Announces Election of Joao M. Castro-Neves to the Board of Directors
PITTSBURGH & CHICAGO–(BUSINESS WIRE)–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.
“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.
Contacts
The Kraft Heinz Company
Michael Mullen (media)
[email protected]
Christopher Jakubik, CFA (investors)
[email protected]
