David Hoffmann, who first worked for McDonald’s when he was in high school and climbed to its upper echelons after getting an MBA from the University of Chicago as part of its management training program, yesterday was named president of Dunkin' Donuts in the U.S. and Canada.
Reporting to Dunkin’ Brands chairman and CEO Nigel Travis starting Oct. 3, Hoffman will be responsible for the brand’s operations and marketing in the U.S. and Canada, as well as global franchising and store development for Dunkin’ Donuts and Baskin-Robbins, according to a release.
Before resigning last week, he was president of McDonald'shigh-growth segment, which includes countries such as China, Russia, Italy and South Korea. A 22-year veteran, Hoffmann, 48, will reportedly forego millions of dollars for jumping directly to a competitor.
In an SEC filing, McDonald's said that Hoffmann failed “to satisfy certain conditions upon his departure, including execution of a noncompete agreement,” Samantha Bomkamp reports in the Chicago Tribune. “As a result, he will forfeit certain benefits, including all unvested cash and equity incentive awards, the company said in the filing.”
It may add up to more than $6 million, a compensation expert tells the Wall Street Journal’s Joann S. Lublin and Julie Jargon.
“‘It’s quite standard’ for companies to seek such noncompete accords from exiting executives, but executives rarely refuse to accept them,” says Robert Sedgwick, who heads the executive-pay practice for law firm Morrison Cohen LLP, tells them.
Hoffmann is the third top executive departing the company recently, including U.S. president Mike Andres at the end of the year, and comes “at a time when McDonald’s is trying to fashion itself into a ‘modern, progressive burger company.’ The chain has struggled in recent years to win back Millennials and other customers who have flocked to other restaurants promising fresher, healthier food,” Jargon writes in a separate story the Wall Street Journal.
“The company had made some progress recently with its all-day breakfast offerings, but its sales growth slowed significantly in its key U.S. market in the second quarter. In the U.S., same-store sales rose 1.8%, far below the 3.2% growth expected by analysts,” Jargon continues.
“Hoffmann will receive a base salary of $700,000 and an annual bonus up to an additional $700,000. But for fiscal year 2016, he will get a bonus payout of $1.1 million, set to be paid in March 2017,” the Tribune’s Bomkamp writes. “He also will be entitled to millions in company stock. Dunkin' is footing the bill for Hoffmann and his family to relocate for his new position” in Canton, Mass.
Hoffmann replaces the retiring Paul Twohig, who is staying with Dunkin’ Donuts through the end of the first quarter 2017 to aid in the transition. Meanwhile, Joseph Erlinger, who had been CFO for McDonald's high-growth markets, will succeed Hoffmann.
“Dave is a proven leader with a wealth of quick-service restaurant and franchising experience, and a solid track record of delivering growth in a wide range of economic and competitive environments,” CEO Travis says in a statement. “His financial and industry expertise, combined with his strong talent development skills and experience using digital technologies to enhance the restaurant experience, makes him uniquely positioned to help accelerate Dunkin’ Donuts’ strategic expansion in the U.S.”
Amid the high-level realignment yesterday, Chris Fuqua SVP, brand marketing, global consumer insights & product innovation, took time to proclaim: “Dunkin' Donuts' coffee heritage, and the love people have for our coffee, goes back 66 years to 1950, something no other leading restaurant brand can match. Since then, our coffee has remained an important part of millions of guests’ daily lives, helping busy people start their morning and keep on running any time of day or night. For National Coffee Day in 2016, we say cheers to 66 years by making Dunkin' Donuts' signature hot coffee available on Sept. 29 for only 66 cents for a medium-sized cup.”
By the time he finished crafting that statement, we venture, his morning cup of joe needed a nuking.