Each year, public companies release a proxy statement that details the compensation its top five executives received during the prior year and how much it rose or declined from year to year.
The following are some interesting takeaways from Papa John’s recently released proxy statement.
With the exception of Papa John’s founder and chairman John Schnatter, the executives’ total compensation — base salary, bonuses and stocks — rose by double digits.
Papa John’s president and chief operating officer Steve Ritchie saw the biggest bump, at least part of which is attributable to his appointment as president back in July. His total compensation jumped 58.4 percent to $2.3 million in 2015.
His compensation will go up again this year. Papa John’s compensation committee approved raising Ritchie’s base pay to $800,000 from $650,000 and the value of his long-term incentive pay to $1 million from $750,000 in 2016.
Schnatter’s pay increase was the only one that was anywhere close to resembling American worker’s average annual raise. Schnatter’s compensation increased 5.5 percent to $3.6 million.
According to a 2015 Towers Watson study, the typical American’s salary will rise 3 percent this year.
Of course, the typical American doesn’t have access to a private plane. In 2015, Papa John’s spent $653,000 on executive business travel via Hampton Airways, a company Schnatter owns.
Proxy statements also look at how much a C-suite would receive if he or she died on the job, if the company was acquired, or if the executive was fired without just cause. It’s not unusual for top executives to have million or even multi-million dollar agreements.
Should another company take over Papa John’s, Schnatter would receive $1.4 million. The company would pay out $1.3 million to Ritchie, $1.1 million to CFO Lance Tucker, and $743,419 to senior vice president and chief development officer Timothy O’Hern.
Notably, O’Hern, Ritchie and Tucker would receive similar amounts if they are fired without cause, whereas Papa John’s would pay Schnatter a measly $73,303. But what is Papa John’s without its founder?
Consumers will likely only find out if Schnatter retires or dies on the job. If the latter occurs, the company will furnish Schnatter’s estate with $1.9 million, according to the proxy statement.
In other Papa John’s news
Insider Louisville previously reported that Papa John’s is focusing increasingly on growing its presence outside the United States. And earlier this week, the company opened its first store in Tel Aviv, Israel.
Franchisee Assaf Greenberg, owner of PJI Pizza Ltd., will open a total of 10 stores during the next few years, according to a news release.
This was the most recent of several new countries and cities the company has expanded into during the past couple months.
Papa John’s also is looking to create greater efficiencies on its commissary side of the business. The company has 10 commissaries throughout the United States that deliver ingredients and dough to its pizza stores.
During a recent conference call with analysts, Schnatter said the company tested a new employee incentive program at one of its commissaries, where it split the profits with workers if their order accuracy and delivery times improved. In the fourth quarter of 2015, Papa John’s paid out more than $60,000 in incentives.
“I like that. I like incentives,” he said. “They perform better.”
The company now plans to introduce the program to its other commissaries.
Papa John’s also hired Atlanta-based Manhattan Associates, which uses probabilistic modeling to find the best routes and improve on-time store deliveries. A news release announced the new partnership. Both Papa John’s and Manhattan Associates declined to speak with IL.
“Manhattan Associates’ sophisticated Transportation Modeling software helps us better manage the variability and complexity of our extensive transportation network and maximize the performance of our transportation fleet, a vital part of fulfilling our brand promise of ‘Better ingredients. Better pizza,’” Eric Hartman, vice president of quality control center operations at Papa John’s, said in the release.