Chipotle 2012 Annual Report Download - page 104

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In structuring and approving our executive compensation programs, as well as policies and procedures
relating to compensation throughout our company, the committee also considers risks that may be inherent in
such programs, policies and procedures. The committee has determined that it is not likely that our compensation
programs, policies and procedures will have a material adverse effect on our company.
Overview of Executive Compensation Determinations
In setting compensation for our executive officers, the committee assesses our performance, focusing in
particular on our growth and shareholder return in relation to other companies in our industry over the prior three
years. This assessment is described in more detail below under “—Discussion of Executive Officer
Compensation Decisions—Assessment of Company Performance.” In conjunction with its review of our
performance, the committee also reviews each executive officer’s individual circumstances, including tally sheet
information reflecting the cash and equity-based compensation paid to each executive officer in each year since
the officer started work with us (or since 1998 in the case of Mr. Ells, our Chairman and Co-Chief Executive
Officer), as well as the accumulated value of all cash and equity-based compensation awarded to each executive
officer. The committee also conducts discussions with our Co-Chief Executive Officers regarding the
performance of our other executive officers, and meets in executive sessions to discuss the performance of the
Co-Chief Executive Officers.
The committee does not “benchmark” the compensation of any of our executive officers in the traditional
sense. Rather, to supplement its review of each executive officer’s historical compensation and performance as
well as overall company performance, the committee also refers to market data on executive compensation. From
this data, the committee determines what it believes to be competitive market practice and approves individual
compensation levels by reference to its assessment of market compensation, together with historical
compensation levels, subjective assessments of individual performance and other subjective factors.
At our annual meeting in May 2012, we held our second annual “say-on-pay” vote, an advisory vote on the
compensation disclosed for our executive officers, in which approximately 79 percent of the votes cast were in
favor of our executive compensation as disclosed in the proxy statement for the meeting. The Compensation
Committee believes the level of support evidenced by the 2012 say-on-pay vote reflects a belief by the holders of
a majority of our outstanding common stock that our compensation programs are appropriate and are consistent
with our pay for performance philosophy. Accordingly, the Committee determined that the say-on-pay vote did
not warrant significant changes to our determinations of executive compensation. The Committee will continue
to consider the outcome of the Company’s future say-on-pay votes when making compensation decisions for the
named executive officers.
The committee’s outside compensation consultant, Compensation Strategies, also provides input on
compensation decisions, including providing comparisons to market levels of compensation as described below
under “—Market Data.”
Market Data
The committee believes the investment community generally assesses our company performance by
reference to other companies in the restaurant industry, and our management team and Board also reference such
peer company performance in analyzing and evaluating our business. Accordingly, calibrating compensation by
reference to our relative performance against, and levels of executive compensation at, companies in the
restaurant industry allows for the most meaningful comparisons of our actual performance against our peers and
of our executive compensation programs and practices against competitive market practice. The committee
further believes that this ensures that compensation packages for our executive officers are structured in a manner
rewarding superior operating performance and the creation of shareholder value.
34
Proxy Statement