- Chipotle's board of directors appointed Brian Niccol, the company's CEO, as chairman of the board, effective immediately, according to a press release.
- The company's founder, Steve Ells, has stepped down from the position as executive chairman as well as a director. Ells cited the "good reason" clause under his employment contract for his resignation and as a result the board will continue to pay him his base $900,000 salary for two years in addition to long-term equity awards, according to an SEC filing.
- Neil Flanzraich will continue as lead independent director while directors Matthew Paull and Paul Cappuccio will not seek re-election to the board at the 2020 Annual Meeting of Shareholders. The company is also reducing the size of its board from nine to seven.
Ells' reason for wasn't specifically given, but his employment contract defines "good reason" as a decrease in base salary or annual bonus opportunity; a material diminution of the executive's duties and responsibilities as executive chairman; a relocation of the executive's primary work location more than 30 miles away; a material breach by the company of any material provision of the agreement; the company's failure to nominate an executive for election to the board; or failure of a successor to the company to assume the employment agreement.
His resignation could very well be due to his annual bonus opportunity. In the SEC filing about his departure, the company stated that its compensation committee approved the continued vesting in full of two of Ells' long-term equity awards, which he received in February 2019. If he elected to receive his bonus in cash instead of stock, the company would have had to pay him in full.
While Ells' departure, will leave a hole in the board, especially since he has been part of his company since its foundation in 1993, the company is in good hands. Niccol, who joined Chipotle in February 2018, helped steer the company out of a difficult time following food safety scares. In his first year, the company’s stock price rose 40% and became a top-10 performer in the S&P 500, according to CNN.
This momentum continued into 2019, with Chipotle consistently reporting same-store sales growth in the double-digits as Niccol led the modernization of the chain, which included a growing focus on digital orders. In 2019, Chipotle created Chipotlanes, car pickup lanes for mobile orders, and will add this element to half of its 150 to 165 new units this year. It also launched a rewards program, a second makeline and pickup shelves. All of these initiatives helped push digital sales above $1 billion in 2019, a 90% increase from 2018.
While Ells’ creation of Chipotle helped create the fast casual segment in the restaurant industry, Chipotle's digital modernization under Niccol has helped lead a transformation within the restaurant industry with chains like Wingstop and Noodles & Company also reaping the benefits of increased digital sales.