How Much Is Too Much?

Or is there even such a thing, when you're talking about CEO pay?

There are certainly some people who will argue that there's no such thing as too much; that the big guys earn the big bucks because they're so smart and so capable. But maybe attitudes are changing, just a little bit.

This morning's New York Times carried a DealBook article by David Gelles on the remarkable pay package proposed for Chipotle Mexican Grill co-chief executives Steve Ells and Montgomery Moran. Chipotle is arguably one of the hottest chains out there today, and the company rewarded its chiefs last year with cash and stock in excess of $24 million. Each.

As Gelles noted,

Each man individually made more than the chief executives of larger companies like Ford, Boeing and AT&T. Together, they made more than all but the highest-paid chief executive among the country’s biggest 100 companies, Lawrence J. Ellison of Oracle.

I'm not going to say that running Chipotle is easy, but it strikes me as a lot less complex than running Boeing.

And last year was not an aberration: "Since 2011, Mr. Ells and Mr. Moran have each made more than $100 million on top of their salaries through a complex mix of stock awards."

Most troublesome is the huge gap between executive pay and front-line pay:

...[Although] general managers at Chipotle can earn upward of $100,000 a year, the average starting salary at one of the company’s 1,600 restaurants is about $21,000 annually. Earning that wage, a Chipotle employee would have to work for more than a thousand years to equal one year of the co-C.E.O.s’ pay.

Ells and Moran hit on a great concept and have rolled it out brilliantly. They deserve to be well-compensated. But the skills to be great entrepreneurs aren't necessarily the skills needed to be great managers. And if what they are now is managers, shouldn't they be paid as managers?

One investor, who was planning to oppose the pay proposal, said, "It's a reckless pay structure that does nothing to appropriately incentivize management to create long-term value.... Their pay is out of whack however you measure it."

At last year's shareholders meeting, "27 percent of shareholders... voted against the company's compensation package." Gelles surmised that the number might be higher this year.

And he was right. In a follow-up story posted online later today, Gelles reported that

More than 75 percent of investors voted against Chipotle’s say-on-pay measure, which asked investors to ratify a compensation plan that would continue such payments to Steve Ells, Chipotle’s founder, and his co-chief, Montgomery Moran, over the next few years. That was the highest vote against any say-on-pay measure among the country’s largest 3,000 companies this year.

The motion is of course non-binding, but "Chipotle said it was taking investor sentiment into consideration." We'll see....