Chipotle 2013 Annual Report Download - page 121

Discussion of Executive Officer Compensation Decisions
Assessment of Company Performance
The committee generally sets the base salaries of, and makes long-term incentive awards to, the executive
officers in February of each year. In making these decisions, the committee references our company performance
primarily by comparing our sales growth, net income growth and total shareholder return over the preceding one-
year, three-year and five-year periods to the same measures for the restaurant peer group described above. In
February 2013, the committee referred to these performance measures, as set forth in the table titled
“Performance Versus Peer Group—One, Three and Five Year Periods Ended December 31, 2013” in the
“Overview of the Performance-Based Nature of our Executive Compensation” above. This assessment of
company performance is only one factor used by the committee in making compensation decisions, as described
in more detail below, but does play a significant role in the committee’s decision-making, consistent with our
pay-for-performance philosophy. Because of our strong performance in 2012 and prior years relative to market-
wide performance in our industry, the committee generally set compensation levels for our executive officers for
2013 in the upper end of the ranges that the committee believed to be appropriate for each executive officer.
Base Salaries
To set base salary levels for 2013 for our executive officers, the committee considered the existing base
salary of each officer, as well as each officer’s contribution level and effectiveness in his role, and the range of
base salaries at our peer companies. In order to preserve a heavy emphasis on “at-risk” elements of compensation
as part of our pay-for-performance philosophy, the committee determined not to increase the base salaries of our
Co-Chief Executive Officers during 2013. Base salaries for the other executive officers were increased based on
our company performance versus the restaurant industry peer group as described above under “—Assessment of
Company Performance,” and additionally based on the committee’s subjective determinations as to each officer’s
individual performance and contribution to our significant growth. Base salaries for 2013 remained at $1,400,000
for Mr. Ells and $1,200,000 for Mr. Moran, and were increased to $655,050, for Mr. Hartung, $416,707 for
Mr. Blessing and $388,411 for Mr. Crumpacker. The difference in the base salaries of Mr. Moran and Mr. Ells is
attributable to Mr. Moran serving in the office of Co-Chief Executive Officer only since the beginning of 2009,
whereas Mr. Ells has served as Chief Executive Officer since our inception. The differences in salary between the
Co-Chief Executive Officers and the other executive officers are attributable to the committee’s belief in the
tremendous importance of strong leadership at the chief executive officer level as well as to the level of impact of
the contributions made by the Co-Chief Executive Officers to our success.
In connection with his assuming the role of Chief Development Officer following Mr. Blessing’s retirement
in October 2013, Mr. Crumpacker’s base salary was increased to $425,000.
Annual Incentives—AIP Structure
The formula to determine payouts under the AIP consists of a company performance factor, a team
performance factor, and an individual performance factor, each stated as a percentage by which an executive
officer’s target payout amount will be adjusted to determine actual cash bonuses. The payout formula is as
follows:
(AIP Bonus Target X Company Performance Factor) X 30% X Team Performance Factor +
(AIP Bonus Target X Company Performance Factor) X 70% X Individual Performance Factor
For our development employees (including, until the time of Mr. Blessing’s retirement, our Chief
Development Officer), the team factor is weighted at 50 percent and the individual factor is weighted at 50
percent.
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Proxy Statement