8-KLeadership ChangesExhibits & Filings

CHIPOTLE MEXICAN GRILL INC 8-K Report, Executive Changes (May 23, 2008)

Filed May 23, 2008For Securities:CMG

Summary

This 8-K filing from Chipotle Mexican Grill, Inc. (CMG) on May 23, 2008, primarily concerns shareholder approval and board adoption of updated compensation plans and director pay policies. Key among these are the Amended and Restated 2006 Cash Incentive Plan and the Amended and Restated 2006 Stock Incentive Plan, both approved by shareholders at the Annual Meeting on May 21, 2008. These plans outline the framework for executive and employee incentives, including maximum award limits for cash bonuses and an increase in authorized shares for stock-based compensation, with provisions designed to align executive interests with long-term company performance. Additionally, the filing details revised compensation for non-employee directors, shifting towards a greater emphasis on equity. Directors will now receive a significant portion of their annual retainer in restricted stock units (RSUs), aiming to further align their interests with shareholders. The report also notes the conversion of certain restricted stock awards for named executive officers from service-based to performance-contingent vesting, underscoring a focus on achieving specific performance targets for executive compensation. Investors should note these changes reflect an ongoing effort to refine executive and director compensation structures to incentivize performance and shareholder value.

Key Highlights

  • 1Shareholder approval of the Amended and Restated Chipotle Mexican Grill, Inc. 2006 Cash Incentive Plan.
  • 2Shareholder approval of the Amended and Restated Chipotle Mexican Grill, Inc. 2006 Stock Incentive Plan.
  • 3The Stock Incentive Plan saw an increase of 2,250,000 shares authorized for issuance, bringing the total to 4,450,000 shares.
  • 4The Stock Incentive Plan's term was extended to May 21, 2018, and prohibits the repricing of stock awards.
  • 5Named executive officers' unvested service-based restricted stock was converted to performance-contingent restricted stock.
  • 6New Board Pay Policies were adopted, effective January 1, 2008, for non-employee directors, with a significant portion of their retainer paid in Restricted Stock Units (RSUs).
  • 7Non-employee directors will receive an annual retainer of $100,000, with $40,000 in cash and $60,000 in RSUs.

Frequently Asked Questions

Chipotle's shareholders approved amended and restated versions of the 2006 Cash Incentive Plan and 2006 Stock Incentive Plan. The Cash Plan continues to provide performance-based cash awards with maximum payouts of $5 million for one-year periods and $15 million for longer periods. The Stock Plan increased the number of shares authorized for grants and extended its term, while introducing new limitations and prohibiting the repricing of awards.

Chipotle has adopted new Board Pay Policies that significantly alter director compensation. Effective January 1, 2008, non-employee directors receive an annual retainer of $100,000, where $40,000 is paid in cash and $60,000 is paid in Restricted Stock Units (RSUs). Directors also receive per-meeting fees and reimbursement for expenses. Additional retainers are provided to committee chairpersons.

The company converted certain unvested restricted stock awards held by named executive officers, which were previously tied to service-based vesting, into performance-contingent restricted stock. These new awards vest based on the achievement of performance targets set by the Compensation Committee, but not before the original vesting date, with provisions for accelerated vesting carried over.

The filing states that Chipotle has not yet made a definitive determination to implement the Employee Stock Purchase Plan. The company will report on its implementation through a separate Form 8-K filing if a decision is made.