This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Chipotle Shareholders Don't Like the Taste of Executive Pay

NEW YORK ( TheStreet) -- Chipotle Mexican Grill (CMG - Get Report)CMG burritos may have a cult-like following among its customers, but investors in the company have soured on the pay of top executives.

According to The Motley Fool, investor groups such as the California State Teachers' Retirement System and the Florida State Board of Administration have disclosed that they will each vote against executive pay at today's annual shareholder meeting.

Companies are required to seek shareholder approval each year for compensation of their CEO and other executives.With Chipotle, the issue is that two CEOs are getting paid generously.

The company said it paid co-CEO Steve Ells $25.1 million in cash and stock last year, while the other co-CEO, Montgomery F. Moran, received $24.4 million.

Must Read: Geithner's Most Candid Crisis Moments as Told to Jim Cramer

Each CEO made more than all but the country's highest-paid CEO -- Oracle's(ORCL)ORCL Larry Ellison, who brought home close to $78.4 million in the fiscal 2013.

Supporters of Chipotle's pay package say that the company's rising stock price is positive for both investors and executives. The company's revenue and profits have doubled since 2009, while its stock has more than doubled during the past three years.

"It's still the best growth story in the restaurant industry of any size," Jason West, an analyst at Deutsche Bank, told The New York Times.

Meanwhile, those who oppose the executives' salary say that the pay structure doesn't provide proper incentive for what is in the company's best interest.

Chipotle offers its co-chiefs stock appreciation rights that do not require the executives to hold the stock for very long, meaning they can cash out quickly upon receiving their compensation.

Ells has received more than 600,000 Chipotle shares during the last four years and has sold more than 548,000 during that same time, according to the Times.

Columbia University law school professor Robert Jackson said that stock appreciation rights were flawed because they let executives ride the soaring stock market without putting any of their own money on the line.

"We can't call it pay for performance if it rewards rising tides and lets the execs cash out as soon as they're ready," Jackson told the Times,"they're really using an outdated, antiquated structure. It's not a common or preferred corporate governance practice."

CMG Chart
CMG data by YCharts

>>Read More: Gannett Turns the Page and Continues the Transformation

At the time of publication, the author had no position in any of the stocks mentioned.

Follow @macroinsights

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CMG $443.19 2.20%
AAPL $94.94 1.40%
FB $117.88 -0.58%
GOOG $694.35 -0.55%
TSLA $234.71 -2.90%


Chart of I:DJI
DOW 17,729.16 -162.00 -0.91%
S&P 500 2,059.31 -22.12 -1.06%
NASDAQ 4,760.8110 -56.7830 -1.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs