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Exclusive-US Foods seeks new top executives amid investor pressure -sources -Breaking


© Reuters. FILE PHOTO : Scott Ferguson (Managing Partner, Portfolio Manager, Sachem Head Capital Management LP) presents at the 2018 Sohn Investment Conference held in New York City. April 23, 2018, U.S. REUTERS/Brendan McDermid

Svea Herbst, Bayliss and Jessica DiNapoli

(Reuters) – US Foods Holdings (NYSE) Corp seeks to hire a chief operation officer to take over from its chief financial officers. The move comes as the company faces increased pressure from an activist investor firm to enhance its operations.

US Foods: The largest U.S. food distributor Sysco Corp (NYSE:) has faced labor shortages since the COVID-19 pandemic.

Although demand for US Foods has increased in recent months due to customers returning to the restaurants that it supplies, its profitability is still not back to pre-pandemic levels as it has to pay higher wages to keep workers.

Sachem Head Capital Management LP is a New York-based hedge fund firm that Scott Ferguson runs. It stated in a regulatory filing that it held 5.1% of US Foods common stock. The company may also seek to meet with management and form a group with other shareholders.

The document also stated that it was being advised Avis Budget (NASDAQ) Group Inc Executive Chairman Bernardo Hees. He was previously a 3G Capital Partner and had a reputation as an advocate for drastic cost cutting. He was the chief executive officer at Burger King Worldwide Holdings Inc, then CEO of Kraft Heinz (NASDAQ) Co.

US Foods’ management shakeup is the most clear indication that it intends to make changes in its defense against any possible Sachem Head board challenge.

Since 2015 when Stuart Schuette, then chief executive at American Tire Distributors, announced that he was leaving the company’s chief operating officer position. According to sources, it is currently looking for chief operating officers, who spoke on condition of anonymity.

Dirk Locascio is US Foods CFO depuis 2017. Sources said that the company is currently searching for a new CFO.

Pietro Satriano, who was named US Foods CEO after Sysco’s blockade of the sale by a federal court in 2015, succeeded him. A regulatory filing indicates that he is still not certain how long the company will keep him there. There are no employment agreements between any of his executives. Sources claim that the US Foods Board of Directors has been discussing Satriano’s succession for some time.

“The company does not comment on rumors,” a company spokesperson said.

US Foods was previously owned by buyout firms Clayton, Dubilier & Rice LLC and KKR & Co (NYSE:) Inc, which took it public in 2016. The company’s market capitalization is $8.2 million.

US Foods has worked to combat the rising inflation in prices and labor shortages, leading to higher inventory write-offs.

Analysts at BTIG say that it sought to improve the working environment by limiting how long a new worker works, and providing more bonuses.

Its profitability remained at 15.3% during the three months ended July 3, as compared to 17.7% for the same period two years earlier, prior to the pandemic. On Monday, the company will release its quarterly earnings.

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