Chipotle co-CEOs suffer pay cuts in 2015

AP News
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Posted: Mar 11, 2016 6:27 PM

Chipotle's top two executives suffered big pay cuts after a series of food scares sent sales plunging toward the end of 2015. But they each still took home more than $13 million.

Steve Ells, 50, was given a pay package worth $13.8 million for last year, down from $28.9 million the previous year. Monty Moran, 49, was given compensation worth $13.6 million, down from $28.2 million. The packages include a salary, stock awards and other perks.

Since late October, Chipotle Mexican Grill Inc. has been battered by foodborne illnesses that sickened people around the country. For the fourth quarter, it reported a 14.6 percent drop in sales at established locations. That was the first decline since the Denver company went public.

Still, both men got raises in their base salaries, which the company says was because they had not increased since 2012.

Ells, who serves both as company chairman and co-CEO, was paid a base salary of $1.53 million, up from $1.4 million in the year prior. Moran received a base salary of $1.31 million, up from $1.2 million. Both received stock awards valued at $12 million, but neither received stock options or a performance-based cash payment, which drove their pay cut.

However, they also received other financial perks, such as contributions to retirement plans and car costs. That was pay was valued at $281,858 for Ellis and $223,041 for Moran.

Chipotle was clear in its filing that its recent stumbles are not acceptable.

The company said that because of the food-borne illness incidents that negatively impacted the company's financial results, its performance fell short of its goals. In turn, no bonuses were paid to executive officers.

Chipotle also said that because it ended the year with a damaged stock price, it adjusted the vesting of the executive's stock awards for 2016 to ensure shareholder's value is first met. As a result, the awards will pay out only if the average 30-day closing price of Chipotle's common stock at any point during the fiscal year is at least $700, which is approximately 52 percent higher than the closing price on the grant date. Chipotle shares closed Friday at $507.85.

The company said that its compensation committee determined these performance awards "will continue to motivate our executive officers ... thereby rebuilding customer confidence in the Chipotle brand. If that happens, we believe improved business results and stock price performance will follow."

The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.