Kraft Executives Set to Get Millions in Heinz Deal

Kraft Foods Group CEO John Cahill stands to take home millions once the company’s sale to H.J. Heinz closes, documents filed Wednesday show.

Other executives will also receive special payments tied to their work on the deal, and Kraft will cover an expected $16.2 million in costs for the excise taxes associated with those payments, the company said in a filing with U.S. regulators.

Shareholders of Kraft, based in the Chicago suburb of Northfield, Ill., are set to vote on the takeover by Pittsburgh-based Heinz on July 1. The deal, announced in late March, comes as packaged-food companies are trying to hold on to consumers who are looking for healthier, fresher fare. Heinz, best known for its ketchup, plans to increase distribution of Kraft foods like macaroni and cheese in international markets. The deal stands to create the world’s fifth-largest food-and-beverage company, to be called Kraft Heinz Co.

Cahill, Kraft’s chairman and CEO, would get $5 million soon after the deal closes. General Counsel and Corporate Secretary Kim Rucker is set to get $1.5 million, and Chief Financial Officer James Kehoe $500,000. The awards would be paid within 10 days of the closing of the merger, as long as the individuals continue to work through the closing of the deal, Kraft said.

The make-whole payments, or costs to cover the taxes, are expected to total $16.2 million, including $11.1 million for Cahill and $3.1 million for Rucker, Kraft said. The company said those payments are not extra compensation given to the executives, but would generally be paid to taxing authorities. They cover excise taxes, not ordinary income taxes.

The compensation committee of Kraft’s board approved the plans on June 22 with Heinz’s consent, Kraft said.

Kraft said Heinz has spoken with certain members of Kraft’s management team about continuing with Kraft Heinz once the deal closes. Kraft said no such discussions or compensation arrangements have been set so far.

Kraft also said that it entered into a memorandum of understanding Tuesday with plaintiffs of six lawsuits filed in connection with the pending deal providing for the settlement of all of the lawsuits.