A year ago, Chipotle Mexican Grill shareholders shocked the business world when they rejected the compensation package for the company’s co-CEOs by 77 percent in a proxy vote.
It was a non-binding vote but still a clear sign of percolating dissatisfaction with outsized pay for even highly successful executives such as Steve Ells and Montgomery Moran. They had received, respectively, $25.1 million and $24.4 million in 2013.
But a fat lot of good the shareholders’ protest did.
, “In 2014, Ells and Moran made $28.9 million and $28.2 million, respectively, including $23.7 million each in option awards.”
, “Ells, who founded the company in 1993, pulled in another $41.6 million exercising previously awarded stock options.”
The point is not so much to knock Denver-based Chipotle, whose annual meeting is scheduled to begin Wednesday in Denver. The company remains highly successful and Ells is a true entrepreneur. Unlike some CEOs who preside over legacy industries that barely tread water, he clearly deserved to become rich.
But the question — for Chipotle and for many other companies that provide their top executives with mind-boggling compensation packages that are cumulatively worth hundreds of millions of dollars — is how much is enough? At what point does the package appear unseemly, or even grotesque, particularly at a time when average worker pay continues its lackluster rebound?
Given the buoyant stock market and the way in which top executives are rewarded with stock options and shares, 2014 may have been a record year for CEO pay, . But as corporate governance expert Paul Hodgson understandably asked, “How much does stock performance have to do with the CEO, and how much is it just market conditions lifting stocks?”
No wonder that publication also reports that “At least four pay proposals are up for a vote at [Chipotle’s] annual meeting … including one that shareholders sign off on equity compensation before awards are granted by directors.”
That’s what you should expect when you allow CEO pay to soar into the stratosphere.
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