levels, and/or if more than 730 total NROs occur over the performance period (10% weight). The committee’s policy has generally beenmaximum payout under RCF Dollars metric is 270% and the maximum payout under total NROs metric is 30%. If the level of performance falls between the levels in the table, the payout percentage will be determined using linear interpolation. To help ensure that performance goals drive acceptable returns to make equity compensation awards to officers only onshareholders, the 2023 PSUs contain a provision capping the payout at 100% of target if the company’s 3-year relative TSR is below the 25th percentile of the S&P 500 constituent companies.
2023 SOSARs
The NEOs received an annual basis, within five business days followinggrant of SOSARs on February 9, 2023. These SOSARs have an exercise price equal to the closing price on the grant date, vest in two equal installments on the 2nd and 3rd anniversaries of the grant date, subject to continued employment through the applicable vesting date, and have a 7-year term.
2023 RSUs
Messrs. Brandt and Boatwright received an annual grant of RSUs on February 9, 2023. These RSUs vest in two equal installments on the 2nd and 3rd anniversaries of the grant date, subject to continued employment through the applicable vesting date.
EARNOUT OF 2021-23 PSU Awards
In 2021, we granted PSUs to our public releaseexecutive officers that vested based on the company’s three-year CRS growth, measured from January 1, 2021 – December 31, 2023 and two-year average RCF margin, measured from January 1, 2022 – December 31, 2023. The number of financial resultsshares that could be earned under the award was determined by multiplying the target number of shares subject to the award by the payout percentage, as set forth in the table below:
| | 23.0% | | | 0% | | | 25% | | | 25% | | | 50% | | | 75% | | | 100% | | | 125% | | | 150% | |
| | 24.0% | | | 25% | | | 50% | | | 75% | | | 75% | | | 100% | | | 150% | | | 175% | | | 200% | |
| | 25.0% | | | 50% | | | 75% | | | 100% | | | 100% | | | 125% | | | 175% | | | 225% | | | 275% | |
| | 26.0% | | | 75% | | | 100% | | | 125% | | | 125% | | | 175% | | | 225% | | | 275% | | | 300% | |
| | 27.0% | | | 100% | | | 125% | | | 150% | | | 175% | | | 200% | | | 250% | | | 300% | | | 300% | |
In February 2024, the Committee evaluated the Company’s RCF and CRS performance against the goals for the
previous year. Equity awards are granted to officers outsidetwo performance metrics and certified payout for the 2021-2023 PSUs at 278% of
this annual award cycle only in exceptional circumstances, such as intarget based on 11.6% three-year CRS growth and 25.1% two-year average RCF margin for the
case of key hires or promotions.The committee may make additional long-term incentive awards, including equity awards, or delegate to one or more officers the authority to make such awards, to non-officer employees at any time throughout the year within the terms allowed in the Amended and Restated 2011 Stock Incentive Plan.
performance period.
Benefits and Perquisites
We
In addition to the principal compensation elements described above, we provide our executive officers with access to the same benefits we provide all of our full-time
employees. We also provide our officers withemployees as well as limited perquisites and other personal benefits that we believe are reasonable and
consistent with our compensation objectives,supported by market practice, personal safety and
with additional benefit programsconvenience that
are not available to all employees throughout our company.Perquisites are generally provided to help us attract and retain top performing employees for key positions, and in some cases perquisites are designed to facilitate our executive officers bringing maximum focus to what we believe to be demanding job duties. In addition to the perquisites identified in notes to the Summary Compensation Table below, we have occasionally allowed executive officers to be accompanied by a guest when traveling for business on an airplane owned or chartered by us. enhances productivity.
Executive officers on occasion have also used company-owned or chartered airplanes for personal trips; in those casestrips. We generally require the executive officer to fully reimbursesreimburse us for the incremental cost of personal use of the airplane,trips, except where prohibited by applicable regulations. Our executive officers are also provided with personal administrative and other services by company employees from time to time, including scheduling of personal appointments, performing personal errands, andregulations; however, the Board has preapproved Mr. Niccol’s limited use of company-provided drivers.the company-owned airplanes for personal trips. The Lead Independent Director reviews Mr. Niccol’s personal use of the company-owned aircraft each quarter to assess whether it is consistent with the Board’s approval. Other NEOs also may use the company-owned aircraft for personal travel on occasion and with prior approval of our CEO. We believe
that the perquisites we provide our executive officers are consistent with market practices and are reasonable and consistent with our compensation objectives.
We also administer a non-qualified deferred compensation plan
for our seniorthat permits eligible management employees, including our executive
officers.officers, who earn compensation greater than the maximum compensation that can be considered with respect to the 401(k) Plan, as set by the Internal Revenue Code. The plan allows participants to defer the obligation to pay taxes on certain elements of their compensation while also potentially receiving earnings on deferred amounts. We offer an employer match on a portion of the contributions made by the employees. We believe this plan is an important retention and recruitment tool because it helps facilitate retirement savings and financial flexibility for our key employees, and because many of the companies with which we compete for executive talent provide a similar plan to their key employees.
Discussion of 2015 Executive Officer Compensation Decisions
Assessment of Company Performance
The committee sets the base salaries of, determines annual incentive award opportunities for, and makes long-term incentive awards to the executive officers during the first quarter of each year, generally in February. In making these decisions, the committee references our company performance over the short and long term, both in relative terms versus our restaurant industry peer group, and versus internal goals and expectations.
This assessment of company performance is only one factor used by the committee in making compensation decisions, as described in more detail below, but does play a significant role in the committee’s decision-making, consistent with our pay-for-performance philosophy. Because of our strong performance in 2014 and prior years relative to market-wide performance in our industry, the committee generally set compensation levels for our executive officers for 2015 at the upper end of the ranges that the committee believed to be appropriate for each executive officer.
Base Salaries
To set base salary levels for 2015 for our executive officers, the committee considered the existing base salary of each officer, as well as each officer’s contribution level and effectiveness in his role, and the range of base salaries at our peer companies. In light of the strong performance of our company through the end of 2014 and based on the committee’s subjective determinations as to each officer’s individual performance and contribution to our significant growth, and also in light of the Co-CEO’s base salaries not increasing since 2012, each executive officer’s salary was increased for 2015. Base salaries for 2015 were increased to $1,540,000 for Mr. Ells and $1,320,000 for Mr. Moran, and
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were increased to $750,000, for Mr. Hartung and $535,000 for Mr. Crumpacker. The difference in the base salaries of Mr. Moran and Mr. Ells is attributable to Mr. Moran serving in the office of Co-Chief Executive Officer only since the beginning of 2009, whereas Mr. Ells is our founder and Chairman of the Board, and has served as Chief Executive Officer since our inception. The differences in salary between the Co-Chief Executive Officers and the other executive officers are attributable to the committee’s belief in the tremendous importance of strong leadership at the chief executive officer level as well as to the level of impact of the contributions made by the Co-Chief Executive Officers to our success.
Annual Incentives—AIP Structure
The formula to determine payouts under the AIP consists of a company performance factor, a team performance factor, and an individual performance factor, each stated as a percentage by which an executive officer’s target payout amount will be adjusted to determine actual cash bonuses. The payout formula is as follows:
In most years, each of the company, team and individual performance factors could be adjusted downward to zero based on company, team or individual performance, which could result in no AIP bonuses being paid or an individual’s AIP bonus being significantly reduced. While adjustments downward have generally been much less significant, the potential for one or more factors to be significantly reduced ensures that AIP bonuses will be significantly reduced or not paid at all if our performance falls far short of our expectations, and enables us to avoid unduly rewarding employees not contributing to our success.
We include the company performance factor in the calculation to reward participating employees when our company performs well, which we believe focuses employees on improving corporate performance and aligns the interests of our employees with those of our shareholders. We include the team performance factor to promote teamwork and to provide rewards based on the areas of the company in which a participant can make the most impact. We include the individual performance factor to incentivize individual performance and to ensure individual accountability. Each of these components can reduce award levels when we, one of our “team” units, or an employee participating in the AIP don’t perform well, which further promotes accountability. We believe that as a whole, this structure results in the AIP rewarding our top performers, consistent with our goal of building shareholder value.
To determine the company and team performance factors for each year, during the first quarter of the year the committee approves targeted performance levels for a number of financial or operating measures (on a company-wide basis for the company performance factor and for each of our operating regions for the team performance factor), and key initiatives for improving our company during the year. The AIP formulas are structured so that achievement at the targeted level of each financial and operating measure and achievement (as determined subjectively by the committee) of the key initiatives would result in company and team performance factors that would result in payout at 100 percent—in other words, at target. Achievement above or below the targeted financial and operating measures, and over- or under-achievement of the key initiatives, results in adjustments upward or downward to the company and team performance factors, on a scale for each measure approved by the committee at the beginning of the year. The company and team performance factors to determine payouts are calculated after the conclusion of the year by referencing actual company and regional performance on each of the relevant financial and operating measures, and on the key initiatives, to the scales approved by the committee, and in unusual circumstances, following additional adjustments that the committee deems to be appropriate to account for unforeseen factors during the year. The company performance factor and the team performance factor for most corporate-level employees, including each of the executive officers, are capped at 150 percent. The team performance factor for most corporate-level employees, including each officer, is the average of the regional team performance factors, subject to adjustment based on other variables considered by the committee relating to our corporate employees.
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The individual performance factor is a function of the individual employee’s performance rating for the year. The precise individual performance factor is set from zero to 130 percent following completion of the employee’s performance review, within a range of percentages associated with the employee’s performance rating. The committee evaluates the performance of the Co-Chief Executive Officers to determine each of their individual performance factors, and approves individual performance factors for each other executive officer after considering recommendations from the Co-Chief Executive Officers, in each case based on a subjective review of each officer’s performance for the year.
The committee also sets maximums each year for the company, team and individual performance factors. The committee may, in its discretion, authorize a deviation from the parameters set for any particular performance factor in order to account for exceptional circumstances and ensure that AIP bonuses further the objectives of our compensation programs.
Annual Incentives – 2015 AIP Payouts
For 2015, as a result of the food-borne illness incidents that negatively impacted our results beginning in the fourth quarter of 2015, our results fell significantly short of our performance targets, resulting in no bonuses being paid to the executive officers under the AIP.
The committee set the target annual AIP payouts for each executive officer during the first quarter of 2015, based in part by reference to the historical compensation of each officer, each officer’s performance during the year, and median target bonuses for comparable positions within the restaurant industry peer group. The AIP parameters allow for maximum payouts equal to 204 percent of the target award, which the committee believes is adequate to reward achievement of outstanding results and motivate our employees to drive superior performance.
For 2015, as with past years, the four measures the committee selected to be used in determining the company and team performance factors were income from operations (prior to accrual for AIP payouts and stock compensation expense), new restaurant average daily sales, comparable restaurant sales increases, and new restaurant weeks of operation. Targeted performance for each measure was set as follows:
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Performance Measure | | Target | |
Operating Income (before AIP and stock compensation expense)
| | $ | 1,067.9 million | |
New Rest. Avg. Daily Sales
| | | $5,278 | |
Comparable Rest. Sales Increase
| | | 7.0 | % |
New Weeks of Operations
| | | 5,188 | |
Consistent with our pay-for-performance philosophy these targets represented stretch goals, the achievement of which would have generally resulted in our financial results exceeding the base-level forecast results in our 2015 operating plan and equaling or exceeding the full-year 2015 guidance we publicly issued to investors. Performance on operating income, as adjusted, was weighted most heavily in the computation of the company performance factor, because we believe profitability is the most important measure of our financial success and driver of shareholder value.
In order to provide a strong incentive towards superior performance, the adjustment scales for the company performance factor were set such that overachievement against each goal would have resulted in upward adjustments at a higher rate than the rate at which equivalent levels of underachievement would have resulted in downward adjustments.
The targeted performance and adjustments for each of these measures on a regional level, other than new restaurant weeks of operation, were used to calculate the team performance factor for corporate-level employees as well. The regional performance targets and variance adjustments were set at the regional level consistent with the scales described above for the company performance factor.
The key initiatives targeted for 2015 were building Restaurateur cultures, setting salaried managers up for success, developing outstanding crew members, extraordinary customer service and throughput, and focusing on the fundamentals of our business. The committee’s subjective determination of our level of achievement against these initiatives results in a specified adjustment to the company performance factor, though the adjustment attributable to the key initiatives is set at a maximum of five percent in either direction, considerably less than most other metrics impacting the company performance factor.
Due to the food-borne illness incidents that negatively impacted our results in 2015, our company performance factor was 0 percent, resulting in no AIP payouts to the executive officers.
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Long-Term Incentives – Performance Share Awards
2015 Performance Share Awards
In February 2015, in response to the say-on-pay vote at our 2014 annual meeting of shareholders and following extensive engagement with shareholders representing more than one-half of our shares outstanding, the committee made long-term incentive awards to each executive officer in the form of new performance share awards, in lieu of SOSARs. The performance share awards incorporate a three-year performance-contingent vesting period based on Chipotle’s relative performance return versus a restaurant industry peer group in three equally-weighted measures:
TABLE OF CONTENTS
average revenue growth,
OTHER COMPENSATION-RELATED POLICIES total shareholder return.
The awards will pay out at the target number of shares set forth below if our relative achievement versus the peer group, averaged across the three performance measures, is at the 65th percentile; will pay out at two times the target number of shares set forth below if our averaged relative percentile achievement versus the peer group is at or above the 90th percentile; and will pay out at one-half the target number of shares set forth below if our averaged relative percentile achievement versus the peer group is at the 35th percentile. Payout for achievement in between the 35th and 65th, and between the 65th and 90th, percentiles will be interpolated linearly between the threshold and target payout levels or target and maximum payout levels, as applicable. Averaged relative achievement versus the peer group below the 35th percentile will result in expiration of the awards with no payout. The shares issuable at the threshold, target and maximum performance levels, and the reduction in grant date value of the awards versus total officer equity awards in 2014, are set forth below.
| | | | | | | | | | | | | | | | | | | | |
| OFFICER NAME | | SHARES
EARNED FOR
PERFORMANCE
BELOW
THRESHOLD | | | THRESHOLD:
SHARES
EARNED AT
35TH
PERCENTILE | | | TARGET:
SHARES
EARNED AT
65TH
PERCENTILE | | | MAXIMUM:
SHARES
EARNED AT
90TH
PERCENTILE | | | % REDUCTION
FROM 2014
LTI
VALUE | |
Steve Ells | | | 0 | | | | 7,444 | | | | 14,887 | | | | 29,774 | | | | 49.2 | % |
Monty Moran | | | 0 | | | | 7,444 | | | | 14,887 | | | | 29,774 | | | | 49.2 | % |
Jack Hartung | | | 0 | | | | 3,126 | | | | 6,252 | | | | 12,504 | | | | 37.8 | % |
Mark Crumpacker | | | 0 | | | | 2,233 | | | | 4,466 | | | | 8,932 | | | | 11.2 | % |
Performance will be calculated over the three year period beginning January 1, 2015 and ending December 31, 2017. The peer group used to measure relative performance under these awards is the same peer group disclosed on page 45. Vesting and payout of each award is subject to the recipient’s continued employment through the vesting date, subject to the potential pro-rata payout to the recipient or his estate in the event of termination due to death, disability or retirement, and to potential accelerated vesting in the event of certain terminations within two years of certain change in control transactions.
The committee believes that this departure from prior equity compensation award practices for the executive officers effectively continued our performance-based compensation programs and encouraged our officers to continue to drive the creation of shareholder value, while addressing the principal points of concern raised by shareholders with our past compensation practices.
2016 Performance Share Awards
In late 2015, the committee evaluated how to approach executive officer equity compensation following the business challenges we faced during the second half of the year. After significant analysis and input from Pay Governance, the committee concluded that using operating or relative performance metrics for the 2016 equity awards would not be optimal. The committee had concerns that using 2015 year-end financials or stock price at the beginning of 2016 as the basis for performance evaluation could create a misalignment of shareholder returns and executive officer compensation. More specifically, the committee recognized that performance against the measures incorporated into the 2015 performance share awards may not translate into rebuilding lost shareholder value.
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In early 2016, we discussed some of these issues and potential equity program changes with a number of our largest shareholders. Following those discussions and after further review and analysis, for 2016, the Compensation Committee decided to continue using performance shares for the executive officer equity compensation program. However, the 2016 performance shares will be tied solely to highly-challenging absolute stock price performance goals over a three-year performance period beginning February 3, 2016. The committee considered alternative performance metrics to be used for the 2016 performance shares, but ultimately concluded that restoring lost shareholder value was paramount. Further, the committee also concluded that granting SOSARs or other option-like awards would not be appropriate given the low strike price that would be associated with this type of grant.
Chipotle has undertaken a broad array of initiatives to address the issues that led to the stock price decline in 2015. The committee concluded that the 2016 performance share awards will continue to motivate our executive officers to ensure the successful implementation of these initiatives, thereby rebuilding customer confidence in the Chipotle brand. If that happens, we believe improved business results and stock price performance will follow.
Vesting of the awards will be based on Chipotle’s stock price performance over the performance period.The awards will pay out only if the average closing price of Chipotle’s common stock for any period of 30 consecutive trading days during the performance term is at least $700, which is approximately 52% higher than the closing price of Chipotle’s common stock on the grant date. The number of shares issuable at the end of the performance term will be determined based on the highest average closing stock price achieved for any period of 30 consecutive trading days during the performance term. The number of shares to be issuable to each executive officer at assumed levels of performance are set forth below.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Number of Shares Issued at Assumed 30-Day Average Stock
Price Achievement During Performance Term | |
| Officer Name | | Below $700 | | | $700
(Threshold) | | | $800
(Target) | | | $900 | | | $1,000 | | | $1,200
(Maximum) | |
Steve Ells | | | 0 | | | | 13,500 | | | | 27,000 | | | | 54,000 | | | | 81,000 | | | | 108,000 | |
Monty Moran | | | 0 | | | | 13,500 | | | | 27,000 | | | | 54,000 | | | | 81,000 | | | | 108,000 | |
Jack Hartung | | | 0 | | | | 5,675 | | | | 11,350 | | | | 22,700 | | | | 34,050 | | | | 45,400 | |
Mark Crumpacker | | | 0 | | | | 4,050 | | | | 8,100 | | | | 16,200 | | | | 24,300 | | | | 32,400 | |
Illustrative Market Capitalization(1) (was $13.8 billion at grant date) | | | | | | $
| 21.1
billion |
| | $
| 24.1
billion |
| | $
| 27.2
billion |
| | $
| 30.3
billion |
| | $
| 36.4
billion |
|
(1) | Illustrative market capitalization is based on shares outstanding as of the grant date, plus shares issuable at each stock price performance hurdle. |
The number of shares to be issuable between the various performance levels depicted above will be determined by linear interpolation between the next highest and lowest of the depicted performance levels. If the closing price of Chipotle common stock does not average at least $700 for any period of 30 consecutive trading days during the performance term, the awards will expire with no payout. The vesting and payout of the awards will be subject to the recipient’s continued employment through the end of the performance term, subject to the potential pro-rata payout, based on actual stock price performance, to the recipient or his estate in the event of termination due to death, disability or retirement, and to potential accelerated vesting in the event of certain terminations within two years of certain change in control transactions.
The awards described above are intended to be the only equity incentive awards made to Chipotle’s executive officers during 2016, and are in lieu of all other performance share, restricted stock, stock appreciation rights, option or other equity awards that otherwise could be made to the executive officers during 2016 under the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan.
Vesting of Previously-Granted Performance SOSARs
As of December 31, 2014, the performance criteria on the second tranche of Performance SOSARs granted in 2012, and on the first tranche of Performance SOSARs granted in 2013, were satisfied. Accordingly in February 2015 the awards became vested and exercisable. The performance criteria on these awards was the achievement of cumulative adjusted cash flow from operations as follows:
| | | | | | | | |
AWARD | | PERFORMANCE PERIOD | | | CUM. ADJ. CASH FLOW FROM OPS | |
2012 Performance SOSARs
| | | 1/1/2012 to 12/31/2014 | | | $ | 1.472 billion | |
2013 Performance SOSARs
| | | 1/1/2013 to 12/31/2014 | | | $ | 1.158 billion | |
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As of December 31, 2015, the performance criteria on the second tranche of Performance SOSARs granted in 2013, and on the first tranche of Performance SOSARs granted in 2014, were satisfied. Accordingly, following certification of the achievement of the performance criteria on these awards, the second tranche of the 2013 Performance SOSAR awards and the first tranche of the 2014 Performance SOSAR awards will vest and become exercisable. The performance criteria on these awards was the achievement of cumulative adjusted cash flow from operations as follows:
| | | | | | | | |
AWARD | | PERFORMANCE PERIOD | | | CUM. ADJ. CASH FLOW FROM OPS | |
2013 Performance SOSARs
| | | 1/1/2013 to 12/31/2015 | | | $ | 1.761 billion | |
2014 Performance SOSARs
| | | 1/1/2014 to 12/31/2015 | | | $ | 1.729 billion | |
2013 Performance Share Awards
The end of the third quarter of 2014 represented conclusion of the second year of the three-year performance period for performance shares awarded in December of 2013. These performance share awards consist of a right to receive a pre-determined number of shares of our common stock based on our achievement of cumulative adjusted cash flow from operations over the performance period at a threshold, target or maximum level. These awards are reflected below in the Outstanding Equity Awards at December 31, 2015 table below.
Executive Stock Ownership Guidelines
Our Board of Directors has adopted stock
Stock ownership
guidelines for our executive officers. These guidelines are intended to ensure that our executive officers retain ownership of a sufficient amount of Chipotle stock to align their interests in a meaningful way with
thosethe interests of our
long-term shareholders. Alignment of our employees’ interests with those of our shareholders is a principal purpose of the equity component of our compensation program.
The Committee believes that the stock ownership guidelines reflectedfor our NEOs are robust and in the case of the CEO and CFAO, the requirements are among the highest in our compensation peer group. The table below reflects our guidelines and compliance by our NEOs with the guidelines as of December 31, 2023.
| | Brian Niccol | | | 7 times | | | ✓ | |
| | Jack Hartung | | | 4 times | | | ✓ | |
| | Curt Garner | | | 3 times | | | ✓ | |
| | Chris Brandt | | | 3 times | | | ✓ | |
| | Scott Boatwright | | | 3 times | | | ✓ | |
Compliance with the stock ownership requirements is evaluated each year on the last trading day of the calendar year using the average closing price of Chipotle’s common stock over the 30 trading days ending on and including the last trading day of the calendar year. Executive officers have five years to achieve the requisite ownership; however, if an executive officer is not on track to meet the applicable ownership requirement by the end of the third year, he or she (i) cannot sell shares of common stock owned outright, if any, and (ii) must retain at least 50% of the shares received upon the vesting of a
targeted numberRSU, PSU or other full-value equity award, and/or the exercise of an option or SOSAR, measured after withholding of shares
to be owned, are presented below.by the company for the exercise price. The guidelines are reviewed
for possible adjustment each yearannually and may be adjusted by the
committeeCommittee at any time.
| | | | | | | | |
| OFFICER | | # OF
SHARES | | | ACTUAL
OWNERSHIP | |
Steve Ells | | | 31,000 | | | | 196,802 | |
Monty Moran | | | 31,000 | | | | 154,755 | |
Jack Hartung | | | 7,000 | | | | 30,464 | |
Mark Crumpacker | | | 3,000 | | | | 3,000 | |
Shares underlying unvested restricted stock or restricted stock unitsRSUs count towards satisfaction of the guidelines, while shares underlying stock options and SOSARs (whether vested or unvested) and unearned performance shares and PSUs do not count. Executive officers who do notAs of December 31, 2023, all of our NEOs satisfied, exceeded or were on track to meet the guidelines are allowed five years to acquirethese requirements within the requisite numbertime period.
Stock ownership guidelines applicable to non-employee members of
sharesour Board are described on page 22. Executive Compensation Recovery Policy Chipotle’s Executive Compensation Recovery Policy requires the Board to comply. Allpursue reimbursement of incentive-based compensation paid or awarded to an executive officer if the payment or award was predicated upon the achievement of certain financial results that subsequently were the subject of a restatement, and a lower payment or award would have been made to the executive officer based upon the restated financial results. The clawback covers incentive-based compensation paid or awarded on or after October 2, 2023 and during the three fiscal years prior to the restatement. In addition, the Board may require forfeiture of an executive officer’s compensation, both cash and equity, if the executive officer engaged in egregious conduct substantially detrimental to the company. Our policy complies with and exceeds the New York Stock Exchange listing standards that became effective in 2023.
Prohibition on Hedging and Pledging To further align the interests of our executive officers meetwith the stock ownership guidelines. We also have adopted a policy prohibitinginterests of our shareholders, we prohibit our directors, executive officers and certain employees including all of the executive officers,who have access to material, nonpublic information, from hedging their Chipotle
stock ownership or pledging theirany shares of Chipotle common stock, holding shares of Chipotle common stock in a margin account or otherwise pledging shares of Chipotle common stock as collateral for loans.
Tax And Other Regulatory Considerations
Code Section 162(m)
Section 162(m)loans, and engaging in put options, call options, covered call options or other derivative securities in Chipotle common stock on an exchange or in any other organized market.
Our current and historical practice is to grant LTI awards to senior management during periods when our trading window for insiders is open. Our annual grant date, which generally includes the annual grant of the Internal Revenue Code provides that compensation of more than $1,000,000 paidLTI awards to the chief executive officer or to certainNEOs and other executive officers, usually occurs within one week after we publicly announce our financial results for the fourth quarter and full fiscal year. The Compensation, People and Culture Committee approves all LTI awards to executive officers and has delegated authority to our CEO, Chief Human Resources Officer and General Counsel to make grants of a public company will not be deductible for federal income tax purposes unless amounts above $1,000,000 qualify for one of several exceptions. The committee’s primary objective in designing executive compensation programs isLTI awards, within specified parameters, to support and encourage the achievement of our company’s strategic goalsnon-executive officer employees and to enhance long-term shareholder value. For thesenewly hired or newly promoted employees below the executive officer level, which also generally occur only during periods when our trading window for insiders is open.
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In February 2024, the Compensation, People and other reasons,Culture Committee approved the committee has determined that it will not necessarily seekChipotle Mexican Grill, Inc. Executive Officer Severance Plan (the “Severance Plan”). The Severance Plan provides severance benefits to limitour executive compensationofficers, including the NEOs, if their employment is terminated either by us without “cause” (excluding termination due to death or disability) or due to their resignation for “good reason” (each as defined in the Severance Plan) (a “Qualifying Termination”).
An executive officer who experiences a Qualifying Termination would be eligible to receive (i) cash severance equal to the
amount that will be fully deductible under Section 162(m).We have implemented the 2014 Cash Incentive Plan as an umbrella plan under which AIP bonuses are paid in order to meet requirements to deduct the amountsum of the payouts from our reported income under Section 162(m). Under the 2014 plan, the committee sets maximum bonuses for each executive officer and other key employees. If thetheir base salary plus target cash bonus amount determined under the AIP for participantsthe year in which the Qualifying Termination occurs multiplied by two, in the 2014 plan is lower thancase of the maximumCEO, or one and one-half, in the case of other executive officers, paid in equal installments over 24 months, for the CEO, and 18 months for other executive officers, plus (ii) a pro-rated portion of their annual bonus set under the 2014 plan, the committee has historically exercised discretion to pay the lower AIP bonus rather than the maximum bonus payable under the 2014 plan. In instances where the committee has determined to pay bonuses in excess of those determined under the AIP such additional
for the year in which the Qualifying Termination occurs, based on the Company’s actual performance, plus (iii) the cash equivalent of the employer portion of the cost of the Company group health plans in which the executive officer was participating immediately prior to the Qualifying Termination for 24 months, with respect to the CEO, or for 18 months, with respect to other executive officers. In addition, each executive officer would vest in a pro-rata portion of their unvested equity awards, with the performance-based equity awards vesting based on the Company’s actual performance. Any SOSARs held by the executive officer would be exercisable for 12 months after the Qualifying Termination or if earlier, until the expiration date. | | |
52 | | NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENT |
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Executive Officers and Compensation
(continued)
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|
bonuses were paidTo be eligible for benefits under the predecessor toSeverance Plan, the 2014 planexecutive officer must timely execute and not revoke a separation and general release agreement, in combination with AIP bonuses, were less than the maximum bonuses fixedform provided by the Company, which contains customary confidentiality, non-solicitation and non-disparagement restrictions.
An executive officer cannot receive benefits under the
plan.Accounting Rules
Various rulesSeverance Plan if they become eligible to receive benefits under generally accepted accounting principles determine the mannerChipotle Mexican Grill, Inc. Change in Control Severance Plan.
In February 2024 the Compensation, People and Culture Committee also approved a letter agreement with Brian Niccol providing that, if he is subject to a Qualifying Termination under the Severance Plan, he would receive an additional 12 months of pro-rated vesting credit for any equity awards held by him on the Qualifying Termination Date. See “Potential Payments Upon Termination or Change-In-Control – Severance Arrangements” for more details.
Change in Control Severance Plan We have a Change in Control Severance Plan (“CIC Plan”) to encourage retention of key management employees in the event of a change in control, which we accountis designed to help incent key executives to remain with the company during the pendency of any planned or unexpected change in control of the company. Severance benefits are only payable in the event a change in control of the company occurs and an executive officer’s employment is terminated without cause or by him or her for equity-basedgood reason (each as defined in the plan). See “Potential Payments Upon Termination or Change-In-Control – Change in Control Severance Plan” for more details.
Compensation Program Risk Assessment F.W. Cook, an independent executive compensation consulting firm retained by the Compensation, People and Culture Committee, conducted a risk assessment of our compensation programs in March 2024 and concluded that our financial statements. compensation policies, practices and programs do not create risks that are reasonably likely to have a material adverse effect on Chipotle. F.W. Cook’s assessment included a review of our pay and incentive plan structures, pay practices and policies and governance processes, the Compensation, People and Culture Committee’s oversight of such programs and available recoupment policies in place to help mitigate risk.
The committee may considerrisk assessment considered the accounting treatment underfollowing factors:
Financial Accounting Standards Board Accounting Standards Codification Topic 718 (FASB Topic 718)Our executive compensation program is designed to encourage behaviors aligned with the long-term interests of alternative grant proposals when determiningshareholders, with a significant portion of executive compensation awarded in the form of long-term equity incentives.
There is appropriate balance in the executive compensation program structure to mitigate compensation-related risk with fixed and timing of equityvariable pay; cash and equity; corporate and individual goals; formulas and discretion; and short-term and long-term measurement periods.
We have policies to mitigate compensation grantsrisk including stock ownership guidelines, insider trading prohibitions, discretion to reduce payments, forfeiture provisions, independent Compensation, People and Culture Committee oversight, and a compensation recovery and clawback policy.
Compensation, People and Culture Committee oversight extends to incentive plans below the executive officer level, where no potential material compensation-related risk was identified.
In structuring and approving our executive officers.compensation programs, as well as policies and procedures relating to compensation throughout our company, the Compensation, People and Culture Committee also considers risks that may be inherent in such programs, policies and procedures. The accounting treatment of such grants, however, is not generally determinativeCommittee reviewed the assessment of the type, timing, or amount ofcompany’s 2023 compensation program and discussed the report with management and, based on its review, determined that any particular grant of equity-basedrisks arising from the company’s compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the committee determines to make.company.
| | | | 2024 Proxy Statement 69 | | |
COMPENSATION COMMITTEE REPORTTABLE OF CONTENTS
Compensation, People and Culture Committee Report
The Compensation,
People and Culture Committee reviewed and discussed the Compensation Discussion and Analysis included in this
Proxy Statementproxy statement with management. Based on such review and discussion, the
Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this
Proxy Statementproxy statement and Chipotle’s Annual Report on Form 10-K for filing with the SEC.
The
Compensation,
People and Culture Committee.
Neil W. Flanzraich,
Patricia Fili-Krushel, Chairperson
Patrick J. Flynn
Darlene J. Friedman
Gregg Engles
Laura Fuentes
| | | | 2024 Proxy Statement 70 | |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENT | | | 53 | |
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Executive Officers and Compensation
(continued)
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|
TABLE OF CONTENTS
20152023 COMPENSATION TABLES
In reviewing the compensation information included below, it is important to bear in mind that consistent with past practice, compensation decisions for 2015 were made early in the year. Consequently, the amounts and awards reflected in the compensation tables below primarily reflect decisions made well before the fourth quarter of 2015 and the difficulties we experienced in our business during that time.
2023 SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | |
NAME AND PRINCIPAL POSITION | | YEAR | | SALARY | | | STOCK
AWARDS(1) | | | OPTION
AWARDS(2) | | | NON-EQUITY
INCENTIVE PLAN
COMPENSATION(3) | | | ALL OTHER
COMPENSATION(4) | | | TOTAL | |
STEVE ELLS | | 2015 | | $ | 1,526,000 | | | $ | 12,030,036 | | | | — | | | | — | | | $ | 281,858 | | | $ | 13,837,894 | |
| Chairman and Co-Chief Executive Officer | | 2014 | | $ | 1,400,000 | | | | — | | | $ | 23,698,500 | | | $ | 3,570,000 | | | $ | 255,770 | | | $ | 28,924,270 | |
| | 2013 | | $ | 1,400,000 | | | $ | 7,961,250 | | | $ | 12,304,500 | | | $ | 3,196,816 | | | $ | 254,305 | | | $ | 25,116,871 | |
MONTY MORAN | | 2015 | | $ | 1,308,000 | | | $ | 12,030,036 | | | | — | | | | — | | | $ | 223,041 | | | $ | 13,561,077 | |
| Co-Chief Executive Officer | | 2014 | | $ | 1,200,000 | | | | — | | | $ | 23,698,500 | | | $ | 3,060,000 | | | $ | 194,702 | | | $ | 28,153,203 | |
| | 2013 | | $ | 1,200,000 | | | $ | 7,961,250 | | | $ | 12,304,500 | | | $ | 2,740,128 | | | $ | 191,176 | | | $ | 24,397,054 | |
JACK HARTUNG | | 2015 | | $ | 745,769 | | | $ | 5,052,179 | | | | — | | | | — | | | $ | 235,361 | | | $ | 6,033,309 | |
| Chief Financial Officer | | 2014 | | $ | 700,000 | | | | — | | | $ | 8,125,200 | | | $ | 1,213,800 | | | $ | 206,842 | | | $ | 10,245,842 | |
| | 2013 | | $ | 645,719 | | | $ | 3,980,625 | | | $ | 4,101,500 | | | $ | 975,501 | | | $ | 179,004 | | | $ | 9,882,349 | |
MARK CRUMPACKER | | 2015 | | $ | 532,077 | | | $ | 3,608,930 | | | | — | | | | — | | | $ | 141,581 | | | $ | 4,282,588 | |
| Chief Creative and Development Officer | | 2014 | | $ | 500,000 | | | | — | | | $ | 4,062,600 | | | $ | 663,000 | | | $ | 109,591 | | | $ | 5,335,191 | |
| | 2013 | | $ | 402,580 | | | $ | 3,184,500 | | | $ | 1,692,400 | | | $ | 506,328 | | | $ | 107,054 | | | $ | 5,892,862 | |
| | Brian Niccol
Chairman and Chief Executive Officer | | | 2023 | | | $ 1,292,308 | | | $ 9,300,795 | | | $6,200,364 | | | $5,200,000 | | | $ 479,961 | | | $22,473,427 | |
| | 2022 | | | $1,250,000 | | | $8,101,452 | | | $5,400,343 | | | $2,115,000 | | | $319,359 | | | $17,186,154 | |
| | 2021 | | | $1,250,000 | | | $7,200,970 | | | $4,800,102 | | | $4,342,500 | | | $287,008 | | | $17,880,580 | |
| | Jack Hartung
Chief Financial and Administrative Officer | | | 2023 | | | $865,000 | | | $ 3,300,593 | | | $2,200,112 | | | $1,903,000 | | | $114,577 | | | $8,383,282 | |
| | 2022 | | | $862,692 | | | $2,400,138 | | | $1,600,202 | | | $894,410 | | | $81,451 | | | $5,838,893 | |
| | 2021 | | | $844,615 | | | $2,100,961 | | | $1,400,358 | | | $1,598,000 | | | $224,740 | | | $6,168,673 | |
| | Curt Garner
Chief Customer and Technology Officer | | | 2023 | | | $775,385 | | | $3,000,101 | | | $2,000,384 | | | $1,560,000 | | | $90,644 | | | $7,426,514 | |
| | 2022 | | | $746,154 | | | $2,400,138 | | | $1,600,202 | | | $695,625 | | | $78,086 | | | $5,520,205 | |
| | 2021 | | | $717,308 | | | $2,100,961 | | | $1,400,358 | | | $1,329,288 | | | $156,797 | | | $5,704,712 | |
| | Chris Brandt
Chief Brand Officer | | | 2023 | | | $720,384 | | | $3,602,692 | | | $900,328 | | | $1,305,000 | | | $96,374 | | | $6,624,779 | |
| | 2022 | | | $691,923 | | | $2,220,246 | | | $1,480,345 | | | $572,333 | | | $78,055 | | | $5,042,902 | |
| | 2021 | | | $671,154 | | | $1,800,612 | | | $1,200,025 | | | $1,107,338 | | | $120,131 | | | $4,899,260 | |
| | Scott Boatwright
Chief Operating Officer | | | 2023 | | | $607,500 | | | $3,602,692 | | | $900,328 | | | $1,170,000 | | | $66,252 | | | $6,346,772 | |
| | 2022 | | | $562,692 | | | $2,220,246 | | | $1,480,345 | | | $465,278 | | | $52,515 | | | $4,781,076 | |
| | 2021 | | | $546,154 | | | $1,950,047 | | | $1,300,388 | | | $902,275 | | | $140,151 | | | $4,839,015 | |
(1)
| Amounts under “Stock Awards” represent the grant date fair value under FASB Topic 718 of the 2023 annual grant of (i) performance shares awarded in 2013 and 2015 and for which vesting was consideredshare units (PSUs), based on the probable achievement as of the date of grant, date.and (ii) restricted stock units (RSU). See Note 68 to our audited consolidated financial statements for the year ended December 31, 2015,2023, which are included in our Annual Report on Form 10-K filed with the SEC on February 5, 2016,8, 2024 for descriptions of the methodologies and assumptions we use to value stock awards and the manner in which we recognize the related expense pursuant to FASB ASC Topic 718. The 2023 annual PSU awards will only pay out to the extent the two performance metrics (three-year cumulative restaurant cash flow (RCF) dollars and total number of new restaurant openings (NROs)) equal or exceed the predetermined threshold performance levels over the 2023 through 2025 performance period. The PSU awards reflect an assumed target outcome of the performance conditions and do not reflect the value that ultimately may be realized by the executive officer. The aggregate grant date fair value of the 20152023 PSU awards, assuming the highest level ofmaximum performance, were achieved (which was determined not to be probable as of the grant date) would have been $17,399,032is $27.9 million for Mr. Ells and Mr. Moran; $7,306,962Niccol, $9.9 million for Mr. Hartung;Hartung, $9.0 million for Garner, and $5,219,593$8.1 million for Mr. Crumpacker.Messrs. Brandt and Boatwright. For further details, see “Compensation Discussion and Analysis – 2023 Compensation Program.” For 2023, the annual grant to executive officers was in the form of 60% PSUs, 20% stock-only stock appreciation rights (SOSARs), and 20% individual choice between RSUs or SOSARs with an equivalent grant value. Messrs. Brandt and Boatwright elected to receive 20% of their 2023 grant in the form of RSUs; the other NEOs elected to receive 40% of their 2023 grant in the form of SOSARs rather than receive RSUs. |
(2)
| Amounts under “Option Awards” represent the grant date fair value under FASB Topic 718 of SOSARs awarded in the relevant year.2023. See Note 68 to our audited consolidated financial statements for the year ended December 31, 2015,2023, as referenced in footnote 1,(1), for descriptions of the methodologies and assumptions we use to value SOSAR awards and the manner in which we recognize the related expense pursuant to FASB ASC Topic 718. |
(3)
| Amounts under “Non-Equity Incentive Plan Compensation” represent the amountscash payouts earned under the AIPannual incentive plan (AIP) for the relevant year,year. Under the 2023 AIP, payouts to our executive officers that exceed 200% of target are paid in the form of RSUs that vest in two equal installments on the second and third anniversaries of the grant date, subject to continued employment through the applicable vesting date. For 2023, AIP payouts exceeded 200% and, as described undera result, each of the NEOs was granted RSUs with the following grant values in lieu of cash on the same date as the 2024 annual LTI grant: Mr. Niccol ($585,000), Mr. Hartung ($178,406), Mr. Garner ($126,750), Mr. Brandt ($106,031) and Mr. Boatwright ($117,000). Only the cash portion of the 2023 AIP payouts is included in the table above. For further discussion, see “Compensation Discussion and Analysis – Discussion of Executive Officer Compensation Decisions – Annual Incentives – AIP Structure” and “– 2015 AIP Payouts.Incentive Plan (AIP).” |
(4)
| Amounts undershown in the “All Other Compensation” column for 2015 include2023 consist of the following: |
Matching contributions we made on the executive officers’ behalf to the Chipotle Mexican Grill, Inc. 401(K) plan as well as the Chipotle Mexican Grill, Inc. Supplemental Deferred Investment Plan, in the aggregate amounts of $205,692 for Mr. Ells, $176,308 for Mr. Moran, $80,398 for Mr. Hartung, and $48,474 for Mr. Crumpacker. See “Non-Qualified Deferred Compensation for 2015” below for a description of the Chipotle Mexican Grill, Inc. Supplemental Deferred Investment Plan.
Company car costs, which include the depreciation expense recognized on company-owned cars or lease payments on leased cars (in either case less employee payroll deductions), insurance premiums, and maintenance and fuel costs. Company car costs for Mr. Ells were $60,496, for Mr. Moran were $37,074, for Mr. Hartung were less than $25,000, and for Mr. Crumpacker were $32,028.
Housing costs, including monthly rent and utilities payments, of $35,392 for Mr. Hartung and $45,274 for Mr. Crumpacker.
$14,918 for Mr. Ells, $8,906 for Mr. Moran, $63,294 for Mr. Hartung, and $15,071 for Mr. Crumpacker for reimbursement of taxes payable in connection with taxable perquisites under rules of the Internal Revenue Service.
Commuting expenses, which include air fare, airport parking and ground transportation relating to travel between home and our company headquarters, for Mr. Hartung totaling $38,604.
| | Brian Niccol | | | $231,000 | | | $200,000 | | | $763 | | | $48,197 | | | $479,961 | |
| | Jack Hartung | | | $107,712 | | | $0 | | | $918 | | | $5,947 | | | $114,577 | |
| | Curt Garner | | | $84,017 | | | $0 | | | $680 | | | $5,947 | | | $90,644 | |
| | Chris Brandt | | | $82,151 | | | $0 | | | $759 | | | $13,464 | | | $96,374 | |
| | Scott Boatwright | | | $59,598 | | | $0 | | | $698 | | | $5,956 | | | $66,252 | |
(a)
| | |
54 | | NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENTConsists of matching contributions made by the company to Chipotle’s 401(k) Plan and the Supplemental Deferred Investment Plan for the benefit of the executive. The Supplemental Deferred Investment Plan is a nonqualified deferred compensation arrangement for employees who earn compensation greater than the maximum compensation that can be considered with respect to the 401(k) Plan, as set by the Internal Revenue Code. See “Nonqualified Deferred Compensation for 2023” for more details on this plan. |
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Executive Officers and Compensation
(continued)
| 2024 Proxy Statement 71 |
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TABLE OF CONTENTS
(b)
| Consists of the aggregate incremental costs of personal use by Mr. Niccol of company-owned aircraft, which use was approved by our Board. The aggregate incremental costs include costs billed by the applicable third-party or, for company-owned aircraft, the hourly operating cost of the aircraft, consisting of fuel costs, and other operating costs such as crew expenses, catering and landing fees. |
(c)
| Consists of the company’s reimbursement of taxes payable by the executive in connection with use of a meal card to receive a set amount of free Chipotle meals each month, which meal card is provided broadly to all the company’s corporate and field management employees. The meal card perquisite is not required to be included in the table above since it is available to a broad base of company employees, but the perquisite is taxable to all employees under Internal Revenue Service rules. |
(e)
| Includes costs of life insurance premiums and a gym allowance for all officers; financial and tax counseling services for Mr. Brandt; and home security costs for Mr. Niccol. |
GRANTS OF PLAN-BASED AWARDS IN
2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | ESTIMATED POSSIBLE PAYOUTS
UNDER NON-EQUITY INCENTIVE
PLAN AWARDS(1) | | | ESTIMATED POSSIBLE PAYOUTS
UNDER EQUITY INCENTIVE
PLAN AWARDS(2) | | | GRANT DATE
FAIR VALUE
OF STOCK
AWARDS(3) | |
| NAME | | GRANT
DATE | | AWARD DESCRIPTION | | THRESHOLD
($) | | | TARGET ($) | | | MAXIMUM ($) | | | THRESHOLD
(# shares) | | | TARGET (# shares) | | | MAXIMUM (# shares) | | |
| STEVE ELLS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | n/a | | AIP | | $ | 0 | | | $ | 1,925,000 | | | $ | 3,927,000 | | | | | | | | | | | | | | | | | |
| | 2/20/15 | | Performance Shares | | | | | | | | | | | | | | | 7,444 | | | | 14,887 | | | | 29,774 | | | $ | 12,030,036 | |
| MONTY MORAN | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | n/a | | AIP | | $ | 0 | | | $ | 1,650,000 | | | $ | 3,366,000 | | | | | | | | | | | | | | | | | |
| | 2/20/15 | | Performance Shares | | | | | | | | | | | | | | | 7,444 | | | | 14,887 | | | | 29,774 | | | $ | 12,030,036 | |
| JACK HARTUNG | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | n/a | | AIP | | $ | 0 | | | $ | 637,500 | | | $ | 1,300,500 | | | | | | | | | | | | | | | | | |
| | 2/20/15 | | Performance Shares | | | | | | | | | | | | | | | 3,126 | | | | 6,252 | | | | 12,504 | | | $ | 5,052,179 | |
| MARK CRUMPACKER | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | n/a | | AIP | | $ | 0 | | | $ | 347,750 | | | $ | 709,410 | | | | | | | | | | | | | | | | | |
| | 2/20/15 | | Performance Shares | | | | | | | | | | | | | | | 2,233 | | | | 4,466 | | | | 8,932 | | | $ | 3,608,930 | |
| | Brian Niccol | | | AIP | | | — | | | $0 | | | $2,600,000 | | | $7,150,000 | | | | | | | | | | | | | | | | | | | | | | |
| | PSUs(5) | | | 2/9/23 | | | | | | | | | | | | 0 | | | 5,788 | | | 17,364 | | | | | | | | | | | | $9,300,795 | |
| | SOSARs(6) | | | 2/9/23 | | | | | | | | | | | | | | | | | | | | | | | | 11,983 | | | $1,606.91 | | | $6,200,364 | |
| | Jack Hartung | | | AIP | | | — | | | $0 | | | $951,500 | | | $2,616,625 | | | | | | | | | | | | | | | | | | | | | | |
| | PSUs(5) | | | 2/9/23 | | | | | | | | | | | | 0 | | | 2,054 | | | 6,162 | | | | | | | | | | | | $3,300,593 | |
| | SOSARs(6) | | | 2/9/23 | | | | | | | | | | | | | | | | | | | | | | | | 4,252 | | | $1,606.91 | | | $2,200,112 | |
| | Curt Garner | | | AIP | | | — | | | $0 | | | $780,000 | | | $2,145,000 | | | | | | | | | | | | | | | | | | | | | | |
| | PSUs(5) | | | 2/9/23 | | | | | | | | | | | | 0 | | | 1,867 | | | 5,601 | | | | | | | | | | | | $3,000,101 | |
| | SOSARs(6) | | | 2/9/23 | | | | | | | | | | | | | | | | | | | | | | | | 3,866 | | | $1,606.91 | | | $2,000,384 | |
| | Chris Brandt | | | AIP | | | — | | | $0 | | | $652,500 | | | $1,794,375 | | | | | | | | | | | | | | | | | | | | | | |
| | PSUs(5) | | | 2/9/23 | | | | | | | | | | | | 0 | | | 1,681 | | | 5,043 | | | | | | | | | | | | $2,701,216 | |
| | SOSARs(6) | | | 2/9/23 | | | | | | | | | | | | | | | | | | | | | | | | 1,740 | | | $1,606.91 | | | $900,328 | |
| | RSUs(6) | | | 2/9/23 | | | | | | | | | | | | | | | | | | | | | 561 | | | | | | | | | $901,477 | |
| | Scott Boatwright | | | AIP | | | — | | | $0 | | | $585,000 | | | $1,608,750 | | | | | | | | | | | | | | | | | | | | | | |
| | PSUs(5) | | | 2/9/23 | | | | | | | | | | | | 0 | | | 1,681 | | | 5,043 | | | | | | | | | | | | $2,701,216 | |
| | SOSARs(6) | | | 2/9/23 | | | | | | | | | | | | | | | | | | | | | | | | 1,740 | | | $1,606.91 | | | $900,328 | |
| | RSUs(6) | | | 2/9/23 | | | | | | | | | | | | | | | | | | | | | 561 | | | | | | | | | $901,477 | |
(1)
| Each executive officer was entitled toThe Compensation, People and Culture Committee approved the 2023 annual grants on February 7, 2023, with a cash award to be paid under our 2014 Cash Incentive Plan, although as a mattergrant date of practice the Compensation Committee exercises discretion to pay each executive officer a lesser amount determined under the AIP as described under “Compensation Discussion and Analysis – Components of Compensation – Annual Incentives.” Amounts under Threshold reflectFebruary 9, 2023. |
(2)
| The “Threshold” column reflects amounts that no payouts would be paid under the AIP if achievement against company targetseach executive officer achieved the plan goals at the minimum level required to receive any payout. The “Target” column reflects amounts that would be paid under the AIP if the performance goals under the AIP were sufficiently below target. Amounts under Target reflect the target AIP bonus, whicheach achieved at 100%. The “Maximum” column reflects amounts that would have beenbe paid to the executive officer if each of the company performance factor, team performance factor and individual performance factor under the AIP had been set at 100 percent. Amountsif the performance goals under Maximum reflect the AIP bonus which would have been payable had each of the company performance factor, team performance factor and individual performance factor beenwere achieved at the maximum level. Amounts in each column assume that the Compensation, People and Culture Committee does not utilize the food safety modifier to decrease the payout to any NEO by up to -20%. Actual AIP bonuses paid are reflected in the “Non-Equity Incentive Plan Compensation” column of the table labeled2023 Summary Compensation Table above. See “Compensation Discussion and Analysis – 2023 Compensation Program – Annual Incentive Plan” for further information regarding the AIP. |
(2)(3)
| The Performance ShareAll equity awards are denominatedshown in shares of common stock and were granted under the Chipotle Mexican Grill, Inc. 20112022 Stock Incentive Plan, as amended and restated.Plan. See “Terms of 2015 Equity-Based2023 Annual PSU Awards,” “Terms of 2023 Annual SOSAR Awards” and “Terms of 2023 Annual RSU Awards” below for a description of the vesting terms for the Performance SharesPSUs, SOSARs and RSUs granted during 2015. 2023. |
(4)
| See Note 68 to our audited consolidated financial statements for the year ended December 31, 2015,2023, which are included in our Annual Report on Form 10-K filed with the SEC on February 5, 2016,8, 2024, for descriptions of the methodologies and assumptions we used to value Performance Shareequity awards pursuant to FASB Topic 718. The grant date fair value of Performance Share awards is included in the “Stock Awards” column of the Summary Compensation Table above for each executive officer for 2015. |
(3)(5)
| See footnote (1)PSUs will vest to the Summary Compensation Table above.extent that the company’s three-year cumulative RCF dollars and total number of new restaurant openings over the 2023 through 2025 performance period equal or exceed the predetermined threshold performance level. |
(6)
| SOSAR and RSU awards vest 50% on the second anniversary and 50% on the third anniversary of the date of grant, subject to continued employment through the applicable vesting date. |
| | | | 2024 Proxy Statement 72 | | |
TermsTABLE OF CONTENTS
TERMS OF 2023 ANNUAL PSU AWARDS Annual PSUs granted to the executive officers in 2023 will vest only if and to the extent that the company’s three-year cumulative restaurant cash flow (RCF) dollars and total number of
2015 Performance Share AwardsVestingnew restaurant openings (NROs) over the 2023 through 2025 performance period equal or exceed the predetermined threshold performance level. The payout range for the PSUs is 0% to 300%, and PSUs will only be earned if the 3-year cumulative RCF Dollars are greater than $7.1 billion (90% weight) and/or if more than 730 total NROs occur over the performance period (10% weight). If the cumulative RCF dollars and/or the total NROs fall between two stated performance levels in the performance goal table, the payout of the Performance Share awards made in 2015percentage will be based on Chipotle’s relative performance versus our restaurant industry peer group in revenue growth, net income growth, and total shareholder return, with each performance measure to be weighted equally. The awards will pay out at the target number of shares set forth in the Grants of Plan-Based Awards for 2015 table, above, if our relative achievement versus the peer group, averaged across the three performance measures, is at the 65th percentile; will pay out at two times the target number of shares set forth in the table if our averaged relative percentile achievement versus the peer group is at or above the 90th percentile; and will pay out at one-half the target number of shares set forth below if our averaged relative percentile achievement versus the peer group is at the 35th percentile. Payout for achievement in between the 35th and 65th, and between the 65th and 90th, percentiles will be interpolated linearly between the threshold and target payout levels or target and maximum payout levels, as applicable. Averaged relative achievement versus the peer group below the 35th percentile will result in expiration of the awards with no payout. Performance will be calculated over the three year period beginning January 1, 2015 and ending December 31, 2017.determined using linear interpolation. Vesting and payout of each awardPSU is subject to the recipient’sexecutive officer’s continued employment through the vesting date subject to the potential pro-rata payout to the recipient or his estate(except in the event of termination of employment due to death disability or retirement,disability), and to potentialeach PSU may be paid out on an accelerated vestingbasis in the event of certain terminations within two yearsa change in control transaction and continued vesting (possibly on a pro-rata basis) upon retirement of the holder.
TERMS OF 2023 ANNUAL SOSAR AWARDS A SOSAR represents the right to acquire a specific number of shares of common stock at a pre-set price, which has value when the market price of the common stock at the time of exercise exceeds the exercise price. The exercise price of the SOSARs is equal to the closing price of our common stock on the date of grant. SOSARs vest 50% on the second anniversary and 50% on the third anniversary of the date of grant, subject to the executive’s continued employment, and have a seven-year term. SOSARs may continue to vest upon the holder’s retirement and may vest on an accelerated basis in the event of termination of employment due to death or disability, a qualifying termination of employment following a change in control, and upon completion of certain change in control transactions as describedin which the SOSARs are not replaced.
TERMS OF 2023 ANNUAL RSU AWARDS RSUs vest 50% on the second anniversary and 50% on the third anniversary of the date of grant, subject to the executive’s continued employment, and will settle in shares of common stock on a one-for-one basis. The RSUs may continue to vest upon the holder’s retirement and may vest on an accelerated basis in the
footnotesevent of termination of employment due to
death or disability, a qualifying termination of employment following a change in control, and upon completion of certain change in control transactions in which the
Equity Award Vesting table appearing belowRSUs are not replaced. | | | | 2024 Proxy Statement 73 | |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENT | | | 55 | |
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TABLE OF CONTENTS
under “Potential Payments Upon Termination or Change-in-Control.” We filed the form of Performance Share Agreements for these grants as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on April 22, 2015.
OUTSTANDING EQUITY AWARDS AT
DECEMBER 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | |
| | | OPTION AWARDS | | | STOCK AWARDS | |
NAME | | NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS EXERCISABLE | | | NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS UNEXERCISABLE | | | OPTION
EXERCISE
PRICE | | | OPTION
EXPIRATION
DATE | | | EQUITY INCENTIVE
PLAN AWARDS:
NUMBER OF
UNEARNED
SHARES, UNITS OR OTHER RIGHTS
THAT HAVE NOT
VESTED | | | EQUITY INCENTIVE
PLAN AWARDS:
MARKET OR
PAYOUT VALUE
OF UNEARNED
SHARES, UNITS
OR OTHER RIGHTS
THAT HAVE NOT
VESTED | |
| STEVE ELLS | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | 37,500 | (1) | | $ | 318.45 | | | | 2/7/2020 | | | | 5,000 | (6) | | $ | 2,399,250 | (7) |
| | | — | | | | 37,500 | (2) | | $ | 318.45 | | | | 2/7/2020 | | | | 7,444 | (8) | | $ | 3,572,003 | (7) |
| | | — | | | | 87,500 | (3) | | $ | 543.20 | | | | 2/3/2021 | | | | | | | | | |
| | | — | | | | 87,500 | (4) | | $ | 543.20 | | | | 2/3/2021 | | | | | | | | | |
| MONTY MORAN | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 40,000 | | | | — | | | $ | 371.63 | | | | 2/6/2019 | | | | 5,000 | (6) | | $ | 2,399,250 | (7) |
| | | 60,000 | | | | — | | | $ | 371.63 | | | | 2/6/2019 | | | | 7,444 | (8) | | $ | 3,572,003 | (7) |
| | | 37,500 | | | | 37,500 | (1) | | $ | 318.45 | | | | 2/7/2020 | | | | | | | | | |
| | | 37,500 | | | | 37,500 | (2) | | $ | 318.45 | | | | 2/7/2020 | | | | | | | | | |
| | | — | | | | 87,500 | (3) | | $ | 543.20 | | | | 2/3/2021 | | | | | | | | | |
| | | — | | | | 87,500 | (4) | | $ | 543.20 | | | | 2/3/2021 | | | | | | | | | |
| JACK HARTUNG | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 12,500 | | | | 12,500 | (1) | | $ | 318.45 | | | | 2/7/2020 | | | | 2,500 | (6) | | $ | 1,199,625 | (7) |
| | | 12,500 | | | | 12,500 | (2) | | $ | 318.45 | | | | 2/7/2020 | | | | 3,126 | (8) | | $ | 1,500,011 | (7) |
| | | — | | | | 30,000 | (3) | | $ | 543.20 | | | | 2/3/2021 | | | | | | | | | |
| | | — | | | | 30,000 | (4) | | $ | 543.20 | | | | 2/3/2021 | | | | | | | | | |
| MARK CRUMPACKER | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | 4,000 | (1) | | $ | 318.45 | | | | 2/7/2020 | | | | 2,000 | (6) | | $ | 959,700 | (7) |
| | | — | | | | 4,000 | (2) | | $ | 318.45 | | | | 2/7/2020 | | | | 2,233 | (8) | | $ | 1,071,505 | (7) |
| | | — | | | | 2,000 | (5) | | $ | 365.80 | | | | 6/8/2020 | | | | | | | | | |
| | | — | | | | 15,000 | (3) | | $ | 543.20 | | | | 2/3/2021 | | | | | | | | | |
| | | — | | | | 15,000 | (4) | | $ | 543.20 | | | | 2/3/2021 | | | | | | | | | |
| | Brian Niccol | | | 3/5/2018 | | | 1,334 | | | — | | | $400.20 | | | 3/5/2025 | | | — | | | — | | | — | | | — | |
| | 2/8/2019 | | | 5,275 | | | — | | | $582.77 | | | 2/8/2026 | | | — | | | — | | | — | | | — | |
| | 2/6/2020 | | | 17,812 | | | — | | | $857.00 | | | 2/6/2027 | | | — | | | — | | | — | | | — | |
| | 2/4/2021 | | | 6,098 | | | 6,098 | | | $1,479.55 | | | 2/4/2028 | | | — | | | — | | | 13,531 | | | $30,944,856 | |
| | 2/10/2022 | | | — | | | 11,940 | | | $1,578.00 | | | 2/10/2029 | | | — | | | — | | | 5,134 | | | $11,741,253 | |
| | 2/9/2023 | | | — | | | 11,983 | | | $1,606.91 | | | 2/9/2030 | | | — | | | — | | | 17,364 | | | $39,710,773 | |
| | Jack Hartung | | | 2/8/2019 | | | 6,782 | | | — | | | $582.77 | | | 2/8/2026 | | | — | | | — | | | — | | | — | |
| | 2/6/2020 | | | 5,344 | | | — | | | $857.00 | | | 2/6/2027 | | | — | | | — | | | — | | | — | |
| | 2/4/2021 | | | 1,779 | | | 1,779 | | | $1,479.55 | | | 2/4/2028 | | | — | | | — | | | 3,948 | | | $9,028,918 | |
| | 2/10/2022 | | | — | | | 3,538 | | | $1,578.00 | | | 2/10/2029 | | | — | | | — | | | 1,521 | | | $3,478,466 | |
| | 2/9/2023 | | | — | | | 4,252 | | | $1,606.91 | | | 2/9/2030 | | | — | | | — | | | 6,162 | | | $14,092,248 | |
| | Curt Garner | | | 3/29/2018 | | | 5,384 | | | — | | | $355.42 | | | 3/29/2025 | | | — | | | — | | | — | | | — | |
| | 2/8/2019 | | | 6,782 | | | — | | | $582.77 | | | 2/8/2026 | | | — | | | — | | | — | | | — | |
| | 2/6/2020 | | | 5,344 | | | — | | | $857.00 | | | 2/6/2027 | | | — | | | — | | | — | | | — | |
| | 2/4/2021 | | | 1,779 | | | 1,779 | | | $1,479.55 | | | 2/4/2028 | | | — | | | — | | | 3,948 | | | $9,028,918 | |
| | 2/10/2022 | | | — | | | 3,538 | | | $1,578.00 | | | 2/10/2029 | | | — | | | — | | | 1,521 | | | $3,478,466 | |
| | 2/9/2023 | | | — | | | 3,866 | | | $1,606.91 | | | 2/9/2030 | | | — | | | — | | | 5,601 | | | $12,809,263 | |
| | Chris Brandt | | | 2/6/2020 | | | 4,453 | | | — | | | $857.00 | | | 2/6/2027 | | | — | | | — | | | — | | | — | |
| | 2/4/2021 | | | 1,525 | | | 1,524 | | | $1,479.55 | | | 2/4/2028 | | | — | | | — | | | 3,384 | | | $7,739,073 | |
| | 2/10/2022 | | | — | | | 3,273 | | | $1,578.00 | | | 2/10/2029 | | | — | | | — | | | 1,407 | | | $3,217,753 | |
| | 2/9/2023 | | | — | | | 1,740 | | | $1,606.91 | | | 2/9/2030 | | | 561 | | | $1,282,985 | | | 5,043 | | | $11,533,139 | |
| | Scott Boatwright | | | 2/4/2021 | | | 1,652 | | | 1,652 | | | $1,479.55 | | | 2/4/2028 | | | — | | | — | | | 3,665 | | | $8,381,708 | |
| | 2/10/2022 | | | — | | | 3,273 | | | $1,578.00 | | | 2/10/2029 | | | — | | | — | | | 1,407 | | | $3,217,753 | |
| | 2/9/2023 | | | — | | | 1,740 | | | $1,606.91 | | | 2/9/2030 | | | 561 | | | $1,282,985 | | | 5,043 | | | $11,533,139 | |
(1)
| These SOSARs which wereand RSUs vest ratably on the second and third anniversary of the grant date, subject to time-basedcontinued employment through the applicable vesting only, vested in full on February 7, 2016.date. |
(2)
| Vesting of these Performance SOSARs, is contingent upon our achievement of stated levels of cumulative adjusted cash flow from operations prior to the fifth fiscal year-end following the award date, with vesting to occur upon certification of the satisfaction of the performance criteria by the Compensation Committee and no earlier than expiration of the time-based vesting requirement on February 7, 2016. The performance criteria for these awards were satisfied as of December 31, 2015, and accordingly, following February 7, 2016, vesting is subject only to certification by the Compensation Committee of achievement of the performance criteria. Vesting of these Performance SOSARs may accelerate as described in the footnotes to the table below under “Potential Payments Upon Termination or Change-in-Control.” |
(3) | These SOSARs are subject to time-based vesting; one-half of the awards vested on February 3, 2016. |
(4) | Vesting of these Performance SOSARs is contingent upon our achievement of stated levels of cumulative adjusted cash flow from operations prior to the fourth and fifth fiscal year-ends following the award date with vesting to occur no sooner than February 3, 2016 and 2017 (with half of each Performance SOSAR subject to each such time-based vesting date). The performance criteria for the first tranche of these awards were satisfied as of December 31, 2015, and accordingly, following February 3, 2016, vesting of one-half of the awards is subject only to certification by the Compensation Committee of achievement of the performance criteria. Vesting of these Performance SOSARs may accelerate as described in the footnotes to the table below under “Potential Payments Upon Termination or Change-in-Control.” |
(5) | These SOSARs will vest on June 8, 2016, subject to potential accelerated vesting as described in the footnotes to the table below under “Potential Payments Upon Termination or Change-in-Control.” |
(6) | Represents shares issuable under 2013 performance share awards, assuming achievement at the threshold level of cumulative adjusted cash flow from operations, subject to certain adjustments for stock-based compensation expense and for one-time or unusual items, through September 30, 2016. |
(7) | BasedCalculated based on the closing stock price of our common stock on December 31, 201529, 2023 of $479.85$2,286.96 per share. |
(8)(3)
| Represents shares issuable under 2015Unless otherwise indicated, PSUs vest if and to the extent that the performance share awards, assuming achievementtargets are met at the end of the three-year performance period, subject to continued employment. For the 2021 PSUs, which vested on February 15, 2024, the number of shares in the table reflect shares earned based on actual achievement of the performance objectives. For the 2022 PSUs, which are scheduled to vest on February 15, 2025, the number of shares in the table reflect payout at target achievement level since performance through the completed years of the performance period exceeded threshold level. Thelevels. For the 2023 PSUs, which are scheduled to vest on February 15, 2026, the number of shares in the table reflect payout at maximum achievement level since performance termsthrough the completed years of the performance period exceeded target levels. Actual achievement of the performance objectives for the 20152022 PSUs and 2023 PSUs may vary from the achievement reflected in the table based on company performance share awards are described above under “—Termsover the remainder of 2015 Performance Share Awards.”the performance period. |
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56 | 2024 Proxy Statement 74 | NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENT | |
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Executive Officers and Compensation
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TABLE OF CONTENTS
OPTION EXERCISES AND STOCK VESTED IN
2015The following table provides summary information about SOSARs exercised by our executive officers during 2015. No full-value shares of stock vested during 2015.
| | | | | | | | |
| | | OPTION AWARDS | |
| NAME | | NUMBER OF SHARES ACQUIRED ON EXERCISE | | | VALUE REALIZED
ON EXERCISE(1) | |
Steve Ells | | | 150,000 | | | $ | 46,594,735 | |
Monty Moran | | | 270,000 | | | $ | 107,808,576 | |
Jack Hartung | | | 75,000 | | | $ | 27,544,397 | |
Mark Crumpacker | | | 18,000 | | | $ | 5,330,771 | |
| | Brian Niccol | | | 23,908 | | | $37,043,365 | | | 16,535 | | | $27,555,009 | |
| | Jack Hartung | | | — | | | — | | | 6,661 | | | $11,196,218 | |
| | Curt Garner | | | 1,250 | | | $2,190,945 | | | 6,661 | | | $11,196,218 | |
| | Chris Brandt | | | 5,304 | | | $6,854,765 | | | 6,066 | | | $10,217,729 | |
| | Scott Boatwright | | | 2,449 | | | $2,906,197 | | | 6,364 | | | $10,707,796 | |
(1)
| BasedReflects the number of shares of Chipotle common stock acquired on exercise of SOSARs or the vesting of RSUs and PSUs. |
(2)
| Equals the number of underlying shares exercised multiplied by the difference between the market value of common stock on the amount by whichdate of exercise and the price of our common stock used to compute the exercise proceeds exceeded the base price of the SOSARs. |
(3)
| Equals the closing price the Chipotle’s common stock on the vesting date multiplied by the number of shares vested. |
NON-QUALIFIEDNONQUALIFIED DEFERRED COMPENSATION FOR 2015
2023
The Chipotle Mexican Grill, Inc. Supplemental Deferred Investment Plan permits eligible management employees, who elect to participate in the plan, including our executive officers, to make contributions to deferral accounts once the participantemployee has maximized his or her contributions to our 401(k) plan. Contributions are made on the participant’s behalf through payroll deductions from 1 percent1% to 50 percent50% of the participant’s monthly base compensation, which are credited to the participant’s “Supplemental Account,” and from 1 percent1% to 100 percent100% of awardspayouts under the AIP, which are credited to the participant’s “Deferred Bonus Account.” We also match contributions at the rate of 100 percent100% on the first 3 percent3% of compensation contributed and 50 percent50% on the next 2 percent2% of compensation contributed. Amounts contributed to a participant’s deferral accounts are not subject to federal income tax at the time of contribution. Amounts credited to a participant’s deferral accountscontribution, fluctuate in value to track a variety of availablebased on the investment choices selected by the participant (which consist of a variety of mutual funds and may be changed by the participant at any time), and are fully vested at all times following contribution.
Participants may elect to receive distribution of amounts credited to either or both of the participant’s Supplemental Account or Deferred Bonus Account,their accounts in either (1)(i) a lump sum amount paid from two to six years following the end of the year in which the deferral is made, subject to a one-time opportunity to postpone such lump sum distribution, or (2)(ii) a lump sum or installment distribution following termination of the participant’s service with us,employment, with installment payments made in accordance with the participant’s election on a monthly, quarterly or annual basis over a period of up to 15 years following termination, subject to a one-time opportunity to change such distribution election within certain limitations. Distributions in respect of one or both of a participant’s deferral accountsaccount are subject to federal income tax as ordinary income in the year the distribution is made.
Amounts credited to participants’ deferral accounts are our unsecured general obligations of ours to pay the value of the accounts to the participants at times determined under the plan.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENT | | | 57 | |
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Executive Officers and Compensation
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The table below presents contributions by each executive officer and our matching contributions, to the Supplemental Deferred Investment Plan during 2015, as well as2023, our matching contributions, each executive officer’s earnings under and distributions from the planPlan and the ending balances in the planPlan on December 31, 2015.
| | | | | | | | | | | | | | | | | | | | |
| NAME | | EXECUTIVE
CONTRIBUTIONS IN LAST FY(1) | | | REGISTRANT
CONTRIBUTIONS IN LAST FY(2) | | | AGGREGATE EARNINGS/
(LOSSES) IN LAST FY(3) | | | AGGREGATE
WITHDRAWALS/ DISTRIBUTIONS | | | AGGREGATE
BALANCE AT LAST FYE(4) | |
Steve Ells | | $ | 243,865 | | | $ | 195,092 | | | ($ | 13,574 | ) | | $ | 334,701 | | | $ | 1,476,761 | |
Monty Moran | | $ | 497,835 | | | $ | 165,708 | | | ($ | 93,566 | ) | | | — | | | $ | 3,319,889 | |
Jack Hartung | | $ | 967,515 | | | $ | 78,244 | | | ($ | 11,486 | ) | | | — | | | $ | 5,741,288 | |
Mark Crumpacker | | $ | 78,835 | | | $ | 37,874 | | | ($ | 5,083 | ) | | $ | 73,856 | | | $ | 270,264 | |
| | Brian Niccol | | | $170,365 | | | $217,800 | | | $217,909 | | | $0 | | | $1,332,314 | |
| | Jack Hartung | | | $438,381 | | | $94,512 | | | $539,319 | | | $0 | | | $10,665,166 | |
| | Curt Garner | | | $441,302 | | | $70,817 | | | $386,262 | | | $0 | | | $2,810,150 | |
| | Chris Brandt | | | $200,912 | | | $68,951 | | | $178,894 | | | $0 | | | $1,043,394 | |
| | Scott Boatwright | | | $121,500 | | | $46,398 | | | $96,807 | | | $0 | | | $842,268 | |
(1)
| These amounts are reported in the 2023 Summary Compensation Table as part ofin each executive’s “Salary” and “Non-Equity Incentive Plan Compensation” for 2015.2023. |
(2)
| These amounts are reported in the 2023 Summary Compensation Table as part ofin each executive’s “All Other Compensation” for 2015.2023. |
(3)
| These amounts are not reported as compensation in the 2023 Summary Compensation Table because none of the earnings are “above market” as defined in SEC rules. |
(4)
| These amounts include amounts previously reported in the Summary Compensation Table for years prior to 2023 as “Salary,” “Non-Equity Incentive Plan Compensation” or “All Other Compensation” for years prior to 2015 (ignoring(excluding for purposes of this footnote any investment losses on balances in the plan and any withdrawals/distributions), in the following aggregate amounts: $1,899,712 for Mr. Ells, $2,471,015 for Mr. Moran, $4,183,180 forNiccol ($1,662,168); Mr. Hartung ($7,587,705); Mr. Garner ($1,320,250); Mr. Brandt ($730,036); and $201,903 for Mr. Crumpacker.Boatwright ($554,445). |
McDonald’s Excess Non-Qualified Plan and Non-Qualified Supplemental Plan
Prior to our separation from McDonald’s in October 2006, our executive officers and other key employees were permitted to participate in non-qualified deferred compensation plans maintained by McDonald’s. These plans provided substantially similar benefits to participants as our Supplemental Deferred Investment Plan, except that the investment and distribution options in the McDonald’s
plans are different than those in our plan. Effective with our separation from McDonald’s, our employees’ service with McDonald’s was deemed to have terminated, and the balances in these plans were distributed in accordance with each participant’s distribution elections. Our employees are no longer permitted to contribute to these plans, but the balances remaining in the plans in respect of our executive officers are attributable in part to service as one of our employees.
The table below presents, for Mr. Hartung, our only executive officer with a balance remaining in any McDonald’s non-qualified deferred compensation plan, his aggregate earnings under and aggregate withdrawals from the McDonald’s plans during 2015, as well as his aggregate ending balance in the plans as of December 31, 2015.
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| NAME | | EXECUTIVE
CONTRIBUTIONS IN LAST FY | | | REGISTRANT
CONTRIBUTIONS IN LAST FY | | | AGGREGATE EARNINGS IN LAST FY(1) | | | AGGREGATE
WITHDRAWALS/
DISTRIBUTIONS | | | AGGREGATE
BALANCE AT LAST FYE(2) | |
Jack Hartung | | | — | | | | — | | | $ | 11,848 | | | $ | 372,984 | | | $ | 378,628 | |
(1) | This amount is not reported as compensation in the Summary Compensation Table because none of the earnings are “above market” as defined in SEC rules. | | 2024 Proxy Statement 75 | | |
TABLE OF CONTENTS
(2) | This amount includes amounts previously reported in the Summary Compensation Table as “Salary” or “All Other Compensation” for 2006 (ignoring for purposes of this footnote any investment losses on balances in the plans), in the amounts of $140,647. |
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Executive Officers and Compensation
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
We have not entered into written
Severance Arrangements
In February 2024, the Compensation, People and Culture Committee approved the Chipotle Mexican Grill, Inc. Executive Officer Severance Plan (the “Severance Plan”), which was effective immediately. The Severance Plan provides for severance benefits to the “executive officers” of the company, as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended, if the executive officer’s employment change-in-control, severance or similar agreements with any of our employees, including our executive officers. Accordingly, we do not have any written agreements requiring that we make post-employment severance paymentsis terminated either by the company without “cause” (excluding termination by the company due to the executive officersofficer’s death or disability) or due to a resignation by the executive officer for “good reason” (each as defined in the eventSeverance Plan) that in each case does not entitle the executive officer to benefits under Chipotle’s Change in Control Severance Plan (a “Qualifying Termination”).
An executive officer who experiences a Qualifying Termination would be eligible to receive (i) cash severance equal to the sum of their
employment terminates. In addition, payoutsbase salary plus target cash bonus under the AIP
are conditioned onfor the
employee being employed asyear in which the Qualifying Termination occurs multiplied by two, in the case of the
payout date. We haveChief Executive Officer, or one and one-half, in the
past paid severance to executives orcase of other
key employees who have left us, and we may negotiate individual severance arrangements with any executive officer whose employment with us terminates in the future, depending on the circumstances of the executive’s termination.The terms of the equity-based awards made to our executive officers, do providepaid in equal installments over 24 months, for post-employment benefitsthe Chief Executive Officer, and 18 months for other executive officers, plus (ii) a pro-rated portion of their annual bonus under the AIP for the year in certain circumstances. The table below reflectswhich the dollar value,Qualifying Termination occurs, based on the closing price of our common stock on December 31, 2015,company’s actual performance, plus (iii) the cash equivalent of the valueemployer portion of the cost of the company group health plans in which the executive officer was participating immediately prior to the Qualifying Termination for 24 months, with respect to the Chief Executive Officer, or for 18 months, with respect to other executive officer. In addition, each listed typeexecutive officer would vest in a pro-rata portion of equity award that was not vested on December 31, 2015 and on which vesting would have been accelerated had the executive’s employment terminated, for the reasons identified in the table, as of December 31, 2015.
Potential Amounts Realizable Upon Termination Under Equity Awards
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| NAME | | INVOLUNTARY
TERMINATION(1) | | | VOLUNTARY
RESIGNATION(1) | | | RETIREMENT(2) | | | QUALIFYING
TERMINATION
FOLLOWING CHANGE
IN CONTROL(3) | | | DEATH/
DISABILITY(4) | |
STEVE ELLS | |
SOSARs(5) | | | – | | | | – | | | $ | 12,105,000 | | | $ | 12,105,000 | | | $ | 12,105,000 | |
Performance Shares | | | – | | | | – | | | $ | 5,640,622 | | | $ | 11,942,027 | | | $ | 5,640,622 | |
Total | | $ | 0 | | | $ | 0 | | | $ | 17,745,622 | | | $ | 24,047,027 | | | $ | 17,745,622 | |
MONTY MORAN | |
SOSARs(5) | | | – | | | | – | | | | N/A | | | $ | 12,105,000 | | | $ | 12,105,000 | |
Performance Shares | | | – | | | | – | | | | N/A | | | $ | 11,942,027 | | | $ | 5,640,622 | |
Total | | $ | 0 | | | $ | 0 | | | | N/A | | | $ | 24,047,027 | | | $ | 17,745,622 | |
JACK HARTUNG | |
SOSARs(5) | | | – | | | | – | | | $ | 4,035,000 | | | $ | 4,035,000 | | | $ | 4,035,000 | |
Performance Shares | | | – | | | | – | | | $ | 2,648,515 | | | $ | 5,399,272 | | | $ | 2,648,515 | |
Total | | $ | 0 | | | $ | 0 | | | $ | 6,683,515 | | | $ | 9,434,272 | | | $ | 6,683,515 | |
MARK CRUMPACKER | |
SOSARs(5) | | | – | | | | – | | | | N/A | | | $ | 1,519,300 | | | $ | 1,519,300 | |
Performance Shares | | | – | | | | – | | | | N/A | | | $ | 4,062,410 | | | $ | 2,041,587 | |
Total | | $ | 0 | | | $ | 0 | | | | N/A | | | $ | 5,581,710 | | | $ | 3,560,887 | |
(1) | Assumes the absence of a change in control as described in further detail in footnote 3 below. |
(2) | Certain outstanding equity awards provide that the holder is eligible for retirement when the employee reaches a combined age and years-of-service with us (and with McDonald’s Corporation unless there was a break in service prior to joining us from McDonald’s) of 70. Of the executive officers, Mr. Ells and Mr. Hartung were eligible for retirement as of December 31, 2015. |
| In the event the employment of a holder of SOSARs terminates as a result of the holder’s retirement, provided we receive six months’ prior written notice of the retirement and the holder executes an agreement not to engage in any competitive activity with us for a period of at least two years following retirement, service-based vesting conditions on the SOSARs are deemed satisfied immediately. In such event, SOSARs subject to performance conditions remain outstanding and subject to vesting based on achievement of the performance conditions, and SOSARs without performance conditions are immediately vested. All such SOSARs remain outstanding and exercisable (following vesting) for the original duration of the SOSAR. The amounts reflected in the table as realizable upon retirement in respect of SOSARs reflects amounts attributable to the portion of SOSARs granted in 2013 and 2014 subject to performance conditions for which the performance conditions were satisfied as of December 31, 2015, notwithstanding that the Compensation Committee had not yet certified the satisfaction of the performance conditions as of that date as is required for the awards to vest, but does not reflect any amounts in respect of performance SOSARs for which the performance conditions were not yet satisfied as of December 31, 2015, due to the ongoing vesting conditions that would be in effect at the time of the holder’s retirement. |
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|
| In the event the employment with us of a holder of performance shares terminates as a result of the holder’s retirement, the performance shares will be paid out on the payout date, with the number of shares issuable to be based on actual performance over the performance period and pro-rated in an amount equal to the period of the holder’s service with us following the grant of the award as a percentage of the time period from the grant of the award until the end of the performance period. The amounts reflected in the table as realizable in respect of the performance shares in connection with retirement assume that the performance shares actually paid out at target. These amounts would not be realizable until following completion of the applicable performance periods for each award. |
(3) | The award agreements for SOSARs provide that in the event of a change in control under our Amended and Restated 2011 Stock Incentive Plan, unless the SOSARs are replaced with an award meeting the criteria described below under “–Equity Award Vesting Upon Change in Control,” the SOSARs immediately vest. One of the provisions required to be included in a replacement award in order to avoid vesting of the SOSARs immediately upon occurrence of a change in control is that the replacement award must provide that if the employment of the holder is terminated without cause or by the holder for good reason, in each case as defined in the plan, the award will vest. |
| A change in control would generally be deemed to occur under the plan in the event any person or group acquires shares of our common stock representing greater than 25 percent of the combined voting power of our outstanding common stock, or in the event our current directors, or persons we nominate to replace current directors, do not constitute at least a majority of our Board, or in the event of certain mergers, liquidations, or sales of substantially all of our assets by us. |
| The award agreement for our outstanding performance shares provides that in the event of a change in control under the plan that also constitutes a “change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation” under applicable U.S. Treasury Regulations, the performance shares remain outstanding and vesting will accelerate (with payout at target level performance) in the event the employment of the holder is terminated without cause or by the holder for good reason within two years following the change in control. In the event of a change in control under the plan that also constitutes a “change in the ownership of a corporation” or a “change in the ownership of a substantial portion of a corporation’s assets” under applicable U.S. Treasury Regulations, unless the performance shares are replaced with an award meeting the criteria described below under “– Equity Award Vesting Upon Change in Control,” the performance shares immediately vest at target level performance. One of the provisions required to be included in a replacement award in order to avoid vesting of the performance shares immediately upon occurrence of such a change in control is that the replacement award must provide that if the employment of the holder is terminated without cause or due to death or disability of the holder, or by the holder for good reason, in each case as defined in our Amended and Restated 2011 Stock Incentive Plan, the award will vest. |
(4) | In the event the employment with us of a holder of SOSARs subject to performance conditions terminates as a result of the holder’s death or disability, service-based vesting conditions on such SOSARs are deemed satisfied immediately. In such event, the SOSARs remain outstanding and subject to vesting based on achievement of the performance conditions, with vesting to be prorated for the time period of the holder’s service prior to death and disability as a proportion of the period from the grant date to the satisfaction of the performance condition. The amounts reflected in the table as realizable upon death or disability in respect of SOSARs reflects amounts attributable to the portion of SOSARs granted in 2013 and 2014 subject to performance conditions for which the performance conditions were satisfied as of December 31, 2015, notwithstanding that the Compensation Committee had not yet certified the satisfaction of the performance conditions as of that date as is required for the awards to vest, but does not reflect any amounts in respect of performance SOSARs for which the performance conditions were not yet satisfied as of December 31, 2015, due to the ongoing vesting conditions that would be in effect at the time of the holder’s death or disability. |
| In the event the employment with us of a holder of performance shares terminates as a result of the holder’s death or disability, the performance shares will be paid out on the payout date, with the number of shares issuable to be based on actual performance over the performance period and pro-rated in an amount equal to the period of the holder’s service with us following the grant of the award as a percentage of the time period from the grant of the award until the end of the performance period. The amounts reflected in the table as realizable in respect of the performance shares as a result of the death or disability of each executive officer assumes that the performance shares actually paid out at target. These amounts would not be realizable until following completion of the performance period. |
(5) | The dollar values reflected in the table are based on the excess of the closing price of our common stock on December 31, 2015 over the exercise price of the applicable SOSARs. |
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Equity Award Vesting Upon Change in Control
Generally, our outstandingtheir unvested equity awards, dowith the performance-based equity awards vesting based on the extent of the company’s achievement of the applicable performance-based metrics. Any SOSARs held by the executive officer would be exercisable for 12 months after the Qualifying Termination or if earlier, until the expiration date. To be eligible for benefits under the Severance Plan, the executive officer must timely execute and not vest automaticallyrevoke a separation and general release agreement, in the form provided by the company, which contains customary confidentiality, non-solicitation and non-disparagement restrictions.
In February 2024, the Compensation, People and Culture Committee also approved a letter agreement with Brian Niccol, our Chairman and Chief Executive Officer, providing that if he is subject to a Qualifying Termination under the Severance Plan, he will receive an additional 12 months of pro-rated vesting credit for any equity awards held by him on the Qualifying Termination Date.
Change in Control Severance Plan
We maintain a Change in Control Severance Plan (“CIC Plan”) to encourage retention of key management employees in the event of a change in control.
In additionThe Board believes that the CIC Plan would help incent key executives to
remain with the
provisions described above relating to equity-based awards for which vesting may accelerate in connection with a terminationcompany during the pendency of
the holder’s employment following certain changesany planned or unexpected change in control of
Chipotle, however, our outstanding SOSARs and performance shares have provisions providing for acceleration of vesting in connection with certain changes in control in some circumstances, as described in more detail below.SOSARs
The award agreement for outstanding SOSARs provides that in the event ofcompany. Severance benefits are only payable if both a change in control under our Amendedof the company occurs and Restated 2011 Stock Incentive Plan, anyan executive officer’s employment is terminated without cause or by him or her for good reason (each as defined in the plan). Under the plan, each named executive officer would be eligible to receive a (i) lump sum cash payment equal to two times his annual base salary plus target bonus for the year in which the termination occurs, plus a prorated bonus for the portion of the year served prior to termination, and (ii) cash amount equal to the employer portion of the cost of medical insurance coverage for two years after termination. In addition, all unvested SOSARs will automaticallyLTI held by the named executive officer at the time of termination would vest in full, with PSUs vesting at the greater of (a) target or (b) actual performance, as ofdetermined based on the company’s performance through the date of the change in control. The plan does not provide for any tax gross ups and executives are entitled to the best after tax result of either having payments reduced so as not to trigger excise taxes or receiving full payments and paying excise taxes. As a condition to receipt of any benefits under the plan, the executive officer would be required to sign a release of claims against the company and be subject to customary restrictive covenants.
Equity Awards
The terms of some equity-based award agreements, including awards granted to our executive officers, provide for post-employment benefits in certain circumstances.
Performance Share Units. The award agreement for the annual PSU grant provides that if the holder’s employment terminates due to death or disability, the PSU will be settled, without proration, at the same time the PSUs are settled with respect to other PSU holders. If the holder’s employment terminates due to retirement (i) before the one-year anniversary of the grant date, the holder will vest in a pro rata portion of the PSU, or (ii) on or after the one-year anniversary of the grant date, the holder will vest in the PSU, without proration, in each case at the same time the PSUs are settled with respect to other PSU holders. Retirement is defined as the holder having a combined age and years of service with the company equal to at least 70. In the event a change in control unlessof the company occurs, the PSUs will immediately vest at the greater of target or actual performance through the date the change in control is completed; provided that, in lieu of immediate vesting, the Compensation, People and Culture Committee may approve the replacement of the company’s PSUs with a comparable performance share unit issued by the company’s successor and the awards will vest if there is a qualifying termination of employment by the company’s successor without cause or by the executive officer for good reason.
Stock Appreciation Rights. The award agreement for the annual SOSAR grant provides that if the holder’s employment terminates due to death or disability, any unvested SOSARs as of the termination date will immediately vest and will remain exercisable until the third anniversary of the termination date. If the holder’s employment terminates due to retirement (i) before the one-year anniversary
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of the grant date, the holder will vest in a pro rata portion of the SOSAR over the remainder of the vesting period, or (ii) on or after the one-year anniversary of the grant date, the holder will continue to vest in the SOSAR over the remainder of the vesting period without proration, and in each case the SOSARs
are replacedwill be exercisable until the earlier of the third anniversary of the retirement date or the expiration date of the SOSAR. Retirement is defined as the holder having a combined age and years of service with
an award meeting the
following criteria:company equal to at least 70. In the replacement award must be denominatedevent a change in securities listedcontrol of the company occurs that results in our common stock being removed from listing on a national securities exchange;
exchange, the Compensation, People and Culture Committee is required to arrange for the substitution for any unvested SOSARs with the grant of a replacement award must have athat provides the holder with substantially the same economic value equal toand benefits and that vest on the earlier of the date the SOSARs being replaced, including an aggregate exercise price equal towould otherwise have vested under the aggregate exercise priceterms of such SOSARs, an aggregate spread equal to the aggregate spreadoriginal SOSAR agreement and the third anniversary of such SOSARs as determined immediately prior to the relevantgrant date; provided that the SOSAR will vest if, during the two-year period following the change in control, andthe holder experiences a ratioqualifying termination of exercise price to the fair market value of the securities subject to such replacement award that is equal to the ratio of exercise price of such SOSARs to the price of our common stock at the time of the change in control;
the vesting date(s) of the replacement award must be the same as the vesting date(s) of the performance-contingent restricted stock, subject to full acceleration of vesting of the replacement award in the event that the holder’s employment is terminated by the surviving orcompany’s successor entity without cause or by the holder for good reason,reason.
Restricted Stock Units. The award agreement for the annual RSU grant provides that if the holder’s employment terminates due to death or disability, any unvested RSUs as of the termination date will immediately vest. If the holder’s employment terminates due to retirement (i) before the one-year anniversary of the grant date, the holder will vest in each case as defineda pro-rata portion of the RSU over the remainder of the vesting period, or (ii) on or after the one-year anniversary of the grant date, the holder will continue to vest in the plan;RSU over the remainder of the vesting period without proration. Retirement is defined as the holder having a combined age and
years of service with the replacement award must provide for immediate vesting upon any transaction with respectcompany equal to at least 70. In the surviving or successor entity (or parent or subsidiary company thereof) of substantially similar character toevent a change in control as definedof the company occurs that results in the plan, or upon the securities constituting such replacement award ceasing to be listedour common stock being removed from listing on a national securities exchange.
Inexchange, the eventCompensation, People and Culture Committee is required to arrange for the substitution for any unvested RSUs with the grant of a replacement award that provides the holder with substantially the same value and contains the same material terms and conditions of the original award agreement; provided that the RSU will vest if, during the two-year period following the change in control, under the plan as of December 31, 2015, if SOSARs outstanding on that date were not replaced with replacement awards meeting the criteria specified above, the executive officers as of that
date would have had vesting accelerated on awards with the following dollar values:
| | | | |
| EXECUTIVE OFFICER | | VALUE OF VESTED AWARD | |
Steve Ells | | $ | 12,105,000 | |
Monty Moran | | $ | 12,105,000 | |
Jack Hartung | | $ | 4,035,000 | |
Mark Crumpacker | | $ | 1,519,300 | |
Performance Shares
The award agreement for our outstanding performance share awards provides that in the event of a change in control under our Amended and Restated 2011 Stock Incentive Plan that also constitutes a “change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation” under applicable U.S. Treasury Regulations, the performance share awards remain outstanding and vesting will only accelerate in the event the employment of the holder is terminatedexperiences a qualifying termination of employment by the company’s successor without cause or by the holder for good reason within two yearsreason.
The following
table presents the
changepotential estimated payments to each named executive officer if he were terminated due to the indicated triggering event as of December 29, 2023, the last business day of the fiscal year. The table does not include amounts that we would need to pay regardless of the occurrence of the indicated triggering event, such as accumulated balances in
control.retirement plans. In calculating the amounts reflected in the table, we assumed the following:
each triggering event occurred on December 29, 2023, the last trading day of fiscal 2023, and the price of our common stock was $2,286.96 per share, the closing price of Chipotle common stock on December 29, 2023;
the executive earned a payout under the 2023 AIP equal to the actual payout amount for 2023, since he was employed by the company through the end of the year; and
with respect to equity awards, “Annual Equity Grants” reflect actual projected performance for PSUs as of December 31, 2023, which equal (i) for the 2021 PSUs, payout at 278%, which was the actual payout rate for that award; (ii) for the 2022 PSUs, payout at target since this is higher than actual projected payout; and (iii) for the 2023 PSUs, payout at 300%. For further discussion, see “Compensation Discussion and Analysis – 2023 Compensation Program – 2023 PSU Awards.”
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| | Brian Niccol | | | | | | | | | | | | | |
| | Salary | | | $0 | | | $2,600,000 | | | $0 | | | $0 | |
| | Bonus | | | $0 | | | $10,985,000 | | | $0 | | | $0 | |
| | Equity Grants | | | $0 | | | $103,932,797 | | | $0 | | | $98,062,171 | |
| | Benefits | | | $0 | | | $23,710 | | | $0 | | | $0 | |
| | Jack Hartung | | | | | | | | | | | | | |
| | Salary | | | $0 | | | $1,730,000 | | | $0 | | | $0 | |
| | Bonus | | | $0 | | | $3,984,406 | | | $0 | | | $0 | |
| | Equity Grants | | | $0 | | | $33,434,972 | | | $29,834,499 | | | $31,695,739 | |
| | Benefits | | | $0 | | | $15,738 | | | $0 | | | $0 | |
| | Curt Garner | | | | | | | | | | | | | |
| | Salary | | | $0 | | | $1,560,000 | | | $0 | | | $0 | |
| | Bonus | | | $0 | | | $3,246,750 | | | $0 | | | $0 | |
| | Equity Grants | | | $0 | | | $31,889,489 | | | $0 | | | $30,150,256 | |
| | Benefits | | | $0 | | | $23,710 | | | $0 | | | $0 | |
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| | Chris Brandt | | | | | | | | | | | | | |
| | Salary | | | $0 | | | $1,450,000 | | | $0 | | | $0 | |
| | Bonus | | | $0 | | | $2,716,031 | | | $0 | | | $0 | |
| | Equity Grants | | | $0 | | | $28,123,955 | | | $0 | | | $26,515,078 | |
| | Benefits | | | $0 | | | $23,316 | | | $0 | | | $0 | |
| | Scott Boatwright | | | | | | | | | | | | | |
| | Salary | | | $0 | | | $1,300,000 | | | $0 | | | $0 | |
| | Bonus | | | $0 | | | $2,457,000 | | | $0 | | | $0 | |
| | Equity Grants | | | $0 | | | $28,869,436 | | | $0 | | | $27,260,559 | |
| | Benefits | | | $0 | | | $23,132 | | | $0 | | | $0 | |
(1)
| Chipotle adopted an Executive Officer Severance Plan in February 2024. Because the Plan was not in effect on December 31, 2023, potential payouts under the plan are not reflected in the table above. See “Potential Payments Upon Termination or Change-In-Control – Severance Arrangements” for details on the Plan. |
(2)
| Reflects amounts the executive may receive if both a change in control of Chipotle occurs and the executive’s employment is terminated (other than for cause or by the executive for good reason). If a successor company does not grant the executive comparable equity awards in replacement of the outstanding Chipotle awards, the awards will vest upon a change in control. |
(3)
| Retirement is defined as the executive having achieved a combined age and years of service equal to at least 70. Mr. Hartung is the only NEO who is eligible for retirement treatment as of December 31, 2023. |
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, U.S. publicly traded companies are required to disclose the ratio of their CEO’s annual total compensation to the median of the annual total compensation of all employees of the company other than the CEO. The rule requires that our median employee be selected from all employees, including full-time, part-time, seasonal and temporary employees.
The SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies and assumptions, apply certain exclusions and make reasonable estimates that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable with the pay ratio that we have reported. For example, Chipotle employs approximately 115,000 people around the world, and approximately 110,000 are hourly restaurant crew employees working in our nearly 3,400 restaurants.
We calculated our CEO to median employee pay ratio in accordance with the Dodd-Frank Act and Item 402(u) of the SEC’s Regulation S-K, to arrive at a reasonable estimate calculated in accordance with SEC regulations. We identified our median employee by using total 2023 compensation for all individuals, excluding our CEO, who were employed by us on December 31, 2023 and we annualized the compensation of all full- and part-time employees who joined Chipotle mid-year during 2023. The pay ratio disclosure rules permit companies to exclude non-U.S. employees from the median employee calculation if non-U.S. employees in a particular jurisdiction account for five percent (5%) or less of the company’s total number of employees. Applying this de minimis exemption, we excluded 1,419 employees in Canada, 402 employees in the United Kingdom,156 employees in France and 45 employees in Germany from the calculations of our median employee. To arrive at a consistently applied compensation measure, we excluded from total 2023 compensation certain unusual or non-recurring items not available to all employees generally. This resulted in identification of a changemedian employee with annual total compensation for 2023 of $16,595, which is the compensation for an hourly part-time employee who works roughly 24 hours per week at one of our restaurants in control underFlorida and is calculated in accordance with the plan that also constitutes a “changeSummary Compensation Table rules. The compensation of our median employee is not necessarily representative of the compensation of other restaurant employees or of our overall compensation practices.
Based on an annual total compensation of our median employee for 2023 of $16,595, and the annual total compensation of $22.47 million for Brian Niccol, our CEO, as reported in the ownership2023 Summary Compensation Table, the ratio of our CEO’s annual total compensation to our median employee’s annual total compensation is 1,354 to 1. One of the most significant factors that differentiates us from other restaurant companies is that we own all our restaurants (i.e., none of our restaurants are franchised), so all the over 110,000 persons working in our U.S.-based restaurants are employees included in our calculation. This impacts the comparability of our CEO pay ratio to the ratio of many other restaurant or retail companies that operate under a corporation”franchise model (and that do not employ all the hourly restaurant or a “changeretail crew employees).
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PAY VERSUS PERFORMANCE TABLE
As described in
the ownership of“Compensation Discussion and Analysis,” our Compensation, People and Culture Committee has implemented an executive compensation program designed to link a substantial portion of
a corporation’s assets” under applicable U.S. Treasury Regulations, the performance share awards immediately vest at target unless they are replaced with an award meeting the following criteria:the replacement award must consist of securities listed on a national securities exchange;
the replacement award must have a value equalour NEOs’ realized compensation to the valueachievement of financial, operational and strategic goals that we believe enhance long-term shareholder value. The table below sets forth additional compensation information for our NEOs, calculated in accordance with SEC regulations, for fiscal years 2020 through 2023:
| | 2023 | | | $ 22,473,427 | | | $ 95,261,876 | | | $7,195,337 | | | $ 28,967,744 | | | $273 | | | $ 141 | | | $1,229 | | | $2,586 | |
| | 2022 | | | $17,186,153 | | | ($16,848,694) | | | $6,500,834 | | | ($6,223,351) | | | $166 | | | $126 | | | $899 | | | $2,062 | |
| | 2021 | | | $17,880,580 | | | $66,215,877 | | | $5,402,915 | | | $22,935,919 | | | $209 | | | $139 | | | $653 | | | $1,707 | |
| | 2020 | | | $38,035,868 | | | $95,328,425 | | | $14,751,175 | | | $30,272,465 | | | $166 | | | $115 | | | $356 | | | $1,041 | |
Column (a). Reflects compensation amounts reported in the Summary Compensation Table for our CEO, Brian Niccol, for the respective years shown.
Column (b). Reflects the respective amounts set forth in column (a) of the unvested performance share award assuming the target level of performance, calculatedtable above, adjusted as if each unvested share were exchanged for the consideration (including all stock, other securities or assets, including cash) payable for one share of common stockset forth in the changetable below, as determined in control transaction;
accordance with SEC rules and computed in accordance with the vesting datemethodology used for financial reporting purposes. The dollar amounts reflected in column (b) of the replacement award must be September 30, 2016 (fortable above do not reflect the performance shares granted in 2013)actual amount of compensation earned, realized, or December 31, 2016 (forreceived by the performance shares granted in 2015, unlessCEO during the dateapplicable year, and a significant portion of such change in controlthe value is after December 31, 2016, in which case the vesting of such replacement award must be December 31, 2017), subject to full acceleration offorfeiture if the underlying vesting of the replacement award in the event that the holder’s employment is terminated by the surviving or successor entity without cause or by the holder for good reason, in each case as defined in the plan, or the
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|
| | holder’s employment terminates due to the holder’s medically diagnosed permanent physical or mental inability to perform his or her job duties; and
|
the replacement award must provide for immediate vesting upon any transactionconditions with respect to the surviving or successor entity (or parent or subsidiary company thereof) of substantially similar character to a change in control as definedequity awards are not achieved. For information regarding the decisions made by our Compensation, People and Culture Committee regarding the CEO’s compensation for each fiscal year, see “Compensation Discussion and Analysis” and the tables and narrative explanations reporting pay for the fiscal years covered in the plan,table above.
| | 2023 | | | $22,473,427 | | | $15,501,159 | | | $52,191,463 | | | $ 28,407,137 | | | $7,691,008 | | | $0 | | | $ 95,261,876 | |
| | 2022 | | | $17,186,153 | | | $13,501,795 | | | $7,812,978 | | | ($17,794,792) | | | ($10,551,238) | | | $0 | | | ($16,848,694) | |
| | 2021 | | | $17,880,580 | | | $12,001,072 | | | $29,796,775 | | | $29,160,321 | | | $1,379,272 | | | $0 | | | $66,215,877 | |
| | 2020 | | | $38,035,868 | | | $33,223,032 | | | $45,251,258 | | | $54,892,816 | | | ($9,628,485) | | | $0 | | | $95,328,425 | |
Column (c). The following non-CEO NEOs are included in the average amounts for each year shown:
2023: Jack Hartung, Curt Garner, Christopher Brandt and Scott Boatwright
2022: Jack Hartung, Curt Garner, Christopher Brandt, Scott Boatwright and Marissa Andrada
2021: Jack Hartung, Curt Garner, Christopher Brandt and Scott Boatwright
2020: Jack Hartung, Curt Garner, Christopher Brandt and Scott Boatwright
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Column (d). Reflects the respective amounts set forth in column (c) of the table above, adjusted as set forth in the table below, as determined in accordance with SEC rules and computed in accordance with the methodology used for financial reporting purposes. The dollar amounts reflected in column (d) of the table above do not reflect the actual amount of compensation earned, realized, or received by the securities constituting such replacement award ceasingnon-CEO NEOs during the applicable year, and a significant portion of the value is subject to be listed on a national securities exchange.
Inforfeiture if the eventunderlying vesting conditions with respect to the equity awards are not achieved. For information about the decisions made by our Compensation, People and Culture Committee regarding the non-CEO NEOs’ compensation for each fiscal year, see “Compensation Discussion and Analysis” and the related tables and narrative explanations reporting pay for the fiscal years covered in the table above.
| | 2023 | | | $7,195,337 | | | $4,876,808 | | | $16,111,788 | | | $7,931,308 | | | $2,606,119 | | | $0 | | | $ 28,967,744 | |
| | 2022 | | | $6,500,834 | | | $4,952,583 | | | $2,987,539 | | | ($4,482,629) | | | ($3,707,258) | | | $2,569,255 | | | ($6,223,351) | |
| | 2021 | | | $5,402,915 | | | $3,313,428 | | | $8,226,718 | | | $10,490,185 | | | $2,129,529 | | | $0 | | | $22,935,919 | |
| | 2020 | | | $14,751,175 | | | $13,147,324 | | | $16,396,916 | | | $13,279,493 | | | ($1,007,795) | | | $0 | | | $30,272,465 | |
Column (e). For the relevant fiscal year, represents the cumulative total shareholder return (“TSR”) of such a change in control under the plan as ofChipotle through December 31 2015, if the outstanding performance share awards were not replaced with a replacement award meeting the criteria specified above, the executive officers as of that date would have had vesting accelerated on awards with the following dollar values: | | | | |
| EXECUTIVE OFFICER | | VALUE OF VESTED AWARD | |
Steve Ells | | $ | 11,942,027 | |
Monty Moran | | $ | 11,942,027 | |
Jack Hartung | | $ | 5,399,272 | |
Mark Crumpacker | | $ | 4,062,410 | |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors and holders of greater than 10 percent of our outstanding common stock to file initial reports of their ownership of our equity securities and reports of changes in ownership withapplicable fiscal year, assuming $100 was invested on December 31, 2019.
Column (f). For the SEC. Based solely on a reviewrelevant fiscal year, represents the cumulative TSR of the copiesS&P 500 Restaurants Index (Peer Group TSR) through December 31 of such reports furnishedthe applicable fiscal year, assuming $100 was invested on December 31, 2019 and dividends were reinvested.
Column (g). Reflects net income in Chipotle’s Consolidated Income Statements included in the Company’s Annual Reports on Form 10-K for each of the years ended December 31, 2023, 2022, 2021 and 2020.
Column (h). Company Selected Measure (“CSM”) is Restaurant Cash Flow Dollars (“RCF Dollars”), which is calculated as the Company’s total revenue less restaurant operating costs (exclusive of depreciation and amortization) for the applicable Company fiscal year.
PAY FOR PERFORMANCE ALIGNMENT
The following table identifies the four most important performance measures used by our Compensation, People and Culture Committee to uslink the compensation actually paid (“CAP”) to our CEO and written representations fromother NEOs in 2023 to company performance. The role of each of these performance measures on our officersNEOs’ compensation is discussed in “Compensation Discussion and directors, we believe that all Section 16(a) filing requirements were complied withAnalysis” above.
Most Important Performance Measures
Restaurant Cash Flow (RCF) Dollars
Comparable Restaurant Sales (CRS) Growth
RCF Margin %
Site Assessment Requests (SARs) | |
The charts below reflect the relationship of CAP to our CEO and other NEOs in each of 2020, 2021, 2022 and 2023 to (1) TSR of both Chipotle (“CMG”) and the S&P 500 Restaurants Index, (2) CMG net income and (3) CMG RCF Dollars.
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TABLE OF CONTENTS
CAP, as required under SEC rules, reflects adjusted values to unvested and vested equity awards during the years shown in the table based on a timely basis in 2015, except that one Form 4 filed on behalf of Steve Ells to report a single sale transaction under a Rule 10b5-1 trading plan was filed lateyear-end stock prices, various accounting valuation assumptions and projected performance modifiers, but does not reflect actual amounts paid out for those awards. CAP generally fluctuates due to stock price achievement and varying levels of projected and actual achievement of performance goals for outstanding PSU grants. For a brokerage firm’s errordiscussion of how our Compensation, People and Culture Committee assessed Chipotle’s performance and our NEOs pay each year, see “Compensation Discussion and Analysis” in transmitting confirmation of the transaction.this proxy statement and in our proxy statements for 2023, 2022, 2021 and 2020.
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62 | 2024 Proxy Statement 81 | NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENT | |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Prior to our initial public offering in 2006, certain of our current shareholders, including Steve Ells, our Chairman and Co-Chief Executive Officer, Monty Moran, our Co-Chief Executive Officer andAlbert Baldocchi, a member of our Board of Directors, and Albert S. Baldocchi and Darlene J. Friedman, members of our Board, entered into a registration rights agreement with us relating to shares of common stock they held at the time the agreement was executed. Under the agreement, these directors areMr. Baldocchi is entitled to piggyback registration rights with respect to registration statements we file under the Securities Act of 1933, as amended, subject to customary restrictions and pro rata reductions in the number of shares to be sold in an offering. We would be responsible for the expenses of any such registration.
Director and Officer Indemnification
We have entered into agreements to indemnify our directors and executive officers, in addition to the indemnification provided for in our certificate of incorporation and bylaws. These agreements, among other things, provide for indemnification of our directors and executive officers forand advancement of certain expenses (including attorneys’ fees), judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of our company, arising out of such person’s services as a director or executive officer of ours, any subsidiary of ours or any other company or enterprise to which the person provided services at our request. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.
OTHER BUSINESS AT THE MEETING
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENT | | | 63 | |
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Other Business and Miscellaneous
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The Board and our management do not know of any other matters to be presented at the annual meeting. If other matters do properly come before the annual meeting, it is intended that the persons
named indesignated on the accompanying
form of proxy
will vote
the proxyon such matters in accordance with their
best judgment on such matters.judgment.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR
20172025 ANNUAL MEETING
Inclusion of Proposals in Our Proxy Statement and Proxy Card under the SEC’s Rules
Any proposal of a shareholder intended to be included in our proxy statement and form of proxy/voting instruction card for the 20172025 annual meeting of shareholders pursuant to SEC Rule 14a-8 must be received by us no later than NovemberDecember 24, 2016,2024, unless the date of our 20172025 annual meeting is more than 30 days before or after May 11, 2017,June 6, 2025, in which case the proposal must be received a reasonable time before we begin to print and send our proxy materials. All proposals must be addressed to Chipotle Mexican Grill, Inc., 1401 Wynkoop Street,610 Newport Center Dr., Suite 500, Denver, CO 80202,1100, Newport Beach, CA 92660, Attn: Corporate Secretary.
Inclusion of Director Nominations in Our Proxy Statement and Proxy Card under Our Proxy Access Bylaws Our proxy access bylaws permit qualified shareholders or groups of shareholders to include nominations for election as a director in our proxy statement and form of proxy/voting instruction card, if the shareholder(s) comply with the proxy access provisions in our bylaws. For the 2025 annual meeting, notice of a proxy access nomination must be received at the address provided above no earlier than November 24, 2024, and no later than December 24, 2024.
Notice of Intent to Solicit Proxies
To comply with the SEC’s universal proxy rules, shareholders who intend to solicit proxies in support of director nominees, other than Chipotle’s nominees, for the 2025 annual meeting of shareholders must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than 60 days before the anniversary of the previous year’s annual meeting, which would be April 7, 2025. Notice must be submitted to the Company in accordance with the advance notice procedures and other requirements set forth in Article II of our bylaws.
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TABLE OF CONTENTS
Bylaw Requirements for Shareholder Submission of Nominations and Proposals
A shareholder nomination of a person for election to our Board of Directors or a proposal for consideration at our 20172025 annual meeting (other than a proposal submitted pursuant to SEC Rule 14a-8) must be submitted in accordance with the advance notice procedures and other requirements set forth in Article II of our bylaws. These requirements are separate from, and in addition to, the requirements discussed above to have the shareholder nomination or other proposals included in our proxy statement and form of proxy/voting instruction card pursuant to the SEC’s rules. Our bylaws require that the proposal or nomination must be received by our corporateCorporate Secretary at the above address no earlier than the close of business on January 11, 2017,February 6, 2025, and no later than the close of business on February 10, 2017,March 8, 2025, unless the date of the 20172025 annual meeting is more than 30 days before or 60 days after May 11, 2017.June 6, 2025. If the date of the 20172025 annual meeting is more than 30 days before or 60 days after May 11, 2017,June 6, 2025 we must receive the proposal or nomination no earlier than the 120th120th day before the meeting date and no later than the 90th90th day
before the meeting date, or if the date of the meeting is announced less than 100 days prior to the meeting date, no later than the tenth day following the day on which public disclosure of the date of the 20172025 annual meeting is made.
AVAILABILITY OF SEC FILINGS, CORPORATE GOVERNANCE GUIDELINES, CODE OF
CONDUCT, CODES OF ETHICS AND COMMITTEE CHARTERS
Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and all amendments to those reports filed with the SEC, our
Code of Conduct, Codes of Ethics, Corporate Governance Guidelines, the charters of the Audit
& Risk Committee, the Compensation,
People and Culture Committee and the Nominating and Corporate Governance Committee, and any reports of beneficial ownership of our common stock filed by executive officers, directors and beneficial owners of more than 10 percent of the outstanding shares of either class of our common stock are posted on and may be obtained on the Investors page of our website at
www.chipotle.comchipotle.com without charge, or may be requested (exclusive of exhibits), at no cost by mail to Chipotle Mexican Grill, Inc.,
1401 Wynkoop Street,Newport Center Dr., Suite
500, Denver, CO 80202,1100, Newport Beach, CA 92660, Attn: Corporate Secretary.
DELIVERY OF MATERIALS TO SHAREHOLDERS WITH SHARED ADDRESSES
Beneficial holders who own their shares through a broker, bank or other nominee and who share an address with another such beneficial owner are only being sent one Notice of Internet Availability of Proxy Materials or set of proxy materials, unless such holders have provided contrary instructions.requested to receive separate copies of these materials. If you wish to receive a separate copy of these materials or if you are receiving multiple copies and would like to receive a single copy, please contact Chipotle investor relations by phone at (303) 605-1042, by writing to Investor Relations, Chipotle Mexican Grill, Inc., 1401 Wynkoop Street,610 Newport Center Dr., Suite 500, Denver, Colorado,1100, Newport Beach, CA 92660, or by email to ir@chipotle.com.ir@chipotle.com. We will promptly deliver a separate copy of the proxy materialsto you upon written or oral request.
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64 | | NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENT |
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Other Business and Miscellaneous
(continued)
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MISCELLANEOUS
If you request physical delivery of these proxy materials, we will mail along with the proxy materials our
2015 Annual Report, including our Annual Report on Form 10-K for fiscal year
20152023 (and the financial statements included in that report) as filed with the SEC; however, it is not intended that the Annual Report on Form 10-K be a part of the proxy statement or a solicitation of proxies.
You are respectfully urged to enter your vote instruction via the Internet as explained on the Notice of Internet Availability of Proxy Materials that was mailed to you, or if you are a holder of record and have received a proxy card, via telephone as explained on the proxy card. We
willwould appreciate your prompt response.
By order
Web links throughout this proxy statement are provided for convenience only, and the content on the referenced websites are not incorporated into and do not constitute a part of
the Board of Directors/s/ Monty Moran
Co-Chief Executive Officer, Secretary and Director
March 24, 2016
this proxy statement.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND2016 PROXY STATEMENT | | | 65 | |
Appendix A-Proposed Certificate of Amendment to Certificate of Incorporation
CERTIFICATETABLE OF AMENDMENTCONTENTS
OF
APPENDIX B — PROPOSED AMENDMENTS TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF CHIPOTLE MEXICAN GRILL, INC.
Pursuant to Section 242
of the General Corporation Law of the State of Delaware
Chipotle Mexican Grill, Inc.
(the “Corporation”), a corporation
duly organized and existing under the General Corporation Law of the State of Delaware (the
“Corporation”“DGCL”), does hereby
further certify
that:1.as follows:
(1) The name of the Corporation is Chipotle Mexican Grill, Inc.
(2) The name under which the Corporation was originally incorporated was Chipotle Mexican Grill, Inc., and the original certificate of incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on January 30, 1998.
(3) This Amended and Restated Certificate of Incorporation
only restates and integrates and does not further amend the provisions of the
Corporation,Amended and Restated Certificate of Incorporation as
theretofore amended
or supplemented (the “Certificate of Incorporation”) and there is
herebyno discrepancy between the provisions of the Amended and Restated Certificate of Incorporation as theretofore amended
by deleting, in its entirety, Section XI thereof.The foregoing amendmentand supplemented and the provisions of this Amended and Restated Certificate of Incorporation.
(4) This Amended and Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Section 242245 of the DGCL.
(5) The text of the Certificate of Incorporation hereby is integrated and restated to read in its entirety, as follows:
ARTICLE I — NAME
The name of the company is Chipotle Mexican Grill, Inc. (the “Corporation”).
ARTICLE II — AGENT
The registered office of the Corporation is located at 2711 Centerville Road, Suite 400, in the City of Wilmington, in the County of New Castle, in the State of Delaware. The name of its registered agent at that address is Corporation Service Company.
ARTICLE III — PURPOSE
The purpose for which the Corporation is organized is to engage in any lawful act or activity for which corporations may be organized and incorporated under the General Corporation Law of the State of
Delaware.IN WITNESS WHEREOF, Chipotle Mexican Grill, Inc. has caused this Certificate to be executed by its duly authorized officer on thisday of, 2016.
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CHIPOTLE MEXICAN GRILL, INC. |
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By: | | |
Name: |
Office: |
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APPENDIX A TO2016 PROXY STATEMENT | | | A-1 | |
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Appendix B
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Appendix B—Proposed Amendment to Bylaws
If Proposal 5 is approved by shareholders, Sections 9 through 12 of Article II ofDelaware or any applicable successor act thereto, as the Company’s Bylaws willsame may be amended from time to time (the “DGCL”).
ARTICLE IV — STOCK
Section 1. Authorized Stock. The Corporation shall have the authority to issue eight hundred thirty million (830,000,000)twelve billion one hundred million (12,100,000,000) shares of capital stock, consisting of two hundred thirty million (230,000,000)eleven billion five hundred million (11,500,000,000) shares of common stock with a par value of $0.01 per share (the “Common Stock”), and
restated as set forth below. Proposed additions are indicated by double underline.Section 9. Noticesix hundred million (600,000,000) shares of Shareholder Business and Nominations.
(a)Annual Meetingspreferred stock with a par value of Shareholders.
(i)Except as provided in Section 12$0.01 per share (the “Preferred Stock”). The number of this Bylaw,Nnominationsauthorized shares of persons for election to the Board of Directors and the proposal of other business to be considered by the shareholdersCommon Stock may be made at an annual meeting of shareholders (A) pursuant toincreased or decreased (but not below the notice of meeting given by or at the direction of the Board of Directors, (B) by or at the direction of the Board of Directors, or (C) by any shareholder of the Corporation who: (1) was a shareholder of record at the time of giving of notice provided for in this Bylaw and at the time of the annual meeting, (2) is entitled to vote at the meeting, and (3) complies with the notice procedures set forth in this Bylaw as to such business or nomination. Clause (C) or Section 12 of this Bylaw shall be the exclusive means for a shareholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and included in the Corporation’s notice of meeting) before an annual meeting of shareholders. Only persons who are nominated in accordance with Section 9(a) or Section12 of this Bylaw will be eligible for election at an annual meeting of shareholders as Directors of the Corporation.
(ii) Without qualification, for any nominations or any other business to be properly brought before an annual meeting by a shareholder pursuant to Section 9-(a)(i)(C) or Section 12 of this Bylaw, the shareholder must have given timely notice thereof in writing to the Secretary and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting;provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a shareholder’s notice as described above. To be in proper form, a shareholder’s notice (whether given pursuant to this Section 9(a)(ii),or Section 9(b) or Section 12) to the Secretary must: (A) set forth, as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (1) the name and address of such shareholder, as they appear on the Corporation’s books, and of such beneficial owner, if any, (2) (x) the class or series and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of recordCommon Stock then outstanding) by such shareholder and such beneficial owner, (y) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such shareholder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (z) any proxy, contract, arrangement, understanding, or relationship pursuant to which such shareholder has a right toaffirmative vote any shares of any security of the Corporation, (xx) any short interest in any security of the Corporation (for purposes of this Bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (yy) any rights to dividends on the shares of the Corporation owned beneficially by such shareholder that are separated or separable from the underlying shares of the Corporation, (zz) any
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APPENDIX B TO2016 PROXY STATEMENT | | | B-1 | |
proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such shareholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (xxx) any performance-related fees (other than an asset-based fee) that such shareholder is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such shareholder’s immediate family sharing the same household (which information shall be supplemented by such shareholder and beneficial owner, if any, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date), and (yyy) any other information relating to such shareholder and beneficial owner, if any, that wouldmay be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; (B) if the notice relates to any business other than a nomination of a director or directorsat that the shareholder proposes to bring before the meeting, set forth (1) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such shareholder and beneficial owner, if any, in such business and (2) a description of all agreements, arrangements and understandings between such shareholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such shareholder; (C) set forth, as to each person, if any, whom the shareholder proposes to nominate for election or reelection to the Board of Directors (1) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (2) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such shareholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the shareholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and (3) with respect to each nominee for election or reelection to the Board of Directors, include a completed and signed questionnaire, representation and agreement required by Section 10 of this Bylaw. The Corporation may require any proposed nominee to furnish such other information as may reasonably be requiredtime by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such nominee.
(iii) Notwithstanding anything in the second sentence of DGCL.
Section 9(a)(ii) of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.(b)Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to (i) the notice of meeting given by or at the direction of the Board of Directors, or (ii) the instruction of the Board of Directors. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (A) by or at the direction of the Board of Directors or (B) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any shareholder of the Corporation who (1) is a shareholder of record at
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B-2 | | APPENDIX B TO2016 PROXY STATEMENT |
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Appendix B
(continued)
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the time of giving of notice provided for in this Bylaw and at the time of the special meeting, (2) is entitled to vote at the meeting, and (3) complies with the notice procedures set forth in this Bylaw as to such nomination. In the event the Corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the Board of Directors, any such shareholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the shareholder’s notice required by Section 9(a)(ii) of this Bylaw with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by Section 10 of this Bylaw) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to the date of such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a shareholder’s notice as described above.
(c)General.
(i) Only such persons who are nominated in accordance with the procedures set forth in this Bylaw shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Bylaw.2. Common Stock
. (a) Voting – General. Except as otherwise provided by law
the Certificate of Incorporation or
these Bylaws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Bylaw and, if any proposed nomination or business is not in compliance with this Bylaw, to declare that such defective proposal or nomination shall be disregarded.(ii) For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation withresolution or resolutions providing for the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.
(iii) Notwithstanding the foregoing provisions of this Bylaw, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw; provided, however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to Section 9(a)(i)(C),or Section 9(b) or Section 12 of this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights (A) of shareholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (B) of the holdersissue of any series of Preferred Stock, ifthe holders of outstanding shares of Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. Except as otherwise required by law or this Certificate of Incorporation:
(i) The holders of the Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders; and
(ii) holders of Common Stock shall be entitled to cast votes in person or by proxy in the manner and to the extent providedpermitted under the Bylaws of the Corporation (the “Bylaws”).
Section 3. Preferred Stock. The Preferred Stock may be issued from time to time in one or more classes or series. The Board of Directors of the Corporation (the “Board of Directors”) is hereby authorized to provide for the issuance of shares of Preferred Stock in one or more classes or series and, by filing a certificate pursuant to the applicable law of the State of Delaware (hereinafter referred to as “Preferred Stock Designation”), to establish from time to time the number of shares to be included in each such class or series, and to fix the designation, powers, preferences and rights of the shares of each such class or series and the qualifications, limitations and restrictions thereof prior to its issuance. Each such class or series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, as shall be authorized by the Board of Directors and stated in the applicable Preferred Stock Designation.
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TABLE OF CONTENTS
assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (b) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (c) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with, all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.
Section 11. Opening of Polls. The date and time of the opening and the closing of the polls for each matter upon which the shareholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. ARTICLE XII — AMENDMENT OF BY-LAWS
The Board of Directors
mayis expressly authorized and empowered to adopt,
amend and repeal the Bylaws by
resolution such rules and regulations for the
conductaffirmative vote of a majority of the
total number of directors present at a regular or special meeting of
shareholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors
the person presiding over any meeting of shareholders shall have the right and authorityat which there is a quorum (as defined from time to
convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as,time in the
judgmentCertificate of
such presiding person, are appropriate for the proper conductIncorporation) or by written consent. The shareholders of the
meeting.Such rules, regulationsCorporation may not adopt, amend or procedures, whetherrepeal any Bylaw, and no provision inconsistent therewith shall be adopted by the Board of Directors or prescribedshareholders, unless such action is approved by the presiding personaffirmative vote of the meeting, may include, without limitation, the following: (a) the establishmentholders of an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting and the safety of those present; (c) limitations on attendance at or participation in the meeting to shareholders of recordnot less than a majority of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding personvoting power of the meeting shall determine; (d) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (e) limitations on the time allotted to questions or comments by participants.
outstanding Common Stock.
The
presiding person at any meeting of shareholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of shareholders shall not be required to be held in accordance with the rules of parliamentary procedure.Section 12. Proxy Access for Director Nominations.
| (a) | Whenever the Board of Directors solicits proxies with respect to the election of directors at an annual meeting of the shareholders, subject to the provisions of Section 12 ofundersigned has executed this Bylaw, the Corporation shall include in its proxy statement for such annual meeting, in addition to any person nominated for election by the Board of Directors or any committee thereof, the name, together with the Required Information, of any person or persons, as applicable, nominated for election (the “Shareholder Nominee(s)”) to the Board of Directors by a shareholder or group of no more than twenty (20) shareholders that satisfies the requirements of Section 12(d) (the “Eligible Shareholder”) of this Bylaw, and who expressly elects at the time of providing the notice required by Section 12 (the “Notice of Proxy Access Nomination”) of this Bylaw to have its nominee or nominees, as applicable, included in the Corporation’s proxy materials pursuant to Section 12 of this Bylaw. For purposes of Section 12 of this Bylaw, the“Required Information” that the Corporation will include in its proxy statement is the information provided to the Secretary concerning the Shareholder Nominee(s) and the Eligible Shareholder that is required to be disclosed in the Corporation’s proxy statement by Section 14 of the Exchange Act, and rules and regulations promulgated thereunder, and, if the Eligible Shareholder so elects, a written statement, not to exceed 500 words, in support of the Shareholder Nominee(s)’ candidacy (the “Statement”). Notwithstanding anything to the contrary contained in Section 12 of this Bylaw, the Corporation may omit from its proxy materials any information or Statement (or portion thereof) that it, in good faith, believes would violate any applicable law or regulation. |
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B-4 | | APPENDIX B TO2016 PROXY STATEMENT |
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Appendix B
(continued)
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| (b) | To be timely for purposes of Section 12 of this Bylaw, the Notice of Proxy Access Nomination must be addressed to the Secretary and delivered to or mailed to and received at the principal executive offices of the Corporation no more than 150 calendar days and not less than 120 calendar days prior to the anniversary date of the date (as specified in the Corporation’s proxy materials for its immediately preceding annual meeting of shareholders) on which the Corporation first mailed its proxy materials for its immediately preceding annual meeting of shareholders. In no event will an adjournment or postponement of an annual meeting of shareholders or the announcement thereof commence a new time period for the giving of a Notice of Proxy Access Nomination as provided above. |
| (c) | The maximum number of Shareholder Nominees nominated by all Eligible Shareholders that will be included in the Corporation’s proxy materials with respect to an annual meeting of shareholders shall not exceed the greater of (i) one director or (ii) 20% of the number of directors in office as of the last day on which a Notice of Proxy Access Nomination may be delivered pursuant to and in accordance with Section 12 of this Bylaw (the “Final Proxy Access Nomination Date”), or if such amount is not a whole number, the closest whole number below 20%. In the event that one or more vacancies for any reason occurs on the board after the Final Proxy Access Nomination Date but before the date of the annual meeting and the Board of Directors resolves to reduce the size of the Board in connection therewith, the maximum number of Shareholder Nominees included in the Corporation’s proxy materials shall be calculated based on the number of directors in office as so reduced. Any individual nominated by an Eligible Shareholder for inclusion in the Corporation’s proxy materials pursuant to Section 12 of this Bylaw whom the Board of Directors decides to nominate as a nominee for Director shall be counted as one of the Shareholder Nominees for purposes of determining when the maximum number of Shareholder Nominees provided for in Section 12 of this Bylaw has been reached. Any Eligible Shareholder submitting more than one Shareholder Nominee for inclusion in the Corporation’s proxy materials pursuant to Section 12 of this Bylaw shall rank such Shareholder Nominees based on the order that the Eligible Shareholder desires such Shareholder Nominees to be selected for inclusion in the Corporation’s proxy statement in the event that the total number of Shareholder Nominees submitted by Eligible Shareholders in the Corporation’s proxy statement pursuant to Section 12 of this Bylaw exceeds the maximum number of nominees provided for in Section 12 of this Bylaw. In the event that the number of Shareholder Nominees submitted by Eligible Shareholders pursuant to Section 12 of this Bylaw exceeds the maximum number of nominees provided for in Section 12 of this Bylaw, the highest ranking Shareholder Nominee who meets the requirements of this Section 12 from each Eligible Shareholder will be selected for inclusion in the Corporation’s proxy materials until the maximum number is reached, going in order of the amount (largest to smallest) of shares of common stock of the Corporation each Eligible Shareholder disclosed as owned in its respective Notice of Proxy Access Nomination submitted to the Corporation. If the maximum number is not reached after the highest ranking Shareholder Nominee who meets the requirements of Section 12 of this Bylaw from each Eligible Shareholder has been selected, this process will continue as many times as necessary, following the same order each time, until the maximum number is reached. Notwithstanding anything to the contrary contained in Section 12 of this Bylaw, if the Corporation receives notice pursuant to Section 9(c) of this Bylaw that a shareholder intends to nominate for election at such meeting a number of nominees greater than or equal to a majority of the total number of directors to be elected at such meeting, no Shareholder Nominees will be included in the Corporation’s proxy materials with respect to such meeting pursuant to Section 12 of this Bylaw. |
| (d) | For purposes of Section 12 of this Bylaw, an Eligible Shareholder shall be deemed to “own” only those outstanding shares of common stock of the Corporation as to which the shareholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares; provided, that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (x) sold by such shareholder or any of its affiliates in any transaction that has not been settled or closed, (y) borrowed by such shareholder or any of its affiliates for any purposes or purchased by such shareholder or any of its affiliates pursuant to an agreement to resell or (z) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such shareholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of outstanding common stock of the Corporation, in any such case which instrument or agreement has, or its intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such shareholder’s or its affiliates’ full right to vote or direct the voting of any such shares, and/or (2) hedging, offsetting or altering to any degree any gain or loss realized or
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APPENDIX B TO2016 PROXY STATEMENT | | | B-5 | |
| realizable from maintaining the full economic ownership of such shares by such shareholder or affiliate. For purposes of Section 12 of this Bylaw, a shareholder shall “own” shares held in the name of nominee or other intermediary so long as the shareholder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A shareholder’s ownership of shares shall be deemed to continue during any period in which the shareholder has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any time by the shareholder. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of the common stock of the Corporation are “owned” for these purposes shall be determined by the Board of Directors or any committee thereof. For purposes of Section 12 of this Bylaw, the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations under the Exchange Act. |
| (e) | In order to make a nomination pursuant to Section 12 of this Bylaw, an Eligible Shareholder must have owned the Required Ownership Percentage of the Corporation’s outstanding common stock (the “Required Shares”) continuously for the Minimum Holding Period as of both the date of the Notice of Proxy Access Nomination is delivered to or mailed to and received by the Secretary in accordance with Section 12 of this Bylaw and the record date for determining the shareholders entitled to vote at the annual meeting, and must continue to own the Required Shares through the meeting date. For purposes of Section 12 of this Bylaw, the “Required Ownership Percentage” is 5% or more, and the “Minimum Holding Period” is 3 years. Within the time period specified in Section 12 of this Bylaw for Delivering the Notice of Proxy Access Nomination, an Eligible Shareholder must provide the following information in writing to the Secretary: (i) one or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the Minimum Holding Period) verifying that, as of a date within seven calendar days prior to the date of the Notice of Proxy Access Nomination is delivered to or mailed to and received by the Secretary, the Eligible Shareholder owns, and has owned continuously for the Minimum Holding Period, the Required Shares, and the Eligible Shareholder’s agreement to provide, within five business days after the record date for the annual meeting, written statements from the record holder and intermediaries verifying the Eligible Shareholder’s continuous ownership of the Required Shares through the record date; (ii) a copy of the Schedule 14N that has been filed with the Securities and Exchange Commission as required by Rule 14a-18 under the Exchange Act; (iii) the information, representations and agreements that are the same as those that would be required to be set forth in a shareholder’s notice of nomination pursuant to Section 9(a)(ii) of this Bylaw; (iv) the consent of each Shareholder Nominee to being named in the proxy statement as a nominee and to serving as a Director if elected; (v) a representation that the Eligible Shareholder (including each member of any group of shareholders that together is an Eligible Shareholder hereunder) (A) acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control at the Corporation, and does not presently have such intent, (B) presently intends to maintain qualifying ownership of the Required Shares through the date of the annual meeting, (C) has not engaged and will not engage in, and has not and will not be a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(1) under the Exchange Act in support of the election of any individual as a Director at the annual meeting other than its Shareholder Nominee(s) or a nominee of the Board of Directors, (D) agrees to comply with all applicable laws and regulations applicable to the use, if any, of soliciting material, and (E) will provide facts, statements and other information in all communications with the Corporation and its shareholders that are or will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; (vi) a representation as to the Eligible Shareholder’s (including each member of any group of shareholders that togetheris an Eligible Shareholder hereunder) intentions with respect to maintaining qualifying ownership of the Required Shares for at least one year following the annual meeting; (vii) an undertaking that the Eligible Shareholder agrees to (A) assume all liability stemming from any legal or regulatory violation arising out of the Eligible Shareholder’s communications with the shareholders of the Corporation or out of the information that the Eligible Shareholder provided to the Corporation and (B) indemnify and hold harmless the Corporation and each of its directors, officers and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of any nomination submitted by the Eligible Shareholder pursuant to Section 12 of this Bylaw. |
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B-6 | | APPENDIX B TO2016 PROXY STATEMENT |
| | |
Appendix B
(continued)
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|
| (f) | Within the time period specified in Section 12 of this Bylaw for delivering the Notice of Proxy Access Nomination, each Shareholder Nominee must deliver to the Secretary the representations, agreements and other information required by Section 10 of this Bylaw. |
| (g) | In the event that any information or communications provided by the Eligible Shareholder or any Shareholder Nominees to the Corporation or its shareholders ceases to be true and correct in all material respects or omits a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, each Eligible Shareholder or Shareholder Nominee, as the case may be, shall promptly notify the Secretary of any defect in such previously provided information and of the information that is required to correct any such defect. |
| (h) | The Corporation shall not be required to include, pursuant to Section 12 of this Bylaw, a Shareholder Nominee in its proxy materials for any meeting of shareholders (i) for which the Secretary receives a notice that a shareholder has nominated such Shareholder Nominee for election to the Board of Directors pursuant to the advance notice requirements for shareholder nominees for director set forth in Section 9(a) of this Bylaw, (ii) if the Eligible Shareholder (including each member of any group of shareholders that together is an Eligible Shareholder hereunder) that has nominated such Shareholder Nominee has engaged in or is currently engaged in, or has been or is a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(1) under the Exchange Act in support of the election of any individual as a Director at the annual meeting other than its Shareholder Nominee(s) or a nominee of the Board of Directors, (iii) if the Shareholder Nominee is or becomes a party to any compensatory, payment or other financial agreement, arrangement or understanding with any person or entity other than the Corporation, or is receiving or will receive any such compensation or other payment from any person or entity other than the Corporation, in each case in connection with service as a Director of the Corporation, (iv) who is not independent under the listing standards of each principal U.S. exchange upon which the common stock of the Corporation is listed, any applicable rules of the Securities and Exchange Commission and any publicly disclosed standards used by the Board of Directors in determining and disclosing independence of the Corporation’s directors, in each case as determined by the Board of Directors, (v) whose election as a member of the Board of Directors would cause the Corporation to be in violation of these Bylaws, the Certificate of Incorporation, as amended, the rules and listing standards of the principal U.S. exchanges upon which the common stock of the Corporation is traded, or any applicable state or federal law, rule or regulation, (vi) who is or has been within the past three years, an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, (vii) who is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offense) or has been convicted in such a criminal proceeding within the past 10 years, (viii) who is subject to any order of the type specific in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933, as amended, (ix) if such Shareholder Nominee or the applicable Eligible Shareholder (including each member of any group of shareholders that together is an Eligible Shareholder hereunder) shall have provided information to the Corporation in respect to such nomination that was untrue in any material respect or omitted to state a material fact necessary in order to make the statement made, in light of the circumstances under which they were made, not misleading, as determined by the Board of Directors or any committee thereof, or (x) the Eligible Shareholder (including each member of any group of shareholders that together is an Eligible Shareholder hereunder) or applicable Shareholder Nominee fails to comply with its obligations pursuant to Section 12 of this Bylaw. |
| (i) | Notwithstanding anything to the contrary set forth herein, the Board of Directors or the chairman of the annual meeting shall declare a nomination by an Eligible Shareholder to be invalid, and such nomination shall be disregarded notwithstanding that proxies in respect of such vote may have been received by the Corporation, if (i) the Shareholder Nominee(s) and/or the applicable Eligible Shareholder (or any member of any group of shareholders that together is an Eligible Shareholder) shall have breached its or their obligations under Section 12 of this Bylaw as determined by the Board of Directors or the chairman of the annual meeting or (ii) the Eligible Shareholder (or a qualified representative thereof) does not appear at the annual meeting to present any nomination pursuant to Section 12 of this Bylaw. In the event of any such declaration by the Board of Directors or the chairman of the annual meeting, the Eligible Shareholder (and any member of any group of shareholders that together is an Eligible Shareholder) whose nomination(s) was/were subject to such declaration will be ineligible to be an Eligible Shareholder (or a member of any group of shareholders that together is an Eligible Shareholder) pursuant to, Section 12 of this Bylaw for the next two annual meetings. |
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APPENDIX B TO2016 PROXY STATEMENT | | | B-7 | |
| (j) | Any Shareholder Nominee who is included in the Corporation’s proxy materials for a particular annual meeting of Shareholders but either (i) withdraws from or becomes ineligible or unavailable for election at the annual meeting, or (ii) does not receive at least 25% of the votes cast in favor of such Shareholder Nominee’s election, will be ineligible to be a Shareholder Nominee pursuant to this Article II, Section 12 for the next two annual meetings. For the avoidance of doubt, the immediately preceding sentence shall not prevent any shareholder from nominating any person to the Board of Directors pursuant to and in accordance with Section 9 of this Bylaw. |
| (k) | This Section 12 of this Article shall be the exclusive method for shareholders to include nominees for Director in the Corporation’s proxy materials. |
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B-8 | | APPENDIX B TO2016 PROXY STATEMENT |
CHIPOTLE MEXICAN GRILL, INC. 1401 WYNKOOP ST, STE 500 DENVER, CO 80202
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E02526-P76707 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
CHIPOTLE MEXICAN GRILL, INC.
For All Against All For All Except
To vote “AGAINST” any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
The Board of Directors recommends you vote FOR the following:
1. Election of Nine Directors
Nominees:
01) Al Baldocchi 06) Neil Flanzraich
02) Darlene Friedman 07) Pat Flynn
03) John Charlesworth 08) Stephen Gillett
04) Kimbal Musk 09) Steve Ells
05) Monty Moran
The Board of Directors recommends you vote AGAINST the following proposals:
The Board of Directors recommends you vote FOR the following proposals:
For Against Abstain
For Against Abstain
2. An advisory vote to approve the compensation of our executive officers as disclosed in the proxy statement (“say-on-pay”).
3. Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2016.
4. A proposal to approve an amendment to the Amended and Restated Certificate of Incorporation of Chipotle Mexican Grill, Inc., to remove a provision allowing only the Board of Directors or the Chairmaneffective as of the Boarddate of filing with the ability to call special meetingsSecretary of shareholders.
5. A proposal to approve amendments to the Chipotle Mexican Grill, Inc. Amended and Restated Bylaws to adopt a “proxy access” bylaw allowing a shareholder, or group of not more than 20 shareholders, owning an aggregate of not less than 5% of our outstanding common stock continuously for at least three years to submit a limited number of candidates for election to our Board and to require us to include such candidate(s), subject to satisfactionState of the requirementsState of our bylaws, in our proxy materials for the meeting at which such election will be held.
For address changes and/or comments, please check this box and write them on the back where indicated.
Please indicate if you plan to attend this meeting.
6. A shareholder proposal, if properly presented at the meeting, requesting that the Board of Directors adopt and present for shareholder approval a “proxy access” bylaw to allow a shareholder or group of shareholders owning an aggregate of 3% or more of our outstanding common stock continuously for at least three years to submit a limited number of candidates for election to our Board and to require us to include such candidate(s) in our proxy materials for the meeting at which such election will be held.
7. A shareholder proposal, if properly presented at the meeting, requesting adoption of a stock retention policy for senior executives.
8. A shareholder proposal, if properly presented at the meeting, requesting that the Board of Directors implement changes to Chipotle’s governing documents to allow shareholders owning an aggregate of 10% of our outstanding common stock to call special meetings of shareholders.
9. A shareholder proposal, if properly presented at the meeting, requesting Chipotle to issue an annual sustainability report meeting specified criteria.
10. A shareholder proposal, if properly presented at the meeting, requesting that our Compensation Committee prepare and disclose a report on the feasibility of incorporating sustainability measures into executive officer incentive compensation programs.
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date
Delaware.| | | | | CHIPOTLE MEXICAN GRILL, INC. | |
| | | | | | | | | |
| | | | | By: | | | /s/ Roger Theodoredis | |
| | | | | | | | Name: Roger Theodoredis | |
| | | | | | | | Title: General Counsel, Chief Legal Officer | |
| | | | 2024 Proxy Statement B-4 | | |
