Domino's boss gets too large a slice of salary pie, shareholders say

Domino’s Pizza boss J Patrick Doyle is getting too large a slice of the pie, shareholders will tell the company’s board at the fast food chain’s annual meeting on Tuesday.

The two largest shareholder advisory groups, ISS and Glass Lewis; CalSTRS, California’s $183bn teachers’ pension fund; and Change to Win investment group, which advises trade union-sponsored pension funds, have all voiced concerns about compensation at the pizza company ahead of Tuesday’s annual shareholder meeting in Ann Arbor, Michigan.

Michael Pryce-Jones, senior governance policy analyst at Change to Win Investment Group, said Doyle’s pay deal was worth $43m over the last three years and was three times as large as the median pay package of his peers.

With stock markets at near record highs, shareholders have been focussing less on pay deals but that was changing, he said. “In the US a lot of people are suggesting the stock market rally justifies pay levels,” he said. “Shareholders are more sophisticated than that and will see past this focus on short termism. Domino’s has one of the most short-term focuses I have ever seen.”

Change to Win has put forward proposals that shareholders vote no on “say on pay” – a non-binding vote that allows investors to register disapproval of a board’s pay package deals. It has also called for investors to vote against the re-election of Andrew Balson, chairman of the compensation committee.

Pryce-Jones described Balson as a “serial over-payer” who had served on two other compensation committees where pay deals have attracted the ire of large numbers of shareholders: Bloomin’ Brands and FleetCor Technologies.

He said the fast food’s pay deal were designed to reward short-term thinking. Domino’s annual incentive plan pays out every six months. “So you get that award even if you lose money in the second half of the year,” said Pryce-Jones. “That’s a short-term incentive plan on steroids,” he said.

He said even the company’s long-term incentive plan was short-term in nature and instead of being based on a more usual three year time-frame it was re-calculated on an annual basis. “And it pays out 100% of the award if they meet 85% of the target. It’s the very definition of reward for failure,” he said.

A Domino’s spokesman said: “As our shareholder meeting and final tabulation of the votes on our proxy will not be complete until Tuesday, we believe it’s inappropriate to comment before our shareholders have their say.”

The shareholder row comes after the Demos think tank released a report showing the income gap between fast-food workers and their CEOs was the largest of any industry. In 2012, fast-food CEOs earned 1,200 times as much as the average employee. The gap between CEO and worker pay in food services and accommodation sector was about twice as large as most other sectors between 2009 and 2012, according to Demos.

Fast-food CEOs are some of the highest paid workers in America. According to the Demos report the average CEO at a fast-food company earned $23.8m in 2013, more than four times the average in 2000 in real terms.

Meanwhile fast-food workers are the lowest paid in the US with an average hourly wage of $9.09, or less than $19,000 per year for a full-time worker, though most fast-food workers do not get full-time hours. Demos calculated that fast food wages have increased just 0.3% in real dollars since 2000.