In H.J. Heinz Co. Chief Executive Officer Bill Johnson, Warren Buffett is getting a seasoned executive widely credited for turning the food company around. The question is whether Johnson, who is 64 and may reap about $100 million from the company's buyout, plans to stay on.
About H.J. Heinz Co.
» Is an $11.6 billion global company. Its profit in fiscal 2012 was
» Sells 650 million bottles of ketchup every year, claiming more than 50 percent of market share in the U.S., about 80 percent in the U.K.
» Is about more than ketchup. The company has 15 brands that account for more than two-thirds of its annual sales. Other brands include Ore-Ida potato products, Classico sauces, Bagel Bites mini pizzas, Weight Watchers' Smart Ones entrees, TGIFriday's snack foods and Plasmon infant nutrition products.
» Sells in 200 countries around the world and, in more than 50 of the countries, has the No. 1 or No. 2 market position.
» Employs about 32,000 people around the globe.
» Was founded in Sharpsburg, a suburb of Pittsburgh, in 1869 by entrepreneur Henry John Heinz.
» Ketchup wasn't the company's first product. That was horseradish, sold in glass bottles intended to show off its quality. The pickles featured in the company's “57 Varieties” logo also preceded the company's signature ketchup.
After announcing his Berkshire Hathaway Inc. and Jorge Paulo Lemann's 3G Capital Inc. had agreed to buy the iconic ketchup maker for about $23billion, Buffett told CNBC he hoped Johnson would remain CEO. In a conference call after the deal was announced, Johnson said he was “way too young” to retire. Still, Buffett told CNBC that 3G has the final say.
At a press conference later, Johnson said there hadn't yet been any discussions.
“Johnson has done a really good job,” Jack Russo, a consumer staples analyst for Edward Jones & Co. in St. Louis, said Thursday.
Russo said it's unlikely Johnson will stay.
“This is his chance to be a consultant,” he said. “I am sure he will advise on the sidelines. Berkshire and 3G will be running it going forward. They'll get his input big time.”
Johnson, who became Heinz's sixth CEO in 1998, has made about 40 acquisitions, helping expand the company's international business in such countries as Brazil and China. He streamlined the brand portfolio, boosted spending on marketing and ratcheted up innovation, including Dip & Squeeze ketchup packs. Heinz boosted sales to $11.7 billion in fiscal 2012, a gain of 8.8 percent from the year before. Sales growth is projected to slow to 0.7 percent in fiscal 2013, according to data compiled by Bloomberg.
“Johnson took Heinz back to basics and turned it around,” said Nancy Koehn, a professor at Harvard Business School in Cambridge, Mass. “In the years before he took charge, performance slid.”
Johnson worked at Ralston, Frito-Lay and Anderson-Clayton Foods before joining Heinz in 1982 as a general manager of new business. In 1988, as head of the poorly performing Heinz Pet Products, he revived the business. Four years later he did the same thing at Starkist Foods. He was named president and chief operating officer in 1996.
Johnson took charge of Heinz at a tough time. In the 1990s, the spread of retailers such as Walmart Stores Inc. and the growth of private-label brands put price pressure on Heinz's products amid a scramble for shelf space.
Johnson also was forced to contend with activist investor Nelson Peltz, who initiated a proxy battle in 2006, culminating in a vote to place Peltz's nominees on the board. After the proxy vote, Peltz and another of his nominees, Matthew Craig Walsh, joined the board.