Chipotle 2012 Annual Report Download - page 129

Section 7. Forfeiture and Recovery for Misconduct.
(a) Right of Recovery. Notwithstanding any other provision of the Plan to the contrary, if the Board (or its
authorized designee) determines during the Recovery Period (as defined below) that a Participant has engaged in
Misconduct (as defined below), the Board, subject to the limitations set forth in this Section 7, may in its sole
discretion
(i) terminate such Participant’s participation in the Plan, or with respect to any Award under the Plan,
and treat any outstanding Award as forfeited
(ii) require forfeiture, in whole or in part, of payment of any Award that has been previously approved
for payment under the Plan which remains in whole or in part unpaid, and/or
(iii) demand that the Participant pay to Chipotle in cash the amount described in Section 7(d) below;
provided, however, that in the event the Board determines during the Recovery Period that the Participant
engaged in Misconduct as described in clause (iv) of the definition of Misconduct) (“Restatement
Misconduct”), the Board shall in all circumstances, in addition to any other recovery action taken, require
forfeiture and demand repayment pursuant hereto.
(b) Recovery Period. “Recovery Period” for purposes of this Section 7 means
(i) if the Misconduct relates to Restatement Misconduct, or the Misconduct consists of acts or
omissions relating to the Company’s financial matters that in the discretion of the Board are reasonably
unlikely to be discovered prior to the end of the Performance Period in which the Misconduct occurred and
the completion of the outside audit of the Company’s annual financial statements, the period during which
the Participant is employed by the Company and the period ending two years after the Participant’s last day
of employment,
(ii) if the Misconduct relates to the breach of any agreement between the Participant and the Company,
the term of the agreement and the period ending one year following the expiration of such agreement, and
(iii) in all other cases, the period during which the Participant is employed by the Company and the
period ending one year after the Participant’s last day of employment.
If during the Recovery Period the Board gives written notice to the Participant of potential Misconduct, the
Recovery Period shall be extended for such reasonable time as the Board may specify is appropriate for it to
make a final determination of Misconduct and seek enforcement of any of its remedies described above. The
Company’s rights pursuant to this Section 7 shall terminate on the effective date of a Change in Control (as
defined in the Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan) and no Recovery Period shall extend
beyond that date except with respect to any Participant for which the Board prior to such Change in Control
gave written notice to such Participant of potential Misconduct.
For purposes of administratively enforcing its rights under this Section 6, during any period for which
potential Misconduct has been identified by the Company, the Board may suspend such Participant’s
participation in the Plan, or with respect to any Award, or temporarily withhold, in whole or in part,
payment of any Award that has been previously approved for payment that remains in whole or in part
unpaid.
(c) Definition of Misconduct.
“Misconduct,” as determined by the Company (which determination shall be conclusive), shall mean:
(i) material breach by the Participant of any provision of any employment, consulting, advisory,
proprietary information, non-disclosure, non-competition, non-solicitation or other similar agreement
between the Participant and the Company,
(ii) Violation by the Participant of the Code of Conduct,
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