'Overstuffed' exec pay rejected by Chipotle investors

Shareholders of Chipotle Mexican Grill Thursday overwhelmingly rejected an executive compensation plan that critics said left company chieftains "overstuffed" at the expense of shareholders.

Just 23 percent of Chipotle's shareholders voted in favor of the company-backed "say-on-pay" proposal at Thursday's annual meeting, a Chipotle spokesman said.

The CtW Investment Group, which advises union-sponsored pension funds, applauded the condemnation of "bloated" and "overstuffed" pay for the leaders of the famed burrito chain.

"With this overwhelming rejection of the pay plan by the Company's owners, we expect our board to get to work reining in runaway executive pay at Chipotle," said Dieter Waizenegger, director of CtW Investment Group.

"Chipotle's unbalanced approach to human capital management poses unacceptable risks to shareholders."

Chipotle's compensation plan lifts chairman and co-chief executive Steve Ellis' total compensation from $19.7 million in 2012 to $25.1 million 2013, with most of the compensation in stock awards and option awards, according to a securities filing.

The plan is similar for co-chief executive Monty Moran, raising his pay from $19.1 million in 2012 to $24.4 million in 2013.

The plan could lead to compensation close to $300 million in three years, according to CtW.

Thursday's vote is non-binding, but a Chipotle spokesman said the company will review the compensation program.

"We take this very seriously," said Chipotle spokesman Chris Arnold. "We thank our investors for the feedback we have received on this issue, and will continue to engage with our investors as we review our compensation programs that build value for all of our investors."

Charles Elson, a corporate governance expert at the University of Delaware, said resounding shareholder defeats of company-backed plans are unusual. Thursday's vote could set Chipotle's leadership up for more tussles with shareholders, he added.

"Anytime you get a 'no' vote on compensation, you are vulnerable," Elson said. "You suddenly appear on a lot of peoples' screens."

The Chipotle shareholder vote came as fast-food workers in Miami, New York and other cities organized strikes to push for higher wages.

Arnold said Chipotle has not taken a position on whether the US minimum wage should be lifted and that the chain has not seen "any significant activity" at its restaurants surrounding the minimum wage campaign.