STEVE INSKEEP, HOST:
yesterday, Chipotle restaurant chain shareholders made a rare and surprising move. They voted down a lavish compensation package for two top executives.
NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: Chipotle is one of the fastest-growing restaurant chains in the country and its stock price has exploded in recent years. And that makes what happened at yesterday's shareholder meeting in Denver all the more unusual. Scott Stringer is New York City comptroller and manages the city's pension fund.
SCOTT STRINGER: This was an unprecedented show of dissent by shareholders. A message was sent to the Chipotle board that they couldn't stomach its bloated executive pay plan anymore.
ZARROLI: Under Chipotle's pay plan founder and co-chief executive Steve Ells made over $25 million last year and co-chief executive Montgomery Moran made almost as much.
Patrick McGurn special counsel at Institutional Shareholder Services says that's well above what CEO's make at restaurant companies of a similar size. And McGurn says there's another problem. Much of the money paid to the men is in the form of stock options. Companies like to give their executives stock as a kind of performance incentive. They're likely to work harder when their personal wealth is tied up in the company. But McGurn says Chipotle executives weren't required to hold on to the stock very long.
PATRICK MCGURN: It leads to a situation where the executives tend to exercise and then sell the underlying shares and pocket the proceeds rather than holding onto the stocks to align their interests with other investors.
ZARROLI: In recent years, shareholders have gone along with the company's pay plan but this year they did an about face. The vote yesterday is technically non-binding which means the board can still override it. But board members have to be careful about flouting the wishes of shareholders, especially in the face of such an overwhelming vote. And Chipotle officials issued a statement yesterday saying they took the vote very seriously.
Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.