Chipotle 2013 Annual Report Download - page 116

Board of Directors has also approved executive stock ownership guidelines applicable to our executive officers to
ensure that our officers retain ownership of a sufficient amount of Chipotle stock to align their interests in a
meaningful way with those of our shareholders
Consistent with our intent to maintain a performance-based compensation system for all of our employees,
including our executive officers, the total compensation of each executive officer is weighted heavily towards at-
risk elements of compensation: annual AIP bonuses, SOSAR awards, and performance shares. For 2013, these
performance-based elements accounted for between 88 percent and 98 percent of the total realized compensation
for each executive officer (consisting of base salary, AIP payouts, “All Other Income” as reported in the
Summary Compensation Table, plus amounts reported in the Option Exercises and Stock Vested in 2013 table).
Additional detail regarding our executive compensation programs, policies and procedures, as well as the
actual compensation of our executive officers in 2013, follows.
Compensation Philosophy and Objectives
Our philosophy with regard to the compensation of our employees, including our executive officers, is to
reinforce the importance of performance and accountability at the corporate, regional and individual levels. We
strive to provide our employees with meaningful rewards while maintaining alignment with shareholder interests,
corporate values, and important management initiatives. In setting and overseeing the compensation of our
executive officers, the Compensation Committee believes our compensation philosophy to be best effectuated by
designing compensation programs and policies to achieve the following specific objectives:
• Attracting, motivating, and retaining highly capable executives who are vital to our short- and long-
term success, profitability, and growth;
• Aligning the interests of our executives and shareholders by rewarding executives for the achievement
of strategic and other goals that we believe will enhance shareholder value; and
• Differentiating executive rewards based on actual performance.
The committee believes that these objectives are most effectively advanced when a significant portion of
each executive officer’s overall compensation is in the form of at-risk elements such as incentive bonuses and
long-term incentive-based compensation, which should be structured to closely align compensation with actual
performance and shareholder interests.
The committee’s philosophy in structuring executive compensation rewards is that performance should be
measured by comparing our company performance to market-wide performance in our industry, as well as
subjectively evaluating each executive officer’s performance. See “—Overview of Executive Compensation
Determinations—Market Data” below.
In structuring and approving our executive compensation programs, as well as policies and procedures
relating to compensation throughout our company, the committee also considers risks that may be inherent in
such programs, policies and procedures. The committee has determined that it is not likely that our compensation
programs, policies and procedures will have a material adverse effect on our company.
Overview of Executive Compensation Determinations
In setting compensation for our executive officers, the committee assesses our performance, focusing in
particular on our growth and shareholder return in relation to other companies in our industry over the prior three
years. This assessment is described in more detail below under “—Discussion of Executive Officer
Compensation Decisions—Assessment of Company Performance.” In conjunction with its review of our
performance, the committee also reviews each executive officer’s individual circumstances, including tally sheet
information reflecting the cash and equity-based compensation paid to each executive officer in each year since
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