SCHEDULE 13D/A: JAB Indulgence Sells Krispy Kreme Shares to Bernardo Hees, Aligns Incentives with Long-Term Performance

JAB Indulgence B.V. has sold 694,445 shares of Krispy Kreme, Inc. common stock to Bernardo Hees for $3 million, concurrently granting him significant performance-based equity incentives to align his interests with the company's long-term value creation.

Summary

• JAB Indulgence B.V. (Seller) has entered into a Stock Purchase Agreement with Bernardo Hees (Buyer) dated April 23, 2025.
• Under the agreement, Seller will sell 694,445 shares of Krispy Kreme, Inc. Common Stock to Buyer for an aggregate purchase price of $3,000,000.
• The purchase price per share is equal to the closing price on the New York Stock Exchange on April 22, 2025, which calculates to approximately $4.32 per share.
• Concurrent with the share purchase, JAB Indulgence will grant Mr. Hees a 'Matching Option' to purchase an additional 4,166,670 shares.
• The Matching Option's vesting is subject to a service condition (5th anniversary of Purchase Date with continued service to JAB Holdings B.V.) and a performance condition based on Krispy Kreme's volume weighted average closing price (VWAP) during a 10-trading day period following the Q1 earnings release of the fifth anniversary year, with vesting percentages tied to VWAP targets ranging from $4.31 (0%) to $17.00 (100%).
• Mr. Hees will also receive a one-time incentive award of 173,612 'Sign-On Bonus RSUs' (Restricted Stock Units), which will vest 100% on the fifth anniversary of the Purchase Date, subject to continued consulting services.
• Both the Matching Option and Sign-On Bonus RSUs include provisions for pro-rata vesting upon a 'Qualifying Termination' and accelerated vesting upon a 'Change in Control' or a 'JAB Sell-Down' under specific conditions.
• Mr. Hees is required to hold all Purchased Shares until the Matching Option and Sign-On Bonus RSUs have vested or been forfeited, with a penalty of forfeiture of all incentives if Purchased Shares are sold without JAB Indulgence's consent.
• JAB Indulgence B.V. and its parent entities (JAB Holdings B.V., JAB Investments S.a r.l., JAB Holding Company S.a r.l., Joh. A. Benckiser S.a r.l., Agnaten SE, and Lucresca SE) collectively beneficially own 74,190,990 shares, representing 43.56% of Krispy Kreme's issued and outstanding shares as of February 14, 2025.

Sentiment

Score: 7

Explanation: The document describes a strategic transaction that aligns a significant investor/consultant's interests with the long-term performance of Krispy Kreme through substantial equity and performance-based incentives. This is generally positive for corporate governance and strategic direction, indicating confidence from a major shareholder.

Positives

• The transaction aligns the interests of Bernardo Hees, a sophisticated investor and consultant to JAB Holdings, with the long-term performance of Krispy Kreme through a significant personal share purchase and substantial performance-based equity incentives.
• The performance-based vesting of the Matching Option, tied to Krispy Kreme's share price reaching targets up to $17.00, provides a strong incentive for value creation.
• The long-term nature of the vesting schedules (5 years) indicates a commitment to sustained growth and stability.

Risks

• The Purchased Shares have not been registered under the Securities Act of 1933 and are being sold in an exempt transaction, meaning they must be held indefinitely unless subsequently registered or sold pursuant to an exemption.
• The Purchased Shares will bear a restrictive legend and may be subject to a stop-transfer order, limiting liquidity.
• Buyer (Bernardo Hees) acknowledges that Seller (JAB Indulgence) and its affiliates may possess nonpublic information regarding the Company that has not been disclosed and may impact the value of the Purchased Shares, and Buyer waives any claim based on non-disclosure of such information.
• Buyer must bear the economic risk of holding the Purchased Shares for an indefinite period and can afford to suffer the complete loss of the investment.
• The Matching Option and Sign-On Bonus RSUs are subject to forfeiture if service conditions are not met, restrictive covenants are breached, or if Purchased Shares are sold without consent.

Future Outlook

The document outlines a long-term incentive structure for Bernardo Hees, with equity awards vesting over five years and performance conditions tied to Krispy Kreme's share price reaching targets up to $17.00. This indicates a strategic alignment for sustained growth and value creation, suggesting a positive long-term outlook for the company's performance as envisioned by a major shareholder and its consultant.

Industry Context

This transaction reflects a common strategy by major shareholders, particularly private equity-backed entities like JAB, to align the interests of key consultants or executives with the long-term performance of their portfolio companies. Bernardo Hees, a prominent figure with a strong track record in consumer goods, is being incentivized to contribute to Krispy Kreme's success, suggesting a strategic focus on enhancing the company's value within the broader food and beverage industry.

Comparison to Industry Standards

• The use of a stock purchase combined with performance-based options and restricted stock units is a standard practice in executive compensation and strategic partnerships across various industries, particularly in private equity-backed companies aiming for long-term value creation.
• The five-year vesting period for the Matching Option and Sign-On Bonus RSUs is a typical long-term incentive horizon, comparable to similar arrangements seen in public and private companies to ensure sustained commitment.
• The performance-based vesting tied to specific Volume Weighted Average Price (VWAP) targets (e.g., up to $17.00 for 100% vesting) provides clear, measurable benchmarks for success, a common feature in high-level incentive plans designed to drive shareholder returns.

Corporate Governance

Related Party Transactions

• JAB Indulgence B.V., a direct subsidiary of JAB Holdings B.V. and an indirect subsidiary of other JAB entities (JAB Investments S.a r.l., JAB Holding Company S.a r.l., Joh. A. Benckiser S.a r.l., Agnaten SE, Lucresca SE), is selling shares to Bernardo Hees.
• Bernardo Hees will provide consulting services to JAB Holdings B.V. with respect to its indirect interest in Krispy Kreme, establishing a direct relationship between the buyer and the seller's parent entity.
• The incentive awards (Matching Option and Sign-On Bonus RSUs) are granted by JAB Indulgence B.V. to Bernardo Hees, further solidifying the related party nature of the transaction.

Stakeholder Impact

• **Shareholders**: Potential positive impact due to the alignment of a key consultant's interests with the long-term share price performance, which could lead to more focused strategic initiatives and improved shareholder value.
• **Management**: The incentive structure for Bernardo Hees, a consultant to the major shareholder, could influence strategic decisions and operational focus within Krispy Kreme, potentially complementing the existing management's efforts.
• **JAB Holdings**: The transaction solidifies JAB's strategic relationship with Bernardo Hees, leveraging his expertise for their investment in Krispy Kreme and aligning his incentives with their long-term investment goals.

Next Steps

• The closing of the purchase and sale of the 694,445 Purchased Shares is expected to take place as soon as reasonably practicable following the Commencement Date (as defined in the Services Agreement), but no later than April 23, 2025.
• On the Purchase Date, JAB Indulgence will grant Bernardo Hees the Matching Option (4,166,670 shares) and Sign-On Bonus RSUs (173,612 units).
• Seller will use reasonable best efforts to cause Krispy Kreme to register the resale of the Purchased Shares and shares delivered from the Matching Option and Sign-On Bonus RSUs to cover exercise price and taxes.
• Bernardo Hees will continue to provide consulting services to JAB Holdings B.V. with respect to its indirect interest in Krispy Kreme.
• The Matching Option and Sign-On Bonus RSUs will vest over a five-year period, subject to service and performance conditions, with potential for accelerated vesting under specific circumstances (Qualifying Termination, Change in Control, JAB Sell-Down).

Key Dates

Recommendation

Keywords

Krispy Kreme, JAB Indulgence, Bernardo Hees, Stock Purchase Agreement, Common Stock, Shares, Restricted Stock Units, Options, Incentive Plan, SEC Filing, Schedule 13D/A, Corporate Governance, Investment, Shareholder Alignment, Equity Incentives