Pedro Navio
Kraft HeinzAbout Pedro Navio
Pedro Navio is Executive Vice President and President, North America at Kraft Heinz, responsible for U.S. and Canadian operations with a mandate to drive growth through consumer-first marketing, innovation, and people development . He was elevated to his current role effective December 31, 2023 (start of fiscal 2024) . His incentive mix is heavily performance-based, with annual PSUs tied to three-year relative TSR (40%), Organic Net Sales CAGR (30%), and cumulative Free Cash Flow (30%), capped at target if TSR is negative, and RSUs vesting 75% at year 3 and 25% at year 4 . Company-wide in 2024, net sales fell 3.0% YoY, Organic Net Sales declined 2.1%, Adjusted Operating Income was $5.4B (+1.2%), net cash from operations was $4.2B, and Free Cash Flow was $3.2B (+6.6%), framing the backdrop for executive performance assessment .
Past Roles
Not disclosed in the 2025 DEF 14A beyond current responsibilities .
External Roles
Not disclosed in the 2025 DEF 14A .
Fixed Compensation
| Item | 2024 | Notes |
|---|---|---|
| Annualized Base Salary ($) | $650,000 | Increased from $525,000 upon elevation to EVP & President, North America, effective Dec 31, 2023 |
| Salary Paid ($) | $647,596 | Reported in Summary Compensation Table |
| Target Bonus (% of Salary) | 175% | Raised from 150% effective Dec 31, 2023 |
| Actual PBP Bonus Paid ($) | $335,064 | Based on 48% financial multiplier and 62% individual performance score |
| Bonus Investment Plan Match ($) | $626,122 | Matching RSUs on elected bonus investment |
2024 NEO annual cash incentive payouts were 26%–43% of target overall, reflecting rigorous goals and the change to a 60%/30%/10% financial score weighting (Adjusted Operating Income / Organic Net Sales / Free Cash Flow Conversion) with a 120% cap at maximum .
Performance Compensation
Annual Equity Awards (2024 grant targets)
| Instrument | Target Value ($) | Vesting | Performance Metrics / Terms |
|---|---|---|---|
| PSUs | $2,318,750 | 75% on 3rd anniversary, 25% on 4th | 40% three-year average annual relative TSR; 30% three-year Organic Net Sales CAGR; 30% three-year cumulative Free Cash Flow; max 150%; TSR capped at target if negative |
| RSUs | $993,750 | 75% on 3rd anniversary, 25% on 4th | Time-based; aligns retention and ownership |
| Bonus Investment Plan Matching RSUs | Derived from PBP and election | 3-year cliff for 2024 awards (company-wide policy); updated for 2025 awards to 50% at year 2 and 50% at year 3 | Requires employee investment of 35% of net bonus into company stock |
Grants of Plan-Based Awards (shares for 2024)
| Grant Type | Grant Date | Threshold (#) | Target (#) | Max (#) | Grant-Date Fair Value ($) |
|---|---|---|---|---|---|
| PSUs | 3/01/2024 | 16,501 | 66,005 | 99,008 | 1,923,122 |
| RSUs | 3/01/2024 | — | 28,289 | — | 993,793 |
| Matching RSUs | 3/01/2024 | — | 17,823 | — | 626,122 |
2024 PBP Structure and Navio’s Results
| Component | Company Framework | Navio 2024 Result |
|---|---|---|
| Financial multiplier | Weighted average: 60% Adjusted Operating Income, 30% Organic Net Sales, 10% Free Cash Flow Conversion; 50% threshold, 100% target, 120% max | 48% |
| Individual performance (MBO score) | KPI scorecard set by Compensation Committee | 62% |
| PBP payout earned ($) | Paid in Q1 2025 (cash or via Bonus Investment Plan) | $335,064 |
Detailed 2024 Navio KPIs and weights:
- Deliver Financial Results: Global Adjusted Gross Profit Margin (20%); global market share (20%) .
- Generate Long-Term Sustainable Growth: progress on brand growth system (18%); Away From Home growth (18%); innovation initiatives (10%) .
- Attract and Retain Talent: North America engagement score improvement (14%) .
Equity Ownership & Alignment
| Metric | Value |
|---|---|
| Shares owned | 93,107 |
| Shares acquirable within 60 days (RSUs/options) | 119,874 |
| Total beneficial ownership | 212,981; <1% of outstanding |
| Ownership guidelines (officers) | 3x base salary; compliance required within 5 years; all current NEOs in compliance |
| Anti-hedging/pledging | Hedging, short-selling, options on KHC stock, and pledging/margin accounts prohibited under Insider Trading Policy |
Outstanding awards (as of Dec 27, 2024):
| Grant Type | Grant Date | Quantity | Market/Strike |
|---|---|---|---|
| PSUs (2024) | 3/1/2024 | 66,005 unearned | Payout depends on 3-year metrics |
| RSUs (2024) | 3/1/2024 | 29,660 unvested | Time-based vest |
| Matching RSUs (2024) | 3/1/2024 | 18,686 unvested | 3-year cliff (2024 awards) |
| Options (2018) | 3/1/2018 | 52,325 | $66.89 strike; OTM vs $30.68 close on 12/27/2024 |
| Options (2021) | 3/1/2021 | 977 | $37.09 strike; OTM vs $30.68 |
| Options (2022) | 3/1/2022 | 66,572 (1,939 annual + 64,633 merit/retention) | $38.68 strike; OTM vs $30.68 |
With KHC closing at $30.68 on the last trading day of fiscal 2024, Navio’s outstanding options at $37.09–$66.89 strikes were out-of-the-money, reducing near-term exercise-related selling pressure . Company-wide, shares are sometimes withheld for taxes on RSU vesting, a source of routine insider-related supply offset by buybacks .
Key vesting timing markers (company policies):
- RSUs (2023 grants): 75% on Mar 1, 2026; 25% on Mar 1, 2027 .
- RSUs (2024 grants): 75% on Mar 1, 2027; 25% on Mar 1, 2028 .
- PSUs (2023/2024 grants): 75% on 3rd anniversary; 25% on 4th anniversary, subject to performance certification .
- Matching RSUs: 2022 vest Mar 1, 2025; 2023 vest Mar 1, 2026; 2024 vest Mar 1, 2027; updated to 50% at year 2 and 50% at year 3 for 2025 awards .
Employment Terms
| Provision | Terms |
|---|---|
| Severance Pay Plan (non-CIC) | Senior executives receive 18 months of base salary, Company-paid COBRA for 18 months, outplacement services, and vesting acceleration per award terms upon involuntary termination without cause (subject to release and covenants) . |
| Change-in-Control (CIC) Severance Plan | For non-CEO executive officers: 1.5x (base salary + target PBP), prorated target PBP for year of termination, Company-paid COBRA for 18 months, outplacement; double-trigger; equity vesting/acceleration per award terms (subject to release and restrictive covenants) . |
| Restrictive covenants | Non-compete and non-solicit required to receive severance/CIC benefits; duration equals months used in severance calculation . |
| Clawback policy | Robust clawback terms maintained; Compensation Committee engages independent consultant; no excise tax gross-ups; no single-trigger CIC; no hedging/pledging . |
| Deferred comp/pension | No defined benefit pension or nonqualified deferred compensation for NEOs; benefits provided via defined contribution plans and standard health/welfare programs . |
Potential payments to Navio (hypothetical as of Dec 27, 2024):
| Scenario | Salary ($) | Bonus ($) | Accelerated Equity Intrinsic Value ($) | Benefits ($) | Outplacement ($) | Total ($) |
|---|---|---|---|---|---|---|
| Involuntary termination without cause | 971,394 | — | 2,404,472 | 32,161 | 4,000 | 3,412,027 |
| Termination upon CIC | 971,394 | 1,706,250 | 2,404,472 | 32,161 | 4,000 | 5,118,277 |
| Death/Disability | — | 335,064 | 9,115,519 | — | — | 9,450,583 |
| Retirement | — | 335,064 | 5,063,458 | — | — | 5,398,522 |
Equity acceleration percentages by grant/award are specified in plan terms and differ by scenario (e.g., portions of 2022–2023 RSUs/PSUs vest under severance/CIC; 2024 RSUs/PSUs generally forfeited in those scenarios), with intrinsic values computed against $30.68 closing price on 12/27/2024 .
Compensation Structure Analysis
- Year-over-year changes: Navio’s base salary rose from $525,000 to $650,000 and target bonus increased from 150% to 175% on elevation to North America chief role, increasing fixed and at-risk cash opportunity while maintaining equity-heavy long-term incentives .
- Equity mix: Annual equity awards continue to be weighted 70% PSUs / 30% RSUs, with performance caps and longer vesting promoting multi-year alignment; matching RSUs add retention and ownership .
- Performance rigor: Shift from single EBITDA metric to a broader 60% AOI / 30% Organic Net Sales / 10% FCF Conversion financial multiplier tightened payout alignment; Navio’s 48% financial multiplier and 62% individual score drove below-target cash payout .
- Governance safeguards: Double-trigger CIC, robust clawback, anti-hedging/pledging, and stock ownership guidelines mitigate misalignment risks; no tax gross-ups or enhanced executive-only benefits .
Say-on-Pay & Shareholder Feedback
- Say-on-Pay approval: ~96% support in 2024; program maintained for 2025 reflecting investor feedback .
- Ongoing engagement: Broad outreach across investors with program changes to enhance transparency and focus on capital allocation in PBP from 2025 onward .
Investment Implications
- Pay-for-performance alignment: High PSU weighting tied to multi-year TSR, growth, and FCF with capped TSR ensures alignment but may constrain upside payouts in negative TSR scenarios; expect vesting events clustered around March 2026–2028 for RSUs/PSUs (potential supply), balanced by buybacks and tax-withholding practices .
- Selling pressure assessment: Navio’s options are currently out-of-the-money versus the $30.68 FY2024 close (strikes $37.09–$66.89), reducing near-term option-exercise selling risk; RSU/PSU vesting remains the primary observable supply catalyst .
- Retention/continuity: Severance and CIC structures (18 months severance; 1.5x base+target bonus in CIC; double-trigger) plus ownership requirements and anti-hedging/pledging policies support retention and reduce misalignment and reputational risk .
- Execution signal: Navio’s 2024 individual score (62%) and below-target payout reflect challenging operating context and KPI attainment; monitoring North America share gains, Away From Home growth, and innovation KPIs will be key for future PSU realization and bonus outcomes .
- Benchmarking risk: Compensation is peer-benchmarked to Consumer Staples/FMCG groups, with performance measured against a 13-name TSR peer subset—relative under/over-performance will directly impact PSU payouts and realized pay .
Overall, compensation architecture incentivizes multi-year value creation with governance safeguards; near-term trading signals are tied to scheduled vesting windows (Mar 2025–2028) and company buyback cadence, with limited pressure from options given current strikes vs price .