"Tumultous" is the first word that comes to mind when thinking of Chipotle's performance in 2015. The company's much-lauded move to a menu free of all GMO ingredients was quickly followed up by norovirus and e. coli outbreaks at locations around the country, spurring commentary that their all-natural menu was no longer sustainable. Despite the foodborne illness scares, the company did not seem to lose much credit with Millennials. They didn't seem to lose much market share to competing Mexican quick-service restaurants, either.
Perhaps it is due to their cult status, but it appears Chipotle weathered the storm in ways that other fast-food outlets simply could not. Their co-CEOs, however, were not so lucky. Steve Ells and Monty Moran were both rewarded with compensation over $13.5 million for 2015, but that represented a major downgrade compared to the year prior. In 2014, Ells walked home with $28.9 million, while Moran brought home $28.2 million.
Ironically, both of the co-CEOs received raises in their base salaries. The company noted that the increases were warranted since those base salaries were unchanged since 2012. In it's filing, however, Chipotle made it clear that its recent stumbles were not acceptable. The foodborne illness scares led to a 14.6% drop in sales at same-store locations, representing the first decline since the Denver-based company went public.
As performance fell well short of its goals, no bonuses were paid to executive officers. And since the company ended the year with a damaged stock price, it adjusted the vesting of the executive's stock awards for 2016 to ensure shareholder's value is met first.
It will be interesting to see how the company bounces back following this news. Even though Chipotle wasn't breaking new ground ensuring its executives didn't receive bonuses following the stock price drop encountered last year, I can see certain Millennial populations seeing this as a positive, further enhancing the brand's commitment to an "ethical" lifestyle. And I'm sure Ells and Moran will be motivated to get the brand back to where it was before 2015: the company will keep the bonus structure in place as it continues "to motivate [its] executive officers ... thereby rebuilding customer confidence in the Chipotle brand. If that happens, [it believes] improved business results and stock price performance will follow."
Chris focuses on fresh, canned and frozen fruit and fresh and dried vegetables for the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He is a proud Rutgers University alumnus with a degree in English, and has a background in web writing for a variety of industries, including legal, foodservice and small-to-medium sized businesses. In his downtime you can find him watching New York Yankees baseball, hiking, enjoying live music and spending time with his dog Kaiden. He invites you to contact him via email at email@example.com to talk about anything food-related.
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