Chipotle 2013 Annual Report Download - page 54

On November 20, 2012 the Company entered into a privately negotiated accelerated share repurchase
transaction (“ASR”) to repurchase $25,000 of its common stock. The Company advanced $25,000 on
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 agreement was settled in February
2013, and the Company received an additional 22 shares, resulting in a weighted-average price per share of
$287.20 for the ASR.
The shares of common stock repurchased under authorized programs, including the ASR, were 336, 686 and
220 for a total cost of $109,987, $206,394 and $63,508 during 2013, 2012 and 2011, respectively. As of
December 31, 2013, $90,202 was available to be repurchased under the authorized programs. The shares
repurchased are being held in treasury until such time as they are reissued or retired, at the discretion of the
Board of Directors.
During 2013 and 2012, shares of common stock were netted and surrendered as payment for minimum
statutory 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 2013, the Company’s repurchases in connection with such netting and surrender totaled 57 shares for a
total cost of $28,916, and in the year ended 2012, totaled 28 shares for a total cost of $10,698.
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 pursuant to awards granted 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 2,014 represent shares that were
authorized for issuance but not issued at December 31, 2013. 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 generally 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 SOSARs and stock awards, was $64,781 ($39,465 net of tax) in 2013,
$66,274 ($40,361 net of tax) in 2012 and $42,965 ($26,166 net of tax) in 2011. During the first quarter of 2012,
the Company increased its estimate of the number of non-vested stock awards subject to performance conditions
that were 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, 2013, 2012
and 2011, $1,124, $1,998 and $1,583, 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