Chipotle 2013 Annual Report Download - page 112

Download and view the complete annual report

Please find page 112 of the 2013 Chipotle annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 164

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

our shareholders over the long term. That being the case, the Board believes that it is important to protect the
stability of the Board, and an effective way to maintain that stability is by ensuring that directors may only be
removed with broad shareholder support—particularly now that we have responded to shareholder input by
phasing out the classification of the Board and moving to annual elections for all Directors.
We also believe it is important to consider Chipotle’s distribution of share ownership, which is heavily
concentrated. Currently, our largest five shareholders have the ability to vote more than 40% of our outstanding
shares. Because of this concentration of holdings, without the protection of supermajority voting for limited
fundamental changes, a relative handful of shareholders could implement these changes even if most
shareholders disagreed. We believe this would not be an improvement in corporate governance, as the proponents
claim.
Chipotle has a superb record of building shareholder value. The proponents’ supporting statement suggests
that supermajority voting rights are an impediment to driving stock price performance. In light of Chipotle’s
long-term performance, however, it is difficult to conceive how this possibly could be true in Chipotle’s case. As
illustrated below, the cumulative five-year total shareholder return on our common stock significantly exceeded
that of the S&P 500 Index and the S&P Restaurant Index over the same period.
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
12/08 12/09 12/10 12/11 12/12 12/13
COMPARISON OF 5 YEAR CUMULATIVE
TOTAL RETURN*
Among Chipotle Mexican Grill, Inc, the S&P 500 Index,
and the S&P Restaurants Index
Chipotle Mexican Grill, Inc S&P 500 S&P Restaurants
*$100 invested on 12/31/08 in stock or index, including reinvestment of
dividends. Fiscal year ending December 31.
Copyright© 2014 S&P, a division of The McGraw-Hill Companies Inc. All
rights reserved.
This record of performance also calls into question the proponents’ implications that our Board is low-
quality and that our executive compensation is problematic. To the contrary, we believe this performance
illustrates the strength of our Board and our management team and the benefits of the pay-for-performance
compensation program we have put in place. And while the proponents cite a GMI report finding that Chipotle
has “Very Aggressive” accounting and governance risk, they fail to mention that in its more recent September 30,
2013 report, GMI rated Chipotle’s accounting and governance risk as “Conservative,” placing our company in
the 90th percentile of all companies in North America rated by GMI.
40
Proxy Statement