
Why Did Chipotle's Stumbling CEOs Earn Millions More Than McDonald's CEO?
Despite McDonald's (MCD) - Get Report comeback last year and its much larger size relative to Chipotle (CMG) - Get Report , the hamburger chain's new CEO still didn't earn anywhere near as much as the co-CEOs of Chipotle who presided over a disastrous 2015.
What's wrong with this picture?
McDonald's revealed in its latest proxy statement on Friday that CEO Steve Easterbrook raked in $7.9 million in total compensation in 2015, up from $1.7 million in 2014. Easterbrook, who assumed the CEO position in early 2015, earned just more than $1 million in base salary with the remainder of his compensation coming in the form of stock and options awards, and a non-equity incentive plan.
It's hard to argue that Easterbrook didn't earn his pay.
Shares of McDonald's surged about 28% last year, trouncing the 1.2% drop for the Dow Jones Industrial Average. Thanks in part to the launch of all-day breakfast last October, McDonald's fourth-quarter U.S. same-store sales surged 5.7%, while operating income popped 30% from the prior year.
Meantime, it's difficult to justify another year of lavish pay for Chipotle's top two execs.
According to a regulatory filing in March, Chipotle's co-CEO and founder, Steve Ells, earned $13.8 million in total compensation in 2015, down from a jaw-dropping $28.9 million in 2014. Monty Moran, Chipotle's other CEO, saw his total compensation decline to $13.6 million in 2015 from a whopping $28.1 million the year before.
Both well-paid Chipotle executives presided over one of the biggest food safety incidents in fast-food history, causing consumers to flee its restaurants and investors to dump the stock. Chipotle's fourth-quarter same-store sales plunged 14.6%, with earnings per share nosediving 43.5%. The outlook for the first quarter, meanwhile, is equally as tough to stomach.
Shares of Chipotle shed roughly 30% in 2015.
Chipotle's continued egregious CEO compensation and its high-profile operating stumbles last year, a reflection of a weak board of directors, has landed it in new hot water.
On Wednesday, CtW Investment Group, which works with union-sponsored pension funds with more than $250 billion in assets under management, demanded several changes to Chipotle's board in a scathing letter. Citing a flawed recruitment process for board members, CtW said long-time Chipotle board members Patrick Flynn and Darlene Friedman shouldn't be re-elected at Chipotle's May 11 annual meeting.
The group also cited other issues with Chipotle's board such as excessively long director tenures (a median tenure of 17 years) and low demographic diversity (all-white and overwhelmingly male).









