Announces Election of Joao M. Castro-Neves
to the Board of Directors
The Kraft Heinz Company (Nasdaq: KHC) today announced it filed
with the Securities and Exchange Commission (“SEC”) its Annual
Report on Form 10-K for the year ended December 29, 2018 (the
“Annual Report”). The Company also announced that the Kraft Heinz
Board of Directors elected to the Board Joao M. Castro-Neves,
effective June 12, 2019.
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Joao M. Castro-Neves (Photo: Business
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“We are pleased that Kraft Heinz is returning to a path of
normalization,” said Alex Behring, Chairman of Kraft Heinz’s Board
of Directors. “The adjustments to correct prior year misstatements
are in line with the preliminary amounts disclosed in our Form 8-K
filed on May 6, 2019. In addition, we are thrilled to welcome Joao
to the Board, as he brings significant consumer sector expertise to
Kraft Heinz,” said Mr. Behring.
Restated Financial Statements
The Annual Report includes restated audited consolidated
financial statements as of December 30, 2017, and for the years
ended December 30, 2017, and December 31, 2016, as well as restated
unaudited interim financial statements for the quarterly periods
ended September 29, 2018; June 30, 2018; March 31, 2018; September
30, 2017; July 1, 2017; and April 1, 2017.
The misstatements were not quantitatively material. However, due
to the qualitative nature of the matters identified in our internal
investigation, including the number of years over which the
misconduct occurred and the number of transactions, suppliers, and
procurement employees involved, the Company determined that it
would be appropriate to correct the misstatements in our previously
issued consolidated financial statements by restating such
financial statements.
The cumulative impact of the restatements to previously reported
amounts from 2015 to 2018 is less than 1% of net income/(loss) for
each applicable period. More details, including the impact to
each of the annual and interim financial statements, is described
in detail in the Company’s 2018 annual report. These misstatements
are consistent with what the Company disclosed on May 6, 2019.
The Company currently expects to file its Quarterly Report on
Form 10-Q for the fiscal quarter ended March 30, 2019 on or before
July 31, 2019.
The Company’s internal investigation into its procurement area
and assessment of internal controls is now complete, and the
Company continues to cooperate with the SEC in its investigation.
As a result of the internal investigation and material weaknesses
identified, the Company is taking actions to improve internal
policies and procedures and to strengthen internal control over
financial reporting.
Joao M. Castro-Neves Elected to Board
The Board has elected Mr. Castro-Neves because of his extensive
experience in the consumer goods industry in his various positions
with AB InBev. With the election of Mr. Castro-Neves, the Board
size remains unchanged.
Mr. Castro-Neves, age 52, served as Chief Executive Officer of
Anheuser-Busch, AB InBev’s North American unit, and Zone President,
North America of AB InBev, from January 2015 until December 2017.
Mr. Castro-Neves joined Companhia de Bebidas das Americas S.A.
(“AMBEV”), a predecessor of AB InBev, in 1996 and served in
positions of increasing responsibility, including Chief Financial
Officer from January 2005 until December 2006 and Chief Executive
Officer from January 2009 until December 2014. He has also served
as Chief Executive Officer of Quilmes Industrial S.A., a subsidiary
of AMBEV based in Argentina, from January 2007 until December
2008.
CEO Compensation
The Compensation Committee of the Board of Directors approved
the terms of employment with incoming Chief Executive Officer
Miguel Patricio. The terms of Mr. Patricio's compensation, which
are described in today’s 8-K filing, are largely
performance-driven, based on sustained and significant growth in
long-term shareholder value. In addition, to demonstrate his
commitment to Kraft Heinz, Mr. Patricio is investing $20 million of
his own money to purchase Kraft Heinz shares, which will be issued
in the future consistent with the Company’s policies and applicable
securities laws and subject to a four-year restriction on
transfer.
To further structure and align the compensation of Kraft Heinz's
CEO with its shareholders, Mr. Patricio will receive a
performance-based stock award that will entitle him to receive
between 200,000 and 600,000 shares of Kraft Heinz common stock,
depending on the Company’s stock price appreciating to between $45
and $55 per share (or approximately 55% to 90% above the current
stock price) during the first three years of his employment. If Mr.
Patricio receives these additional performance share units, he will
be required to hold them for an additional three-year period.
Mr. Patricio’s compensation includes a base salary of $1,000,000
per year; a one-time signing bonus of $1,000,000; a target annual
bonus opportunity at 300% of base salary; and an equity award in
the form of performance share units and restricted stock units
(with a grant date fair value of $20 million and $15 million
respectively, for an aggregate equity award of $35 million).
Mr. Hees’ total outgoing CEO compensation in 2018 was
$1,149,136, as he forfeited the performance share units and
restricted stock units granted in 2018 due to the performance of
the business and his decision to leave the company, respectively.
The Board also authorized a severance payment to Mr. Hees, which
will include a year’s base pay of $1 million and a prorated bonus
for six months at $1.084 million, for a total severance payment of
$2.084 million.
ABOUT THE KRAFT HEINZ COMPANY
For 150 years, we have produced some of the world’s most beloved
products at The Kraft Heinz Company (Nasdaq: KHC). Our Vision
is To Be the Best Food Company, Growing a Better World. We are
one of the largest global food and beverage companies, with 2018
net sales of approximately $26 billion. Our portfolio is a diverse
mix of iconic and emerging brands. As the guardians of these brands
and the creators of innovative new products, we are dedicated to
the sustainable health of our people and our planet. To learn more,
visit http://www.kraftheinzcompany.com/ or follow us
on LinkedIn and Twitter.
Forward-Looking Statements
This press release contains a number of forward-looking
statements. Words such as “appreciate,” “drive,” “expect,” “give,”
“growth,” “improve,” “intend,” “invest,” “may,” “remain,” “return,”
“will,” and variations of such words and similar future or
conditional expressions are intended to identify forward-looking
statements. Examples of forward-looking statements include, but are
not limited to, statements regarding Kraft Heinz’s plans,
objectives, opportunities, investments, execution and growth. These
forward-looking statements include, but are not limited to,
statements regarding our beliefs and expectations relating to the
filing of the Annual Report on Form 10-K and Quarterly Report on
Form 10-Q and compliance with Nasdaq’s listing rules and with the
requirements outlined by Nasdaq. These forward-looking statements
are not guarantees of future performance and are subject to a
number of risks and uncertainties, many of which are difficult to
predict and beyond our control. Important factors that may cause
actual results to differ materially from those in the
forward-looking statements include, but are not limited to, the
risk that any announcements relating to the announced changes in
management, executive compensatory arrangements, financial
reporting and the filing of our periodic reports as required by the
Securities and Exchange Commission (the "SEC") could have adverse
effects on the market price of Kraft Heinz’s common stock, and the
risk that the announcements could have an adverse effect on the
ability of Kraft Heinz to retain customers and retain and hire key
personnel and maintain relationships with their suppliers and
customers and on their operating results and businesses generally,
risks related to the disruption of management time from ongoing
business operations due to the time and resources allocated to the
changes to our management team, executive compensatory
arrangements, financial reporting and the filing of the periodic
reports required by to be filed with the SEC, and further material
delays in Kraft Heinz’s completion of its financial reporting and
in the filing of the periodic reports required to be filed with the
SEC, including the possibility that the ongoing reviews and
investigations may identify additional errors, internal control
deficiencies, misstatements, or material weaknesses in Kraft
Heinz’s accounting practices. We disclaim and do not undertake any
obligation to update or revise any forward-looking statement in
this press release, except as required by applicable law or
regulation. For additional information on these and other factors
that could affect Kraft Heinz’s forward-looking statements, see
risk factors described under the heading “Risk Factors,” as they
may be amended from time to time, set forth in its filings with the
Securities and Exchange Commission, including its most recently
filed Annual Report on Form 10-K and subsequent Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K. Kraft Heinz disclaims
and does not undertake any obligation to update or revise any
forward-looking statement in this press release, except as required
by applicable law or regulation.
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version on businesswire.com: https://www.businesswire.com/news/home/20190607005472/en/
The Kraft Heinz CompanyMichael Mullen
(media)Michael.Mullen@kraftheinz.com
Christopher Jakubik, CFA (investors)ir@kraftheinz.com
Kraft Heinz (NASDAQ:KHC)
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