Freshly-baked employment agreements at Dominos…

March 3, 2010

In addition to the exciting news reported yesterday about Dominos Pizza, Inc.—s (DPZ) impressive profits, the company also released information about deals with two top executives.

On March 8th, J. Patrick Doyle will replace David Brandon as President and CEO. And as Doyle’s employment agreement shows, (filed yesterday as an exhibit to Dominos— annual report), the company is investing a lot in its new leader.

The contract runs for three years and starts with a base salary of $750,000 a year. But Doyle may earn as much as another $1.5 million in the form of a bonus if the company meets the targets set out in the Senior Executive Annual Incentive Plan. The company also gave him stock options to purchase 250,000 shares and a performance share award (which vests over three years) of 75,000 shares of stock.

And then there’s the plane. Section 4.7.3 (bottom of p. 4) starts by saying:

The Company acknowledges its obligation to furnish the Executive (which for purposes of this Sub-Section 4.7.3 includes the Executive’s spouse, family and guests when accompanying him), with transportation during the term hereof that provides him with security to address bona fide business-oriented security concerns, and shall, at the Company’s expense, make available to the Executive, Company or other private aircraft for business and personal use at his discretion, provided that any such personal use shall be limited to thirty-five (35) hours per calendar year (the —Yearly Aircraft Hours).

The 35-hour limit is invoked again in the Time Sharing Agreement that gives Doyle the right to use Dominos— Dassault Falcon 2000. (His contract also provides for a gross-up benefit, which means Dominos will pay any taxes that Doyle would otherwise owe personally.)

But while the parties may intend to invoke that 35-hour limit, we noticed an ambiguity that arguably gives Doyle unlimited personal use of the plane. That’s because the agreement also says:

It is recognized that travel by the Executive on Company or other private aircraft is required for security purposes and, as such, all uses by the Executive shall constitute business use of the aircraft and shall not be subject to reimbursement by the Executive.

Meanwhile, David Brandon, the departing CEO, will remain on the Dominos payroll for a while. For starters, even though he’s turning over the reins to Doyle next Monday, he—ll earn his regular base salary of $70,621.83 for the month of March (the calculation comes from the 2009 proxy). After that, he—ll earn $25,000 per month in the newly created role of “Special Advisor to the President and Chief Executive Officer”, a position that will last through January 10, 2011. He will also continue to participate in the Annual Incentive Plan, and he keeps the right to use his —Yearly Aircraft Hours on the company’s plane through the end of FY 2011, or until he stops serving on Dominos— board.

Brandon’s next career will be as the Director of Intercollegiate Athletics at the University of Michigan, where he will reportedly earn a base salary of $525,000 and $100,000 a year in deferred compensation. While that’s certainly a significant pay cut, when combined with his new gig as an advisor to Doyle, he will still probably have enough to treat the kids at Michigan to an occasional pizza.

Image source: Culinet

Leave a Reply