Perhaps it’s fitting, in a year when restaurant profits fell so much and so did stock prices, that three of the 10 highest-paid restaurant industry CEOs of last year aren’t even CEOs right now.
And the biggest payday was handed to a highly regarded former executive as a recruiting tool.
Overall, CEO pay at publicly traded restaurant chains declined by 35% last year, according to a Restaurant Business analysis of SEC documents. That was far more than the 17% median stock price decline for restaurants in 2022.
But it also reflects the volatility of the CEO position and the challenges that many of the top restaurants faced last year, which led to several high-profile departures.
Of the 10 highest-paid CEOs, three either left the company last year or have departed since. Jose Cil, who had been CEO of Restaurant Brands International, resigned and was replaced earlier this year by Josh Kobza, the chief operating officer. Cil was the industry’s third-highest paid chief executive last year, with a total pay package of $17.1 million.
Meanwhile, RBI handed a massive payday to Patrick Doyle to become executive chairman of the owner of Burger King, Tim Hortons, Popeyes Louisiana Kitchen and Firehouse Subs.
Doyle, who led Domino’s for eight years before his 2018 retirement, was enticed with $116.7 million in stock and option awards that could be worth far more than that if RBI wins over investors.
Then there’s Starbucks, whose CEO Kevin Johnson retired in March and was replaced by his predecessor, Howard Schultz (who did not receive a salary but was shuttled around the world to speak with company employees). Starbucks paid $374,557, mostly for use of the company aircraft, security and other expenses connected with his time as interim CEO.
But Starbucks also paid Laxman Narasimhan $8.8 million to spend a half-year serving as Schultz’s understudy before he took over as permanent CEO in March.
By comparison, the retirement of Gene Lee, effective in May, was benign. We calculated averages based on companies’ most recently completed fiscal year, which in Darden’s case ended on May 31, 2022, which is when Lee handed over the reins to Rick Cardenas.
A few other executives either retired or left for other jobs, such as Ritch Allison, who ceded the CEO job at Domino’s to Russ Weiner, and Wyman Roberts, who left the top job at Chili’s owner Brinker International and was replaced by Kevin Hochman. Paul Murphy retired at Red Robin and was soon replaced by GJ Hart. And then there was Charlie Morrison, who left Wingstop unexpectedly last year to take over as CEO of Salad and Go.
None of the departed CEOs was replaced with a woman, continuing a generally poor track record of hiring women into the top job.
When Darden completes its acquisition of Ruth’s Chris Hospitality Group this year, it will leave just one female CEO—Cracker Barrel’s Sandra Cochran, who is also the longest tenured among public company CEOs. That would effectively mean just 3% of publicly traded restaurant companies are run by women. That is lower than the already-low 5% average from a study of CEOs of S&P 500 companies by the consulting firm Equilar.
The decline in pay among restaurant company CEOs did run counter to at least one broader measure of pay among public company executives.
According to Equilar and the Associated Press, median pay for CEOs of S&P 500 companies was $14.8 million. That was up 0.9% over 2021 levels, the slowest rate of growth since 2015. But that was still far higher than the rate of pay growth for restaurant CEOs last year.
But two-thirds of S&P 500 company CEOs saw their pay decrease last year, according to the Wall Street Journal. Three-quarters of restaurant company CEOs saw a decline in pay last year.
Restaurant CEO pay takes a plunge
The top paid executive, non-executive-chairman division, was McDonald’s CEO Chris Kempczinski, who took an 11% decline in pay last year but still finished with the top pay package at $17.8 million, down from $20.1 million in 2021. David Gibbs, the top paid CEO in 2021 (outside of a few CEOs of newly public companies awarded stock following IPOs), received a 40% pay cut to $16.7 million.
For the executives, 2021 proved to be a strong year with surprisingly robust profitability and sales growth. Stocks surged that year and valuations followed right with it, which proved to be a boon to the finances of the executive officers running those companies. CEO pay in 2021 increased 18%.
Last year, however, food and labor costs soared, wiping out profitability at many companies. Wall Street hammered restaurants, worried about the impact from increases in their two primary costs. CEO pay naturally followed suit.
To be sure, the typical CEO still makes a lot more than the typical employee at a restaurant. Of the companies we looked at, the median pay ratio of CEO to employee pay was 234:1, meaning the typical industry CEO was paid 234 times the compensation of a typical employee under them.
Those ratios vary widely among restaurant companies, as those with a higher number of company restaurants with part-time workers will have higher ratios and those with no company restaurants will have low ratios. Dine Brands Global, owner of IHOP, Applebee’s and Fuzzy’s Taco Shop, has a ratio of just 28:1. Yum Brands, owner of KFC, Taco Bell and Pizza Hut, has a ratio of 1,603:1. McDonald’s (1,224:1) and Chipotle (1,073:1) were the other two companies with ratios above 1,000.
All that said, expect CEO pay to rebound again this year. Profitability among many publicly traded chains is up despite concerns about a recession. And stocks so far this year are soaring, which likely means those pay packages will come back up.