When the pandemic hit the restaurant industry last March, several chief executives took pay cuts to help their companies through a difficult time and as a gesture to the employees and franchisees suddenly worried about their financial futures.
As a result, the typical CEO of a publicly traded restaurant chain saw a decline in salary. Median base pay for industry chief executives declined 9.5%, according to a Restaurant Business analysis of data compiled using the Sentieo financial information site.
That didn’t mean CEOs walked away with less money last year. In fact, the typical CEO got a 1% bump in total pay package in 2020. That was lower than in past years, but it still represented a recovery for pay packages—especially considering where many thought they’d be in March.
That said, restaurant industry CEOs didn’t do as well as their counterparts elsewhere, a likely result of uncertainties regarding the future of the business and weak stock performance by many companies. Overall, CEO pay rose 5% last year, according to the consulting firm Aon, which itself was lower than the 9% of the previous year. The 5%, however, was “more in line with historical normal.”
Median pay for 29 restaurant industry chief executives for publicly traded chains was $4.96 million in 2020, slightly higher than the $4.9 million those executives’ chains paid their CEOs the previous year.
Salaries, however, were down. The typical CEO salary last year was $775,000 among executives who were at their chains in both 2019 and 2020. That was down from median pay of $856,526 in 2019.
To be sure, restaurant chief executives get most of their pay in the form of bonuses and stock options that publicly traded companies use as incentives to increase their stock valuations over time. Salary made up only 16% of executives’ pay in 2020, down from 18% in 2019.
The 1% pay increase is generally close to the 2% increase in valuation for restaurant stocks during the period for which the executives’ pay was determined—not all companies have fiscal years based on the calendar.
For instance, the stock price for Brinker International declined 43% during the company’s last fiscal year, which ended June 30. That can help explain the 41% decline in pay for its CEO, Wyman Roberts. He will likely do far better next year: Brinker’s stock in calendar 2020 rose 35% and it’s up another 16% year to date.
But companies take other factors into account when deciding pay packages. Executives sometimes get recruitment or retention bonuses or one-time awards designed to attract and keep good talent. Some companies gave breaks to CEOs last year given inherent challenges in the business.
Five executives got higher pay packages than in 2019 despite decreases in stock price: Carrols Restaurant Group’s Dan Accordino, Wendy’s Todd Penegor, Denny’s John Miller, Dave & Buster’s Brian Jenkins, and Dine Brands Global’s Stephen Joyce, who left that company at the end of the year.
A sixth, Red Robin CEO Paul Murphy, was paid 34% more than his predecessor Denny Marie Post despite a 41% decrease in stock price—Post, however, was not in the job all of 2019. Still, Murphy’s pay package is $700,000 more than the highest package Post received during her years at the burger chain.
On the other end of the spectrum, seven CEOs took pay cuts even as their stock prices increased. Two executives of note: Texas Roadhouse’s late CEO Kent Taylor, who took a 26% pay cut even as his company’s stock soared 39%, and Wingstop’s Charlie Morrison, whose pay fell 7% despite a 50% stock price increase.
Most restaurant executives will likely receive substantial pay increases this year, barring an unforeseen economic calamity.
Here is a look at the 10 highest-paid CEOs, beginning with the highest-paid executive in Chipotle’s Brian Niccol.