Form 4: Kenvue Director Jeffrey C. Smith Reports Acquisition of Deferred Share Units and Significant Indirect Holdings

Kenvue Inc. Director Jeffrey C. Smith reported the acquisition of 7,659 Deferred Share Units (DSUs) as part of director compensation, alongside his substantial indirect beneficial ownership of over 20.9 million common shares through Starboard Value LP.

Summary

• Jeffrey C. Smith, a Director and 10% Owner of Kenvue Inc. (KVUE), filed a Form 4 reporting changes in beneficial ownership.
• On May 22, 2025, Mr. Smith acquired 7,659 Deferred Share Units (DSUs) under the Issuer's Amended and Restated Deferred Fee Plan for Directors.
• These DSUs are valued at $23.5 per unit and will be settled in shares of Kenvue common stock upon the termination of Mr. Smith's directorship, with each DSU representing the right to receive one share.
• Following this transaction, Mr. Smith beneficially owns 9,656 DSUs.
• Additionally, Mr. Smith indirectly beneficially owns 20,929,938 shares of Kenvue Common Stock, $0.01 par value, through Starboard Value LP.
• As a Managing Member of Starboard Value LP, Mr. Smith may be deemed to beneficially own these securities, though he disclaims beneficial ownership except to the extent of his pecuniary interest.

Sentiment

Score: 7

Explanation: The filing indicates a routine compensation grant to a director and discloses significant existing indirect ownership. This is generally a neutral to slightly positive signal as it aligns director interests with shareholders, but does not imply new strategic or financial developments.

Positives

• The acquisition of Deferred Share Units by a director aligns management's interests with those of shareholders, as the value of these units is tied to the company's stock performance.
• The significant indirect ownership by Starboard Value LP, an activist investment firm, suggests a strong institutional interest and potential for strategic oversight in Kenvue.

Risks

• The filing itself does not detail specific risks to the company's operations or financial health, as it is a disclosure of insider ownership changes.

Future Outlook

The Deferred Share Units acquired by Mr. Smith are to be settled in shares of Kenvue's common stock upon the termination of his directorship, indicating a future conversion event tied to his tenure.

Management Comments

• Jeffrey C. Smith, as a Managing Member of Starboard Value LP, may be deemed to beneficially own the securities held by the Starboard Accounts for purposes of Section 16, but expressly disclaims beneficial ownership except to the extent of his pecuniary interest therein.
• The grant of Deferred Share Units was acquired under the Issuer's Amended and Restated Deferred Fee Plan for Directors.

Industry Context

This filing is a routine disclosure of insider ownership changes, common across all publicly traded companies. The involvement of Starboard Value LP, a prominent activist investor, suggests a focus on shareholder value creation within the consumer health industry, where Kenvue operates.

Comparison to Industry Standards

• The grant of Deferred Share Units (DSUs) as director compensation is a standard practice in corporate governance across various industries, aligning director incentives with long-term shareholder value.
• The indirect beneficial ownership through an investment fund like Starboard Value LP is typical for directors who are also principals of investment firms, such as those involved in activist investing, and is comparable to similar arrangements seen with directors from private equity or hedge funds on public company boards.

Corporate Governance

Related Party Transactions

• The acquisition of 7,659 Deferred Share Units by Jeffrey C. Smith, a director, constitutes a related party transaction as it is compensation provided by the issuer to a member of its board.
• Jeffrey C. Smith's indirect beneficial ownership of 20,929,938 shares through Starboard Value LP also represents a significant related party interest, given his role as a Managing Member of Starboard and his directorship at Kenvue.

Stakeholder Impact

• Shareholders: The DSU grant aligns the director's financial interests with the company's stock performance, potentially benefiting shareholders through improved governance and long-term focus.
• Management: The compensation structure provides incentives for the director to contribute to the company's long-term success.

Next Steps

• The Deferred Share Units will be settled in Kenvue common stock upon the termination of Jeffrey C. Smith's directorship.

Key Dates

Keywords

Kenvue, KVUE, SEC Form 4, Insider Transaction, Beneficial Ownership, Director Compensation, Deferred Share Units, Starboard Value LP, Equity Ownership, Corporate Governance