Because of Chipotle's COVID performance, the company rewarded CEO Brian Niccol with $38 million in compensation in 2020—a 137 percent increase year-over-year.
In a letter to shareholders, Chipotle’s compensation committee said leadership’s pay structure was determined prior to COVID and that achievement of financial metrics was negatively impacted. The committee decided to adjust metrics to “fairly reward the leadership’s team’s extraordinary success in developing and executing the turnaround strategy that has benefited employees and guests, as well as shareholders.”
Even though metrics set in 2018 weren’t fulfilled, Chipotle said the leadership team “achieved the underlying ultimate goal of turning around the business and delivering industry-leading shareholder value creation.” The compensation committee also took into consideration the brand’s outperformance of peers during COVID and how the leadership team executed a digital transformation strategy, strengthened food safety and quality, and built brand loyalty.
“Chipotle’s top-of-the market shareholder returns were largely propelled by rapidly expanding digital capabilities that are scalable and sustainable and that positioned us well to adapt to the COVID-19 operating environment,” the compensation committee said in its letter. “Additionally, the organization ensured that the safety and well-being of employees and guests always remained the top priority, even being recognized as the top restaurant for COVID-19 safety measures in June 2020, according to data by Ipsos’ Consumer Health and Safety Index.”
Since Niccol joined the company in 2018, Chipotle’s market-capitalization value has grown by more than $30.6 billion, or a 475 percent increase. More than half of that growth can be attributed to 2020, when share price lifted 65.7 percent. In 2020, revenue increased 7.1 percent to $6 billion, and digital sales skyrocketed 174.1 percent, representing 46.2 percent of sales. The brand also opened 161 new stores, including 100 Chipotlanes, and added more than 10 million members to its loyalty program, which now includes 18.6 million customers.
Not including the COVID-related modifications, Niccol would’ve earned $14.8 million. The CEO made $16.1 million in 2019 and $33.5 million in 2018. CFO Jack Hartung earned $19 million in 2020, or $5.1 million without the COVID-related modifications. Hartung took in $7.5 million in 2019 and $5 million in 2018.
Chief Technology Officer Curt Garner earned $17.2 million ($4.6 million without adjustments), Chief Restaurant Officer Scott Boatwright earned $12 million ($4.02 million without adjustments), and Chief Marketing Officer Chris Brandt earned $10.9 million, ($3.96 million without adjustments).
Niccol’s pay is allocated based on long-term incentives, 69 percent; annual bonus, 22 percent; and base salary, 9 percent. For other executives, it’s long-term incentive, 69 percent; base salary, 16 percent; and annual bonus, 18 percent. Going forward, a portion of Chipotle’s executive compensation plans will be tied to ongoing diversity and sustainability goals.
Chipotle paid nearly $40 million in bonuses and assistance pay to its restaurant workers and spent more than $13 million in tuition costs. The chain also hired roughly 114,120 new employees and promoted about 11,000 workers.