A number of former employees, executives and suppliers who spoke to CNBC say the culture at Kraft Heinz incentivized employees to first and foremost hit their targets, which could heavily impact annual pay.
Monday, Kraft Heinz said that following a subpoena from the Securities and Exchange Commission, it discovered employee misconduct in procurement.
Bad actors can show up at any company, and the kinds of contracts Kraft Heinz had were complicated, say industry experts. The net charge of the broader investigation, $181 million, is a small fraction of the company's roughly $26 billion in sales.
Each year, Kraft Heinz as a company must meet a target for earnings before interest, taxes, depreciation and amortization for the majority of its executives to get their bonuses, which for some could more than double their salary. In 2017, nearly no one got a bonus, say former executives. That year, Kraft Heinz only grew its organic EBITDA by 3%, according to the company's proxy, less than the minimum of 6.
3G has been lauded for its ability to quickly integrate deals and slash costs. In two years, it extracted roughly $1.7 billion in savings from Kraft Heinz. To help achieve those goals, it laid off thousands of employees, including those with years of experience in the consumer goods industry. None of the business unit heads in place when Kraft and Heinz merged are in the same role, and many have left.
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