Chipotle 2009 Annual Report Download - page 93

Download and view the complete annual report

Please find page 93 of the 2009 Chipotle annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

under—“Assessment of Company Performance”), as well as on the committee’s review of each executive
officer’s performance. The number of SOSARs granted to each executive officer was based on the economic
value of the awards, with the precise award levels varying to take into account the committee’s review of each
executive officer’s performance for the prior year, the individual’s position, and the survey data on competitive
market practice. As a result of the committee’s analysis, it approved awards of 150,000 SOSARs to Mr. Ells and
Mr. Moran, 55,600 SOSARs to Mr. Hartung, 24,000 SOSARs to Mr. Blessing, 20,000 SOSARs to
Mr. Crumpacker and 20,000 SOSARs to Mr. Jones.
In January 2009, in connection with our hiring of Mr. Crumpacker as our Chief Marketing Officer, the
committee approved the award to Mr. Crumpacker of 13,600 performance shares. The number of performance
shares awarded was based on the recommendations of the Co-Chief Executive Officers and the committee’s
review of market levels of compensation for this role. The terms of these performance shares are described below
under “Grants of Plan-Based Awards in 2009—Terms of 2009 Equity-Based Awards—Performance Shares.”
In addition to equity awards granted during 2009, shares of performance-contingent restricted stock
originally granted on May 21, 2008 also vested in part. The shares of performance-contingent restricted stock
represented a right to be issued shares of our common stock, subject to satisfaction of a specified level of
cumulative aggregate operating income prior to the expiration date of the award. The committee set the
performance target at the time of granting the awards, at a level that it believed would reward the executive
officers for maintaining the strength of our business at the time the awards were made. The performance target
for these awards is not as aggressive as the target for the performance shares also granted in May 2008 due to the
nature of the performance-contingent restricted stock award, which was designed primarily to comply with
Section 162(m) of the tax code and related rules relating to deductibility of the compensation expense attributable
to the awards. Based on our exceeding the targeted level of $100 million in cumulative aggregate operating
income from and after April 1, 2008, the performance condition in the performance-contingent restricted stock
grants was satisfied as of April 15, 2009. As a result, half of the awards vested as of that date, and the remaining
half of these awards vested on February 20, 2010. The number of shares received by each executive officer upon
the awards vesting in April 2009 is reflected in the table titled “Options Exercised and Stock Vested in 2009”
below, and an equal number of shares for each executive officer vested in February 2010.
Executive Stock Ownership Guidelines
In May 2008 our Board of Directors adopted stock ownership guidelines for our executive officers. These
guidelines are intended to ensure that our executive officers retain ownership of a sufficient amount of Chipotle
stock to align their interests in a meaningful way with those of our shareholders. Alignment of our employees’
interests with those of our shareholders is a principal purpose of the equity component of our compensation
program.
The ownership guidelines were adjusted in February 2009 to account for changes in our executive officers.
The adjusted ownership guidelines, reflected as a targeted number of shares to be owned, are presented in the
table below. The guidelines are reviewed for possible adjustment each year and may be adjusted by the
committee at any time.
Position # of shares
Chairman and Co-Chief Executive Officer .............................. 50,000
President and Co-Chief Operating Officer ............................... 50,000
Chief Financial Officer .............................................. 10,625
Other executive officers ............................................. 6,000
Shares underlying unvested restricted stock or restricted stock units count towards satisfaction of the
guidelines. Executive officers who do not meet the guidelines are allowed five years to acquire the requisite
number of shares to comply.
29
Proxy Statement