Chipotle 2012 Annual Report Download - page 95

Performance Goal
Participants will receive awards under the 2014 Cash Incentive Plan whose payout will be contingent upon
our attaining positive operating income for the fiscal year, as presented in our consolidated audited financial
statements but excluding (i) restructuring and/or other nonrecurring charges; (ii) exchange rate effects, as
applicable, for non-US dollar denominated net sales and operating earnings; (iii) the effects of changes to
generally accepted accounting standards required by the Financial Accounting Standards Board; (iv) the effects
to any statutory adjustments to corporate tax rates and (v) the impact of any “extraordinary items” as determined
under generally accepted accounting principles. The committee will not have the authority to amend or modify
the performance goal.
Performance Period
The 2014 Cash Incentive Plan will cover each of our fiscal years beginning with 2014.
Payment of Awards
All awards under the 2014 Cash Incentive Plan for a fiscal year will be paid in cash (or, in the sole
discretion of the Compensation Committee, in shares of our common stock under the Chipotle Mexican Grill,
Inc. 2011 Stock Incentive Plan or other equity compensation plan that has been approved by our shareholders)
following the end of our fiscal year, provided that the committee has previously certified that the performance
goal was attained. The maximum amount paid under the plan to any participant with respect to any annual award
will be $8.0 million, though the committee may, in its discretion, provide for payments in lesser amounts,
including zero. The committee may not waive the achievement of the performance goal.
We are establishing the plan as an “umbrella plan.” It is the Compensation Committee’s current intention
that it will exercise negative discretion so that the payment amount due under the plan upon meeting the
performance goal described above will be determined in a manner consistent with how we pay bonuses
determined via the AIP, as described below under “Executive Officers and Compensation—Compensation
Discussion and Analysis—Components of Compensation—Annual Incentives.”
Termination of Employment
The 2014 Cash Incentive Plan generally requires that a participant be actively employed at the end of a
fiscal year to receive payment for that year. If a participant’s employment ends during a fiscal year due to
retirement with the Board’s consent, death or permanent disability, the committee will have the discretion to
approve payment of up to a pro rata portion of the award payment that the participant would have received if
employed throughout the fiscal year.
Amendment and Termination
The Compensation Committee or Board may amend, suspend or terminate the 2014 Cash Incentive Plan
from time to time. An amendment will be subject to the approval of our shareholders only if such approval is
necessary so that payments under the plan may qualify as “performance-based compensation” exempt from the
$1 million deduction limitation under Section 162(m). The Compensation Committee may exercise discretion to
make an incentive payment for the fiscal year in which a change in control, as defined for purposes of
Section 162(m), of the Company occurs.
Recovery for Misconduct
If the Board or the Compensation Committee determines that a participant has engaged in certain types of
misconduct defined in the plan, the Board or committee may, subject to limitations in the plan, require forfeiture,
in whole or in part, of payment of any award that has been previously approved for payment under the plan
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Proxy Statement