Chipotle Mexican Grill CEO Brian Niccol had a bit of a pay cut last year, despite the fast-casual chain’s stellar performance.
According to proxy filings with the Securities and Exchange Commission Monday, Niccol earned a total of $17.2 million last year. That’s down from the $17.9 million in total compensation earned in 2021.
Niccol’s base salary of $1.25 million has not changed since 2020, though other executives got a raise last year. CFO Jack Hartung, for example, saw his base salary increase 2% to $865,000 in 2022, compared with $850,000 the year prior.
In addition to base pay, Niccol’s compensation package included another $8 million in stock awards, and $5.4 million in option awards. Another $2.1 million came from company performance factors, and another $319,359 from other sources (including company contributions to his retirement plan, and use of a private jet).
The variation between 2022 and the year prior appears to be tied to stock performance and shifts in incentive compensation.
Chipotle’s stock declined 10% in 2022, but the public company fared better than most. The S&P 500 lost more than 18% of its value last year and most restaurant companies saw declines.
The $2.1 million Niccol earned in incentives resulted from achieving 94% of his company targets, which included metrics like same-store sales, margins and goals related to issues like sustainability and increasing diversity within leadership ranks.
Niccol did a bit better with his goals in 2021, when he earned about $4.3 million in incentive compensation, the result of surpassing his goals by 193%. That was a year when Niccol delivered revenue growth of 26.1% to $7.5 billion. Same-store sales were up 19.3% and restaurant margins were 22.6%, despite the ongoing challenges from COVID and its variants at the time.
In 2022, revenue increased more than 14% to $8.6 billion and same-store sales were up 8% and restaurant-level margins grew to 23.9%, despite soaring commodity inflation.
Of course, the past two years have been a return to normalcy after Niccol’s compensation packaged topped a whopping $38 million in 2020, a year when the fast-casual chain’s stock price surged more than 58% over it’s pre-pandemic peak. But that was a year when certain financial targets already set when Niccol was hired as CEO in 2018 were waived because of the pandemic.
In keeping with the Dodd-Frank Act, which requires public companies to disclose the ratio of their CEOs annual total compensation in relation to the median compensation for all employees, Niccol’s $17.2 million in 2022 was about 1,073 times the compensation of the median (non-CEO) team member at Chipotle.
For that calculation, however, Chipotle is a bit different from most restaurant chains in that the company owns its restaurants and pays all of its crew members. For restaurant chains that franchise, franchisees would likely pay many hourly crew members, not the corporate employer, which would impact the calculation of median pay.
At Chipotle’s annual shareholder meeting, scheduled for May 25, shareholders will be asked to vote on the frequency of the vote on executive compensation, or “say on pay.”
Currently, shareholders are asked to vote every year, but this year they will be asked to vote on whether that should continue, or if the compensation review should occur every second or third year.
The proposal is non-binding as an “advisory vote.” The board recommends keeping “say on pay” as an annual process.
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