.While the Internet has been having a lot of feelings over Chipotle's new literary cups, some actually important developments happened at burrito headquarters. The executive board at Chipotle is experiencing one of the biggest shareholder pushbacks in recent history.
During today's annual shareholder meeting, the Chipotle executive pay plan was overwhelmingly voted down: 77 percent of the shareholders did not like the proposal. The rejected proposal was meant to "approve the compensation of our executive officers." Last year, this compensation was to the tune $24.4 million for Monty Moran and $25.1 million for Steve Ells, who are co-CEOs.
This is the largest vote against CEO pay this year, according to the CtW Investment Group. CtW works with pension funds, and these funds "have more than $250 billion in assets under management and are 'substantial' Chipotle shareholders." The investment group led lobbying for the rejection, successfully urging other shareholders to vote against the pay proposal.
Their main argument against it is that pay has been escalated every year "without clear rationale." CtW hopes to oust Darlene Friedman, the head of the Chipotle board's compensation committee. Friedman has held this title since 1995 and is up for re-election in 2016. She is currently 71 years old, so perhaps she will step down herself at the age of 73. CtW also called into question some of the elaborate perks for executives, like schooling expenses for their children and tax reimbursements. “Chipotle’s unbalanced approach to human capital management poses unacceptable risks to shareholders,” said Dieter Waizenegger, director of CtW.
Michael Pryce-Jones, a senior policy analyst at CtW, told The Street, "We were taken aback by the level of defeat. The board said this is a wake-up call for them."
Chipotle spokesperson Chris Arnold responded, "We take this very seriously. It has always been, and continues to be, a top priority that our compensation programs are driving the creation of shareholder value. We thank our investors for the feedback we have received on this issue, and will continue to engage with our investors as we review our compensation programs.”
Though the shareholder vote is non-binding, in the wake of Chipotle raising prices and a potential increase in wages for fast food workers across the board, they would be wise to heed the warnings of their investors.