Shareholders at Chipotle Mexican Grill have voted overwhelmingly to reject the way the fast-food company compensates senior executives.
About 77 percent of shareholders voted against the say-on-pay plan, Chipotle said Thursday at its annual shareholders meeting. The vote, while advisory and non-binding, is a "wake-up call for Chipotle and other companies who've awarded huge compensation packages and equity grants to executives, says Michael Pryce-Jones of CTW Investment Group, which had launched the proposal.
CTW had said executive pay had been continuously escalated without clear rationale and had been seeking the ouster of director Darlene Friedman, who heads Chipotle's board compensation committee. Friedman, 71, has been a board member since 1995. She is not up for re-election until 2016.
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About 27 percent of shareholders voted against the say-on-pay measure at Chipotle's 2013 shareholder's meeting. "They should have gotten the wake-up call last year,'' Pryce-Jones tells USA Today.
Chipotle co-CEO Steve Ells received compensation valued at $25.1 million last year after making $19.7 million in 2012 and $19.4 million in 2011. Co-CEO Monty Moran's compensation was valued at $24.4 million in 2013, $19.1 million in 2012 and $18.7 million in 2011. CTW also questioned some of the perks provided to executives, including schooling expenses for Moran's children and tax reimbursements on perks for both Ells and Moran.
Both Ells and Moran have profited on equity awards. Ells gained $41.7 million exercising stock options last year and gained another $20.4 million from vested shares. Moran gained $1.7 million exercising options in 2013, plus $20.4 million from vested shares, according to Chipotle's March proxy statement.