Chipotle Slashed CEO Pay Amid Food-Safety Crisis
Chipotle co-CEOs Montgomery Moran, left, and Steve Ells. (Photos: Moran: John Gress/Reuters; Chipotle sign: Jason Redmond/Getty Images; Ells: Chris Haston/Getty Images)
We’ve seen a lot of Chipotle co-CEO Steve Ells since last fall, when the first in a series of food-borne outbreaks were tied to the chain, bringing the safety of its food and the soundness of its business into question. In December Ells went on the Today show, where he promised Matt Lauer that the company is working to make Chipotle “the safest restaurant to eat at.”
Despite the apparently successful apology tour and food-safety overhaul Ells and co-CEO Monty Moran have overseen, the pair have taken a rather enormous pay cut: After having their bonuses revoked, both earned roughly half of their total compensation in 2015. According to a Security and Exchange Commission filing the company made last week, Chipotle's board has pegged future compensation for CEOs to the company's share price.
The stock price will have to hold at more than $700 for a month for the co-CEOs to earn stock awards. Shares now sell for just over $500, about a third of the height reached before the outbreaks began last fall.
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The change makes sense in light of the food-safety crisis, but the issue of CEO compensation runs deeper at Chipotle. Last year, a report on the CEO-worker pay gap from Glassdoor (which is like Yelp for corporate management) put Ells at No. 2 on its list of worst offenders. With his $28.9 million in total compensation in 2014, Ells was paid 1,522 times more than $19,000, the median salary of a Chipotle employee. A similarly minded investigation from USA Today calculated that Ells’ and Moran’s wages are nearly $13,500 an hour, based on a 40-hour workweek, compared with the employee average of $8.57 an hour, according to Glassdoor.
This is more than an outrage headline: Shareholders have expressed frustration with the high pay awarded to Ells and Moran in the past. Last May, 77 percent of shareholders voted against Ells' compensation package, but the ballot was nonbinding, and his pay remained.
Still, even after Chipotle’s most terrible year, its top brass aren’t exactly hurting. After the cut, Ells earned $13.8 million, and Moran, $13.6 million.