Tim Hortons parent company taps former Domino’s CEO as new executive chair

The parent company of Tim Hortons has hired an executive known for leading a turnaround at Domino’s Pizza Inc. DPZ-N as its new executive chair, and is giving him one of the largest sign-on executive compensation packages in Canadian history.

Restaurant Brands International Inc. QSR-T announced Patrick Doyle as its new executive chair on Wednesday. He will replace co-chairs Alex Behring and Daniel Schwartz, who are co-managing partners of 3G Capital, RBI’s largest shareholder. Both Mr. Behring and Mr. Schwartz will remain on the board.

The Toronto-based company, which also owns fast-food chains Burger King, Popeyes Louisiana Kitchen and Firehouse Subs, is making the move as it seeks to boost its stock performance, which its executives believe has lagged the underlying value of the business. While the company’s share price has recovered from a significant dip during the early days of the pandemic, it is hovering around roughly the same price it reached five years ago.

“We have multiplied the value of the company by over 20 times since 2010, but I think we can grow even faster than we’re already growing for shareholders and our franchisees,” Mr. Schwartz said in an interview, adding that 3G is not looking for an exit. “Our investment in RBI is generational. It’s not the five, 10-year – we’re here for the very long term.”

Mr. Doyle is expected to take an active role in advising the company’s executive team, which is in the midst of a two-year, US$400-million investment in improving Burger King’s lagging U.S. business. RBI has begun to see improvements in its Tim Hortons business, following what the company called a “back to basics” turnaround plan.

“The success of this business starts and ends with the franchisees,” Mr. Doyle told The Globe. “If the franchisees are prospering, if they’re making good profits out of the investments that they’ve made ... and they feel good about the future of the business, they’re going to continue to invest, they’re going to continue to build restaurants, they’re going to be able to bring in the right people to give great service, to make great food.”

While he was chief executive of Domino’s, from 2010 to 2018, Mr. Doyle oversaw significant improvements at the pizza chain, including an overhaul of the quality of the food and heavy investment in digital technology. Mr. Doyle appeared in an ad campaign that highlighted customer complaints about Domino’s tasting “like cardboard,” and explained what the company was doing to improve its recipe.

Under his leadership, the company also remodelled stores, harmonized its point-of-sale systems and dramatically simplified online ordering to drive more sales. During that time, the company reported 29 consecutive quarters of same-store sales growth and more than doubled franchisee profitability in the U.S.

“I love the restaurant business, and I’ve missed being in it,” Mr. Doyle said.

He added that he believes there is an opportunity for RBI to develop its digital offerings further, which he said would both improve customer service and make restaurants more efficient.

“Digital has become core to the restaurant industry,” he added.

The appointment adds a major name in the industry to RBI’s leadership. After leaving Domino’s, Mr. Doyle joined global investment firm the Carlyle Group as an executive partner in September, 2019 – a role he is now leaving. He will continue to serve as chair of the board at retailer Best Buy Co. Inc., a role he has held since May, 2020.

“We are excited by the opportunity to really put an accelerator on the business and to drive growth through the things that that we believe are the enablers of long-term growth, which is franchise success and guest satisfaction,” said RBI’s chief executive, Jose Cil.

RBI is also betting on Mr. Doyle’s track record of shareholder returns: When he became chief executive, Domino’s shares traded at roughly US$10; by the time he announced plans to leave, in January, 2018, the share price had exceeded US$200.

Mr. Doyle is personally investing about US$30-million to buy 500,000 shares in RBI. He has agreed to hold those shares for at least five years, subject to some conditions. As compensation, Mr. Doyle will receive no salary or bonuses, but he will receive an equity package of two million stock options vesting in five years, another 500,000 restricted share units vesting over five years and 750,000 performance share units that will pay out depending on RBI’s stock price meeting certain targets.

If RBI stock appreciates on average by about 10 per cent a year in each of the next five years – a goal that is one of the targets of the compensation plan – the two million options and the 1.25 million restricted and performance shares would be worth almost US$198-million in 2027. If RBI stock appreciates on average by about 15 per cent per year in each of the next five years, RBI will award Mr. Doyle extra shares as part of the plan, and his stock package would be worth nearly US$370-million.

It’s a package that rivals two of the largest given to new executives in the past decade. BlackBerry Ltd. gave chief executive John Chen a stock award valued at nearly US$85-million when he joined the company in 2013. When Valeant Pharmaceuticals Inc. hired Joseph Papa in 2016, his sign-on stock award was valued at US$52-million, but accelerators in the plan meant the shares could be worth as much as US$773-million four years later, if Valeant stock hit aggressive targets.