Yum China Holdings, Inc.

Notice Of Annual Meeting

Of Stockholders

The Board of Directors of Yum China Holdings, Inc. solicits the enclosed proxy for use at the 2018 annual meeting of the Company’s stockholders (the “Annual Meeting”) to be held at 8:30 a.m. (local time), on Friday, May 11, 2018, at Mandarin Oriental Hong Kong, 5 Con-

naught Road, Central, Hong Kong. This proxy statement contains information about the matters to be voted on at the Annual Meeting and the voting process, as well as information about our directors and most highly paid executive officers.

At the Annual Meeting, stockholders will vote on several important Company matters. In addition, our management will report on the Company’s performance over the

last fiscal year and, following the meeting, respond to questions from stockholders.

You received these materials because our Board of Directors is soliciting your proxy to vote your shares at the Annual Meeting. As a stockholder of record as of the

close of business on March 13, 2018, you are invited to attend the Annual Meeting and are entitled to vote on the items of business described in this proxy statement.

As permitted by SEC rules, we are making this proxy statement and our 2017 annual report available to our stockholders electronically via the Internet. On or about March 30, 2018, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access this proxy statement and our 2017 annual report and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials unless you request a copy. The Notice contains instructions on how to access and review all of the important information contained in the

proxy statement and the annual report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice.

We encourage you to take advantage of the availability of the proxy materials on the Internet in order to help lower the costs of delivery and reduce the Company’s environmental impact.

The Annual Meeting is open to all stockholders of record as of the close of business on March 13, 2018, or their duly appointed proxies. If you would like to attend the Annual Meeting, you will need to bring a valid picture identification. If your shares are held in the name of a bank, broker or other nominee, you will need to bring a legal proxy from your bank or nominee or other proof of ownership as of the record date to be admitted to the

Annual Meeting. A recent brokerage statement or letter from a bank, broker or other nominee is an example of proof of ownership.

Please note that computers, cameras, sound or video recording equipment, large bags, briefcases and packages will not be allowed in the meeting room.

You may vote if you owned any shares of Company common stock as of the close of business on the record date, March 13, 2018. Each share of Company common stock

is entitled to one vote. As of March 13, 2018, there were 385,926,528 shares of Company common stock outstanding.

You will be voting on the following three items of business at the Annual Meeting:

We will also consider other business that properly comes before the meeting.

Our Board of Directors recommends that you vote your shares:

There are three ways to vote before the meeting:

Proxies submitted through the Internet or by telephone as described above must be received by 11:59 p.m., local time, on May 10, 2018. Proxies submitted by mail must be received prior to the meeting.

If you hold your shares in the name of a bank, broker or other nominee, your ability to vote through the Internet or by telephone depends on their voting processes. Please follow the directions of your bank, broker or other nominee carefully.

Shares registered directly in your name as the stockholder of record may be voted in person at the Annual Meeting. Shares held through a bank, broker or other nominee may be voted in person only if you obtain a legal proxy from the bank, broker or other nominee that holds your shares

giving you the right to vote the shares. Even if you plan to attend the Annual Meeting, we encourage you to vote your shares by proxy. You may still vote your shares in person at the meeting even if you have previously voted by proxy.

You may change your vote at any time before the polls close at the Annual Meeting. You may do this by:

Your attendance at the Annual Meeting will not have the effect of revoking a proxy unless you notify our Corporate Secretary in writing before the polls close that you wish to revoke a previous proxy.

If you hold your shares in the name of a bank, broker or other nominee, your ability change your vote depends on their voting processes. Please follow the directions of your bank, broker or other nominee carefully.

If you vote by proxy card, your shares will be voted as you instruct by the individuals named on the proxy card. If you sign and return a proxy card but do not specify how your

shares are to be voted, the persons named as proxies on the proxy card will vote your shares in accordance with the recommendations of the Board set forth on page 1.

If you received more than one Notice or proxy card, it means that you have multiple accounts with brokers and/or our transfer agent. Please vote all of these shares. We recommend that you contact your broker and/or our

transfer agent to consolidate as many accounts as possible under the same name and address. Our transfer agent is American Stock Transfer and Trust Company, LLC, which may be reached at 1 (888) 439-4986.

Your shares may be voted on certain matters if they are held in the name of a brokerage firm, even if you do not provide the brokerage firm with voting instructions. Brokerage firms have the authority under the New York Stock Exchange (“NYSE”) rules to vote shares for which their customers do not provide voting instructions on certain “routine” matters.

The proposal to ratify the appointment of KPMG Huazhen LLP as our independent auditor for 2018 is considered a routine matter for which brokerage firms may vote

shares for which they have not received voting instructions. The other matters to be voted on at our Annual Meeting are not considered “routine” under applicable rules. When a matter is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that matter, the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.”

Your shares are counted as present at the Annual Meeting if you attend the Annual Meeting in person or if you properly submit a proxy by Internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of the shares of Company common stock outstanding as of

March 13, 2018 must be present in person or represented by proxy at the Annual Meeting. This is referred to as a “quorum.” Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the Annual Meeting.

You may vote “FOR” each nominee or “AGAINST” each nominee, or “ABSTAIN” from voting on one or more nominees. Unless you mark “AGAINST” or “ABSTAIN” with respect to a particular nominee or nominees or for all nominees, your proxy will be voted “FOR” each of the director nominees named in this proxy statement. In an uncontested election, a nominee will be elected as a director if the number of “FOR” votes

exceeds 50% of the number of votes cast with respect to that director’s election. Abstentions will be counted as present but not voted. Abstentions and broker non-votes will not affect the outcome of the election of directors. Full details of the Company’s majority voting policy are set out in our Corporate Governance Principles and are described under “Governance of the Company—Majority Voting Policy.”

Proposals 2 and 3 must receive the “FOR” vote of a majority of the shares, present in person or represented by proxy, and entitled to vote at the Annual Meeting. For each of these proposals, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions will be counted as shares present and entitled to vote at the

Annual Meeting. Accordingly, abstentions will have the same effect as a vote “AGAINST” Proposals 2 and 3. Broker non-votes will not be counted as shares present and entitled to vote with respect to the particular matter on which the broker has not voted. Thus, broker non-votes will not affect the outcome of either of these proposals.

The Company knows of no other matters to be submitted to the stockholders at the Annual Meeting, other than the proposals referred to in this proxy statement. If any other matters properly come before the stockholders at the

Annual Meeting, it is the intention of the persons named on the proxy to vote the shares represented thereby on such matters in accordance with their best judgment.

The business and affairs of the Company are managed under the direction of the Board of Directors. The Board believes that good corporate governance is a critical factor in achieving business success and in fulfilling the Board’s responsibilities to stockholders. The Board believes that its practices align management and stockholder interests.

The corporate governance section of our website makes available certain of the Company’s corporate governance materials, including our Corporate Governance Principles, the charters for each Board committee and our Code of Conduct. To access these documents on our Investor Relations website, ir.yumchina.com, click on “Governance” and then “Corporate Governance Documents.”

Our Board of Directors presently consists of 12 directors. As discussed in more detail later in this section, the Board has determined that nine of those directors, including three of the directors standing for election at the Annual Meeting, are independent under the rules of the NYSE.

The Board is currently divided into three classes of equal size. The directors designated as Class I and Class III directors have terms expiring at the 2019 annual meeting

of the Company’s stockholders. The directors designated as Class II directors have terms expiring at the Annual Meeting and, if elected, will serve for a one-year term. Beginning at the 2019 annual meeting of the Company’s stockholders, each of our directors will stand for election each year for a one-year term, and our Board will therefore no longer be divided into three classes.

Our Board met seven times during 2017. Each director attended all of the meetings of the Board and committees on which such director served that were held during 2017 while the director was a member. Our independent direc-

tors meet privately in executive session without management present at each regularly scheduled Board meeting and held six such executive sessions in 2017. Our independent Chairman leads these Board executive sessions.

The Nominating and Governance Committee is responsible for recommending director candidates to the full Board for nomination and election at the annual meetings of stockholders. The Nominating and Governance Committee will interview a director candidate before the candidate is submitted to the full Board for approval. The Nominating and Governance Committee’s charter provides that it may retain a third-party search firm to identify candidates from time to time. The Nominating and Governance Committee will also consider director candidates recommended by stockholders or other sources in the same manner as nominees identified by the Committee.

For a stockholder to submit a candidate for consideration by the Nominating and Governance Committee, a stockholder must notify the Company’s Corporate Secretary by mail at Yum China Holdings, Inc., 7100 Corporate Drive, Plano, Texas 75024 or at Yum China Holdings, Inc., Yum China Building, 20 Tian Yao Qiao Road, Shanghai 200030, People’s Republic of China.

In accordance with the Corporate Governance Principles, our Board seeks members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity.

Directors should have experience in positions with a high degree of responsibility and be leaders in the companies or institutions with which they are affiliated, and are selected based upon contributions they can make to the Board and management. The Nominating and Governance Committee seeks to complete customary vetting procedures and background checks with respect to individuals suggested for potential Board membership by stockholders of the Company or other sources.

Ten of our current directors joined the Board in connection with the spin-off from YUM in 2016. In 2017, the Board expanded its size from ten directors to 12 directors and appointed Ms. Joey Wat and Mr. William Wang as directors. Ms. Wat serves as the Chief Executive Officer of the Company and Mr. Wang was identified to the Company by Primavera pursuant to the shareholders agreement discussed below. We believe that each of our directors has met the guidelines set forth in the Corporate Governance Principles.

As noted in the director biographies that follow this section, our directors have experience, qualifications and skills across a wide range of public and private companies spanning many different industries, possessing a broad

spectrum of experience both individually and collectively. They bring a diverse mix of regional, industry and professional expertise to the Company.

Yes, under our amended and restated bylaws, stockholders may nominate persons for election as directors at an annual meeting by following the procedures described under “Additional Information.”

In addition, our amended and restated bylaws include provisions permitting, subject to certain terms and conditions, stockholders owning at least 3% of the outstanding shares of Company common stock for at least three consecutive years to use our annual meeting proxy statement to nominate a number of director candidates not to exceed 20% of the number of directors in office, subject to reduc-

tion in certain circumstances. Because we have been an independent publicly traded company for less than three years, stockholders will not be able to nominate directors for election using these proxy access procedures until the 2020 annual meeting of the Company’s stockholders.

Our Board is currently led by an independent Chairman, Dr. Fred Hu. Our Board believes that Board independence and oversight of management are effectively maintained through a strong independent Chairman and through the Board’s composition, committee system and policy of having regular executive sessions of non-management directors, all of which are discussed below this section.

Further, separating the Chairman and Chief Executive Officer roles enables the Chairman to focus on corporate governance matters and the Chief Executive Officer to focus on the Company’s business. We find that this structure works well to foster an open dialogue and constructive feedback among the independent directors and

management. It further allows the Board to effectively represent the best interests of all stockholders and contribute to the Company’s long-term success.

To promote effective independent oversight, the Board has adopted a number of governance practices discussed below.

The Board maintains overall responsibility for overseeing the Company’s risk management framework. In furtherance of its responsibility, the Board has delegated specific

risk-related responsibilities to the Audit Committee, the Compensation Committee and the Food Safety Committee.

The Audit Committee engages in substantive discussions with management regarding the Company’s major risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. Our Head of Corporate Audit reports directly to the Audit Committee, as well as our Chief Financial Officer. The Audit Committee also receives reports at each committee meeting regarding legal and regulatory risks from management and meets periodically in separate executive sessions with

our independent auditor and our Head of Corporate Audit. The Chief Legal Officer reports regularly to the Audit Committee on the Company’s key risk areas and compliance programs. The Audit Committee periodically provides a summary to the full Board of the risk areas reviewed together with any other risk-related subjects discussed at the Audit Committee meeting. Alternatively, the Board may review and discuss directly with management the major risks arising from the Company’s business and operations.

The Compensation Committee considers the risks that may be implicated by our compensation programs through a risk assessment conducted by management and reports its conclusions to the full Board. This oversight helps ensure the Company’s compensation programs

align with the Company’s goals and compensation philosophies and, along with other factors, operate to mitigate against the risk that such programs would encourage excessive or inappropriate risk-taking.

In December 2017, the Board established the Food Safety Committee to assist the Board in its oversight of the Company’s practices, programs, procedures and initiatives relating to food safety. The Food Safety Committee also

monitors trends, issues and concerns affecting the Company’s food safety practices, and the risks arising therefrom, in light of the Company’s overall efforts related to food safety.

The Board considers management development and succession planning to be a critical part of our Company’s long-term strategy. In accordance with our Corporate Governance Principles, the Board reviews the Company’s succession planning, including succession planning in the case of retirement of the Chief Executive Officer of the Company. The Chief Executive Officer periodically reports to the Board with regard to his or her recommendations for potential successors to senior executive positions and development plans for such individuals. In addition, the Board reviews recommendations from the Compensation Committee with regard to the performance evaluation of the Chief Executive Officer, which the

Compensation Committee conducts annually, in accordance with its charter.

In September 2017, Mr. Micky Pant notified the Board that he would be stepping down from the office of Chief Executive Officer of the Company, effective March 1, 2018. Pursuant to the Company’s succession plan and after careful deliberations, the Board appointed Ms. Joey Wat as the Company’s Chief Executive Officer, effective March 1, 2018. Mr. Pant continues to serve the Company as Senior Advisor to the Company and also assumed the role of Vice Chairman of the Board.

The Company’s Corporate Governance Principles, adopted by the Board, require that a majority of the directors qualify as independent in accordance with the applicable rules of the NYSE. The Board determines on an annual basis whether each director qualifies as independent pursuant to the applicable rules of the NYSE.

Pursuant to the Corporate Governance Principles, the Board undertook its annual review of director independence. During this review, the Board considered transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates. As provided in the Corporate Governance Principles, the purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.

As a result of the review, the Board affirmatively determined that all of the directors are independent of the Company and its management under NYSE rules, with the exception of Christian Campbell, Micky Pant and Joey Wat. Mr. Campbell is not considered an independent director because he served as an executive officer of

YUM until his retirement in February 2016. Mr. Pant is not considered an independent director because he formerly served as Chief Executive Officer of the Company. Ms. Wat is not considered an independent director because she is the current Chief Executive Officer of the Company.

In reaching this conclusion, the Board determined that Dr. Hu, Messrs. Bassi, Chan, Ettedgui, Hsieh, Linen, Shao and Wang and Ms. Lu had no material relationship with the Company other than their relationship as a director. As part of its assessment, the Board considered the fact that Mr. Shao served as Co-Chairman and Partner of King & Wood Mallesons China until May 2017, and that the Company paid fees to King & Wood Mallesons China for legal services that accounted for less than 1% of King & Wood Mallesons China’s revenue in 2017. Based on the amount of fees the Company paid to King & Wood Mallesons China, and based on the fact that Mr. Shao did not directly participate in rendering legal services to the Company, the Board determined that this relationship was not material to Mr. Shao or King & Wood Mallesons China, and therefore the Board determined Mr. Shao was independent.

Stockholders or other parties who wish to communicate directly with the non-management directors, individually or as a group, or the entire Board may do so by writing to the Nominating and Governance Committee, c/o the Corporate Secretary, Yum China Holdings, Inc., 7100 Corporate Drive, Plano, Texas, 75024. The Nominating and Governance Committee of the Board has approved a process for handling correspondence received by the Company and addressed to non-management members of the Board or the entire Board. Under that process, the Corporate Secretary of the Company reviews all such correspondence and regularly forwards to a designated member of the Nominating and Governance Committee copies of all such correspondence (except commercial

correspondence and correspondence that is duplicative in nature) and a summary of all such correspondence. Directors may at any time review a log of all correspondence received by the Company that is addressed to members of the Board and request copies of any such correspondence. Written correspondence from stockholders relating to accounting, internal controls or auditing matters are brought to the attention of the Chairperson of the Audit Committee and to the internal audit department and are handled in accordance with procedures established by the Audit Committee with respect to such matters (described below). Correspondence from stockholders relating to Compensation Committee matters are referred to the Chairperson of the Compensation Committee.

Our Board and management are committed to regular engagement with our stockholders. In 2017, we contacted our top 25 stockholders, which comprise holders of nearly 50% of the outstanding shares of Company common stock, in order to solicit their input on important governance, executive compensation and other matters. Additionally, our senior management team, including our Chief Executive Officer and Chief Financial Officer, regularly engage in meaningful dialogue with our stockholders, including through our quarterly earnings calls and

investor conferences and meetings. Our senior management team regularly reports to our Board and, as applicable, committees of our Board, regarding stockholder views.

We evaluate and respond to the views voiced by our stockholders. As a result of our stockholder engagement process in 2017, we have expanded our disclosures on risk oversight and succession planning in this proxy statement.

The Audit Committee has established policies on reporting concerns regarding accounting and auditing matters in addition to our policy on communicating with our non-management directors. Any employee may, on a confidential or anonymous basis, submit complaints or concerns regarding accounting or auditing matters to the Chief Legal Officer of the Company through the Company’s Employee Hotline or by e-mail or regular mail. If an

employee is uncomfortable for any reason contacting the Chief Legal Officer, the employee may contact the Chairperson of the Audit Committee. The Chief Legal Officer maintains a log of all complaints or concerns, tracking their receipt, investigation and resolution and prepares a periodic summary report thereof for the Audit Committee.

Under the Company’s Related Person Transaction Policies and Procedures, the Audit Committee reviews the material facts of all related person transactions that require the Audit Committee’s approval and either approves or disapproves of the entry into the related person transaction. In determining whether to approve or ratify a related person transaction, the Audit Committee will determine whether such transaction is in, or not opposed to, the best interest of the Company and will take into account, among other factors it deems appropriate, whether such transaction is on terms no less favorable to the Company than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. Transactions, arrangements or relationships or any series of similar transactions, arrangements or relationships in which (i) a related person has or will have a direct or indirect material interest, (ii) the Company is a participant and (iii) that exceed $120,000 in any calendar year are subject to the Audit Committee’s review. Any director who is a related person with respect to a transaction under review may not participate in any discussion or approval of the transaction, except that the director will provide all material information concerning the transaction to the Audit Committee.

Related persons are directors, director nominees, executive officers, beneficial owners of 5% or more of the outstanding shares of Company common stock and their immediate family members. An immediate family member includes a person’s children, stepchildren, parents, stepparents, spouse, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone sharing such person’s household (other than a tenant or employee).

After its review, the Audit Committee may approve or ratify the transaction. The policies and procedures provide that certain transactions are deemed to be pre-approved even if they will exceed $120,000. These transactions include employment of executive officers, director compensation and transactions with other companies if the

aggregate amount of the transaction does not exceed the greater of $1 million or 2% of that company’s total consolidated gross revenues and the related person is not an executive officer of the other company.

Other than as described below, there were no transactions considered to be a related person transaction from January 1, 2017 through the date of this proxy statement.

In connection with the spin-off, on September 1, 2016, YUM and the Company entered into investment agreements with each of Pollos Investment L.P., an affiliate of Primavera Capital Group (“Primavera”), and API (Hong Kong) Investment Limited, an affiliate of Zhejiang Ant Small and Micro Financial Services Group Co., Ltd. (“Ant Financial” and, together with Primavera, the “Investors”). Pursuant to the investment agreements, on November 1, 2016, Primavera and Ant Financial collectively invested $460 million (the “Investment”) in the Company in exchange for: (i) shares of the Company’s common stock representing in the aggregate 4.8% of the Company’s common stock issued and outstanding immediately following the spin-off, after giving effect to the post-closing adjustment as discussed below and (ii) two tranches of warrants (the “Warrants”), exercisable by the Investors for an approximate additional 3.9% ownership, in the aggregate, of the Company’s common stock issued and outstanding after the spin-off, taking into account the shares previously issued to the Investors. In connection with and at the closing of the Investment, on November 1, 2016, the Company and the Investors entered into a shareholders agreement, relating to rights and obligations of the Investors as holders of Company common stock and Warrants. Pursuant to the terms of the shareholders agreement, Primavera identified two director designees, Dr. Hu and Mr. Wang. In addition, Ant Financial designated one non-voting Board observer.

On January 9, 2017, following the expiration of the post-closing measurement period specified in the investment agreements, the Company repurchased from the Investors a portion of the previously-issued shares of Company

common stock at par value. In addition, the Company issued the Warrants to the Investors. These transactions were completed pursuant to the terms of the investment

agreements entered into prior to the spin-off and were, accordingly, approved by the board of directors of YUM.

The Board believes that the number of shares of Company common stock owned by each director is a personal decision. However, the Board strongly supports the position that directors should own a meaningful number of shares of Company common stock and expects that a director will not sell any shares received as director compensation until at least 12 months following the director’s retirement or departure from the Board.

The Company’s non-employee directors receive a significant portion of their annual compensation in shares of Company common stock. The Company believes that the emphasis on the equity component of director compensation serves to further align the interests of directors with those of our stockholders.

The Board has adopted Stock Ownership Guidelines, which require executive officers to own a substantial amount of Company common stock in order to promote

an ownership mentality among management and align their interests with those of stockholders. See “Executive Compensation—Stock Ownership Guidelines” for more information.

Employee directors do not receive additional compensation for serving on the Board of Directors. The annual compensation for each director who is not an employee of

the Company is discussed under “2017 Director Compensation.”

Our Board currently consists of 12 directors divided into three classes of equal size. The directors designated as Class I and Class III directors have terms expiring at the 2019 annual meeting of the Company’s stockholders. The directors designated as Class II directors have terms expiring at the Annual Meeting and, if elected, will serve for a one-year term. Beginning at the 2019 annual meeting of the Company’s stockholders, each of our directors will stand for election each year for a one-year term, and our Board will therefore no longer be divided into three classes.

Who are the Class II director nominees?

The Board has selected Louis T. Hsieh, Jonathan S. Linen, Muktesh “Micky” Pant and William Wang for election as Class II director nominees. None of the Class II nominees has been elected by our public stockholders. If elected, the nominees will serve as directors and hold office until the 2019 annual meeting of the Company’s stockholders and until their respective successors have been duly elected and qualified or until their earlier death, resignation or removal.

The biographies of each of the nominees for Class II directors and the continuing Class I and Class III directors below contain information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Nomi-

nating and Governance Committee and the Board to determine that the person should serve as a director for the Company. In addition to the information presented below regarding each nominee’s specific experience, qualifications, attributes and skills that led our Board to the conclusion that he or she should serve as a director, we also believe that all of our director nominees have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to the Company and our Board.

There are no family relationships among any of the directors and executive officers of the Company. Director ages are as of March 13, 2018.

What if a nominee is unwilling or unable to serve?

That is not expected to occur. If it does, proxies may be voted for a substitute nominated by the Board of Directors.

What vote is required to elect directors?

A nominee will be elected as a director if the number of “FOR” votes exceeds the number of “AGAINST” votes with respect to his election.

The Board of Directors recommends that you vote FOR the election of the four Class II director nominees.

What am I voting on?

We are asking stockholders to approve a proposal to ratify the appointment of KPMG Huazhen LLP (“KPMG”) as our independent auditor for 2018. KPMG has served as our independent auditor since 2016.

As part of its audit engagement process, the Audit Committee considers on at least an annual basis the engagement of the independent auditor. In deciding to engage KPMG as the independent auditor for 2018, the Audit Committee considered:

KPMG rotates its lead audit engagement partner every five years. The Audit Committee is directly involved in the evaluation of the lead audit engagement partner to ensure that the he or she is appropriately qualified to lead the Company’s audit. After considering the criteria set forth above, the Audit Committee believes that retaining KPMG as the Company’s independent auditor is in the best interests of the Company and its stockholders.

Will a representative of KPMG be present at the Annual Meeting?

Representatives of KPMG will be present at the Annual Meeting, will have the opportunity to make a statement if

they desire and will be available to respond to appropriate questions from stockholders.

What vote is required to approve this proposal?

Approval of this proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting.

The Audit Committee and the Board of Directors recommend that you vote FOR approval of this proposal.

What were KPMG’s fees for audit and other services for 2017 and 2016?

The following table presents fees for professional services rendered by KPMG for the audit of the Company’s annual financial statements, and fees billed for audit-related services, tax services and all other services rendered by KPMG for 2017 and 2016. All KPMG services for 2017 and 2016 were approved in advance by the Audit Committee (or, prior to the spin-off, YUM’s audit committee) specifically or pursuant to procedures similar to those outlined below.

What is the Company’s policy regarding the approval of audit and non-audit services?

The Audit Committee has implemented a policy for the pre-approval of all audit and permitted non-audit services, including tax services, proposed to be provided to the Company by its independent auditor. Under the policy, the Audit Committee may approve engagements on a case-by-case basis or pre-approve engagements on a categorical basis pursuant to the Audit Committee’s pre-approval policy. The Audit Committee may delegate pre-approval authority to one of its independent members and has currently delegated pre-approval authority up to certain amounts to its Chairperson.

In considering pre-approvals, the Audit Committee considers the nature, scope and fees of the service to be provided to the Company as well as the principles and guidance established by the SEC and the Public Company Accounting Oversight Board (“PCAOB”) with respect to auditor independence. Services as to which a general pre-approval has been granted on an annual basis are effective for the applicable year. Any proposed service for which the estimated fees would cause the total fees for that class of service to exceed the applicable estimated fee threshold requires specific approval by the Audit Committee or its delegate.

The Principal Accounting Officer monitors the performance of all services provided by the independent auditor and determines whether such services are in compliance with this policy. The Principal Accounting Officer reports periodically to the Audit Committee with respect to compliance with this policy and the status of outstanding engagements, including actual services provided by the independent auditor and associated fees, and must promptly report to the Chairperson of the Audit Committee any non-compliance (or attempted non-compliance) with this policy of which the Corporate Controller becomes aware.

What am I voting on?

In accordance with SEC rules, we are asking stockholders to approve, on a non-binding basis, the compensation of the Company’s named executive officers as disclosed in this proxy statement. This non-binding advisory vote is also known as the “Say on Pay” vote. This is not a vote on the Company’s general compensation policies or the compensation of the Board. At the 2017 annual meeting of the Company’s stockholders, approximately 96% of the votes cast by our stockholders were voted in approval of the compensation of our named executive officers as disclosed in the 2017 proxy statement.

Our performance-based executive compensation program is designed to attract, reward and retain the talented leaders necessary for our Company to succeed in the highly competitive market for talent, while maximizing stockholder returns. This approach has made our management team a key driver in the Company’s strong performance over both the long and short term. We believe that our compensation program has attracted and retained strong leaders, and is closely aligned with the interests of our stockholders.

In deciding how to vote on this proposal, we urge you to read the Compensation Discussion and Analysis section of this proxy statement, which discusses in detail how our compensation policies and procedures operate and are

designed to meet our compensation goals and how our Compensation Committee makes compensation decisions under our programs.

Accordingly, we ask our stockholders to vote in favor of the following resolution at the Annual Meeting:

“RESOLVED, that the compensation paid to the named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and related materials included in the proxy statement, is hereby approved.”

What vote is required to approve this proposal?

Approval of this proposal requires the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. While this vote is advisory and non-binding on the Company, the Board of Directors and the Compensation Committee will review the voting results and consider stockholder concerns in their continuing evaluation of the Company’s compensation program.

What is the recommendation of the Board of Directors?

The Board of Directors recommends that you vote FOR approval of this proposal.

The following table sets forth the number of shares of Company common stock beneficially owned as of March 13, 2018 by (i) beneficial owners of more than 5% of the outstanding shares of Company common stock, (ii) each of the Company’s named executive officers, (iii) each of the Company’s directors and director nominees and (iv) all of the Company’s directors and executive officers as a group.

In accordance with SEC rules, beneficial ownership includes all shares the stockholder actually owns beneficially or of record, all shares over which the stockholder has or shares voting or dispositive control and all shares the stockholder has the right to acquire within 60 days of March 13, 2018. Except as indicated in the footnotes to the table, the Company believes that the persons named in the table have sole voting and investment power with respect to all shares owned beneficially by them.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own more than 10% of the outstanding shares of Company common stock to file with the SEC reports of their ownership and changes in their ownership of Company common stock. Directors, executive officers and greater-than-ten percent stockholders are also required to furnish to us copies of all ownership reports

they file with the SEC. To our knowledge, based solely on a review of the copies of such reports and representations by our directors and executive officers that no other reports were required, all of the reports required to be filed by such persons during 2017 were timely filed, except that a Form 4 filed on October 20, 2017 by Mr. Jacky Lo reported one late transaction.

2017 was a transformative year for the Company, as we completed our first full calendar year as an independent, public company. Following our successful separation from YUM in October 2016 (the “spin-off”), the Compensation Committee of the Company’s Board (the “Compensation Committee”) approved an executive compensation program designed to reflect the Company’s business strategy, performance and evolving corporate governance best practices. As a newly independent company, we expect the Company’s executive compensation program to continue to evolve in support of our ongoing business strategy and to further align the interests of our executives with those of our stockholders. This Compensation Discussion and Analysis (“CD&A”) describes the compensation for each of our named executive officers (“NEOs”).

Named Executive Officers. For 2017, the NEOs, whose compensation will be discussed in detail in this CD&A, were:

During 2017 and early 2018, we experienced transitions in the CEO and CFO roles of the Company, which resulted in various NEO compensation adjustments as described in this CD&A. In September 2017, the Company promoted Ms. Wat to the position of CEO of the Company, to succeed to the role upon Mr. Pant stepping down as CEO on March 1, 2018. In connection with CEO transition, Mr. Pant entered into a transition agreement pursuant to which he will remain an employee of the Company, serving as Senior Advisor for a two-year period. In February 2017, Ms. Wat was promoted from the position of Chief Executive Officer of KFC to the position of President and Chief Operating Officer of the Company. In addition, in June 2017, Mr. Stedem stepped down from the position of CFO and Mr. Lo succeeded him in an interim capacity until he was appointed as the CFO of the Company, effective in September 2017.

2017 Performance. 2017 was a year of significant financial and operational accomplishments for the Company. As of the end of 2017, the Company was the largest restaurant company in China, with over 7,900 restaurants. Our restaurant base consists of KFC, the leading quick-service restaurant brand in China in terms of system sales and number of restaurants, Pizza Hut, the leading casual dining restaurant concept in China as measured by system sales and number of restaurants, Taco Bell, East Dawning and Little Sheep. We maintain the exclusive right to operate and sub-license the KFC, Pizza Hut and Taco Bell brands in China (excluding Hong Kong, Taiwan and Macau), and own the East Dawning and Little Sheep concepts outright.

Our 2017 performance highlights include the following:

Recent Changes to the Compensation Program. The Compensation Committee evaluated the Company’s executive compensation program after the spin-off and took the following key actions:

2017 “Say on Pay” Vote. As part of its ongoing review of the Company’s executive compensation program, the Compensation Committee considered the approval by approximately 96% of the votes cast for the Company’s “say on pay” vote at the Company’s 2017 Annual Meeting of Stockholders. After considering the 2017 “say on pay” results, the Compensation Committee determined that the Company’s executive compensation philosophy, compensation objectives, and compensation elements continued to be appropriate and did not make any specific changes to the Company’s executive compensation program in response to the 2017 “say on pay” vote.

A unique feature of the Company is that while the Company operates largely in China, it is registered in the U.S. and listed on the NYSE. As a result, knowledge and expertise of both U.S. and China regulatory regimes and business practices are required for many of the Company’s executive officers.

The Company’s executive compensation program has been designed to attract and retain the talent necessary to achieve superior stockholder results and support the long-term growth of the Company while simultaneously hold-

ing our executives accountable to continuously achieve results year after year. In addition, the program has been designed to reward performance, emphasize long-term value creation and drive an ownership mentality.

The Company’s executive compensation program has three primary pay components: base salary; annual performance-based cash bonuses; and long-term equity awards. We believe that these key elements are aligned with the Company’s compensation philosophy, as illustrated in the following table.

The Company’s executive compensation program consists of three primary pay components: (i) base salary; (ii) annual performance-based cash bonuses; and (iii) long-term equity awards. The following chart demonstrates that 2017 compensation for Mr. Pant, our CEO during the year, and our other NEOs was heavily weighted toward variable pay elements, and such elements comprised approximately 83% of the targeted 2017 annual compensation for Mr. Pant (consisting of the target

payout opportunity under the cash bonus plan and his SAR grants and excluding all other compensation reported in the 2017 Summary Compensation Table) and, on average, 65% of the targeted 2017 annual compensation for our other NEOs (consisting of the target payout opportunity under the cash bonus plan and SAR grants and excluding the one-time RSU grants and all other compensation reported in the 2017 Summary Compensation Table).

Base Salary. The Company provides a fixed level of cash compensation to attract and retain high-caliber talent. Base salary in the form of cash is provided to compensate executives for their primary roles and responsibilities. An executive’s actual salary is dependent on factors such as the executive’s role (including the market value of the role), level of responsibility, experience, individual performance and future potential. The Compensation Com-

mittee annually reviews salary levels of the Company’s executive officers.

Annual Performance-Based Cash Bonuses. The principal purpose of our cash-based annual incentive program is to motivate and reward short-term team and individual performance. The following is the formula that was used to calculate 2017 performance-based annual bonuses:

In conjunction with setting 2017 compensation opportunities, the Compensation Committee reviewed the performance measures used in the annual incentive plan to assess the program’s alignment of the incentive payouts with Company performance as an independent company, while maintaining a focus on key performance measures of the Company’s overall business and operating segments for 2017. The measures described below were selected because they were viewed as key indicators of the

Company’s success in executing against its business plans.

The Compensation Committee established the performance measures, targets and weights in January 2017 after receiving input and recommendations from management and the Compensation Committee’s compensation consultant.

The performance objectives and targets in 2017 were developed through the Company’s annual financial planning process, which took into account growth strategies, historical performance and the expected future operating environment of the Company. The performance targets were designed to be challenging but achievable with strong management performance. A leverage formula for each team performance measure magnifies the potential impact that performance above or below the performance target will have on the calculation of the annual bonus.

This leverage increases the payouts when targets are exceeded and reduces payouts when performance is below target. There is a threshold level of performance for all measures that must be met in order for any bonus to be paid. Additionally, all measures have a cap on the level of performance above which no additional bonus will be paid regardless of performance above the cap.

The team performance targets, actual results, weights and overall performance for each measure for the Company’s NEOs are outlined below.

Long-Term Equity Incentives. The Company provides long-term equity compensation to its executives to encourage decision-making that creates long-term sustainable stockholder value. In determining the size of the award, the Compensation Committee considers the following:

Annual Equity Grants. For 2017, the Compensation Committee granted SARs as the annual equity awards for each of our NEOs. These SARs have ten-year terms and vest over four years. The exercise price of each SAR grant was based on the closing market price of the underlying Company common stock on the date of grant. Therefore, SAR awards will have value only if the share price appreciates above the awards’ exercise price.

Promotion Grants. In connection with her promotion to the position of President and Chief Operating Officer of

the Company, the Board awarded Ms. Wat a promotion equity grant in the form of service-based RSUs with a grant date economic value of $2,000,000. These RSUs cliff vest on the fourth anniversary of the grant date, thereby serving as a retention incentive for the entire vesting period and further aligning the interests of Ms. Wat with the Company’s stockholders by aligning her compensation with the long-term performance of the Company. In addition, as described below under “2017 Named Executive Officer Compensation and Performance Summary,” in connection with Ms. Wat’s promotion to the position of CEO of the Company, the Compensation Committee granted Ms. Wat SARs and PSUs as part of her 2018 long-term incentive award, with an aggregate economic value of $5,017,000.

Retention Grants. In September 2017, the Compensation Committee awarded retention grants of RSUs to each of Ms. Ng and Mr. Huang, with a grant date economic value of $1,000,000 and $800,000, respectively. These retention grants were intended to further align the interests of Ms. Ng and Mr. Huang with those of the Company, incentivize management to maximize the value of the Company, and retain critical talent to support the CEO transition. The RSUs granted to Ms. Ng vest in 25% equal annual installments beginning on the first anniversary of the grant date, while the RSUs granted to Mr. Huang cliff vest on the fourth anniversary of the grant date.

Below is a summary of our NEOs’ 2017 compensation—which includes base salary, annual cash bonus, equity awards and compensation arrangements entered into in

connection with the management transitions described above—and an overview of their 2017 performance relative to the annual performance goals.

2017 Performance Summary. Mr. Pant, currently Senior Advisor to the Company, served as the Company’s CEO for the duration of 2017. The Compensation Committee determined Mr. Pant’s performance to be significantly above target with an individual performance factor of 150%. In considering Mr. Pant’s performance, the Compensation Committee recognized that under the leadership of Mr. Pant in 2017, the Company had achieved an

adjusted operating profit growth of 25% while opening 691 new restaurants, exceeding the new builds target of 600. Mr. Pant was recognized for not only achieving strong operating and business results, but also for his management of the transition processes for our senior leadership changes during 2017, including with respect to the identification of strong internal candidates for the positions of CEO, CFO, and Chief People Officer.

2017 Decisions. In January 2017, the Compensation Committee set Mr. Pant’s 2017 compensation levels after considering individual performance and the input of its compensation consultant and market data.

Compensation Adjustments in Connection with Resignation as CEO. On October 5, 2017, the Company announced that, effective March 1, 2018, Mr. Pant would be stepping down from the position of CEO, and assuming the position of Senior Advisor to the Company for a two-year term. Mr. Pant’s long tenure at YUM and the Company and his expertise in the global restaurant industry will continue to bring to the Company his valuable business and strategic development experience in his role of Senior Advisor. In order to account for Mr. Pant’s new role, the Compensation Committee adjusted Mr. Pant’s base salary from $1,100,000 to $1,000,000, payable in cash or Company common stock, as elected by Mr. Pant. In his role as Senior Advisor, Mr. Pant is no longer eligible to participate in the Company’s annual incentive program or receive annual equity grants under the Company’s long-term incentive program. In connection with his stepping down as CEO and assuming the position of Senior Advisor effective March 1, 2018, the outstanding equity awards of Mr. Pant will be allowed to continue to vest under the terms of his letter of understanding dated October 28, 2016 and his transition agreement dated September 29, 2017.

2017 Performance Summary. The Compensation Committee determined Mr. Lo’s performance to be above target with an individual performance factor of 120%. The Compensation Committee determined that under Mr. Lo’s leadership, the Company achieved exceptional financial results in 2017, with payback periods for new restaurants reduced to two and three-to-four years for KFC and Pizza Hut, respectively. Additionally, during his tenure as CFO, the Company declared its first dividend and expanded its share repurchase program.

In March 2017, the Compensation Committee approved the 2017 compensation levels for Mr. Lo in connection with his promotion to the position of Vice President, Controller and Principal Accounting Officer of the Company. In September 2017, Mr. Lo’s compensation was further adjusted in connection with his promotion to the position of CFO. In approving the 2017 adjustments to Mr. Lo’s

compensation, the Compensation Committee considered the input of its compensation consultant, market data and the compensation paid to Mr. Lo’s predecessors at the Company.

2017 Performance Summary. Ms. Wat, our current CEO, served as the President and Chief Operating Officer of the Company from February 2017 through February 28, 2018. In this role, general managers of KFC and Pizza Hut as well as Head of Technology and Public Affairs reported to Ms. Wat. Ms. Wat had previously served as CEO of KFC China. Ms. Wat’s 2017 performance was rated as significantly above target with an individual performance factor of 150%. During 2017, Ms. Wat directed the Company’s formulation of a three-year corporate growth plan, which is now under execution. Ms. Wat assumed responsibilities with respect to Pizza Hut in February 2017 and applied her consumer instinct in driving its turnaround. In addition, Ms. Wat led a product improvement program by enhancing food taste and value perception. Ms. Wat was also viewed as instrumental in PH Bistro gaining traction and reductions in crew turnover, as well as the integration of Pizza Hut Dine-in and Delivery as one brand. The KFC “Little Bird” program that she championed was proven to be a meaningful and successful CSR initiative reaching over 21 provinces and benefiting over 60,000 children.

In January 2017, the Board’s independent and non-management directors approved the 2017 compensation levels for Ms. Wat in connection with her promotion to the position of President and Chief Operating Officer of the Company.

Compensation Adjustments in Connection with Promotion to CEO. On October 5, 2017, the Company announced that Ms. Wat would be assuming the position of CEO of the Company, effective March 1, 2018. In formulating Ms. Wat’s compensation as CEO, the Compensation Committee worked closely with its compensation consultant to create an overall package that would be competitive and reasonable when compared against peer companies, potential competing offers and the compensation paid to the current CEO. After considering the advice of its compensation consultant, the Compensation

Committee recommended and 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 cash bonus target from 100% to 130% of her annual base salary. Pursuant to the Company’s long-term incentive program, in 2018, Ms. Wat is eligible to receive SARs and PSUs, weighted 75% and 25% in terms of face value, respectively, with a grant date face value of $10,000,000 (equal to a grant date economic value of $5,017,000). By economic value, approximately 50% of Ms. Wat’s 2018 target long-term incentive opportunity was delivered as PSUs. Ms. Wat remains eligible to receive certain expa-

triate benefits in connection with her employment with the Company. Ms. Wat will no longer be eligible for tax equalization benefits, except for those connected to previous equity grants and retirement contributions. If Ms. Wat’s employment is terminated by the Company without “cause” prior to March 1, 2021, then she will be entitled to a severance payment, payable in monthly installments, equal to two times her base salary and annual bonus target, subject to her execution of a post-termination agreement that includes restrictive covenants relating to non-solicitation, non-competition and non-disclosure.

2017 Performance Summary. During 2017, Ms. Ng served as the Company’s Chief Legal Officer and Corporate Secretary. Ms. Ng’s performance was rated as above target with an individual performance factor of 125%. In determining Ms. Ng’s bonus payout, Ms. Ng was recognized for the leadership roles she assumed with respect to the Company’s establishment of a compliance oversight committee, the Company’s acquisition of Daojia, and declaration of the Company’s first dividend. Dating back to her time with YUM, Ms. Ng has over 22 years of experience with the Company, and her know-how has been critical to providing a strong legal and corporate foundation to our newly independent company.

In January 2017, the Compensation Committee set Ms. Ng’s 2017 compensation levels after considering the input of its compensation consultant and market data.

In September 2017, the Compensation Committee awarded a retention award of RSUs with a grant date economic value of $1,000,000, which vests in 25% annual installments beginning on the first anniversary of the grant date. Concurrently with the award of RSUs, Ms. Ng was awarded a cash retention award of $256,664 payable in 2019, subject to her remaining employed with the Company through March 31, 2019. Ms. Ng is eligible to receive a pro-rated portion of her retention bonus based on the number of days she remained with the Company from November 1, 2017 through March 31, 2019 in the event her employment is terminated by the Company without cause on or after November 30, 2018. These retention grants were intended to further align the interests of Ms. Ng with those of the Company, incentivize management to maximize the value of the Company, and retain critical talent to support the CEO transition.

2017 Performance Summary. Mr. Huang has served as General Manager, KFC since February 2017. He previously served as the Company’s Chief Information and Marketing Support Officer from October 2016 to February 2017. During 2017, Mr. Huang’s performance was rated as above target with an individual performance factor of 130%. The Compensation Committee determined that under Mr. Huang’s leadership in 2017, KFC achieved exceptional performance, exceeding targets in adjusted operating profit growth, adjusted same stores sales growth, new builds and customer satisfaction. Mr. Huang’s technology-driven expertise was considered by the Compensation Committee to be critical to KFC’s continued development of digital and customer relationship management initiatives, with KFC loyalty program members surpassing 110 million, with member sales representing 38% of KFC’s sales in the fourth quarter of 2017.

In January 2017, in connection with Mr. Huang’s promotion to the position of General Manager, KFC, the Board’s independent and non-management directors approved Mr. Huang’s 2017 compensation levels. In September 2017, the Compensation Committee increased Mr. Huang’s compensation to reflect his increased responsibilities as General Manager, KFC, based on the input of its compensation consultant and market data, Mr. Huang’s performance and potential and the compensation package of his predecessor.

In September 2017, the Compensation Committee awarded a retention award of RSUs with a grant date economic value of $800,000, which cliff vest on the fourth anniversary of the date of grant, subject to Mr. Huang’s continued employment with the Company through the vesting date. This retention grant was intended to further align the interests of Mr. Huang with those of the Company, incentivize management to maximize the value of the Company, and retain critical talent to support the CEO transition.

Mr. Stedem served as the Company’s CFO from the beginning of the year until June 1, when he resigned and ceased to have an employment relationship with the Company.

In January 2017, the Compensation Committee set Mr. Stedem’s 2017 compensation levels after considering the input of its compensation consultant, individual performance and market data.

As with all Company employees, Company executive officers receive certain employment and post-employment benefits. Benefits are an important part of retention and capital preservation for all levels of employees. Our benefits are designed to protect against unexpected catastrophic losses of health and earnings potential and provide a means to save and accumulate assets for retirement and other post-employment needs.

Retirement Plans. The Company maintains the Yum China Holdings, Inc. Leadership Retirement Plan (“YCHLRP”), which is an unfunded, unsecured account-based retirement plan that allocates a percentage of pay to an account payable to a participating executive following the later to occur of the executive’s separation of employment and attainment of age 55. During 2017, Messrs. Pant and Stedem received annual allocations to their accounts under the YCHLRP. The Company offers certain executives working in China retirement benefits under the Bai Sheng Restaurants (Hong Kong) Limited Retirement Scheme. Under this program, the Company provides a company-funded contribution ranging from 5% to 10% of an executive’s base salary. During 2017, Mr. Lo, Ms. Wat, Ms. Ng and Mr. Huang were participants in the program.

Medical, Dental, Life Insurance and Disability Coverage. The Company provides benefits such as medical, dental, life insurance and disability coverage to its executive officers through the same benefit plans that are provided to all eligible China-based employees.

Perquisites. Certain perquisites are provided to certain Company executive officers relating to overseas assignments. These perquisites are governed by the Company’s formal mobility policy, are offered on a case-by-case basis and reflect each executive’s particular circumstances while also generally reflecting market practices for similarly situated, globally mobile executives working in international companies based in Mainland China. For example, the Company may offer executive perquisites such as housing reimbursement, children education, mobility allowances, home leave payments, cost of living allowances, tax preparation services and tax equalization benefits while the executive is performing services in China. These perquisites are intended to help the Company attract and retain high-performing executives from different countries who have the skill sets and experience to successfully manage and lead the Company while living in Mainland China. While tax equalization benefits are viewed as an important element in our ability to recruit and retain talent to work in Mainland China, we intend to review these benefits in connection with new compensation arrangements to assess whether they remain consistent with our overall compensation program. In connection with the entry into Ms. Wat’s letter agreement for her role as CEO, we eliminated tax equalization benefits other than certain grandfathered tax equalization benefits. In addition, tax equalization benefits for Messrs. Lo and Huang were also eliminated, other than certain grandfathered tax equalization benefits. See the 2017 All Other Compensation Table for details regarding the perquisites received by our NEOs with respect to 2017.

Role of the Compensation Committee. The Compensation Committee reviews and approves corporate goals and objectives relevant to the compensation of the CEO and other executive officers, sets the compensation levels of each of the executive officers and approves the compensation of the CEO, with ratification by the independent directors of the Board. The Compensation Committee’s responsibilities under its charter are further described in the “Governance of the Company” section of this Proxy Statement. While not members of the Compensation Committee, the CEO and Chief People Officer as well as Chief Legal Officer, when necessary, also attended meetings of the Compensation Committee in 2017 to contribute to and understand the committee’s oversight of, and decisions relating to, executive compensation. The CEO, Chief People Officer and Chief Legal Officer did not attend portions of the meetings relating to their compensation. The Compensation Committee regularly conducts executive sessions without management present. The Compensation Committee also engages in an ongoing dialog with the CEO and Chief People Officer and the committee’s compensation consultant in the evaluation and establishment of the elements of our executive compensation program.

Role of the Independent Consultants. During 2017, the Compensation Committee retained Willis Tower Watson (“WTW”) as its principal independent consultant to advise it on executive compensation matters. WTW’s responsibilities for 2017 included providing advice and guidance to the Compensation Committee on the design of the annual and long-term incentive plans, including the design of the new PSU plan; the market competitiveness of executive pay policies, practices and levels, including those pertaining to expatriates; pay recommendations for executive officers, including pay actions in response to promotions and other role changes; the competiveness and design of non-employee director compensation; stock ownership guidelines for executives and Board members; equity award valuation services; and advice on pay disclosures, including the CD&A. The Compensation Committee has assessed the independence of WTW pursuant to NYSE rules, and the Company has concluded that WTW’s work for the Compensation Committee does not raise any conflicts of interest.

During 2017, the Compensation Committee also retained Mercer to conduct a competitive market review of executive officer (excluding the CEO position) compensation and advise the Compensation Committee regarding the form and level of compensation for these officers. The Compensation Committee has assessed the independence of Mercer pursuant to NYSE rules, and the Company has concluded that Mercer’s work for the Compensation Committee does not raise any conflicts of interest.

Competitive Market Review. One of the key objectives of our executive compensation program is to retain and reward the right talent by providing reasonable and competitive compensation. Accordingly, in 2017, the Compensation Committee determined that it should establish a peer group applicable to the Company. Recognizing the evolving nature of the competitive landscape for executive talent, the Compensation Committee intends to reassess the peer companies on a periodic basis to evaluate the continued appropriateness of such peer companies. As part of its engagement with the Compensation Committee, WTW assisted with the development of the peer group.

Based on its review and after consideration of the skills, background and understanding of the business and regulatory environments that are required of the management team to run a U.S. listed company with all operations in China, WTW developed two sets of peer companies with the following characteristics: