http:\/\/fortune.com\/2016\/03\/14\/chipotle-bonus\/<\/b><\/a> <\/b><\/p>\n <\/p>\n
Chipotle
\nMexican Grill’s (cmg, +1.35%) top bosses have extra reason to make sure the
\nburrito chain recovers from its year of food safety mishaps: their
\ncompensation.<\/p>\n
<\/p>\n
Last year, the
\nfast-service restaurant chain was rocked by an E.Coli outbreak that closed
\ndozens of restaurants and made headlines for months, decimating its sales
\nresults and keeping diners away for months: last quarter, same-restaurants
\nsales (which exclude the impact of newly opened or closed outlets) fell 15%. It
\nwas also hurt by norovirus outbreaks at two Boston-area restaurants, the most
\nrecent case occurring last week.<\/p>\n
<\/p>\n
Those
\nincidents, as well as a federal probe into its food safety practices, have
\nweighed on Chipotle’s shares, which remain about 33% below pre-crisis peaks, a
\ntough reversal of fortune for the one-time Wall Street darling. (They are now
\ntrading in the low $500-range, up from around $400 at the trough in December as
\nthe crisis seems to be ebbing, last week’s norovirus case notwithstanding.)<\/p>\n
So now,
\nChipotle’s brass will future compensation tied directly to the company\u2019s share
\nprice performance, according to a filing with the U.S. Securities and Exchange
\nCommission.<\/p>\n
<\/p>\n
In the filing,
\nChipotle’s board said that share prices would have to return to above $700 for
\n30 straight days to trigger the new stock awards, meaning shares have to rise
\n40% or so for those incentives to kick in.<\/p>\n
<\/p>\n
“We had
\nconcerns that using 2015 year-end financials or stock price at the beginning of
\n2016 as the basis for relative performance evaluation for a 2016 performance
\nshare program could create a misalignment of shareholder returns and executive
\nofficer compensation,\u201d lead director and compensation committee chair Neil
\nFlanzraich said in a letter to shareholders included in securities filing.<\/p>\n
<\/p>\n
\n
Chipotle’s
\nco-CEO’s, Monty Moran and Steve Ells, have already been dinged by the food
\nsafety crisis: neither received bonuses for 2015, so their total compensation
\nfell by about half each.<\/p>\n
<\/p>\n<\/div>\n
<\/p>\n
Use the Rothaermel
\n6th<\/sup> edition textbook pages 468-469 to review how Executive
\nCompensation can be used as a governance mechanism and answer the questions
\nbelow.<\/p>\n <\/p>\n
1. Explain how the changes relating to
\nbonuses of executives (agents) help better align agent interests with
\nshareholder (principals) interest.<\/b><\/p>\n
<\/b><\/p>\n
<\/b><\/p>\n
<\/b><\/p>\n
2. What types of unintended consequences
\nmight occur by setting the target stock price so high above the current price
\nbefore executives qualify for bonuses?<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
Review the news article below and respond to the questions that follow. Chipotle\u2019s CEOs Have Taken a Huge Paycut Phil Wahba Mar 14, 2016 http:\/\/fortune.com\/2016\/03\/14\/chipotle-bonus\/ Chipotle Mexican Grill’s (cmg, +1.35%) top bosses have extra reason to make sure the burrito chain recovers from its year of food safety mishaps: their compensation. Last year, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","meta":[],"disciplines":[],"paper_types":[],"tagged":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/questions\/20625"}],"collection":[{"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/questions"}],"about":[{"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/types\/questions"}],"author":[{"embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/comments?post=20625"}],"version-history":[{"count":0,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/questions\/20625\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/media?parent=20625"}],"wp:term":[{"taxonomy":"disciplines","embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/disciplines?post=20625"},{"taxonomy":"paper_types","embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/paper_types?post=20625"},{"taxonomy":"tagged","embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/tagged?post=20625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}