Chipotle 2013 Annual Report Download - page 124

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we believe these targets represented a challenge to our development team members, including Mr. Blessing, and
although achievable, we believe meeting the targets was substantially uncertain at the time they were set.
The key initiatives targeted for 2013 were developing Restaurateur cultures, setting salaried managers up for
success, developing outstanding crew, extraordinary customer service and throughput, food with integrity, and
development of our future growth opportunities. The committee’s discretionary determination of our level of
achievement against these initiatives results in a specified adjustment to the company performance factor, though
the adjustment attributable to the key initiatives is set at a maximum of five percent in either direction,
considerably less than most other metrics impacting the company performance factor.
Our actual results for 2013 exceeded the targeted operating income measure by about 1.7 percent, exceeded
targeted new restaurant average daily sales by about 8.1 percent, exceeded our targeted comparable restaurant
sales increases by 0.8 percentage points, and exceeded targeted new weeks of operation by about 9.4 percent. As
a result, 2013 AIP bonuses throughout the company were based on a company performance factor of 146 percent.
With regard to the team performance factor, strong regional performance in most regions offset only
moderate to weaker results in two regions, leading to a team performance factor at the maximum level of 150
percent for corporate employees (including each executive officer other than Mr. Blessing), and our performance
on the applicable development measures led to a team performance factor of 121 percent for corporate employees
in our development group (including Mr. Blessing).
The committee determined the individual performance factor for each executive officer in view of the
performance we achieved versus our targets and relative to our peers during 2013, and taking into account our
strong sales growth, particularly in the second half of the year when many of our peer companies were struggling
to maintain sales levels, as well as our continued growth in restaurant numbers and profitability even as our size
has increased substantially. Using its subjective assessment of each executive’s performance and overall
contributions to our results and to positioning us for continued success, the committee arrived at individual
performance factors that were used to calculate the final AIP payouts.
As a result of the plan design and performance determinations described above, total 2013 AIP bonus
payouts to the executive officers were 165 to 199 percent of targeted bonuses (in Mr. Blessing’s case, based on
proration of his actual and target payout to account for his retirement on October 31, 2013). The actual bonuses
paid to the executive officers under the AIP are reflected in the “Non-Equity Incentive Plan Compensation”
column of the Summary Compensation Table below (or in Mr. Blessing’s case, under the “All Other
Compensation” column as a result of his payout being made in connection with his retirement).
Long-Term Incentives—SOSAR and Performance Share Grants During 2013
Annual SOSAR Grants
On February 7, 2013, the committee approved annual SOSAR grants to the executive officers as well as a
broader population of key employees and top performers. The exercise price of the SOSARs is $318.45, the
closing price of our common stock on the date the committee approved the grants.
The committee based the number of SOSARs awarded to each executive officer on its determination of
company performance and each officer’s individual performance, as well as the size of SOSAR awards made to
each executive officer in past years. In evaluating company performance, the committee considered our
performance versus the restaurant industry peer group on the basis of sales growth, net income growth and total
shareholder return over the one, two and three year periods ended December 31, 2012. Evaluation of each
officer’s individual performance involved a subjective assessment by the committee of each executive officer’s
impact on and value to our business, as well as the individual’s position and length of tenure.
52
Proxy Statement