Chipotle 2013 Annual Report Download - page 115

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We believe our executive compensation programs have contributed significantly to our significant growth
and strong business performance. The following table demonstrates our performance on key growth and
profitability measures over the past three years:
Annual Company Performance
Total
Restaurants
Increase from
Prior Year Sales
Increase from
Prior Year
Net
Income
Increase from
Prior Year
2013 ..................... 1,595 13% $3,214,591 18% $327,438 18%
2012 ..................... 1,410 15% $2,731,224 20% $278,000 29%
2011 ..................... 1,230 13% $2,269,548 24% $214,945 20%
Our performance relative to our restaurant industry peer group (the composition of which is further
described below under “Overview of Executive Compensation Decisions—Market Data”) has also generally
been strong in the areas of sales growth, net income growth, and total shareholder return. The following table
illustrates our relative performance in each of these areas as a percentile of the peer group over the one, three,
and five year periods ended December 31, 2013, computed based on the compound annual growth rate of each
measure (for the periods greater than one year).
Performance Versus Peer Group—One, Three and Five Year Periods Ended
December 31, 2013
Sales Growth Net Income Growth Total Shareholder Return
5 years ................. 97th percentile 100th percentile 95th percentile
3 years ................. 97th percentile 88th percentile 77th percentile
1 year ................. 94th percentile 74th percentile 83rd percentile
The compensation of our executive officers has been determined in light of, and has been significantly
driven by, this consistent record of strong performance.
Several of our officers realized significant value during 2013 by exercising SOSARs granted in years 2011
and prior, and each officer also realized substantial compensation in connection with the vesting of performance
share awards made in 2010. The amounts realized, which are reflected under “Option Awards” in the Option
Exercises and Stock Vested in 2013 table below, were attributable to our strong performance and substantial
increases in shareholder value since the grant date of the awards. Our market capitalization was nearly $16.5
billion as of the end of 2013, as compared to approximate market capitalizations of $1.7 billion as of the grant
date of SOSARs awarded in 2009, $3.3 billion as of the grant date of SOSARs awarded in 2010, $6.8 billion as
of the grant date of performance shares awarded in 2010, and $8.9 billion as of the grant date of SOSARs
awarded in 2011. We believe our officers’ collective realization of value representing (on a pre-tax basis)
approximately one percent of the average growth in our market capitalization from the grant dates of the
exercised awards through the end of 2013 represents an appropriate reward for tremendous performance,
irrespective of non-cash accounting values attributed to the awards and recognized in our financial statements
and compensation disclosures. This realization of compensation by our officers exemplifies how our long-term
incentive program rewards the creation of shareholder value.
During 2013, the committee also continued its practice, first initiated in 2011, of including a performance
vesting condition in addition to time-based vesting in half of the SOSARs granted to the executive officers, and
its practice, first initiated in 2012, of including a “clawback” in the award agreements for SOSAR awards, in the
event NYSE listing standards or SEC rules in the future require the recovery of compensation received in
connection with the awards. The committee believes that the addition of vesting conditions requiring our
achievement of stated levels of cumulative adjusted cash flow from operations during the term of the award
further strengthens the connection between rewards to our officers and our company’s business performance,
helping to restrict the rewards attributable solely to a robust stock market if our business performance is lacking.
The inclusion of a clawback provision helps to protect against executives reaping rewards from misconduct. Our
43
Proxy Statement