Chipotle 2008 Annual Report Download

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2008 Annual Report
and Proxy Statement

Table of contents

  • Page 1
    2008 Annual Report and Proxy Statement

  • Page 2
    ...member of the team knows there is significant potential at Chipotle, and is ready and eager to delight our customers. During 2008, we increased our revenue by 22.7% to $1.3 billion, grew comparable restaurant sales by 5.8%, and increased diluted earnings per share 10.8% to $2.36. Our healthy balance...

  • Page 3
    ... the closing prices of the registrant's class A and class B common stock on June 30, 2008, the last trading day of the registrant's most recently completed second fiscal quarter. For purposes of this calculation, shares of class A and class B common stock held by each executive officer and director...

  • Page 4
    ... ...Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...Item 9A. Controls and Procedures ...Item 9B. Other Information ...PART III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers and Corporate Governance ...Executive Compensation...

  • Page 5
    ... grow or raise the food. We manage our operations and restaurants based on five regions that all report into a single segment. Financial information about our operations, including our revenues and net income for the years ended December 31, 2008, 2007, and 2006, and our total assets as of December...

  • Page 6
    ... large orders to avoid standing in line to wait for their food. We have installed change machines at the cashier station in virtually all of our restaurants, and have implemented a hand-held point-of-sale terminal in a small number of our restaurants which allows customers to pay with a credit card...

  • Page 7
    ... their work experience and enrich their personal lives. Our best restaurant managers who run great restaurants and develop strong restaurant teams are promoted to Restaurateur, and can earn bonuses for developing people and building sales. We've leveraged our outstanding Restaurateurs' leadership by...

  • Page 8
    ... understanding of our brand, and we seek to develop mutually beneficial long-term relationships with them. We work closely with our suppliers and use a mix of forward, fixed and formula pricing protocols. We've tried to increase, where necessary, the number of suppliers for our ingredients, which we...

  • Page 9
    ...our marketing strategy and direction with an eye to making our marketing more effective. As part of these efforts, we have developed and introduced in select markets new logos and other branding. Annual Report Competition The fast-casual segment of the restaurant industry is highly competitive and...

  • Page 10
    ...harm the value of our brand and adversely affect our business. Information Systems Annual Report Chipotle uses an integrated information system to manage the flow of information within each restaurant and between the restaurants and the corporate office. This system includes a point-of-sales local...

  • Page 11
    ... of the difficult economic environment and tight credit markets; difficulty managing construction and development costs of new restaurants at affordable levels, particularly in competitive markets; obstacles to hiring and training qualified operating personnel in the local market; any shortages of...

  • Page 12
    ..., our ability to increase comparable restaurant sales depends in part on our ability to successfully implement a new marketing and branding strategy, our initiative to increase the speed at which our crew serves each customer, and expanded use of fax service lines and online ordering, each of which...

  • Page 13
    ... results of operations. Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs. Like all restaurant companies, we are susceptible to increases in food costs as a result of factors beyond our control, such as general economic conditions, seasonal...

  • Page 14
    ...operating costs, and we believe good managers and crew are a key part of our success. We devote significant resources to recruiting and training our restaurant managers and crew. Increased labor costs due to factors like competition, increased minimum wage requirements, employee benefits and changes...

  • Page 15
    ... distributors or ones that can provide us, either initially or over time, with adequate supplies of ingredients meeting our quality standards. Sales at restaurants opened in new markets may take longer to ramp up and reach expected sales and profit levels, and may never do so, thereby affecting our...

  • Page 16
    ...competitors in the fast-casual and quick-service segments of the restaurant industry also emphasize lower-cost, "value meal" menu options, a strategy we do not currently pursue. Our sales may be adversely affected by these products and price competition. Moreover, new companies may enter our markets...

  • Page 17
    ... electronic processing and transmission of confidential customer information. We accept electronic payment cards for payment in our restaurants. During 2008, approximately half of our sales were attributable to credit card transactions, and credit card usage could continue to increase. A number of...

  • Page 18
    ... minimum wage increases, and these increases could increase our labor costs. In recent years, there has been an increased legislative, regulatory and consumer focus at the federal, state and municipal levels on the food industry including nutrition and advertising practices. Restaurants operating in...

  • Page 19
    ... of food-borne illnesses or other problems at our restaurants; changes in consumer preferences and discretionary spending; increases in infrastructure costs; fluctuations in supply prices; and tax expenses, impairment charges and other non-operating costs. Annual Report Seasonal factors also...

  • Page 20
    ...any year. Average restaurant sales or comparable restaurant sales in any particular future period may decrease. In the future, operating results may fall below the expectations of securities analysts and investors, which could cause our stock prices to fall. We believe the market prices of our class...

  • Page 21
    ... in connection with the tax treatment of McDonald's exchange offer could adversely affect us," may discourage a potential acquirer from proposing or completing a transaction that may have otherwise presented a premium to our shareholders. ITEM 1B. UNRESOLVED STAFF COMMENTS None. Annual Report 19

  • Page 22
    ... and our telephone number is (303) 595-4000. We lease our main office and substantially all of the properties on which we operate restaurants. For additional information regarding the lease terms and provisions, see Item 7. "Management's Discussion and Analysis of Financial Condition and Results of...

  • Page 23
    .... PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The following table describes the per share range of high and low sales prices for shares of each class of our common stock for the quarterly periods indicated, as reported...

  • Page 24
    ... Holders: Chipotle 2006 Incentive Plan ...Equity Compensation Plans Not Approved by Security Holders: None. 1,323,117 $52.49 2,848,802 (1) Includes shares issuable in connection with performance share rights and non-employee director restricted stock units. The weighted-average exercise price...

  • Page 25
    ..., whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. COMPARISON OF CUMULATIVE TOTAL RETURN* Among Chipotle Mexican Grill, Inc, The Russell 2000 Index And S&P SmallCap 600 Restaurants Annual Report $400 $350 $300 $250 $200 $150...

  • Page 26
    ... per share data). For the years ended December 31, Annual Report 2008 2007 2006 2005 2004 Statements of Income: Revenue Restaurant sales ...Franchise royalties and fees ...Total revenue ...Food, beverage and packaging costs ...Labor costs ...Occupancy costs ...Other operating costs ...General...

  • Page 27
    ... declines as a result of our recent menu price increases and variability in prior-year comparisons, we could experience rapid and large changes in our comparable restaurant sales trends during the year. Food Costs. The cost of many basic foods for humans and animals, including corn, wheat, rice...

  • Page 28
    ... of revenue into 2009. In addition to excelling in providing quality food and customer service, restaurant managers are expected to contribute substantially to the development of their crew. Our restaurant management structure is designed to facilitate the development of crew members into restaurant...

  • Page 29
    ... Annual Report Our results of operations as a percentage of revenue and period-over-period variances are discussed in the following section. As our business grows, as we open more restaurants and hire more employees, our restaurant operating costs increase. Restaurant Sales % For the years ended...

  • Page 30
    ... of menu price increases partially offset by increased average wage rates and labor inefficiencies associated with the new restaurant openings. In 2007, labor costs as a percentage of revenue decreased due to more effective management of staffing, improved efficiency as restaurant sales increased...

  • Page 31
    ... card processing fees resulting from a higher percentage of our customers using credit cards. The increase was partially offset by lower marketing and promotional spend. In 2007 other operating costs declined as a percentage of revenue primarily due to the effect of higher average restaurant sales...

  • Page 32
    ... higher average restaurant sales on a partially fixed-cost base. Pre-opening Costs % For the years ended increase December 31, 2008 over 2008 2007 2006 2007 (dollars in millions) % increase 2007 over 2006 Annual Report Pre-opening costs ...As a percentage of revenue ...Restaurant openings ... $11...

  • Page 33
    ...) Revenue ...Operating income ...Net income ...Number of restaurants opened in quarter ...Comparable restaurant sales increase ... $236.1 $274.3 $286.4 $289.0 $ 18.6 $ 30.7 $ 31.4 $ 27.5 $ 12.4 $ 20.0 $ 20.6 $ 17.6 28 32 28 37 8.3% 11.6% 12.4% 10.6% Seasonal factors cause our profitability to...

  • Page 34
    ... of credit we issue in the normal course of business and normal short-term working capital needs. While operations continue to provide cash, our primary use of cash is in new restaurant development. As we expand into more urban areas, our average costs to open new restaurants will increase due...

  • Page 35
    ... areas of our operations affected by inflation are food, labor, fuel, insurance, utility costs and materials used in the construction of our restaurants. Although almost all of our crew members make more than the minimum wage, increases in the applicable federal or state minimum wage will have an...

  • Page 36
    ... our operating results and cash flows. Sabbatical Liability We offer our employees a sabbatical leave after each ten years of service they complete. We record a liability for our estimate of the accumulated sabbatical expense as of the balance sheet date. Our estimated liability is based on a number...

  • Page 37
    ... million deposited in short-term investments and available-for-sale securities bearing a weighted-average interest rate of 0.3% (approximately 0.4% tax equivalent). Commodity Price Risks We are also exposed to commodity price risks. Many of the ingredients we use to prepare our food, as well as our...

  • Page 38
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheet as of December 31, 2008 and 2007 ...Consolidated Statement of Income for the years ended December 31, 2008, 2007 and ...

  • Page 39
    ... and Other Similar Benefits Pursuant to FASB Statement No. 43 Accounting for Compensated Absences. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Chipotle Mexican Grill, Inc.'s internal control over financial reporting as of...

  • Page 40
    ...Income tax receivable ...Available-for-sale securities ...Total current assets ...Leasehold improvements, property and equipment, net ...Other assets ...Goodwill ...Total assets ...Liabilities and shareholders' equity Current liabilities: Accounts payable ...Accrued payroll and benefits ...Accrued...

  • Page 41
    CHIPOTLE MEXICAN GRILL, INC. CONSOLIDATED STATEMENT OF INCOME (in thousands, except per share data) Years ended December 31 2008 2007 2006 Revenue: Restaurant sales ...Franchise royalties and fees ...Total revenue ...Restaurant operating costs (exclusive of depreciation and amortization shown ...

  • Page 42
    ... of common stock ...6,061 Costs to issue common stock ...Grant of common stock ...1 Conversion of common stock ...8,010 Stock-based compensation ...Stock option exercises ...150 Excess tax benefit on option exercises, net of utilization of $423 ...Tax sharing arrangement ...Separation from McDonald...

  • Page 43
    ... and amortization ...Current income tax benefit ...Deferred income tax (benefit) provision ...Change in valuation allowance ...Loss on disposal of assets ...Bad debt allowance ...Stock-based compensation ...Other ...Changes in operating assets and liabilities: Accounts receivable ...Inventory...

  • Page 44
    ... its operations to one reportable segment and one reporting unit. Initial Public Offering Annual Report In January 2006, the Company completed its offering of 6,061 shares of class A common stock, $0.01 par value, in its initial public offering at a per share price of $22.00 receiving net proceeds...

  • Page 45
    ... performed substantially all initial services required by the franchise arrangement. The Company purchased its eight franchised restaurants in 2007 and there are no longer any Company franchised restaurants. The Company reports revenue net of sales and use taxes collected from customers and remitted...

  • Page 46
    ...lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purpose of reviewing restaurant assets for potential impairment, assets are grouped together at the market level. The Company manages its...

  • Page 47
    ... for the training and opening teams, food and other restaurant operating costs, are expensed as incurred prior to a restaurant opening for business. Insurance Liability The Company maintains various insurance policies for workers' compensation, employee health, general liability and property damage...

  • Page 48
    ... Translation The Company's international operations generally use its local currency as the functional currency. Assets and liabilities are translated at exchange rates in effect as of the balance sheet date. Income and expense accounts are translated at the average monthly exchange rates during the...

  • Page 49
    ...,590 4,099 - 28,689 (2,263) 406 - Annual Report (1,857) - $26,832 Years ended December 31 2008 2007 2006 Statutory U.S. federal income tax rate ...State income tax, net of related federal income tax benefit ...Meals and entertainment ...Tax-exempt interest income ...Other ...Valuation allowance...

  • Page 50
    ...Gift card liability ...Capitalized transaction costs ...Stock-based compensation and other employee benefits ...Foreign net operating loss carry-forwards ...Valuation allowance ...Total long-term deferred income tax asset ...Net long-term deferred income tax liability ...Current deferred income tax...

  • Page 51
    ... of the Board of Directors. 5. Stock Based Compensation Effective with the Company's initial public offering the Company adopted the Chipotle Mexican Grill, Inc. 2006 Incentive Plan. An amended and restated plan (the "Plan") was approved at the Company's annual meeting of shareholders on May...

  • Page 52
    .... A summary of non-vested stock award activity under the Plan is as follows (in thousands, except per share data): 2008 Grant Date Shares Fair Value 2007 Grant Date Shares Fair Value Outstanding, beginning of year ...Granted ...Forfeited ...Outstanding, end of year ... 123 109 (3) 229 $64.75 $87...

  • Page 53
    ... competitors whose shares are traded in the public markets and are adjusted to reflect anticipated behavior specific to the Company. 6. Employee Benefit Plans In October 2006, effective upon consummation of the Disposition, the Company adopted the Chipotle Mexican Grill 401(k) plan (the "401(k) plan...

  • Page 54
    ... payment of common area maintenance, property taxes, insurance and various other use and occupancy costs by the Company. In addition, the Company is the lessee under non-cancelable leases covering certain offices. Annual Report Future minimum lease payments required under existing operating leases...

  • Page 55
    ...226 stock awards subject to performance conditions were excluded from the 2008 calculation of diluted EPS. The following table sets forth the computations of basic and dilutive earnings per share: Year ended December 31, 2008 2007 2006 Annual Report Net income ...Shares: Weighted average number of...

  • Page 56
    ...'s annual consolidated financial statements. However, a significant increase in the number of these claims, or one or more successful claims resulting in greater liabilities than the Company currently anticipates, could materially and adversely affect the Company's business, financial condition...

  • Page 57
    ... the design and operation of our disclosure controls and procedures. Based on the foregoing, our co-Chief Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report. Change in Internal...

  • Page 58
    ... Registered Public Accounting Firm The Board of Directors and Shareholders of Chipotle Mexican Grill, Inc. We have audited Chipotle Mexican Grill, Inc.'s (the "Company") internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated...

  • Page 59
    ... set 2009 target bonus levels for the executive officers, generally consistent with the target bonuses in past years. The target bonus for Mr. Moran was increased, in recognition of his promotion to co-Chief Executive Officer, to 100% of base salary. Annual Report PART III ITEM 10. DIRECTORS...

  • Page 60
    ... STATEMENT SCHEDULES 1. All Financial statements Consolidated financial statements filed as part of this report are listed under Item 8. "Financial Statements and Supplementary Data." 2. Financial statement schedules No schedules are required because either the required information is not present or...

  • Page 61
    ... been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Date Title Annual Report /s/ STEVE ELLS Steve Ells February 19, 2009 Co-Chief Executive Officer and Chairman of the Board of Directors (principal executive officer...

  • Page 62
    ... invited to attend the annual meeting of shareholders of Chipotle Mexican Grill, Inc., which will be held on May 21, 2009 at 8:00 a.m. local time at The Westin Tabor Center, 1672 Lawrence Street, Denver, Colorado. Details of the business to be conducted at the annual meeting are given in the...

  • Page 63
    .... The record date for the meeting has been fixed by the Board of Directors as the close of business on March 27, 2009. Shareholders of record at that time are entitled to vote at the meeting. By order of the Board of Directors /s/ Monty Moran Co-Chief Executive Officer, Secretary and Director April...

  • Page 64
    ... Chipotle Mexican Grill, Inc. to be held on Thursday, May 21, 2009, beginning at 8:00 a.m. at The Westin Tabor Center, 1672 Lawrence Street, Denver, Colorado. This proxy statement was prepared under the direction of the company's Board of Directors to solicit your proxy for use at the annual meeting...

  • Page 65
    ... to conduct business at the annual meeting. At any meeting of our shareholders, the holders of a majority in voting power of our outstanding shares of capital stock entitled to vote at the meeting, present in person or by proxy, constitutes a quorum for all purposes. You are part of the quorum...

  • Page 66
    ... Internet Availability of Proxy Materials, or by enrolling on the Investors page of our web site at www.chipotle.com. Delivering future notices by e-mail will help us reduce the cost and environmental impact of our annual meeting. Who is bearing the cost of this proxy solicitation? We will bear the...

  • Page 67
    ... either class of our common stock; each of the executive officers listed in the Summary Compensation Table appearing later in this proxy statement; each of our directors; and all of our current executive officers and directors as a group. The number of shares beneficially owned by each shareholder...

  • Page 68
    ... (6) Based solely on a report on Schedule 13G/A filed on February 11, 2009. Shares of Class B common stock beneficially owned by T. Rowe Price Associates, Inc. (Price Associates) are owned by various individual and institutional investors including T. Rowe Price Mid-Cap Growth Fund, Inc. (which owns...

  • Page 69
    ... beneficially owned by Mr. Baldocchi include 140,623 shares owned jointly by Mr. Baldocchi and his spouse. The shares beneficially owned by Mr. Baldocchi are pledged as collateral to secure a personal line of credit. (17) Shares of Class B common stock beneficially owned by Ms. Friedman are held by...

  • Page 70
    ... Statement Age Steve Ells ... Mr. Ells founded Chipotle in 1993. He is CoChief Executive Officer and was appointed Chairman of the Board in 2005, and has served as a director since 1996. Prior to launching Chipotle, Mr. Ells worked for two years at Stars restaurant in San Francisco. He is a member...

  • Page 71
    ... Legal Practice Group of Heller Ehrman LLP, a law firm, and from 1991 to 1995, Mr. Flanzraich served as Senior Vice President and a member of the Corporate Operating Committee of Syntex Corporation, an international pharmaceutical company. He is also a director of Continucare Corporation (Amex:CNU...

  • Page 72
    Class III directors whose terms expire at the 2011 annual meeting of shareholders Age Director Since John S. Charlesworth ... Mr. Charlesworth has served as a director of Chipotle since 1999. He is currently the sole owner/member of Hunt Business Enterprises LLC and EZ Street LLC. Before retiring...

  • Page 73
    ... and make recommendations to the Board with respect to the establishment of any new incentive compensation and equitybased plans; review and approve the terms of written employment agreements and post-service arrangements for executive officers; review our compensation programs generally to confirm...

  • Page 74
    ... awards under the plan as described below under "Compensation Discussion and Analysis-Components of Compensation-Long-Term Incentives." The committee has in past years delegated its authority under the plan to our executive officers to make grants to non-executive officer level employees, within...

  • Page 75
    ... that each non-employee director is expected to own Chipotle common stock with a market value of at least $100,000 within four years of the director's appointment or election to the Board. Unvested restricted stock units received as compensation for Board service count as shares owned for purposes...

  • Page 76
    ... our Board committee charters; the Chipotle Mexican Grill Code of Conduct, which applies to all Chipotle officers, directors and employees; and separate Codes of Ethics for our directors, our Co-Chief Executive Officers, our Chief Financial Officer and our principal accounting officer. The Corporate...

  • Page 77
    ...with SEC Rule 14a-8. Change the advance notice period for business (including nominations) that a shareholder intends to bring at an annual meeting (assuming the annual meeting is held no earlier than 30 days prior and no later than 60 days following the date of the prior year's annual meeting) from...

  • Page 78
    ... such nominees complete a questionnaire to provide additional information to us. • Policies and Procedures for Review and Approval of Transactions with Related Persons We recognize that transactions in which our executive officers, directors or principal shareholders, or family members or other...

  • Page 79
    ... consultations. (2) Includes fees for a subscription to an Ernst & Young online service used for accounting research purposes. The Board of Directors unanimously recommends a vote FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm. 16

  • Page 80
    ... independence. Based on the review and discussions described above, the Audit Committee recommended to our Board of Directors that our audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 for filing with the SEC. The Audit Committee...

  • Page 81
    ... The Audit Committee periodically reviews a schedule of fees paid and payable to the independent auditor by type of covered service being performed or expected to be provided. Our Chief Financial Officer also reports periodically to the Audit Committee any non-compliance with this policy of which he...

  • Page 82
    .... Mr. Hartung joined Chipotle in 2002 after spending 18 years at McDonald's where he held a variety of management positions, most recently as Vice President and Chief Financial Officer of its Partner Brands Group. Mr. Hartung has a Bachelor of Science degree in accounting and economics as well as an...

  • Page 83
    ...-Market Data" below. Overview of Executive Compensation Determinations In setting compensation for our executive officers, the committee reviews tally sheet information reflecting the cash and equity-based compensation paid to each executive officer in each year since the officer started work...

  • Page 84
    ... determine market levels of pay for each particular executive officer. The restaurant peer group is comprised of all publicly-traded companies in the Global Industry Classification Standard, or GICS, restaurant industry with annual revenues greater than $600 million, excluding McDonald's Corporation...

  • Page 85
    ... our long-term incentive awards were made in the form of stock option grants. We believe options align the economic interests of our employees, including our executive officers, with those of our shareholders, and closely tie rewards to corporate performance because options do not offer value unless...

  • Page 86
    ... executive officers' compensation packages, the committee determined to award a portion of each executive officer's long-term incentive award in the form of performance shares with a targeted three-year performance term. The committee also authorized the cancellation of time-based restricted stock...

  • Page 87
    ... 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 to...

  • Page 88
    ... performance levels for a number of financial or operating measures (on a company-wide basis for the company performance factor and for each of our operating regions for the team performance factor), and key initiatives for improving our company during the year. The AIP formulas are structured so...

  • Page 89
    .... The measures used for the development department's team performance factor were new restaurant average daily sales and new weeks of operation (at the same target levels described above), as well as new restaurant development costs, which were targeted at $900,000, and a measure of the number of...

  • Page 90
    ... during the early part of the year when the AIP parameters were set. The committee considered that we have continued to open new restaurants when many competitors are scaling back their expansion plans, and also considered that we achieved positive comparable restaurant sales increases for the full...

  • Page 91
    ...above. The operating and financial performance targets and key initiatives to be used to determine the company and team performance factors for 2009 were set at or above the levels included in the internal projections we relied on in issuing publicly-stated guidance regarding our company performance...

  • Page 92
    ...the Internal Revenue Code provides that compensation of more than $1,000,000 paid to the chief executive officer or to any of the three other most highly compensated executive officers of a public company, other than the chief financial officer, will not be deductible for federal income tax purposes...

  • Page 93
    ... the U.S. tax code generally changes the tax rules that affect most forms of deferred compensation that were not earned and vested prior to 2005. The committee takes Section 409A into account in determining the form and timing of compensation paid to our executive officers. Accounting Rules Various...

  • Page 94
    ...Principal Position Stock Bonus(1) Awards(2) Non-Equity Option Incentive Plan All Other Awards(3) Compensation(4) Compensation(5) Year Salary Total Steve Ells (6) ...2008 $938,462 $180,620 $2,170,992 $1,638,138 Chairman and Chief 2007 $557,692 $ 86,670 $1,281,128 $1,065,400 Executive Officer 2006...

  • Page 95
    ... granted during 2003 are included in our Annual Report on Form 10-K for the year ended December 31, 2005, which we filed with the SEC on March 17, 2006. (4) Amounts under Non-Equity Incentive Plan Compensation represent the amounts earned by the listed officer under the AIP for the relevant fiscal...

  • Page 96
    ... in shares of Class A common stock, and are granted under the Amended and Restated Chipotle Mexican Grill, Inc. 2006 Stock Incentive Plan. The terms of the awards are described above under "Compensation Discussion and Analysis-Discussion of Executive Officer Compensation Decisions-Long-Term...

  • Page 97
    ... of the awards requires that the executive serve as our employee or as a non-employee member of our Board at all times from the grant date to the payout, subject to pro-rata payouts in the event the executive terminates service with us due to death, disability, or the executive's retirement and the...

  • Page 98
    ...under "Potential Payments Upon Termination or Change-in-Control-Equity Award Vesting Upon Termination." (7) Represents an award of performance shares of Class A common stock approved on February 20, 2008, subject to shareholder approval of our Amended and Restated 2006 Stock Incentive Plan. Approval...

  • Page 99
    ... price equal to the fair market value of a share of McDonald's common stock on the grant date, and generally were granted with a ten-year life, and vested in equal annual installments over periods of four years. Subject to the approval of the compensation committee of McDonald's board of directors...

  • Page 100
    ...ours to pay in the future the value of the accounts. The table below presents contributions by each executive officer, and our matching contributions, to the Chipotle Supplemental Deferred Investment Plan during 2008, as well as each executive officer's earnings under the plan and ending balances in...

  • Page 101
    ... terms of the equity-based awards made to our executive officers do provide for post-employment benefits in certain circumstances. The table below reflects the dollar value, based on the closing price of our Class A common stock on December 31, 2008, of the amount of each listed type of equity award...

  • Page 102
    ... use of company information, or commission of a felony involving moral turpitude. (2) Under our Amended and Restated 2006 Stock Incentive Plan, "good reason" generally means a reduction in an employee's responsibilities or pay, or a change by more than 30 miles in the location of an employee's job...

  • Page 103
    ...voting power of our outstanding common stock, or in the event our current directors, or persons we nominate to replace current directors, do not constitute at least a majority of our Board, or in the event of certain mergers, liquidations, or sales of substantially all of our assets by us. The award...

  • Page 104
    ... with certain changes in control of Chipotle. Performance Shares The award agreement for our outstanding performance share awards provide that in the event of a change in control under the plan that also constitutes a "change in the ownership or effective control of a corporation, or a change in the...

  • Page 105
    ... ceasing to be listed on a national securities exchange. In the event of such a change in control under the plan as of December 31, 2008, if the outstanding performance share awards were not replaced with a replacement award meeting the criteria specified above, the executive officers would have had...

  • Page 106
    ... Act of 1934 requires our officers and directors and holders of greater than 10 percent of either class of our outstanding common stock to file initial reports of their ownership of our equity securities and reports of changes in ownership with the SEC. Based solely on a review of the copies of such...

  • Page 107
    ... $742 thousand for services. Registration Rights Prior to our initial public offering, McDonald's and certain of our current shareholders, including Steve Ells, our Chairman and Co-Chief Executive Officer, Monty Moran, our Co-Chief Executive Officer and member of our Board of Directors, and Albert...

  • Page 108
    ... day on which public disclosure of the date of the 2010 annual meeting is made. AVAILABILITY OF SEC FILINGS, CORPORATE GOVERNANCE GUIDELINES, CODE OF CONDUCT, CODES OF ETHICS AND COMMITTEE CHARTERS Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form...

  • Page 109
    ..., IVAX Corporation; Private Investor Patrick J. Flynn Director Executive Vice President, Strategic Planning and Acquisitions, McDonald's Corp. (retired) Darlene J. Friedman Director Senior Vice President, Human Resources, Syntex Corp. (retired) STOCK EXCHANGE LISTING New York Stock Exchange Class...

  • Page 110
    Cert no. SCS-COC-00648