Higher labor costs and supply chain challenges have apparently earned retention bonuses for executives at Carrols Restaurant Group.
The big Burger King franchisee is giving the bonuses, which range from $30,000 to $100,000, on March 15, according to recent federal securities filings.
In giving out the retention bonuses, Carrols cited “several significant and unforeseen challenges,” including labor shortages and rising labor and commodity costs.
Those challenges have “materially impacted the profitability and our stock price,” Carrols said. In addition, the company is looking for a new CEO to replace Dan Accordino, who will retire on June 30.
The largest retention bonus, $100,000, will go to CFO Anthony Hull. Richard Gross, the chief development officer, will get $50,000. Nathan Mucher, chief information officer, will get $35,000. And Gerald DiGenova, VP of human resources, will get $30,000.
Retention bonuses are not uncommon among publicly traded companies. They are often given at times of upheaval, such as a bankruptcy filing, for instance, or when a company is a potential sale target.
Yet it’s indicative of the challenges that Carrols has had, at least when it comes to Wall Street. The company’s stock price has been cut in half over the past year, due in part to concerns about the performance of Burger King—Carrols operates more than 1,000 units in the brand—and more recently because of those labor and commodity costs.
Burger King’s same-store sales have weakened over the past year—despite an industry that had otherwise improved—which has hurt Carrols stock. The performance of the company on Wall Street was enough to get Accordino to defend the business last year. “We certainly believe our current stock price doesn’t reflect our current level of free-cash-flow generation,” he told investors in March.
Carrols is the only major publicly traded franchisee in the U.S., though plenty of international operators are publicly traded. Investors have been especially concerned about the company’s cost issues. Labor and commodity costs soared last year. Carrols said its labor costs rose 3.5 percentage points in the third quarter, costing the company an additional $15 million.
Beef costs, meanwhile, rose 15.5%. “We do know that the inflationary cost pressures we experienced during the third quarter were not expected to the degree that they impacted our industry,” Accordino said in October.
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