8-K
SYSCO CORP (SYY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 12, 2020
Sysco Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 1-06544 | 74-1648137 |
|---|---|---|
| (State or Other Jurisdiction<br> <br>of Incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
| 1390 Enclave Parkway, Houston, TX 77077-2099 | ||
| --- | ||
| (Address of principal executive offices) (zip code) |
Registrant’s telephone number, including area code: (281) 584-1390
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common stock, $1.00 Par Value | SYY | New York Stock Exchange |
| 1.25% Notes due June 2023 | SYY23 | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
SECTION 5 – CORPORATE GOVERNANCE AND MANAGEMENT
| ITEM 5.02 | DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS. |
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On November 16, 2020, the Board of Directors (the “Board”) of Sysco Corporation (the “Company”) named Mr. Aaron E. Alt as Executive Vice President and Chief Financial Officer of the Company, with an expected effective date of December 7, 2020 (the “Effective Date”). Mr. Alt will succeed Mr. Joel T. Grade, who will be transitioning to serve as the Company’s Executive Vice President, Business Development, effective as of the Effective Date.
Mr. Alt, 49, most recently served as Senior Vice President and Chief Financial Officer of Sally Beauty Holdings (“SBH”), an international specialty retailer and distributor of professional beauty supplies, and President of Sally Beauty Supply, the world’s largest retailer of professional beauty supplies, based in Dallas, Texas, since October 2018. Mr. Alt previously served as SBH’s Senior Vice President, Chief Financial Officer and Chief Administrative Officer from May 2018 to October 2018. Prior to his appointment with SBH, Mr. Alt served in various executive leadership roles on increasing responsibility at Target Corporation, an American retailing company and the second-largest discount retailer in the U.S., including Senior Vice President, Operations from March 2017 to May 2018; Senior Vice President Grocery Transformation from January 2016 to March 2017; Chief Executive Officer, Target Canada Co. from January 2015 to May 2018; Senior Vice President, Finance from August 2015 to January 2016; Senior Vice President, Tax and Treasurer from March 2015 to August 2015; Senior Vice President, Business Development, Risk Management, Tax and Treasurer from October 2013 to March 2015; and Senior Vice President, Business Development and Treasurer from September 2012 to October 2013. Prior to joining Target Corporation, Mr. Alt held several senior level positions with Sara Lee Corporation from 2004 to 2012. Mr. Alt was a partner at the law firm of Kirkland & Ellis in London from 2003 to 2004. Mr. Alt holds a J.D. from Harvard Law School, an M.B.A. from J.L. Kellogg School of Management at Northwestern University and a B.A. in History and Political Science from Northwestern University.
Executive Vice President and Chief Financial Officer Compensation Arrangements
In connection with Mr. Alt’s appointment as Executive Vice President and Chief Financial Officer, Mr. Alt entered into a letter agreement with the Company, pursuant to which he will be eligible to receive an annual base salary of $775,000 and will be eligible to receive (i) a target short-term cash incentive opportunity equal to 50% of his annual base salary for the performance period from December 27, 2020 to July 3, 2021, and (ii) annual equity awards in the amounts and on such terms as are determined by the Compensation and Leadership Development Committee of the Board. For the Company’s fiscal year 2021, he will receive an annual equity award under the Company’s fiscal year 2021 long-term incentive program with a grant date fair value equal to 325% of his annual base salary that consists 50% of performance share units, 30% of stock options and 20% of restricted stock units.
In addition, Mr. Alt will receive a one-time cash payment equal to $365,000 (the “sign-on bonus”). The sign-on bonus is primarily intended to compensate Mr. Alt for the forfeiture of his outstanding equity awards issued by his current employer that were scheduled to vest in May 2021, with a portion of the sign-on bonus awarded in lieu of a pro-rated award for the current six-month performance period (i.e., June 28, 2020 to December 26, 2020) under the Company’s short-term incentive program. The after-tax amount of the sign-on bonus must be repaid to the Company if Mr. Alt is terminated for cause or resigns prior to the first anniversary of his start date, and 50% of the after-tax amount of the sign-on bonus must be repaid if he is terminated for cause or resigns on or after the first anniversary but prior to the second anniversary of the start date.
The foregoing description of the terms and conditions of the letter agreement with Mr. Alt, does not purport to be complete and is qualified in its entirety by reference to such agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Executive Vice President, Business Development Compensation Arrangements
In connection with his appointment as Executive Vice President, Business Development, with respect to fiscal year 2021, Mr. Grade will continue to receive an annual base salary of $690,000 and will continue to be eligible to earn a target annual cash incentive opportunity equal to 125% of his annual base salary.
A copy of the press release issued by the Company on November 17, 2020, is attached as Exhibit 99.1 hereto.
SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS. |
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| (a) | Financial Statements of Businesses Acquired. |
| --- | --- |
Not applicable.
| (b) | Exhibits. |
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Not applicable.
| (c) | Exhibits. |
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Not applicable.
| (d) | Exhibits. |
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| Exhibit<br> <br>Number | Description |
| --- | --- |
| 10.1 | Letter Agreement, dated as of November 12, 2020, by and between Aaron E. Alt and Sysco Corporation. |
| 99.1 | Press Release dated as of November 17, 2020. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Sysco Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Sysco Corporation | ||
|---|---|---|
| Date: November 17, 2020 | By: | /s/ Eve M. McFadden |
| Eve M. McFadden | ||
| Senior Vice President, Legal, General Counsel and Corporate Secretary |
EX-10.1
EXHIBIT 10.1
Sysco Corporation 1390 Enclave Parkway Houston, Texas 77077T 281.584.1390 sysco.com
PERSONAL AND CONFIDENTIAL
November 12, 2020
Mr. Aaron E. Alt
Delivered via email: aaralt@yahoo.com
Dear Aaron:
I am delighted to offer you the important leadership role of Executive Vice President & Chief Financial Officer reporting to me, with a start date of December 7, 2020. The following is a summary of your compensation package:
| • | Your annual base salary will be $775,000. Your next review date is expected to be September 2021.<br> |
|---|---|
| • | For Fiscal Year 2021, you will be eligible for to participate in Sysco’s Management Incentive Plan (MIP) and<br>receive a bonus with actual payment based on your annual base salary, the Company’s financial performance and your strategic bonus objectives. Your target bonus will be 100% of your base pay. Your incentive award calculation for FY2021 will be<br>prorated based on your time in this role. Eligibility for the bonus is contingent upon your continued employment with Sysco through the end of the fiscal year. An overview of the FY2021 Short-term Incentive Plan is attached for your information.<br> |
| --- | --- |
| • | You will receive a long-term incentive award for FY2021 representing 325% of your annual base salary. This award<br>will comprise 30% stock options, 50% performance share units (PSUs), and 20% restricted stock units (RSUs), as approved by the Compensation & Leadership Development Committee of the Board of Directors. The stock options and RSUs will vest<br>one third on each anniversary date of the grant over three years, and the PSUs will vest at the end of FY2022 contingent upon achieving the performance criteria associated with the FY2021-FY2022 two-year<br>performance period. An overview of the FY2021 Long-term Incentive Plan is attached for your information. Additional details about these grants and their respective terms will be provided at the time of grant, which will be within 60 days of<br>your start date. |
| --- | --- |
Mr. Aaron E. Alt
Page 2
| • | You will receive a one-time, initial<br>sign-on bonus of $300,000, payable within 30 days of the commencement of your employment with Sysco, less applicable withholding for taxes. In the event you voluntarily resign or are terminated for cause (as<br>determined by Sysco in its sole discretion) within one year after receipt of the sign-on bonus payment, you agree to repay 100% of the net (after tax) amount of the<br>sign-on bonus within thirty (30) days of your termination date. In the event you voluntarily resign or are terminated for cause (as determined by Sysco in its sole discretion) within two years after<br>receipt of the sign-on bonus payment, you agree to repay 50% of the net (after tax) amount of the applicable sign-on bonus within thirty (30) days of your<br>termination date. |
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| • | You will be eligible for full benefits with medical, dental, vision, and life / AD&D insurance effective the<br>first day of the month coincident with or next following 60 days of employment. An overview of the available benefits can be viewed at www.syscobenefits.com. During this eligibility waiting period, you will be eligible for reimbursement of out-of-pocket premiums associated with continuation of previous health care coverage under COBRA for you and any eligible dependents. |
| --- | --- |
| • | You will be eligible to enroll in the Sysco Corporate Employees 401(k) Plan and Employee Stock Purchase Plan<br>effective on your hire date. |
| --- | --- |
| • | In addition to Sysco’s standard employee benefits, you will also be eligible to participate in the following<br>significant executive benefit programs: |
| --- | --- |
| • | Management Savings Plan. This is a non-qualified<br>deferred compensation program that allows you to defer salary and bonus on a pre-tax basis above amounts limited under the company’s 401(k) plan. |
| --- | --- |
| • | A Disability Income Plan that will provide you with benefits in case of personal disability.<br> |
| --- | --- |
| • | Additional group life and accidental death and dismemberment benefits. |
| --- | --- |
An overview of these executive rewards programs is attached.
| • | Upon commencing employment as a member Sysco’s Senior Executive Leadership team, you will be subject to<br>certain protective covenants agreements. You will also be eligible for executive severance benefits in the case of termination without cause, resignation for Good Reason, or Change in Control. |
|---|---|
| • | As an Executive Vice President of Sysco Corporation, you will be required to comply with the Stock Ownership<br>Requirements as set forth in Sysco’s Corporate Governance Guidelines. Five years from your appointment to this role you will be required to own Sysco stock valued at four times your salary. During that five-year period, you will be subject to<br>retention requirements until your holdings meet or exceed the ownership requirements. |
| --- | --- |
| • | You will become eligible for relocation benefits in accordance with the terms and conditions of Sysco’s<br>current domestic Executive Vice President relocation policy, a copy of which is attached. |
| --- | --- |
| • | Notwithstanding the foregoing, if your employment with Sysco is terminated for any reason other than death,<br>disability, or an involuntary termination without cause, within |
| --- | --- |
Mr. Aaron E. Alt
Page 3
| <br>one year following the reimbursement of any such moving or rental expenses or payment for loss-on-sale of your<br>current residence, you will be required to pay back to Sysco 100% of the amount of any such reimbursement (plus the amount of any tax gross-up paid on such amounts) and loss-on-sale payment. If your employment with Sysco is terminated within 13-24 months following reimbursement, then you will be required to pay back to Sysco 50% of the<br>relocation expenses. |
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This offer is contingent upon approval by the Board of Directors of your appointment as an executive officer of Sysco Corporation and successful completion of the pre-employment drug and background check process. Please be advised that this letter is not intended to create or imply any contract or contractual rights between you and Sysco Corporation. Any employee may terminate his/her employment at any time, with or without reason, and the company retains the same right.
Aaron, we are excited to have you join the Sysco team and look forward to your contributions to our continued success.
If you have any questions please contact Eve McFadden or me.
Sincerely,
/s/ Kevin P. Hourican
Kevin P. Hourican
President and Chief Executive Officer
Agreed and Accepted:
| /s/ Aaron E. Alt <br>11/12/2020 |
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| Aaron E. Alt Date |
Attachments: Sysco Executive Rewards Overview
Sysco FY2021 MIP Long-term Incentive Plan Brochure
Sysco FY2021 Short-term Incentive Brochure
Sysco Corporation EVP US Domestic Relocation Policy
cc: Eve M. McFadden, Senior Vice President, Legal, General Counsel & Corporate Secretary
Erin C. Packwood, Vice President, Total Rewards & HR Transformation
Sebastian Skalany, Sr. Director, Compensation
EX-99.1
EXHIBIT 99.1
| For more information contact: ****<br> <br><br><br><br>Shannon Mutschler<br> <br>Media Contact<br><br><br>Mutschler.Shannon@corp.sysco.com<br> <br>T 281-584-4059 | Rachel Lee<br> <br>Investor Contact<br><br><br>lee.rachel@corp.sysco.com<br> <br>T 281-436-7815 |
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SYSCO NAMES AARON E. ALT CHIEF FINANCIAL OFFICER
Joel Grade Assumes Role of Executive Vice President, Business Development
HOUSTON, Nov. 17, 2020 - Sysco Corporation (NYSE: SYY), the leading global foodservice distribution company, named Aaron E. Alt executive vice president and chief financial officer, effective Dec. 7, 2020. Joel Grade, currently executive vice president and chief financial officer, will assume a newly created role of executive vice president, business development. In this capacity, Joel will be responsible for accelerating both organic and inorganic sales growth through new business development, including strengthening future M&A capabilities. Joel’s extensive experience in operations and finance make him uniquely qualified for this role as Sysco looks to accelerate its business transformation.
Alt most recently served as chief financial officer and senior vice president of Sally Beauty Holdings, an international specialty retailer and wholesale distributor of professional beauty supplies, and president of Sally Beauty Supply, a 3,000-store retailer of professional beauty supplies in the United States and Canada. He is a proven finance leader with over 20 years of experience and a track record of delivering transformative change and profitable growth.
“I’m pleased to welcome Aaron to our executive leadership team,” said Kevin Hourican, Sysco’s president and chief executive officer. “He brings with him experience overseeing customer-centric businesses, a dynamic and flexible leadership approach as well as a proven ability to drive value creation at large organizations. The addition of Aaron to our executive leadership team will further Sysco’s ability to serve
our customers and drive accelerated, profitable growth. I’m also confident that with his depth of expertise in our industry and his strong financial and operations experience, Joel will be instrumental in accelerating our growth and market leadership position in his new role.”
Alt said, “I’m excited to join Sysco and help drive long-term, profitable growth for the Company. Sysco has a strong balance sheet, ample liquidity and a compelling strategy to profitably grow the business through its strategic transformation. I look forward to working with the Sysco team to execute on the Company’s growth objectives.”
Alt’s experience also includes executive leadership roles in finance, operations and grocery transformation at Target Corporation. Prior to joining Target, he held senior-level finance and operations positions with Sara Lee Corporation, including chief financial officer of its North American retail and foodservice businesses. Before that, he was a partner at law firm Kirkland & Ellis in London, with a focus on mergers and acquisitions.
Alt holds an M.B.A. from the J.L. Kellogg School of Management at Northwestern University, a J.D. from Harvard Law School and a B.A. in History and Political Science from Northwestern University.
About Sysco
Sysco is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. With more than 57,000 associates, the company operates 326 distribution facilities worldwide and serves more than 625,000 customer locations. For fiscal 2020 that ended June 27, 2020, the company generated sales of more than $52 billion. Information about our CSR program, including Sysco’s 2020 Corporate Social Responsibility Report, can be found at www.sysco.com/csr2020report.
For more information, visit www.sysco.com or connect with Sysco on Facebook at www.facebook.com/SyscoCorporation or Twitter at https://twitter.com/Sysco. For important news and information regarding Sysco, visit the Investor Relations section of the company’s Internet home page at investors.sysco.com, which Sysco plans to use as a primary channel for publishing key information to its investors, some of which may contain material and previously non-public information. Investors should also follow us at www.twitter.com/SyscoStock and download the Sysco IR App, available on the iTunes App Store and the Google Play Market. In addition, investors should continue to review our news releases and filings with the SEC. It is possible that the information we disclose through any of these channels of distribution could be deemed to be material information.
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