U.S. Securities and Exchange Commission
Washington, DC 20549
NOTICE OF EXEMPT SOLICITATION
1. Name of the Registrant:
BURGER KING WORLDWIDE, INC.
___________________________________________________________________________
2. Name of the person relying on exemption:
CTW INVESTMENT GROUP
___________________________________________________________________________
3. Address of the person relying on exemption:
1900 L STREET, NW, SUITE 900 WASHINGTON, DC 20036
___________________________________________________________________________
4. Written materials. Attach written materials required to be submitted
pursuant to Rule 14a6(g)(1):
CtW INVESTMENT GROUP
April 21, 2014
Please WITHHOLD support for the re-election of Directors Alexandre Behring
and Carlos Alberto Sicupira and vote AGAINST the "Say-on-Pay" proposal at
Burger King Worldwide, Inc. (NYSE: BKW) Annual Meeting on May 15, 2014.
Dear Burger King Worldwide shareholder:
We urge you to WITHHOLD support for support for Compensation Committee
members Alexandre Behering and Carlos Albert Sicupira, and to VOTE NO on
the Advisory Vote To Approve Executive Compensation ("Say-on-Pay") at
the Burger King Worldwide, Inc. (NYSE: BKW) Annual Meeting on May 15,
2014. While BKW is still a controlled company with roughly 70% of shares
owned by the private equity firm 3G Capital Partners, Ltd. ("3G"), its
inclusion in broadly used indices such as the Russell 3000 exposes
numerous non-insider shareholders to the costs and risks of the
company's unbalanced human capital management practices. Moreover, it
seems prudent for public shareholders to anticipate that 3G will in the
future sell off its position, making it all the more important that BKW
address the deficiencies of its corporate governance practices now. Our
concerns include:
- The Compensation Committee now has only two members, neither of whom
should be viewed as independent.
- The Compensation Committee has made numerous exceptions to the terms
of its established programs, increasing the size and moving forward
the payouts received by executives who left the company in late
2013 or early 2014.
- The Committee has, without explanation, doubled the options it
provides to executives participating in the Bonus Matching Award
Program.
- The Committee annually grants large discretionary equity awards to
executives without explaining the rationale for these awards or
providing any insight into how the size of these equity grants is
determined.
The CtW Investment Group works with pension funds sponsored by affiliates
of Change to Win - a federation of unions representing over six million
members - to enhance long-term shareholder value through active ownership.
These funds have $250 billion in assets under management, and are
substantial holders of Burger King Worldwide, Inc.
COMPENSATION COMMITTEE LACKS INDEPENDENCE
Following Marcel Herrmann Telles' departure from the board last June, the
Compensation Committee is now comprised solely of Chairman Behring and
Director Sicupira, both of whom are founding partners of 3G Capital
Partners, Ltd. We are concerned not only by the decisions taken in 2013
(and described below) to grant departing executives lucrative exceptions
to the established rules of BKW's executive pay programs, but also by the
dearth of explanation for the sizes and increases in the discretionary
equity awards granted to senior executives. Since these awards will not
vest for several years, the consequences of excessive and poorly designed
awards may fall primarily on public shareholders - if 3G begins to sell
off its controlling positions in the next few years. Consequently, the
Compensation Committee should be providing a convincing rationale for its
decisions. Instead, the Committee has adopted practices - such as
granting a fiscal year's Bonus Matching options in the following calendar
year - which make it difficult or impossible to assess the true level of
executive pay. Moreover, the Compensation Committee provides no disclosure
of any payments or equity exposure new BKW CEO Daniel Schwartz obtains
from his role as a partner in 3G, a position which he still apparently
holds.
BONUS MATCHING PROGRAM DOUBLED WITHOUT EXPLANATION
BKW allows its executives and to use either 25% or 50% of their cash bonus
to purchase "Investment Shares" in the company. Executives who devote 50%
of their bonus to purchasing Investment Shares receive stock options
(these are in addition to the options the Committee grants annually on a
discretionary basis), equal to twice the value of the Investment Share
purchase. Thus, an executive who chooses to purchase Investment Shares
with 50% of their bonus would end up receiving an amount equal to twice
their annual bonus. In 2013 BKW made this offer even more attractive by
introducing Additional Bonus Matching Options, such that an executive
purchasing Investment Shares with 50% of their allotted bonus receive"
additional options "in the same number as the Bonus Matching Options."
In essence, executives fully taking advantage of this program stand to
triple their bonus. The Compensation Committee provides no rationale
explaining the decision to substantially increase the cost and rewards
of the Bonus Matching Program in this way. Moreover, by granting these
options - which again are an outgrowth of what is supposed to be 2013
performance-based pay - in January 2014, shareholders do not know even
the grant date fair value of these options.
UNJUSTIFIED BONUS AND OTHER UNEXPLAINED EXCEPTIONS FOR DEPARTED
EXECUTIVES
Along with former CEO Bernardo Hees, two of BKW's senior executives
left the company in late 2013 and early 2014: Steven Wiborg, the
former President and Chairman of North America, and Flavia Faugeres,
the former Executive Vice President
1900 L Street, NW, Suite 900 Washington, DC 20036
202-721-6060
www.ctwinvestment group.com
and Global Chief Marketing Officer. In conjunction with these departures,
the Compensation Committee used its discretion to enable these executives
to receive substantially larger and more immediate payouts than they would
otherwise be entitled to, particularly in the case of Mr. Wiborg.
First, the Compensation Committee granted Mr. Wiborg a cash bonus in 2013
despite the fact that the North American region did not achieve the 80%
of targeted performance required for bonuses to be paid to under the
Non-Equity Incentive Plan. Instead, the Compensation Committee lowered the
threshold for 2013 for North America to 70%, without explaining or
justifying this decision. We note that the metric employed by the
Compensation Committee in measuring performance - "organic adjusted EBITDA
growth" - is already one that the Committee sets on an annual basis and
which is designed to neutralize performance with respect to asset sales.
The Committee is quite clear in explaining that the adjustments made to
this metric take into account the sales of North American restaurants in
2012 and 2013, making the decision to lower the performance threshold for
the executives responsible for North America hard to explain.
Second, while the Individual Achievement component of the Non-Equity
Incentive plan requires that an executive achieve at least 50% of the
goals set out by the Compensation Committee at the beginning of the year
in order for that executive to receive a bonus, in 2013 the Committee
awarded Mr. Wiborg a $407,030 bonus despite his achieving only 42% of
his assigned goals. This substantial bonus is explained only be
reference to Mr. Wiborg's "years of service as President and Chairman of
North America." We note that Mr. Wiborg joined BKW in 2010, and over this
three years of service received approximately $5.5 million in salary and
bonus payments, as well as nearly $15 million in realized option grants.
We find it hard to understand why the Compensation Committee felt it
necessary to again depart from the stated terms of its program to reward
Mr. Wiborg at the time of his departure from the company.
Third, even though Mr. Wiborg had been a BKW executive for only three
years, and was contractually entitled to a $1.3 million severance package
upon his departure, the Compensation Committee not only granted him the
discretionary bonus described above, but also accelerated the vesting of
all of the stock options Mr. Wiborg had been awarded from 2010-2012,
enabling him to realize $14.7 million on the sale of these options. We
note that the earliest vesting date for these options would have come in
2015, and that the value realized by Mr. Wiborg on these sales totals 33x
his 2013 salary. This decision by the Compensation Committee fatally
undermines any argument that these options were granted in order to
provide a long-term incentive for performance and retention, given that
Mr.Wiborg has left the company, was allowed to exercise these options
long before their vesting date, and that Mr. Woborg's performance, in
the Compensation Committee's own assessment, failed to achieve even half
of the goals the Committee identified at the beginning of 2013.
Finally, for Ms. Faugeres, the Committee had agreed that the options she
was granted in 2012 and 2013 could continue to vest on their established
schedule following her departure from the company, in exception to the
rule that departing executives forfeit unvested options. This rule was
presumably established to incentivize tenure and discourage turnover
among executives; the Compensation Committee again provides no rationale
or explanation for this decision.
LARGE EQUITY GRANTS UNCONNECTED TO PERFORMANCE
In each of the past two years the Compensation Committee has made
discretionary equity grants to executives without describing any
performance-based or strategically-linked criteria for determining the
size or appropriateness of these grants. For instance, in 2013 and 2014
CEO Daniel Schwartz was awarded a total of 900,000 stock options, while
the other named executives received over 1 million options total. We
note that many of these executives already hold large numbers of
options: Mr. Schwartz, for instance, held over 1.5 million options
before the 2013 grants were made, and most of these options have strike
prices under $4 per share. It is unclear to us what additional
otivation the Compensation Committee believes the 900,000 options
granted since January 2013 will provide. Moreover, BKW does not disclose
in its proxy statement any exposure to BKW Mr. Schwartz obtains through
his position as a partner in 3G.
We urge you to join us by WITHHOLDING from Chairman Alexandre Behring
and Director Carlos Alberto Sicupira (Item 1), and in voting AGAINST
approval of the advisory vote on executive compensation (Item 2). If
you would like to discuss our concerns directly with us, please contact
my colleague Richard Clayton at (202) 721-6038 or Richard.clayton@
changetowin.org.
Sincerely,
/S/
Dieter Waizenegger
Executive Director, CtW Investment Group
THIS IS NOT A SOLICITATION OF AUTHORITY TO VOTE YOUR PROXY. PLEASE DO
NOT SEND US YOUR PROXY CARD AS IT WILL NOT BE ACCEPTED.