Chipotle 2013 Annual Report Download - page 117

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the officer started work with us (or since 1998 in the case of Mr. Ells, our Chairman and Co-Chief Executive
Officer), as well as the accumulated value of all cash and equity-based compensation awarded to each executive
officer. The committee also conducts discussions with our Co-Chief Executive Officers regarding the
performance of our other executive officers, and meets in executive sessions to discuss the performance of the
Co-Chief Executive Officers.
The committee does not “benchmark” the compensation of any of our executive officers in the traditional
sense. Rather, to supplement its review of each executive officer’s historical compensation and performance as
well as overall company performance, the committee also refers to market data on executive compensation. From
this data, the committee determines what it believes to be competitive market practice and approves individual
compensation levels by reference to its assessment of market compensation, together with historical
compensation levels, subjective assessments of individual performance and other subjective factors.
The committee’s outside compensation consultant, Compensation Strategies, also provides input on
compensation decisions, including providing comparisons to market levels of compensation as described below
under “—Market Data.”
Market Data
The committee believes the investment community generally assesses our company performance by
reference to other companies in the restaurant industry, and our management team and Board also reference such
peer company performance in analyzing and evaluating our business. Accordingly, calibrating compensation by
reference to our relative performance against, and levels of executive compensation at, companies in the
restaurant industry allows for the most meaningful comparisons of our actual performance against our peers and
of our executive compensation programs and practices against competitive market practice. The committee
further believes that this ensures that compensation packages for our executive officers are structured in a manner
rewarding superior operating performance and the creation of shareholder value.
The restaurant peer group used for these purposes is generally comprised of all publicly-traded companies in
the Global Industry Classification Standard, or GICS, restaurant industry with annual revenues greater than $500
million, excluding McDonald’s Corporation due to its substantially greater size than us. At the time the
committee made its initial executive compensation decisions for 2013, the companies included in the peer group
were as follows: Biglari Holdings, Inc., BJ’s Restaurants, Inc., Bob Evans Farms, Inc., Brinker International,
Inc., Buffalo Wild Wings, Inc., Carrols Restaurant Group, Inc., CEC Entertainment, Inc., The Cheesecake
Factory Incorporated, Cracker Barrel Old Country Store, Inc., Darden Restaurants, Inc., Denny’s Corp.,
DineEquity Inc., Domino’s Pizza Inc., Jack In The Box Inc., Panera Bread Company, Papa John’s International
Inc., Red Robin Gourmet Burgers, Inc., Ruby Tuesday, Inc., Sonic Corp., Starbucks Corporation, Texas
Roadhouse Inc., The Wendy’s Company and Yum! Brands, Inc. Prior components of the peer group O’Charley’s
Inc. and P.F. Chang’s China Bistro, Inc. were taken private during 2012 and thus were eliminated from the peer
group. The committee reviews the composition of the restaurant industry peer group periodically and will make
additional adjustments to the peer group in response to changes in the size or business operations of Chipotle and
of companies in the peer group, companies in the peer group being acquired or taken private, and other
companies in the GICS restaurant industry becoming public.
Data drawn from the restaurant peer group is adjusted by using regression analysis to eliminate variations in
compensation level attributable to differences in size of the component companies. Compensation Strategies, the
committee’s independent executive compensation consultant, performs this analysis.
2013 Say-on-Pay Vote
At our annual meeting in May 2013, we held our third annual “say-on-pay” vote, an advisory vote on the
compensation disclosed for our executive officers, in which approximately 73 percent of the votes cast were in
favor of our executive compensation as disclosed in the proxy statement for the meeting. Our Chief Financial
45
Proxy Statement