Summary
This 8-K filing from Chipotle Mexican Grill, Inc. (CMG) on April 3, 2018, primarily details equity awards granted to key executives, including CEO Brian Niccol, CFO Jack Hartung, Chief Digital and Information Officer Curt Garner, and Chief Restaurant Officer Scott Boatwright. These awards, granted on March 29, 2018, are part of their 2018 annual compensation and include performance shares and stock-only stock appreciation rights (SOSARs). The performance shares are tied to specific increases in comparable restaurant sales and restaurant-level cash flow margins over a three-year period, with payout potential up to three times the target based on achievement levels. The SOSARs provide a right to receive value based on the increase in stock price above an exercise price, which is set at a premium to the market price for most executives, with a notable exception for the CEO as per his offer letter.
Key Highlights
- 1Chipotle granted performance shares and stock-only stock appreciation rights (SOSARs) to its executive team on March 29, 2018.
- 2Awards are intended as the long-term incentive portion of 2018 annual compensation.
- 3Performance shares are contingent on achieving specified comparable restaurant sales increases and restaurant-level cash flow margins over a three-year period (2018-2020).
- 4Payout for performance shares can range from zero to three times the target amount based on achievement matrix.
- 5SOSARs have an exercise price set at a premium (10%) to the closing stock price on the grant date for most executives.
- 6CEO Brian Niccol's SOSARs have an exercise price equal to the closing stock price on the grant date, aligning with his offer letter terms.
- 7Vesting for SOSARs occurs in equal installments on the second and third anniversaries of the grant date, with provisions for accelerated vesting in certain termination and change-in-control scenarios.