Chipotle 2008 Annual Report Download - page 86

Also in February 2008, in order to include a longer-term performance element to the 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 awards granted to the executive officers in 2007,
and the replacement of those awards with performance-contingent restricted stock awards in order to comply
with Section 162(m) of the tax code and related rules relating to deductibility of the compensation expense
attributable to these awards.
The long-term incentive awards made in 2008 are described below under “—Discussion of Executive
Officer Compensation Decisions—Option, Performance Share and Performance-Contingent Restricted Stock
Grants during 2008.”
The committee has historically made option and other equity award grants on an annual basis, except in the
case of certain key hires. In December 2006, the committee adopted a policy of making stock option grants only
on an annual basis, within five business days following our public release of financial results for the previous
fiscal year. We plan not to grant equity awards outside of this annual award cycle, absent exceptional
circumstances. All options granted subsequent to our initial public offering have, and all options and SOSARs we
grant in the future will have, an exercise or base price equal to no less than the closing market price of the
underlying stock on the date of the grant.
Benefits and Perquisites
We provide our executive officers with access to the same benefits we provide all of our full-time
employees. We also provide our officers with perquisites and other personal benefits that we believe are
reasonable and consistent with our compensation objectives, and with additional benefit programs that are not
available to all employees throughout our company.
Perquisites are generally provided to help us attract and retain top performing employees for key positions,
and in some cases perquisites are designed to facilitate our executive officers bringing maximum focus to what
we believe to be demanding job duties. In addition to the perquisites identified in notes to the Summary
Compensation Table below, we have occasionally allowed executive officers to be accompanied by a guest when
traveling for business on an airplane chartered by us. Executive officers have also used airplanes that are
available to us through our charter relationship for personal trips; in each case the executive officer has fully
reimbursed us for the cost of chartering the airplane. Our executive officers are also provided with personal
administrative services by company employees from time to time, including scheduling of personal appointments
and performing personal errands. We believe that the perquisites we provide our executive officers are currently
consistent with market practices, and are reasonable and consistent with our compensation objectives.
We have also established a non-qualified deferred compensation plan for our senior employees, including
our executive officers. The plan allows participants to defer the obligation to pay taxes on certain elements of
their compensation while also potentially receiving earnings on deferred amounts. We established this plan in
order to continue benefits, including company matching contributions, that were offered prior to our separation
from McDonald’s under certain McDonald’s plans in which our executive officers and other key employees were
allowed to participate. We also believe it is critical to facilitate retirement savings and financial flexibility for our
key employees. In addition, we believe that the deferred compensation plan is an important retention and
recruitment tool because many of the companies with which we compete for executive talent provide a similar
plan to their senior employees.
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Proxy Statement