Dive Brief:
- Sysco approved grants of performance-based stock awards for both its CEO, Kevin Hourican, and interim CFO, Brandon Sewell, as the food distribution company works to close its pending $29 billion acquisition of Jetro Restaurant Depot, according to a recent securities filing. The business announced its plans to acquire JRD in March, according to a press release at the time.
- The company granted Hourican a one-time performance share unit award with a grant date value of $2 million, while Sewell received a one-time PSU grant valued at $1 million, according to the filing Friday with the Securities and Exchange Commission. The company also approved a one-time cash award of $700,000 for its EVP and chief human resources officer, Ronald Phillips, in association with his leadership on Sysco’s “efforts to transform its AI efficiencies,” the company said in the Friday filing.
- The PSU grants are “intended by the Committee to ensure a continuity of leadership and facilitate a smooth transition through the integration of the assets acquired in the JRD Acquisition,” the company said in its Friday filing. Both grants are contingent upon the close of the JRD acquisition — anticipated to occur by the third quarter of 2027 — and will be forfeited and canceled should the acquisition not occur, Sysco said.
Dive Insight:
Also Friday, Sysco announced a revolving credit agreement with Bank of America to establish a $750 million loan facility, used to pay, in part, the cash consideration for its JRD Unico and Warehouse, Realty LLC acquisitions, as well as related fees and expenses, per the filing.
Sysco, dually headquartered in Houston, Texas and Whitestone, New York, agreed to acquire JRD in a transaction comprised of $21.6 billion in cash proceeds and 91.5 million Sysco shares, according to its March press release. Based on Sysco’s closing share price as of March 27 of about $81.80 per share, that represents an enterprise value of about $29.1 billion, according to the release.
JRD operates a “cash and carry” wholesale service for restaurants and grocery stores, where goods are sold directly to business buyers on premises, and buyers arrange their own transportation costs. Sysco described the acquisition as a “transformative transaction” which will enable the company to enter the “high-margin, growing, and resilient” cash and carry market, a channel with a $60 billion to $70 billion total addressable market, according to its March release.
The acquisition, however, has received pushback both from lawmakers on antitrust grounds and from independent restaurants. In an August letter, Reps. Jerrold Nadler, D-N.Y., and Maxwell Alejandro Frost, D-Fla., asked both the Department of Justice and the Federal Trade Commission to closely scrutinize the acquisition and its potential anticompetitive effects — noting concerns that the merger of the two entities could reduce competition and increase costs both for independent restaurants and consumers.
“The proposed merger would likely increase food prices when Americans are already facing an affordability crisis, and this merger would threaten the viability of independent restaurants, the trillion dollars they contribute to the economy, and the 12 million jobs they sustain,” the letter addressed to FTC Chairman Andrew Fergusan and Deputy Assistant Attorney General Omeed Assefi reads, arguing the two entities are direct competitors.
The Independent Restaurant Coalition, meanwhile, a trade association for restaurant and bar operators, has also called on the FTC to halt the merger, with IRC’s executive director Erika Polmar telling Food & Wine magazine that competition between Sysco and JDR helps with price stability, according to a June article.
Hourican in June during remarks at Deutsche Bank’s annual dbAccess Global Consumer Conference said Sysco had received a second request from the government asking for additional information regarding the merger, according to a transcript on Seeking Alpha. The data the government will review shows “there’s very little overlap between the two customer business profiles, Hourican said.
“This deal is about saving restaurants money, bringing the low-cost leader format to more communities,” he said. “And definitively, we will not be raising prices at restaurant depots stores. The government will see this when they look at their data, and we're confident the deal will get approved.”
The PSU awards “provide the opportunity” for both Hourican and Sewell to receive shares based on performance commencing with the closing of the JRD acquisition and ending on the third anniversary of the closing, according to the SEC filing. The number of shares to be paid out depends on the achievement of specific performance metrics, “with payouts ranging from 0% to 200% of the target” according to the Friday filing.
An alum of CVS Health, Hourican has served as CEO and chair of the board for the food distribution company since March 2024 — previously serving as Sysco’s top executive and president in joining the company in February 2020, according to his LinkedIn profile.
Sewell, meanwhile, took the interim CFO chair in March, stepping in after finance chief Kenny Cheung announced he would be resigning from his seat, according to a company filing at the time. Sewell has held various roles throughout his 12-year span at Sysco, most recently serving as SVP and CFO of its U.S. business, according to his LinkedIn profile. Before joining Sysco in 2014 as a senior finance manager, Sewell served four years at Dell Technologies in roles including senior manager, services finance.
