Chipotle’s new chief government is Scott Boatwright, a well-known face and identify, provided that he’s served because the interim CEO since August following former CEO Brian Niccol’s shock resolution to guide a turnaround at Starbucks.
And whereas Boatwright, 52, will get a major pay increase in his new corner-office position in comparison with his days as chief working officer and chief restaurant officer, his comp is valued effectively under the rockstar pay of ex-CEO Niccol.
Boatwright’s deal as everlasting CEO has not been modified for the reason that 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 acquired after Niccol left in a bid to preserve Boatwright—and the whole government 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 worth continues to carry out, however the award could possibly be greater relying on the precise worth of Chipotle’s shares when his awards vest.
“We performed a radical and rigorous exterior search course of that confirmed Scott is completely the perfect individual to guide the subsequent stage of development at Chipotle,” stated board chair Scott Maw in a assertion on Monday. “At the moment’s announcement is an affirmation of each Scott’s management functionality and our inner succession planning course of. The board overwhelmingly believes Scott will ship on the important thing methods in place and place the corporate for continued success.”
The package deal marks a major rise from Boatwright’s earlier comp as COO, valued at $6.3 million within the firm’s 2023 annual shareholder report. But it surely’s a far cry from Niccol’s whole pay in 2023, which was valued at $22.5 million, in accordance with Chipotle’s disclosures. In a press release, a Chipotle spokesperson declined to touch upon Fortune‘s valuation of Boatwright’s compensation. “The majority of Scott’s compensation will likely be obtained by means of his fairness awards, and the precise worth Scott will obtain is fully depending on achievement of the efficiency targets for the awards and the inventory worth on the time of vesting,” they stated.
Niccol led the burrito-bowl big from March 2018 to August 2024, driving inventory worth development 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.
12 months of the COO
Niccol’s departure rocked Chipotle and led to a major management shakeup on the chain, the place Niccol served in a mixture CEO and chairman of the board position. In response, the Chipotle board reworked its succession plan, accelerated a number of inner C-suite promotions, and made a collection of fairness grants with a mixed whole 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 publish to the CEO position is consistent with S&P 500 and Russell 3000 traits, in accordance with a research from The Convention Board. In 2024, a whopping 77% of S&P 500 CEOs had been promoted from inside, with the COO place the commonest springboard to the nook workplace, the research discovered. A separate research of S&P 1500 CEO transitions performed by search agency Spencer Stuart discovered 57% of latest CEOs had been promoted COOs or presidents, a spike from 43% in 2022, main it to dub 2023 “the 12 months of the chief working 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 research revealed. Corporations in turmoil usually tend to look outdoors for his or her subsequent senior chief and so they usually pay dearly for it. Outsiders normally want important make-whole fairness grants to make up for the inventory they accrued in a earlier place. On common, CEOs employed from outdoors receives a commission 33% greater than these grown from inside, the research revealed.
At Chipotle, Niccol’s departure additionally shook up the very best ranks. Impartial board member Scott Maw was appointed as board chairman in Niccol’s stead, a task he nonetheless holds even with Boatwright’s promotion. The Chipotle board additionally saved 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 a substitute, 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—usually designed to maintain executives of their seats throughout doubtlessly unstable instances. The board additionally awarded a pair of $7 million retention grants to chief buyer and know-how 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 had been supposed to maneuver into their roles on Jan. 1, 2025 beneath the earlier timeline that included Hartung’s retirement.
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