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Wendy’s investors shut down chairman’s possible payday

By
James Covert
Published May 30, 2014, 9:53 p.m. ET

Nelson Peltz just survived another turn on the grill at Wendy’s.

The billionaire investor — who took control of the fast-food chain in 2008 after agitating for change as a shareholder — got slapped this week by Wendy’s investors for his own governance practices.

Fifteen percent of non-Peltz-controlled shares voted against the company’s executive compensation plan at the burger joint’s annual meeting Wednesday, a Friday securities filing revealed.

The pay plan, critics charge, has lowered performance hurdles so that top execs, including CEO Emil Brolick, are getting fat pay packages despite mediocre performance.

Peltz’s New York investment firm, Trian Partners, which has rattled cages at other food companies, including Heinz, Cadbury, Kraft and PepsiCo, has been blasted for selling chunks of its Wendy’s stake after approving company share buybacks.

This spring, Peltz also got questions from proxy advisor Institutional Shareholder Services for billing $690,000 to Wendy’s for personal security services.

Peltz, who is currently non-executive chairman of Wendy’s, insists he needs security because of threats of violence related to his role at the burger chain — but he has refused to elaborate.

Years ago, Wendy’s shares got a boost when Peltz forced the company to sell assets and slash costs. But in recent years concerns about strategy — like an expensive store-remodeling program — are growing as competition increases.

David E. Schwab II, a Wendy’s director who chairs the compensation and governance committees, got singled out by voters over the compensation issue this week, with an unusually high 11.4 percent of independent shareholders voting to oust him at the annual meeting.

That’s four times the opposition Schwab got last year — a signal that investors are becoming increasingly fed up with what one shareholder has called “pay-for-failure” compensation.

“Shareholder value has eroded under this board’s watch — nearly $400 million in five years — and it’s time for Wendy’s board to address calls for reform by long-term shareholders,” said Dieter Waizenegger, director of the CtW Investment Group, which had rallied opposition to the Peltz-controlled board.

At least one Wendy’s director had an easier time this year than last. Trian exec Edward Garden — a son-in-law of Peltz who last year had weathered opposition from 29 percent of shareholders over his poor attendance at board meetings — was reelected with 98 percent of the vote.