Chipotle 2013 Annual Report Download - page 84

annual shareholder meetings absent extenuating circumstances, and all directors attended the 2013 annual
meeting of shareholders (other than Mr. Musk, who had not yet been appointed to the Board at the time of the
2013 annual meeting).
A Majority of our Board Members are Independent
Our Board of Directors, under direction of the Nominating and Corporate Governance Committee, reviews
the independence of our directors to determine whether any relationships, transactions or arrangements involving
any director or any family member or affiliate of a director may be deemed to compromise the director’s
independence from us, including under the independence standards contained in the rules of the NYSE. Based on
that review, in March 2014 the Board determined that none of our directors have any relationships, transactions
or arrangements that would compromise their independence, except Messrs. Ells and Moran, our Co-Chief
Executive Officers. In particular, the Board determined that the registration rights granted to Mr. Baldocchi and
Ms. Friedman, as described below under “Certain Relationships and Related Party Transactions,” and payments
by Chipotle Cultivate Foundation, our company charitable foundation, to The Kitchen Community, a non-profit
organization founded and chaired by Mr. Musk, do not constitute relationships that would create material
conflicts of interest or otherwise compromise the independence of Messrs. Baldocchi or Musk or Ms. Friedman
in attending to their duties as directors. Accordingly, the Board concluded that each director other than Messrs.
Ells and Moran qualifies as an independent director.
Committees of the Board
Our Board of Directors has three standing committees: (1) the Audit Committee, (2) the Compensation
Committee, and (3) the Nominating and Corporate Governance Committee, each composed entirely of persons
the Board has determined to be independent as described above. Each member of the Audit Committee has also
been determined by the Board to be independent under the definition included in SEC Rule 10A-3(b)(1), and
each member of the Compensation Committee has been determined to be independent under NYSE Rule
303A.02(a)(ii). Each committee operates pursuant to a written charter adopted by our Board of Directors which
sets forth the committee’s role and responsibilities and provides for an annual evaluation of its performance. The
charters of all three standing committees are available on the Investors page of our corporate website at
www.chipotle.com under the Corporate Governance link.
Audit Committee
In accordance with its charter, the Audit Committee acts to oversee the integrity of our financial statements
and system of internal controls, the annual independent audit of our financial statements, the performance of our
internal audit services function, our compliance with legal and regulatory requirements, the implementation and
effectiveness of our disclosure controls and procedures, and the evaluation and management of risk issues, and
also acts to ensure open lines of communication among our independent auditors, accountants, internal audit and
financial management. The committee’s responsibilities also include review of the qualifications, independence
and performance of the independent auditors, who report directly to the Audit Committee. The committee retains,
determines the compensation of, evaluates, and when appropriate replaces our independent auditors and pre-
approves audit and permitted non-audit services provided by our independent auditors. The Audit Committee has
adopted the “Policy Relating to Pre-Approval of Audit and Permitted Non-Audit Services” under which audit and
non-audit services to be provided to us by our independent auditors are pre-approved. This policy is summarized
on page 20 of this proxy statement. The committee determined that the fees paid to the independent auditor in
2013, including in connection with non-audit services, were appropriate, necessary and cost-efficient in the
management of our business, and did not present a risk of compromising the auditor’s independence.
As required by law, the Audit Committee has established procedures to handle complaints received
regarding our accounting, internal controls or auditing matters. It is also required to ensure the confidentiality of
employees who have provided information or expressed concern regarding questionable accounting or auditing
practices. The committee also fulfills the oversight function of the Board with respect to risk management, as
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Proxy Statement