For the first time in years, the CEO of the country’s largest restaurant chain also happens to be its highest paid.
Steve Easterbrook, who led a turnaround at McDonald’s that led to a 40% stock price increase in 2017, received a total pay package of $21.8 million, making him the highest paid public company executive in the industry, according to a Restaurant Business analysis of CEO pay packages.
Easterbrook bested Howard Schultz, the executive chairman at Starbucks who received $18 million the year he stepped down as CEO.
McDonald’s and Starbucks are the two most valuable restaurant companies in the world, based on market capitalization. In recent years Starbucks, Chipotle and Yum Brands would employ the highest paid restaurant CEO.
Overall, CEO pay among publicly traded restaurant companies increased slightly, to $3.51 million from $3.47 million.
The increase was somewhat surprising, given that industry stock prices fell by 2% on average last year, while restaurant chain same-store sales struggled and CEO changes were common. Seven of the 38 chief executives we tracked for the analysis were new to their jobs in 2017.
To be sure, restaurant industry pay did not keep pace with the chief executives of the largest publicly traded companies by revenue, whose pay increased 5%, according to the research firm Equilar.
Median pay at the 10 largest restaurant chains by total revenue—McDonald’s, Starbucks, Darden Restaurants, Yum Brands, Restaurant International, Chipotle, Bloomin’ Brands, Brinker International, Cracker Barrel and Domino’s—was $7.7 million, up 1% over the year before.
The bulk of most CEOs’ pay packages come in the form of stock and option grants, though some executives can receive substantial cash incentives on top of salaries—which range from about $500,000 to $1.5 million.
Major CEO changes in the industry have led to significant changes to pay packages restaurant companies are paying.
For instance, in 2016 Chipotle paid its two co-CEOs, Steve Ells and Monty Moran, a combined $31 million. At the end of the year Moran left the company, and Ells saw his pay package decline more than 29% after the chain struggled to generate sales and the company’s stock price declined 23%.
As such, the amount Chipotle actually paid the people to fill the CEO role declined 65% in 2017.
It will change further this year: Chipotle has since replaced Ells with former Taco Bell CEO Brian Niccol.
Schultz, meanwhile, was the highest paid, single CEO in 2015 and 2016. His replacement, Kevin Johnson, received a pay package of $11.5 million in the company’s 2017 fiscal year, or 47% lower than Schultz’s 2016 pay.
But Schultz was CEO for most of Starbucks 2017 fiscal year, which ended Oct. 1. And he is still active as executive chairman of the chain he founded. His 2017 pay, $18 million, was down by 17.6%.
Johnson received a similar amount in 2017 that he did in 2016. Starbucks thus paid its top two executives nearly 12% less than it did in 2016. Starbucks stock increased 3% in 2017.
A few CEOs stepped into jobs and received substantial pay packages right away. Stephen Joyce was named CEO of what is now Dine Brands Global, parent of Applebee’s and IHOP, last August. He immediately received a pay package valued at more than $7 million—more than predecessor Julie Stewart received in either 2015 or 2016.
But all but $1 million of that was in the form of stock awards, most of which were sign-on bonuses and restricted stock.
Similarly, Richard Stockinger was named CEO last year of Fiesta Restaurant Group, parent company of struggling chains Pollo Tropical and Taco Cabana. He received sign-on grants and stock awards that built his package to $3.4 million—well over double the pay of his predecessor Tim Taft.
The biggest single change in CEO pay, by far, came at Biglari Holdings, where CEO Sardar Biglari’s pay skyrocketed 817% to $8.3 million from $900,000 the year before.
Biglari’s pay package is unusual, and his pay package is tied to the increase in his company’s value. That package increased thanks to a $53.5 million income tax benefit that bolstered Biglari Holdings’ earnings.
A few CEOs were the beneficiaries of notably strong performances, in addition to Easterbrook and his 42% pay increase.
Charlie Morrison, CEO at Wingstop, saw his pay package nearly double to nearly $2.8 million in 2017. But his pay package is still below the $3.5 million median for industry chief executives.
On the other hand, some CEOs saw their pay packages cut. John Schnatter, who opted to step down as CEO at the end of 2017, saw his pay package fall by 22% to $2.8 million. Jack in the Box CEO Lenny Comma’s pay package fell by nearly 50%, to $4.7 million from $9.4 million.
Other notable changes in pay include Greg Creed, the CEO of Taco Bell and KFC owner Yum Brands whose pay fell 20% to $12.4 million.
The acquisition of Popeyes didn’t lead to higher pay for Burger King owner Restaurant Brands International CEO Daniel Schwartz, whose pay package declined 33% to $4.2 million.
Schwartz isn’t even the highest paid executive at his company. Josh Kobza, who was CFO last year and has since been named chief technology and development officer, made $5.3 million. Of course, that was down from $14.4 million the year before, when Kobza was the highest paid, non-CEO in the industry.