Among signs that someone is ready for a new job: he is willing to give up $6 million to get it.
Such is the story of David Hoffmann, who looks like he will be triaging $6 million in compensation in order to not sign a noncompete agreement with his employer of 22-year, McDonalds. Or, at least, that is the current estimate from one independent compensation consultant.
The consensus view is that Hoffman thinks he has a better shot of becoming the CEO of Dunkin Donuts than McDonald’s.
Hoffman ran McDonald’s Asia-Pacific, Middle East and Africa operations until he was appointed in July 2015 to lead the high-growth markets division — which includes China, Russia and South Korea. As of the third of October, Hoffman will be Dunkin’s president of U.S. and Canada; operations and marketing, global franchising and store development for both Dunkin’ Donuts and Baskin-Robbins will fall under his purview.
McDonald’s noted in a regulatory filing last week that Mr. Hoffmann’s “failure to satisfy certain conditions upon his departure,” including not signing a noncompete agreement, will result in him forfeiting all unvested cash and equity-incentive awards.
Estimates about how much money is being left on the table include Mr. Hoffmann’s vested stock options.
“It’s quite standard” for companies to seek such noncompete accords from exiting executives, but executives rarely refuse to accept them, said Robert Sedgwick, who heads the executive-pay practice for law firm Morrison Cohen LLP.
In announcing Mr. Hoffmann’s hire, Dunkin’ Chief Executive Nigel Travis noted that the appointment “supports our succession planning efforts as we work to position the company for long-term growth.”
The new agreement with Dunkin Donuts will see Hoffman receive equity worth about $2.8 million and a 2017 fiscal award valued at about $2 million.
Mr. Hoffmann’s agreement with Dunkin’ also said that if he is terminated without cause or resigns for good reason, he would be entitled to severance of up to 12 months of his then current base salary. Mr. Hoffmann will submit to noncompete provisions as part of his Dunkin Donuts contract.