Burger King gives CEO pay hike amid revitalization
NEW YORK (AP) — Burger King CEO Bernardo Hees got a big pay hike last year as the world's second-largest hamburger chain revamped its menu and began trading publicly again.
The Miami-based fast-food chain gave Hees a pay package worth $6.5 million, according to a filing with the Securities and Exchange Commission. That's up 61 percent from the $4 million he received in 2011. Hees is also a partner at 3G Capital, the investment firm that bought Burger King and took it private in 2010.
The compensation for the 43-year-old Hees included a base salary of $750,000, which was unchanged from the previous year. His option awards rose to $4.2 million, from $1.2 million, in part because he used a "bonus swap" program that allowed him to use some of his bonus pay to buy shares and get matching shares from the company.
His annual incentive bonus dipped to $1.5 million from $1.65 million. Hees did not get a one-time bonus in 2012, compared with $250,000 bonus he received as part of his sign-on deal the previous year, according to a Burger King spokesman.
All other compensation came to $71,472 and covered contributions to Hees' retirement plans and tax payments in connection with the re-valuation of options.
Since taking over Burger King, 3G has applied its aggressive cost-cutting strategy that included slashing jobs at its headquarters and shifting to an entirely franchised model. Burger King, which has more than 12,900 locations worldwide, has also been working to expand its presence in emerging markets such as China and Russia. Back at home, the chain launched its biggest-ever menu revamp last spring and has rolled out a steady stream of limited-time offers ever since.
For 2012, Burger King earned $117.7 million, up from $88.1 million the previous year.
Meanwhile, 3G Capital is becoming a bigger play in the U.S. food industry. The firm, headed by Brazilian billionaire Jorge Paulo Lemann, announced in February that it was teaming up with Warren Buffett's Berkshire Hathaway to purchase H.J. Heinz Co. in the food industry's biggest ever deal. Berkshire is acting as the financing partner in the deal, while 3G will run ketchup maker.
The Associated Press formula for executive compensation takes into account salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year.
The value that a company assigned to an executive's stock and option awards for 2012 was the present value of what the company expected the awards to be worth to the executive over time. The number is just an estimate and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted.