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Chipotle Gets 'Wake Up Call' on Executive Compensation

NEW YORK (TheStreet) -- Chipotle (CMG - Get Report) may be raising menu prices and forcing consumers to shell out more for their burrito bowls and guacamole-dolloped burritos, but the Denver-based chain's executive pay practices are getting scrutinized by investors.

At Chipotle's annual shareholder meeting on Thursday, investors gave the company what was referred to as a "wake up call" with regards to its executive compensation practices.

According to Michael Pryce-Jones, the senior policy analyst at CtW Investment Group, Chipotle's executive pay plan, a so-called say-on-pay proposal, received support from just 23% of shareholders, meaning that 77% of shareholders voted against the proposal -- the largest vote against CEO pay so far this year, the organization said.

"We were taken aback by the level of defeat," Pryce-Jones told TheStreet in an interview. "The board said this is a wake-up call for them." CtW Investment works with pension funds associated with Change to Win, a federation of unions representing more than 6 million workers in the U.S. The pension funds have more than $250 billion in assets under management and are "substantial" Chipotle shareholders.

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Leading up to the vote, investors and corporate governance firms Institutional Shareholder Services (ISS) and Glass Lewis were urging shareholders to oppose the compensation for Chipotle's unusual co-chief executive structure in which co-founder, chairman and co-CEO, Steve Ells, received a package worth $25.1 million for 2013. Monty Moran, the successful burrito chain's other co-CEO, received a package worth $24.4 million for 2013. The proposal was Proposal B on the meeting's docket -- "An advisory vote to approve the compensation of our executive officers as disclosed in this proxy statement."

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