Board Governance and Value Creation at US Foods: Activist vs. Management-Led Strategies

The battle for corporate governance at US Foods Holding Corp. (USFD) has long been a case study in the tension between activist investor agendas and management-led strategies. Sachem Head Capital Management’s repeated attempts to reshape the board and leadership of US Foods since 2022 contrast sharply with the company’s own approach to governance and value creation. As of August 2025, the results of these competing strategies offer a compelling lens through which to assess the merits of activist interventions versus organic management execution.

Sachem Head’s Activist Playbook

Sachem Head’s strategy at US Foods has centered on board control and leadership changes. In 2022, the firm demanded the appointment of seven directors and pushed for Bernardo Hees—a former executive at Kraft Heinz and America Latina Logística—as Executive Chairman. US Foods rejected these proposals, citing concerns over Hees’ track record, including controversies at previous companies [2]. Instead, the company opted for a more incremental approach, adding two independent directors and retaining its CEO, who had overseen a long-range strategy focused on margin expansion and operational efficiency [2].

By 2025, Sachem Head’s stake in US Foods had shrunk by $129.8 million, reflecting a strategic pivot to other holdings like Kenvue Inc. [1]. This shift suggests the firm’s confidence in US Foods’ management may have waned, or that it found more compelling opportunities elsewhere. Activist investors often prioritize short-term gains and boardroom influence, but Sachem Head’s reduced exposure raises questions about the sustainability of its approach at US Foods.

US Foods’ Management-Led Strategy: Governance and Financial Gains

US Foods’ response to the activist pressure has been to reinforce its governance structure and double down on operational improvements. The company separated the roles of Chairman and CEO, added executives with expertise in supply chain and technology, and emphasized long-term value creation over short-term fixes [2]. These changes coincided with a surge in financial performance. In Q2 2025, US Foods reported a 12.1% increase in Adjusted EBITDA to $548 million and a 28% rise in adjusted diluted EPS to $1.19, driven by cost efficiencies and market share gains [1]. The company also repurchased $250 million of shares, reducing net leverage to 2.6x and signaling confidence in its capital structure [1].

Critically, US Foods’ strategy has prioritized profitable growth over activist-driven cost-cutting. For example, its acquisitions of Smart Foodservice and Food Group were framed as long-term plays to enhance market share and profitability [4]. These moves, combined with digital transformation initiatives like routing optimization, have delivered operational efficiencies that outpace many activist-driven overhauls [6].

The Merits of Each Approach

Activist campaigns often promise quick wins through cost reductions and boardroom shakeups, but they risk destabilizing long-term strategies. Sachem Head’s demands for Hees’ appointment, for instance, were met with skepticism by US Foods, which highlighted the risks of repeating past governance missteps [2]. In contrast, US Foods’ management-led approach has yielded consistent financial gains without sacrificing strategic coherence. The company’s 56% total shareholder return (TSR) over one year and 90 basis point EBITDA margin expansion since pre-pandemic levels underscore the effectiveness of its balanced strategy [3].

Moreover, US Foods’ recent share repurchase of $211 million from Sachem Head at $52.28 per share in 2024 further illustrates management’s confidence in its own trajectory [2]. This transaction not only diluted Sachem Head’s influence but also signaled to the market that US Foods’s strategy was delivering value.

Conclusion

The US Foods saga highlights a broader debate in corporate governance: Can activist investors outperform management in creating value? In this case, US Foods’ management-led strategy has demonstrably outpaced Sachem Head’s activist bid. By focusing on governance stability, operational efficiency, and strategic acquisitions, US Foods has achieved robust financial results and maintained a healthy balance sheet. While activist campaigns can force necessary changes, they often lack the nuance and long-term vision required for sustained value creation. As Sachem Head shifts its focus to Kenvue and other targets, US Foods’s success serves as a reminder that patient, strategic management can be a formidable counter to even the most aggressive activist campaigns.

**Source:[1] US Foods Reports Second Quarter Fiscal Year 2025 Earnings [https://ir.usfoods.com/news-events/press-releases/news-details/2025/US-Foods-Reports-Second-Quarter-Fiscal-Year-2025-Earnings/default.aspx][2] US Foods Announces $211 Million Repurchase of Shares From Sachem Head Capital Management LP [https://ir.usfoods.com/news-events/press-releases/news-details/2024/US-Foods-Announces-211-Million-Repurchase-of-Shares-From-Sachem-Head-Capital-Management-LP/default.aspx][3] US Foods Sends Letter to Shareholders [https://ir.usfoods.com/news-events/press-releases/news-details/2022/US-Foods-Sends-Letter-to-Shareholders/default.aspx][4] US Foods Responds to Sachem Head Capital Management's Attempt to Take Over Control of Board of Directors [https://ir.usfoods.com/news-events/press-releases/news-details/2022/US-Foods-Responds-to-Sachem-Head-Capital-Managements-Attempt-to-Take-Over-Control-of-Board-of-Directors/default.aspx]