Chipotle’s Bosses Get Extra $64.4 Million From Tweak to Results
(Bloomberg) -- Chipotle Mexican Grill Inc.’s five most-senior executives received an additional $64.4 million of awards last year after the company’s board tweaked bonus calculations to exclude abysmal sales from the first few months of the pandemic lockdown.
The company stripped out certain results for March, April and May of 2020, when government restrictions forced it to close restaurants and limit service to delivery and takeout, according to a regulatory filing Monday. Chipotle said it also excluded some cost increases attributable to the pandemic.
The changes added $23.6 million to Chief Executive Officer Brian Niccol’s total compensation, pushing his 2020 pay to $38 million, more than double what he received in 2019. Four other bosses, including Chief Financial Officer Jack Hartung, also saw their compensation more than double from the prior year.
In the year since the coronavirus pandemic struck the U.S., scores of companies have tweaked payout terms for bonuses given to senior bosses to discount unfavorable results, or handed them new awards to compensate for losses. Those moves will be on trial at annual meetings in coming months, when shareholders cast their annual advisory votes on executive compensation.
Chipotle said in the filing that it made the adjustments after conferring with five of its top shareholders on how to best modify certain payout hurdles to reward executives for the work they’ve done since 2018 with “turning around the business.” It also imposed a two-year vesting period for the bulk of the additional payouts, which were made in restricted shares.
Chipotle’s comparable sales -- a key industry measure -- climbed slightly in 2020 thanks to soaring revenue from online orders, even though store closures and higher delivery-related expenses weighed on results. Still, the company opened more stores last year and its shares rose 66%.
The stock climbed 1% at 10:44 a.m. Monday in New York.
In addition to adjusting the top executives’ compensation calculations, Chipotle said almost 1,000 other employees who are part of the same incentive plan also received special payouts. Chipotle didn’t disclose how much money they collectively received.
Chipotle’s typical employee -- a part-time worker in Illinois who logs 25 hours per week -- was paid $13,127 in 2020, the filing said.
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