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Kraft's Cahill entitled to US$19.9m golden parachute
[NEW YORK]John Cahill, who agreed to sell Kraft Foods Group Inc to HJ Heinz after just a few months as chief executive officer of the macaroni-and-cheese maker, is entitled to a US$19.9 million golden parachute.
The payment would include more than US$9 million in cash and about US$10.6 million in equity, according to a filing Monday tied to the deal. Mr Cahill joined Kraft in 2012 from private equity firm Ripplewood Holdings and became chairman of the Northfield, Illinois-based foodmaker as it separated from Mondelez International Inc. He became CEO in December.
The sale to Heinz, which is owned by 3G Capital and Warren Buffett's Berkshire Hathaway Inc, would create the third- largest food and beverage company in North America. 3G slashed thousands of jobs at Heinz after buying the ketchup maker in 2013 and has promised more cost cuts after taking over Northfield, Illinois-based Kraft.
"What we have not been thrilled about is some of our execution," Mr Cahill said on a call with investors after the merger was announced in March. "And so, our plan was to really focus on driving, much like 3G has done at Heinz, a much leaner organization with much better decision making. Fortunately, we have this transaction now where we're bringing in management that can actually have this happen deeper and faster." The golden parachute applies if he's terminated without cause within two years of the completion of the deal. It would also be triggered if he leaves because of a reduction in his duties or a salary cut.
Heinz has said that its CEO, Bernardo Hees, will lead the combined company. Mr Cahill will become vice chairman and lead an operations-and strategy-committee after the close of the deal. The panel will also include one member each from Berkshire and 3G, according the filing Monday.
Mr Cahill was paid $4.1 million in 2014 for his role as Kraft executive chairman, and W Anthony Vernon, who had been CEO, got more than US$8 million, according to a company filing.
Basil Maglaris, a representative for Kraft, had no immediate comment on the golden parachute. The pay data was also included in a separate filing in April tied to the deal.
Kraft shares have advanced about 36 percent this year, with most of the gain on the day the Heinz deal was announced.
"The Kraft board believes that Kraft has made significant progress as a company since its separation from Mondelez International Inc. in 2012, but that Kraft has not yet realized its full potential -- and that a combination with Heinz offers a scaled, global platform to realize such full potential as part of the combined company," according to the documents.