CBRL – Changes to management’s compensation metrics in 2009

In the CBRL’s proxy filed last week, the compensation committee changed the key financial metrics for management’s compensation. According to the proxy “We seek to align the interests of the named executives Named Executive Officers with those of our shareholders by evaluating executive performance on the basis of key financial measurements which that we believe closely correlate to both near-term and long-term shareholder value, including increases in operating profit, revenue growth and operating margin.“ In 2008 the key metrics included operating profit, revenue growth and return on investment.

Why would management not want to include ROI in 2009? One thought would be to make it easier for management to get a bonus since they did not hit the key metrics in 2008

For management to get a bonus in 2009 total revenue are to increase approximately 4.5% to 5.5% over 2008 and operating income margin to be approximately 6.0% to 6.3% compared with 6.3% in 2008. All of this translates to operating income growth of approximately 6.4% in 2009.

Currently, the Reuters estimate for revenues growth is 3%, flat EBITDA and earnings declining slightly.