Chipotle 2008 Annual Report Download - page 93

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We have implemented a 2006 Cash Incentive Plan as an umbrella plan under which the AIP bonuses are
paid in order to ensure that we can deduct the amount of the payouts from our reported income under
Section 162(m). Under the 2006 Cash Incentive Plan, the committee sets maximum bonuses for each executive
officer and other key employees. If the bonus amount determined under the AIP for participants in the 2006 Cash
Incentive Plan is lower than the maximum bonus set under the 2006 Cash Incentive Plan, the committee has
historically exercised discretion to pay the lower AIP bonus rather than the maximum bonus payable under the
2006 Cash Incentive Plan.
Code Section 409A
Section 409A of 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 rules under generally accepted accounting principles determine the manner in which we account for
equity-based compensation in our financial statements. The committee may consider the accounting treatment
under SFAS 123(R) of alternative grant proposals when determining the form and timing of equity compensation
grants to our executive officers. The accounting treatment of such grants, however, is not generally determinative
of the type, timing, or amount of any particular grant of equity-based compensation the committee determines to
make.
COMPENSATION COMMITTEE REPORT
The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis included
in this Proxy Statement with management. Based on such review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy
Statement for filing with the SEC.
The Compensation Committee.
Darlene J. Friedman, Chairperson
Patrick J. Flynn
30
Proxy Statement