WK Kellogg Co appointed Gary Pilnick as new CEO

Item 5.02. 
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. 


Resignation of Directors 

Effective upon the consummation of the Distribution, Gordon Paulson and Norma Barnes-Euresti (collectively, the “Resigning Directors”) resigned from the Board of Directors (the “Board”) of WK Kellogg. The Resigning Directors' resignation from the Board was not due to any disagreement with WK Kellogg relating to the operations, practices or policies of WK Kellogg. 


Appointment of Directors and Officers 

Effective upon the consummation of the Distribution, Zack Gund, Michael Corbo, Ramón Murguía, Mindy Sherwood, R. David Banyard, Jr. and Julio Nemeth were appointed as directors of WK Kellogg. Gary Pilnick was appointed Chair of the Board effective as of the consummation of the Distribution. Gary Pilnick and Wendy Arlin, who had been appointed to the Board effective July 30, 2023 and September 26, 2023, respectively, continue to serve as directors of WK Kellogg following the Distribution. Messrs. Pilnick and Gund are serving as Class I directors. Messrs. Corbo and Murguía and Ms. Sherwood are serving as Class II directors. Ms. Arlin and Messrs. Banyard and Nemeth are serving as Class III directors. Each class of directors is elected until the third annual meeting of the shareholders following the Spin-Off. The initial terms of the Class I, Class II and Class III directors will expire in 2024, 2025 and 2026, respectively. 

The Information Statement of WK Kellogg included as an exhibit to the Registration Statement filed with the Commission on July 24, 2023 (as amended, the “Information Statement”) under the section entitled “Management” contains the biographical information about and compensation information for the newly appointed directors. Such information is incorporated by reference in this Item 5.02. There are no arrangements or understandings between any of the directors named above and any other person pursuant to which such director was appointed to the Board. There are no other relationships between the directors named above and WK Kellogg that would require disclosure pursuant to Item 404(a) of Regulation S-K. 

In connection with their joining the Board, in addition to Ms. Arlin who had previously already been appointed as a member and the Chair of the Audit Committee on September 26, 2023, certain other directors of WK Kellogg were appointed to the Audit Committee, Compensation and Talent Management Committee, and Nominating and Governance Committees of the Board effective as of the consummation of the Distribution. The current composition of each committee is as follows: 


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the Audit Committee consists of Wendy Arlin, R. David Banyard, Jr., Julio Nemeth and Mike Corbo, with Ms. Arlin serving as the Chair of the Audit Committee; 


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the Compensation and Talent Management Committee consists of R. David Banyard, Jr., Wendy Arlin, Zack Gund, Ramón Murguía and Mindy Sherwood, with Mr. Banyard serving as Chair of the Compensation and Talent Management Committee; and 


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the Nominating and Governance Committee consists of Zack Gund, Mike Corbo, Ramón Murguía, Julio Nemeth and Mindy Sherwood, with Mr. Gund serving as Chair of the Nominating and Governance Committee. 


In addition, effective as of the consummation of the Distribution, Gary Pilnick was appointed to serve as the Chief Executive Officer of WK Kellogg, Norma Barnes-Euresti was appointed to serve as the Chief Legal Officer and Secretary of WK Kellogg, Sherry Brice was appointed to serve as the Chief Supply Chain Officer of WK Kellogg, Bruce Brown was appointed to serve as the Chief Customer Officer of WK Kellogg and Doug VanDeVelde was appointed to serve as the Chief Growth Officer of WK Kellogg. David McKinstray, Chief Financial Officer of WK Kellogg, and Lisa Walter, Chief Accounting Officer of WK Kellogg, who had been appointed to their respective positions effective September 8, 2023, continue to serve as Chief Financial Officer and Chief Accounting Officer, respectively, of WK Kellogg following the Distribution. 

The Information Statement under the sections entitled “Management” and “Compensation Discussion and Analysis” contains the biographical information about and compensation information for the newly appointed officers, respectively. Such information is incorporated by reference in this Item 5.02. 

Non-Employee Director Compensation 

Following the consummation of the Spin-Off, WK Kellogg's non-employee directors will be entitled to receive annual cash and equity compensation in connection with their services as follows: 

Cash Retainers 

Each non-employee director will receive an annual cash retainer of $95,000. Any non-employee director who serves as the Non-Executive Board Chair in the future will receive an additional annual cash retainer of $100,000. Each non-employee director who serves as the Lead Director will receive an additional annual cash retainer of $35,000. Chairs of the following committees will be entitled to the following applicable additional annual cash retainers: (i) Audit Committee Chair: $20,000; (ii) Compensation and Talent Management Committee Chair: $20,000; and (iii) Nominating and Governance Committee Chair: $15,000. 


Equity Grants 

Each non-employee director will receive an annual grant of restricted stock units with an award value of $140,000 on terms and conditions to be determined by the Board after the Distribution Date. 

WK Kellogg Co Compensation Plans 

WK Kellogg has adopted the WK Kellogg Co 2023 Long-Term Incentive Plan, effective as of the Distribution Date (the “LTIP”), the WK Kellogg Co 2023 Employee Stock Purchase Plan, effective as of the Distribution Date (the “ESPP”), and other compensation and benefit plans, including the WK Kellogg Co Supplemental Savings and Investment Plan, effective as of August 4, 2023 (the “Supplemental S&I Plan”), the WK Kellogg Co Severance Benefit Plan, effective as of July 30, 2023 (the “Severance Plan”), the WK Kellogg Co Change of Control Severance Policy for Key Executive, effective as of the Distribution Date (the “Change of Control Policy”), and the WK Kellogg Co Executive Survivor Income Plan, effective as of the Distribution Date (the “Survivor Income Plan” and together with the LTIP, the ESPP, the Supplemental S&I Plan, the Severance Plan and the Change of Control Policy, the “Compensation Plans”). 

The LTIP was adopted to assume the converted equity incentive awards held by employees of WK Kellogg or one of its subsidiaries, including those held by our executive officers, in each case as a result of the Spin-Off, and to grant equity incentive awards to be made upon or after the Spin-Off. The LTIP provides for the grant of stock options, stock appreciation rights, time- or performance-based restricted shares, time- or performance-based restricted share units and other cash-based or stock-based awards to employees, officers, non-employee directors or certain other service providers of WK Kellogg or its subsidiaries as may be selected by the committee of the Board of WK Kellogg administering the LTIP (the “Committee”). Treatment of awards granted under the LTIP upon a termination of the grantee's employment or service will generally be determined by the Committee and set forth in the applicable award agreement, subject to certain exceptions provided in the LTIP. In the event of a “change of control” (as defined in the LTIP), unless otherwise determined by the Committee, any outstanding awards assumed, continued or substituted by the successor to WK Kellogg will be subject to “double-trigger” accelerated vesting upon an involuntary termination of employment or service of the grantee within two years following the change of control. In the event outstanding awards are not assumed, continued or substituted by the successor in connection with the change of control, such awards will be subject to “single trigger” accelerated vesting upon the change of control. 

The ESPP allows participants, including our executive officers, to acquire WK Kellogg stock at up to 15% discount to the market price. Under applicable tax law, a participant in the ESPP may purchase up to $25,000 in fair market value, as defined in the plan, of WK Kellogg common stock in any calendar year. 

The Supplemental S&I Plan is intended to provide our executive officers with benefits comparable to those which would be available under our tax-qualified plan if the Internal Revenue Service regulations did not include limits on covered compensation and benefits. The Supplemental S&I Plan uses the same benefit formulas as our broad-based tax-qualified plan, and uses the same type of compensation to determine benefit amounts. The Supplemental S&I Plan also provides for matching contributions to certain eligible employees. 

The Severance Plan provides severance benefits to employees, including the named executive officers, who are terminated by WK Kellogg under certain circumstances, subject to their execution of a general release and compliance with certain restrictive covenants. 

The Change of Control Policy provides benefits to our executives, including the named executive officers, in connection with a “change of control” in the event an executive is terminated without “cause” or the executive terminates employment for “good reason” (each as defined in the policy), in each case within two years following the change of control (or if the executive reasonably demonstrates that such qualifying termination has been initiated by a third party that has taken steps reasonably calculated to effect a change of control or otherwise has arisen in connection with or in anticipation of a change of control). Severance benefits under the Change of Control Policy 


consist of (i) a lump sum payment of a prorated target annual bonus, (ii) a lump sum payment of the sum of the executive's annual base salary and target annual bonus, multiplied by the applicable “group multiple” (not to exceed two), (iii) a lump sum payment equal to the actuarial equivalent of the benefit the executive would have received for a number of years (equal to the applicable group multiple) of additional participation under our retirement plans, (iv) continued participation in health and welfare benefit plans for a number of years (equal to the applicable group multiple) following termination, (v) up to two years' vesting credit for equity incentive awards (depending on the applicable group multiple) and (vi) outplacement services, in each case subject to the executive's execution of a general release and compliance with certain restrictive covenants. 

The Survivor Income Plan provides beneficiaries of eligible executives with WK Kellogg-funded life insurance policies upon the executive's death. 

Retention Agreement and General Release 

Effective on the Distribution Date, WK Kellogg assumed the obligations under that certain Retention Agreement and General Release by and between Doug VanDeVelde and Kellanova, dated August 22, 2022, pursuant to which Mr. VanDeVelde is entitled to receive a retention award consisting of restricted stock units, which fully vested in connection with the Spin-Off and a cash bonus (the “Retention Bonus”). Information on the Retention Bonus is included in the Information Statement under the caption “Compensation Discussion and Analysis,” on pages 137 to 138, which pages are incorporated herein by reference. Such information relating to the Retention Bonus as set forth in the Information Statement does not purport to be complete and is qualified in its entirety by reference to the full text of the Retention Agreement and General Release, which is filed as Exhibit 10.14 to this Current Report on Form 8-K and is incorporated herein by reference. 

Recognition Awards 

On May 11, 2023, David McKinstray, Bruce Brown and Sherry Brice received recognition awards, in the amount of $94,200, $103,000 and $85,300, respectively, in the form of a cash bonus (the “Recognition Bonus”) pursuant to a Recognition Award Agreement and General Release (the “Recognition Award Agreement”) with Kellanova, which was assumed by WK Kellogg in connection with the Spin-Off, for their significant contributions in connection with the Spin-Off. The Recognition Bonus will be paid shortly after the Distribution Date, subject to the recipient's continued employment and execution of a general release of claims. 

Executive Officer Salary Increases 

Each of WK Kellogg named executive officers will have the following base salary rates, target annual incentive plan (“AIP”) opportunity and target annual long-term incentive (“LTI”) opportunity, effective as of the Distribution Date: (i) for Gary Pilnick, $1,000,000 annual base salary, $1,100,000 target AIP and $3,300,000 target annual LTI; (ii) for David McKinstray, $500,000 annual base salary, $400,000 target AIP and $800,000 target annual LTI; (iii) for Doug VanDeVelde, $550,000 annual base salary, $357,500 target AIP and $700,000 target annual LTI; (iv) for Bruce Brown, $455,000 annual base salary, $295,750 target AIP and $500,000 target annual LTI; and (v) for Sherry Brice, $400,000 annual base salary, $240,000 target AIP and $300,000 target annual LTI. 

The foregoing descriptions of the Compensation Plans and Recognition Bonuses and the applicable terms and conditions of the benefits and awards as set forth under this Item 5.02 do not purport to be complete and are qualified in their entirety by reference to the full text of such plans and awards, which are filed as Exhibits 10.7, 10.8, 10.9, 10.10, 10.11, 10.12, 10.13, 10.15 and 10.16, respectively, to this Current Report on Form 8-K, and are incorporated herein by reference.