Chipotle 2012 Annual Report Download - page 98

PROPOSAL F
AN ADVISORY VOTE ON A SHAREHOLDER PROPOSAL
Proposal F is a shareholder proposal. If the shareholder proponent, or representative who is qualified under
state law, is present at the annual meeting and submits the proposal for a vote, the proposal will be voted upon.
The shareholder proposal and related supporting statement are included in this proxy statement as submitted by
the proponent and we accept no responsibility for their contents. The Board’s statement in opposition to the
proposal is presented immediately following the proposal and supporting statement. The name and address of the
proponent and the amount of stock owned by the proponent will be provided to any shareholder making an oral
or written request for such information to our corporate Secretary at our headquarters.
Proposal Encouraging Adoption of a Policy Restricting the Acceleration of Vesting of Equity Awards in
the Event of a Change in Control of Chipotle
RESOLVED, The shareholders ask the board of directors to adopt a policy that in the event of a change in
control (as defined under any applicable employment agreement or other agreement or under any equity
incentive plan or other plan), there shall be no acceleration of vesting of any equity award granted to any senior
executive, provided, however, that the board’s Compensation Committee may provide in an applicable grant or
purchase agreement that any unvested award will vest on a partial, pro rata basis up to the time of the senior
executive’s termination, with such qualifications for an award as the Committee may determine.
For purposes of this Policy, “equity award” means an award granted under an equity incentive plan as
defined in Item 401 of the SEC’s Regulation S-K, which addresses executive compensation. This resolution shall
be implemented so as not affect any contractual rights in existence on the date this proposal is adopted.
Supporting Statement
Chipotle Mexican Grill allows senior executives to receive an accelerated award of unearned equity under
certain conditions after a change of control of the Company. We do not question that some form of severance
payments may be appropriate in that situation. We are concerned, however, that current practices at the Company
may permit windfall awards that have nothing to do with a senior executive’s performance.
According to last year’s proxy statement, if the five senior executives had been terminated without cause
after a change of control, or if they had departed for good reason, they would have been eligible to receive almost
$200 million in unvested stock-only stock appreciation rights and performance shares, based on the stock price at
the end of 2011, with over $73 million apiece going to the two co-CEOs.
We are unpersuaded by the argument that executives somehow “deserve” to receive unvested awards. To
accelerate the vesting of unearned equity on the theory that an executive was denied the opportunity to earn those
shares seems inconsistent with a “pay for performance” philosophy worthy of the name.
We do believe, however, that an affected executive should be eligible to receive an accelerated vesting of
equity awards on a pro rata basis as of his or her termination date, with the details of any pro rata award to be
determined by the Compensation Committee.
Other S&P 500 corporations, including Apple, Chevron, Dell, ExxonMobil, IBM, Intel, Microsoft, and
Occidental Petroleum, have limitations on accelerated vesting of unearned equity, such as providing pro rata
awards or simply forfeiting unearned awards.
We urge you to vote FOR this proposal.
28
Proxy Statement