Chipotle’s new chief govt is Scott Boatwright, a well-known face and title, on condition that he’s served because the interim CEO since August following former CEO Brian Niccol’s shock determination to guide a turnaround at Starbucks.
And whereas Boatwright, 52, will get a big pay enhance in his new corner-office position in comparison with his days as chief working officer and chief restaurant officer, his comp is valued properly beneath the rockstar pay of ex-CEO Niccol.
Boatwright’s deal as everlasting CEO has not been modified because the board’s compensation committee gave him a lift when he was named to the interim place. That included an fairness grant valued at $8 million he obtained after Niccol left in a bid to maintain Boatwright—and the whole govt management group at Chipotle—from leaping ship. Along with the grant, Boatwright’s interim CEO package deal introduced in August included a $1 million base wage, a possible money bonus of practically $1.2 million, a further restricted inventory award valued at $3.5 million, plus a $200,000 plane allowance. Boatwright’s most potential package deal might high $11 million, if Chipotle’s inventory value continues to carry out, however the award might be greater relying on the precise worth of Chipotle’s shares when his awards vest.
“We conducted a thorough and rigorous external search process that confirmed Scott is absolutely the best person to lead the next stage of growth at Chipotle,” mentioned board chair Scott Maw in a assertion on Monday. “Today’s announcement is an affirmation of both Scott’s leadership capability and our internal succession planning process. The board overwhelmingly believes Scott will deliver on the key strategies in place and position the company for continued success.”
The package deal marks a big rise from Boatwright’s earlier comp as COO, valued at $6.3 million within the firm’s 2023 annual shareholder report. However it’s a far cry from Niccol’s complete pay in 2023, which was valued at $22.5 million, in accordance with Chipotle’s disclosures. In an announcement, a Chipotle spokesperson declined to touch upon Fortune‘s valuation of Boatwright’s compensation. “The bulk of Scott’s compensation will be received through his equity awards, and the actual value Scott will receive is entirely dependent on achievement of the performance goals for the awards and the stock price at the time of vesting,” they mentioned.
Niccol led the burrito-bowl big from March 2018 to August 2024, driving inventory value progress of 800% and a close to sevenfold enhance in earnings, however left after Starbucks supplied him a possible $113 million pay package deal to show across the espresso chain. The majority of Niccol’s package deal at Starbucks was doled out to make up for the pay he left behind at Chipotle, with a $10 million sign-on bonus and a $75 million fairness grant.
Yr of the COO
Niccol’s departure rocked Chipotle and led to a big management shakeup on the chain, the place Niccol served in a mix CEO and chairman of the board position. In response, the Chipotle board reworked its succession plan, accelerated a number of inside C-suite promotions, and made a collection of fairness grants with a mixed complete worth of $34.5 million designed to maintain the manager management group in place whereas it looked for its subsequent Niccol.
Boatwright’s promotion from the COO submit to the CEO position is in step with S&P 500 and Russell 3000 tendencies, in accordance with a examine from The Convention Board. In 2024, a whopping 77% of S&P 500 CEOs have been promoted from inside, with the COO place the most typical springboard to the nook workplace, the examine discovered. A separate examine of S&P 1500 CEO transitions performed by search agency Spencer Stuart discovered 57% of recent CEOs have been promoted COOs or presidents, a spike from 43% in 2022, main it to dub 2023 “the year of the chief operating officer.”
As for the distinction between Boatwright’s pay and Niccol’s, it isn’t sudden. On the median, a brand new CEO is paid about 15% lower than the earlier one—normally as a result of they arrive at a reduction as a result of they’ve much less expertise, the Convention Board examine revealed. Firms in turmoil usually tend to look outdoors for his or her subsequent senior chief they usually usually pay dearly for it. Outsiders normally want important make-whole fairness grants to make up for the inventory they amassed in a earlier place. On common, CEOs employed from outdoors receives a commission 33% greater than these grown from inside, the examine revealed.
At Chipotle, Niccol’s departure additionally shook up the very best ranks. Unbiased board member Scott Maw was appointed as board chairman in Niccol’s stead, a job he nonetheless holds even with Boatwright’s promotion. The Chipotle board additionally stored its outgoing chief monetary and administrative officer Jack Hartung, who was set to retire on March 31, 2025 after 23 years within the CFO chair. As an alternative, the board named Hartung president of technique, finance, and provide chain. The board gave Hartung an $8 million retention grant, the identical worth as Boatwright’s. Each awards have two-year vesting phrases—typically designed to maintain executives of their seats throughout probably unstable instances. The board additionally awarded a pair of $7 million retention grants to chief buyer and expertise officer Curt Garner and chief model officer Chris Brandt, the corporate disclosed.
Chipotle sped up the appointments of Adam Rymer as chief monetary officer and Jamie McConnell as chief accounting and administrative officer to Oct. 1 and gave each equity-based retention grants: Rymer’s was valued at $3 million and McConnell’s at $1.5 million. The 2 have been supposed to maneuver into their roles on Jan. 1, 2025 beneath the earlier timeline that included Hartung’s retirement.
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