Chipotle 2008 Annual Report Download - page 90

would result in specified adjustments to the company performance factor, though the impact of adjustments
attributable to the key initiatives would be of lesser magnitude than the other metrics impacting the company
performance factor.
As a result of the difficult operating environment created by the economic downturn in the latter half of
2008, we fell short of the targeted performance levels for each AIP measure other than new restaurant weeks of
operations.
The committee believes that the unusually difficult operating conditions that developed in the latter half of
2008 could not have been reasonably foreseen 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 year, and particularly in the third and fourth quarters, when many of our competitors were
posting flat or declining comparable sales. To reward this strong operating performance the committee
determined that some upward adjustment in AIP payouts was in the best interests of the company. As a result,
2008 AIP bonuses throughout the company were based on a company performance factor set by the committee at
70 percent, rather than the 59 percent that would have resulted from adherence to the original plan parameters.
With regard to the team performance factor, the committee also approved discretionary adjustments
upwards to the regional performance factors used to determine the team factor for corporate employees
(including the executive officers, except for Mr. Jones, whose team performance factor is based on our
development team results). These adjustments were made for the same reasons described above regarding the
company performance factor, and ensured that regional level employees were rewarded for our strong relative
operating performance. The committee made more significant adjustments to this performance factor than the
company performance factor in order to ensure appropriate rewards for regions achieving particularly strong
performance, without having an overly significant effect on executive officer payouts due to the relatively minor
impact of the team performance factor on overall payouts. The adjustments approved by the committee resulted
in the team performance factor for corporate employees being set at 67 percent, rather than the 34 percent that
would have resulted from adherence to the original plan parameters. No adjustment was made to the team
performance factor for Mr. Jones, which was calculated at 67 percent. The team performance factor for
Mr. Blessing was pro-rated between the regional performance factor for our northeast region, which Mr. Blessing
led prior to his appointment in May 2008 as Restaurant Support Officer, and the corporate team performance
factor. As a result of this pro-ration, his team performance factor was set at 73 percent, rather than the 36 percent
that would have resulted from adherence to the original plan parameters.
The committee determined the individual performance factor for each executive officer in view of the strong
performance we achieved relative to our peers during 2008 and our continued profitability and growth in the
midst of an extremely difficult operating environment for restaurant companies. Using its subjective assessment
of each executive’s performance, the committee arrived at individual performance factors that were used to
calculate the final AIP payouts.
To determine the final amount of 2008 AIP bonus payouts, each executive officer’s (and each other AIP
participant’s) targeted bonus amount was multiplied by the 70 percent company performance factor to arrive at
an adjusted targeted award amount. The adjusted targeted award amount was then adjusted based on the
applicable team performance factor, which was weighted at 30 percent, and the applicable individual
performance factor, which was weighted at 70 percent (except for Mr. Jones, whose team performance factor was
weighted at 60 percent and individual performance factor was weighted at 40 percent, consistent with all
employees in our development group). As a result of these calculations, total 2008 AIP bonus payouts to the
executive officers were approximately 57 to 78 percent of targeted bonuses and 42 to 65 percent of 2007 payouts.
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, except that amounts attributable to the
discretionary adjustments to the AIP terms described above are reflected in the “Bonus” column.
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Proxy Statement