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Tim Hortons CEO Marc Caira will take on the role of vice-chairman of the new merged entity and serve as a director.Peter Power/The Globe and Mail

Investors in Tim Hortons Inc. have seen some hefty returns since news of a tie-up with Burger King was announced this week. But even better payouts could be ahead for some stakeholders.

Ever since reports of a possible merger first surfaced Sunday night, shares of Burger King Worldwide Inc. and Tim Hortons have been surging. Tim Hortons' share price jumped 29 per cent by the time the $12.5-billion takeover was announced Tuesday, soaring from $68.87 last Friday to $88.71 at the close Tuesday on the TSX.

That has proven profitable for some of the company's biggest shareholders.

Toronto-Dominion Bank, which holds a 6.8-per-cent stake in the company through various funds, made more than $177.2-million between Friday and Tuesday. Royal Bank of Canada pocketed $162.3-million in the same time through its funds and asset manager Jarislowsky Fraser Ltd. gained $129.8-million.

Another big winner is Tim Hortons' chief executive officer, Marc Caira.

Mr. Caira took over as the chain's CEO last year, but the Burger King takeover bid has already proven to be lucrative for him with more to come, if he decides to leave.

He already stands to make approximately $7.4-million on stock options that the company has granted him since his July, 2013, arrival, based on Tuesday's closing price.

Tim Hortons has also awarded Mr. Caira more than 33,000 restricted shares worth nearly $3-million at Tuesday's price, according to the coffee chain's proxy circular and other and documents.

And there could be another payoff looming.

Like most companies, Tim Hortons has a "change-in-control" policy that triggers payments to senior executives who might get tossed out by the new owners within two years. Under Tim Hortons' policy, the payments are made if an executive is fired by the new owner but the money can also be paid if he or she resigns for "good reason." Among the factors considered good reason are a change in the executive's status, duties or responsibilities. Put simply, if "in his or her reasonable judgment, the change is not a promotion."

Under the terms of the proposed takeover, Mr. Caira will take on the role of vice-chairman of the new merged entity and serve as a director. But he will cede the CEO position to Burger King's chief executive Daniel Schwartz, who will run the combined company.

But if he does decide to leave and is eligible for change-in-control payments, he'd be in line for a lump-sum payment of $3.82-million within 10 days, $1-million from a short-term incentive plan payout, plus the profit on his stock options, according to the company's most recent management circular. All told, Mr. Caira could walk away with more than $15-million.

Other top Tim Hortons executives could also be poised for multimillion-dollar payouts, according to the circular, should they leave as a result of the takeover.

Right now, Burger King and Tim Hortons say they are looking at both businesses for additional executives in the new global company structure, and some changes will be announced when the deal closes.

Fast food and the proposed takeover have also been good to hedge fund giant Bill Ackman and his firm, Pershing Square Capital Management LP, which is the second-largest investor in Burger King with a 10.9-per-cent stake. The silver-haired billionaire's interest in the burger joint went from about $1-billion (U.S.) on Friday night to $1.2-billion by the time markets closed on Tuesday.

Mr. Ackman first invested in Burger King in 2012 as part of a deal that brought the chain back to the public markets in an offering that started trading at $15 a share. Now the shares are worth about $30 on the New York Stock Exchange.

There is another winner too; the majority owners of the new company, Brazilian private equity group 3G Capital Inc. That firm's initial investment in Burger King has already paid off handsomely. The investor group bought the struggling restaurant chain in 2010 for $4-billion. After taking the company public, 3G retained 70 per cent of the shares – a stake now worth about $7.7-billion. 3G will own 51 per cent of the merged Burger King and Tim Hortons.

The group could further benefit financially from the way the transaction has been structured. Under the proposed deal, 3G will convert its stake in Burger King into units in a new TSX-listed limited partnership. Those units must be held for one year before being converted into common shares in the new company. Many experts say that structure may mean the units would not immediately be subject to capital gains taxes. Just one more benefit in a deal that has already proven beneficial to so many.

With files from freelance writer David Milstead.

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