Two proxy advisory firms have recommended shareholders of Restaurant Brands International (QSR)(QSR.TO) vote against the company’s US$116.7 million compensation plan for executive chairman Patrick Doyle.
Institutional Shareholder Services Inc. (ISS) and Glass Lewis released reports this month highlighting concerns about the compensation package for Doyle ahead of RBI’s annual meeting on May 23.
RBI, the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, appointed former Domino’s Pizza chief executive Doyle as executive chairman in November. At the time, RBI touted Doyle as “one of the world’s most successful quick-service restaurant leaders” and said he would be “an important contributor to unlocking growth in the company.”
Doyle will not receive a salary or participate in the company’s annual bonus program, but his sign-on compensation package, which includes performance-based and time-vested stock options, is to total US$116.7 million over a period of five years. RBI reports its financial reports in U.S. dollars.
If RBI’s stock reaches the maximum stock performance targets outlined in the company’s proxy report, the total value of the sign-on package would be approximately $165 million, Glass Lewis said in its report.
ISS and Glass Lewis have each recommended that shareholders vote against the compensation plan for Doyle.
“There are significant concerns raised by the size of the new executive chairman Doyle’s equity awards, which the company values at $116.7 million, nearly 8 times the median total CEO pay at ISS-selected peers,” ISS wrote, adding that Doyle will receive $30 million “earned merely by the passage of time” and another $35.5 million in time-vesting stock options.
“While the remainder of the grant consists of [performance share units] with stock price goals, this structure may reward for temporary peaks in performance… in light of these factors, support for this proposal is not warranted.”
In its report, Glass Lewis called the company’s compensation practices “excessive” and also raised concerns about the time-vested compensation.
“Shareholders may reasonably question the Company's decision to grant approximately $65.1 million in solely time-based equity, of which a portion cliff vests at the end of five years, with the other portion vesting ratably over the next five years,” the advisory firm said in its report.
“On the basis of this decision alone, we do not believe shareholders should support the Company's pay decisions for the year in review.”
RBI said in its proxy statement released ahead of its annual general meeting that the board developed the compensation package “in order to attract Mr. Doyle to the role, which requires a significant commitment and investment of his time, and in light of other opportunities available to him.”
“Mr. Doyle’s compensation is entirely tied to creating shareholder value and reflects his unmatched performance as one of the world’s most successful quick service restaurant leaders. His compensation is aligned with the company and shareholder interests as benefits are substantially realized upon improvement in stock price,” RBI spokesperson Jane Almeida said in an emailed statement to Yahoo Finance Canada.
“Achievement of the performance elements of his award incentivizes Mr. Doyle to remain deeply engaged in his role throughout the entirety of the more than 5-year performance period and, if achieved, would represent significant outperformance and value creation for all shareholders.”
Glass Lewis also recommended shareholders vote against the election of four board members for a range of reasons, including Doyle’s compensation package. Glass Lewis urged shareholders to vote against the election of Alexandre Behring, the chair of RBI’s compensation committee, over Doyle’s compensation. The advisory firm recommended voting against Jordana Fribourg, citing concerns about experience and status as an independent board member; Marc Lemann, over concerns about board independence, and Ali Hedayat, a member of the nominating committee for the board. ISS recommended shareholders vote in favour of all nominated board directors.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.