Chipotle 2012 Annual Report Download - page 53

November 20, 2012 and received 65 shares, which represented 70% of the total number of shares to be
repurchased calculated using the closing price on November 20, 2012. The final number of shares to be
repurchased under the ASR will be determined on the volume-weighted average share price of the Company’s
common stock over a specified period. The ASR will be completed during the first quarter of 2013.
The shares of common stock repurchased under authorized programs, including the ASR, were 686, 220 and
828 for a total cost of $206,394, $63,508 and $115,885 during 2012, 2011 and 2010, respectively. As of
December 31, 2012, $100,179 was available to be repurchased under the authorized programs. Treasury shares
totaling 3,819 are being held in treasury until such time as they are reissued or retired, at the discretion of the
Board of Directors.
On February 5, 2013, the Company announced that its Board of Directors authorized the repurchase of up to
an additional $100 million to repurchase shares of common stock.
During 2012 and 2010, shares of common stock were netted and surrendered as payment for applicable tax
withholding obligations in connection with the vesting of outstanding stock awards. Shares surrendered by the
participants in accordance with the applicable award agreements and plan are deemed repurchased by the
Company but are not part of publicly announced share repurchase programs. In the year ended 2012, the
Company repurchased 28 shares for a total cost of $10,698, and in the year ended 2010, the Company
repurchased 67 shares for a total cost of $10,717.
5. Stock Based Compensation
The Company issues shares pursuant to the Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan (the
“2011 Incentive Plan”). Shares issued prior to the 2011 Incentive Plan were issued subject to previous stock
plans. For purposes of counting the shares remaining available under the 2011 Incentive Plan, each share issuable
pursuant to outstanding full value awards, such as restricted stock units and performance shares, will count as
two shares used, whereas each share underlying a stock appreciation right or stock option will count as one share
used. Under the 2011 Incentive Plan, 3,360 shares of common stock have been authorized and reserved for
issuances to eligible employees, of which 2,760 represent shares that were authorized for issuance but not issued
at December 31, 2012. The 2011 Incentive Plan is administered by the Compensation Committee of the Board of
Directors, which has the authority to select the individuals to whom awards will be granted, to determine the type
of awards and when the awards are to be granted, the number of shares to be covered by each award, the vesting
schedule and all other terms and conditions of the awards. The exercise price for stock awards granted under the
2011 Incentive Plan cannot be less than fair market value at the date of grant.
The Company granted stock options prior to 2008, and has granted stock only stock appreciation rights
(“SOSARs”) since that time. SOSARs vest equally over two and three years and expire after seven years. Stock-
based compensation expense is generally recognized on a straight-line basis for each separate vesting portion.
Compensation expense related to employees eligible to retire and retain full rights to the awards is recognized
over six months which coincides with the notice period. Compensation expense on performance shares, which is
based on the quantity of awards the Company has determined are probable of vesting, is recognized over the
longer of the estimated performance goal attainment period or time vesting period. Stock-based compensation
expense, including options, SOSARs and stock awards, was $66,274 ($40,361 net of tax) in 2012, $42,965
($26,166 net of tax) in 2011 and $22,280 ($13,713 net of tax) in 2010. During the first quarter of 2012, the
Company increased its estimate of the number of non-vested stock awards subject to performance conditions that
are probable of vesting, which resulted in a cumulative adjustment to expense of $5,578 ($3,397 net of tax and
$0.11 impact to basic and diluted earnings per share for 2012). For the years ended December 31, 2012, 2011 and
2010, $1,998, $1,583 and $899, respectively, of stock-based compensation expense was recognized as capitalized
development and is included in leasehold improvements, property and equipment in the consolidated balance
sheet.
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Annual Report