Chipotle 2012 Annual Report Download - page 55

The following table reflects the average assumptions utilized in the Black-Scholes option-pricing model to
value SOSAR awards granted for each year:
2012 2011 2010
Risk-free interest rate ........................................ 0.4% 1.6% 1.5%
Expected life (years) ......................................... 3.4 3.4 3.4
Expected dividend yield ...................................... 0.0% 0.0% 0.0%
Volatility .................................................. 39.1% 51.0% 51.1%
Weighted-average Black-Scholes fair value per share at date of grant . . . $ 104.97 $ 101.91 $ 39.52
The Company has not paid dividends to date and does not plan to pay dividends in the near future. The risk-
free interest rate is based upon U.S. Treasury rates for instruments with similar terms. The volatility assumption
was based on our historical data and implied volatility, and the expected life assumptions were based on our
historical data.
6. Employee Benefit Plans
The Company maintains the Chipotle Mexican Grill 401(k) plan (the “401(k) Plan”). The Company matches
100% of the first 3% of pay contributed by each eligible employee and 50% on the next 2% of pay contributed.
Employees become eligible to receive matching contributions after one year of service with the Company. For
the years ended December 31, 2012, 2011 and 2010, Company matching contributions totaled approximately
$2,431, $2,039 and $1,734, respectively.
In February 2012, the Company began offering an employee stock purchase plan (“ESPP”). Under the
ESPP, 250 shares of common stock have been authorized and reserved for issuances to eligible employees.
Employees become eligible to contribute after one year of service with the Company and may contribute up to
15% of their base earnings, subject to an annual maximum dollar amount, toward the monthly purchase of the
Company’s common stock. During 2012, there were 1 shares issued under the ESPP.
The Company also maintains the Chipotle Mexican Grill, Inc. Supplemental Deferred Investment Plan (the
“Deferred Plan”) which covers eligible employees of the Company. The Deferred Plan is a non-qualified plan
that allows participants to make tax-deferred contributions that cannot be made under the 401(k) Plan because of
Internal Revenue Service limitations. Participants’ earnings on contributions made to the Deferred Plan fluctuate
with the actual earnings and losses of a variety of available investment choices selected by the participant. Total
liabilities under the Deferred Plan as of December 31, 2012 and 2011 were $10,037 and $6,802, respectively, and
are included in other long-term liabilities in the consolidated balance sheet. The Company matches 100% of the
first 3% of pay contributed by each eligible employee and 50% on the next 2% of pay contributed once the
401(k) contribution limits are reached. For the years ended December 31, 2012, 2011 and 2010, the Company
made deferred compensation matches of $213, $179 and $156 respectively, to the Deferred Plan.
Prior to the first quarter of 2012, the Deferred Plan was unfunded, with all earnings and losses recorded in
general and administrative expenses in the consolidated statement of income and comprehensive income. The
total expense recognized related to the unfunded portion of the Deferred Plan including the matching
contributions was $487, $20 and $610 for the years ended December 31, 2012, 2011 and 2010, respectively.
During the first quarter of 2012, the Company elected to fund its deferred compensation obligations through a
rabbi trust. The rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the rabbi
trust are not available for general corporate purposes. Amounts in the rabbi trust are invested in mutual funds, as
selected by participants, which are designated as trading securities and carried at fair value, and are included in
other assets in the consolidated balance sheet. Fair value of mutual funds is measured using Level 1 inputs
(quoted prices for identical assets in active markets), and the fair value of the investments in the rabbi trust was
$10,037 as of December 31, 2012. The Company records trading gains and losses in general and administrative
expenses in the consolidated statement of income and comprehensive income, along with the offsetting amount
related to the increase or decrease in deferred compensation to reflect its exposure of the Deferred Plan liability.
The Company recorded $240 of unrealized gains on investments held in the rabbi trust during twelve months
ended December 31, 2012.
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Annual Report