Chipotle 2012 Annual Report Download - page 87

Director, other directors, senior management or outside advisors regarding a particular candidate. The committee
also takes into account the results of recent Board and Board committee self-evaluations and the current size and
composition of the Board, including expected retirements and anticipated vacancies. In the course of this
evaluation, some candidates may be eliminated from further consideration because of conflicts of interest,
unavailability to attend Board or committee meetings or other reasons. Following the initial evaluation, if one or
more candidates were deemed worthy of further consideration, the committee would arrange for interviews of the
candidates. To the extent feasible, candidates would be interviewed by the Chairman, the Co-Chief Executive
Officers and a majority of committee members, and potentially other directors as well. The results of these
interviews would be considered by the committee in its decision to recommend a candidate to the Board. Those
candidates approved by the Board as nominees are named in the proxy statement for election by the shareholders
at the annual meeting (or, if between annual meetings, one or more nominees may be elected by the Board itself
if needed to fill vacancies, including vacancies resulting from an increase in the number of directors).
Policies and Procedures for Review and Approval of Transactions with Related Persons
We recognize that transactions in which our executive officers, directors or principal shareholders, or family
members or other associates of our executive officers, directors or principal shareholders, have an interest may
raise questions as to whether those transactions are consistent with the best interests of Chipotle and our
shareholders. Accordingly, our Board has adopted written policies and procedures requiring the Audit Committee
to approve in advance, with limited exceptions, any transactions in which any person or entity in the categories
named above has any material interest, whether direct or indirect, unless the value of all such transactions in
which a related party has an interest during a year total less than $10,000. We refer to such transactions as
“related person transactions.” Current related person transactions to which we are a party are described on page
54.
A related person transaction will only be approved by the Audit Committee if the committee determines that
the related person transaction is beneficial to us and the terms of the related person transaction are fair to us. No
member of the Audit Committee may participate in the review, consideration or approval of any related person
transaction with respect to which such member or any of his or her immediate family members is the related
person.
Role of the Board of Directors in Risk Oversight
While our executive officers and various other members of management are responsible for the day-to-day
management of risk, the Board of Directors exercises an oversight role with respect to risk issues facing our
company, principally through considering risks associated with our company strategy as part of its oversight of
our overall strategic direction, as well as delegation to the Audit Committee of the responsibility for evaluating
enterprise risk issues. Under the terms of its charter, the Audit Committee discusses with management, our
internal auditors and our independent auditors our major risk exposures, whether financial, operating or
otherwise, as well as the adequacy and effectiveness of steps management has taken to monitor and control such
exposures (including, for instance, our internal control over financial reporting). The Audit Committee’s
oversight of risk management includes its review each year of an annual risk assessment conducted by our
internal audit department, which functionally reports to the Audit Committee. The Audit Committee also
recommends from time to time that key identified risk areas be considered by the full Board, and individual
Board members also periodically ask the full Board to consider an area of risk. In those cases the Board considers
the identified risk areas at its regularly-scheduled meetings, including receiving reports from and conducting
discussions with the appropriate management personnel.
The Board believes our current leadership structure facilitates its oversight of risk by combining
independent leadership through the Lead Director, independent Board committees, and majority independent
Board composition, with an experienced Chairman and Co-Chief Executive Officer and additional Co-Chief
Executive Officer with intimate knowledge of our business, industry and challenges. The Co-Chief Executive
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Proxy Statement