Brian Niccol, Chipotle's CEO, will take on an additional role as chairman with Ells' departure.
Shares of Chipotle fell 3.63% to $701.12 a share as the markets extended their rout amid escalating concerns over the deadly coronavirus.
Ells cited a "good reason" clause in his employment contract for his decision to step down, with Chipotle's board agreeing to pay his $900,000 salary for the next two years, the company said in a filing with the Securities and Exchange Commission.
Ells' employment contract requires him to abide by unspecified "restrictive covenants" for two years. In exchange for extending those restrictive covenants for an additional two years, Ells will pocket a $1 million a year incentive plan bonus each year for two years, with Chipotle also picking up the tab for his insurance premiums.
"Steve is a visionary founder who not only created a new and successful brand, but also revolutionized casual dining with the introduction in 1993 of Chipotle and the concept of food with integrity," said Neil Flanzraich, lead independent director, in a press statement.
Chipotle is also cutting the size of its board to seven members, down from nine.
Mathew Paull, a director appointed to the board under an agreement with Pershing Square Capital in 2016, will not stand for re-election, while the company has decided not to nominate Paul Cappuccio, who recently accepted another full-time job, to another term on the board.