Chipotle’s CEOs Got a Massive Paycut Because of Its E.Coli Crisis
Not only did last year’s E.Coli crisis dent Chipotle Mexican Grill’s (CMG) financial results, but the outbreak also cut the burrito chain’s co-CEO’s total compensation by more than half.
Last year, the fast-service restaurant chain was rocked by an E.Coli outbreak that closed dozens of restaurants and made headlines for months, decimating its sales results and keeping diners away for months. Comparable sales in the fourth quarter of 2015 fell 15%, and the drops only worsened in the first two months of this year, falling 36.4% in January before tempering last month with a 26.1% decline.
Co-CEOs Steve Ells and Monty Moran each saw their 2015 base pay rise a bit to $1.526 million and $1.308 million, according to a proxy statement filed on Thursday with the U.S. Securities and Exchange Commission.
But each executive’s total compensation fell sharply because neither received options or non-stock awards in 2015 as they had the previous year.
In all, Ells’ compensation came to $13.837 million, down more than half from almost $29 million in 2014, while Moran’s total package shrank to $13.561 million from $28.153 million the year before.
In addition to all of Chipotle’s travails, the restaurant was hit by norovirus outbreaks at two Boston-area restaurants, as well as a federal probe into its food safety practices.
Shares are about 40% below pre-crisis peaks, a tough reversal of fortune for the one-time Wall Street darling.
And if Messrs. Ells and Moran want to get bonuses in 2016, they have a lot of work to do. Chipotle’s board recently changed its compensation plan for both, tying future compensation directly to the company’s share price performance.
In a recent filing, share prices would have to return to above $700 for 30 straight days to trigger the new stock awards. Shares closed at $471.37 on Thursday.