Touch the Soil News #371
After giving the nation the largest food poisoning outbreak from any single restaurant chain, Chipotle said in a recent press release that their food safety practices were already well within industry norms. What does this say about the industry, health inspections and Chipotle?
Despite words and efforts to improve, Chipotle has taken a financial beating. Financial results for the first quarter of 2016 – compared to the first quarter of 2015 were way off. Revenues decreased 23.4 percent and the company experienced a net loss of 26.4 million.
How long do you think it will take for customers to regain full confidence in Chipotle?
Chipotle’s top executive officers also took a beating in 2015. The top four executives, including Co-CEO Steve Ellis and Co-CEO Monty Moran, received total compensation back in 2014 of $72.7 million – not bad for the top four executives’ performance that preceded one of history’s greatest food poisoning events. (Source: 2016 proxy statement)
In 2015, the top four executives received combined compensation of $37.7 million. Certainly the food poisoning events contributed to the decline in compensation. The $37.7 million in compensation between the top four executives is certainly gracious and reveals that executive management was shielded from the full effects of the company’s mistakes. Do you think any of the lower employees – who might have fought valiantly to help arrest the food poisoning outbreaks – were made millionaires many times over?
While the executives of Chipotle may receive millions each year, they have a not-so-fun job that faces them. They have to answer to a group of five (5) institutional investors who are some of the most powerful financial forces in the world. From Chipotle’s 2016 proxy statement, here are the investment firms, their holdings and the dollar amount of assets they manage
Following are brief statistics on the group of five (5) institutional investors who own 41.2 percent of Chipotle. Included in their ranks are the largest investment enterprises ever in history.
Name: Fidelity Investments
Percent Chipotle Ownership: 12.44 percent
Assets Managed: $5,100 billion
Name: The Vanguard Group
Percent Chipotle Ownership: 8.82 percent
Assets Managed: $3,000 billion
Name: BlackRock, Inc.
Percent of Chipotle Ownership: 7.58 percent
Assets Managed: $4,600 billion
Name: T. Rowe Price Associates
Percent of Chipotle Ownership: 7.08 percent
Assets Managed: $765 billion
Name: Sands Capital Management, LLC
Percent of Chipotle Ownership: 5.28 percent
Assets Managed: $44.2 billion
Together, these five (5) investment firms own 41.2 percent of Chipotle. Together they manage $13.5 trillion dollars of their customers’ money. They have a say in the finances and operations of most of the Global Fortune 1,000 companies. If Chipotle does not perform for them – heaven help Chipotle.
Following is a short video clip interview of Steve Ells, CEO of Chipotle as he discusses the Chipotle food poisoning drama: