Chipotle 2009 Annual Report Download - page 92

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continued restaurant growth and extraordinary growth in profitability in the midst of a difficult operating
environment for restaurant companies. 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.
To determine the final amount of 2009 AIP bonus payouts, each executive officer’s (and each other AIP
participant’s) targeted bonus amount was multiplied by the 150 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, for whom as with all of our
development employees the team factor was weighted at 60 percent and the individual factor was weighted at
40 percent. As a result of these calculations, total 2009 AIP bonus payouts to the executive officers were
approximately 188 to 204 percent of targeted bonuses. 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.
In addition to setting and approving AIP payouts as described above, the committee also determined in
February 2010 that it would be appropriate to reward our top executives for our outstanding performance during
2009 with special discretionary bonuses in addition to the AIP payouts. The committee made subjective
determinations as to the amount of additional bonus that would be appropriate in light of the contributions of our
Co-Chief Executive Officers and Chief Financial Officer, and approved payment of the bonuses reflected in the
“Bonus” column of the table titled “Summary Compensation Table” below.
Annual Incentives—2010 AIP Structure
At its meeting on February 16, 2010, the committee approved the parameters of the AIP for 2010, with the
structure of the 2010 AIP remaining substantially the same as described above. The operating and financial
performance targets and key initiatives to be used to determine the company and team performance factors for
2010 were set at or above the levels included in the internal projections we relied on in issuing publicly-stated
guidance regarding our company performance expectations for 2010.
In addition, the committee reconfirmed the target AIP bonus for 2010 at 100 percent of base salary for
Mr. Ells and Mr. Moran, 75 percent of base salary for Mr. Hartung, and 50 percent of base salary for
Mr. Blessing and Mr. Crumpacker.
Long-Term Incentives—SOSAR and Performance Share Grants and Performance-Contingent Restricted
Stock Vesting during 2009
On February 16, 2009, the committee approved annual equity award grants to employees throughout our
company, including grants of SOSARs to the executive officers. The base price of the SOSARs is $53.36, the
closing price of our Class A common stock on the date the committee approved the grants. The SOSARs are
subject to equal vesting on the second and third anniversaries of the grant date. The committee determined to
apply this vesting schedule to the SOSARs granted in 2009, rather than the three-year cliff vesting schedule
employed for option and SOSAR awards in prior years, in order to increase the perceived value of the awards at
the time of grant and to make the SOSAR terms more consistent with market practice. The committee believes
that many companies provide for partial vesting of equity awards beginning as soon as one year following the
grant date of the award, and that employees may be better motivated by an award with at least partial vesting
occurring sooner than three years following the award date.
The committee based the number of SOSARs awarded to each executive officer on our outperformance of
substantially all of the companies in the restaurant industry peer group on the basis of sales growth, our
extremely strong performance as compared to the peer group with respect to net income growth, and our above-
average performance with respect to total shareholder return over the measurement period (as described above
28
Proxy Statement