- McDonald’s new CEO Chris Kempczinski doesn’t own a single share of the restaurant chain, but a company rule requires him to hold $US7.5 million worth by October 2020.
- Kempczinski sold his 10,900 share position in May for roughly $US4.44 million before taxes, according to regulatory filings.
- The new CEO won’t need to foot the entire bill at once, as he holds about 36,800 options he can exercise at any point. He’s also likely to receive share rewards in his new role.
- Watch McDonald’s trade live here.
McDonald’s new CEO Chris Kempczinski doesn’t own any shares of the company right now. But he’ll soon need to go on a multimillion-dollar spending spree to adhere to the restaurant chain’s rules.
The new chief executive sold his entire stake in the company in May, according to regulatory filings, netting roughly $US4.44 million before taxes on a sale of about 10,900 shares. Yet McDonald’s, like most other large firms, requires its senior leadership to own a specific amount of shares.
In this case, Kempczinski’s new role obliges him to hold $US7.5 million worth of McDonald’s stock by October 2020.
Kempczinski quickly rose to the top of McDonald’s leadership Sunday, replacing former CEO Steve Easterbrook after he was fired over a consensual relationship with an employee. The new CEO previously served as the chain’s US president. Had Kempczinski not been promoted, he would still need to own $US2.9 million worth of stock by the 2020 deadline.
The required stake comes in at six times the CEO’s $US1.25 million salary, but Kempczinski won’t have to foot the full $US7.5 million bill at once. He currently holds about 36,800 options that he could exercise at any point, bringing his stake to roughly $US7.08 million as of McDonald’s share price at 3:20 p.m. ET Tuesday. However, such a transaction would cost him about $US5 million.
Kempczinski is also poised to receive generous stock rewards through his new position. Easterbrook won stock and options awards worth $US11.5 million in 2018 alone, but certain restrictions limit when he can sell them or schedule when shares are vested.
Policies which require executives to hold shares are used to tie leaders’ personal wealth to shareholders’ interests. The requirements’ deadlines typically land on an anniversary of the executive’s first day in the role, and the stake sizes scale up as employees ascend the corporate ladder.
The restaurant chain shed about $US4 billion in value after announcing Easterbrook’s departure, with the stock sinking as much as 3% in early Monday trading. The former CEO will receive at least $US675,000 in severance pay, but won’t be able to work at any of the chain’s rivals for at least two years.
McDonald’s traded at $US192.37 per share at 3:20 p.m. ET, up roughly 9% year-to-date.
Now read more markets coverage from Markets Insider and Business Insider:
Business Insider Emails & Alerts
Site highlights each day to your inbox.