New owners move Burger King CEO to Heinz helm

[April 12, 2013]  NEW YORK (AP) -- The new owners of Heinz are tapping Burger King CEO Bernardo Hees as the company's next top executive, a move that installs one of their own at the helm of the ketchup maker.

It also signals other big changes could be in store for the 144-year-old company, which had been run by CEO William Johnson for the past 15 years.

The Pittsburgh-based company, which also makes baked beans, vinegar and Classico pasta sauce, had announced in February that it was being acquired and taken private by Warren Buffett's Berkshire Hathaway and 3G Capital, a private investment firm run by Brazilian billionaires.

The firms noted at the time that Berkshire would act as a financing partner while 3G would run the company. The appointment is further evidence that Heinz will be an active investment by 3G, in contrast to Buffett's traditionally more passive approach.

Hees, a 43-year-old Brazilian who is also a partner at 3G, became CEO of Burger King after the firm bought the struggling hamburger chain in 2010.

He has since slashed costs, revamped the chain's menu and launched a major marketing campaign intended to help it pose a greater threat to longtime rival McDonald's. The moves set the groundwork for Burger King's return to the stock market last spring in a deal that allowed 3G to more than recoup its investment while remaining the majority owner.

The firm's strategy of aggressive cost-cutting and overhauling at companies had prompted speculation that H.J. Heinz Co. could be in store for a major shakeup. To ease concerns among employees, Heinz and 3G noted when the deal was announced that Heinz was different because it's a relatively healthy business. But the radical changes Hees oversaw at Burger King Worldwide Inc. during his short tenure could nevertheless be a clue for what's in store for Heinz.

At the fast-food chain's headquarters in Miami, for example, executive offices were eliminated in favor of open spaces. Hees sits at a desk right outside the elevators on the seventh floor, appearing almost like a receptionist, flanked by his executive lieutenants.

A big board in front of their desks is updated with daily reports on sales and customer traffic globally and by region. Executives, including Hees, have color-coded boards by their desks displaying their annual goals. The idea is that everyone at the company can see each other's goals.

For now, Hees will remain CEO of Burger King and Johnson will remain CEO of Heinz until the deal is done. Johnson, who is 64, noted when the deal was announced that he had not discussed his future at the company with its new owners.

But he stands to walk away with a total of $212.7 million. The figure includes $40 million if he chose to leave at any time and an additional $16 million if he was fired. Johnson is also entitled to a payout of $99.7 million in vested stock and $57 million in deferred compensation benefits that he accrued over his 30-year career with Heinz.

Berkshire and 3G said they will discuss with Johnson a continuing role with the company.

Heinz shareholders are set to vote on the deal at a meeting April 30. The deal is expected to close in the second or third quarter and still awaits regulatory approval in some countries and the European Union. U.S. authorities have already signed off on it.

At Burger King Worldwide Inc., Chief Financial Officer Daniel Schwartz will become chief operating officer, then take the CEO job on July 1. He is also a partner at 3G.

On Wednesday, Burger King said it expects revenue at restaurants open at least a year fell 1.5 percent in the first quarter. The figure is considered critical because it strips out the effects of locations that opened or closed during the year.

Despite the moves made by Hees, the world's second-biggest hamburger chain says it needs to play up value more aggressively to compete with rivals.

Shares of Burger King were up almost 3 percent at $18.93. Heinz shares edged up 2 cents to $72.32.

[Associated Press; By CANDICE CHOI]

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