Chipotle heads suffer compensation cut following E.Coli impact
Chipotle, a US-based restaurant chain, which recently battled with outbreaks of E.Coli associated with its restaurants, slashed its executives' pay for the year 2015. The restaurant chain's decision to trim salaries come amid the E.coli incident that pushed the company to shut its stores and report ugly numbers during the fourth quarter of 2015.
In a regulatory filing released on Friday, Chipotle said that its executives will not receive any bonus for 2015 as a result of the E.coli incident. With regard to this salary policy, Steve Ells, co-chief executive officer and Chairman, will receive $13.8 million as compensation for 2015, down from $28.9 million in the previous year.
Moreover, Monty Moran, another co-chief executive officer, will receive a total compensation of $13.56 million, down from $28.15 million in 2014. Chief financial officer Jack Hartung's compensation dropped to $6.03 million from $10.24 million in the prior year. While, the compensation of Mark Crumpacker, chief creative and development officer declined to $4.3 million from $5.3 million in 2014.
The restaurant company unveiled a new structure for its performance share awards program for 2016 owing to the decline in stock value during the last six-month period of 2015. According to the company, compensation program for executives includes three key components like base salary, annual cash bonus, and equity compensation. Chipotle also said that its forthcoming compensation will be based on stock value performance.
Both Steve Ells and Monty Moran received option awards of $23.7 million in 2014 but they were deprived of option awards in 2015. However, the company paid both executives stock awards of $12 million each in 2015 to offset the loss of option awards. Chipotle also increased base salaries by nearly $100,000 - $1.5 million for Steve Ells and $1.3 million for Monty Moran, as reported by THE WALL STREET JOURNAL.
Shares of Chipotle fell 0.2% to $506.80 in the after-hours trading session on Friday. Last month, the restaurant chain reported its first fall in quarterly profits, impacted by E.Coli outbreaks. The company's total revenue dropped 6.8%, with comparable-restaurant sales dropping 14.6% during the fourth quarter of 2015.
Meanwhile, a Chipotle restaurant in Billerica closed its doors after a worker confirmed positive for norovirus. Billerica Board of Health's director, Richard Berube, said USA TODAY that the restaurant will begin its operations on Thursday if employees test negative for norovirus. Berube added that the company will examine its employees through symptom inquiry form and stool sample. The stock of Chipotle is down 20% over the past 12-month period.
The company has promised to take safety measures to prevent sickness outbreaks in the future. The E.coli outbreak in the recent period has burdened the company's stock price, leading Chipotle to slash its CEOs' compensation.