Chipotle – Economic Inequality – 2016
Outcome: Omitted by SEC
RESOLVED: Chipotle Mexican Grill, Inc. shareholders urge the Board to adopt principles for minimum wage reform, to be published by October 2016.
This proposal does not encompass payments used for lobbying or ask the company to take a position on any particular piece of legislation.
We believe that principles for minimum wage reform should recognize that:
1. A sustainable economy must ensure a minimum standard of living necessary for the health and general well-being of workers and their families; and
2. The minimum wage should be indexed to maintain its ability to support a minimum standard of living; and to allow for orderly increases, predictability and business planning.
Until the early 1980s, an annual minimum-wage income – after adjusting for inflation – was above the poverty line for a family of two. Today, the federal minimum wage of $7.25 per hour, working 40 hours per week, 52 weeks per year, yields an annual income of only $15,080, well below the federal poverty line for families.
Poverty-level wages may undermine consumer spending and corporate social license. Income inequality is recognized as an economy-wide problem. For example, an S&P research brief stated “increasing income inequality is dampening U.S. economic growth.” Peter Georgescu, chairman emeritus of Young & Rubicam, wrote in an op-ed Capitalists, Arise: We Need to Deal With Income Inequality “Business has the most to gain from a healthy America, and the most to lose by social unrest”.
There are examples of CEOs supporting strong wages and indexing:
• Costco CEO Jelinek wrote to Congress urging it to increase the minimum wage. “We know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty”.
• Morgan Stanley CEO Gorman, McDonald’s CEO Thompson, and Panera CEO Shaich have indicated support for minimum wages to be raised.
• Subway CEO DeLuca supports minimum wage indexing because it allows for business planning.
• Aetna’s CEO Bertolini, said paying less than $16.00 per hour is “unfair.”
According to polls, minimum wage reform is one of the most significant social policy issues.
Chipotle, an international company, also faces exposure to minimum wage laws around the world, necessitating a clear statement of principles.
According to more than 600 leading economists, including seven Nobel Prize winners, the U.S. should raise the minimum wage and index it. Studies indicate that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers. Some research suggests a minimum-wage increase could have a small stimulative effect on the economy.
An August 2015 Reuters report pointed out that Chipotle pays its leadership “more than a thousand times what they pay their typical worker, giving them [one of] the biggest internal pay gaps among S&P 500 companies.” In a 2014 analyst call, the company indicated that a minimum wage increase to $10 would impact the company, “but not too significant.”