Chipotle Mexican Grill Inc. founder Steve Ells, who announced plans this week to step down as CEO, will be awarded stock options with an ambitious price target — a sign the company has high hopes for its shares in the coming years.
Ells will get 175,000 options in January with an exercise price of $500 or the closing price on the date they’re granted – whichever is bigger. The stock has slid 18 percent this year to $307.59 on Friday, meaning the shares will have to gain more than 60 percent for the executive to see a payoff.
He can exercise the options 18 months after they’re granted, the Denver-based company said Friday in a regulatory filing. The securities will expire after five years, which is shorter than the usual seven- or 10-year life of options granted to public company executives.
Even as Ells vacates the CEO role, he plans to remain closely involved with Chipotle, staying on as executive chairman. The company embarked on a search for a new leader on Wednesday after struggling to pull out of a two-year slump. Foodborne-illness outbreaks and other woes – including a data breach — have dogged the burrito chain, hammering its share price and reputation.
Ells, who’ll remain CEO until a successor is found, will also receive a $900,000 base salary in his new role, down from $1.54 million, and be eligible for a $900,000 target annual bonus.
During Chipotle’s heyday – prior to 2015 — Ells drew criticism for overly generous compensation. CtW Investment Group had railed against the pay packages, saying Ells and former co-CEO Monty Moran were treated like “sun kings.”