Chipotle 2012 Annual Report Download - page 81

independence from us, including under the independence standards contained in the rules of the NYSE. Based on
that review, in March 2013 the Board determined that none of our directors have any relationships, transactions
or arrangements that would compromise their independence, except Messrs. Ells and Moran, our Co-Chief
Executive Officers. In particular, the Board determined that the registration rights granted to Mr. Baldocchi and
Ms. Friedman, as described below under “Certain Relationships and Related Party Transactions,” and payments
of $750 per semester to Mr. Flanzraich’s son, a college student, as part of a marketing program we maintain on
college campuses throughout the country, do not constitute relationships that would create material conflicts of
interest or otherwise compromise the independence of Messrs. Baldocchi or Flanzraich or Ms. Friedman in
attending to their duties as directors. Accordingly, the Board concluded that each director other than Messrs. Ells
and Moran qualifies as an independent director.
Committees of the Board
Our Board of Directors has three standing committees: (1) the Audit Committee, (2) the Compensation
Committee, and (3) the Nominating and Corporate Governance Committee, each composed entirely of persons
the Board has determined to be independent as described above, and for members of the Audit Committee, also
under the definition included in SEC Rule 10A-3(b)(1). Each committee operates pursuant to a written charter
adopted by our Board of Directors which sets forth the committee’s role and responsibilities and provides for an
annual evaluation of its performance. The charters of all three standing committees are available on the Investors
page of our corporate website at www.chipotle.com under the Corporate Governance link.
Audit Committee
In accordance with its charter, the Audit Committee acts to oversee the integrity of our financial statements
and system of internal controls, the annual independent audit of our financial statements, the performance of our
internal audit services function, our compliance with legal and regulatory requirements, the implementation and
effectiveness of our disclosure controls and procedures, and the evaluation and management of risk issues, and
also acts to ensure open lines of communication among our independent auditors, accountants, internal audit and
financial management. The committee’s responsibilities also include review of the qualifications, independence
and performance of the independent auditors, who report directly to the Audit Committee. The committee retains,
determines the compensation of, evaluates, and when appropriate replaces our independent auditors and pre-
approves audit and permitted non-audit services provided by our independent auditors. The Audit Committee has
adopted the “Policy Relating to Pre-Approval of Audit and Permitted Non-Audit Services” under which audit and
non-audit services to be provided to us by our independent auditors are pre-approved. This policy is summarized
on page 23 of this proxy statement.
The Audit Committee is required to establish procedures to handle complaints received regarding our
accounting, internal controls or auditing matters. It is also required to ensure the confidentiality of employees
who have provided information or expressed concern regarding questionable accounting or auditing practices.
The committee also fulfills the oversight function of the Board with respect to risk management, as described
under “Corporate Governance—Role of the Board of Directors in Risk Oversight.” The committee may retain
independent advisors at our expense that it considers necessary for the completion of its duties.
The Audit Committee held nine meetings in 2012 and acted by written consent two times. The members of
the Audit Committee are Messrs. Baldocchi (Chairperson), Charlesworth and Flanzraich. Our Board of Directors
has determined that all of the Audit Committee members meet the enhanced independence standards required of
audit committee members by regulations of the SEC, and are financially literate as defined in the listing
standards of the NYSE. The Board has further determined that Mr. Baldocchi qualifies as an “Audit Committee
Financial Expert” as defined in SEC regulations.
No member of the Audit Committee served on more than three audit or similar committees of publicly held
companies, including Chipotle, in 2012. A report of the Audit Committee is found under the heading “Audit
Committee Report” on page 22.
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Proxy Statement