Chipotle 2006 Annual Report Download - page 62

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information
required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information
is accumulated and communicated to our management, including our Chief Executive Officer, President and
Chief Operating Officer and Chief Finance and Development Officer, as appropriate, to allow timely decisions
regarding required disclosure.
As of December 31, 2006, we carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer, President and Chief Operating Officer and Chief
Finance and Development Officer, of the effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our Chief Executive Officer, President and Chief Operating Officer and
Chief Finance and Development Officer concluded that our disclosure controls and procedures were effective as
of the end of the period covered by this annual report.
There were no changes during the year ended December 31, 2006 in our internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably
likely to materially affect our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
On February 20, 2007, the Compensation Committee of our Board of Directors approved grants to our
executive officers of options to purchase shares of our class A common stock, as well as special grants of
restricted shares of class A common stock, under our 2006 Stock Incentive Plan. The Compensation Committee
granted 80,000 options and 55,000 shares of restricted stock to Mr. Ells, 40,000 options and 30,000 shares of
restricted stock to Mr. Moran, 25,000 options and 20,000 shares of restricted stock to Mr. Hartung, and 20,000
options and 15,000 shares of restricted stock to Mr. Wilner.
The stock options have an exercise price of $63.89 per share, the closing market price of our class A
common stock on the grant date, and include a three-year vesting period and seven-year term. No options vest
prior to the third anniversary of the grant, subject to possible acceleration of vesting in certain circumstances.
The restricted stock grants were made as a special incentive award to reward our executive officers for
extraordinary performance during 2006, including execution of our successful initial public offering and
completion of our separation from McDonald’s, while still delivering outstanding financial and operating result
Terms of the grants include vesting in two equal installments on the second and third anniversary of the date of
grant. No shares of restricted stock vest prior to the second anniversary of the grant, subject to possible
acceleration of vesting in certain circumstances. The full terms of these grants are set forth in the forms of Stock
Option Agreement and Restricted Stock Agreement, and in the 2006 Stock Incentive Plan, as amended, all of
which are filed as exhibits to this Annual Report on Form 10-K.
The Compensation Committee has also approved the payment of performance-based bonuses to our
executive officers under our 2006 Cash Incentive Plan, based on our achievement in 2006 against performance
targets established by the Compensation Committee in early 2006. The Compensation Committee also approved
new base salaries to be paid to the executive officers beginning in March 2007. The committee approved a 2006
bonus payment to Mr. Ells of $741,000, and set Mr. Ells’s 2007 base salary at $600,000; approved a 2006 bonus
payment to Mr. Moran of $507,000, and set Mr. Moran’s 2007 base salary at $450,000; approved a 2006 bonus
payment to Mr. Hartung of $320,731, and set Mr. Hartung’s 2007 base salary at $350,000; and approved a 2006
bonus payment to Mr. Wilner of $251,889, and set Mr. Wilner’s 2007 base salary at $285,000.
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