Control is a “change in control event” within the meaning of Section 409A of the
Code and such termination of employment occurs within two years following such
Change in Control and, if the foregoing conditions are not satisfied, any shares
deliverable under Section 3.4 shall be delivered at the time set forth in
Section 3.3, in each case, subject to clauses (a), (b) and (c) of this sentence.

 

 

Addendum-1