Chipotle 2012 Annual Report Download - page 107

each award than do stock options, because only the shares representing the appreciation over the exercise price of
the SOSARs are issued upon exercise, whereas upon the exercise of a stock option all of the shares subject to the
option are issued. As a result, SOSARs minimize dilution as compared to equivalent grants of stock options. All
options and SOSARs have had, and all SOSARs or similar awards we grant in the future will have, an exercise
price equal to no less than the closing market price of our common stock on the date of the grant.
The other portion of each executive officer’s long-term incentive award consists of performance shares. The
committee believes that having a portion of each executive’s long-term incentive in the form of full-value shares
is best correlated with performance by including a performance vesting condition on the awards. 2012 marked
completion of the second year of the three-year performance period associated with performance shares awarded
in 2010. See “Outstanding Equity Awards at December 31, 2012” below, which reflects the performance share
awards to each executive officer. Payout of the awards will be determined following completion of the third
quarter of 2013.
The committee’s policy is generally to make SOSAR grants only on an annual basis, within five business
days following our public release of financial results for the previous year. SOSARs are granted outside of this
annual award cycle only in exceptional circumstances, such as in the case of certain key hires. The committee
may in exceptional circumstances determine to make additional equity awards at other times during the year.
Because our practice has been to make periodic performance share awards designed to compensate
performance over a multi-year performance period, the compensation reported for each executive officer in the
Summary Compensation Table below will reflect additional compensation expense in the years in which
performance share are granted. In light of these fluctuations, and because we have most recently made
performance share awards with a fixed three year performance period, the committee believes the compensation
of our executive officers should be reviewed and evaluated on a three-year basis in order to assess the relative
mixture of each officer’s equity and cash compensation.
Benefits and Perquisites
We provide our executive officers with access to the same benefits we provide all of our full-time
employees. We also provide our officers with perquisites and other personal benefits that we believe are
reasonable and consistent with our compensation objectives, and with additional benefit programs that are not
available to all employees throughout our company.
Perquisites are generally provided to help us attract and retain top performing employees for key positions,
and in some cases perquisites are designed to facilitate our executive officers bringing maximum focus to what
we believe to be demanding job duties. In addition to the perquisites identified in notes to the Summary
Compensation Table below, we have occasionally allowed executive officers to be accompanied by a guest when
traveling for business on an airplane chartered by us. Executive officers have also used airplanes that are
available to us through our charter relationship for personal trips; in those cases the executive officer has fully
reimbursed us for the cost of personal use of the airplane. Our executive officers are also provided with personal
administrative and other services by company employees from time to time, including scheduling of personal
appointments, performing personal errands, and use of company-provided drivers. We believe that the perquisites
we provide our executive officers are consistent with market practices, and are reasonable and consistent with
our compensation objectives.
We have also established a non-qualified deferred compensation plan for our senior employees, including
our executive officers. The plan allows participants to defer the obligation to pay taxes on certain elements of
their compensation while also potentially receiving earnings on deferred amounts. We believe this plan is an
important retention and recruitment tool because it helps facilitate retirement savings and financial flexibility for
our key employees, and because many of the companies with which we compete for executive talent provide a
similar plan to their key employees.
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Proxy Statement