Restaurant chain CEOs made out like their shareholders last year: Their assets took a hit.
Median compensation for the top executives at publicly traded restaurant companies fell 7.5% in 2024, a number that largely reflects the generally weak performance such companies had last year.
Median restaurant stocks declined 4.8%, a number that stood out in a year in which the S&P 500 stock index rose 23%.
None of this is to say that restaurant companies didn’t throw money at top executives. After all, Starbucks paid $95 million in various bonuses and stock compensation to lure Brian Niccol away from Chipotle Mexican Grill. That made Niccol one of the highest paid executives on Wall Street, in any industry.
The bulk of that--$90.3 million—was in the form of long-term stock and other benefits. Starbucks did that largely to convince him to give up the benefits he’d get for sticking around at Chipotle to take on another turnaround.
Niccol’s pay package will certainly come back to earth next year. Or at least the earth occupied by high-level executives of major publicly traded consumer companies.
Niccol wasn’t the only CEO who received an outsized package to start a new job. Wendy’s Kirk Tanner ($17.3 million) and Shake Shack’s Rob Lynch ($13.1 million) both received stock-based incentives when they took their jobs last year.
Among returning CEOs whose pay was not bulked up with come-join-us incentives, Yum Brands CEO David Gibbs was the highest paid, with total compensation last year at $24.7 million, up 16% compared with his pay in 2023.
We collected the data on restaurant CEO compensation with the assistance of the financial services site AlphaSense. For chief executives of companies whose fiscal years do not coincide with the calendar, we relied on the most recent information for their pay packages.
Most pay from top executives is in the form of stock, which corporate boards frequently give to ensure alignment between CEO decisions and those of shareholders. And those awards are typically tied to performance and won’t be fully realized unless certain performance metrics are met.
Yum’s Gibbs, for instance, received $1.3 million in salary, the same he was paid in 2023. He also received $1.8 million in bonus pay, which was less than half what he received the year before. But he received $9.5 million in stock awards and $3 million in options. The biggest increase came in an $8.9 million change in the value of his pension.
Corporate boards typically want their CEOs’ actions to benefit shareholders, and so they usually use stock grants and awards to ensure their decisions are aimed in that direction.
As such, outside of restaurants, CEOs were generally rewarded for what was a strong 2024.
According to the Associated Press and the consulting firm Equilar, pay of CEOs in the S&P 500 rose 10% last year.
Restaurant chains struggled with weak overall sales and traffic. Total chain restaurant sales increased just 3% last year, according to data from Restaurant Business sister company Technomic. For fast-food chains, sales increased just 2.3%. For casual-dining chains, they increased 1.3%. Those two sectors represent the bulk of publicly traded restaurant companies.
All that led to company and stock price underperformance. It also led to a lot of change in the CEO role. Starbucks, which experienced its worst sales challenges—outside the pandemic—in 15 years dismissed CEO Laxman Narasimhan and replaced him with Niccol.
Several other restaurant CEOs left, too. Jack in the Box CEO Darin Harris left and was soon replaced by Lance Tucker. G.J. Hart left Red Robin this year. Dave Deno left Outback Steakhouse owner Bloomin’ Brands. Dave & Buster’s CEO Chris Morris left. Rob Lynch left Papa Johns for Shake Shack.
To be sure, restaurant chains CEOs get a lot more than their frontline workers. The ratio of CEO pay to median employee compensation for Niccol was one of the highest in the country at 6,666:1.
By contrast, the median pay ratio for CEOs of of public companies, according to Equilar, was 300:1. Among restaurants, actually, the median ratio was lower, at 283:1.
Fast-food chains with a number of company-owned restaurants like McDonald’s (1,014:1), Chipotle (1,148) and Taco Bell owner Yum Brands (1,440) had high ratios of CEO pay to median employee pay. Such ratios can frequently appear high due to the combination of large pay packages typically awarded to such executives along with the relatively low pay of frontline workers.
But restaurant ownership also plays a role, because a lot of restaurant brands don’t operate many or any actual restaurants and instead rely on franchisees, who are the ones that employ the workers.
Those companies tend to have lower pay ratios, such as Applebee’s and IHOP owner Dine Brands Global, where John Peyton’s pay package is 31.4 times the median pay for the company’s employees.
It also helps when the CEO themselves do not get an extensive pay package, such as with the company-operated salad chain Sweetgreen, where Jonathan Neman is paid less than $1 million and has a ratio of 39:1.