Chipotle Mexican Grill has cut the total compensation for its two co-CEOs for 2015 by about half, the restaurant chain announced on Friday evening. The decision came in the wake of a rough year for the company, which also cancelled executive bonuses for the year following the food-borne E. Coli and Norovirus outbreaks that made hundreds sick.
Steve Ells, 50, was given a pay package worth $13.8 million for 2015, a roughly 52 percent cut from the $28.9 million he earned in 2014. Monty Moran, 49, was given $13.6 million, down from the $28.2 million he was paid the previous year.
Still, both men got raises on their base salaries, each increasing by just over $100,000. The lack of stock options was the main contributor to the drop in pay according to ABC News.
“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.”
The two men had received $27.3 million in options the year before. Neither of them were awarded with stock options for 2015, though the Wall Street Journal reported that they were compensated with $12 million in stock awards for 2015. According to CBS, they also received other financial perks, including contributions to retirement plans and car costs, valued at $281,858 for Ellis and $223,041 for Moran.
Even without bonuses and benefits, Chipotle’s executives still all made millions of dollars, Forbes reported.
“CFO Jack Hartung and Chief Creative Officer Mark Crumpacker made $6 million and $4.3 million. Six out of Chipotle’s seven non-employee board directors made over $200,000 in total pay in 2015, the filing shows.”
Chipotle’s stock suffered in the face of the food and safety issues, which mark the worst crisis in the company’s 23-year-history. In August of 2015, that is before the outbreaks, Chipotle’s stock had reached all-time high of $758 per share, before plummeting to $507 per share on Friday. ABC News reported that the Denver-based chain reported a 1.6 percent drop in sales in established locations for the fourth quarter, the first decline since they went public.
The outbreaks both hurt sales and significantly damaged Chipotle’s image as a fast food restaurant chain that offers healthier options. Overall quarterly revenue declined by 6.8 percent. The chain took in $68 million in profit during the last quarter of 2015, indicating a 44 percent drop from the previous year. The company famous for its Mission-style burritos and tacos, recently launched a new ad campaign and promotions to try and entice back alienated customers.
To top it all, they may not be out of the woods yet. Foodbeast notes that at least one more outbreak has occurred recently since the nationwide shutdown and inspections. A Chipotle location in Billerica, Massachusetts was forced to close its doors for two days after four of its workers tested positive for the Norovirus.
“Chipotle thought they had it all figured out. They had a nationwide closure, addressed new regulations to keep customers and workers safe, gave away free burritos, and were ready to rebuild after having crazy Norovirus and E. Coli outbreaks that affected hundreds.”
The Centers for Disease Control announced they had concluded their investigation into the E. Coli outbreak in February of this year. A cause was never determined.
Meanwhile, according to CBS, the company “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 company stated that future compensation for its executives would depend on stock performance in accordance with its new incentive plans.
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