Chipotle

-2017- 
ANNUAL REPORT 

& PROXY STATEMENT

Brian is a tremendous talent and shares our passion for
Chipotle’s purpose. His track record of success is undeniable. 
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Hut and Taco Bell, Brian distinguished himself as an innovator
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the right leader to help Chipotle reclaim its leadership, and
accelerate our return to greater success. 

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interactive service are as strong as ever. These commitments
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for our future.

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DEAR SHAREHOLDERS

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leadership that made Chipotle such a compelling brand for our
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our Board of Directors, strengthened our internal leadership 
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restaurant operations structure, and embraced innovation to 
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TO MY FELLOW 
SHAREHOLDERS

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efforts to enhance Chipotle’s performance, including making 
some important changes to our management team and 
Board of Directors.

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as leadership, oversight, and enhanced stakeholder
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retired and one resigned to focus on other opportunities. 
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tenures at Chipotle, strengthening restaurant operations, 
realigning restaurant leadership teams to ensure continued 
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single umbrella. 

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to more enlightened food sourcing practices and our
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impact. We are pleased to share more information about 
these important issues. The publication of this report offers
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Hut, and Taco Bell. Throughout his career, Brian has proven
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marketing and brand development, and technological and
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believe he is the right leader for Chipotle as it approaches its
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enhancing shareholder value. We believe that our efforts to 
strengthen leadership, oversight, and effective communication 
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017
or

For the transition period from

to
Commission File Number: 1-32731

CHIPOTLE MEXICAN GRILL, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

1401 Wynkoop Street, Suite 500 Denver, CO
(Address of Principal Executive Offices)

84-1219301
(IRS Employer
Identification No.)

80202
(Zip Code)

Registrant’s telephone number, including area code: (303) 595-4000
Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

Common stock, par value $0.01 per share

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ‘ No È
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files). È Yes ‘ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)
is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. È
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):
È Large accelerated filer

‘ Accelerated filer

‘ Smaller reporting
company

‘ Emerging growth
company

‘ Non-accelerated filer
(do not check if a
smaller reporting
company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È
As of June 30, 2017, the aggregate market value of the registrant’s outstanding common equity held by non-affiliates was
$7.075 billion, based on the closing price of the registrant’s common stock on such date, the last trading day of the
registrant’s most recently completed second fiscal quarter. For purposes of this calculation, shares of common stock held
by each executive officer and director and by holders of 5% or more of the outstanding common stock have been excluded
since those persons may under certain circumstances be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
As of February 6, 2018, there were 27,930,272 shares of the registrant’s common stock, par value of $0.01 per share
outstanding.

Part III incorporates certain information by reference from the registrant’s definitive proxy statement for the 2018 annual
meeting of shareholders, which will be filed no later than 120 days after the close of the registrant’s fiscal year ended
December 31, 2017.

DOCUMENTS INCORPORATED BY REFERENCE

TABLE OF CONTENTS

Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

PART I

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director
Independence

Item 14. Principal Accounting Fees and Services

PART IV

Item 15. Exhibits, Financial Statement Schedules

Item 16. Form 10-K Summary

Signatures

1

6

23

24

24

24

25

27

28

36

38

59

59

61

62

62

62

62

62

63

65

66

PART I

Cautionary Note Regarding Forward-Looking
Statements
This report includes statements of our expectations,
intentions, plans and beliefs that constitute “forward-
looking statements” within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, and that are intended to come within
the safe harbor protection provided by those sections.
These statements, which involve risks and uncertainties,
relate to the discussion of our business strategies and our
expectations concerning future operations, margins,
profitability, trends, liquidity and capital resources and to
analyses and other information that are based on forecasts
of future results and estimates of amounts not yet
determinable. Forward-looking statements include, among
others, forecasts of the number of restaurants we expect to
open in 2018; statements regarding the effectiveness of our
food safety systems and procedures; statements about the
potential impact of catering and delivery offerings and
technology initiatives; projections of comparable restaurant
sales increases and sales trends we expect for 2018;
forecasts of trends in general and administrative expenses,
restaurant development costs, and other expenses for 2018;
estimates of expected effective tax rates for the year;
statements about possible repurchases of our common
stock; projections of planned capital expenditures; and
other statements of our expectations and plans. We have
used words such as “may,” “will,” “should,” “expect,”
“intend,” “plan,” “anticipate,” “believe,” “think,” “estimate,”
“seek,” “expect,” “predict,” “could,” “project,” “potential”
and other similar terms and phrases, including references to
assumptions, in this report to identify forward-looking
statements. These forward-looking statements are made
based on expectations and beliefs concerning future events
affecting us and are subject to risks and uncertainties
relating to our operations and business environments, all of
which are difficult to predict and many of which are beyond
our control, that could cause our actual results to differ
materially from those matters expressed or implied by
these forward-looking statements. Such risks and
uncertainties include those listed in Item 1A. “Risk Factors,”
and elsewhere in this report.

When considering forward-looking statements in this report
or that we make in other reports or statements, you should
keep in mind the cautionary statements in this report and
future reports we file with the SEC. New risks and
uncertainties arise from time to time, and we cannot predict
when they may arise or how they may affect us. We assume
no obligation to update any forward-looking statements
after the date of this report as a result of new information,

future events or other developments, except as required by
applicable laws and regulations.

ITEM 1. BUSINESS

General
Chipotle Mexican Grill, Inc., a Delaware corporation,
together with its subsidiaries (“Chipotle”, “we”, “us”, or
“our”) operates Chipotle Mexican Grill restaurants, which
serve a focused menu of burritos, tacos, burrito bowls (a
burrito without the tortilla) and salads, made using fresh
ingredients. As of December 31, 2017, we operated 2,363
Chipotle restaurants throughout the United States, as well
as 37 international Chipotle restaurants, and we also had
eight non-Chipotle restaurants. We focus on finding fresh,
high-quality raw ingredients to make great tasting food
prepared using classic cooking methods; on building strong
restaurant teams that are centered on providing an
excellent guest experience; on building restaurants that are
operationally efficient and aesthetically pleasing; and on
doing all of this with the highest regard for the safety of
our customers and with a continuing awareness of and
respect for the environment. We have grown substantially
over the past five years, and expect to open between 130
and 150 new restaurants in 2018, representing a slight
reduction in our rate of new openings as we focus our
resources on improving our operations and delivering an
outstanding experience to every one of our guests.

Throughout our history, we have pursued a mission to
change the way people think about and eat fast food. The
fast food landscape has changed dramatically over
Chipotle’s 24-year history suggesting that we may have
achieved this mission, with a number of concepts built
using service and sourcing formats that closely resemble
ours – with more selective sourcing, food prepared on-site,
and a service model that allows customers to choose
exactly what they eat. Looking at what we have
accomplished, we have reenvisioned our purpose, and are
working to Cultivate nourished communities where
wholesome food is enjoyed every day. We are also aiming to
simplify our business focus, to emphasize only those things
that result in an excellent guest experience in our
restaurants.

We transitioned the management of our restaurants from
eleven to nine regions during the fourth quarter of 2017
and we aggregate our operations into one reportable
segment. Financial information about our operations,
including our revenues and net income for the years ended
December 31, 2017, 2016, and 2015, and our total assets as

2017 Annual Report

1

PART I
(continued)

of December 31, 2017 and 2016, is included in our
consolidated financial statements and accompanying notes
in Item 8. “Financial Statements and Supplementary Data.”
Substantially all of our revenues are generated and assets
are located in the U.S. For a discussion of risks related to
our international operations, see “Risks Related to Our
Plans to Improve Our Sales and Profitability and Restore
Our Economic Model – Our expansion into international
markets has been limited, and may present increased risks
due to lower customer awareness of our brand… ” in
Item 1A. “Risk Factors.”

Our Focus on Safe and Delicious Food Made
with Better Ingredients
Focused Menu. Chipotle restaurants feature only a few
entrée items: burritos, burrito bowls, tacos and salads. But
because customers can choose from four different meats,
tofu, two types of beans, and a variety of extras such as
salsas, guacamole, queso, shredded cheese, and lettuce,
there is enough variety to extend our menu to provide
thousands of choices. In preparing our food, we employ
classic cooking methods and use stoves and grills, pots and
pans, cutting knives and other kitchen utensils, walk-in
refrigerators stocked with a variety of fresh ingredients,
herbs and spices, and dry goods such as rice. Our
restaurants do not have microwaves or freezers.
Ingredients we use include chicken, steak, carnitas
(seasoned and braised pork), barbacoa (spicy braised and
shredded beef), Sofritas (organic braised tofu) and
vegetarian pinto and black beans. We add our rice, which is
tossed with lime juice, freshly chopped cilantro, and a pinch
of salt, as well as freshly shredded cheese, sour cream,
lettuce, peppers and onions, to our entrees depending on
each customer’s request. We use various herbs, spices and
seasonings to prepare our meats and vegetables. We also
serve tortilla chips seasoned with fresh lime juice and salt,
with sides of guacamole, salsas, or queso. In addition to
sodas, fruit and tea drinks, and organic milk, most of our
restaurants also offer a selection of beer and margaritas.
Our food is prepared from scratch, some in our restaurants
and some with the same fresh ingredients in larger batches
in commissaries.

Wholesome Food. Serving high quality food while still
charging reasonable prices is critical to our purpose so that
guests can enjoy wholesome food every day. We insist on
preparing, cooking, and serving nutritious food made from
natural ingredients and animals that are raised or grown
with care and with respect for the environment. We spend
time on farms and in the field to understand where our food
comes from and how it is raised. Because our menu is so
focused, we can concentrate on the sources of each

2 2017 Annual Report

ingredient, and this has become a cornerstone of our
continuous effort to improve the food we serve. We’re all
about simple, fresh food without the use of artificial colors
or flavors typically found in fast food – just genuine raw
ingredients and their individual, delectable flavors.

In all of our Chipotle restaurants, we endeavor to serve only
meats that were raised in accordance with criteria we have
established in an effort to improve sustainability and
promote animal welfare, and without the use of
non-therapeutic antibiotics or added hormones. We brand
these meats as “Responsibly Raised ®.” One of our primary
goals is for all of our restaurants to serve meats raised to
meet our standards, but we have and will continue to face
challenges in doing so. For example, some of our
restaurants periodically serve conventionally raised chicken
or beef from time to time due to supply constraints for our
Responsibly Raised brand meats. In the future, more of our
restaurants may periodically serve conventionally raised
meats or stop serving one or more menu items due to
additional supply constraints. When we become aware that
one or more of our restaurants will serve conventionally
raised meat, we clearly and specifically disclose this
temporary change on signage in each affected restaurant
so that customers can avoid those meats if they choose to
do so.

We also seek to use more responsibly grown produce, by
which we mean produce grown by suppliers whose
practices conform to our priorities with respect to
environmental considerations and employee welfare. Most
of the beans we serve are organically grown or grown using
conservation tillage methods that improve soil conditions,
reduce erosion, and help preserve the environment in which
the beans are grown. A portion of some of the other
produce items we serve is organically grown as well. Our
commitment to better ingredients also extends to the dairy
products we serve. In 2017, all of the sour cream and
shredded cheese served in our U.S. Chipotle restaurants
was made with milk that comes from cows not given rBGH
(recombinant bovine growth hormone) and sourced from
pasture-based dairies that provide an even higher standard
of animal welfare by providing outdoor access for their
cows.

In addition, none of the ingredients in our food (not
including beverages) in U.S. Chipotle restaurants contain
genetically modified organisms, or GMOs. While the meat
and poultry we serve is not genetically modified, the
animals are likely fed a diet of grains containing GMOs. Due
to the prevalence of GMOs in a number of important feed
crops, the vast majority of the grains used as animal feed in

PART I
(continued)

the U.S. are genetically modified. Additionally, some of the
beverages we serve are sweetened with corn-based
sweeteners, which are typically made with genetically
modified corn.

Close Relationships with Suppliers. Maintaining the high
levels of quality and safety we expect in our restaurants
depends in part on our ability to acquire high-quality, fresh
ingredients and other necessary supplies that meet our
specifications from reliable suppliers. Our 24 independently
owned and operated regional distribution centers purchase
from various suppliers we carefully select based on quality
and the suppliers’ understanding of our mission. We work
closely with our suppliers and seek to develop mutually
beneficial long-term relationships with them. We use a mix
of forward, fixed and formula pricing protocols, and our
distribution centers purchase within the pricing guidelines
and protocols we have established with the suppliers. We’ve
also tried to increase, where practical, the number of
suppliers for our ingredients, which we believe can help
mitigate pricing volatility and supply shortages, and we
follow industry news, trade tariffs and other issues,
weather, exchange rates, foreign demand, crises and other
world events that may affect our ingredient prices. Certain
key ingredients (including beef, pork, chicken, beans, rice,
sour cream, cheese, and tortillas) are purchased from a
small number of suppliers. For a discussion of risks related
to our supply chain, see “Risks Related to Operating in the
Restaurant Industry — Failure to receive frequent deliveries
of higher-quality food ingredients and other supplies
meeting our specifications could harm our operations” and
“Risks Related to our Unique Business Strategy — Our Food
With Integrity philosophy subjects us to risks” in Item 1A.
“Risk Factors.”

Quality Assurance and Food Safety. We are committed to
serving safe, high quality food. Our Executive Director of
Food Safety, a respected expert in the industry, oversees
our food safety programs and practices, components of
which include:

• supplier interventions (steps to avoid food safety risks

before ingredients reach Chipotle);

• advanced technology (tools that eliminate pathogens

while maintaining food quality);

• farmer support and training;
• enhanced restaurant procedures (protocols for handling
ingredients and sanitizing surfaces in our restaurants);

• food safety certification;
• internal and third party restaurant inspections; and
• ingredient traceability.

These and other food safety practices underscore our
commitment to becoming a leader in food safety while we
continue to serve high quality food that our customers love.
Our Executive Director of Food Safety directs a quality
assurance department that establishes and monitors our
quality and food safety programs, and works closely with
our suppliers to ensure our high standards are met
throughout the supply chain. We maintain a limited list of
approved suppliers, many of which are among the top
suppliers in the industry. In addition, our training,
operations, and risk management departments develop and
implement operating standards for food quality,
preparation, cleanliness, employee health protocols, and
safety in the restaurants. Our food safety programs are
also intended to ensure that we not only continue to
comply with applicable federal, state and local food safety
regulations, but establish Chipotle as an industry leader in
food safety.

To be sure that our food safety programs continue to
evolve in ways that will help maintain leadership in this
important area, we have a Food Safety Advisory Council
comprised of some of the nation’s foremost food safety
authorities. The Food Safety Advisory Council is charged
with evaluating our programs, both in practice and
implementation, and advising us on ways to elevate our
already high standards for food safety.

Delivering an Excellent Guest Experience
We believe there is nothing more important than treating
our guests to an excellent experience every time they visit
one of our restaurants, and expect that doing so will help us
attract customers more frequently and engender greater
customer loyalty. We have also renewed our commitment
to focusing on our restaurant operations and training to
elevate the experience we are providing, and ensuring
greater consistency throughout all of our restaurants.
Creating an excellent guest experience starts with hiring
great people, creating great teams, and training them on
our high standards. We have re-tooled our restaurant
compensation systems to place greater emphasis on the
strength of operations and the guest experience, and
revamped our training programs to better support these
priorities.

Restaurant Team. Each restaurant typically has a general
manager or Restaurateur (a high-performing general
manager), an apprentice manager (in a majority of our
restaurants), and we aim to have two or three hourly
service managers, one or two hourly kitchen managers and
an average of 22 full and part-time crew members, though
our busier restaurants tend to have slightly more

2017 Annual Report 3

PART I
(continued)

employees. We generally have two shifts at our restaurants,
which simplifies scheduling and provides stability for our
employees. We also cross-train our people so that each can
work a variety of stations, allowing us to work efficiently
during our busiest times, while giving our people the
opportunity to develop a wider array of skills. Consistent
with our emphasis on customer service, we encourage our
general managers and crew members to welcome and
interact with customers throughout the day. In addition to
the employees serving our customers at each restaurant,
we also have a field support system that includes field
leaders and team directors, as well as executive team
directors who report to our Chief Restaurant Officer.

Innovation. We are prioritizing the development of
technological and other innovations, such as digital/mobile
ordering platforms, and delivery and catering choices, that
allow our guests to engage with us in whatever fashion is
most convenient for them. By allowing our customers to
order and receive their food in a variety of ways, we believe
we can attract more customers and encourage customers
to choose us more frequently. In order to successfully
deliver a great experience for more customers, we are
emphasizing the optimization of second make lines and
expanding the ability to pay using Apple Pay or Android
Pay. These initiatives allow us to fulfill catering or online
orders without disrupting throughput on our main service
line. In fact, technological innovations can enhance the
experience of other guests by helping to improve
throughput for those who choose to dine in our
restaurants. Recent digital ordering innovations have
allowed us to increase digital order volumes to the highest
levels we’ve ever achieved, and we believe continued
improvements in these areas will allow us to achieve even
better results. Additionally, we have enhanced our data
capabilities to allow us to better identify individual
customers and their unique frequency patterns, and to
target our marketing and promotional efforts at the
individual level. We believe the advancements we have
made in this area will help us as we continue to target
lapsed customers, and seek to build frequency among
newer customers.

Marketing
Our marketing program is divided into three categories:
top-of-mind advertising, brand advertising and local
marketing. Each of these serves a different purpose, but
together they are intended to differentiate us from the
competition. Top-of-mind advertising is intended to keep
current and new customers coming into our restaurants;
brand advertising is directed at existing customers and
seeks to build deeper connections to our brand; and local

4 2017 Annual Report

advertising aims to help connect our restaurants to local
communities and the customers who live there.

Our top-of-mind advertising has generally included print,
outdoor, social, digital and radio advertising, but we have
also incorporated some national television advertising.
Beyond these traditional channels, we continue to pioneer
new avenues of brand advertising aimed at making
consumers more curious about some of the issues that are
important to us, and explaining why and how we are
working to drive positive change in the nation’s food
supply. We also have a dedicated team of field marketing
staff that helps connect our restaurants to local
communities through fundraisers, sponsorships and
participation in local events.

Alongside our restaurant teams, these efforts have helped
us create considerable word-of-mouth publicity as our
customers learn more about us and share with others. This
approach allows us to build awareness and loyalty with
relatively low advertising expenditures, even in a
competitive category, and to differentiate Chipotle as a
company that is committed to doing the right thing in every
facet of our business.

For a discussion of risks related to our marketing, see
“Risks Related to Our Plans to Improve Our Sales and
Profitability and Restore Our Economic Model — Our
marketing and advertising strategies may not be successful,
or may pose risks that could adversely impact our business”
in Item 1A. “Risk Factors.”

Competition
The fast-casual, quick-service, and casual dining segments
of the restaurant industry are highly competitive with
respect to, among other things, taste, price, food quality
and presentation, service, location, brand reputation, and
the ambience and condition of each restaurant. Our
competition includes a variety of restaurants in each of
these segments, including locally-owned restaurants and
national and regional chains. Many of our competitors offer
dine-in, carry-out, online, catering, and delivery services.
Among our main competitors are a number of multi-unit,
multi-market Mexican food or burrito restaurant concepts,
some of which are expanding nationally. In recent years,
competition has increased significantly from restaurant
formats like ours that serve higher quality food, quickly and
at a reasonable price.

Moreover, we may also compete with companies outside
the fast-casual, quick-service, and casual dining segments
of the restaurant industry. For example, competitive

PART I
(continued)

pressures can come from deli sections and in-store cafés of
major grocery store chains, including those targeted at
customers who seek higher-quality food, as well as from
convenience stores, cafeterias, and other dining outlets.
Meal kit delivery companies and other eat-at-home options
also present some degree of competition for our
restaurants.

We believe that this competition has made it more
challenging to maintain or increase the frequency of
customer visits, but continue to believe that we can
differentiate ourselves with our purpose to cultivate
nourished communities where wholesome food is enjoyed
every day. For more information, see “Risks Related to
Operating in the Restaurant Industry—Competition could
adversely affect us” in Item 1A. “Risk Factors.” We also
compete with other restaurants and retail establishments
for site locations and restaurant employees.

Restaurant Site Selection
We believe restaurant site selection is critical to our
success and growth strategy and thus we devote
substantial time and effort to evaluating each potential
restaurant location. Our site selection process is led by our
internal team of real estate managers and also includes the
use of external real estate brokers with expertise in specific
markets, as well as support from an internal real estate
strategy and research group. We study the surrounding
trade area, demographic and business information within
that area, and available information on competitors and
other restaurants. Based on this analysis, including
utilization of predictive modeling using proprietary
formulas, we determine projected sales and targeted return
on investment for each potential restaurant site. We have
been successful in a number of different types of locations,
such as in-line or end-cap locations in strip or power
centers, in regional malls and downtown business districts,
free-standing buildings, food courts, outlet centers,
airports, military bases and train stations.

For a discussion of risks related to our expansion into new
real estate types, see “Risks Related to Our Plans to
Improve Our Sales and Profitability and Restore Our
Economic Model — Our new restaurants, once opened, may
not be profitable, and may adversely impact the sales of our
existing restaurants” in Item 1A. “Risk Factors.”

Other Restaurant Concepts
We believe that the fundamental principles on which our
restaurants are based — finding better ingredients,
preparing them using classic techniques in front of the
customer, and serving them in an interactive format with

great teams dedicated to providing an excellent dining
experience — can be adapted to cuisines other than the
food served at Chipotle. Over the previous six years, we’ve
explored this idea by investing in innovative concepts such
as Pizzeria Locale, a fast-casual pizza restaurant that now
has seven restaurants in four states, and Tasty Made, a
burger restaurant we opened in Lancaster, Ohio. We also
previously operated ShopHouse Southeast Asian Kitchen
restaurants, but closed all of the ShopHouse locations in
early 2017. In 2018, our focus will remain on thoughtfully
growing the Chipotle brand.

Information Systems
We use a variety of applications and systems to securely
manage the flow of information within each of our
restaurants, and within our centralized corporate
infrastructure. The services available within our systems
and applications include restaurant operations, supply
chain, inventory, scheduling, training, human capital
management, financial tools, and data protection services.
The restaurant structure is based primarily on a
point-of-sale system that operates locally at the restaurant
and is integrated with other functions necessary to
restaurant operations. It records sales transactions,
receives out of store orders, and authorizes, batches, and
transmits credit card transactions. The system also allows
employees to enter time clock information and to produce
a variety of management reports. Select information that is
captured from this system at each restaurant is collected in
the central corporate infrastructure, which enables
management to continually monitor operating results. Our
digital ordering system allows guests to place orders online
or through our mobile app. Orders taken remotely are
routed to the point-of-sales system based on the time of
customer order pickup. We also continue to modernize and
make investments in our information technology networks
and infrastructure, specifically in our physical and
technological security measures to anticipate cyber-attacks
and prevent breaches, and to provide improved control,
security and scalability. Enhancing the security of our
financial data, customer information and other personal
information remains a priority for us.

In April 2017, our information security team detected
unauthorized activity on the network that supports
payment processing for our restaurants, and immediately
began an investigation with the help of leading computer
security firms. The investigation detected malware
designed to access payment card data from cards used at
the point-of-sale system at most of our restaurants. The
malware searched for track data, which may include
cardholder name, card number, expiration date, and

2017 Annual Report 5

PART I
(continued)

internal verification codes; however, no other customer
information was affected. We removed the malware from
our systems and have been working to further enhance the
security of our payment card network.

See “General Business Risks — We may be harmed by
security risks we face in connection with our electronic
processing and transmission of confidential customer and
employee information” in Item 1A. “Risk Factors,” as well as
Note 10. “Commitments and Contingencies” in Item 8.
“Financial Statements and Supplementary Data,” for
further discussion of the payment card security incident in
2017, related legal proceedings, and other risks associated
with our information systems.

Employees
As of December 31, 2017, we had about 68,890 employees,
including about 5,020 salaried employees and about
63,870 hourly employees. None of our employees are
unionized or covered by a collective bargaining agreement.

Seasonality
Seasonal factors influencing our business are described
under the heading “Quarterly Financial Data/Seasonality”
in Item 7. “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.”

Our Intellectual Property and Trademarks
“Chipotle,” “Chipotle Mexican Grill,” “Food With Integrity,”
“Responsibly Raised,” and a number of other marks and
related designs and logos are U.S. registered trademarks of
Chipotle. We have filed trademark applications for a
number of additional marks in the U.S. as well. In addition
to our U.S. registrations, we have registered trademarks for
“Chipotle” and a number of other marks in Canada, the
European Union and various other countries, and have filed
trademark applications for “Chipotle Mexican Grill,”
“Chipotle” and a number of other marks in additional
countries. We also believe that the design of our
restaurants is our proprietary trade dress and have
registered elements of our restaurant design for trade
dress protection in the U.S. as well.

From time to time we have taken action against other
restaurants that we believe are misappropriating our
trademarks, restaurant designs or advertising. Although
our policy is to protect and defend vigorously our rights to
our intellectual property, we may not be able to adequately
protect our intellectual property, which could harm the
value of our brand and adversely affect our business.

6 2017 Annual Report

Available Information
We maintain a website at www.chipotle.com, including an
investor relations section at ir.chipotle.com in which we
routinely post important information, such as webcasts of
quarterly earnings calls and other investor events in which
we participate or host, and any related materials. Our Code
of Conduct is also available in this section of our website.
You may access our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports, as well as other reports
relating to us that are filed with or furnished to the SEC,
free of charge in the investor relations section of our
website as soon as reasonably practicable after such
material is electronically filed with or furnished to the SEC.
The public may also read and copy materials we file with
the SEC at the SEC’s Public Reference Room, which is
located at 100 F Street, NE, Washington, DC 20549. You
can obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains a website that contains reports, proxy
and information statements and other information
regarding issuers that file electronically with the SEC at
www.sec.gov.

The contents of the websites mentioned above are not
incorporated into and should not be considered a part of
this report. The references to the URLs for these websites
are intended to be inactive textual references only.

ITEM 1A. RISK FACTORS

The following risk factors could materially affect our
business, financial condition and results of operations, and
should be carefully considered in evaluating our business or
making an investment decision involving our common
stock. The risks and uncertainties described below are
those that we have identified as material, but are not the
only risks and uncertainties we face. Our business is also
subject to general risks and uncertainties that affect many
other companies, including overall economic and industry
conditions. Additional risks and uncertainties not currently
known to us or that we currently believe are not material
also may materially affect our business, financial condition
and results of operations.

PART I
(continued)

Risks Related to our Plans to Improve Our
Sales and Profitability and Restore our
Economic Model

Our average restaurant sales and profitability will
continue to fall short of our past results unless we
can significantly increase comparable restaurant
sales, and there are material risks to our ability to
do so.
In 2016 we experienced lower total company sales than the
preceding year for the first time in our history as a public
company, and our average restaurant volumes declined
from $2.532 million as of September 30, 2015 to
$1.940 million as of December 31, 2017. To build our
average restaurant sales we will need to increase
comparable restaurant sales, which represent the change in
period-over-period sales for restaurants beginning in their
13th full calendar month of operation. Changes in
comparable restaurant sales are a critical factor affecting
our profitability, because the profit margin on incremental
comparable restaurant sales is generally higher due to the
sales increases being applied against a partially fixed cost
base. Conversely, declines in comparable restaurant sales,
as we have seen in some periods over the past two years,
have a significant adverse effect on profitability due to the
loss of the positive impact on profit margins associated
with comparable restaurant sales increases, while we
continue to incur a certain level of fixed costs.

Our ability to increase comparable restaurant sales
depends on many factors, including:

• perceptions of the Chipotle brand and the safety and

quality of our food, which may continue to be adversely
impacted by actual or rumored food safety incidents or
other adverse publicity, including as described below
under “— We may continue to be negatively impacted by
food safety incidents associated with our restaurants…”;

• competition, especially from an increasing number of

competitors in the fast casual segment of the
restaurant industry and from other restaurant concepts
whose strategies overlap with elements of our Food
With Integrity philosophy, as well as from grocery
stores, meal kit delivery services and other dining
options;

• our ability to increase menu prices without adversely

impacting transaction counts to such a degree that the
impact from lower transactions equals or exceeds the
benefit of the menu price increase, and without “trade
down” by customers or other reductions in average
check in response to price increases;

• executing our strategies effectively, including our

marketing and branding strategies, our initiatives to

expand the use of online and other digital ordering and
increase sales from our catering options, our efforts to
improve the overall quality of our customers’
experience and increase the speed at which our crews
serve each customer, and our potential introduction of
new menu items, each of which we may not be able to
accomplish or which may not have the impact we
expect;

• changes in consumer preferences and discretionary

spending, including weaker consumer spending during
periods of economic difficulty or uncertainty;

• initial sales performance of new restaurants, and the

impact of new Chipotle restaurants in the event
customers who frequent one of our restaurants begin to
visit one of our new restaurants instead, as further
described below under “— Our new restaurants, once
opened, may not be profitable…”;

• weather, natural disasters and other factors limiting

access to our restaurants; and

• changes in government regulation that may impact

customer perceptions of our food, including initiatives
regarding menu labeling and marketing claims about the
origin or makeup of some of the ingredients we serve.

These factors, most of which are described in more detail in
additional Risk Factors below, are beyond our control to at
least some degree. As a result, it is possible that we will
experience future declines in comparable restaurant sales
or that we otherwise will not achieve our targeted or
expected comparable restaurant sales. Any future declines
in comparable restaurant sales or failure to meet market
expectations for comparable restaurant sales increases
would likely result in a significant adverse impact on the
price of our common stock.

Increasing our sales and profits depends in part on
our ability to open new restaurants in sites and on
terms attractive to us, which is subject to many
unpredictable factors, and we plan to open fewer
restaurants in 2018 than we have in prior years,
which will adversely impact our sales growth.
We had 2,408 restaurants in operation as of December 31,
2017, and we plan to increase the number of our
restaurants significantly. In 2018 we plan to open between
130 and 150 new restaurants, significantly fewer than in
prior years. We have in the past experienced delays in
opening some restaurants and that could happen again as a
result of any one or more of the following factors:

• our potential inability to locate and secure new

restaurant sites in locations that we believe to be
attractive;

2017 Annual Report

7

PART I
(continued)

• obstacles to hiring and training top performing

employees in the local market;

• difficulty managing construction and development costs
of new restaurants, particularly in competitive markets
or when real estate development activity is robust;

• delay or cancellation of new site development by
developers and landlords, which may become
increasingly common during periods of economic
uncertainty, tight credit, and/or rising interest rates;
• difficulty ramping up the growth of our international

business or new restaurant concepts, including for the
reasons described below under “— Our expansion into
international markets has been limited, and may present
increased risks…” and “— Pizzeria Locale, Tasty Made
and other new restaurant concepts may not contribute
to our growth”;

• difficulty negotiating leases with acceptable terms;
• any shortages of construction labor or materials;
• failures or delays in securing required governmental
approvals (including construction, parking and other
permits);

• lack of availability of, or inability to obtain, adequate

supplies of ingredients that meet our quality standards;
and

• the impact of inclement weather, natural disasters and

other calamities.

One of our biggest challenges in opening new restaurants is
staffing and training new restaurant teams. We seek to hire
only top performing employees, train them extensively in
order to ensure we provide an outstanding customer
experience, and promote many general managers from our
crew, all of which may make it more difficult for us to staff
all the restaurants we intend to open. Constraints on our
hiring new employees are described further below under
“Risks Related to Operating in the Restaurant Industry —
Our business could be adversely affected by increased labor
costs…”

Another significant challenge is locating and securing an
adequate supply of suitable new restaurant sites.
Competition for restaurant sites in our target markets can
be intense, and development and leasing costs are
increasing, particularly for urban locations. These factors
could negatively impact our ability to manage our
occupancy costs, which may adversely impact our
profitability. In addition, any of these factors may be
exacerbated by economic factors, which may result in
developers and contractors seeing increased demand and
therefore driving our construction and leasing costs up.

If we are unable to open the number of new restaurants we
plan, or if we decide to continue opening fewer new

8 2017 Annual Report

restaurants than we have in past years or delay or forego a
significant number of planned restaurant openings,
including due to any of the reasons set forth above, this
could materially and adversely affect our growth strategy
and our expected results. Moreover, as we open and
operate more restaurants, our rate of expansion relative to
the size of our existing restaurant base will decline, making
it increasingly difficult to achieve levels of sales and
profitability growth that we achieved prior to 2016. We
expect this effect to be more pronounced through at least
2018, given our plan to decrease the number of new
restaurants we open during the year as compared to years
past.

Our progress in opening new restaurants from quarter to
quarter may also occur at an uneven rate, which may result
in quarterly sales and profit growth falling short of market
expectations in some periods.

Our new restaurants, once opened, may not be
profitable, and may adversely impact the sales of
our existing restaurants.
Historically, many of our new restaurants have opened with
an initial ramp-up period typically lasting 24 months or
more, during which they generate sales and income below
the levels at which we expect them to normalize after the
restaurant has built a customer base, and during which
costs may be higher as we train new employees and adjust
our food deliveries and preparation to sales volumes and
peak-hour trends. If we are unable to build the customer
base that we expect for new restaurant locations or
overcome the higher fixed costs associated with new
restaurant locations, new restaurants may not have results
similar to those of our existing restaurants and may not be
profitable. Our new restaurant sales volumes since the
fourth quarter of 2015 have also been negatively impacted
by the food safety issues described elsewhere in this report
and other adverse publicity, and as a result, the effect of
new restaurants on our average restaurant sales over the
past two years has been of greater magnitude than we
have seen in the past. This trend may continue into 2018
and beyond.

We have also opened restaurants in nearly all major
metropolitan areas across the U.S. New restaurants opened
in existing markets may adversely impact sales in
previously-opened restaurants in the same market, as
customers who frequent our established restaurants begin
to visit a newly-opened restaurant instead. This impact
could worsen as we open additional restaurants, and could
make it more difficult for us to increase comparable
restaurant sales and profitability. Existing restaurants

PART I
(continued)

could also make it more difficult to build the customer base
for newly-opened restaurants in the same market, and
could limit our growth potential if we determine that one or
more of our nearby restaurants makes an otherwise viable
new restaurant site unattractive to us.

In addition, in the event we are not able to contain
increases in our average restaurant development costs,
which could result from inflation, an increase in the
proportion of higher cost locations, project
mismanagement or other reasons, our new restaurant
locations could also result in lower returns on our
investment in new restaurants.

Finally, our new restaurant development activity has
broadened recently to incorporate trade areas or types of
restaurant sites in which we have little or no prior
experience, including smaller or more economically mixed
communities, highway sites, outlet centers, and restaurants
in airports, food courts, or on military sites. These types of
sites may become more important to our restaurant growth
strategy as we find fewer opportunities to open in
traditional sites, given our past growth. Many of these site
types may involve additional costs that we do not incur in
our more traditional restaurant sites, which will adversely
impact the profitability of restaurants in these types of
sites. The risks related to building a customer base and
managing development and operating costs in some or all
of these types of trade areas or restaurant sites may also
be more significant than in our traditional sites, which could
result in unexpected negative impacts on our new
restaurant operating results.

We may continue to be negatively impacted by food
safety incidents, and further instances of food-
borne or localized illnesses associated with our
restaurants would result in increased negative
publicity and further adverse impacts on customer
perceptions of our brand.
During late October and early November 2015, illnesses
caused by E. coli bacteria were connected to a number of
our restaurants, initially in Washington and Oregon, and
subsequently to small numbers of our restaurants in as
many as 12 other states. During the week of December 7,
2015, an unrelated incident involving norovirus was
reported at a Chipotle restaurant in Brighton,
Massachusetts, which worsened the adverse financial and
operating impacts we experienced from the E. coli
incident. As a result of these incidents and related publicity,
our sales and profitability were severely impacted
throughout 2016. In July 2017, cases of norovirus
associated with a Chipotle restaurant in Sterling, Virginia

had a further adverse impact on our sales, particularly
throughout the mid-Atlantic and Northeast regions. The
significant amount of media coverage regarding these
incidents, as well as the impact of social media (which was
not in existence during many past food safety incidents
involving other restaurant chains) in increasing the
awareness of these incidents, may continue to negatively
impact customer perceptions of our restaurants and brand,
notwithstanding the high volume of food-borne illness
cases from other sources across the country every day. As
a result our sales may not return to levels we were
achieving prior to late 2015.

Because of customer perceptions in the wake of these food
safety incidents, any future occurrence of food-borne
illness associated with our restaurants—even incidents that
may be considered minor at other restaurants—would likely
have an even more significant negative impact on our sales
and our ability to regain customers. Although we have
followed industry standard food safety protocols in the
past, and over the past two years have enhanced our food
safety procedures to ensure that our food is as safe as it
can possibly be, we may still be at a higher risk for food-
borne illness occurrences than some competitors due to
our greater use of fresh, unprocessed produce and meats,
our reliance on employees cooking with traditional methods
rather than automation, and our avoiding frozen
ingredients. Additionally, no food safety protocols can
completely eliminate the risk of food-borne illness in any
restaurant, including as a result of possible failures by
suppliers or restaurant personnel to follow food safety
policies and procedures. As a result, our enhanced food
safety protocols may not be successful in preventing illness
incidents in the future. The risk of illnesses associated with
our food might also increase in connection with an
expansion of our catering business or other situations in
which our food is served in conditions we cannot
control. Furthermore, we have seen instances of
unsubstantiated reports linking illnesses to Chipotle, and
these reports have negatively impacted us. Even if food-
borne illnesses are attributed to us erroneously or arise
from conditions outside of our control, the negative impact
from any such illnesses is likely to be significant. All of
these factors could have a further impact on our ability to
attract and retain customers.

Our marketing and advertising strategies may not
be successful, or may pose risks that could
adversely impact our business.
In 2017, we hired a new advertising agency and media
buyer, introduced a new advertising campaign and media
strategies, including television advertising, and introduced

2017 Annual Report 9

PART I
(continued)

queso, our first significant new menu item in a number of
years. We will continue to invest in marketing and
advertising strategies that we believe will attract customers
or increase their connection with our brand. If these
investments do not drive increased restaurant sales, the
expense associated with these programs will adversely
impact our financial results, and we may not generate the
levels of comparable restaurant sales we expect.
Additionally, if our marketing and advertising strategies are
not successful, we may be forced to engage in additional
promotional activities to attract and retain customers,
including buy-one get-one offers and other offers for free
or discounted food, and any such promotional activities
could adversely impact our profitability.

We also plan to continue to emphasize strategies such as
remote ordering, new catering options, and delivery in an
effort to increase overall sales. These efforts may not
increase our sales to the degree we expect, or at all. We
may also seek to introduce new menu items that may not
generate the sales we expect. Catering and other
out-of-restaurant sales options, or new menu items, may
also introduce new operating procedures to our restaurants
and we may not successfully execute these procedures,
which could adversely impact the customer experience in
our restaurants and thereby harm our sales and customer
perceptions of our brand.

In addition, some of our marketing has incorporated
elements intended to encourage customers to question
sources or production methods commonly used to produce
food. These elements of our marketing could alienate food
suppliers and other food industry groups and may
potentially lead to an increased risk of disputes or litigation
if suppliers or other constituencies believe our marketing is
unfair or misleading. Increased costs in connection with any
such issues, or any deterioration in our relationships with
existing suppliers, could adversely impact us or our
reputation. Furthermore, if these messages do not resonate
with our customers or potential customers, the value of our
brand may be eroded.

Our expansion into international markets has been
limited, and may present increased risks due to
lower customer awareness of our brand, our
unfamiliarity with those markets and other factors.
As of December 31, 2017, 37 of our restaurants were
located outside of the U.S., with 24 in Canada, six in the
United Kingdom, six in France and one in Frankfurt,
Germany. Our focus for the present time remains on
expanding in North America, which limits our near-term
growth potential.

10 2017 Annual Report

As a result of our small number of restaurants outside the
U.S. and the relatively short time we have been operating
those restaurants, we have lower brand awareness and less
operating experience in these markets, and our average
restaurant sales and/or transaction counts may be lower in
these markets than in the U.S. The markets in which we’ve
opened restaurants outside the U.S., and any additional
new markets we enter outside the U.S. in the future, have
different competitive conditions, consumer tastes and
discretionary spending patterns than our U.S. markets. As a
result, new restaurants outside the U.S. may be less
successful than restaurants in our existing markets.
Specifically, due to lower consumer familiarity with the
Chipotle brand, differences in customer tastes or spending
patterns, or for other reasons, sales at restaurants opened
outside the U.S. may take longer to ramp up and reach
expected sales and profit levels, and may never do so,
thereby affecting our overall growth and profitability. To
build brand awareness in international markets, we may
need to make greater investments in advertising and
promotional activity than we originally planned, which
could negatively impact the profitability of our operations
in those markets.

We may also find it more difficult in international markets
to hire, train and keep top performing employees who can
successfully deliver excellent customer experiences, and
labor costs may be higher in international markets due to
increased regulation, higher employment taxes or social
benefit costs or local market conditions. In addition,
restaurants outside the U.S. have had higher construction,
occupancy and food costs than restaurants in existing
markets, and we may have difficulty finding reliable
suppliers or distributors or ones that can provide us, either
initially or over time, with adequate supplies of ingredients
meeting our quality standards. Additional costs or
difficulties from any of the foregoing factors may adversely
impact the operating results of our international markets.
Markets outside the U.S. may also have regulatory
differences with the U.S. with which we are not familiar, or
that subject us to significant additional expense or to which
we are not able to successfully adapt, which may have a
particularly adverse impact on our sales or profitability in
those markets and could adversely impact our overall
results. For example, a new privacy regulation in the
European Union called the General Data Protection
Regulation, or GDPR, is scheduled to become effective in
May 2018 and requires companies to meet new
requirements regarding the handling of personal data, and
failure to meet GDPR requirements could result in penalties
of up to 4% of our worldwide revenue. Our overall results
may also be negatively affected by currency risk on the

PART I
(continued)

transactions in other currencies and translation
adjustments resulting from the conversion of our
international financial results into the U.S. dollar.

Pizzeria Locale, Tasty Made and other new
restaurant concepts may not contribute to our
growth.
We believe that the fundamental principles on which our
restaurants are based – finding better ingredients,
preparing them using classic techniques in front of the
customer, and serving them in an interactive format with
great teams dedicated to providing an excellent dining
experience – can be adapted to cuisines other than the food
served at Chipotle. In order to see how our model works
when we use different ingredients and a different style of
food, we opened a number of ShopHouse Southeast Asian
Kitchen restaurants beginning in 2011, and one Tasty Made
burger restaurant in Ohio in 2016. We enlisted an equity
partner to help us refine the Tasty Made brand in 2017. We
also have a majority ownership interest in a company
operating seven fast casual Pizzeria Locale restaurants in
Denver, Colorado, Kansas City, Missouri and Cincinnati,
Ohio, and we plan to assist with the further expansion of
Pizzeria Locale in the future. ShopHouse was not able to
achieve a level of sales and profitability that made it
attractive to us for future investment, and we recognized a
$14.5 million non-cash impairment charge, representing
substantially all of the value of long-lived assets of
ShopHouse, during the year ended December 31, 2016, and
closed all of the ShopHouse locations in the first half of
2017. Furthermore, Pizzeria Locale and Tasty Made are new
brands and have lower brand awareness, lower sales and
less operating experience than most Chipotle restaurants,
and may also not achieve restaurant economics that make
them attractive for further investment in the future. These
concepts also operate in markets in which there are
numerous competitors, including a number of large and
well-known brands, and a number of other companies or
individuals in the restaurant industry have recently opened
or invested in fast-casual pizza concepts or so-called
“better burger” restaurants.

Notwithstanding our growth plans for Tasty Made, our
investment in Pizzeria Locale, and exploration of other
restaurant brand opportunities, our immediate focus will
remain on thoughtfully growing the Chipotle brand. As a
result, we do not expect Pizzeria Locale, Tasty Made or
other concepts to contribute to our growth in a meaningful
way for at least the next several years. We may also
determine not to move forward with any further expansion
of Tasty Made or Pizzeria Locale. These decisions would
each limit our overall growth potential over the long term

as well. Additionally, the expansion of Tasty Made or
Pizzeria Locale or investments in other restaurant concepts
each might distract our management, which could have an
adverse impact on our core Chipotle business.

Our failure to manage our restaurant growth
effectively could harm our business and operating
results.
As described elsewhere in this report, our plans call for a
significant number of new restaurants. Our existing
restaurant management systems, financial and
management controls, information systems and personnel
may be inadequate to support our expansion, and
managing our growth effectively will require us to continue
to enhance these systems, procedures and controls, as well
as to hire, train and retain general managers, crew and
corporate staff. We also are continuing to attempt to
improve our field management in an effort to improve
restaurant operations and develop additional top
performing general managers more quickly. We may not
respond quickly enough to the changing demands that our
restaurant growth imposes on management, crew and
existing infrastructure, and changes to our operating
structure may result in increased costs or inefficiencies
that we cannot currently anticipate. We have also
historically placed a great deal of importance on restaurant
cultures, which we believe needs to be redirected to focus
more on effective training of our team to deliver excellent
customer experiences. As we grow our number of
restaurants, additional shifts in our cultural or operational
focus may harm morale in our restaurants or prove
distracting to our restaurant employees, which could
adversely impact our business and operating results.

Risks Related to Operating in the Restaurant
Industry

Competition could adversely affect us.
The fast-casual, quick-service and casual dining segments
of the restaurant industry are highly competitive with
respect to, among other things, taste, price, food quality
and presentation, service, location, brand reputation, and
the ambience and condition of each restaurant. Our
competition includes a variety of restaurants in each of
these segments, including locally-owned restaurants and
national and regional chains. Many of our competitors offer
dine-in, carry-out, online, catering and delivery services.
Among our main competitors are a number of multi-unit,
multi-market Mexican food or burrito restaurant concepts,
some of which are expanding nationally. In recent years,
competition has also increased significantly from
restaurant formats like ours that serve higher quality food
quickly and at a reasonable price.

2017 Annual Report

11

PART I
(continued)

Moreover, we may also compete with companies outside
the fast casual and quick service and casual dining
segments of the restaurant industry. For example,
competitive pressures can come from deli sections and
in-store cafés of several major grocery store chains,
including those targeted at customers who want higher-
quality food, as well as from convenience stores, cafeterias
and other dining outlets. Meal kit delivery companies and
other eat-at-home options also present some degree of
competition for our restaurants. In addition, our strategy
includes opening additional restaurants in existing markets,
and as we do so sales may decline in our previously-opened
restaurants as customers who frequent our established
restaurants begin to visit a newly-opened restaurant
instead.

We believe that competition from all of the foregoing has
made it more challenging to maintain or increase the
frequency of our customer visits, and that those
competitive pressures will continue or increase in the
future.

Many of our competitors have existed longer than we have
and may have a more established market presence with
substantially greater financial, marketing, personnel and
other resources than we have. These and other competitors
may attract customers with, among other things, a more
diverse menu, lower operating costs and prices, better
locations, better facilities, better management, more
effective marketing and more efficient operations than we
have.

Additionally, although we continue to believe that Chipotle
can differentiate itself with our commitment to higher-
quality and responsibly-sourced ingredients, competitors
have increasingly made claims related to the quality of
their ingredients, or distinctions between artificial and
natural flavors, colors and preservatives. The increasing
use of these claims in the marketplace, even if the
substantive basis for some of them may be questionable,
may lessen our differentiation and make it more difficult for
us to compete. Some of these competitors and other fast
casual concepts have sought to duplicate various elements
of our business operations, and more chains may copy us to
varying degrees in the future.

Several of our competitors also compete by offering menu
items that are specifically identified as low in
carbohydrates, better for customers or otherwise targeted
at particular consumer preferences. Many of our
competitors in the fast-casual and quick-service segments
of the restaurant industry also emphasize lower-cost,

12 2017 Annual Report

“value meal” menu options, a strategy we do not currently
pursue. Our sales may be adversely affected by these and
other competing products, or by price competition more
generally.

Any of these competitive factors may adversely affect us
and reduce our sales and profits.

Our business could be adversely affected by
increased labor costs or difficulties in finding,
training and retaining top performing employees.
Labor is a primary component of our operating costs, and
we believe good managers and crew and outstanding
training are key parts of our success. Increased labor costs
due to factors such as competition for workers and labor
market pressures, increased minimum wage requirements,
paid sick leave or vacation accrual mandates, or changes in
our restaurant staffing structure have and may continue to
adversely impact our operating costs. Many companies,
both in the restaurant industry and in other industries with
which we compete for employees, have implemented
company-wide or targeted increases in starting wages or
other enhancements to their compensation and benefit
programs, and we may need to act similarly to continue to
attract employees. For instance, in 2018 we plan to increase
benefits to salaried and hourly managers, including
additional paid leave, short term disability coverage, and a
one-time cash bonus to all restaurant employees, which will
increase our labor costs. These enhancements, and any
further increases in labor costs associated with additional
market pressures on wages or other factors, will adversely
impact our operating results.

Moreover, if our managers do not schedule our restaurant
crews efficiently, our restaurants may be overstaffed at
some times, which adversely impacts our labor costs as a
percentage of revenue, decreasing our operating
margins. Efficient staffing may continue to be a challenge
in 2018 due to continued volatility and uncertainty in our
sales trends. Additional taxes or requirements to incur
additional employee benefits expenses could also adversely
impact our labor costs. And during 2018, we expect to hire
a greater proportion of our restaurant managers from
outside our company than we have in the past. These
employees may be more expensive to hire and train than
managers promoted from crew, and we may not
successfully integrate them into our restaurant teams,
which could adversely impact our operations.

In addition, our success in delivering excellent customer
experiences depends substantially on the energy and skills
of our employees and our ability to hire, train, motivate and

PART I
(continued)

keep qualified employees, especially general managers and
crew members. Turnover among our restaurant crews and
managers has been frequent, and we aim to reduce
turnover in an effort to keep top performing employees and
better realize our investment in training new employees.
Failure to do so will adversely impact our operating results
by increasing training costs and making it more difficult to
deliver outstanding customer experiences. Our failure to
find and keep enough high-caliber employees could also
delay planned restaurant openings, which would slow our
growth.

We use the “E-Verify” program, an Internet-based, free
program run by the U.S. government, to verify employment
eligibility for all employees throughout our company.
However, use of E-Verify does not guarantee that we will
successfully identify all applicants who are ineligible for
employment. Although we use E-Verify and require all
workers to provide us with government-specified
documentation evidencing their employment eligibility,
some of our employees may, without our knowledge, be
unauthorized workers. Unauthorized workers may subject
us to fines or penalties, and if we are found to be employing
unauthorized workers, we could experience adverse
publicity that negatively impacts our brand and may make
it more difficult to hire and keep qualified employees. For
example, following an audit by the Department of
Homeland Security of the work authorization documents of
our restaurant employees in Minnesota during 2010, we lost
approximately 450 employees, resulting in a temporary
increase in labor costs and disruption of our operations,
including slower throughput, as we trained new employees,
as well as some degree of negative publicity. The resulting
broad-based civil and criminal investigations by the U.S.
Attorney for the District of Columbia and U.S. Securities
and Exchange Commission of our compliance with work
authorization requirements and related disclosures and
statements resulted in significant legal costs. Termination
of a significant number of employees in specific markets or
across our company due to work authorization or other
regulatory issues would disrupt our operations including
slowing our throughput, and could also cause additional
adverse publicity and temporary increases in our labor
costs as we train new employees. We could also become
subject to fines, penalties and other costs related to claims
that we did not fully comply with all recordkeeping
obligations of federal and state immigration compliance
laws. Our reputation and financial performance may be
materially harmed as a result of any of these factors.
Furthermore, immigration laws have been an area of
considerable political focus in recent years, and the U.S.
Congress and Department of Homeland Security from time

to time consider or implement changes to Federal
immigration laws, regulations or enforcement programs.
Further changes in immigration or work authorization laws
may increase our obligations for compliance and oversight,
which could subject us to additional costs and potential
liability and make our hiring process more cumbersome, or
reduce the availability of potential employees.

Because we do not franchise, risks associated with hiring
and maintaining a large workforce, including increases in
wage rates or the cost of employee benefits, compliance
with laws and regulations related to the hiring, payment
and termination of employees, and employee-related
litigation, may be more pronounced for us than for
restaurant companies at which some or all of these risks
are borne by franchisees or other operating contractors.

Changes in food and supply costs could adversely
affect our results of operations.
Our profitability depends in part on our ability to anticipate
and react to changes in food and supply costs. Like all
restaurant companies, we are susceptible to increases in
food costs as a result of factors beyond our control, such as
general economic conditions, seasonal fluctuations,
weather conditions, global demand, food safety concerns,
generalized infectious diseases, fluctuations of the U.S.
dollar, product recalls and government regulations. The
cost of many basic foods for humans and animals, including
corn, wheat, rice and cooking oils, has increased markedly
in some years, resulting in upward pricing pressures on
almost all of our raw ingredients including chicken, beef,
tortillas and rice. In 2017, a significant rise in avocado
prices adversely impacted our food costs for most of the
year, and there could be similar or greater pricing pressure
on key ingredients in future periods. Costs have also
increased from the enhanced food safety procedures
described elsewhere in this report. Additionally, a
substantial volume of produce items are grown in Mexico
and other countries, and some of our meats and restaurant
supplies are sourced from outside the U.S. as well. Any new
or increased import duties, tariffs or taxes, or other
changes in U.S. trade or tax policy, could result in higher
food and supply costs that would adversely impact our
financial results.

We could also be adversely impacted by price increases
specific to meats raised in accordance with our
sustainability and animal welfare criteria or other food
items we buy as part of our Food With Integrity focus, the
markets for which are generally smaller and more
concentrated than the markets for food products that are
conventionally raised and grown. Weather related issues,

2017 Annual Report

13

PART I
(continued)

such as freezes or drought, may also lead to temporary
spikes in the prices of some ingredients such as produce or
meats. Increasing weather volatility or other long-term
changes in global weather patterns, including any changes
associated with global climate change, could have a
significant impact on the price or availability of some of our
ingredients. Any increase in the prices of the ingredients
most critical to our menu, such as chicken, beef, cheese,
avocados, beans, rice, tomatoes and pork, would have a
particularly adverse effect on our operating results.
Alternatively, in the event of cost increases with respect to
one or more of our raw ingredients, we may choose to
temporarily suspend serving menu items, such as
guacamole or one or more of our salsas, rather than paying
the increased cost for the ingredients. Any such changes to
our available menu may negatively impact our restaurant
traffic and comparable restaurant sales, and could also
have an adverse impact on our brand.

Food safety scares could adversely affect customer
perceptions of, or the price or availability of,
ingredients we use to prepare our food, which may
adversely impact our sales.
Past reports linking nationwide or regional incidents of
food-borne illnesses such as salmonella, E. coli, hepatitis A,
listeria or norovirus to certain produce items have caused
us to temporarily suspend serving some ingredients in our
foods or to otherwise alter our menu, and have resulted in
consumers avoiding certain products for a period of time.
Similarly, outbreaks of avian flu, incidents of “mad cow”
disease, or similar concerns have also caused consumers to
avoid any products that are, or are suspected of being,
affected. These problems, and injuries caused by food
tampering have had in the past, and could have in the
future, an adverse effect on the price and availability of
affected ingredients. A decrease in customer traffic as a
result of these health concerns or negative publicity, or as
a result of a change in our menu or dining experience or a
temporary closure of any of our restaurants due to the
types of food scares described above, would further
adversely impact our restaurant sales and profitability. In
addition, if we react to these problems by changing our
menu or other key aspects of the Chipotle experience, we
may lose customers who do not accept those changes, and
may not be able to attract enough new customers to
generate sufficient revenue to make our restaurants
profitable. Customers may also shift away from us if we
choose to pass along to consumers any higher ingredient or
operating costs resulting from supply problems or
operational changes associated with incidents of food-
borne illnesses, which would also have a negative impact on
our sales and profitability.

14 2017 Annual Report

Changes we have made in our operations, or that we
make in the future, to further enhance the safety of
the food we serve will adversely impact our
financial performance and may negatively impact
customer perception of our brand.
As a result of the food safety incidents described elsewhere
in this report, we have implemented a number of
enhancements to our food safety protocols to ensure that
our food is as safe as it can be. Many of our enhanced
procedures, which go beyond the industry-standard food
safety practices that we were previously following, increase
the cost of some ingredients or the amount of labor
required to prepare and serve our food. If we aren’t able to
sufficiently increase sales to offset the increased costs
resulting from these changes, our margins will fall well
short of levels we have historically achieved. Even if we
were to restore sales to levels we were achieving prior to
the fourth quarter of 2015, the increased costs from these
changes are likely to result in lower margins than we were
able to achieve in the past.

Additionally, some of the enhanced food safety procedures
we have introduced or may introduce in the future rely on
increased use of centralized food preparation, additional
in-restaurant preparation steps, or new ingredients, some
or all of which may be inconsistent with previous customer
perceptions of our restaurant operations. To the extent
customers perceive any of these developments as a move
away from our Food With Integrity strategy and/or towards
a more traditional fast food experience, our ability to win
back customers may be adversely impacted and our sales
may decline or recover more slowly than they otherwise
would have. Furthermore, even the most advanced food
safety measures cannot eliminate all food safety risks from
a restaurant environment. For risks related to any future
food safety incidents associated with our restaurants, see
“Risks Related to our Plans to Improve Our Sales and
Profitability and Restore our Economic Model — We may
continue to be negatively impacted by food safety incidents,
and further instances of food-borne or localized illnesses
associated with our restaurants would result in increased
negative publicity and further adverse impacts on customer
perceptions of our brand.”

Failure to receive frequent deliveries of higher-
quality food ingredients and other supplies meeting
our specifications could harm our operations.
Our ability to maintain our menu depends in part on our
ability to acquire ingredients that meet our specifications
from reliable suppliers. Shortages or interruptions in the
supply of ingredients caused by unanticipated demand,
problems in production or distribution, food contamination

PART I
(continued)

(which we may detect more frequently under the
microbiological testing protocols we’ve recently
introduced), inclement weather, a supplier ceasing
operations or deciding not to follow our required protocols,
or other conditions could adversely affect the availability,
quality and cost of our ingredients, which could harm our
operations. In particular, shortages of one or more of our
menu items could force our restaurants to remove items
from their menus, which may result in customers choosing
to eat elsewhere. If that happens, our affected restaurants
could experience significant reductions in sales during the
menu item shortage, and potentially thereafter if
customers do not return to us after the shortage is
resolved. Our focus on a limited menu would make the
consequences of a shortage of a key ingredient more
severe to us than at other restaurants.

For many of our food ingredients and other supplies we do
not have long-term contracts with suppliers, and we have
relied largely on a third party distribution network with a
limited number of distribution partners. If any of our
distributors or suppliers performs inadequately, or our
distribution or supply relationships are disrupted for any
reason, the risk of ingredient shortages may increase and
our business, financial condition, results of operations or
cash flows could be adversely affected. We currently
depend on a limited number of suppliers for some of our
key ingredients, including beef, pork, chicken, tofu, beans,
rice, sour cream, cheese, and tortillas. Due to the unique
nature of the products we receive from our Food With
Integrity suppliers and as described in more detail below
under “Risks Related to Our Unique Business Strategy — Our
Food With Integrity philosophy subjects us to risks,” these
suppliers could be more difficult to replace if we were no
longer able to rely on them. If we have to seek new
suppliers and service providers, we may be subject to
pricing or other terms less favorable than those we
currently enjoy. If we cannot replace or engage distributors
or suppliers who meet our specifications in a short period
of time, that could increase our expenses and cause
shortages of food and other items at our restaurants, which
could cause a restaurant to remove items from its menu. If
that were to happen and customers change their dining
habits as a result, affected restaurants could experience
significant reductions in sales during the shortage or
thereafter. Our focus on a limited menu would make the
consequences of a shortage of a key ingredient more
severe.

In the first quarter of 2015, through our ongoing auditing of
suppliers, we identified a pork supplier that was not
meeting our standards and suspended purchases of pork

from this supplier. Without this supply, we did not have
enough pork meeting our specifications for all of our
restaurants and a large number of our restaurants were not
serving carnitas for a number of months during 2015. We
believe our comparable restaurant sales were adversely
impacted as a result, as customers chose to eat elsewhere
rather than substituting a different one of our menu items
for carnitas.

Changes in customer tastes and preferences,
spending patterns and demographic trends could
cause sales to decline.
Changes in customer preferences, general economic
conditions, discretionary spending priorities, demographic
trends, traffic patterns and the type, number and location
of competing restaurants affect the restaurant industry.
Our sales could be impacted by changes in consumer
preferences in response to dietary concerns, including
preferences regarding items such as calories, sodium,
carbohydrates or fat. These changes could result in
consumers avoiding our menu items in favor of other foods,
and our focus on a limited menu could make the
consequences of a change in consumer preferences more
severe than our competitors may face. Some customers
could also avoid freshly-prepared foods like those we serve,
based on concerns regarding food safety. This may be more
likely to impact us as a result of the widely-publicized food
safety incidents we experienced beginning in the fourth
quarter of 2015.

Our success also depends to a significant extent on
consumer confidence, which is influenced by general
economic conditions and discretionary income levels. Our
average restaurant sales may decline during economic
downturns or periods of uncertainty, which can be caused
by various factors such as high unemployment, increasing
taxes, interest rates, or other changes in fiscal or monetary
policy, high gasoline prices, declining home prices, tight
credit markets or foreign political or economic unrest. Any
material decline in consumer confidence or a decline in
family “food away from home” spending could cause our
sales, operating results, profits, business or financial
condition to decline. If we fail to adapt to changes in
customer preferences and trends, we may lose customers
and our sales may deteriorate.

If we were to experience widespread difficulty
renewing existing leases on favorable terms, our
revenue or occupancy costs could be adversely
affected.
We lease substantially all of the properties on which we
operate restaurants, and some of our leases are due for

2017 Annual Report

15

PART I
(continued)

renewal or extension options in the next several years.
Some leases are subject to renewal at fair market value,
which could involve substantial increases, and a smaller
number expire without any renewal option. While we
currently expect to pursue the renewal of substantially all
of our expiring restaurant leases, any difficulty renewing a
significant number of such leases, or any substantial
increase in rents associated with lease renewals, could
adversely impact us. If we have to close any restaurants
due to difficulties in renewing leases, we would lose
revenue from the affected restaurants and may not be able
to open suitable replacement restaurants. Conversely,
substantial increases in rents associated with lease
renewals would increase our occupancy costs, reducing our
restaurant margins.

Risks Related to our Unique Business
Strategy

We may not persuade customers of the benefits of
paying our prices for higher-quality food.
Our success depends in large part on our ability to
persuade customers that food made with higher-quality
ingredients is worth the prices they will pay at our
restaurants relative to prices offered by some of our
competitors, particularly those in the quick-service
restaurant segment. We may not successfully educate
customers about the quality of our food, and customers
may not care even if they do understand our approach.
That could require us to change our pricing, advertising or
promotional strategies, which could materially and
adversely affect our results of operations or the brand
identity that we have tried to create. Additionally, it will
likely be more difficult for us to persuade the public about
the quality and value of our food following the food-borne
illnesses we experienced in 2015 and the associated
deterioration of customer perceptions about our brand, and
we cannot predict when those perceptions will improve, if
ever. If customers are not persuaded that we offer a good
value for their money, our restaurant transaction counts
could be adversely affected, which would negatively impact
our business results.

Our Food With Integrity philosophy subjects us to
risks.
The principle of Food With Integrity constitutes a significant
part of our business strategy. We use a substantial amount
of ingredients grown or raised with an emphasis on
practices we believe to be more sustainable or responsible
than some conventional practices, and we try to make our
food as fresh as we can. We do, however, face challenges
associated with pursuing Food With Integrity philosophy.
There are higher costs and other risks associated with

16 2017 Annual Report

purchasing ingredients grown or raised with an emphasis
on quality, sustainability and other responsible practices.
Growth rate and weight gain can be lower for chickens,
cattle and pigs that are not fed sub-therapeutic antibiotics
and for cattle that are not given growth hormones. Crops
grown organically or using other responsible practices can
take longer to grow and crop yields can be lower. It can
take longer to identify and secure relationships with
suppliers that are able to meet our criteria for meat, dairy
and produce ingredients. Given the costs associated with
what we believe are more responsible farming practices, as
well as uncertainty regarding demand due to changing
customer perceptions, economic trends and other factors,
many large suppliers have not found it economical to
pursue business in this area. Although all of our restaurants
generally serve meat from animals raised in accordance
with criteria we’ve established in an effort to improve
sustainability and promote animal welfare, we may
experience shortages of meat meeting these criteria due to
suppliers suspending production, market conditions, or
other forces beyond our control. In the first quarter of
2015, through our ongoing auditing of suppliers, we
identified a pork supplier that was not meeting our
standards and suspended purchases of pork from this
supplier. Without this supply, we did not have enough pork
meeting our specifications for all of our restaurants and a
large number of our restaurants were not serving carnitas
for a number of months during 2015. We believe our
comparable restaurant sales were adversely impacted as a
result. We have experienced shortages of beef or chicken
meeting our protocols on a periodic basis over the past
several years as well, resulting in our serving commodity
beef and chicken, which may have a negative impact on
customer perceptions of our brand.

If as a result of any of the factors described above we are
unable to obtain a sufficient and consistent supply of our
preferred ingredients on a cost-effective basis, our food
costs could increase, adversely impacting our operating
margins. These factors could also cause us difficulties in
aligning our brand with our Food With Integrity philosophy,
which could make us less popular among our customers
and cause sales to decline. Our commitment to the Food
With Integrity philosophy may also leave us open to actions
against us or criticism from special interest groups whose
ideas regarding food issues differ from ours or who believe
we should pursue different or additional goals with our
Food With Integrity approach. Any adverse publicity that
results from such criticism could damage our brand and
adversely impact customer traffic at our restaurants. We
may also face adverse publicity or liability for false
advertising claims if suppliers do not adhere to all of the

PART I
(continued)

elements of our Food With Integrity programs, such as
responsible meat protocols, requirements for organic or
sustainable growing methods, our use of non-GMO
ingredients in our food, and similar criteria on which we
base our purchasing decisions. If any such supplier failures
occur and are publicized, our reputation would be harmed
and our sales may be adversely impacted. And our Food
With Integrity message may result in customers holding us
to a higher standard in terms of food safety as well, which
may make it more difficult for us to recover from the food-
borne illness incidents discussed elsewhere in this report,
as customers who believe we failed to uphold our own
standards may decline to return to our restaurants as
frequently or at all.

Additionally, in response to increasing customer awareness
and demand, some competitors have also begun to
advertise their use of meats raised without the use of
antibiotics or growth hormones, dairy products from cows
not treated with rBGH, and other ingredients similar to
those we seek as part of our Food With Integrity
philosophy. If competitors become known for using these
types of higher-quality or more sustainable ingredients, it
could further limit our supply of these ingredients, and may
make it more difficult for us to differentiate Chipotle and
our restaurants, which could adversely impact our
operating results.

Our success may depend on the continued service
and availability of key personnel, and upcoming
changes in our management team may not provide
the benefits we expect.
Our Chairman and Chief Executive Officer Steve Ells
founded our company, has been the principal architect of
our business strategy, and has led our growth from a single
restaurant in 1993 to over 2,400 restaurants today. Jack
Hartung, our Chief Financial Officer, has also served with us
since early in our company’s history, and much of our
growth has occurred under his direction as well.
Additionally, Mark Crumpacker, our Chief Marketing and
Strategy Officer, who has played a role in our marketing
and branding efforts for many years and who has been an
executive officer since joining us full time in January 2009,
has been instrumental in formulating strategies to help us
rebuild our business. Curt Garner, who joined us as Chief
Information Officer in November 2015, has had a key role in
developing and executing our digital/mobile ordering
platforms and strategy, and we believe these and other
technology innovations will become increasingly important
in helping us return to sales and profitability growth. And
Scott Boatwright, who joined us as Chief Restaurant Officer
in May 2017, has led our recent efforts to improve the guest

experience in our restaurants, which we also believe will be
critical in attracting new and lapsed customers.

In December 2017, we announced that we have initiated a
search for a new Chief Executive Officer, and that Mr. Ells
will transition to the role of Executive Chairman of the
Board upon the appointment of a new Chief Executive
Officer. It may be difficult to identify and attract a Chief
Executive Officer candidate who meets our needs and is
able to grasp and implement our unique strategic vision. In
addition, we believe our current executive officers, each of
whom is an at-will employee, are creating a business
strategy and culture at our company that will position us
for future success, and these features may be difficult to
replicate under another management team. If a new Chief
Executive Officer does not successfully continue our
business strategy or implement new strategies to improve
our business, or if the change in Chief Executive Officer or
other factors result in other changes to our senior
leadership team, our growth prospects or future operating
results may be adversely impacted. Additionally, if our
company culture or operations were to deteriorate
following our upcoming change in leadership, we may be
adversely impacted as well.

Regulatory and Legal Risks

Governmental regulation in one or more of the
following areas may adversely affect our existing
and future operations and results, including by
harming our ability to open new restaurants or
increasing our operating costs.

Employment and Immigration Regulations
We are subject to various federal, state and local laws
governing our relationship with and other matters
pertaining to our employees, including wage and hour laws,
requirements to provide meal and rest periods or other
benefits, family leave mandates, requirements regarding
working conditions and accommodations to certain
employees, citizenship or work authorization and related
requirements, insurance and workers’ compensation rules
and anti-discrimination laws. Complying with these rules
subjects us to substantial expense and can be cumbersome,
and can also expose us to liabilities from claims for
non-compliance. For example, a number of lawsuits have
been filed against us alleging violations of federal and state
laws regarding employee wages and payment of overtime,
meal and rest breaks, employee classification, employee
record-keeping and related practices with respect to our
employees. We incur legal costs to defend, and we could
suffer losses from, these and similar cases, and the amount
of such losses or costs could be significant. In addition,
several states and localities in which we operate and the

2017 Annual Report

17

PART I
(continued)

federal government have from time to time enacted
minimum wage increases, changes to eligibility for overtime
pay, paid sick leave and mandatory vacation accruals, and
similar requirements and these changes could increase our
labor costs. Changes in U.S. healthcare laws could also
adversely impact us if they result in significant new welfare
and benefit costs or increased compliance expenses.

We also are audited from time to time for compliance with
work authorization requirements, and audit activity and
federal criminal and civil investigations in this area are
described in more detail above under “Risks Related to
Operating in the Restaurant Industry — Our business could
be adversely affected by increased labor costs or difficulties
in finding and retaining top performing employees,” as well
as in Note 10. “Commitments and Contingencies” in our
consolidated financial statements included in Item 8.
“Financial Statements and Supplementary Data.”
Unauthorized workers may subject us to fines or penalties,
and if any of our workers are found to be unauthorized our
business may be disrupted as we try to replace lost workers
with additional qualified employees. On the other hand, in
the event we wrongfully reject work authorization
documents, or if our compliance procedures are found to
have a disparate impact on a protected class such as a
racial minority or based on the citizenship status of
applicants, we could be found to be in violation of anti-
discrimination laws. We could experience adverse publicity
arising from enforcement activity related to work
authorization compliance, anti-discrimination compliance,
or both, that negatively impacts our brand and may make it
more difficult to hire and keep qualified employees.
Moreover, as described above under “Risks Related to
Operating in the Restaurant Industry — Our business could
be adversely affected by increased labor costs or difficulties
in finding and retaining top performing employees,” the
office of the U.S. Attorney for the District of Columbia and
the U.S. Securities and Exchange Commission investigated
us for possible criminal and civil securities law violations
relating to our employee work authorization compliance
and related disclosures and statements as well. Any
potential future investigations in this area may be
expensive and distracting, and could subject us to fines,
reputational damage, and other liabilities that could be
significant.

performing employees could be impaired. Potential
changes in labor laws, including the possible passage of
legislation designed to make it easier for employees to
unionize, could increase the likelihood of some or all of our
employees being subjected to greater organized labor
influence, and could have an adverse effect on our business
and financial results by imposing requirements that could
potentially increase our costs, reduce our flexibility and
impact our employee culture.

Americans with Disabilities Act and Similar State Laws
We are subject to the U.S. Americans with Disabilities Act,
or ADA, and similar state laws that give civil rights
protections to individuals with disabilities in the context of
employment, public accommodations and other areas. We
have incurred substantial legal fees in connection with
ADA-related complaints in the past, and we may in the
future have to modify restaurants, for example by adding
access ramps or redesigning certain architectural features,
to provide service to or make reasonable accommodations
for disabled persons under these laws. The expenses
associated with these modifications, or any damages, legal
fees and costs associated with litigating or resolving claims
under the ADA or similar state laws, could be material.

Nutrition and Food Regulation
In recent years, there has been an increased legislative,
regulatory and consumer focus at the federal, state and
municipal levels on the food industry including nutrition
and advertising practices. Restaurants operating in the
quick-service and fast-casual segments have been a
particular focus. For example, the State of California,
New York City and a number of other jurisdictions around
the U.S. have adopted regulations requiring that chain
restaurants include calorie information on their menu
boards or make other nutritional information available, and
nation-wide nutrition disclosure requirements included in
the U.S. health care reform law are scheduled to go into
effect on May 7, 2018. These nutrition disclosure
requirements may increase our expenses or slow
customers as they move through the line, decreasing our
throughput. These initiatives may also change customer
buying habits in a way that adversely impacts our sales,
and could subject us to liability if we make errors in
calculating or disclosing the required information.

Additionally, while we do not currently have any unionized
employees, union organizers have engaged in efforts to
organize our employees and those of other restaurant
companies. If a significant portion of our employees were
to become union organized, our labor costs could increase
and our efforts to maintain a culture appealing only to top

Privacy/Cybersecurity
We are required to collect and maintain personal
information about our employees, and we collect
information about customers as part of some of our
marketing programs as well. The collection and use of such
information is regulated at the federal and state levels, and

18 2017 Annual Report

PART I
(continued)

by the European Union and its member states, and the
regulatory environment related to information security and
privacy is evolving and increasingly demanding. Significant
new privacy regulation in the European Union is further
described above under “Risks Related to our Plans to
Improve Our Sales and Profitability and Restore our
Economic Model — Our expansion into international markets
has been limited, and may present increased risks due to
lower customer awareness of our brand, our unfamiliarity
with those markets and other factors.” At the same time,
we are relying increasingly on cloud computing and other
technologies that result in third parties holding significant
amounts of customer or employee information on our
behalf. If our security and information systems or those of
outsourced third party providers we use to store or process
such information are compromised, or if we or such third
parties otherwise fail to comply with these laws and
regulations, we could face litigation and the imposition of
penalties that could adversely affect our financial
performance. Our reputation as a brand or as an employer
could also be adversely affected from these types of
security breaches or regulatory violations, which could
impair our sales or ability to attract and keep qualified
employees. Additional risks related to cybersecurity are
described below under “General Business Risks-We may be
harmed by security risks we face in connection with our
electronic processing and transmission of confidential
customer and employee information.”

Local Licensure, Zoning and Other Regulation
Each of our restaurants is also subject to state and local
licensing and regulation by health, alcoholic beverage,
sanitation, food and workplace safety and other agencies.
We may experience material difficulties or failures in
obtaining the necessary licenses or approvals for new
restaurants, which could delay planned restaurant
openings. In addition, stringent and varied requirements of
local regulators with respect to zoning, land use and
environmental factors could delay or prevent development
of new restaurants in particular locations.

Environmental Laws
We are subject to federal, state and local environmental
laws and regulations concerning the discharge, storage,
handling, release and disposal of hazardous or toxic
substances, as well as local ordinances restricting the types
of packaging we can use in our restaurants. We have not
conducted a comprehensive environmental review of our
properties or operations. We have, however, conducted
investigations of some of our properties and identified
contamination caused by third-party operations. We believe
any such contamination has been or should be addressed

by the third party. If the relevant third party does not
address or has not addressed the identified contamination
properly or completely, then under certain environmental
laws, we could be held liable as an owner or operator to
address any remaining contamination, sometimes without
regard to whether we knew of, or were responsible for, the
release or presence of hazardous or toxic substances. Any
such liability could be material. Further, we may not have
identified all of the potential environmental liabilities at our
properties, and any such liabilities could have a material
adverse effect on our operations or results of operations.
We also cannot predict what environmental laws will be
enacted in the future, how existing or future environmental
laws will be administered or interpreted, or the amount of
future expenditures that we may need to make to comply
with, or to satisfy claims relating to, environmental laws.

Other Aspects of Regulatory Risk
From time to time we are the target of litigation in
connection with various laws and regulations that cover our
business. Much of this litigation occurs in California even
though currently only about 17% of our restaurants are
located there. As we continue to expand in California, or if
we are not able to effectively manage the increased
litigation risks and expenses we have experienced in
California, our business may be adversely impacted to a
greater extent than if we did not operate in, or minimized
our operations in, California.

Because we do not franchise, the costs of compliance and
other risks associated with government regulation of our
business, as described above, may be more pronounced for
us than for restaurant companies at which some or all of
these risks are borne by franchisees or other operating
contractors.

Regulatory actions and litigation related to food
safety incidents that impacted us beginning in the
fourth quarter of 2015 may adversely impact us.
We are facing an ongoing government investigation into
food safety incidents and related compliance measures, as
described in Note 10. “Commitments and Contingencies” in
our consolidated financial statements included in Item 8.
“Financial Statements and Supplementary Data.” We also
have received numerous claims from customers who were
or claim to have been impacted by food safety incidents
associated with our restaurants, and a number of those
claimants have filed lawsuits against us. We are
cooperating in the government investigation and with many
of the customers impacted by these incidents, but will
continue to incur significant legal and other costs in doing
so. We have also been sued in a shareholder class action

2017 Annual Report

19

PART I
(continued)

lawsuit in connection with the decline in our stock price in
the wake of the food safety incidents, and defending this
lawsuit will subject us to significant legal
expense. Additionally, the liabilities from customer claims
and related litigation expenses may be greater than we
anticipate due to the uncertainties inherent in litigation. All
of these costs, liabilities and expenses will negatively
impact our operating results. Moreover, publicity regarding
any legal proceedings related to food safety incidents may
increase or prolong consumer awareness of the incidents
or otherwise negatively impact perceptions of our brand,
which may hamper our ability to regain lost sales or attract
new customers to our restaurants.

We could be party to litigation that could adversely
affect us by distracting management, increasing our
expenses or subjecting us to material money
damages and other remedies.
We’re subject to numerous claims alleging violations of
federal and state laws regarding workplace and
employment matters, including wages, work hours,
overtime, vacation and family leave, discrimination,
wrongful termination, and similar matters, and we could
become subject to class action or other lawsuits related to
these or different matters in the future. Our customers also
occasionally file complaints or lawsuits against us alleging
that we’re responsible for some illness or injury they
suffered at or after a visit to our restaurants, or that we
have problems with food quality, operations or our food
related disclosure or advertising practices. See
“— Governmental regulation in one or more of the following
areas may adversely affect our existing and future
operations and results, including by harming our ability to
open new restaurants or increasing our operating costs”
above, for additional discussion of these types of claims.
From time to time, we also face claims alleging that
technology we use in our business infringes patents held by
third parties. In addition, the restaurant industry has been
subject to a growing number of claims based on the
nutritional content of food products sold and disclosure and
advertising practices. We have been subject to a number of
these actions and may be subject to additional actions of
this type in the future. We are also undergoing government
investigations and have been sued in a shareholder class
action lawsuit, each as described elsewhere in this report,
including in Note 10. “Commitments and Contingencies” in
our consolidated financial statements included in Item 8.
“Financial Statements and Supplementary Data,” and these
matters may be particularly expensive to defend and/or
resolve.

have become more visible to potential plaintiffs and their
lawyers, particularly in California. Regardless of whether
any claims against us are valid, or whether we’re ultimately
held liable for such claims, they may be expensive to
defend and may divert time and money away from our
operations and hurt our performance. A significant
judgment for any claims against us could materially and
adversely affect our financial condition or results of
operations. Any adverse publicity resulting from these
allegations, whether directed at us or at fast casual or
quick-service restaurants generally, may also materially
and adversely affect our reputation or prospects, which in
turn could adversely affect our results.

General Business Risks
We may be harmed by security risks we face in
connection with our electronic processing and
transmission of confidential customer and employee
information.
We accept electronic payment cards for payment in our
restaurants. During 2017 approximately 73% of our sales
were attributable to credit and debit card transactions, and
credit and debit card usage could continue to increase. A
number of retailers have experienced actual or potential
security breaches in which credit and debit card
information may have been stolen, including a number of
highly publicized incidents with well-known retailers in
recent years.

In April 2017, our information security team detected
unauthorized activity on the network that supports
payment processing for our restaurants, and immediately
began an investigation with the help of leading computer
security firms. We also self-reported the issue to payment
card processors and law enforcement. Our investigation
detected malware designed to access payment card data
from cards used at point-of-sale devices at most Chipotle
restaurants, primarily in the period from March 24, 2017
through April 18, 2017. We have removed the malware from
our systems and continue to work to enhance our security
measures. However, we expect to be subject to payment
card network assessments and may incur regulatory fines
or penalties, for which our insurance coverage is limited,
and as a result, we recorded a $30 million estimated
liability. We may ultimately be subject to liabilities greater
than or less than the amount accrued. See Note 10.
“Commitments and Contingencies” included in Item 8.
“Financial Statements and Supplementary Data,” for
further discussion of potential liabilities and pending
litigation filed against us in connection with this incident.

We believe the number of many of the foregoing types of
claims has increased as our business has grown and we

We may be subject to additional lawsuits or other
proceedings in the future relating to the incident or any

20 2017 Annual Report

PART I
(continued)

future incidents in which payment card data may have been
compromised. Proceedings related to theft of credit or
debit card information may be brought by payment card
providers, banks and credit unions that issue cards,
cardholders (either individually or as part of a class action
lawsuit) and federal and state regulators. Any such
proceedings could distract our management from running
our business and cause us to incur significant unplanned
losses and expenses. Consumer perception of our brand
could also be negatively affected by these events, which
could further adversely affect our results and prospects.

We also are required to collect and maintain personal
information about our employees, and we collect
information about customers as part of some of our
marketing programs as well. The collection and use of such
information is regulated at the federal and state levels, and
by the European Union and its member states, and the
regulatory environment related to information security and
privacy is increasingly demanding. For example, a new
privacy regulation in the European Union called the General
Data Protection Regulation, or GDPR, is scheduled to
become effective in May 2018 and requires companies to
meet new requirements regarding the handling of personal
data, including its use, protection and the ability of persons
whose data is stored to correct or delete such data about
themselves. Failure to meet GDPR requirements could
result in penalties of up to 4% of worldwide revenue. At the
same time, we are relying increasingly on cloud computing
and other technologies that result in third parties holding
significant amounts of customer or employee information
on our behalf. We have seen an increase over the past
several years in the frequency and sophistication of
attempts to compromise the security of several of these
systems. If the security and information systems that we or
our outsourced third party providers use to store or
process such information are compromised or if we, or such
third parties, otherwise fail to comply with these laws and
regulations, we could face litigation and the imposition of
penalties that could adversely affect our financial
performance. Our reputation as a brand or as an employer
could also be adversely affected from these types of
security breaches or regulatory violations, which could
impair our sales or ability to attract and keep qualified
employees.

If we experience a significant failure in or
interruption of certain key information technology
systems, our business could be adversely impacted.
We use a variety of applications and systems to securely
manage the flow of information within each of our
restaurants, and within our centralized corporate
infrastructure. The services available within our systems

and applications include restaurant operations, supply
chain, inventory, scheduling, training, human capital
management, financial tools, and data protection services.
The restaurant structure is based primarily on a
point-of-sale system that operates locally at the restaurant
and is integrated with other functions necessary to
restaurant operations. It records sales transactions,
receives out of store orders, and authorizes, batches, and
transmits credit card transactions. The system also allows
employees to enter time clock information and to produce
a variety of management reports. Select information that is
captured from this system at each restaurant is collected in
the central corporate infrastructure, which enables
management to continually monitor operating results. Our
ability to efficiently and effectively manage our business
depends significantly on the reliability and capacity of
these and other systems, and our operations depend
substantially on the availability of our point-of-sale system
and related networks and applications. These systems may
be vulnerable to attacks or outages from security breaches,
viruses and other disruptive problems, as well as from
physical theft, fire, power loss, telecommunications failure
or other catastrophic events. Any failure of these systems
to operate effectively, whether from security breaches,
maintenance problems, upgrades or transitions to new
platforms, or other factors could result in interruptions to
or delays in our restaurant or other operations, adversely
impacting the restaurant experience for our guests or
negatively impacting our ability to manage our business. If
our information technology systems fail and our redundant
systems or disaster recovery plans are not adequate to
address such failures, or if our business interruption
insurance does not sufficiently compensate us for any
losses that we may incur, our revenues and profits could be
reduced and the reputation of our brand and our business
could be materially adversely affected. In addition,
remediation of any problems with our systems could result
in significant, unplanned expenses.

Negative publicity relating to our restaurants or our
company could adversely impact our reputation,
which may significantly harm us.
We depend significantly on customers’ perception of and
connection to our brand. In addition to the damage to our
reputation from well-publicized food safety incidents during
2015 as described elsewhere in this report, we may
experience negative publicity from time to time relating to
food quality, customer complaints, restaurant facilities,
advertising and other business practices, litigation alleging
injuries or improper employee practices, government
investigations or other regulatory issues, our suppliers’
potential failure to adhere to elements of our Food With

2017 Annual Report 21

PART I
(continued)

Integrity protocols, other issues regarding the integrity of
our suppliers’ food processing, employee relationships,
customer or employee data breaches, or other matters,
regardless of whether the allegations are valid or whether
we are held to be responsible. The negative impact of
adverse publicity relating to one or more restaurants or
any of the foregoing topics may extend far beyond the
restaurant(s) involved and affect many more, or even all, of
our restaurants. The considerable expansion in the use of
social media over recent years can further amplify any
negative publicity that may be generated. A similar risk
exists with respect to unrelated food service businesses, if
consumers associate those businesses with our own
operations. And even publicity that could reasonably be
viewed as positive may have adverse consequences on our
business. For example, positive developments in regards to
the food safety issues that have impacted us might have
the effect of continuing or increasing customer awareness
of the issue.

The adverse impact of publicity on customers’ perception
of us could have a further negative impact on our sales. If
the impact of any such publicity is particularly long-lasting,
the value of our brand may suffer and our ability to grow
could be diminished. Additionally, negative publicity about
our employment practices may affect our reputation
among employees and potential employees, which could
make it more difficult for us to attract and retain top
performing employees. That could adversely impact the
quality of the customer experience we can offer and our
operations generally, and may increase our labor costs as
well.

Our insurance coverage and self-insurance reserves
may not cover future claims.
We maintain various insurance policies for employee
health, workers’ compensation, general liability, property
damage and auto liability. We are self-insured for our
employee health plans but have third party insurance
coverage to limit exposure for both individual and
aggregate claim costs. We are also responsible for losses
up to a certain limit for workers’ compensation, general
liability, property damage, employment practices liability
and auto liability insurance.

For policies under which we are responsible for losses, we
record a liability that represents our estimated cost of
claims incurred and unpaid as of the balance sheet date.
Our estimated liability is not discounted and is based on a
number of assumptions and factors, including historical
trends, actuarial assumptions and economic conditions, and
is closely monitored and adjusted when warranted by
changing circumstances. Our history of claims experience is

22 2017 Annual Report

relatively short and our significant growth during most of
our operating history could affect the accuracy of
estimates based on historical experience. If a greater
amount of claims occurs compared to what we estimated,
or if medical costs increase beyond what we expected, our
accrued liabilities might not be sufficient and we may be
required to record additional expense. Unanticipated
changes may also produce materially different amounts of
expense than reported under these programs, which could
adversely impact our results of operations. It is also
possible that losses covered under one or more of our
insurance policies may exceed the applicable policy limits,
which would subject us to unexpected additional liabilities
in an amount that could be significant enough to have a
material adverse effect on our financial position.

We may not be able to adequately protect our
intellectual property, which could harm the value of
our brands and adversely affect our business.
Our ability to successfully implement our business plan
depends in part on our ability to further build brand
recognition using our trademarks, service marks, trade
dress and other proprietary intellectual property, including
our name and logos, our Food With Integrity strategy and
the unique ambience of our restaurants. If our efforts to
protect our intellectual property are inadequate, or if any
third party misappropriates or infringes on our intellectual
property, either in print or on the internet, the value of our
brands may be harmed, which could have a material
adverse effect on our business and might prevent our
brands from achieving or maintaining market acceptance.
We are aware of restaurants in foreign jurisdictions using
menu items, logos and other branding that we believe are
based on our intellectual property, and our ability to halt
these restaurants from using these elements may be
limited in jurisdictions in which we are not operating. This
could have an adverse impact on our ability to successfully
expand into other jurisdictions in the future. We may also
encounter claims from prior users of similar intellectual
property in areas where we operate or intend to conduct
operations. This could harm our image, brand or
competitive position and cause us to incur significant
penalties and costs.

Our quarterly results may fluctuate significantly
and could fall below the expectations of securities
analysts and investors due to various factors.
Our quarterly results may fluctuate significantly and could
fail to meet the expectations of securities analysts and
investors because of factors including:

• changes in comparable restaurant sales and customer
visits, including as a result of perceptions about our

PART I
(continued)

brand, competition, changes in consumer confidence or
discretionary spending, and other factors listed in these
Risk Factors;

• additional negative publicity about the occurrence of
food-borne illnesses, the ingredients we use, or other
problems at our restaurants;

• fluctuations in supply costs, particularly for our most
significant food items, including increased ingredient
costs as a result of changes we’ve made to enhance the
safety of our food;

• labor availability and wages of restaurant management
and crew, as well as temporary fluctuations in labor
costs as a result of large-scale changes in workforce;
• increases in marketing or promotional expenses as we
introduce new marketing programs and strategies, or
increased spending on existing marketing programs in
an effort to drive sales;

• our ability to raise menu prices without adversely

impacting customer traffic, particularly if food and labor
costs were to increase;

• the timing of new restaurant openings and related

revenues and expenses;

• operating costs at newly opened restaurants, which are
often materially greater during the first several months
of operation;

• the impact of inclement weather, natural disasters and
other calamities, such as freezes that have impacted
produce crops and droughts that have impacted
livestock and the supply of certain meats;

• variations in general economic conditions, including the

impact of declining interest rates on our interest
income;

• increases in infrastructure costs;
• litigation, settlement costs and related legal expense;
• tax expenses, impairment charges and non-operating

costs; and

• potential distraction or unusual expenses associated

with our expansion into international markets or
initiatives to expand new concepts.

Seasonal factors also cause our results to fluctuate from
quarter to quarter. Our restaurant sales are typically lower
during the winter months and the holiday season and
during periods of inclement weather (because fewer people
are eating out) and higher during the spring, summer and
fall months (for the opposite reason). Our restaurant sales
will also vary as a result of the number of trading days—that
is, the number of days in a quarter when a restaurant is
open.

As a result of these factors, results for any one quarter are
not necessarily indicative of results to be expected for any

other quarter or for any year. Average restaurant sales or
comparable restaurant sales in any particular future period
may decrease. In the future, operating results may fall
below the expectations of securities analysts and investors,
which could cause our stock price to fall. This risk may
continue to be a greater concern during 2018, as analyst
and investor expectations for improvements in our
business results may be higher than the level of results we
actually achieve.

Additionally, we believe the market price of our common
stock, which has generally traded at a higher price-earnings
ratio than stocks of most or all of our peer companies, has
typically reflected high market expectations for our future
operating results. The trading market for our common
stock has been volatile at times as well, including during the
recent past as a result of adverse publicity events. As a
result, if we fail to meet market expectations for our
operating results in the future, any resulting decline in the
price of our common stock could be significant.

Our anti-takeover provisions may delay or prevent a
change in control of us, which could adversely
affect the price of our common stock.
Certain provisions in our corporate documents and
Delaware law may delay or prevent a change in control of
us, which could adversely affect the price of our common
stock. Our amended and restated certificate of
incorporation and amended and restated bylaws contain
some provisions that may make the acquisition of control
of us without the approval of our board of directors more
difficult, including provisions relating to the nomination,
election and removal of directors, the structure of the
board of directors and limitations on actions by our
shareholders. In addition, Delaware law also imposes some
restrictions on mergers and other business combinations
between us and any holder of 15% or more of our
outstanding common stock. Any of these provisions may
discourage a potential acquirer from proposing or
completing a transaction that may have otherwise
presented a premium to our shareholders.

ITEM 1B. UNRESOLVED STAFF
COMMENTS

None.

2017 Annual Report 23

PART I
(continued)

ITEM 2. PROPERTIES

As of December 31, 2017, there were 2,408 restaurants
operated by Chipotle and our consolidated subsidiaries,
2,400 of which were Chipotle restaurants. The table below
sets forth the locations (by state or country) of all
restaurants in operation.

Alabama

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Missouri

Mississippi

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

24 2017 Annual Report

14

79

6

408

76

24

6

20

149

47

8

134

36

12

26

18

10

5

84

53

35

62

38

1

3

9

27

7

57

7

138

54

1

174

12

30

82

Rhode Island

South Carolina

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

Canada

France

Germany

United Kingdom

Total

7

22

20

195

12

1

97

39

5

19

2

24

6

1

6

2,408

We categorize our restaurants as end-caps (at the end of a
line of retail outlets), in-lines (in a line of retail outlets),
free-standing, or other. Of our restaurants in operation as
of December 31, 2017, we had 1,523 end-cap locations, 391
free-standing units, 356 in-line locations, and 138 other
locations. The average restaurant size is about 2,500
square feet and seats about 56 people. Many of our
restaurants also feature outdoor patio space.

Our main office is located at 1401 Wynkoop Street, Suite
500, Denver, Colorado, 80202 and our telephone number is
(303) 595-4000. We lease our main office and substantially
all of the properties on which we operate restaurants. For
additional information regarding the lease terms and
provisions, see Note 8. “Leases” in our consolidated
financial statements included in Item 8. “Financial
Statements and Supplementary Data.”

We own 17 properties and operate restaurants on all of
them.

ITEM 3. LEGAL PROCEEDINGS

For information regarding legal proceedings, see Note 10.
“Commitments and Contingencies” in our consolidated
financial statements included in Item 8. “Financial
Statements and Supplementary Data.”

ITEM 4. MINE SAFETY
DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES

The following table describes the per share range of high and low sales prices for shares of our common stock for the
quarterly periods indicated, as reported by the New York Stock Exchange (“NYSE”). Our common stock trades on the NYSE
under the symbol “CMG.”

2016

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2017

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

High

Low

$ 542.50

$ 399.14

$ 473.17

$384.77

$ 444.13

$ 386.10

$440.00

$352.96

High

Low

$453.08

$ 372.87

$499.00

$ 410.98

$ 419.73

$ 295.11

$ 333.33

$263.00

As of February 1, 2018, there were approximately 948 holders of our common stock, as determined by counting our record
holders and the number of participants reflected in a security position listing provided to us by the Depository Trust
Company. Because such “DTC participants” are brokers and other institutions holding shares of our common stock on
behalf of their customers, we do not know the actual number of unique shareholders represented by these record holders.

Purchases of Equity Securities by the Issuer
The table below reflects shares of common stock we repurchased during the fourth quarter of 2017.

Total Number of
Shares Purchased

Average Price Paid
Per Share

Total
Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs(1)

Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Plans or Programs(2)

October

81,953

$ 303.31

81,953

$170,567,974

Purchased 10/1 through 10/31

November

91,427

$ 279.97

91,427

$ 144,971,147

Purchased 11/1 through 11/30

December

86,775

$307.66

86,775

$ 118,274,235

Purchased 12/1 through 12/31

Total

260,155

$296.56

260,155

$ 118,274,235

(1) Shares were repurchased pursuant to a $100 million repurchase program announced on May 23, 2017.
(2) This column includes $100 million in additional authorized repurchases announced on October 24, 2017. Our authorized repurchase

programs have no expiration date, but may be modified, suspended, or discontinued at any time.

2017 Annual Report 25

PART II
(continued)

Dividend Policy
We are not required to pay any dividends and have not declared or paid any cash dividends on our common stock. We intend
to continue to retain earnings for use in the operation and expansion of our business and to repurchase shares of common
stock (subject to market conditions), and therefore do not anticipate paying any cash dividends on our common stock in the
foreseeable future.

COMPARISON OF CUMULATIVE TOTAL RETURN

The following graph compares the cumulative annual stockholders return on our common stock from December 31, 2012
through December 31, 2017 to that of the total return index for the S&P 500 and the S&P 500 Restaurants Index assuming
an investment of $100 on December 31, 2012. In calculating total annual stockholder return, reinvestment of dividends, if
any, is assumed. The indices are included for comparative purposes only. They do not necessarily reflect management’s
opinion that such indices are an appropriate measure of the relative performance of our common stock. This graph is not
“soliciting material,” is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by
reference in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such
filing.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Chipotle Mexican Grill, Inc, the S&P 500 Index, and the S&P 500 Restaurants Index

$250

$200

$150

$100

$50

$0

12/12

12/13

12/14

12/15

12/16

12/17

Chipotle Mexican Grill, Inc

S&P 500

S&P 500 Restaurants

*$100 invested on 12/31/12 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

Source data: S&P Capital IQ

26 2017 Annual Report

PART II
(continued)

ITEM 6. SELECTED FINANCIAL DATA

Our selected consolidated financial data shown below should be read together with Item 7. “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and respective notes
included in Item 8. “Financial Statements and Supplementary Data.” The data shown below are not necessarily indicative of
results to be expected for any future period (dollar and share amounts in thousands, except per share data).

Statement of Income:

Revenue

Year ended December 31,

2017

2016

2015

2014

2013

$4,476,412 $3,904,384 $ 4,501,223 $ 4,108,269

$3,214,591

Food, beverage and packaging costs

1,535,428

1,365,580

1,503,835

1,420,994

1,073,514

Labor costs

Occupancy costs

Other operating costs

General and administrative expenses

Depreciation and amortization

Pre-opening costs

Loss on disposal of assets

Total operating expenses

Income from operations

Interest and other income, net

Income before income taxes

Provision for income taxes

Net income

Earnings per share

Basic

Diluted

1,205,992

1,105,001

1,045,726

904,407

739,800

327,132

651,644

296,388

163,348

12,341

13,345

293,636

641,953

276,240

146,368

17,162

23,877

262,412

514,963

250,214

130,368

16,922

13,194

230,868

434,244

199,107

347,401

273,897

203,733

110,474

96,054

15,609

6,976

15,511

6,751

4,205,618

3,869,817

3,737,634

3,397,469

2,681,871

270,794

34,567

763,589

710,800

532,720

4,949

275,743

(99,490)

4,172

6,278

3,503

1,751

38,739

769,867

714,303

534,471

(15,801)

(294,265)

(268,929)

(207,033)

$ 176,253 $

22,938 $ 475,602 $ 445,374

$ 327,438

$

$

6.19 $

6.17 $

0.78 $

15.30 $

0.77 $

15.10 $

14.35

14.13

$

$

10.58

10.47

Weighted average common shares outstanding

Basic

Diluted

28,491

28,561

29,265

29,770

31,092

31,494

31,038

31,512

30,957

31,281

Balance Sheet Data:

Total current assets

Total assets

Total current liabilities

Total liabilities

2017

2016

2015

2014

2013

December 31,

$ 629,535 $ 522,374 $ 814,647

$ 859,511

$ 653,095

$2,045,692 $2,026,103 $2,725,066 $ 2,527,317

$1,996,068

$ 323,893 $ 281,793 $ 279,942

$ 245,710

$ 199,228

$ 681,247 $ 623,610 $ 597,092

$ 514,948

$ 457,780

Total shareholders’ equity

$ 1,364,445 $1,402,493 $ 2,127,974 $2,012,369

$ 1,538,288

2017 Annual Report 27

PART II
(continued)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with Item 6. “Selected Financial Data” and our consolidated financial
statements and related notes included in Item 8. “Financial Statements and Supplementary Data.” The discussion contains
forward-looking statements involving risks, uncertainties and assumptions that could cause our results to differ materially
from expectations. Factors that might cause such differences include those described in Item 1A. “Risk Factors” and
elsewhere in this report.

Overview
Steve Ells, our founder, Chairman and CEO, started Chipotle with the idea that food served fast did not have to be a typical
fast food experience. Today, we continue to offer a focused menu of burritos, tacos, burrito bowls, and salads made from
fresh, high-quality raw ingredients, prepared using classic cooking methods and served in an interactive style allowing
people to get what they want. We seek out extraordinary ingredients that are not only fresh, but that are raised responsibly,
with respect for the animals, land, and people who produce them. We prepare our food using real, wholesome ingredients
and without the use of artificial colors or flavors typically found in fast food. Chipotle opened with a single restaurant in
Denver in 1993 and as of December 31, 2017, we operated 2,408 restaurants.

Sales. Our sales and profitability improved during 2017 as compared to 2016. Comparable restaurant sales increased 6.4%
as a result of an increase in the average check, including a 1.2% benefit from menu price increases implemented in about
500 restaurants during the second quarter of 2017 and 900 restaurants during the fourth quarter of 2017. Comparable
restaurant sales represent the change in period-over-period sales for restaurants beginning in their 13th full calendar month
of operation. Average restaurant sales were $1.940 million as of December 31, 2017, increasing from $1.868 million as of
December 31, 2016. We define average restaurant sales as the average trailing 12-month sales for restaurants in operation
for at least 12 full calendar months. We expect comparable restaurant sales increases in the low single digits for the full year
2018, including the benefit from extending menu price increases to almost 950 additional restaurants in January 2018.
Sales growth from new restaurant openings, however, will be lower in 2018 than in the past due to our planned decrease in
new restaurant openings during the year, as discussed below under “Restaurant Development.”

During 2017, we invested in improving our digital platforms, including significant improvements to our mobile application
and online ordering platform, and equipping select restaurants with an upgraded second make line dedicated to fulfilling
out-of-restaurant orders. Sales from out-of-restaurant orders represented 8.3% of our revenue during the year ended
December 31, 2017, up from 6.4% of revenue during the year ended December 31, 2016. Additionally, in September 2017 we
introduced an all-natural queso, which was ordered in approximately 10% of our transactions in January 2018.

Restaurant Operating Costs. During the full year 2017, our restaurant operating costs (food, beverage and packaging; labor;
occupancy; and other operating costs) as a percent of revenue decreased 4.1% compared to the full year 2016. The
decrease was attributable to sales leverage, including the benefit of the menu price increases, lower marketing and
promotional spend as a percent of revenue, and labor efficiencies, partially offset by higher wages paid to crew and
managers.

Restaurant Development. As of December 31, 2017, we had 2,408 restaurants in operation, including 2,363 Chipotle
restaurants throughout the United States, with an additional 37 international Chipotle restaurants and eight non-Chipotle
restaurants that were consolidated into our financial results. We opened 183 restaurants in 2017, including two relocations,
and closed 23 additional restaurants (including 15 ShopHouse Southeast Asian Kitchen restaurants). We intend to open
between 130 and 150 restaurants for the full year 2018, as we focus our resources on improving our operations and
delivering an outstanding experience to every one of our guests. Most of our 2018 restaurant openings are planned in
markets that already have a Chipotle presence established.

Tax Law Changes. In December 2017, the Tax Cuts and Jobs Act was signed into law, and among other changes, the Act
lowered the U.S. corporate income tax rate from 35% to 21% beginning in 2018. As a result, we recognized a $6.0 million
benefit in our provision for income taxes related to the remeasurement of our deferred tax position at the lower rate.

28 2017 Annual Report

PART II
(continued)

We expect our 2018 annual effective tax rate to be in the range of 30% to 31%, which includes an underlying effective tax
rate of 27% to 28%, and around 3% to 4% related to stock awards. As discussed in Note 1. “Description of Business and
Summary of Significant Accounting Policies” included in Item 8. “Financial Statements and Supplementary Data,” the
adoption of ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718)” will subject our tax rate to quarterly
volatility from the effect of stock award exercise and vesting activities. Additionally, we have deferred tax assets related to
outstanding non-vested stock awards that contain market conditions. If market conditions are not achieved, then we may
not realize the benefit of these deferred tax assets, which would result in a higher effective tax rate in future periods. We
believe the stock awards granted in 2015 and 2016 that contain market conditions will increase our tax rate in the first and
fourth quarters of 2018, respectively.

During 2018, we expect to use a portion of the savings from the lower federal corporate income tax rate to provide
enhanced benefits to our employees, including by making all restaurant managers and crew eligible for a one-time cash
bonus, awarding one-time stock bonuses to a broad group of staff employees, and enhancing a number of other benefits
such as parental leave and short-term disability. Additionally, we will use a portion of the savings by investing in our existing
restaurants. We expect these initiatives to increase labor, other operating, and general and administrative expenses, and to
result in higher capital expenditures than we have typically incurred.

Management and Governance. During the second quarter of 2017, we announced that we hired Scott Boatwright as Chief
Restaurant Officer, and Scott has assumed oversight of operations for all North American Chipotle restaurants. In the
fourth quarter of 2017, we announced that Steve Ells, our Chairman and CEO, will become Executive Chairman following the
completion of a search to identify a new CEO. For risks associated with our planned installation of a new CEO, see “Risks
Related to our Unique Business Strategy — Our success may depend on the continued service and availability of key
personnel, and upcoming changes in our management team may not provide the benefits we expect” in Item 1A. “Risk
Factors.”

Data Security Incident. In April 2017, we detected malware on the network that supports payment processing for our
restaurants, and subsequently determined that the malware searched for track data, which may include cardholder name,
card number, expiration date, and internal verification codes. We removed the malware from our systems and continue to
evaluate ways to enhance our security measures. See “General Business Risks — We may be harmed by security risks we face
in connection with our electronic processing and transmission of confidential customer and employee information” in
Item 1A. “Risk Factors,” as well as Note 10. “Commitments and Contingencies” in Item 8. “Financial Statements and
Supplementary Data,” for further discussion of the payment card security incident and related legal proceedings.

During the year ended December 31, 2017, we recorded a liability of $30.0 million ($18.2 million after tax), or $0.64 per basic
and diluted earnings per share, as an estimate of potential losses associated with anticipated claims and assessments by
payment card networks. We may ultimately be subject to liabilities greater or less than the amount accrued.

Restaurant Openings, Relocations and Closures
The following table details restaurant unit data for the years indicated.

Beginning of period

Openings

Relocations/closures

ShopHouse closures

Total restaurants at end of period

Year ended
December 31,

2017

2016

2015

2,250

2,010

1,783

183

(10)

(15)

243

229

(2)

(3)

—

2,408

2,250

2,010

2017 Annual Report 29

PART II
(continued)

Results of Operations
Our results of operations as a percentage of revenue and period-over-period variances are discussed in the following
section. As we open more restaurants and hire more employees, our aggregate restaurant operating costs and depreciation
and amortization generally increase.

Revenue

Revenue

Average restaurant sales

Year ended
December 31,

2017

2016

2015

(dollars in millions)

%
increase
2017 over
2016

%
increase/
(decrease)
2016 over
2015

$4,476.4 $3,904.4

$4,501.2

$ 1.940 $ 1.868

$ 2.424

14.7%

3.9%

(13.3%)

(22.9%)

Comparable restaurant sales increases (decreases)

6.4% (20.4%)

0.2%

Number of restaurants as of the end of the year

Number of restaurants opened in the year

2,408

183

2,250

243

2,010

229

7.0%

11.9%

The significant factors contributing to the increase in revenue in 2017 were new restaurant openings and comparable
restaurant sales increases. Revenue from restaurants not yet in the comparable restaurant base contributed $338.8 million
to the revenue increase, of which $149.1 million was attributable to restaurants opened in 2017, and comparable restaurant
sales increased $233.2 million. The increase in comparable restaurant sales was attributable to an increase in average
check, including a 1.2% benefit from menu price increases.

In 2016, the decrease in revenue was attributable to a decline in comparable restaurant sales, which we attribute primarily
to the impact of food safety incidents beginning in late 2015, partially offset by new restaurant openings. Comparable
restaurant sales decreased $914.7 million while revenue from restaurants not yet in the comparable restaurant base
contributed $323.9 million, of which $156.2 million was attributable to restaurants opened in 2016.

Food, Beverage and Packaging Costs

Year ended
December 31,

2017

2016

2015

(dollars in millions)

%
increase
2017
over
2016

%
decrease
2016
over
2015

Food, beverage and packaging

As a percentage of revenue

$1,535.4

$1,365.6

$1,503.8

12.4%

(9.2%)

34.3%

35.0%

33.4%

Food, beverage and packaging costs decreased as a percentage of revenue in 2017 primarily due to the benefit of the menu
price increases taken in select restaurants during the second and fourth quarters of 2017. Food, beverage and packaging
costs also benefitted from bringing the preparation of lettuce and bell peppers back into our restaurants after using pre-cut
produce during portions of 2016, and cost savings initiatives resulting in lower prices and usage of paper and packaging
products. These decreases were partially offset by higher avocado prices. We expect food, beverage and packaging costs as
a percentage of revenue in 2018 to be lower than 2017 due to the benefit of menu price increases, and our expectations for
stable commodity prices.

Food, beverage and packaging costs increased as a percentage of revenue in 2016 primarily due to increased waste and
costs related to new food safety procedures as well as higher avocado prices, partially offset by relief in beef prices. In
dollar terms, food, beverage and packaging costs decreased in 2016 due to lower sales.

30 2017 Annual Report

PART II
(continued)

Labor Costs

Labor costs

As a percentage of revenue

Year ended
December 31,

2017

2016

2015

(dollars in millions)

%
increase
2017 over
2016

%
increase
2016 over
2015

$1,206.0

$1,105.0

$1,045.7

9.1%

5.7%

26.9%

28.3%

23.2%

Labor costs as a percentage of revenue decreased during the year ended December 31, 2017 due primarily to increased
crew efficiency, including the benefit of lower promotional activity during the year, improved manager deployment, and
sales leverage, including the impact of menu price increases. The decrease was partially offset by wage inflation. We expect
labor costs as a percentage of revenue to be higher in 2018 than 2017 due to labor inflation and the enhanced benefits
described above under “Overview – Tax Law Changes.”

Labor costs as a percentage of revenue increased in 2016 due primarily to sales deleveraging and wage inflation, partially
offset by labor efficiencies resulting from fewer managers and crew in each of our restaurants. Labor costs increased in
dollar terms for the year ended December 31, 2016 due to staffing needs for new restaurants.

Occupancy Costs

Occupancy costs

As a percentage of revenue

Year ended
December 31,

2017

2016

2015

(dollars in millions)

%
increase
2017 over
2016

%
increase
2016 over
2015

$327.1

$293.6

$262.4

11.4%

11.9%

7.3%

7.5%

5.8%

Occupancy costs as a percentage of revenue decreased in 2017 primarily due to sales leverage on a largely fixed-cost base.

Occupancy costs as a percentage of revenue increased in 2016 primarily due to lower average restaurant sales on a largely
fixed-cost base. Occupancy costs increased in dollar terms for the year ended December 31, 2016, primarily due to costs
associated with new restaurants.

Other Operating Costs

Other operating costs

As a percentage of revenue

Year ended
December 31,

2017

2016

2015

(dollars in millions)

%
increase
2017 over
2016

%
increase
2016 over
2015

$651.6

$642.0

$515.0

1.5%

24.7%

14.6%

16.4% 11.4%

Other operating costs include, among other items, marketing and promotional costs, bank and credit card fees, and
restaurant utilities and maintenance costs. Other operating costs decreased as a percentage of revenue in 2017 due
primarily to decreased marketing and promotional spend, sales leverage including the benefit of menu price increases, and
decreased kitchen supplies expense. Marketing and promotional spend decreased to 3.5% of revenue in 2017, as compared
to 5.1% of revenue in 2016. We expect other operating costs as a percentage of revenue in 2018 to remain consistent with
2017 as planned lower marketing and promotional spend is offset by expected higher maintenance costs from investments
in our existing restaurants.

2017 Annual Report 31

PART II
(continued)

Other operating costs increased as a percentage of revenue in 2016 due primarily to higher marketing and promotional
expense as well as sales deleveraging. We increased our marketing and promotional spend in an effort to regain customers,
which contributed $98.2 million to the increase.

General and Administrative Expenses

General and administrative expense

As a percentage of revenue

Year ended
December 31,

2017

2016

2015

(dollars in millions)

%
increase
2017 over
2016

%
increase
2016 over
2015

$296.4

$276.2

$250.2

7.3%

10.4%

6.6%

7.1%

5.6%

General and administrative expenses increased in dollar terms in 2017, due to recording a liability of $30.0 million as an
estimate of potential losses associated with anticipated claims and assessments by payment card networks for the data
security incident that occurred in 2017. Increased bonus costs and higher non-cash stock-based compensation expense also
contributed to the increase. The increase was partially offset by lower legal costs, and decreased meeting costs because of
the biennial All Managers Conference held in September 2016. The increase in stock-based compensation expense during
2017 was primarily a result of a cumulative reduction of expense in 2016 for performance share awards that were no longer
expected to vest. We expect that general and administrative expenses will increase in dollar terms in 2018 due to increased
wages and benefits, the biennial All Managers’ Conference planned for the third quarter of 2018, and an increase in stock-
based compensation expense.

The increase in general and administrative expenses in dollar terms for 2016 primarily resulted from increased legal
expense, higher payroll costs as we grew, and expenses associated with our biennial All Managers’ Conference held during
2016, partially offset by lower bonus expense and travel costs.

Depreciation and Amortization

Depreciation and amortization

As a percentage of revenue

Year ended
December 31,

2017

2016

2015

(dollars in millions)

%
increase
2017 over
2016

%
increase
2016 over
2015

$163.3

$146.4

$130.4

11.6%

12.3%

3.6%

3.7%

2.9%

Depreciation and amortization decreased as a percentage of revenue in 2017 due to sales leverage on a partially fixed-cost
base.

Depreciation and amortization increased as a percentage of revenue in 2016 due to sales deleveraging. The increase in
dollar terms was due primarily to depreciation and amortization costs associated with new restaurants.

Loss on Disposal and Impairment of Assets

Year ended
December 31,

2017

2016

2015

(dollars in millions)

%
decrease
2017 over
2016

%
increase
2016 over
2015

Loss on disposal and impairment of assets

$13.3

$23.9

$13.2

(44.1%)

81.0%

As a percentage of revenue

0.3%

0.6% 0.3%

32 2017 Annual Report

PART II
(continued)

Loss on disposal and impairment of assets during the year ended December 31, 2017 consisted primarily of charges related
to the closure of underperforming Chipotle restaurants and the replacement of certain kitchen equipment.

Loss on disposal and impairment of assets increased in 2016 primarily due to a non-cash impairment charge of $14.5 million
to write-down substantially all of the value of the long-lived assets of our 15 ShopHouse restaurants.

Income Tax Provision

Provision for income taxes

Effective tax rate

Year ended
December 31,

2017

2016

2015

(dollars in millions)

%
increase
2017 over
2016

%
decrease
2016 over
2015

$99.5

$ 15.8

$294.3

529.6%

(94.6%)

36.1% 40.8% 38.2%

The 2017 annual effective tax rate was lower than the 2016 rate due to the enactment of the Tax Cuts and Jobs Act,
resulting in our recording a benefit for the remeasurement of our deferred tax liability, as well as from a lower state tax
rate. The decrease in our effective tax rate was partially offset by federal credits on overall higher pre-tax operating
income.

The 2016 effective tax rate was higher than 2015 due to a higher state tax rate, not qualifying for the federal research and
development tax credit in 2016 whereas we did qualify for the credit in 2015, and other federal credits on overall lower
pre-tax operating income.

Quarterly Financial Data/Seasonality
The following table presents data from the consolidated statement of income for each of the eight quarters in the period
ended December 31, 2017. The operating results for any quarter are not necessarily indicative of the results for any
subsequent quarter.

Revenue

Operating income

Net income

2017 Quarters Ended

March 31

June 30

September 30

December 31

$1,068.8

$1,169.4

$

$

73.2

46.1

$ 106.7

$ 66.7

$1,128.1

$ 30.9

$ 19.6

$1,110.1

$ 60.0

$ 43.8

Number of restaurants opened in the quarter, net of relocations/
closures

Comparable restaurant sales increase

41

17.8%

48

8.1%

35

1.0%

34

0.9%

2016 Quarters Ended

March 31

June 30

September 30

December 31

Revenue

Operating income (loss)

Net income (loss)

$834.5

$ (46.6)

$ (26.4)

$998.4

$ 40.9

$ 25.6

Number of restaurants opened in the quarter, net of relocations/
closures

56

58

$1,037.0

$

$

9.7

7.8

54

Comparable restaurant sales increase (decrease)

(29.7%)

(23.6%)

(21.9%)

$1,034.6

$

$

30.6

16.0

72

(4.8%)

Seasonal factors cause our profitability to fluctuate from quarter to quarter. Historically our average daily restaurant sales
are lower, and net income has generally been lower, in the first and fourth quarters due in part to the holiday season and

2017 Annual Report 33

PART II
(continued)

because fewer people eat out during periods of inclement weather (the winter months) than during periods of mild or warm
weather (the spring, summer and fall months). Other factors also have a seasonal effect on our results. For example,
restaurants located near colleges and universities generally do more business during the academic year. Seasonal factors,
however, might be moderated or outweighed by other factors that may influence our quarterly results, such as unexpected
publicity impacting our business in a positive or negative way, as well as fluctuations in food or packaging costs or the
timing of menu price increases. The number of trading days in a quarter can also affect our results, although on an overall
annual basis, changes in trading days do not have a significant impact.

Our quarterly results are also affected by other factors such as the number of new restaurants opened in a quarter, the
amount and timing of non-cash stock-based compensation expense, and anticipated and unanticipated events. New
restaurants typically have lower margins following opening as a result of the expenses associated with opening new
restaurants and their operating inefficiencies in the months immediately following opening. Accordingly, results for a
particular quarter are not necessarily indicative of results to be expected for any other quarter or for any year.

Liquidity and Capital Resources
Our primary liquidity and capital requirements are for new restaurant construction, initiatives to improve the guest
experience in our restaurants, working capital, and general corporate needs. As of December 31, 2017, we had a cash and
short-term investment balance of $509.0 million that we expect to utilize, along with cash flow from operations, to provide
capital to support the growth of our business, to invest in, maintain and refurbish our existing restaurants, to repurchase
additional shares of our common stock subject to market conditions, and for general corporate purposes. As of
December 31, 2017, there was $118.3 million remaining available under repurchase authorizations previously approved by
our Board of Directors. Under the remaining repurchase authorizations, shares may be purchased from time to time in open
market transactions, subject to market conditions. We believe that cash from operations, together with our cash and
investment balances, will be enough to meet ongoing capital expenditures, working capital requirements and other cash
needs for the foreseeable future.

We haven’t required significant working capital because customers generally pay using cash or credit and debit cards and
because our operations do not require significant receivables, nor do they require significant inventories due, in part, to our
use of various fresh ingredients. In addition, we generally have the right to pay for the purchase of food, beverage and
supplies some time after the receipt of those items, generally within ten days, thereby reducing the need for incremental
working capital to support our growth.

Our total capital expenditures for 2017 were $216.8 million. In 2017, we spent on average about $835,000 in development
and construction costs per new restaurant, or about $735,000 net of landlord reimbursements of $100,000. In 2018, we
expect to incur about $300 million in total capital expenditures. We expect the majority of our capital expenditures to
consist of investments in existing restaurants, including remodeling and similar improvements, and upgrading our second
make lines and other restaurant equipment. We also expect about $120 million in capital expenditures related to our
construction of new restaurants, before any reductions for landlord reimbursements. For new restaurants to be opened in
2018, we anticipate average development costs will increase due to initiatives planned in most of our new restaurants such
as the addition of the upgraded second make line. Finally, we expect a portion of our capital expenditures for the year to be
incurred for additional corporate initiatives.

Contractual Obligations
Our contractual obligations as of December 31, 2017 were as follows:

Operating leases(1)

Purchase obligations(2)

Deemed landlord financing(1)

Total

34 2017 Annual Report

Payments Due by Fiscal Year

Total

2018

2019-2020

2021-2022

Thereafter

(in thousands)

$3,906,253

$ 281,461

$ 569,198

$ 558,431

$ 2,497,163

$ 929,242

$409,568

$323,906

$ 177,408

$

3,472

$

423

$

855

$

908

$

$

18,360

1,286

$4,838,967

$ 691,452

$893,959

$736,747

$2,516,809

PART II
(continued)

(1) See Note 8. “Leases” of our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”

(2) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms.

We have excluded agreements that are cancelable without penalty. The majority of our purchase obligations relate to amounts owed for chicken, produce,
and other ingredients and supplies, construction contractor agreements, orders submitted for equipment for restaurants under construction and planned
remodels, and marketing initiatives and corporate sponsorships.

The above table does not include income tax liabilities for uncertain tax positions for which we are not able to make a
reasonably reliable estimate of the amount and period of related future payments. Additionally, we have excluded our
estimated loss contingencies related to the data security incident described elsewhere, due to uncertainty regarding the
timing and amount of payment. See Note 10. “Commitments and Contingencies” of our consolidated financial statements
included in Item 8. “Financial Statements and Supplementary Data.”

Off-Balance Sheet Arrangements
As of December 31, 2017 and 2016, we had no off-balance sheet arrangements or obligations.

Inflation
The primary areas of our operations affected by inflation are food, labor, healthcare costs, fuel, utility costs, and materials
used in the construction of our restaurants. Although a significant majority of our crew members make more than the
federal and applicable state and local minimum wage, increases in the applicable federal or state minimum wage may have
an impact on our labor costs by causing wage inflation above the minimum wage level. Additionally, many of our leases
require us to pay property taxes, maintenance, and utilities, all of which are generally subject to inflationary increases. In
the past we have largely been able to offset inflationary increases with menu price increases. There have been, and there
may be in the future, delays in implementing such menu price increases. If we do raise menu prices in the future, general
competitive pressures may limit our ability to completely recover cost increases attributable to inflation.

Critical Accounting Estimates
We describe our significant accounting policies in Note 1. “Description of Business and Summary of Significant Accounting
Policies” of our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”
Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective
or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our
estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the
circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different
assumptions or factors. We believe that of our critical accounting estimates, the following involve a higher degree of
judgement and subjectivity.

Leases
We lease nearly all of our restaurant locations. Our leases typically contain escalating rentals over the lease term as well as
optional renewal periods. We have estimated that our lease term, including reasonably assured renewal periods, is the
lesser of the lease term or 20 years. We account for our leases by recognizing rent expense on a straight-line basis over the
reasonably assured lease term. The majority of our leasehold improvements are also depreciated over the reasonably
assured lease term. If the estimate of our reasonably assured lease term was changed, our depreciation and rent expense
could differ materially.

Stock-based Compensation
We recognize compensation expense for equity awards over the vesting period based on the award’s fair value. We use the
Black-Scholes valuation model to determine the fair value of our stock-only stock appreciation rights, or SOSARs, and we
use the Monte Carlo simulation model to determine the fair value of stock awards that contain market conditions. Both of
these models require assumptions to be made regarding our stock price volatility, the expected life of the award and
expected dividend rates. The volatility assumption was based on our historical data and implied volatility, and the expected
life assumptions were based on our historical data. Similarly, the compensation expense of performance share awards, and
SOSARs with performance-based vesting conditions, is based in part on the estimated probability of our achieving levels of
performance associated with particular levels of payout for performance shares and with vesting for performance SOSARs.
We determine the probability of achievement of future levels of performance by comparing the relevant performance level

2017 Annual Report 35

PART II
(continued)

with our internal estimates of future performance. Those estimates are based on a number of assumptions, and different
assumptions may have resulted in different conclusions regarding the probability of our achieving future levels of
performance relevant to the payout levels for the awards. Had we arrived at different assumptions of stock price volatility
or expected lives of our SOSARs, or different assumptions regarding the probability of our achieving future levels of
performance with respect to performance share awards and performance SOSARs, our stock-based compensation expense
and results of operations could have been different. Certain awards that contain service, performance and market
conditions have vesting criteria based on Chipotle’s relative performance versus a restaurant industry peer
group in annual average revenue growth, net income growth, and total shareholder return. Our estimates of Chipotle’s
future performance and the future performance of the restaurant industry peer group are assumptions that involve a high
degree of subjectivity. If we had arrived at different assumptions for revenue growth or net income for Chipotle or the peer
group, our stock-based compensation expense and results of operations could have been different.

Insurance Liability
We are self-insured for a significant portion of our risks and associated liabilities with respect to workers’ compensation,
general liability, employee health, property and auto damage, but have third party insurance coverage to limit exposure to
these claims. We record a liability that represents our estimated cost of claims incurred and unpaid as of the balance sheet
date. Our estimated liability is not discounted and is based on a number of assumptions and factors, including historical
trends, actuarial assumptions and economic conditions, and is closely monitored and adjusted when warranted by changing
circumstances. Our history of claims experience is relatively short and our significant growth during most of our operating
history could affect the accuracy of estimates based on historical experience. If a greater amount of claims occurs
compared to what we have estimated, or if medical costs increase beyond what we expected, our accrued liabilities might
not be sufficient and we may be required to record additional expense. Actual claims experience could also be more
favorable than estimated, which would result in expense reductions. Unanticipated changes may produce materially
different amounts of expense than that reported under these programs. The total estimated insurance liabilities as of
December 31, 2017 were $52.0 million.

Reserves/Contingencies for Litigation and Other Matters
We are involved in various claims and legal actions that arise in the ordinary course of business. These actions are subject
to many uncertainties, and we cannot predict the outcomes with any degree of certainty. Consequently, we were unable to
estimate the ultimate aggregate amount of monetary liability or financial impact with respect to these matters as of
December 31, 2017. Although we have recorded liabilities related to a number of legal actions, our estimates used to
determine the amount of these liabilities may not be accurate, and there are other legal actions for which we have not
recorded a liability. As a result, in the event legal actions for which we have not accrued a liability or for which our accrued
liabilities are not accurate are resolved, such resolution may affect our operating results and cash flows.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK

Commodity Price Risks
We are exposed to commodity price risks. Many of the ingredients we use to prepare our food, as well as our packaging
materials and utilities to run our restaurants, are ingredients or commodities that are affected by the price of other
commodities, exchange rates, foreign demand, weather, seasonality, production, availability and other factors outside our
control. We work closely with our suppliers and use a mix of forward pricing protocols under which we agree with our
supplier on fixed prices for deliveries at some time in the future, fixed pricing protocols under which we agree on a fixed
price with our supplier for the duration of that protocol, formula pricing protocols under which the prices we pay are based
on a specified formula related to the prices of the goods, such as spot prices, and range forward protocols under which we
agree on a price range for the duration of that protocol. However, a majority of the dollar value of our purchases is
effectively at spot prices. Generally, our pricing protocols with suppliers can remain in effect for periods ranging from one
to 24 months, depending on the outlook for prices of the particular ingredient. In several cases, we have minimum purchase
obligations. We’ve tried to increase, where practical, the number of suppliers for our ingredients, which we believe can help
mitigate pricing volatility, and we follow industry news, trade issues, exchange rates, foreign demand, weather, crises and

36 2017 Annual Report

PART II
(continued)

other world events that may affect our ingredient prices. Increases in ingredient prices could adversely affect our results if
we choose for competitive or other reasons not to increase menu prices at the same rate at which ingredient costs increase,
or if menu price increases result in customer resistance.

Changing Interest Rates
We are also exposed to interest rate risk through fluctuations of interest rates on our investments. Changes in interest rates
affect the interest income we earn, and therefore impact our cash flows and results of operations. As of December 31, 2017,
we had $362.1 million in investments and interest-bearing cash accounts, including insurance-related restricted trust
accounts classified in other assets, and $129.3 million in accounts with an earnings credit we classify as interest income,
which combined earned a weighted average interest rate of 0.97%.

Foreign Currency Exchange Risk
A portion of our operations consist of activities outside of the U.S. and we have currency risk on the transactions in other
currencies and translation adjustments resulting from the conversion of our international financial results into the U.S.
dollar. However, a substantial majority of our operations and investment activities are transacted in the U.S., and therefore
our foreign currency risk is not material at this date.

2017 Annual Report 37

PART II
(continued)

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheet as of December 31, 2017 and 2016

39

40

Consolidated Statement of Income and Consolidated Statement of Comprehensive
Income for the years ended December 31, 2017, 2016 and 2015

41

Consolidated Statement of Shareholders’ Equity for the years ended December 31,
2017, 2016 and 2015

42

Consolidated Statement of Cash Flows for the years ended December 31, 2017,
2016 and 2015

Notes to Consolidated Financial Statements

43

44

38 2017 Annual Report

PART II
(continued)

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of
Chipotle Mexican Grill, Inc.

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Chipotle Mexican Grill, Inc. (the Company), as of
December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, shareholders’
equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
consolidated financial position of the Company at December 31, 2017 and 2016, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S.
generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United Stated)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated February 8, 2018 expressed an unqualified opinion thereon.

Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1997.

Denver, Colorado
February 8, 2018

2017 Annual Report 39

PART II
(continued)

CHIPOTLE MEXICAN GRILL, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)

Assets

Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $0 and $259 as of
December 31, 2017 and 2016, respectively

Inventory

Prepaid expenses and other current assets

Income tax receivable

Investments

Total current assets

Leasehold improvements, property and equipment, net

Long term investments

Other assets

Goodwill

Total assets

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable

Accrued payroll and benefits

Accrued liabilities

Total current liabilities

Deferred rent

Deferred income tax liability

Other liabilities

Total liabilities

Shareholders’ equity:

Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of
December 31, 2017 and 2016, respectively

Common stock $0.01 par value, 230,000 shares authorized, and 35,852 and 35,833
shares issued as of December 31, 2017 and 2016, respectively

Additional paid-in capital

Treasury stock, at cost, 7,826 and 7,019 common shares at December 31, 2017 and 2016,
respectively

Accumulated other comprehensive income (loss)

Retained earnings

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying notes to consolidated financial statements.

40 2017 Annual Report

December 31,

2017

2016

$

184,569 $

87,880

40,453

19,860

50,918

9,353

324,382

629,535

40,451

15,019

44,080

5,108

329,836

522,374

1,338,366

1,303,558

—

125,055

55,852

21,939

53,177

21,939

$ 2,045,692 $ 2,026,103

$

82,028 $

78,363

82,541

159,324

323,893

316,498

814

40,042

681,247

76,301

127,129

281,793

288,927

18,944

33,946

623,610

—

359

—

358

1,305,090

1,238,875

(2,334,409)

(2,049,389)

(3,659)

(8,162)

2,397,064

2,220,811

1,364,445

1,402,493

$ 2,045,692 $ 2,026,103

PART II
(continued)

CHIPOTLE MEXICAN GRILL, INC.

CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)

Revenue

Restaurant operating costs (exclusive of depreciation and amortization shown
separately below):

Food, beverage and packaging

Labor

Occupancy

Other operating costs

General and administrative expenses

Depreciation and amortization

Pre-opening costs

Loss on disposal and impairment of assets

Total operating expenses

Income from operations

Interest and other income, net

Income before income taxes

Provision for income taxes

Net income

Earnings per share:

Basic

Diluted

Weighted average common shares outstanding:

Basic

Diluted

Year ended December 31,

2017

2016

2015

$4,476,412

$3,904,384

$ 4,501,223

1,535,428

1,365,580

1,503,835

1,205,992

1,105,001

1,045,726

327,132

651,644

296,388

163,348

12,341

13,345

293,636

641,953

276,240

146,368

17,162

23,877

262,412

514,963

250,214

130,368

16,922

13,194

4,205,618

3,869,817

3,737,634

270,794

4,949

275,743

(99,490)

$ 176,253

$

$

6.19

6.17

$

$

$

34,567

763,589

4,172

6,278

38,739

769,867

(15,801)

(294,265)

22,938

$ 475,602

0.78

0.77

$

$

15.30

15.10

28,491

28,561

29,265

29,770

31,092

31,494

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in thousands)

Net income

Other comprehensive income (loss), net of income taxes:

Foreign currency translation adjustments

Unrealized gain (loss) on available-for-sale securities

Tax benefit (expense)

Other comprehensive income (loss), net of income taxes

Comprehensive income

See accompanying notes to consolidated financial statements.

Year ended December 31,

2017

2016

2015

$ 176,253

$22,938

$475,602

4,689

(274)

88

4,503

(1,291)

2,251

(849)

(6,322)

(2,468)

946

111

(7,844)

$180,756

$23,049

$467,758

2017 Annual Report 41

PART II
(continued)

CHIPOTLE MEXICAN GRILL, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(in thousands)

Common Stock

Treasury Stock

Accumulated
Other
Comprehensive
Income (Loss)

Shares Amount

Additional
Paid-In
Capital

Shares

Amount

Retained
Earnings

Available-
for-Sale
Securities

Foreign
Currency
Translation

Total

Balance, December 31, 2014

35,394

$354

$ 1,038,932 4,367 $ (748,759) $ 1,722,271

$

—

$ (429) $2,012,369

Stock-based compensation

Stock plan transactions and other

396

4

Excess tax benefit on stock-based
compensation

Acquisition of treasury stock

Net income

Other comprehensive income
(loss), net of income tax

59,465

(211)

74,442

839

(485,853)

475,602

59,465

(207)

74,442

(485,853)

475,602

(1,522)

(6,322)

(7,844)

Balance, December 31, 2015

35,790

$358

$ 1,172,628 5,206 $ (1,234,612) $ 2,197,873

$(1,522)

$ (6,751) $ 2,127,974

Stock-based compensation

Stock plan transactions and other

43

—

Excess tax benefit on stock-based
compensation

Acquisition of treasury stock

Net income

Other comprehensive income
(loss), net of income tax

65,112

(185)

1,320

1,813

(814,777)

22,938

65,112

(185)

1,320

(814,777)

22,938

1,402

(1,291)

111

Balance, December 31, 2016

35,833

$358

$ 1,238,875

7,019 $(2,049,389) $ 2,220,811

$ (120)

$(8,042) $1,402,493

Stock-based compensation

Stock plan transactions and other

19

1

66,396

(181)

Acquisition of treasury stock

Net income

Other comprehensive income
(loss), net of income tax

807

(285,020)

176,253

66,396

(180)

(285,020)

176,253

(186)

4,689

4,503

Balance, December 31, 2017

35,852

$359

$1,305,090 7,826 $(2,334,409) $2,397,064

$ (306)

$ (3,353) $1,364,445

See accompanying notes to consolidated financial statements.

42 2017 Annual Report

PART II
(continued)

CHIPOTLE MEXICAN GRILL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

Operating activities

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Deferred income tax (benefit) provision

Loss on disposal and impairment of assets

Bad debt allowance

Stock-based compensation expense

Excess tax benefit on stock-based compensation

Other

Changes in operating assets and liabilities:

Accounts receivable

Inventory

Prepaid expenses and other current assets

Other assets

Accounts payable

Accrued liabilities

Income tax payable/receivable

Deferred rent

Other long-term liabilities

Net cash provided by operating activities

Investing activities

Purchases of leasehold improvements, property and equipment

Purchases of investments

Maturities of investments

Proceeds from sale of investments

Net cash provided by (used in) investing activities

Financing activities

Acquisition of treasury stock

Excess tax benefit on stock-based compensation

Stock plan transactions and other financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental disclosures of cash flow information

Income taxes paid

Increase (decrease) in purchases of leasehold improvements, property, and equipment accrued
in accounts payable and accrued liabilities

Increase (decrease) in acquisition of treasury stock accrued in accrued liabilities

See accompanying notes to consolidated financial statements.

Year ended December 31,

2017

2016

2015

$ 176,253

$ 22,938

$ 475,602

163,348

146,368

130,368

(18,026)

13,345

214

65,255

—

(218)

(140)

(5,250)

(6,710)

(2,587)

10,908

38,574

(4,173)

29,996

6,316

(14,207)

23,877

(262)

64,166

(1,320)

(604)

11,666

13,194

(23)

57,911

(74,442)

582

(1,923)

(3,504)

(91)

(4,259)

(4,855)

(6,734)

33,491

54,340

37,030

1,287

262

(5,259)

(5,619)

19,525

(7,440)

32,756

32,911

4,826

467,105

349,242

683,316

(216,777)

(258,842)

(257,418)

(199,801)

—

(559,372)

330,000

45,000

352,650

—

540,648

—

(86,578)

326,806

(464,140)

(285,920)

(837,655)

(460,675)

—

26

1,320

52

74,442

(207)

(285,894)

(836,283)

(386,440)

2,056

96,689

87,880

110

(4,196)

(160,125)

(171,460)

248,005

419,465

$ 184,569

$ 87,880

$ 248,005

$ 119,787

$ 23,862

$ 248,547

$

$

(7,690) $

(1,781) $

(2,870)

(900) $ (22,778) $

25,178

2017 Annual Report 43

PART II
(continued)

CHIPOTLE MEXICAN GRILL, INC.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

(dollar and share amounts in thousands,
unless otherwise specified)

1. Description of Business and Summary of
Significant Accounting Policies
In this annual report on Form 10-K, Chipotle Mexican Grill,
Inc., a Delaware corporation, together with its subsidiaries,
is collectively referred to as “Chipotle,” “we,” “us,” or
“our.”

We develop and operate restaurants that serve a focused
menu of burritos, tacos, burrito bowls, and salads, made
using fresh, high-quality ingredients. As of December 31,
2017, we operated 2,363 Chipotle restaurants throughout
the United States as well as 37 international Chipotle
restaurants and eight non-Chipotle restaurants. We
transitioned the management of our operations from 11 to
nine regions during 2017 and have aggregated our
operations to one reportable segment.

Principles of Consolidation and Basis of
Presentation
Our consolidated financial statements include our accounts,
including wholly and majority owned subsidiaries. All
intercompany balances and transactions have been
eliminated.

Management Estimates
The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual
results could differ from those estimates under different
assumptions or conditions.

Revenue Recognition
We recognize revenue, net of discounts and incentives,
when payment is tendered at the point of sale. We
recognize a liability for offers of free food by estimating the
cost to satisfy the offer based on company–specific
historical redemption patterns for similar
promotions. These costs are recognized in other operating
costs in the consolidated statement of income and in
accrued liabilities in the consolidated balance sheet. We

44 2017 Annual Report

report revenue net of sales-related taxes collected from
customers and remitted to governmental taxing authorities.

We sell gift cards which do not have an expiration date and
we do not deduct non-usage fees from outstanding gift
card balances. We recognize revenue from gift cards when:
(i) the gift card is redeemed by the customer; or (ii) we
determine the likelihood of the gift card being redeemed by
the customer is remote (gift card breakage) and there is
not a legal obligation to remit the unredeemed gift cards to
the relevant jurisdiction. The determination of the gift card
breakage rate is based upon company-specific historical
redemption patterns. We have determined that 4% of gift
card sales will not be redeemed and will be retained. Gift
card breakage is recognized in revenue as the gift cards are
used on a pro rata basis. During the quarter ended
December 31, 2017, we revised the period over which we
recognize gift card breakage from six months to eight
months from the date of the gift card sale in the
consolidated statement of income. Breakage recognized
during the years ended December 31, 2017, 2016 and 2015
was $3,590, $3,624 and $4,226, respectively.

During the year ended December 31, 2016, we offered a
limited-time frequency program that awarded free food or
merchandise to customers based on frequency of monthly
visits. We deferred revenue reflecting the portion of
original sales allocated to the rewards that were earned by
program participants and not redeemed at the end of the
year, and recorded a corresponding liability in accrued
liabilities on our consolidated balance sheet. The portion of
revenue allocated to the rewards was based on the
estimated value of the award earned and takes into
consideration company-specific historical redemption
patterns for similar promotions. Rewards expire according
to the loyalty awards terms and conditions. Deferred
revenue related to the frequency program was $0 and
$5,489 as of December 31, 2017 and December 31, 2016,
respectively, and the entire amount that was deferred as of
December 31, 2016 was recognized during 2017.

Cash and Cash Equivalents
We consider all highly liquid investment instruments
purchased with an initial maturity of three months or less
to be cash equivalents. We maintain cash and cash
equivalent balances with financial institutions that exceed
federally-insured limits. We have not experienced any
losses related to these balances and believe the risk to be
minimal.

Accounts Receivable
Accounts receivable primarily consists of receivables from
third party gift card distributors, tenant improvement

PART II
(continued)

receivables, vendor rebates, and interest receivable. The
allowance for doubtful accounts is our best estimate of the
amount of probable credit losses in our existing accounts
receivable based on a specific review of account balances.
Account balances are charged against the allowance after
all means of collection have been exhausted and the
potential for recoverability is considered remote.

lives did not have a material impact on depreciation in any
period. The estimated useful lives are:

Leasehold improvements and buildings

Furniture and fixtures

Equipment

3-20 years

4-7 years

3-10 years

Inventory
Inventory, consisting principally of food, beverages, and
supplies, is valued at the lower of first-in, first-out cost or
net realizable value. Certain key ingredients (beef, pork,
chicken, beans, rice, sour cream, cheese, and tortillas) are
purchased from a small number of suppliers.

Investments
Investments classified as trading securities are carried at
fair value with any unrealized gain or loss being recorded in
the consolidated statement of income. Investments
classified as available-for-sale are carried at fair value with
unrealized gains and losses, net of tax, included as a
component of other comprehensive income (loss) on the
statement of comprehensive income. Held-to-maturity
securities are carried at amortized cost. Impairment
charges on investments are recognized in interest and
other income, net on the consolidated statement of income
when management believes the decline in the fair value of
the investment is other-than-temporary.

Leasehold Improvements, Property and Equipment
Leasehold improvements, property and equipment are
recorded at cost. Internal costs directly associated with the
acquisition, development and construction of a restaurant
are capitalized and were $7,507, $8,076 and $9,554 for
the years ended December 31, 2017, 2016 and 2015,
respectively. Expenditures for major renewals and
improvements are capitalized while expenditures for minor
replacements, maintenance and repairs are expensed as
incurred. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets.
Leasehold improvements are amortized over the shorter of
the lease term, which generally includes reasonably
assured option periods, or the estimated useful lives of the
assets. Upon retirement or disposal of assets, the accounts
are relieved of cost and accumulated depreciation and any
related gain or loss is reflected in loss on disposal and
impairment of assets in the consolidated statement of
income.

At least annually, we evaluate, and adjust when necessary,
the estimated useful lives of leasehold improvements,
property and equipment. The changes in estimated useful

Goodwill
Goodwill represents the excess of cost over fair value of
net assets of the business acquired. Goodwill is not subject
to amortization, but instead is tested for impairment at
least annually, and we are required to record any necessary
impairment adjustments. Impairment is measured as the
excess of the carrying value over the fair value of the
goodwill. Based on our analysis, no impairment charges
were recognized on goodwill for the years ended
December 31, 2017, 2016 and 2015.

Other Assets
Other assets consist primarily of restricted cash assets of
$29,601 and $28,490 as of December 31, 2017 and 2016,
respectively, a rabbi trust as described further in Note 7.
“Employee Benefit Plans,” transferable liquor licenses
which are carried at the lower of fair value or cost, and
rental deposits related to leased properties. Restricted cash
assets are primarily insurance-related restricted trust
assets.

Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. For
the purpose of reviewing restaurant assets to be held and
used for potential impairment, assets are grouped together
at the market level, or in the case of a potential relocation
or closure, at the restaurant level. We manage our
restaurants as a group with significant common costs and
promotional activities; as such, an individual restaurant’s
cash flows are not generally independent of the cash flows
of others in a market. Recoverability of assets to be held
and used is measured by a comparison of the carrying
amount of an asset to the estimated undiscounted future
cash flows expected to be generated by the asset. If the
carrying amount of an asset exceeds its estimated future
cash flows, an impairment charge is recognized as the
amount by which the carrying amount of the asset exceeds
the fair value of the asset.

During the years ended December 31, 2017, 2016 and 2015,
an aggregate impairment charge of $3,291, $17,394 and
$6,675, respectively, was recognized in loss on disposal and
impairment of assets in the consolidated statement of

2017 Annual Report 45

PART II
(continued)

income. During the year ended December 31, 2017, the
impairment charges resulted primarily from the closure of a
small number of underperforming Chipotle restaurants.
Impairment charges recognized during the year ended
December 31, 2016 resulted primarily from the impairment
of ShopHouse Southeast Asian Kitchen restaurants which
were closed during 2017. During the year ended
December 31, 2015, the impairment charges resulted from
an internally developed software program we chose not to
implement and the related hardware, the discontinued use
of certain kitchen equipment from our restaurants, as well
as restaurant relocations. The fair value of restaurants was
determined using Level 3 inputs (unobservable inputs)
based on a discounted cash flows method. See “Fair Value
Measurements” below for a description of level inputs.

Income Taxes
Deferred tax assets and liabilities are recognized at enacted
income tax rates for the temporary differences between
the financial reporting bases and the tax bases of our
assets and liabilities. Any effects of changes in income tax
rates or tax laws are included in the provision for income
taxes in the period of enactment. The deferred income tax
impacts of investment tax credits are recognized as an
immediate adjustment to income tax expense. When it is
more likely than not that a portion or all of a deferred tax
asset will not be realized in the future, we provide a
corresponding valuation allowance against the deferred tax
asset, except for deferred tax assets related to stock
awards when there is sufficient future taxable income to
recover the deferred tax assets. When it is more likely than
not that a position will be sustained upon examination by a
tax authority that has full knowledge of all relevant
information, we measure the amount of tax benefit from
our position and record the largest amount of tax benefit
that is greater than 50% likely of being realized after
settlement with a tax authority. Our policy is to recognize
interest to be paid on an underpayment of income taxes in
interest expense and any related statutory penalties in the
provision for income taxes in the consolidated statement of
income.

Restaurant Pre-Opening Costs
Pre-opening costs, including rent, wages, benefits and
travel for training and opening teams, food and other
restaurant operating costs, are expensed as incurred prior
to a restaurant opening for business, and are included in
operating expenses on the consolidated statement of
income.

Insurance Liability
We are self-insured for a significant portion of our risks and
associated liabilities with respect to workers’

46 2017 Annual Report

compensation, employee health, general liability,
automobile, and property damage. Pursuant to these
policies, we are responsible for losses up to varying
deductibles and are required to estimate a liability that
represents the ultimate exposure for aggregate losses
below those limits. This liability is based on our estimates of
the ultimate costs to be incurred to settle known claims
and, where applicable, claims not reported as of the
balance sheet date. The estimated liability is not discounted
and is based on a number of assumptions and factors,
including historical trends, actuarial assumptions, and
economic conditions. If actual trends differ from the
estimates, the financial results could be impacted. As of
December 31, 2017 and 2016, $37,096 and $35,550,
respectively, of the estimated liability was included in
accrued payroll and benefits and $14,014 and $13,881,
respectively, was included in accrued liabilities in the
consolidated balance sheet.

Advertising and Marketing Costs
Advertising and marketing costs are expensed as incurred
and totaled $106,345, $102,969 and $69,257 for the years
ended December 31, 2017, 2016 and 2015, respectively.
Advertising and marketing costs are included in other
operating costs in the consolidated statement of income.

Rent
Rent expense for our leases, which generally have
escalating rentals over the term of the lease, is recorded on
a straight-line basis over the lease term. The lease term is
the lesser of 20 years inclusive of reasonably assured
renewal periods, or the lease term. The lease term begins
when we have the right to control the use of the property,
which is typically before rent payments are due under the
lease. The difference between the rent expense and rent
paid is recorded as deferred rent in the consolidated
balance sheet. Pre-opening rent is included in pre-opening
costs in the consolidated statement of income. Tenant
incentives used to fund leasehold improvements are
recorded in deferred rent and amortized as reductions of
rent expense over the term of the lease.

Additionally, certain operating leases contain clauses that
provide additional contingent rent based on a percentage
of sales greater than certain specified target amounts.
Contingent rent expense is recognized provided the
achievement of that target is considered probable.

Stock-Based Compensation
We issue shares as part of employee compensation
pursuant to the Amended and Restated Chipotle Mexican
Grill, Inc. 2011 Stock Incentive Plan (the “2011 Incentive

PART II
(continued)

Plan”). Stock only stock appreciation rights (“SOSARs”) and
stock awards generally vest equally over two and three
years and expire after seven years. Stock-based
compensation expense is generally recognized on a
straight-line basis for each separate vesting portion.
Compensation expense related to employees eligible to
retire and retain full rights to the awards is recognized over
six months which coincides with the notice period. We
estimate forfeitures based on historical data when
determining the amount of stock-based compensation costs
to be recognized in each period. We have also granted
SOSARs and stock awards with performance vesting
conditions and/or market vesting conditions. Stock awards
with performance or market vesting conditions generally
vest based on our achievement versus stated targets or
criteria over a three-year performance and service period.
Compensation expense on SOSARs subject to performance
conditions is recognized over the longer of the estimated
performance goal attainment period or time vesting period.
Compensation expense on stock awards subject to
performance conditions, which is based on the quantity of
awards we have determined are probable of vesting, is
recognized over the longer of the estimated performance
goal attainment period or time vesting period.
Compensation expense is recognized ratably for awards
subject to market conditions regardless of whether the
market condition is satisfied, provided that the requisite
service has been provided. Some stock-based
compensation awards are made to employees involved in
our new restaurant development activities, and expense for
these awards is recognized as capitalized development and
included in leasehold improvements, property and
equipment in the consolidated balance sheet.

Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, accounts
receivable and accounts payable approximate fair value
because of their short-term nature.

Fair Value Measurements
Fair value is the price we would receive to sell an asset or
pay to transfer a liability (exit price) in an orderly
transaction between market participants. For assets and
liabilities recorded or disclosed at fair value on a recurring
basis, we determine fair value based on the following:

Level 1: Quoted prices in active markets for identical
assets or liabilities that the entity has the ability to
access.

Level 2: Observable inputs other than prices included in
Level 1, such as quoted prices for similar assets and
liabilities in active markets; quoted prices for identical or

similar assets and liabilities in markets that are not
active; or other inputs that are observable or can be
corroborated with observable market data.

Level 3: Unobservable inputs that are supported by little
or no market activity and that are significant to the fair
value of the assets and liabilities. This includes certain
pricing models, discounted cash flow methodologies and
similar techniques that use significant unobservable
inputs.

Foreign Currency Translation
Our international operations use the local currency as the
functional currency. Assets and liabilities are translated at
exchange rates in effect as of the balance sheet date.
Income and expense accounts are translated at the average
monthly exchange rates during the year. Resulting
translation adjustments are recorded as a separate
component of other comprehensive income (loss) in the
consolidated statement of comprehensive income.

Recently Issued Accounting Standards
In November 2016, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2016-18, “Statement of Cash Flows (Topic 230)”,
which provides guidance on the classification of restricted
cash to be included with cash and cash equivalents when
reconciling the beginning of period and end of period total
amounts on the statement of cash flows. We will be
adopting this pronouncement on January 1, 2018, using a
retrospective adoption method. For the years ended
December 31, 2017, 2016 and 2015, $29,601, $28,490 and
$22,572, respectively, of restricted cash would have been
included in cash and cash equivalents and changes in the
balance excluded from net cash provided by operating
activities in the consolidated statement of cash flows if this
new guidance had been adopted as of the respective dates.

In February 2016, the FASB issued ASU No. 2016-02,
“Leases (Topic 842).” The pronouncement requires lessees
to recognize a liability for lease obligations, which
represent the discounted obligation to make future
minimum lease payments, and a corresponding right-of-use
asset on the balance sheet. The guidance requires
disclosure of key information about leasing arrangements
which are intended to give financial statement users the
ability to assess the amount, timing, and potential
uncertainty of cash flows related to leases. We expect to
adopt the requirements of the new lease standard effective
January 1, 2019. We are currently evaluating the provisions
of the new lease standard, including optional practical
expedients, and assessing our existing lease portfolio in
order to determine the impact to our accounting systems,

2017 Annual Report 47

PART II
(continued)

processes and internal control over financial reporting. The
adoption of ASU 2016-02 will have a significant impact on
our consolidated balance sheet because we will record
material assets and obligations for current operating
leases. We are still assessing the expected impact on our
consolidated statements of income and cash flows.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue
from Contracts with Customers (Topic 606),” as amended
by multiple standards updates. This guidance requires an
entity to recognize revenue when it transfers promised
goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled
in exchange for those goods or services. Additionally, this
guidance will require us to enhance our disclosures,
including disclosing performance obligations to customers
arising from gift cards and certain promotional activity. The
pronouncement is effective for reporting periods beginning
after December 15, 2017. The adoption is not expected to
have an impact on our consolidated financial position or
results of operations.

We reviewed all other recently issued accounting
pronouncements and concluded that they were either not
applicable or not expected to have a significant impact to
the consolidated financial statements.

Recently Adopted Accounting Standard
In March 2016, the FASB issued ASU 2016-09,
“Compensation-Stock Compensation (Topic 718).” The
pronouncement was issued to simplify several aspects of
the accounting for share-based payment transactions,
including the income tax consequences, classification of
awards as either equity or liabilities and classification on
the consolidated statement of cash flows.

We adopted ASU 2016-09 on January 1, 2017, prospectively
(prior periods have not been restated). The primary impact
of adoption was the recognition for the year ended
December 31, 2017, of an excess tax benefit of $448, which
reduces our provision for income taxes and the
classification of these excess tax benefits in operating
activities in the consolidated statement of cash flows
instead of financing activities.

recognized in each period. No other provisions of ASU
2016-09 had a material impact on our financial statements
or disclosures.

2. Supplemental Financial Information
Leasehold improvements, property and equipment were as
follows:

December 31,

2017

2016

Land

$

12,943

$

12,943

Leasehold improvements and
buildings

Furniture and fixtures

Equipment

Leasehold improvements,
property and equipment

1,677,294

1,572,606

166,915

157,541

460,138

405,937

2,317,290

2,149,027

Accumulated depreciation

(978,924)

(845,469)

Leasehold improvements,
property and equipment, net

$1,338,366

$1,303,558

Accrued payroll and benefits were as follows:

December 31,

2017

2016

Workers’ compensation liability

$ 34,631

$33,038

Accrued payroll

19,666

22,338

Other accrued payroll and benefits

28,244

20,925

Accrued payroll and benefits

$ 82,541

$ 76,301

Accrued liabilities were as follows:

Gift card liability

Transaction tax payable

December 31,

2017

2016

$ 63,645

$59,438

18,920

20,435

Data security incident liability

30,000

—

Other accrued liabilities

Accrued liabilities

46,759

47,256

$159,324

$ 127,129

The presentation requirements for cash flows related to
employee taxes paid for withheld shares had no impact to
any of the periods presented in the consolidated statement
of cash flows, since such cash flows have historically been
presented in financing activities. We also elected to
continue estimating forfeitures when determining the
amount of stock-based compensation costs to be

3. Investments
As of December 31, 2017 and 2016, our investments
consisted of U.S. treasury notes with maturities up to
approximately one year and were classified as
available-for-sale. Fair value of U.S. treasury notes is
measured on a recurring basis based on Level 1 inputs
(quoted prices for identical assets in active markets).

48 2017 Annual Report

PART II
(continued)

The following is a summary of available-for-sale securities:

December 31,

2017

2016

4. Income Taxes
The components of the provision for income taxes are as
follows:

Amortized cost

$324,875

$455,109

Unrealized gains (losses)

(493)

(218)

Fair value

$324,382

$454,891

Current tax:

Year ended December 31,

2017

2016

2015

The following is a summary of unrealized gains (losses) on
available-for-sale securities recorded in other
comprehensive income (loss) in the consolidated statement
of comprehensive income:

U.S. State

Foreign

Deferred tax:

18,639

669

8,687

556

37,957

172

117,516

30,008

282,599

U.S. Federal

$98,208

$ 20,765

$244,470

Year ended December 31,

2017

2016

2015

U.S. Federal

(16,201)

(11,596)

(1,559)

(2,546)

(496)

(2,470)

(2,288)

11,000

699

U.S. State

Foreign

$(274)

$ 2,251

$(2,468)

Valuation allowance

230

2,405

(18,256)

(16,612)

9,411

2,255

Unrealized gains (losses)
on available-for-sale
securities

Unrealized gains (losses)
on available-for-sale
securities, net of tax

$ (186)

$1,402

$ (1,522)

Realized gains and losses on available-for-sale securities
are recorded in interest and other income on the
consolidated statement of income. We had no realized
gains or losses for the years ended December 31, 2017 and
2015, and $547 of realized gains on available-for-sale
securities for the year ended December 31, 2016. During the
year ended December 31, 2015, we recorded an other-than-
temporary impairment charge of $244 in interest and other
income in the consolidated statement of income in
connection with a decline in the fair market value of certain
available-for-sale securities.

We have elected to fund certain deferred compensation
obligations through a rabbi trust, the assets of which are
designated as trading securities, as described further in
Note 7. “Employee Benefit Plans.”

Provision for income
taxes

$99,490

$ 15,801

$294,265

On December 22, 2017, the Tax Cuts and Jobs Act, (the
“TCJA”) was enacted. The TCJA includes a number of
changes to existing U.S. tax laws that impact the Company,
most notably a reduction of the U.S. corporate tax rate
from 35% to 21%, for tax years beginning after
December 31, 2017. We recorded a benefit of $6,047 ($0.21
per basic and diluted earnings per share) in deferred
income tax expense for the remeasurement of our net
deferred tax liability at the 21% tax rate. The TCJA also
provides for acceleration of depreciation for certain assets
placed into service after September 27, 2017, as well as
prospective changes beginning in 2018, including additional
limitations on deductibility of executive compensation and
employee meal benefits.

The $6,047 benefit represents what we believe is the
impact of the TCJA. As the benefit is based on currently
available information and interpretations, which are
continuing to evolve, the benefit should be considered
provisional. We will continue to analyze additional
information and guidance related to the TCJA as
supplemental legislation, regulatory guidance, or evolving
technical interpretations become available. The final
impacts may differ from the recorded amounts as of
December 31, 2017, and we will continue to refine such
amounts within the measurement period provided by Staff
Accounting Bulletin No. 118. We expect to complete our
analysis no later than the fourth quarter of 2018.

2017 Annual Report 49

Deferred income tax liabilities and assets consist of the
following:

PART II
(continued)

Actual taxes paid for 2016 and 2015 were less than the
current tax expense due to the excess tax benefit on stock-
based compensation of $1,320 and $74,442 during the
years ended December 31, 2016 and 2015, respectively.

The effective tax rate differs from the statutory tax rates
as follows:

Year ended December 31,

2017

2016

2015

35.0% 35.0% 35.0%

4.4

(1.5)

13.3

(10.1)

3.6

(0.4)

Deferred income tax liability:

Leasehold improvements,
property and equipment

Goodwill and other assets

Prepaid assets and other

Total deferred income tax
liability

Deferred income tax asset:

Deferred rent

Gift card liability

(0.2)

(2.4)

(0.2)

Capitalized transaction costs

0.1

1.5

(2.3)

6.0

6.2

—

0.3

—

—

Stock-based compensation and
other employee benefits

Foreign net operating loss carry-
forwards

(0.9)

(7.2)

(0.1)

State credits

Statutory U.S. federal income
tax rate

State income tax, net of related
federal income tax benefit

Federal credits

Enhanced deduction for food
donation

Valuation allowance

Other

Effects of the TCJA

Return to provision and other
discrete items

December 31,

2017

2016

$140,908

$204,640

1,339

5,191

1,856

6,012

147,438

212,508

42,859

4,580

324

63,159

5,563

500

80,447

101,628

11,376

5,589

13,719

9,580

4,595

19,359

Effective income tax rate

36.1% 40.8% 38.2%

Allowances, reserves and other

The 2017 effective tax rate was lower than the 2016 rate
due to the enactment of the TCJA and a lower state tax
rate, partially offset by federal credits on overall higher
pre-tax operating income. The 2016 effective tax rate was
higher than 2015 due to a higher state tax rate, not
qualifying for the federal research and development tax
credit in 2016, and other federal credits on overall lower
pre-tax operating income.

Deferred income tax liabilities are taxes we expect to pay in
future periods. Similarly, deferred income tax assets are
recorded for expected reductions in taxes payable in future
periods. Deferred income taxes arise because of the
differences in the book and tax bases of certain assets and
liabilities.

Valuation allowance

(12,270)

(10,820)

Total deferred income tax asset

146,624

193,564

Net deferred income tax liability

$

814

$ 18,944

The December 31, 2017, deferred tax liability was measured
using a 21% U.S. federal tax rate because of the enactment
of TCJA, which reduced the rate from 35%.

As of December 31, 2017, we have $8,468 of deferred tax
assets related to outstanding non-vested stock awards that
contain market conditions. If market conditions are not
achieved, then we may not realize the benefit of these
deferred tax assets, which would result in a higher effective
tax rate in future periods.

The unrecognized tax benefits are as follows:

2017

2016

2015

Beginning of year

$ 4,211

$3,776

$ 1,342

Increase resulting from
prior year tax position

Increase resulting from
current year tax position

—

—

402

4,726

435

2,032

End of year

$8,937

$ 4,211

$3,776

50 2017 Annual Report

PART II
(continued)

During the years ended December 31, 2017, 2016, and 2015,
we recognized $364, $430, and $0, respectively, in interest
expense related to uncertain tax positions. We have $794
and $430 for the payment of interest accrued at
December 31, 2017, and 2016, respectively. We are open to
federal and state tax audits until the applicable statutes of
limitations expire. Tax audits by their very nature are often
complex and can require several years to complete. We are
no longer subject to U.S. federal tax examinations by tax
authorities for tax years before 2014. For the majority of
states where we have a significant presence, we are no
longer subject to tax examinations by tax authorities for
tax years before 2014. As of December 31, 2017, we had
cumulative gross foreign net operating losses of $50,292,
which have no expiration date.

5. Shareholders’ Equity
Through December 31, 2017, we had announced
authorizations by our Board of Directors of repurchases of
shares of common stock, which in the aggregate,
authorized expenditures of up to $2,400,000. Under the
remaining repurchase authorizations, shares may be
purchased from time to time in open market transactions,
subject to market conditions.

The following table summarizes common stock repurchases
under authorized programs:

Year ended December 31,

2017

2016

2015

Shares of common
stock repurchased

Total cost of common
stock repurchased

805

1,811

839

$284,318 $813,881 $485,841

As of December 31, 2017, $118,274 was available to be
repurchased under the authorized programs. The shares
repurchased are being held in treasury until such time as

they are reissued or retired, at the discretion of the Board
of Directors.

During 2017, 2016, and 2015, shares of common stock were
netted and surrendered as payment for minimum statutory
tax withholding obligations in connection with the exercise
and vesting of outstanding stock awards. We deem shares
surrendered by the participants in accordance with the
applicable award agreements and plan as repurchased, but
do not deem such shares to be part of publicly announced
share repurchase programs.

6. Stock-Based Compensation
We issue shares in connection with stock-based
compensation pursuant to the Amended and Restated
Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan. For
purposes of counting the shares remaining available under
the 2011 Incentive Plan, each share issuable pursuant to
outstanding full value awards, such as restricted stock units
and performance shares, counts as two shares used,
whereas each share underlying a stock appreciation right
or stock option counts as one share used. Under the 2011
Incentive Plan, 5,560 shares of common stock have been
authorized and reserved for issuance to eligible
participants, of which 1,786 represent shares that were
authorized for issuance but not issued or subject to
outstanding awards at December 31, 2017. The 2011
Incentive Plan is administered by the Compensation
Committee of the Board of Directors, which has the
authority to select the individuals to whom awards will be
granted or to delegate its authority under the plan to make
grants (subject to certain legal and regulatory restrictions),
to determine the type of awards and when the awards are
to be granted, the number of shares to be covered by each
award, the vesting schedule and all other terms and
conditions of the awards. The exercise price for stock
awards granted under the 2011 Incentive Plan cannot be
less than fair market value at the date of grant.

The following table sets forth stock-based compensation expense, including SOSARs and stock awards:

Stock-based compensation expense

Stock-based compensation expense, net of tax

Stock-based compensation expense recognized as capitalized development

Excess tax benefit on stock-based compensation recognized in provision for income
taxes

Year ended December 31,

2017

2016

2015

$66,396

$ 65,112

$59,465

$40,370

$35,974

$36,666

$

$

1,141

448

$

$

946

$ 1,554

—

$

—

2017 Annual Report 51

PART II
(continued)

The tables below summarize the SOSAR activity under the stock incentive plans (in thousands, except years and per share
data):

Outstanding, beginning of year

Granted

Exercised

Forfeited or cancelled

Outstanding, end of year

2017

2016

2015

Weighted-Average
Exercise Price Per
Share

$490.06

$ 426.70

$ 307.83

$ 527.53

$480.09

Shares

1,917

304

(35)

(187)

1,999

Shares

1,694

460

(124)

(113)

1,917

Weighted-Average
Exercise Price Per
Share

$490.70

$ 457.77

$ 315.87

$ 559.25

$490.06

Shares

2,087

379

(716)

(56)

1,694

Weighted-Average
Exercise Price Per
Share

$395.46

$ 659.12

$ 297.25

$ 554.73

$490.70

Outstanding as of December 31, 2017

Vested and expected to vest as of December 31, 2017

Exercisable as of December 31, 2017

Weighted-Average
Exercise Price Per
Share

$480.09

$ 480.77

$ 474.20

Shares

1,999

1,957

1,130

Weighted-
Average
Remaining
Years of
Contractual
Life

3.7

3.7

2.7

Aggregate
Intrinsic
Value

$209

$209

$209

In the past, we have granted SOSARs that included performance conditions. As of December 31, 2017, 278 outstanding
SOSARs that included performance conditions were determined to have met the performance conditions. For the remaining
110 outstanding SOSARs that included performance conditions, the financial targets underlying the performance conditions
had been satisfied as of December 31, 2017, and vesting of the awards was pending confirmation by the Compensation
Committee that the performance conditions were met. The total intrinsic value of options and SOSARs exercised during the
years ended December 31, 2017, 2016 and 2015 was $4,296, $15,946 and $260,466. Unearned compensation as of
December 31, 2017 was $21,998 for SOSAR awards, and is expected to be recognized over a weighted average period of
1.4 years.

The following table reflects the weighted average assumptions utilized in the Black-Scholes option-pricing model to value
SOSAR awards granted for each year:

Risk-free interest rate

Expected life (years)

Expected dividend yield

Volatility

2017

2016

2015

1.6%

3.7

0.0%

29.9%

1.0%

3.5

0.0%

32.2%

1.1%

3.4

0.0%

30.8%

Weighted-average Black-Scholes fair value per share at date of grant

$105.97

$117.48

$156.32

The risk-free interest rate is based upon U.S. Treasury rates for instruments with similar terms and the expected life
assumptions were based on our historical data. We have not paid dividends to date and do not plan to pay dividends in the
near future. The volatility assumption was based on our historical data and implied volatility.

52 2017 Annual Report

PART II
(continued)

A summary of non-vested stock award activity under the 2011 Stock Incentive Plans and prior stock compensation plan is as
follows (in thousands, except per share data):

Outstanding, beginning of year

Granted

Vested

Forfeited or cancelled

Outstanding, end of year

2017

2016

2015

Weighted
Average
Grant Date
Fair Value
Per Share

$606.24

$ 436.36

$454.84

$502.46

$ 519.62

Shares

125

127

(8)

(31)

213

Weighted
Average
Grant Date
Fair Value
Per Share

$ 511.88

$509.05

$605.83

$529.54

$606.24

Weighted
Average
Grant Date
Fair Value
Per Share

$525.60

$ 785.32

$ 413.07

$534.55

$ 511.88

Shares

70

47

(1)

—

116

Shares

116

90

(7)

(74)

125

There were 141 non-vested stock awards with a weighted
average grant date fair value per share of $522.38 that
were vested and expected to vest as of December 31, 2017.
The aggregate intrinsic value of the shares was $32,829
and the weighted average remaining contractual life was
5.8 years. Unearned compensation for non-vested stock
awards we have determined are probable of vesting was
$37,962 as of December 31, 2017, and is expected to be
recognized over a weighted average period of 1.6 years.
The fair value of shares earned as of the vesting date
during the year ended December 31, 2017, 2016, and 2015
was $3,524, $2,787, and $634, respectively.

As of December 31, 2017, 133 of the outstanding non-vested
stock awards were subject to performance and/or market
conditions, in addition to service vesting conditions. During
the first quarter of 2017, we awarded 36 performance
shares that are subject to service, market and performance
vesting conditions. Two-thirds of the shares had a grant
date fair value of $485.53 per share and have vesting
criteria based on the price of our common stock reaching
certain targets for a consecutive number of days during the
three-year period starting on the grant date, with the
quantity of shares that vest ranging from 0% to 350% of
the targeted number of shares. The remaining one-third of
the shares had a grant date fair value of $427.61 and have
vesting criteria based on reaching certain comparable
restaurant sales increases during the three-year period
starting on January 1, 2017, with the quantity of shares that
vest ranging from 0% to 300% of the targeted number of
shares. If the defined minimum targets are not met, then no
shares will vest.

During the year ended December 31, 2016, we awarded 73
performance shares, net of cancellations, that are subject
to both service and market vesting conditions. The quantity
of shares that vest will range from 0% to 400% of a

targeted number of shares, and will be determined based
on the price of our common stock reaching certain targets
for a consecutive number of days during the three-year
period starting on the grant date. If the minimum defined
stock price target is not met, then no shares will vest.

During the year ended December 31, 2015, we awarded
40 performance shares that were subject to service,
performance, and market vesting conditions. The quantity
of shares that vest will be determined based on our relative
performance versus a restaurant industry peer group in
annual average revenue growth, net income growth, and
total shareholder return. The quantity of shares that vest
will range from 0% to 200% based on the level of
achievement of the performance and market conditions. If
minimum targets are not met, then no shares will vest.
Each performance and market measure will be weighted
equally, and performance is calculated over a three-year
period beginning January 1, 2015 through December 31,
2017.

During the year ended December 31, 2017, 20 stock awards
that were subject to service and performance or market
conditions were forfeited.

2017 Annual Report 53

PART II
(continued)

We adjusted our estimates of the non-vested stock awards
expected to vest, which had the following reduction on our
expense and earnings per share (dollars in thousands,
except per share data) in each of the following years:

Cumulative change in
expense

Net of tax impact from
cumulative change in
expense

Impact on basic earnings
per share

Impact on diluted earnings
per share

Year ended December 31,

2017

2016

2015

$(1,410) $ (6,031) $(12,195)

$ (857) $(3,332) $(7,520)

$ 0.03

$ 0.03

$

$

0.11

$ 0.25

0.11

$ 0.24

Measurement of the grant date fair value of the stock
awards with market conditions included a Monte Carlo
simulation model, which incorporates into the fair value
determination the possibility that the market condition may
not be satisfied, using the following assumptions:

2017

2016

2015

Risk-free interest rate

1.5% 0.9%

1.0%

Expected life (years)

3.0

3.0

2.9

Expected dividend yield

0.0% 0.0%

0.0%

Volatility

29.9% 31.4% 33.7%

The assumptions are based on the same factors as those
described for SOSARs, except that the expected life is
based on the contractual performance period for the stock
awards.

7. Employee Benefit Plans
We maintain the Chipotle Mexican Grill 401(k) Plan (the
“401(k) Plan”). We match 100% of the first 3% of pay
contributed by each eligible employee and 50% on the next
2% of pay contributed. Employees become eligible to
receive matching contributions after one year of service
with the Company. For the years ended December 31, 2017,
2016, and 2015, matching contributions totaled
approximately $6,072, $5,939 and $4,995, respectively.

We also maintain the Chipotle Mexican Grill, Inc.
Supplemental Deferred Investment Plan (the “Deferred
Plan”) which covers our eligible employees. The Deferred
Plan is a non-qualified plan that allows participants to make
tax-deferred contributions that cannot be made under the
401(k) Plan because of Internal Revenue Service limitations.
Participants’ earnings on contributions made to the

54 2017 Annual Report

Deferred Plan fluctuate with the actual earnings and losses
of a variety of available investment choices selected by the
participant. Total liabilities under the Deferred Plan as of
December 31, 2017 and 2016 were $19,887 and $17,843,
respectively, and are included in other liabilities in the
consolidated balance sheet. We match 100% of the first 3%
of pay contributed by each eligible employee and 50% on
the next 2% of pay contributed once the 401(k)
contribution limits are reached. For the years ended
December 31, 2017, 2016, and 2015, we made deferred
compensation matches of $199, $225, and $617,
respectively, to the Deferred Plan.

We have elected to fund our deferred compensation
obligation through a rabbi trust. The rabbi trust is subject
to creditor claims in the event of insolvency, but the assets
held in the rabbi trust are not available for general
corporate purposes. Amounts in the rabbi trust are
invested in mutual funds, consistent with the investment
choices selected by participants in their Deferred Plan
accounts, which are designated as trading securities and
carried at fair value, and are included in other assets in the
consolidated balance sheet. Fair value of mutual funds is
measured using Level 1 inputs (quoted prices for identical
assets in active markets), and the fair values of the
investments in the rabbi trust were $19,887 and $17,843 as
of December 31, 2017 and 2016, respectively. Trading gains
and losses are recorded in general and administrative
expenses in the consolidated statement of income, along
with the offsetting amount related to the increase or
decrease in deferred compensation to reflect its exposure
of the Deferred Plan liability.

The following table sets forth unrealized gains (losses) on
trading securities held in the rabbi trust:

Year ended
December 31,

2017

2016

2015

Unrealized gains (losses) on
trading securities held in rabbi
trust

$1,520

$586

$(571)

We also offer an employee stock purchase plan (“ESPP”).
Employees become eligible to participate after one year of
service with Chipotle and may contribute up to 15% of their
base earnings, subject to an annual maximum dollar
amount, toward the monthly purchase of our common stock.
Under the ESPP, 250 shares of common stock have been
authorized and reserved for issuances to eligible employees,
of which 246 represent shares that were authorized for
issuance but not issued at December 31, 2017. For each of

PART II
(continued)

the years ended December 31, 2017, 2016, and 2015, the
number of shares issued under the ESPP were less than 1.

8. Leases
Our restaurants are generally operated in leased premises.
Lease terms for traditional shopping center or building
leases generally include combined initial and option terms
of 20-25 years. Ground leases generally include combined
initial and option terms of 30-40 years. The option terms in
each of these leases are typically in five-year increments.
Typically, the lease includes rent escalation terms every
five years including fixed rent escalations, escalations
based on inflation indexes, and fair market value
adjustments. Certain leases contain contingent rental
provisions that include a fixed base rent plus an additional
percentage of the restaurant’s sales in excess of stipulated
amounts. Our leases generally provide for the payment of
common area maintenance, property taxes, insurance and
various other use and occupancy costs. In addition, we are
the lessee under non-cancelable leases covering certain
offices.

Contractually required future minimum cash lease
payments under existing operating leases as of
December 31, 2017 are as follows:

2018

2019

2020

2021

2022

Thereafter

Total minimum lease payments

$

281,461

285,264

283,934

279,816

278,615

2,497,163

$3,906,253

Minimum lease payments have not been reduced by
minimum sublease rentals of $7,359 due in the future
under non-cancelable subleases.

Rental expense consists of the following:

We have six sales and leaseback transactions. These
transactions do not qualify for sale leaseback accounting
because of our deemed continuing involvement with the
buyer-lessor due to fixed price renewal options, which
results in the transaction being recorded under the
financing method. Under the financing method, the assets
remain on the consolidated balance sheet and the proceeds
from the transactions are recorded as a financing liability.
A portion of lease payments are applied as payments of
deemed principal and imputed interest. The deemed
landlord financing liability was $2,630 and $2,854 as of
December 31, 2017, and 2016, respectively, with the current
portion of the liability included in accrued liabilities, and the
remaining portion included in other liabilities in the
consolidated balance sheet.

9. Earnings Per Share
Basic earnings per share is calculated by dividing income
available to common shareholders by the weighted-average
number of shares of common stock outstanding during
each period. Diluted earnings per share (“diluted EPS”) is
calculated using income available to common shareholders
divided by diluted weighted-average shares of common
stock outstanding during each period. Potentially dilutive
securities include shares of common stock underlying
SOSARs and non-vested stock awards (collectively “stock
awards”). Diluted EPS considers the impact of potentially
dilutive securities except in periods in which there is a loss
because the inclusion of the potential common shares
would have an anti-dilutive effect. Stock awards are
excluded from the calculation of diluted EPS in the event
they are subject to performance conditions or antidilutive.
The following stock awards were excluded from the
calculation of diluted EPS:

Stock awards subject to
performance conditions

Stock awards that were
antidilutive

Year ended December 31,

2017

2016

2015

217

263

266

1,695

1,316

289

Year ended December 31,

2017

2016

2015

Total stock awards excluded from
diluted earnings per share

1,912

1,579

555

Minimum rentals

$278,812 $255,955 $227,602

Contingent rentals

$

2,317 $

1,811 $ 4,542

Sublease rental income $ (2,214) $ (2,074) $ (1,879)

2017 Annual Report 55

PART II
(continued)

The following table sets forth the computations of basic
and diluted earnings per share:

associated with the data security incident in future periods.
We will recognize these expenses as services are received.

Net income

Shares:

Weighted average
number of common
shares outstanding

Year ended December 31,

2017

2016

2015

$176,253 $22,938 $475,602

28,491

29,265

31,092

Dilutive stock awards

70

505

402

Diluted weighted
average number of
common shares
outstanding

Basic earnings per
share

Diluted earnings per
share

28,561

29,770

31,494

$

$

6.19 $ 0.78 $

15.30

6.17 $ 0.77 $

15.10

10. Commitments and Contingencies

Purchase Obligations
We enter into various purchase obligations in the ordinary
course of business, generally of a short term nature. Those
that are binding primarily relate to commitments for food
purchases and supplies, amounts owed under contractor
and subcontractor agreements, orders submitted for
equipment for restaurants under construction, and
marketing initiatives and corporate sponsorships.

Litigation
Data Security Incident
In April 2017, our information security team detected
unauthorized activity on the network that supports
payment processing for our restaurants, and immediately
began an investigation with the help of leading computer
security firms. We also self-reported the issue to payment
card processors and law enforcement. Our investigation
detected malware designed to access payment card data
from cards used at point-of-sale devices at most Chipotle
restaurants, primarily in the period from March 24, 2017
through April 18, 2017. The malware searched for track
data, which may include cardholder name, card number,
expiration date, and internal verification codes; however,
no other customer information was affected. We have
removed the malware from our systems and continue to
evaluate ways to enhance our security measures. We
expect that substantially all of our investigation costs will
be covered by insurance; however, we may incur legal
expenses in excess of our insurance coverage limits

56 2017 Annual Report

During the year ended December 31, 2017, we recorded an
expense of $30,000 ($18,234 after tax), or $0.64 per
diluted earnings per share, as an estimate of potential
liabilities associated with anticipated claims and
assessments by payment card networks in connection with
the data security incident. We may ultimately be subject to
liabilities greater than or less than the amount accrued. The
expense is recorded in general and administrative expenses
in our consolidated statement of income and a
corresponding liability in accrued liabilities on our
consolidated balance sheet.

Litigation Arising from Security Incident
On May 4, 2017, Bellwether Community Credit Union filed a
purported class action complaint in the United States
District Court for the District of Colorado alleging that we
negligently failed to provide adequate security to protect
the payment card information of customers of the plaintiffs
and those of other similarly situated credit unions, banks
and other financial institutions alleged to be part of the
putative class, causing those institutions to suffer financial
losses. The complaint also claims we were negligent per se
based on alleged violations of Section 5 of the Federal
Trade Commission Act and similar state laws. The plaintiff
seeks monetary damages, injunctive relief and attorneys’
fees. On May 26, 2017, Alcoa Community Credit Union filed
a purported class action complaint in the U. S. District Court
for the District of Colorado making substantially the same
allegations as the Bellwether complaint and seeking
substantially the same relief. The Bellwether and Alcoa
cases have been consolidated and will proceed as a single
action.

On June 9, 2017, Todd Gordon filed a purported class action
complaint in the U. S. District Court for the District of
Colorado alleging that we negligently failed to provide
adequate security to protect the payment card information
of the plaintiff and other similarly situated customers
alleged to be part of the putative class, causing some
customers to suffer alleged injuries and others to be at risk
of possible future injuries. The complaint also claims we
were negligent per se based on alleged violations of
Section 5 of the Federal Trade Commission Act and similar
state laws, and also alleges breach of contract, unjust
enrichment, and violations of the Arizona Consumer Fraud
Act. Additionally, on August 21, 2017, Greg Lawson and
Judy Conard filed a purported class action complaint in the
U. S. District Court for the District of Colorado making
allegations substantially similar to those in the Gordon

PART II
(continued)

complaint, and stating substantially similar claims as well as
claims under the Colorado Consumer Protection Act. The
Gordon and Lawson/Conard cases have been consolidated
and will proceed as a single action.

We intend to vigorously defend each of the aforementioned
cases, but it is not possible at this time to reasonably
estimate the outcome of or any potential liability from
these cases. Although certain fees and costs associated
with the data security incident and the aforementioned
litigation to date have been paid or reimbursed by our
cyber liability insurer, the ultimate amount of liabilities
arising from the litigation may be in excess of the limits of
our applicable insurance coverage.

Receipt of Grand Jury Subpoenas
On January 28, 2017, we were served with a Federal Grand
Jury Subpoena from the U.S. District Court for the Central
District of California in connection with an official criminal
investigation being conducted by the U.S. Attorney’s Office
for the Central District of California, in conjunction with the
U.S. Food and Drug Administration’s Office of Criminal
Investigations. The subpoena requires the production of
documents and information related to company-wide food
safety matters dating back to January 1, 2013. We received
a follow-up subpoena on July 19, 2017 requesting
information related to illness incidents associated with a
single Chipotle restaurant in Sterling, Virginia. We intend to
continue to fully cooperate in the investigation. It is not
possible at this time to determine whether we will incur, or
to reasonably estimate the amount of, any fines or
penalties in connection with the investigation pursuant to
which the subpoena was issued.

Shareholder Derivative Actions
On April 6, 2016, Uri Skorski filed a shareholder derivative
action in Colorado state court in Denver, Colorado, alleging
that our Board of Directors and officers breached their
fiduciary duties in connection with our alleged failure to
disclose material information about our food safety policies
and procedures, and also alleging that our Board of
Directors and officers breached their fiduciary duties in
connection with allegedly excessive compensation awarded
from 2011 to 2015 under our stock incentive plan. On
April 14, 2016, Mark Arnold and Zachary Arata filed a
shareholder derivative action in Colorado state court in
Denver, Colorado, making largely the same allegations as
the Skorski complaint. On May 26, 2016, the court issued an
order consolidating the Skorski and Arnold/Arata actions
into a single case. On August 8, 2016, Sean Gubricky filed a
shareholder derivative action the U.S. District Court for the
District of Colorado, alleging that our Board of Directors

and certain officers failed to institute proper food safety
controls and policies, issued materially false and misleading
statements in violation of federal securities laws, and
otherwise breached their fiduciary duties. On September 1,
2016, Ross Weintraub filed a shareholder derivative action
in Colorado state court in Denver, Colorado, making largely
the same allegations as the Gubricky complaint. On
March 27, 2017, the Weintraub case was consolidated with
the Skorski and Arnold/Arata action into a single case. On
December 27, 2016, Cyrus Lashkari filed a shareholder
derivative action the U.S. District Court for the District of
Colorado, making largely the same allegations as the
foregoing shareholder derivative complaints. Each of these
actions purports to state a claim for damages on our
behalf, and is based on statements in our SEC filings and
related public disclosures, as well as media reports and
company records. We have reached an agreement in
principle to settle the foregoing actions, and have recorded
a corresponding liability in accrued liabilities on our
consolidated balance sheet; the proposed settlement has
been preliminarily approved by the U.S. District Court for
the District of Colorado, with a final approval hearing set
for March 15, 2018.

On July 28, 2017, Mark Blau filed a shareholder derivative
action in the U.S. District Court for the District of Colorado,
making allegations similar to those of the several
shareholder derivative actions described above, and adding
further allegations related to the Board’s investigation of
the foregoing matters, as well as customer illnesses and
operational issues associated with two Chipotle restaurants
in July 2017. The action purports to state claims for
damages on our behalf, and is based on statements in our
SEC filings and related public disclosures, as well as media
reports and company records. On February 2, 2018, the
Court stayed this matter pending the outcome of the
March 15, 2018 settlement approval hearing in the
consolidated Gubricky actions described above.

Shareholder Class Actions
On January 8, 2016, Susie Ong filed a complaint in the U.S.
District Court for the Southern District of New York on
behalf of a purported class of purchasers of shares of our
common stock between February 4, 2015 and January 5,
2016. The complaint purports to state claims against us,
each of the co-Chief Executive Officers serving during the
claimed class period and the Chief Financial Officer under
Sections 10(b) and 20(a) of the Exchange Act and related
rules, based on our alleged failure during the claimed class
period to disclose material information about our quality
controls and safeguards in relation to consumer and
employee health. The complaint asserts that those failures

2017 Annual Report 57

Chipotle restaurant in Sterling, Virginia. A response to the
amended complaint in that matter is due on February 12,
2018. We intend to defend these cases vigorously, but it is
not possible at this time to reasonably estimate the
outcome of or any potential liability from the cases.

Miscellaneous

We are involved in various other claims and legal actions
that arise in the ordinary course of business. We do not
believe that the ultimate resolution of these actions will
have a material adverse effect on our financial position,
results of operations, liquidity or capital resources.
However, a significant increase in the number of these
claims, or one or more successful claims under which we
incur greater liabilities than we currently anticipate, could
materially and adversely affect our business, financial
condition, results of operations and cash flows.

2017

March 31

June 30

September 30

December 31

$1,068,829

$1,169,409

$1,128,074

$1,110,100

$

$

$

$

73,173

$ 106,725

$ 30,867

$ 60,029

46,120

$ 66,730

1.60

1.60

$

$

2.33

2.32

$

$

$

19,610

$ 43,793

0.69

0.69

$

$

1.56

1.55

2016

March 31

June 30

September 30

December 31

$834,459

$998,383

$1,036,982

$1,034,560

$ (46,604)

$ 40,895

$ (26,432)

$ 25,596

$

$

(0.88)

(0.88)

$

$

0.88

0.87

$

$

$

$

9,726

7,799

0.27

0.27

$

$

$

$

30,550

15,975

0.55

0.55

PART II
(continued)

and related public statements were false and misleading
and that, as a result, the market price of our stock was
artificially inflated during the claimed class period. The
complaint seeks damages on behalf of the purported class
in an unspecified amount, interest, and an award of
reasonable attorneys’ fees, expert fees and other costs. On
March 8, 2017, the court granted our motion to dismiss the
complaint, with leave to amend. The plaintiff filed an
amended complaint on April 7, 2017. On June 7, 2017,
Chipotle filed a motion to dismiss the amended complaint,
and briefing on that motion was completed on
September 6, 2017. Additionally, on July 20, 2017, Elizabeth
Kelley filed a complaint in the U.S. District Court for the
District of Colorado on behalf of a purported class of
purchasers of shares of our common stock between
February 5, 2016 and July 19, 2017, with claims and factual
allegations similar to the Ong complaint, based primarily on
media reports regarding illnesses associated with a

11. Quarterly Financial Data (Unaudited)
Summarized unaudited quarterly financial data:

Revenue

Operating income

Net income

Basic earnings per share

Diluted earnings per share

Revenue

Operating income (loss)

Net income (loss)

Basic earnings (loss) per share

Diluted earnings (loss) per share

58 2017 Annual Report

PART II
(continued)

ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND
PROCEDURES

We maintain disclosure controls and procedures (as defined
in Rule 13a-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”))
that are designed to ensure that information required to be
disclosed in Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified
in the Securities and Exchange Commission’s rules and
forms, and that such information is accumulated and
communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required
disclosure.

Evaluation of Disclosure Controls and
Procedures
As of December 31, 2017, we carried out an evaluation,
under the supervision and with the participation of our
management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design
and operation of our disclosure controls and procedures.
Based on the foregoing, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure
controls and procedures were effective as of the end of the
period covered by this annual report.

Changes in Internal Control over Financial
Reporting
There were no changes during the fiscal quarter ended
December 31, 2017 in our internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange
Act) that have materially affected or are reasonably likely
to materially affect our internal control over financial
reporting.

Management’s Annual Report on Internal
Control over Financial Reporting
The management of Chipotle Mexican Grill, Inc. is
responsible for establishing and maintaining adequate
internal control over financial reporting. Our internal
control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial
statements for external purposes in accordance with
accounting principles generally accepted in the United
States of America. Our internal control over financial
reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the
transactions and dispositions of our assets; (ii) provide
reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted
in the United States of America, and that our receipts and
expenditures are being made only in accordance with
authorizations of our management and directors; and
(iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or
disposition of assets that could have a material effect on
our financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in
conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2017,
based on the framework set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in
Internal Control—Integrated Framework (the “2013
framework”). Based on that assessment, management
concluded that, as of December 31, 2017, our internal
control over financial reporting was effective based on the
criteria established in the 2013 framework.

Our independent registered public accounting firm, Ernst &
Young LLP, has issued an attestation report on the
effectiveness of our internal control over financial
reporting as of December 31, 2017. This report follows.

2017 Annual Report 59

PART II
(continued)

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Chipotle Mexican Grill, Inc.

Opinion on Internal Control over Financial Reporting
We have audited Chipotle Mexican Grill, Inc.’s internal control over financial reporting as of December 31, 2017, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Chipotle Mexican Grill, Inc. (the Company)
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the
COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets as of December 31, 2017 and 2016, and the related consolidated statements of
income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended
December 31, 2017, and the related notes, of the Company and our report dated February 8, 2018 expressed an unqualified
opinion thereon.

Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Denver, Colorado
February 8, 2018

60 2017 Annual Report

PART II
(continued)

ITEM 9B. OTHER INFORMATION

None.

2017 Annual Report 61

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

Incorporated by reference from the definitive proxy statement for our 2018 annual meeting of shareholders, which will be
filed no later than 120 days after December 31, 2017.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference from the definitive proxy statement for our 2018 annual meeting of shareholders, which will be
filed no later than 120 days after December 31, 2017.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Securities Authorized for Issuance Under Equity Compensation Plans
The following table presents information regarding options and rights outstanding under our equity compensation plans as
of December 31, 2017. All options/SOSARs reflected are options to purchase common stock.

(a)
Number of Securities
to be Issued Upon
Exercise of Outstanding
Options and Rights(1)

(b)
Weighted-Average
Exercise Price of
Outstanding Options and
Rights(1)

(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(excluding securities
reflected in column (a))(2)

Equity Compensation Plans Approved by
Security Holders

Equity Compensation Plans Not
Approved by Security Holders

Total

2,211,600

None

2,211,600

$480.09

N/A

$480.09

2,032,484

None

2,032,484

(1)

Includes shares issuable in connection with awards with performance and market conditions, which will be issued based on achievement of performance
criteria associated with the awards, with the number of shares issuable dependent on our level of performance. The weighted-average exercise price in
column (b) includes the weighted-average exercise price of SOSARs only.

(2) Includes 1,786,198 shares remaining available under the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan, and 246,286 shares

remaining available under the Chipotle Mexican Grill, Inc. Employee Stock Purchase Plan. In addition to being available for future issuance upon exercise of
SOSARs or stock options that may be granted after December 31, 2017, all of the shares available for grant under the Amended and Restated Chipotle
Mexican Grill, Inc. 2011 Stock Incentive Plan may instead be issued in the form of restricted stock, restricted stock units, performance shares or other equity-
based awards. Each share underlying a full value award such as restricted stock, restricted stock units or performance shares counts as two shares used
against the total number of securities authorized under the plan.

Additional information for this item is incorporated by reference from the definitive proxy statement for our 2018 annual
meeting of shareholders, which will be filed no later than 120 days after December 31, 2017.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE

Incorporated by reference from the definitive proxy statement for our 2018 annual meeting of shareholders, which will be
filed no later than 120 days after December 31, 2017.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Incorporated by reference from the definitive proxy statement for our 2018 annual meeting of shareholders, which will be
filed no later than 120 days after December 31, 2017.

62 2017 Annual Report

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

1. All Financial statements
Consolidated financial statements filed as part of this report are listed under Item 8. “Financial Statements and
Supplementary Data.”

2. Financial statement schedules
No schedules are required because either the required information is not present or is not present in amounts sufficient to
require submission of the schedule, or because the information required is included in the consolidated financial statements
or the notes thereto.

3. Exhibits

Exhibit
Number

Exhibit Description

Description of Exhibit Incorporated Herein by Reference

Form File No.

Filing Date

Exhibit
Number

Filed
Herewith

3.1

3.2

4.1

Amended and Restated Certificate of
Incorporation of Chipotle Mexican Grill, Inc.

Chipotle Mexican Grill, Inc. Amended and Restated
Bylaws

Form of Stock Certificate for Shares of Common
Stock

10-Q 001-32731 October 26, 2016

3.1

8-K

001-32731 October 6, 2016

3.1

10-K 001-32731

February 10, 2012

4.1

10.1†

Amended and Restated Chipotle Mexican Grill, Inc.
2006 Stock Incentive Plan

10-K 001-32731

February 17, 2011

10.2

10.1.1†

Form of 2011 Stock Appreciation Rights Agreement 10-K 001-32731

February 17, 2011

10.2.10

10.1.2†

10.2†

Form of 2011 Performance-Based Stock
Appreciation Rights Agreement

10-K 001-32731

February 17, 2011

10.2.11

Amended and Restated Chipotle Mexican Grill, Inc.
2011 Stock Incentive Plan

10-Q 001-32731 October 26, 2016

10.2.1†

Form of Board Restricted Stock Units Agreement

10-Q 001-32731 July 22, 2014

10.2.2†

Form of Stock Appreciation Rights Agreement

10-Q 001-32731 April 20, 2012

10.1

10.1

10.1

10.2.3†

10.2.4†

10.2.5†

Form of Performance-Based Stock Appreciation
Rights Agreement

10-Q 001-32731 April 20, 2012

10.2

Form of 2014 Stock Appreciation Rights
Agreement

Form of 2014 Performance-Based Stock
Appreciation Rights Agreement

10-K 001-32731

February 7, 2017

10.2.4

10-K 001-32731

February 7, 2017

10.2.5

10.2.6†

Form of 2015 Performance Share Agreement

10-Q 001-32731 April 22, 2015

10.2

10.2.7†

Form of 2016 Stock Appreciation Rights
Agreement

10-Q 001-32731 April 27, 2016

10.2.8†

Form of 2016 Performance Share Agreement

10-Q 001-32731 April 27, 2016

10.1

10.2

10.2.8.1†

Amendment to 2016 Performance Share
Agreement

8-K

001-32731 March 30, 2017

10.1

2017 Annual Report 63

PART IV
(continued)

Exhibit Description

Form File No.

Filing Date

Exhibit
Number

Filed
Herewith

Description of Exhibit Incorporated Herein by Reference

Form of 2017 Stock Appreciation Rights
Agreement

10.2.10†

Form of 2017 Restricted Stock Units Agreement

—

—

—

—

—

—

10.2.11†

Form of 2017 Performance Share Agreement

10-Q 001-32731 July 26, 2017

10.2.12†

Form of Staff Restricted Stock Units Agreement

—

—

—

Amended and Restated Registration Rights
Agreement dated January 31, 2006 among
Chipotle Mexican Grill, Inc., McDonald’s
Corporation and certain shareholders

10-K 001-32731 March 17, 2006

Board Pay Policies

10-Q 001-32731 July 26, 2017

Chipotle Mexican Grill, Inc. Supplemental Deferred
Investment Plan

10-K 001-32731

February 23,
2007

Amendment No. 1 to Chipotle Mexican Grill, Inc.
Supplemental Deferred Investment Plan

Amendment No. 2 to Chipotle Mexican Grill, Inc.
Supplemental Deferred Investment Plan

Form of Director and Officer Indemnification
Agreement

Chipotle Mexican Grill, Inc. Employee Stock
Purchase Plan

Chipotle Mexican Grill, Inc. 2014 Cash Incentive
Plan

Investor Agreement dated December 14, 2016
between Chipotle Mexican Grill, Inc. and Pershing
Square Capital Management, L.P.

Registration Rights Agreement dated February 3,
2017, between Chipotle Mexican Grill, Inc. and
Pershing Square Capital Management, L.P.

10-Q 001-32731 August 1, 2007

10.1

10-Q 001-32731 October 31, 2007

10.1

8-K

001-32731 March 21, 2007

10.1

10-K 001-32731

February 10, 2012

10.11

10-Q 001-32731 July 19, 2013

10.1

8-K

001-32731

December 19,
2016

10.1

10-K 001-32731

February 7, 2017

10.11

Executive Agreement dated May 29, 2017 between
Chipotle Mexican Grill, Inc. and Scott Boatwright

8-K

001-32731

September 15,
2017

10.1

Executive Chairman Agreement dated
November 28, 2017 between Chipotle Mexican
Grill, Inc. and Steve Ells

Subsidiaries of Chipotle Mexican Grill, Inc.

Consent of Ernst & Young LLP (as the independent
registered public accounting firm of Chipotle
Mexican Grill, Inc.)

Power of Attorney (included on signature page of
this report)

8-K

001-32731 December 1, 2017

10.1

—

—

—

—

—

—

—

—

—

—

—

—

—

—

10.2

—

10.6

10.1

10.11

X

X

X

X

X

X

Exhibit
Number

10.2.9†

10.3

10.4†

10.5†

10.5.1†

10.5.2†

10.6†

10.7†

10.8†

10.10

10.11

10.12

10.13

21.1

23.1

24.1

64 2017 Annual Report

PART IV
(continued)

Exhibit
Number

31.1

31.2

32.1

101

Exhibit Description

Form File No.

Filing Date

Exhibit
Number

Filed
Herewith

Description of Exhibit Incorporated Herein by Reference

Certification of Chief Executive Officer of Chipotle
Mexican Grill, Inc. pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer of Chipotle
Mexican Grill, Inc. pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

Certification of Chief Executive Officer and Chief
Financial Officer of Chipotle Mexican Grill, Inc.
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002

—

—

—

—

—

—

—

—

—

—

—

—

X

X

X

The following financial statements, formatted in
XBRL: (i) Consolidated Balance Sheet as of
December 31, 2017 and December 31, 2016, (ii)
Consolidated Statement of Income for the years
ended December 31, 2017, 2016 and 2015, (iii)
Consolidated Statement of Comprehensive Income
for the years ended December 31 2017, 2016 and
2015, (iv) Consolidated Statement of Shareholders’
Equity for the years ended December 31, 2017,
2016 and 2015, (v) Consolidated Statements of
Cash Flows for the years ended December 31, 2017,
2016 and 2015; and (vi) Notes to the Consolidated
Financial Statements

—

—

—

—

X

ITEM 16. FORM 10-K SUMMARY

None.

2017 Annual Report 65

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CHIPOTLE MEXICAN GRILL, INC.

By:
Name:
Title:

/s/ JOHN R. HARTUNG

John R. Hartung
Chief Financial Officer

Date: February 8, 2018

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
Steve Ells and John Hartung, and each of them, his or her true and lawful attorneys-in-fact, each with full power of
substitution, for him or her in any and all capacities, to sign any amendments to this report on Form 10-K and to file the
same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to
be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Date

Title

/S/ STEVE ELLS

Steve Ells

February 8, 2018

Chief Executive Officer and Chairman of the Board of
Directors
(principal executive officer)

/S/ JOHN R. HARTUNG

February 8, 2018

John R. Hartung

Chief Financial Officer
(principal financial and accounting officer)

/S/ ALBERT S. BALDOCCHI

February 8, 2018

Director

Albert S. Baldocchi

/S/ PAUL CAPPUCCIO

February 8, 2018

Director

Paul Cappuccio

/S/ NEIL W. FLANZRAICH

February 8, 2018

Director

Neil W. Flanzraich

/S/ ROBIN S. HICKENLOOPER

February 8, 2018

Director

Robin S. Hickenlooper

/S/ KIMBAL MUSK

Kimbal Musk

/S/ ALI NAMVAR

Ali Namvar

/S/ MATTHEW PAULL

Matthew Paull

66 2017 Annual Report

February 8, 2018

Director

February 8, 2018

Director

February 8, 2018

Director

Chipotle Mexican Grill, Inc.
1401 Wynkoop Street, Suite 500
Denver, CO 80202

DEAR SHAREHOLDER:

April 2, 2018

You are cordially invited to attend the annual meeting of shareholders of Chipotle Mexican Grill, Inc., which

will be held on May 22, 2018 at 8:00 a.m. local time at The Westin Denver Downtown, 1672 Lawrence Street,
Denver, Colorado. Details of the business to be conducted at the annual meeting are given in the notice of
meeting and proxy statement that follow.

Please vote promptly by following the instructions in this proxy statement or in the Notice of Internet

Availability of Proxy Materials that was sent to you.

Sincerely,

/s/ Brian Niccol
Chief Executive Officer

NOTICE OF MEETING

The 2018 annual meeting of shareholders of Chipotle Mexican Grill, Inc. will be held on May 22, 2018 at 8:00 a.m. local time
at The Westin Denver Downtown, 1672 Lawrence Street, Denver, Colorado.

Shareholders will consider and take action on the following matters:

1.

Election of the nine directors named in this proxy statement, Al Baldocchi, Paul Cappuccio, Steve Ells, Neil Flanzraich,
Robin Hickenlooper, Kimbal Musk, Ali Namvar, Brian Niccol and Matthew Paull, each to serve a one-year term;

2. An advisory vote to approve the compensation of our executive officers as disclosed in this proxy statement (or

“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, 2018;

4. A proposal to approve the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan, to authorize the
issuance of an additional 1,270,000 shares of common stock under the plan and make other changes to the terms of
the plan;

5. A shareholder proposal, if properly presented at the meeting; and

6. Such other business as may properly come before the meeting or any adjournments or postponements of the meeting.

Information with respect to the above matters is set forth in the proxy statement that accompanies this notice.

The record date for the meeting has been fixed by the Board of Directors as the close of business on March 23, 2018.
Shareholders of record at that time are entitled to vote at the meeting.

If you would like to attend the meeting in person, you will need to obtain an admission ticket in advance. You can obtain a
ticket by following the instructions beginning on page 60.

By order of the Board of Directors

/s/ Steve Ells
Executive Chairman of the Board

April 2, 2018

Please execute your vote promptly by following the instructions included on the Notice of Internet Availability of
Proxy Materials that was sent to you, or as described under “How do I vote?” beginning on page 1 of the
accompanying proxy statement.

Proxy Statement Summary

MATTERS TO BE VOTED ON AT THE ANNUAL MEETING AND BOARD RECOMMENDATIONS

1. Election of nine Directors (page 6)

2. Say on Pay (page 21)

3. Ratification of Ernst & Young LLP as independent auditors (page 22)

4. Approval of Amended and Restated 2011 Stock Incentive Plan (page 25)

For

For

For

For

5. Shareholder proposal (page 32)

AGAINST

2018 BOARD HIGHLIGHTS

YEARS
OF SERVICE

INDEPENDENT

BOARD
RECOMMENDATION

AUDIT
COMMITTEE

COMPENSATION
COMMITTEE

NAME

Albert Baldocchi

Paul T. Cappuccio

Steve Ells
Executive Chairman

Neil Flanzraich
Lead Independent Director

Robin Hickenlooper

Kimbal Musk

Brian Niccol

Ali Namvar

Matthew Paull

Chairperson†

✓

✓

21

1

22

11

1

5

–

1

1

Yes

Yes

No

Yes

Yes

Yes

No

Yes

Yes

FOR

FOR

FOR

FOR

FOR

FOR

FOR

FOR

FOR

NOMINATING
& CORPORATE
GOVERNANCE
COMMITTEE

Chairperson

Chairperson

✓

✓

✓

✓

† – Designated as “Audit Committee Financial Expert” under SEC rules.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT i

Proxy Statement Summary
(continued)

TIMELINE OF SHAREHOLDER ENGAGEMENT, GOVERNANCE ENHANCEMENTS AND COMPENSATION HIGHLIGHTS

2013
Management discussions with
a number of large shareholders
regarding compensation issues,
a number of whom supported our
performance-based approach.

2014
Board and management discussions
following outreach to approximately
2/3rds of outstanding shares; in response,
eliminated SOSARs for officers in 2015 and
moved to performance shares vesting on
performance relative to peer group.

2015
Board and management
discussions with holders
totaling approximately half
of outstanding shares; in
response, revised performance
share awards for 2016 to incentivize
restoration of stock price.

May 2013
73.2% Say-on-pay approval

= Compensation

= Governance

May 2014
23.4% Say-on-pay approval

May 2014
Began phase-out of classified Board.

Feb 2015
Grant of performance shares, with
substantial reduction in grant date
value of awards to officers.

May 2015
95.4% Say-on-pay approval

May 2015
Eliminated provisions requiring
supermajority vote for shareholders
to approve certain actions.

Sept 2015
Implemented majority voting for
election of directors.

May 2016
•   Completed phase-out of classified

Board.

•   Implemented right of shareholders

to call special meetings.

Sep 2016
Implemented market-standard
proxy access bylaw.

Dec 2016
•   Streamlined management by
eliminating co-CEO structure.
•   Appointed four new independent

directors, including two designated
shareholder appointees.

May 2017
Board succession and refreshment
continued, with departures of four
primarily longer-tenured Board members.

Nov 2017
Announced planned CEO succussion.

Feb 2018
Announced appointment
of Brian Niccol as CEO.

2016
Board and management
outreach to holders totaling
approximately 60% of
outstanding shares; in response,
revised performance share
awards for 2017 to add a comparable
restaurant sales goal.

Feb 2016
Grant of performance shares
with aggressive stock price
performance goals.

May 2016
71.8% Say-on-pay approval

2017
Board and management discussions with
holders totaling over
half of outstanding shares.

Feb 2017
Grant of performance shares with
aggressive stock price performance
goals, addition of comparable
restaurant sales goal, and reduced
grant date value of awards to officers.

May 2017
93.3% Say-on-pay approval

2018

Jan 2018
Grant of Executive Chairman award
of SOSARs with substantial pricing
premium, and entered into retention
agreements with officers.

ii NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proxy Statement Summary
(continued)

The graphics below represent a snapshot of the overall independence and tenure of our Board.

8+ yrs
2

Tenure of  
Independent  
Directors

< 4 yrs
4

4–8 yrs
1

Independent

Non-Independent

SUMMARY OF CORPORATE GOVERNANCE HIGHLIGHTS

Seven of the nine members on our Board of Directors are independent.

Independent directors are led by an independent Lead Director.

All directors are up for re-election on an annual basis.

Adoption of bylaws permitting proxy access for qualifying shareholders to nominate directors.

Directors are elected by majority vote in uncontested elections rather than plurality.

Independent Board members meet in executive session at each quarterly Board meeting.

Board performance is reviewed in an annual self-assessment by each director, with reporting to and evaluation by the
full Board.

Each independent director is subject to Board stock ownership requirements and prohibitions on hedging/pledging of
shares owned.

No shareholder rights plan or “poison pill.”

Adoption of bylaws permitting holders of at least 25% of our outstanding common stock to call special meetings of
shareholders.

See also pages 39 and 40 for significant compensation policies and procedures we employ to motivate our employees to
build shareholder value, while protecting the interests of all our shareholders.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT iii

Table of Contents

Proxy Statement Summary

Annual Meeting Information

Beneficial Ownership of Our Common Stock

Proposal 1 — Election of Directors

Information Regarding the Board of Directors

Biographical Information

Board Qualifications, Skills and Attributes

A Majority of our Board Members are Independent

Committees of the Board

Director Compensation

Corporate Governance

Chairman of the Board

Lead Director

Board Performance and Self-Evaluation Process

How to Contact the Board of Directors

Executive Sessions

Director Nomination Process

Policies and Procedures for Review and Approval of Transactions with Related Persons

Role of the Board of Directors in Risk Oversight

Proposal 2 — An Advisory Vote to Approve the Compensation of our Executive
Officers as Disclosed in this Proxy Statement

Proposal 3 — Ratification of Appointment of Ernst & Young LLP as Independent
Registered Public Accounting Firm

Independent Auditors’ Fee

Audit Committee Report

Policy for Pre-Approval of Audit and Permitted Non-Audit Services

Proposal 4 — Approval of the Amended and Restated Chipotle Mexican Grill, Inc.
2011 Stock Incentive Plan

Securities Authorized for Issuance Under Equity Compensation Plans

Proposal 5 — An Advisory Vote on a Shareholder Proposal Requesting that We
Implement a Right of Shareholders to Act by Written Consent Without a Meeting

Statement in Opposition by our Board of Directors

iv NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

i

1

4

6

6

6

10

11

12

14

15

16

16

16

17

17

17

19

19

21

22

23

23

23

25

31

32

Table of Contents
(continued)

Executive Officers

Compensation Discussion and Analysis

Letter From the Compensation Committee of our Board of Directors

Executive Summary

CEO Transition

Compensation Philosophy and Objectives

Executive Compensation Program Components and Structures

Variable Pay

Factors in Setting Executive Officer Pay

Roles and Responsibilities of the Committee, Compensation Consultant and the CEO in
Setting Executive Officer Compensation

Role of Market Data and Our Peer Group

2017 Compensation Program

Executive Stock Ownership Guidelines

Prohibition on Hedging and Pledging

Executive Agreements

Compensation Program Risk

Tax and Other Regulatory Considerations

Compensation Committee Report

2017 Compensation Tables

Summary Compensation Table

Grants of Plan-Based Awards in 2017

Terms of 2017 Performance Share Awards

Terms of 2017 SOSAR Awards

Outstanding Equity Awards at December 31, 2017

Option Exercises and Stock Vested in 2017

Non-Qualified Deferred Compensation for 2017

Potential Payments Upon Termination or Change-in-Control

CEO Pay Ratio

Section 16(a) Beneficial Ownership Reporting Compliance

Certain Relationships and Related Party Transactions

Shareholder Proposals and Nominations for 2019 Annual Meeting

Availability of SEC Filings, Corporate Governance Guidelines, Code of Conduct,
Codes of Ethics and Committee Charters

Delivery of Materials to Shareholders with Shared Addresses

Attendance at the Meeting

Miscellaneous

Appendix A—Proposed Amended and Restated 2011 Stock Incentive Plan

34

35

36

36

40

40

41

42

42

43

43

45

49

49

49

52

52

52

53

53

54

55

55

56

56

56

57

58

58

59

60

60

60

60

61

A-1

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT v

Annual Meeting Information

ANNUAL MEETING INFORMATION

This proxy statement contains information related to the annual meeting of shareholders of Chipotle
Mexican Grill, Inc. to be held on Tuesday, May 22, 2018, beginning at 8:00 a.m. at The Westin Denver
Downtown, 1672 Lawrence Street, Denver, Colorado. This proxy statement was prepared under the
direction of Chipotle’s Board of Directors to solicit your proxy for use at the annual meeting. It will be
made available to shareholders on or about April 2, 2018.

Who is entitled to vote and how many votes do I have?
If you were a shareholder of record of our common stock on March 23, 2018, you are entitled to vote at the annual meeting,
or at any postponement or adjournment of the annual meeting. On each matter to be voted on, you may cast one vote for
each share of common stock you hold. As of March 23, 2018, there were 27,835,850 shares of common stock outstanding
and entitled to vote.

What am I voting on?
You will be asked to vote on five proposals:

Board
Recommendation:

PROPOSAL 1 – Election of nine directors: Al Baldocchi, Paul T. Cappuccio, Steve Ells, Neil Flanzraich,

FOR

Robin Hickenlooper, Kimbal Musk, Ali Namvar, Brian Niccol and Matthew Paull.

PROPOSAL 2 – An advisory vote to approve the compensation of our executive officers as disclosed

FOR

in this proxy statement (“say-on-pay”).

PROPOSAL 3 – Ratification of the appointment of Ernst & Young LLP as our independent registered

public accounting firm for the year ending December 31, 2018.

PROPOSAL 4 – Approval of the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock

Incentive Plan, to authorize the issuance of an additional 1,270,000 shares of common
stock under the plan and make other changes to the terms of the plan.

FOR

FOR

PROPOSAL 5 – 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 to take action by written consent without a meeting.

AGAINST

The Board of Directors is not aware of any other matters to
be presented for action at the meeting.

How does the Board of Directors recommend I
vote on the proposals?
The Board of Directors recommends a vote FOR each
candidate for director, FOR Proposals 2, 3 and 4, and
AGAINST Proposal 5.

How do I vote?
If you hold your shares through a broker, bank, or other
nominee in “street name,” you need to submit voting
instructions to your broker, bank or other nominee in order

to cast your vote. In most instances you can do this over
the Internet. The Notice of Internet Availability of Proxy
Materials that was provided to you has specific instructions
for how to submit your vote, or if you have received or
request a hard copy of this proxy statement you may mark,
sign, date and mail the accompanying voting instruction
form in the postage-paid envelope provided. Your vote is
revocable by following the procedures outlined in this proxy
statement. However, since you are not a shareholder of
record you may not vote your shares in person at the
meeting without obtaining authorization from your broker,
bank or other nominee.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 1

Annual Meeting Information
(continued)

If you are a shareholder of record, you can vote your
shares over the Internet as described in the Notice of
Internet Availability of Proxy Materials that was provided to
you, or if you have received or request a hard copy of this
proxy statement and accompanying form of proxy card you
may vote by telephone as described on the proxy card, or
by mail by marking, signing, dating and mailing your proxy
card in the postage-paid envelope provided. Your
designation of a proxy is revocable by following the
procedures outlined in this proxy statement. The method
by which you vote will not limit your right to vote in person
at the annual meeting.

If you receive hard copy materials and sign and return your
proxy card without specifying choices, your shares will be
voted as recommended by the Board of Directors.

Will my shares held in street name be voted if
I do not provide voting instructions?
Under the rules of the New York Stock Exchange, or NYSE,
on voting matters characterized by the NYSE as “routine,”
NYSE member firms have the discretionary authority to
vote shares for which their customers do not provide
voting instructions. On non-routine proposals, such
“uninstructed shares” may not be voted by member firms.
Only the proposal to ratify the appointment of our
independent registered public accounting firm is
considered a routine matter for this purpose. None of the
other proposals presented in this proxy statement are
considered routine matters. Accordingly, if you hold your
shares through a brokerage firm and do not provide timely
voting instructions, your shares will be voted, if at all, only
on Proposal 3. We strongly encourage you to exercise
your right to vote in the election of directors and other
matters to be voted on at the annual meeting.

Can I change my vote or revoke my proxy?
You can change your vote or revoke your proxy at any time
before it is voted at the annual meeting by:

• re-submitting your vote on the Internet;

• if you are a shareholder of record, by sending a written
notice of revocation to our corporate Secretary at our
principal offices, 1401 Wynkoop Street, Suite 500,
Denver, Colorado, 80202; or

• if you are a shareholder of record, by attending the

annual meeting and voting in person.

Attendance at the annual meeting will not by itself revoke
your proxy. If you hold shares in street name and wish to
cast your vote in person at the meeting, you must contact
your broker, bank or other nominee to obtain authorization
to vote.

What do I need to attend the meeting?
To attend the meeting, you must be a shareholder on the
record date and obtain an admission ticket in advance by
following the instructions set forth beginning on page 60.
Tickets will be available to registered and beneficial owners
and to one guest accompanying each registered or
beneficial owner. Requests for admission tickets will be
processed in the order in which they are received and must
be requested no later than May 21, 2018. Please note that
seating is limited and requests for tickets will be accepted
on a first-come, first-served basis. On the day of the
meeting, each shareholder will be required to present valid
picture identification such as a driver’s license or passport
with their admission ticket. Seating will begin at 7:30 a.m.
and the meeting will begin at 8:00 a.m. Cameras (including
cell phones with photographic capabilities), recording
devices and other electronic devices will not be permitted
at the meeting. You may be required to enter through a
security check before being granted access to the meeting.

What constitutes a quorum?
A quorum is necessary to conduct business at the annual
meeting. At any meeting of our shareholders, the holders of
a majority in voting power of our outstanding shares of
common stock entitled to vote at the meeting, present in
person or by proxy, constitutes a quorum for all purposes.
You are part of the quorum if you have voted by proxy.
Abstentions, broker non-votes and votes withheld from
director nominees count as “shares present” at the
meeting for purposes of determining whether a quorum
exists.

What is a “broker non-vote”?
A broker non-vote occurs when a broker, bank or other
nominee who holds shares for another does not vote on a
particular item because the nominee has not received
instructions from the owner of the shares and does not
have discretionary voting authority for that item. See “Will
my shares held in street name be voted if I do not provide
voting instructions?” above for more information.

What vote is required to approve each
proposal?
Proposal 1 — Re-election of each nominee for director
requires that such nominee receive a majority of the votes
cast regarding his or her election. Abstentions and broker
non-votes are not counted as votes cast and will have no
effect on the outcome of the election of directors.

Proposals 2 through 5 — The say-on-pay vote and
ratification of the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the year

2 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Annual Meeting Information
(continued)

we are distributing to our shareholders of record and
beneficial owners as of the close of business on March 23,
2018 a Notice of Internet Availability of Proxy Materials. On
the date of distribution of the notice, all shareholders and
beneficial owners will have the ability to access all of the
proxy materials at the URL address included in the notice.
These proxy materials are also available free of charge upon
request at 1-800-690-6903, or by e-mail at
sendmaterial@proxyvote.com, or by writing to Chipotle
Mexican Grill, Inc., c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717. Requests by e-mail or in writing should
include the control number included on the notice you
received. If you would like to receive the Notice of Internet
Availability of Proxy Materials via e-mail rather than regular
mail in future years, please follow the instructions on the
notice, or enroll on the Investors page of our web site at
www.chipotle.com. Delivering future notices by e-mail will
help us reduce the cost and environmental impact of
our annual meeting.

Who is bearing the cost of this proxy
solicitation?
We will bear the cost of preparing, assembling and mailing
the Notice of Internet Availability of Proxy Materials; of
making these proxy materials available on the Internet and
providing hard copies of the materials to shareholders who
request them; and of reimbursing brokers, nominees,
fiduciaries and other custodians for the out-of-pocket and
clerical expenses of transmitting copies of the Notice of
Internet Availability of Proxy Materials and the proxy
materials themselves to beneficial owners of our shares. A
few of our officers and employees may participate in the
solicitation of proxies, without additional compensation, by
telephone, e-mail or other electronic means or in person.
We have also engaged Alliance Advisors, LLC to assist us in
the solicitation of proxies, for which we have agreed to pay
a fee of $22,500 plus reimbursement of customary
expenses.

ending December 31, 2018, approval of the Amended and
Restated 2011 Stock Incentive Plan, and approval of the
shareholder proposal (if properly presented at the
meeting), all require the affirmative vote of a majority of
the voting power present at the annual meeting and
entitled to vote in order to be approved. Abstentions
represent shares entitled to vote, and therefore will have
the same effect as a vote “AGAINST” a proposal. Broker
non-votes are not counted as entitled to vote and therefore
will have no effect on the outcome of any of these
proposals.

Because the say-on-pay vote (Proposal 2) and the vote on
the shareholder proposal (Proposal 5) are advisory, they
will not be binding on the Board or Chipotle. However, the
Board will review the voting results and take them into
consideration when making future decisions regarding
executive compensation and the subject matter of the
shareholder proposal. Ratification of our appointment of
independent auditors is not required and therefore the vote
on Proposal 3 is also advisory only. See Proposal 3 for
additional information about the effect of the voting
outcome on this proposal.

What if a nominee for director does not receive a
majority of votes cast regarding his or her election?
Such director(s) would be required to submit an irrevocable
resignation to the Nominating and Governance Committee
of the Board, and the committee would make a
recommendation to the Board as to whether to accept or
reject the resignation or whether other action should be
taken. The Board would then act on the resignation, taking
into account the committee’s recommendation, and publicly
disclose (by a press release and filing an appropriate
disclosure with the SEC) its decision regarding the
resignation, and if such resignation is rejected the rationale
behind the decision, within 90 days following certification
of the election results. The committee in making its
recommendation and the Board in making its decision each
may consider any factors and other information that they
consider appropriate and relevant.

How is this proxy statement being delivered?
We have elected to deliver our proxy materials electronically
over the Internet as permitted by rules of the Securities and
Exchange Commission, or SEC. As required by those rules,

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 3

Beneficial Ownership of our
Common Stock

BENEFICIAL OWNERSHIP OF OUR COMMON STOCK

The following tables set forth information as of March 23, 2018 as to the beneficial ownership of shares of our common
stock by:

• each person (or group of affiliated persons) known to us to beneficially own more than 5 percent of our common stock;

• each of the executive officers listed in the Summary Compensation Table appearing later in this proxy statement;

• each of our directors; and

• all of our current executive officers and directors as a group.

The number of shares beneficially owned by each shareholder is determined under SEC rules and generally includes shares
for which the holder has voting or investment power. The information does not necessarily indicate beneficial ownership for
any other purpose. The percentage of beneficial ownership shown in the following tables is based on 27,835,850
outstanding shares of common stock as of March 23, 2018. For purposes of calculating each person’s or group’s percentage
ownership, shares of common stock issuable pursuant to the terms of stock options, stock appreciation rights or restricted
stock units exercisable or vesting within 60 days after March 23, 2018 are included as outstanding and beneficially owned
for that person or group, but are not treated as outstanding for the purpose of computing the percentage ownership of any
other person or group.

Name of Beneficial Owner

Beneficial holders of 5% or more of outstanding common stock

Pershing Square Capital Management, L.P.(1)

The Vanguard Group, Inc.(2)

BlackRock, Inc.(3)

FMR LLC(4)

Susquehanna Securities(5)

Directors and named executive officers

Steve Ells(6)

Brian Niccol

John Hartung(7)

Mark Crumpacker(8)

Curt Garner(9)

Scott Boatwright

Albert Baldocchi(10)(11)

Paul Cappuccio

Neil Flanzraich(10)

Robin Hickenlooper

Kimbal Musk(12)

Ali Namvar(13)

Matthew Paull

Total Shares
Beneficially Owned

Percentage of
Class Beneficially
Owned

2,882,463

2,688,770

1,559,197

1,519,913

1,499,536

383,339

–

145,272

46,461

5,500

–

73,887

500

4,146

–

501

3,000

400

10.36%

9.66%

5.60%

5.46%

5.39%

1.37%

–

*

*

*

–

*

–

*

–

*

*

*

All directors and current executive officers as a group (12 people)(14)

616,545

2.19%

Less than one percent.

*
(1) Based solely on a report on Schedule 13D/A filed by Pershing Square Capital Management, L.P., PS Management GP, LLC, and William A.
Ackman (collectively, “Pershing Square”) on February 7, 2017. The address of Pershing Square is 888 Seventh Avenue, 42nd Floor, New
York, New York, 10019.

4 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Beneficial Ownership of our
Common Stock (continued)

(2) Based solely on a report on Schedule 13G/A filed on February 9, 2018. The address of The Vanguard Group, Inc. is 100 Vanguard Blvd.,

Malvern, Pennsylvania, 19355.

(3) Based solely on a report on Schedule 13G/A filed on January 29, 2018. The address of BlackRock, Inc. is 55 East 52nd Street, New York,

New York, 10022.

(4) Based solely on a report on Schedule 13G/A filed on February 13, 2018. Various persons have the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of, the shares of common stock reflected as beneficially owned by FMR
LLC. The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.

(5) Based solely on a report on Schedule 13G filed on February 9, 2018. The address of Susquehanna Securities is 401 E. City Avenue, Suite

220, Bala Cynwyd, Pennsylvania, 19004.

(6) Shares beneficially owned by Mr. Ells include 175,000 shares underlying vested stock appreciation rights.
(7) Shares beneficially owned by Mr. Hartung include: 19,782 shares in a revocable trust for Mr. Hartung’s benefit and of which his spouse

is the trustee; 35 shares beneficially owned by his children; and 110,000 shares underlying vested stock appreciation rights. Mr. Hartung
disclaims beneficial ownership of the shares beneficially owned by his children.

(8) Shares beneficially owned by Mr. Crumpacker include 40,000 shares underlying vested stock appreciation rights. Mr. Crumpacker’s

employment terminated on March 15, 2018.

(9) Shares beneficially owned by Mr. Garner include 5,500 shares underlying vested stock appreciation rights.
(10) Shares beneficially owned by Messrs. Baldocchi and Flanzraich include 704 shares underlying unvested restricted stock units, which

are deemed to be beneficially owned because each such director is retirement-eligible and the vesting of the awards accelerates in the
event of the director’s retirement.

(11) Shares beneficially owned by Mr. Baldocchi include 69,648 shares owned jointly by Mr. Baldocchi and his spouse.
(12) Shares beneficially owned by Mr. Musk include 189 shares underlying unvested restricted stock units which will vest on May 13, 2018.
(13) Mr. Namvar disclaims beneficial ownership of the shares beneficially owned by Pershing Square Capital Management L.P., PS

Management GP, LLC and William A. Ackman, and accordingly such shares are not reported above as beneficially owned by Mr. Namvar.

(14) See Notes (6) through (13), except that shares beneficially owned by Mr. Crumpacker are excluded because he was not employed as of

March 23, 2018.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 5

Proposal 1

Election of Directors

Our Board of Directors currently has nine members. At the annual meeting, shareholders will be asked to vote on the nine
nominees named below, each of whom will be elected on an annual basis, and each of whom is an incumbent member of the
Board. Each of the nominees was nominated by the Board upon the recommendation of the Nominating and Corporate
Governance Committee, and has consented to serve if elected. If any nominee is unable to serve or will not serve for any
reason, the persons designated on the accompanying form of proxy will vote for other candidates in accordance with their
judgment. We are not aware of any reason the nominees would not be able to serve if elected.

Re-election of each nominee for director requires that such nominee receive a majority of the votes cast regarding his or
her election. Abstentions and broker non-votes are not counted as votes cast and will have no effect on the outcome of any
of these proposals.

The Board of Directors recommends a vote FOR the election of Ms. Hickenlooper and Messrs. Baldocchi, Cappuccio,
Ells, Flanzraich, Musk, Namvar, Niccol and Paull as directors.

INFORMATION REGARDING THE BOARD OF DIRECTORS

Biographical Information
The following is biographical information about each nominee, including a description of the experience, qualifications and
skills that have led the Board to determine that each nominee should serve on the Board. The respective current terms of all
directors expire as of the date of next year’s annual meeting of shareholders or continue until their successors are elected
and have qualified.

DIRECTORS WHOSE TERMS EXPIRE AT THE 2018 ANNUAL MEETING OF
SHAREHOLDERS AND WHO ARE NOMINEES FOR TERMS EXPIRING AT THE 2019 ANNUAL
MEETING

Background:
Mr. Baldocchi has been self-employed since 2000
as a financial consultant and strategic advisor for,
and investor in, a variety of privately-held
companies. He holds a Bachelor of Science degree
in chemical engineering from the University of
California at Berkeley and an MBA from Stanford
University.

Qualifications:
Mr. Baldocchi’s extensive
involvement with restaurant
companies for more than 25 years
has given him an in-depth knowledge
of restaurant company finance,
operations and strategy. He also has
considerable experience with high-
growth companies in the restaurant
industry and in other industries, and
his experience as a senior investment
banker at a number of prominent
institutions, including Morgan
Stanley, Solomon Brothers and
Montgomery Securities, helped him
develop solid capabilities in
accounting and finance as well.

Albert S. Baldocchi

Age: 63
Director Since: 1997

6 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 1
(continued)

DIRECTORS WHOSE TERMS EXPIRE AT THE 2018 ANNUAL MEETING OF
SHAREHOLDERS AND WHO ARE NOMINEES FOR TERMS EXPIRING AT THE 2019 ANNUAL
MEETING (CONT’D)

Background:
Mr. Cappuccio has served as Executive Vice
President and General Counsel of Time Warner
since 2001. In this capacity, he oversees the
worldwide management of Time Warner’s legal
functions, collaborating with all of its operating
businesses. From 1999 to 2001, Mr. Cappuccio was
Senior Vice President and General Counsel at
America Online. Before joining AOL, he was a
partner at the Washington, DC office of law firm
Kirkland & Ellis LLP, where he specialized in
telecommunications law, appellate litigation, and
negotiation with government agencies. From 1991
to 1993, Mr. Cappuccio was Associate Deputy
Attorney General at the United States
Department of Justice. Prior to his service at the
DOJ, Mr. Cappuccio served as law clerk at the
United States Supreme Court for Justices Antonin
Scalia and Anthony M. Kennedy, and as a law clerk
to Judge Alex Kozinski of the United States Court
of Appeals for the Ninth Circuit. Mr. Cappuccio
earned a law degree from Harvard Law School
and a Bachelor’s degree from Georgetown
University, and serves on the board of directors of
Central European Media Enterprises Ltd.
(NasdaqGS: CETV).

Background:
Mr. Ells founded Chipotle in 1993. He was Chief
Executive Officer until Mr. Niccol was appointed to
that role in March 2018, at which time Mr. Ells
became Executive Chairman. From 2009 through
2016 Mr. Ells served as Co-Chief Executive Officer
and Chairman. Prior to launching Chipotle, Mr. Ells
worked for two years at Stars restaurant in San
Francisco. Mr. Ells’s vision – that food served fast
doesn’t have to be low quality and that delicious
food doesn’t have to be expensive – is the
foundation on which Chipotle is based. Mr. Ells
graduated from the University of Colorado with a
Bachelor of Arts degree in art history, and is also
a graduate of the Culinary Institute of America.

Paul T. Cappuccio

Age: 56
Director Since: 2016

Steve Ells

Age: 52
Director Since: 1996

Qualifications:
Mr. Cappuccio’s contributions to the
Board include strong experience in
legal and regulatory compliance, risk
management, and public company
corporate governance.

Qualifications:
Mr. Ells’s visionary thinking has led
Chipotle to extraordinary
accomplishments, such as growing
from a single restaurant to over
2,400, and leading us to become the
only national restaurant brand to
prepare its food with no added
flavors, colors or preservatives. This
progressive thinking has also resulted
in Mr. Ells remaining a principal
driving force behind making our
company innovative and striving for
constant improvement, and he
continues to provide important
leadership to our executive officers,
management team, and Board. He is
also one of the largest individual
shareholders of our company.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 7

Proposal 1
(continued)

DIRECTORS WHOSE TERMS EXPIRE AT THE 2018 ANNUAL MEETING OF
SHAREHOLDERS AND WHO ARE NOMINEES FOR TERMS EXPIRING AT THE 2019 ANNUAL
MEETING (CONT’D)

Qualifications:
Mr. Flanzraich’s executive experience
has helped him develop outstanding
skills in leading and managing strong
teams of employees, and in oversight
of the growth and financing of
businesses in a rapidly-evolving
market. His legal background also is
valuable to us in the risk
management area, and Mr. Flanzraich
brings to us extensive experience
serving as an independent director of
other public and privately-held
companies.

Qualifications:
Ms. Hickenlooper brings to the Board
significant experience in marketing
and new media, as well as public
company corporate governance.

Background:
Mr. Flanzraich is the Executive Chairman of
Cantex Pharmaceuticals, Inc. (formerly
ParinGenix, Inc.), a privately-owned biotech
company, where he previously served as CEO and
Chairman, and additionally, he has been a private
investor since February 2006. From 1998 through
its sale in January 2006 to TEVA Pharmaceuticals
Industries, Ltd., he served as Vice Chairman and
President of IVAX Corporation, an international
pharmaceutical company. From 1995 to 1998,
Mr. Flanzraich served as Chairman of the Life
Sciences Legal Practice Group of Heller Ehrman
LLP, a law firm, and from 1981 to 1994, served as
the Senior Vice President and Chief Counsel and
member of the Operating and Executive
Committees of Syntex Corporation, an
international pharmaceutical company. He was a
director of Equity One Inc. (NYSE:EQY) until it was
acquired on March 1, 2017. Mr. Flanzraich also
previously served as a director of a number of
additional publicly-traded companies. He received
an A.B. from Harvard College and a J.D. from
Harvard Law School.

Background:
Ms. Hickenlooper is Senior Vice President of
Corporate Development at Liberty Media
Corporation and has served in senior corporate
development roles at Liberty Media and its
affiliates since 2010. Prior to joining Liberty Media
in 2008, Ms. Hickenlooper worked at Del Monte
Foods and in investment banking at Thomas
Weisel Partners. Ms. Hickenlooper serves on the
board of directors of FTD Companies, Inc.
(Nasdaq: FTD). She earned an MBA from Kellogg
School of Management at Northwestern
University and a Bachelor’s degree in Public
Policy from Duke University.

Neil W. Flanzraich

Age: 74
Director Since: 2007

Robin Hickenlooper

Age: 39
Director Since: 2016

8 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 1
(continued)

DIRECTORS WHOSE TERMS EXPIRE AT THE 2018 ANNUAL MEETING OF
SHAREHOLDERS AND WHO ARE NOMINEES FOR TERMS EXPIRING AT THE 2019 ANNUAL
MEETING (CONT’D)

Background:
Mr. Musk is an entrepreneur and restaurateur who
has had a role in founding and advising several
companies and non-profits including: The Kitchen
Restaurant Group, a restaurant company with
restaurants in Colorado, Illinois and Tennessee;
The Kitchen Community; Zip2 Corporation
(acquired by Compaq Computer Corporation);
PayPal, Inc. (acquired by eBay Inc.); Everdream
Corporation (acquired by Dell Inc.); Tesla Motors,
Inc.; Space Exploration Technologies Corp.
(SpaceX); OneRiot (acquired by Wal-Mart Stores,
Inc.) and SolarCity Corporation. Mr. Musk has
been Chief Executive Officer of The Kitchen
Restaurant Group since April 2004, and Executive
Director of The Kitchen Community, a non-profit
organization that creates learning gardens in
schools across the United States, since November
2010. After success in the technology business,
Mr. Musk decided to pursue his passion for food
and cooking and attended the French Culinary
Institute in New York City. He is a member of the
board of directors of Tesla Motors, Inc.
(Nasdaq:TSLA) as well as a number of privately-
held companies and charitable organizations. He
has served as an Adjunct Professor at New York
University, and is a graduate of Queen’s Business
School in Canada and the French Culinary
Institute.

Background:
Mr. Namvar is a private investor, and until April 1,
2018 was an active Partner and senior member of
the investment team at Pershing Square Capital
Management, L.P., currently our largest
shareholder. Prior to joining Pershing Square in
2006, Mr. Namvar held positions at Blackstone
Group and Goldman Sachs Group, Inc. Mr. Namvar
holds a Bachelor of Arts degree from Columbia
University and an MBA from the Wharton School
at the University of Pennsylvania.

Kimbal Musk

Age: 45
Director Since: 2013

Ali Namvar

Age: 48
Director Since: 2016

Qualifications:
Mr. Musk’s extensive experience with
fast-growing and innovative
companies, as well as restaurants and
other retail operations, and his
experience on numerous boards of
directors, are an asset to our Board.

Qualifications:
Mr. Namvar has significant
experience with investments in the
restaurant industry as well as the
overall consumer goods sector, and
also brings to the Board a deep
knowledge of finance, strategic
transactions and investor relations.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 9

Proposal 1
(continued)

DIRECTORS WHOSE TERMS EXPIRE AT THE 2018 ANNUAL MEETING OF
SHAREHOLDERS AND WHO ARE NOMINEES FOR TERMS EXPIRING AT THE 2019 ANNUAL
MEETING (CONT’D)

Qualifications:
Mr. Niccol brings us extensive
experience in brand management,
marketing and operations, as well as
a proven track record of driving
outstanding results at multiple
restaurant brands. He also adds to
the Board’s experience in corporate
governance and public company
oversight.

Qualifications:
Mr. Paull brings to our Board expert
knowledge in finance, accounting, and
public company corporate
governance.

Background:
Mr. Niccol was appointed to our Board effective
March 5, 2018, at the same time he became our
Chief Executive Officer. Mr. Niccol previously
served from January 1, 2015 as Chief Executive
Officer of Taco Bell, a division of Yum! Brands, Inc.
He joined Taco Bell in 2011 as Chief Marketing and
Innovation Officer and served as President from
2013 to 2014. Prior to his service at Taco Bell,
from 2005 to 2011 he served in various executive
positions at Pizza Hut, another division of Yum!
Brands, including General Manager and Chief
Marketing Officer. Before joining Yum! Brands,
Mr. Niccol spent 10 years at Procter & Gamble Co.,
serving in various brand management positions.
Mr. Niccol holds an undergraduate degree from
Miami University and an MBA from the University
of Chicago Booth School of Business. He serves as
a director of Harley-Davidson, Inc. (NYSE: HOG)

Background:
Mr. Paull was Senior Vice President and Chief
Financial Officer of McDonald’s Corp. from 2001
until he retired from that position in 2008. Prior
to joining McDonald’s in 1993, Mr. Paull was a
Partner at Ernst & Young, LLP. Mr. Paull currently
serves on the boards of directors of Air Products
and Chemicals, Inc. (NYSE: APD), Canadian Pacific
Railway Limited (NYSE: CP) and KapStone Paper
and Packaging Corp. (NYSE: KS). Mr. Paull
previously served as a member of the board of
WMS Industries, Inc. until 2013, and Best Buy Co.
until 2013. He also serves on the advisory board of
Pershing Square Capital Management, L.P.
Mr. Paull holds a Bachelor’s degree and a Master’s
degree in Accounting from the University of
Illinois.

Brian Niccol

Age: 43
Director Since: 2018

Matthew H. Paull

Age: 66
Director Since: 2016

Board Qualifications, Skills and Attributes
In addition to the specific qualifications, skills and experience described above, each incumbent director has demonstrated a
strong work ethic and dedication to Chipotle, including coming prepared to meetings, supporting our strategic vision while
asking constructive questions and challenging management in a productive way, and otherwise providing valuable oversight
of our business on behalf of our shareholders. We also believe that each director, through their personal accomplishments
and in their service to Chipotle, has demonstrated high integrity, strong intellectual acumen, solid business judgment, and
strategic vision.

10 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 1
(continued)

The graphic below depicts a number of the key skills, experiences and attributes our Board believes to be important to have
represented on the Board, and identifies the number of continuing directors having those skills, experiences and attributes.

SKILLS, EXPERIENCE AND ATTRIBUTES

LEADERSHIP

REAL ESTATE

(CEO; LEADERSHIP OF LARGE ORGANIZATIONS; PUBLIC
COMPANY BOARD SERVICE)

(SITE SELECTION; PROPERTY ADMINISTRATION)

7/9 DIRECTORS

4/9 DIRECTORS

RESTAURANT INDUSTRY

(SOURCING & SUPPLY; FOOD SAFETY; QUALITY ASSURANCE)

6/9 DIRECTORS

INTERNATIONAL

5/9 DIRECTORS
(FOREIGN JURISDICTIONS; ORGANIZATIONAL & TAX
STRUCTURE)

HR/PEOPLE MANAGEMENT

SUSTAINABILITY

(RECRUITING; TALENT DEVELOPMENT & MOTIVATION;
COMPLIANCE)

3/9 DIRECTORS

2/9 DIRECTORS
(ENVIRONMENTAL, SOCIAL & GOVERNANCE ISSUES)

FINANCE/ACCOUNTING

6/9 DIRECTORS

(REGULATION, INVESTIGATIONS & COMPLIANCE)

GOVERNMENT RELATIONS

3/9 DIRECTORS

(ACCOUNTING SYSTEMS; PUBLIC REPORTING; INTERNAL
CONTROLS)

RISK MANAGEMENT

(OVERSIGHT & EVALUATION)

BRANDING/MARKETING

INVESTOR RELATIONS

6/9 DIRECTORS

3/9 DIRECTORS

(ENGAGEMENT REGARDING STRATEGY, COMPENSATION, AND
CORPORATE GOVERNANCE)

5/9 DIRECTORS

(GENDER; ETHNIC/NATIONAL ORIGIN)

1/9 DIRECTORS

DIVERSITY

(CUSTOMER RELATIONS; BRAND INNOVATION)

TECHNOLOGY

1/9 DIRECTORS
(BUSINESS EFFICIENCY; REVENUE OPPORTUNITIES;
CYBERSECURITY)

The Board of Directors held seven meetings in 2017. Each
director attended at least 75 percent of the meetings of the
Board and of committees of which they were members
during the time in which they served as a member of the
Board in 2017. The Board has requested that each of its
members attend our annual shareholder meetings absent
extenuating circumstances, and all directors serving on the
Board following the date of the 2017 annual meeting
attended the meeting.

A Majority of our Board Members Are
Independent
Our Board of Directors, under direction of the Nominating
and Corporate Governance Committee, reviews the
independence of our directors to determine whether any
relationships, transactions or arrangements involving any
director or any family member or affiliate of a director may
be deemed to compromise the director’s independence
from us, including under the independence standards
contained in the rules of the NYSE. Based on that review, in
March 2018 the Board determined that none of our

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 11

Proposal 1
(continued)

directors have any relationships, transactions or
arrangements that would compromise their independence,
except that Mr. Ells is not an independent director as a
result of his employment with us as Chief Executive Officer
until March 2018, and as Executive Chairman thereafter.
Additionally, Mr. Niccol is not an independent director as a
result of his employment with us as Chief Executive Officer
since March 2018.

In making its determination as to the independence of
members of the Board, the Board determined that the
following transactions do not constitute relationships that
would create material conflicts of interest or otherwise
compromise the independence of the directors in attending
to their duties as Board members: (i) the registration rights
granted to Mr. Baldocchi as described below under “Certain
Relationships and Related Party Transactions;” and (ii) our
agreements with Pershing Square Capital Management,
L.P., in which Mr. Namvar was a partner until April 1, 2018,
and for which Mr. Paull serves on the advisory board.
Accordingly, the Board concluded that each director other
than Mr. Ells and Mr. Niccol qualifies as an independent
director.

Committees of the Board
Our Board of Directors has three standing committees:
(1) the Audit Committee, (2) the Compensation Committee,
and (3) the Nominating and Corporate Governance
Committee, each composed entirely of persons the Board
has determined to be independent as described above.
Each member of the Audit Committee has also been
determined by the Board to be independent under the
definition included in SEC Rule 10A-3(b)(1), and each
member of the Compensation Committee has been
determined to be independent under NYSE Rule
303A.02(a)(ii). Each committee operates pursuant to a
written charter adopted by our Board of Directors which
sets forth the committee’s role and responsibilities and
provides for an annual evaluation of its performance. The
charters of all three standing committees are available on
the Investors page of our corporate website at
ir.chipotle.com under the Corporate Governance link.

Audit Committee
In accordance with its charter, the Audit Committee acts to
oversee the integrity of our financial statements and
system of internal controls, the annual independent audit of
our financial statements, the performance of our internal
audit services function (including review of audit plans,
budget and staffing), our compliance with legal and
regulatory requirements, the implementation and
effectiveness of our disclosure controls and procedures,

and the evaluation and oversight of risk issues, and also
acts to ensure open lines of communication among our
independent auditors, accountants, internal audit and
financial management. The committee’s responsibilities
also include review of the qualifications, independence and
performance of the independent auditors, who report
directly to the Audit Committee. The committee regularly
holds executive sessions with the audit partner for
continued assessment of the performance, effectiveness
and independence of the independent audit firm. The
committee also retains, determines the compensation of,
evaluates, and when appropriate replaces our independent
auditors and pre-approves audit and permitted non-audit
services provided by our independent auditors. The Audit
Committee has adopted the “Policy Relating to
Pre-Approval of Audit and Permitted Non-Audit Services”
under which audit and non-audit services to be provided to
us by our independent auditors are pre-approved. This
policy is summarized beginning on page 23 of this proxy
statement. The committee determined that the fees paid to
the independent auditor in 2017, including in connection
with non-audit services, were appropriate, necessary and
cost-efficient in the management of our business, and did
not present a risk of compromising the auditor’s
independence. The committee has also adopted and
annually reviews compliance with the company’s Hiring
Policy for Former Employees of Independent Auditor Firm,
which further ensures that the independence of the
independent audit firm is not impaired.

As required by law, the Audit Committee has established
procedures to handle complaints received regarding our
accounting, internal controls or auditing matters. It is also
required to ensure the confidentiality of employees who
have provided information or expressed concern regarding
questionable accounting or auditing practices. The
committee also fulfills the oversight function of the Board
with respect to risk management, as described under
“Corporate Governance – Role of the Board of Directors in
Risk Oversight.” The committee may retain independent
advisors at our expense that it considers necessary for the
completion of its duties. The Audit Committee held eight
meetings in 2017. The members of the Audit Committee are
Messrs. Baldocchi (Chairperson) and Cappuccio and
Ms. Hickenlooper. Our Board of Directors has determined
that all of the Audit Committee members meet the
enhanced independence standards required of audit
committee members by regulations of the SEC, and are
financially literate as defined in the listing standards of the
NYSE. The Board has further determined that Mr. Baldocchi
qualifies as an “Audit Committee Financial Expert” as
defined in SEC regulations.

12 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 1
(continued)

No member of the Audit Committee served on more than
three audit or similar committees of publicly held
companies, including Chipotle, in 2017. A report of the Audit
Committee is found under the heading “Audit Committee
Report” on page 23.

Compensation Committee
The Compensation Committee oversees our executive
compensation policies and programs. In accordance with its
charter, the committee determines the compensation of
our Chief Executive Officer based on an evaluation of his
performance, and approves the compensation level of our
other executive officers following an evaluation of their
performance and recommendation by the Chief Executive
Officer. The manner in which the committee makes
determinations as to the compensation of our executive
officers is described in more detail below under “Executive
Officers and Compensation – Compensation Discussion and
Analysis.”

The Compensation Committee charter also grants the
committee the authority to: review and make
recommendations to the Board with respect to the
establishment of any new incentive compensation and
equity-based plans; review and approve the terms of
written employment agreements and post-service
arrangements for executive officers; review our
compensation programs generally to confirm that those
plans provide reasonable benefits to us; recommend
compensation to be paid to our outside directors; review
disclosures to be filed with the SEC and distributed to our
shareholders regarding executive compensation and
recommend to the Board the filing of such disclosures;
assist the Board with its functions relating to our
compensation and benefits programs generally; and other
administrative matters with regard to our compensation
programs and policies. The committee may delegate any of
its responsibilities to a subcommittee comprised of one or
more members of the committee, except where such
delegation is not allowed by legal or regulatory
requirements.

The Compensation Committee has also been appointed by
the Board to administer our Amended and Restated 2011
Stock Incentive Plan and to make awards under the plan,
including as described below under “Executive Officers and
Compensation – Compensation Discussion and Analysis –
2017 Compensation Program – Long-Term Incentives – 2017
Performance Share Award Design.” The committee has for
several years, including 2017, delegated its authority under
the plan to our executive officers to make grants to
non-executive officer level employees, within limitations
specified by the committee in its delegation of authority.

The Compensation Committee retained Pay Governance,
LLC, an independent executive compensation consulting
firm, to provide the committee with advice regarding
compensation matters for 2017 and for the equity
compensation awards made to our executive officers in
February 2017. All of the fees paid to Pay Governance
during 2017 were in connection with the firm’s work on
executive compensation matters on behalf of the
committee; no fees were paid to the firm for any other
work. Pay Governance was retained pursuant to an
engagement letter with the Compensation Committee, and
the committee determined that the firm’s service to
Chipotle did not and does not give rise to any conflict of
interest, and considers Pay Governance to have sufficient
independence from our company and executive officers to
allow it to offer objective advice.

The Compensation Committee held six meetings in 2017.
Additionally, the Chairman of the committee held a number
of discussions with shareholders regarding executive
compensation and related matters. A report of the
committee is found under the heading “Executive Officers
and Compensation – Compensation Discussion and
Analysis – Compensation Committee Report” on page 52.

Compensation Committee Interlocks and Insider
Participation
The members of the Compensation Committee are Messrs.
Flanzraich (Chairperson), Namvar and Paull. There are no
relationships between the members of the committee and
our executive officers of the type contemplated in the
SEC’s rules requiring disclosure of “compensation
committee interlocks.” None of the members of the
committee is our employee and no member has been an
officer of our company at any time. The Board has
determined that each member of the committee qualifies
as a “Non-Employee Director” under SEC Rule16b-3 and as
an “Outside Director” under Section 162(m) of the Internal
Revenue Code, and that each member satisfies the
standards of NYSE Rule 303A.02(a)(ii) regarding
independence of compensation committee members. No
member of the committee nor any organization of which
any member of the committee is an officer or director
received any payments from us during 2017, other than the
payments disclosed under “– Director Compensation”
below.

Nominating and Corporate Governance Committee
The responsibilities of the Nominating and Corporate
Governance Committee include reviewing, at least annually,
the adequacy of our corporate governance principles and
recommending to the Board any changes to such principles

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 13

Proposal 1
(continued)

as deemed appropriate, and recommending to the Board
appropriate guidelines and criteria to determine the
qualifications to serve and continue to serve as a director.
The Nominating and Corporate Governance Committee
identifies and reviews the qualifications of, and
recommends to the Board, (i) individuals to be nominated
by the Board for election to the Board at each annual
meeting, (ii) individuals to be nominated and elected to fill
any vacancy on the Board which occurs for any reason
(including increasing the size of the Board) and
(iii) appointments to committees of the Board.

The committee, at least annually, reviews the size,
composition and organization of the Board and its
committees and recommends any policies, changes or
other action it deems necessary or appropriate, including
recommendations to the Board regarding retirement age,
resignation or removal of a director, independence
requirements, frequency of Board meetings and terms of
directors. A number of these matters are covered in our
Corporate Governance Guidelines, which the committee
also reviews at least annually. The committee also reviews
the nomination by our shareholders of candidates for
election to the Board if such nominations are within the
time limits and meet other requirements established by our
bylaws. The committee oversees the annual evaluation of
the performance of the Board and its committees and
reviews and makes recommendations regarding succession
plans for positions held by executive officers.

The Nominating and Corporate Governance Committee
held four meetings in 2017. The members of the committee
are Mr. Cappuccio (Chairperson), Flanzraich and Namvar.

Special Committees
In addition to the standing committees described above, in
May 2016 the Board established a Demand Review
Committee in response to requests from two individual
shareholders that the Board investigate potential violations
of law in connection with food safety matters. In 2017, the
scope of the committee’s authority was broadened to also
encompass a demand from a shareholder that the Board
investigate potential violations of law in connection with
payment card security matters. As of December 31, 2017,
the Demand Review Committee consisted of Messrs.
Flanzraich and Cappuccio.

Additionally, in September 2017, the Board established a
Special Litigation Committee to review and approve the
terms of settlement of certain shareholder derivative

litigation. As of December 31, 2017, the Special Litigation
Committee consisted of Messrs. Cappuccio, Namvar and
Paull and Ms. Hickenlooper.

Director Compensation
Directors who are also employees of Chipotle do not
receive compensation for their services as directors.
Directors who are not employees of Chipotle received an
annual retainer during 2017 of $195,000, of which $75,000
was paid in cash and $120,000 was paid in restricted stock
units representing shares of our common stock, based on
the closing price of the stock on the grant date, which is the
date of our annual shareholders meeting each year. Each
director who is not an employee of Chipotle also received a
$2,000 cash payment for each meeting of the Board of
Directors he or she attended and $1,500 for each meeting
of a committee of the Board of Directors he or she
attended ($750 in the case of telephonic attendance at an
in-person committee meeting). Annual cash retainers are
paid to the chairperson of each committee of the Board of
Directors, in the following amounts for 2017: $20,000 for
the Audit Committee Chairperson, $15,000 for the
Compensation Committee Chairperson, $10,000 for the
Nominating and Corporate Governance Committee
Chairperson, and $5,000 for the chairperson of any other
committee established by the Board of Directors unless
otherwise specified by the Board. We also pay an annual
retainer to the Lead Director; in March 2017, the Board
(with Mr. Flanzraich recusing himself) approved an increase
in the annual Lead Director retainer to $50,000.
Additionally, directors are reimbursed for expenses
incurred in connection with their service as directors,
including travel expenses for meetings.

The Compensation Committee of the Board reviews and
makes recommendations to the Board on compensation
provided to non-employee directors, as required by its
charter. The committee reviews the non-employee director
compensation program no less than biennially. At the
request of the committee, in May 2017 Pay Governance
conducted an assessment of the competitiveness of our
non-employee director compensation program as
compared to the 2017 peer group disclosed on page 44, an
additional group of consumer brand companies that had a
median market capitalization approximating that of
Chipotle, and a general industry group of approximately
300 companies with annual revenues between $2.5 billion
and $10 billion. Upon review and consideration, the
committee recommended, and the Board approved, that no
further changes would be made to the non-employee
director compensation for 2017.

14 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 1
(continued)

We have also adopted a requirement that each
non-employee director is expected to own Chipotle
common stock with a market value of five times the annual
cash retainer within five years of the director’s
appointment or election to the Board. All continuing
directors other than Mr. Musk, who was appointed to the
Board in September 2013, and Messrs. Cappuccio, Namvar
and Paull and Ms. Hickenlooper, each of whom was
appointed to the Board in December 2016, met this

requirement as of December 31, 2017. Mr. Namvar met the
stock ownership requirement as of March 23, 2018, the
record date for the meeting. Unvested restricted stock
units received as compensation for Board service count as
shares owned for purposes of this requirement.

Mr. Namvar waived his right to receive compensation as a
member of the Board for 2017.

The compensation of each of our non-employee directors in 2017 is set forth below.

NAME

Albert S. Baldocchi

Paul T. Cappuccio

John S. Charlesworth(2)

Neil W. Flanzraich

Patrick J. Flynn(2)

Darlene J. Friedman(2)

Stephen Gillett(2)

Robin Hickenlooper

Kimbal Musk

Ali Namvar(3)

Matthew H. Paull

FEES EARNED OR
PAID IN CASH

STOCK AWARDS(1)

TOTAL

$ 118,750

$107,800

$ 41,781

$ 174,250

$ 50,981

$ 46,281

$ 42,531

$ 95,750

$ 85,250

–

$120,348

$120,348

$ 48,620

$120,348

$ 48,620

$ 48,620

$ 48,620

$120,348

$120,348

–

$239,098

$ 228,148

$ 90,401

$294,598

$ 99,601

$ 94,901

$

91,151

$ 216,098

$205,598

–

$ 92,750

$120,348

$ 213,098

(1) Reflects the grant date fair value under FASB Topic 718 of restricted stock units awarded for the equity portion of each director’s
annual retainer. Restricted stock units in respect of 250 shares of common stock were granted to non-employee directors Messrs.
Baldocchi, Cappuccio, Flanzraich, Musk and Paull and Ms. Hickenlooper on May 25, 2017, and restricted stock units in respect of 101
shares of common stock were granted to non-employee directors Messrs. Charlesworth, Flynn and Gillett and Ms. Friedman on the
same date. The restricted stock units were valued at $481.39, the closing price of our common stock on May 25, 2017. The restricted
stock units vest on the third anniversary of the grant date subject to the director’s continued service as a director through that date.
Vesting accelerates in the event of the retirement of a director who has served for a total of six years (including any breaks in service),
or in the event the director leaves the Board following certain changes in control of Chipotle. Directors may elect in advance to defer
receipt upon vesting of the shares underlying the restricted stock units. As of December 31, 2017, Messrs Baldocchi, Flanzraich and
Musk each held 704 unvested restricted stock units, and Messrs. Cappuccio, and Paull and Ms. Hickenlooper each held 266 unvested
restricted stock units as of that date.

(2) Ms. Friedman and Messrs. Charlesworth and Flynn retired from the Board, and Mr. Gillett resigned from the Board, effective May 25,
2017. On May 24, 2017, the Compensation Committee approved the acceleration of vesting of 518 restricted stock units held by
Mr. Gillett as of the date of his resignation.

(3) Mr. Namvar waived his right to receive compensation as an outside director for 2017.

CORPORATE GOVERNANCE

Our Board of Directors has adopted a number of policies to
support our values and provide for good corporate
governance, including our Corporate Governance
Guidelines, which set forth our principles of corporate
governance; our Board committee charters; the Chipotle
Mexican Grill, Inc. Code of Conduct, which applies to all
Chipotle officers, directors and employees; and separate
Codes of Ethics for our directors, our Chief Executive
Officer and our Chief Financial Officer/principal accounting
officer. The Corporate Governance Guidelines, Code of

Conduct, and each of the Codes of Ethics are available on
the Investors page of our corporate website at
ir.chipotle.com under the Corporate Governance link.

If we make any substantive amendment to, or grant a
waiver from, a provision of the Code of Conduct or our
Codes of Ethics that apply to our executive officers, we
intend to satisfy the applicable SEC disclosure requirement
by promptly disclosing the nature of the amendment or
waiver on the Investors page of our website at
ir.chipotle.com under the Corporate Governance link.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 15

Proposal 1
(continued)

Chairman of the Board
Mr. Ells, our founder and Executive Chairman, serves as
Chairman of the Board. The Chairman of the Board presides
at meetings of the Board and exercises and performs such
other powers and duties as may be periodically assigned to
him in that capacity by the Board or prescribed by our
bylaws. We believe it is not only appropriate but also
important for Mr. Ells to serve as Chairman. As the founder
of our company, he has since our inception been the
principal architect of our corporate strategy and vision, and
continues to be a primary driving force to keep our
company innovative and striving for constant improvement.
The Board believes that its oversight responsibilities can be
most effectively fulfilled if the Board is led by that same
driving force, and also believes that it is appropriate for
Mr. Ells to lead the Board due to his being one of the largest
individual shareholders of our company. The Board also
believes that in light of recent changes on the Board as part
of our ongoing Board refreshment efforts, as well as the
recent appointment of Mr. Niccol as Chief Executive Officer
and as a member of the Board, the continuity of vision and
strategy that is inherent in having the company founder
lead the Board will be valuable as new Board members are
assimilated onto our Board and Mr. Niccol assimilates as
Chief Executive Officer of our company.

The Board, particularly the Lead Director and the
chairperson of the Nominating and Corporate Governance
Committee, as well as each member of the Board through
our annual Board evaluation program, carefully considers
the Board’s leadership structure, and acknowledges that at
some point there may be a need for a different Board
leadership structure. At the present time, however, the
Board is confident that the leadership structure of Mr. Ells
as Chairman of the Board, and Mr. Niccol as Chief Executive
Officer and as a member of the Board, is in the best
interests of Chipotle and our shareholders.

Lead Director
Mr. Flanzraich was appointed Lead Director in September
2014. The Board believes that maintaining a Lead Director
position held by an independent director ensures that our
outside directors remain independent of management and
provide objective oversight of our business and strategy.
The responsibilities of the Lead Director as provided in our
Corporate Governance Guidelines are as follows: (i) chairing
any Board meetings during executive session without
employee directors present, which are held at least
quarterly; (ii) consulting with the Chief Executive Officer
and Chief Financial Officer on business issues and with the
Nominating and Corporate Governance Committee on
Board management; (iii) coordinating activities of the other

independent directors and serving as a liaison between the
Chairman and independent directors; (iv) calling meetings
of the independent directors when determined to be
necessary or appropriate; (v) reviewing and approving the
agenda for each Board meeting; (vi) interviewing, along
with the Chairman and the Chair and members of the
Nominating and Corporate Governance Committee,
candidates for director positions and making
recommendations to the Nominating and Corporate
Governance Committee; (vii) working in collaboration with
the Chair of the Nominating and Corporate Governance
Committee to complete the annual Board performance self-
evaluation process; (viii) advising the Nominating and
Corporate Governance Committee on the composition of
Board committees and selection of committee chairs;
(ix) providing leadership to the Board if circumstances arise
in which the Chairman may have, or may be perceived to
have, a conflict of interest; (x) considering Board
succession planning matters; (xi) together with the chair of
the Compensation Committee, leading the annual
performance evaluation of the Chief Executive Officer; (xii)
participating in shareholder outreach efforts relating to
executive compensation and corporate governance
matters; and (xiii) writing an annual letter to shareholders
to be included in the proxy statement for our annual
meeting of shareholders each year.

Board Performance Self-Evaluation Process
The Chairman of the Nominating and Corporate
Governance Committee oversees an annual evaluation
process during which each director evaluates the Board as
a whole and their individual contributions to the Board, and
each member of the standing committees of the Board
evaluates the committees on which he or she serves.

The individual director evaluations consider, among other
factors, (i) the extent to which directors understand our
products, markets and business initiatives, (ii) the extent to
which individual director experience, information and
insight contribute to the effectiveness of the Board, and
(iii) the availability of training and development
opportunities, if necessary, to enhance individual
contributions to the Board. The Board self-evaluations
consider whether and how the Board has performed the
responsibilities in our Corporate Governance Guidelines,
evaluates the composition of the Board and its committees,
and assesses the quality of meetings, agendas,
presentations and meeting materials in relation to the
Board’s role of overseeing management’s execution of our
corporate strategies. The committee self-evaluations
consider whether and how well each committee has
performed the responsibilities in its charter, whether the

16 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 1
(continued)

committee members possess the right skills and experience
to perform their responsibilities, whether the meeting
materials are effective in communicating important
information and enabling the committees to meet their
responsibilities, and other matters.

For 2017, the Chairman of the Nominating and Corporate
Governance Committee conducted an interview with each
director to discuss the matters described above, and to
conduct individual director self-evaluations and identify any
other issues regarding Board or committee performance.
The results of these discussions were then compiled and
presented in discussions with the full Board. In some years,
the Board self-evaluation also results in changes to the
Board’s policies, procedures and priorities in order to best
enable the Board to discharge its oversight responsibilities.

How to Contact the Board of Directors
Any shareholder or other interested party may contact the
Board of Directors, including the Lead Director or the
non-employee directors as a group, or any individual
director or directors, by writing to the intended recipient(s)
in care of Chipotle Mexican Grill, Inc., 1401 Wynkoop Street,
Suite 500, Denver, Colorado, 80202, Attention: Corporate
Secretary. Any communication to report potential issues
regarding accounting, internal controls and other auditing
matters will be directed to the Audit Committee. Our
corporate Secretary or general counsel, or their designees,
will review and sort communications before forwarding
them to the addressee(s), although communications that do
not, in the opinion of the Secretary, our general counsel or
their designees, deal with the functions of the Board or a
committee or do not otherwise warrant the attention of the
addressees may not be forwarded.

Executive Sessions
Our independent directors met in executive session without
management present at the end of each regularly-
scheduled Board meeting during 2017. The independent
directors also typically hold an executive session prior to
each regularly-scheduled Board meeting as well. The Lead
Director chaired the non-employee executive sessions of
the Board held during 2017. The Board expects to continue
to conduct executive sessions of the independent directors
at each regularly-scheduled Board meeting during 2018,
and independent directors may schedule additional
sessions in their discretion.

At regularly-scheduled meetings of the Audit Committee,
Compensation Committee and Nominating and Corporate
Governance Committee, executive sessions are scheduled
at the end of each meeting, with only the committee

members or the committee members and their advisors
present, to discuss any topics the committee members
deem necessary or appropriate.

Director Nomination Process
The Nominating and Corporate Governance Committee is
responsible for establishing criteria for nominees to serve
on our Board, screening candidates, and recommending for
approval by the full Board candidates for vacant Board
positions and for election at each annual meeting of
shareholders. The committee’s policies and procedures for
consideration of Board candidates are described below.
Each member of the Board is a nominee for election as a
director at this year’s annual meeting, and was
recommended to the Board as a nominee by the
Nominating and Corporate Governance Committee.

The committee considers candidates suggested by its
members, other directors, senior management and
shareholders. The committee is also authorized under its
charter to retain, at our expense, search firms, consultants,
and any other advisors it may deem appropriate to identify
and screen potential candidates. The committee may also
retain a search firm to evaluate and perform background
reviews on director candidates, including those
recommended by shareholders. Any advisors retained by
the committee will report directly to the committee.

Candidate Qualifications and Considerations
The committee seeks to identify candidates of high integrity
who have a strong record of accomplishment and who
display the independence of mind and strength of character
necessary to make an effective contribution to the Board
and to represent the interests of all shareholders.
Candidates are selected for their ability to exercise good
judgment and to provide practical insights and diverse
perspectives. In addition to considering the Board’s and
Chipotle’s needs at the time a particular candidate is being
considered, the committee considers candidates in light of
the entirety of their credentials, including:

• Their integrity and business ethics;

• Their strength of character and judgment;

• Their ability and willingness to devote sufficient time to

Board duties;

• Their potential contribution to the diversity and culture

of the Board;

• Their educational background;

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 17

Proposal 1
(continued)

• Their business and professional achievements and

experience and industry background, particularly in light
of our principal business and strategies, and from the
standpoint of alignment with our vision and values;

• Their independence from management, including under
requirements of applicable law and listing standards,
and any potential conflicts of interest arising from their
other business activities; and

• Relevant provisions of our Corporate Governance

Guidelines.

These factors may be weighted differently depending on
the individual being considered or the needs of the Board at
the time. We do not have a particular policy regarding the
diversity of nominees or Board members. The Board does
believe that diverse membership with varying perspectives
and breadth of experience is an important attribute of a
well-functioning Board. Accordingly, diversity (whether
based on factors commonly associated with diversity such
as race, gender, national origin, religion, or sexual
orientation or identity, as well as on broader principles such
as diversity of perspective and experience) is one of many
elements that will be considered in evaluating a particular
candidate. Search firms with which we work to identify
potential Board nominees will be instructed to specifically
focus on identifying candidates that would, in addition to
bringing particular skills and experience to the Board, also
add to the gender and/or ethnic diversity on the Board.

Consideration of Shareholder-Recommended
Candidates and Procedure for Shareholder
Nominations
Shareholders wishing to recommend candidates to be
considered by the Nominating and Corporate Governance
Committee must submit to our corporate Secretary the
following information: a recommendation identifying the
candidate, including the candidate’s contact information; a
detailed resume of the candidate and an autobiographical
statement explaining the candidate’s interest in serving on
our Board; and a statement of whether the candidate meets
applicable law and listing requirements pertaining to
director independence. Candidates recommended by
shareholders for consideration will be evaluated in the
same manner as any other candidates, as described below
under “– Candidate Evaluation Process,” and in view of the
qualifications and factors identified above under
“– Candidate Qualifications and Considerations.”

Under our bylaws, shareholders may also nominate
candidates for election as a director at our annual meeting.
To do so, a shareholder must comply with the provisions of
our bylaws regarding shareholder nomination of directors,

including compliance with the deadlines described under
“Other Business and Miscellaneous – Shareholder Proposals
and Nominations for 2019 Annual Meeting – Bylaw
Requirements for Shareholder Submission of Nominations
and Proposals” on page 60. Our bylaws also permit
qualified shareholders or groups of shareholders to include
nominations for election as a director in our proxy
materials. To do so, a shareholder must comply with the
proxy access provisions in our bylaws.

Candidate Evaluation Process
The Nominating and Corporate Governance Committee
initially evaluates candidates in view of the qualifications
and factors identified above under “– Candidate
Qualifications and Considerations,” and in doing so may
consult with the Chairman, the Lead Director, other
directors, senior management or outside advisors regarding
a particular candidate. The committee also takes into
account the results of recent Board and Board committee
self-evaluations and the current size and composition of the
Board, including expected retirements and anticipated
vacancies. In the course of this evaluation, some candidates
may be eliminated from further consideration because of
conflicts of interest, unavailability to attend Board or
committee meetings or other reasons. Following the initial
evaluation, the committee would arrange for interviews of
candidates deemed worthy of further consideration. To the
extent feasible, candidates are interviewed by the Chairman,
the Lead Director, and the members of the Nominating and
Corporate Governance Committee, and potentially other
directors as well. The results of these interviews would be
considered by the committee in its decision to recommend a
candidate to the Board. Those candidates approved by the
Board as nominees are named in the proxy statement for
election by the shareholders at the annual meeting (or, if
between annual meetings, one or more nominees may be
elected by the Board itself if needed to fill vacancies,
including vacancies resulting from an increase in the
number of directors).

Investor Agreement Regarding Board Nominations
On December 14, 2016, we and Pershing Square Capital
Management, L.P. (together with funds it advises, “Pershing
Square”) entered into a letter of agreement (which we refer
to as the “Investor Agreement”) regarding nominations to
the Board and a number of related matters.

The Investor Agreement provides for the nominations of Ali
Namvar and Matthew Paull for election to Chipotle’s Board
at the 2017 annual meeting of shareholders and the 2018
annual meeting of shareholders, a procedure for replacing
Mr. Namvar with a successor director in certain cases, and

18 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 1
(continued)

specified voting obligations of Pershing Square with respect
to Chipotle’s annual shareholder meetings. In accordance
with the Investor Agreement, Pershing Square has further
agreed to cause the resignation of Mr. Namvar from
Chipotle’s Board in the event Pershing Square’s ownership
of Chipotle’s outstanding common stock falls below 5%.

Under the Investor Agreement, Pershing Square is also
subject to specified standstill restrictions lasting generally
until the later of a specified period before the advance
notice period for nominating directors at Chipotle’s 2019
annual meeting of shareholders, and a specified period
after Pershing Square ceases to have any representatives
serving on Chipotle’s Board. For further details regarding
the Investor Agreement and related agreements, see
“Certain Relationships and Related Party Transactions.”

Policies and Procedures for Review and
Approval of Transactions with Related
Persons
We recognize that transactions in which our executive
officers, directors or principal shareholders, or family
members or other associates of our executive officers,
directors or principal shareholders, have an interest may
raise questions as to whether those transactions are
consistent with the best interests of Chipotle and our
shareholders. Accordingly, our Board has adopted written
policies and procedures requiring the Audit Committee to
approve in advance, with limited exceptions, any
transactions in which any person or entity in the categories
named above has any material interest, whether direct or
indirect, unless the value of all such transactions in which a
related party has an interest during a year total less than
$10,000. We refer to such transactions as “related person
transactions.” Current related person transactions to which
we are a party are described on page 59.

A related person transaction will only be approved by the
Audit Committee if the committee determines that the
related person transaction is beneficial to us and the terms
of the related person transaction are fair to us. No member
of the Audit Committee may participate in the review,
consideration or approval of any related person transaction
with respect to which such member or any of his or her
immediate family members is the related person.

Role of the Board of Directors in Risk
Oversight
While our executive officers and various other members of
management are responsible for the day-to-day
management of risk, the Board of Directors and its standing
committees exercise an oversight role with respect to risk
issues facing our company. The following table summarizes
the role of the Board and each of its committees in
overseeing risk:

Governing Body

Role in Risk Oversight

Board

• Ongoing review of strategic

plans, including associated risks

Audit
Committee

• Regular review and analysis
with management of most
significant business risks as
identified by the Board, the
Audit Committee, and/or
management

• Oversees our risk management
framework and the process for
identifying, assessing and
monitoring key business risks

• Conducts annual review of

internal risk assessment and
mitigation plans

• Discusses with management,
our internal auditors and
independent auditors major
financial, operating and other
risk exposures, as well as the
adequacy and effectiveness of
steps management has taken
to monitor and control such
exposures

• Oversees compliance with legal
and regulatory requirements
and the Company’s Code of
Conduct

• Oversees financial risks,

including risks relating to key
accounting policies

• Reviews internal controls with

management

• Evaluates and oversees related

person transactions

• Meets regularly with

representatives of the
independent auditors

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 19

Proposal 1
(continued)

Governing Body

Role in Risk Oversight

Compensation
Committee

• Oversees risks relating to our

compensation programs

• Employs an independent

compensation consultant to
assist in reviewing
compensation programs,
including potential risks
created by the programs

Nominating and
Corporate
Governance
Committee

• Oversees risks relating to

corporate governance matters
and processes

• Oversees compliance with key

corporate governance
documents, including our
Corporate Governance
Guidelines

• Conducts annual succession
plan reviews to ensure the
Company maintains
appropriate succession plans
for its senior officers

Board Leadership Structure and Risk Oversight
The Board believes our current leadership structure
facilitates the oversight of risk by combining independent
leadership through the Lead Director, independent Board
committees, and majority independent Board, with an
experienced Executive Chairman who has intimate
knowledge of our business, industry and challenges. The
Executive Chairman’s in-depth understanding of these
matters has also been bolstered through the appointment
of our new Chief Executive Officer, who also has extensive
operating, leadership and risk management experience
from his prior roles. The experience and operating
expertise that our Executive Chairman and our Chief
Executive Officer bring to the Board, combined with the
independent leadership of our Lead Director, allow the
Board to promptly identify and raise key risks, hold special
meetings of the Board when necessary to address critical
issues, and focus management’s attention on areas of
concern. Additionally, the Board’s independent committees,
or the independent directors as a whole, can objectively
assess the risks identified by the Board or by management,
as well as management’s effectiveness in managing such
risks.

20 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 2

An Advisory Vote to Approve the Compensation of our
Executive Officers as Disclosed in this Proxy Statement

As required by Section 14A of the Securities Exchange Act
of 1934, we are asking shareholders to cast an advisory
vote to approve the compensation of our executive officers
as disclosed in this proxy statement. This proposal,
commonly known as a “say-on-pay” proposal, gives
shareholders the opportunity to endorse or not endorse
our executive compensation programs and policies and the
compensation paid to our executive officers. We have
committed to holding say-on-pay votes at each year’s
annual meeting until at least the next shareholder vote on
the frequency of say-on-pay votes in 2023.

Executive Compensation Disclosures
Detailed discussion and analysis of our executive
compensation begins on page 35. See, in particular, the
disclosures under “Executive Officers and Compensation –
Compensation Discussion and Analysis – Executive
Summary” for a concise description of shareholder
outreach in which we’ve engaged in regards to the
compensation of our executive officers, compensation
decisions the Compensation Committee made for 2017, and
measures we’ve taken to ensure that executive
compensation is aligned with company performance and
the creation of shareholder value.

Say-on-Pay Resolution
The Compensation Committee of our Board of Directors
believes that our executive compensation programs

continue to emphasize performance-oriented components
that encourage and reward strong operating and financial
performance and stock price gains, and that have aligned
the interests of our officer team with those of shareholders.
Accordingly, our Board asks that you vote in favor of the
following shareholder resolution:

“RESOLVED, that the compensation of the executive
officers of Chipotle Mexican Grill, Inc. as disclosed
pursuant to the Securities and Exchange Commission’s
compensation disclosure rules, including the
Compensation Discussion and Analysis section,
compensation tables and related material in the
company’s proxy statement, are hereby approved.”

The say-on-pay vote is advisory and therefore will not be
binding on the Compensation Committee, the Board of
Directors, or Chipotle. However, the Compensation
Committee and Board will review the voting results and
take them into consideration when making future decisions
regarding executive compensation.

The Board of Directors recommends a vote FOR the
say-on-pay proposal.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 21

Proposal 3

Ratification of Appointment of Ernst & Young LLP as
Independent Registered Public Accounting Firm

The Audit Committee, which is responsible for the
appointment, compensation and oversight of our
independent auditors, has engaged Ernst & Young LLP as
independent auditors to audit our consolidated financial
statements for the year ending December 31, 2018 and to
perform other permissible, pre-approved services. As a
matter of good corporate governance, we are requesting
that shareholders ratify the committee’s appointment of
Ernst & Young as independent auditors. If shareholders do
not ratify the appointment of Ernst & Young, the committee
will reevaluate the appointment. Even if the selection is
ratified, the committee in its discretion may select a
different independent registered public accounting firm at
any time during fiscal 2018 if it determines that such a
change would be in the best interests of Chipotle and our
shareholders.

The Audit Committee annually evaluates the performance
of our independent registered public accounting firm,
including the senior audit engagement team, and
determines whether to reengage the current independent
auditors or consider other audit firms. Factors considered
by the committee in deciding whether to retain include:

• Ernst & Young’s capabilities considering the scope and
complexity of our business, and the resulting demands
placed on Ernst & Young in terms of technical expertise
and knowledge of our industry and business;

• the quality and candor of Ernst & Young’s

communications with the committee and management;

• Ernst & Young’s independence;

• the quality and efficiency of the services provided by
Ernst & Young, including input from management on
Ernst & Young’s performance and how effectively
Ernst & Young demonstrated its independent judgment,
objectivity and professional skepticism;

• external data on audit quality and performance,

including recent Public Company Accounting Oversight
Board (PCAOB) reports on Ernst & Young and its peer
firms; and

• the appropriateness of Ernst & Young’s fees, tenure as
our independent auditor, including the benefits of a
longer tenure, and the controls and processes in place
that help ensure Ernst & Young’s continued
independence.

Based on this evaluation, the Audit Committee and the
Board believe that retaining Ernst & Young to serve as our
independent registered public accounting firm for the fiscal
year ending December 31, 2018, is in the best interests of
Chipotle and our shareholders.

The Audit Committee also oversees the process for, and
ultimately approves, the selection of our independent
registered public accounting firm’s lead engagement
partner at the five-year mandatory rotation period. Prior to
the mandatory rotation period, at the committee’s
instruction, Ernst & Young will select candidates to be
considered for the lead engagement partner role, who are
then interviewed by members of our management. After
considering the candidates recommended by Ernst &
Young, management makes a recommendation to the
committee regarding the new lead engagement partner.
After discussing the qualifications of the proposed lead
engagement partner with the current lead engagement
partner, the members of the committee, individually and/or
as a group, will interview the leading candidate, and the
committee then considers the appointment and approves
the selection as a committee. A new lead engagement
partner was appointed for the 2016 audit; the next change
in lead engagement partner after the current five-year
rotation period will occur for the 2021 audit.

The Audit Committee has adopted a policy which sets out
procedures that the committee must follow when retaining
the independent auditor to perform audit, review and attest
engagements and any engagements for permitted
non-audit services. This policy is summarized below under
“– Policy for Pre-Approval of Audit and Permitted
Non-Audit Services” and will be reviewed by the committee
periodically, but no less frequently than annually, for
purposes of assuring continuing compliance with applicable
law. All services performed by Ernst & Young for the years
ended December 31, 2017 and 2016 were pre-approved by
the Audit Committee in accordance with this policy,
following a determination by the committee that the fees to
be paid to Ernst & Young in each year, including in
connection with non-audit services, were appropriate,
necessary and cost-efficient in the management of our
business, and did not present a risk of compromising the
independence of Ernst & Young as our independent
auditors.

22 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 3
(continued)

Ernst & Young has served as our independent auditors since 1997. Representatives of Ernst & Young are expected to be
present at the annual meeting and will have an opportunity to make a statement if they desire to do so, and are expected to
be available to respond to appropriate questions.

INDEPENDENT AUDITORS’ FEE

The aggregate fees and related reimbursable expenses for professional services provided by Ernst & Young for the years
ended December 31, 2017 and 2016 were:

Fees for Services

Audit Fees(1)

Audit-Related Fees

Tax Fees(2)

All Other Fees

Total Fees

2017

2016

$943,578

$783,808

—

—

37,451

168,426

—

—

$ 981,129

$ 952,234

(1)

Includes fees and expenses related to the fiscal year audit and interim reviews, notwithstanding when the fees and expenses were
billed or when the services were rendered. Audit fees also include fees and expenses, if any, related to SEC filings, comfort letters,
consents, SEC comment letters and accounting consultations.

(2) Represents fees for tax consulting and advisory services.

The Board of Directors recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the year ending December 31, 2018.

AUDIT COMMITTEE REPORT

With regard to the fiscal year ended December 31, 2017, the
Audit Committee (i) reviewed and discussed with
management our audited consolidated financial statements
as of December 31, 2017 and for the year then ended;
(ii) discussed with Ernst & Young LLP, the independent
auditors, the matters required by the Auditing
Standards 1301, Communication with Audit Committees;
(iii) received the written disclosures and the letter from
Ernst & Young LLP required by applicable requirements of
the PCAOB regarding Ernst & Young LLP’s communications
with the Audit Committee regarding independence; and
(iv) discussed with Ernst & Young LLP their independence.

Based on the review and discussions described above, the
Audit Committee recommended to our Board of Directors
that our audited consolidated financial statements be
included in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2017 for filing with the SEC.

The Audit Committee:
Albert S. Baldocchi, Chairperson
Paul Cappuccio
Robin Hickenlooper

POLICY FOR PRE-APPROVAL OF
AUDIT AND PERMITTED NON-AUDIT
SERVICES

The Board of Directors has adopted a policy for the
pre-approval of all audit and permitted non-audit services
proposed to be provided to Chipotle by its independent
auditors. This policy provides that the Audit Committee
must pre-approve all audit, review and attest engagements
and may do so on a case-by-case basis or on a class basis if
the relevant services are predictable and recurring. Any
internal control-related service may not be approved on a
class basis, but must be individually pre-approved by the
committee. The policy prohibits the provision of any
services that the auditor is prohibited from providing under
applicable law or the standards of the PCAOB.

Pre-approvals on a class basis for specified predictable and
recurring services are granted annually at or about the
start of each fiscal year. In considering all pre-approvals,
the committee may take into account whether the level of
non-audit services, even if permissible under applicable law,
is appropriate in light of the independence of the auditor.
The committee reviews the scope of services to be
provided within each class of services and imposes fee
limitations and budgetary guidelines in appropriate cases.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 23

Proposal 3
(continued)

The committee may pre-approve a class of services for the
entire fiscal year. Pre-approval on an individual service
basis may be given or effective only up to six months prior
to commencement of the services.

The committee periodically reviews a schedule of fees paid
and payable to the independent auditor by type of covered
service being performed or expected to be provided. Our
Chief Financial Officer is also required to report to the
committee any non-compliance with this policy of which he
becomes aware. The committee may delegate pre-approval

authority for individual services or a class of services to
any one of its members, provided that delegation is not
allowed in the case of a class of services where the
aggregate estimated fees for all future and current periods
would exceed $500,000. Any class of services projected to
exceed this limit or individual service that would cause the
limit to be exceeded must be pre-approved by the full
committee. The individual member of the committee to
whom pre-approval authorization is delegated reports the
grant of any pre-approval by the individual member at the
next scheduled meeting of the committee.

24 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 4

Approval of the Amended and Restated Chipotle Mexican
Grill, Inc. 2011 Stock Incentive Plan

Introduction
We are requesting that shareholders approve the
amendment and restatement of our Amended and Restated
2011 Stock Incentive Plan, as preliminarily approved by the
Board of Directors on March 13, 2018, subject to
shareholder approval at the annual meeting. If this proposal
is approved:

• 1,270,000 shares will be added to the number of shares
authorized for issuance under the 2011 Stock Incentive
Plan;

• Plan provisions regarding incentive awards subject to

performance goals will be modified in light of the repeal
of the “performance-based compensation” exemption
under Section 162(m) of the Internal Revenue Code;

• the term of the Plan would be extended by

approximately two years; and

• various administrative changes and clarifications will be

made or authorized as discussed below.

If this amendment and restatement is not approved by
shareholders at the annual meeting, no new shares will be
added and equity awards will continue to be granted under
the 2011 Stock Incentive Plan as currently in effect.

The 2011 Stock Incentive Plan is our only plan for providing
equity incentive compensation to our employees, other
than our tax-qualified Employee Stock Purchase Plan that
allows employees to purchase our stock at a discount. The
Board believes that our 2011 Stock Incentive Plan is in the
best interests of shareholders and Chipotle, as equity
awards granted under this plan help to attract, motivate,
and retain key talent, align employee and shareholder
interests, link employee compensation to company
performance and maintain a culture based on employee
stock ownership. Equity is a significant component of total
compensation for many of our key employees.

The following discussion and summary of the 2011 Stock
Incentive Plan as proposed to be amended and restated is
qualified in its entirety by reference to the actual text of
the plan document. A copy of the 2011 Stock Incentive Plan
as proposed to be amended and restated, marked to show
proposed changes versus the plan as currently in effect, is
attached as Appendix A to this proxy statement.

Significant Changes in the Amended and
Restated 2011 Stock Incentive Plan
We are requesting that shareholders approve the Amended
and Restated 2011 Stock Incentive Plan to include the
following significant changes:

Increase to Share Reserve
The Board has determined that the 2011 Stock Incentive
Plan does not have sufficient shares of common stock
under it to support our intended compensation programs.
The Board believes that our success is largely dependent
on our ability to attract and retain highly-qualified
employees, non-employee directors and other key service
providers. The Board strongly believes in aligning the
interests of our key service providers with those of our
shareholders. As such, we are proposing to amend the 2011
Stock Incentive Plan to increase the number of shares of
our common stock subject thereto from 5,560,000 shares
to 6,830,000 shares.

Changes Relating to the Repeal of Section 162(m)‘s
Performance-Based Compensation Exception
The recently-enacted Tax Cuts and Jobs Act repealed the
“performance-based compensation” exemption from the
limits on deductibility under Section 162(m) for awards
granted after November 2, 2017. While there is no federal
tax advantage to granting compensation in the form of
“performance-based compensation” going forward, we
remain committed to granting awards based on
achievement of performance goals tied to our success. If
the shareholders approve the amendment and restatement,
performance goals may be based on, among other things,
achievement of revenue, income and return goals and other
financial or operational criteria the Compensation
Committee of our Board determines to be appropriate. The
committee will also be able to reduce award payouts under
certain circumstances and have additional flexibility to
grant awards subject to performance goals and to establish
the length of performance periods.

95% of Time-Vested Shares Must Have a Vesting
Schedule of One Year or More
The 2011 Stock Incentive Plan as proposed to be amended
and restated requires that at least 95% of shares that vest
based on continued employment cannot vest before the
first anniversary of their grant date.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 25

Proposal 4
(continued)

Share Withholding for Tax Purposes In Excess of
Statutory Minimum
The proposed amendments to the 2011 Stock Incentive Plan
would allow the committee to permit participants who incur
a tax obligation in connection with an award under the plan
to have Chipotle satisfy associated tax withholding
obligations by withholding shares with a value greater than
the statutory minimum (currently, 22% of the amount of
the related tax obligation).

Corporate Governance Aspects of the 2011
Stock Incentive Plan
The 2011 Stock Incentive Plan includes several provisions
that promote best practices by reinforcing alignment with
shareholders’ interests. These provisions include, but are
not limited to, the following:

• No Discounted Options or Stock Appreciation Rights:

Stock options and stock appreciation rights may not be
granted with exercise prices lower than the market
value of the underlying shares on the grant date.

• No Repricing without Shareholder Approval: Other than

in connection with corporate reorganizations or
restructurings, at any time when the purchase price of a
stock option or stock appreciation right is above the
market value of a share, Chipotle will not, without
shareholder approval, reduce the purchase price of such
stock option or stock appreciation right and will not
exchange such stock option or stock appreciation right
for a new award with a lower (or no) purchase price or
for cash.

• No Liberal Share Recycling: Shares used to pay the

exercise price or withholding taxes related to an equity
award under the plan, unissued shares resulting from
the net settlement of any such equity awards, and
shares purchased by us in the open market using the
proceeds of option exercises, do not become available
for issuance as future equity awards under the plan.

• No Transferability: Equity awards generally may not be
transferred, except by will or the laws of descent and
distribution, unless approved by the Compensation
Committee.

• No Evergreen Provision: The 2011 Stock Incentive Plan
does not contain an “evergreen” feature pursuant to
which the shares authorized for issuance under the plan
can be automatically replenished.

• No Automatic Grants: The 2011 Stock Incentive Plan

does not provide for automatic grants to any
participant.

• No Tax Gross-ups: The 2011 Stock Incentive Plan does

not provide for any tax gross-ups.

Key Terms of the 2011 Stock Incentive Plan

Eligible Persons
Currently, executive officers, officers, other employees,
consultants, advisors and non-employee directors of
Chipotle and our subsidiaries are eligible to participate in
the plan. As of March 23, 2018, this group includes seven
non-employee directors and approximately 72,600
employees, consultants and advisors, including our five
executive officers.

Types of Awards
The 2011 Stock Incentive Plan authorizes the Compensation
Committee to grant non-qualified and incentive stock
options, stock appreciation rights and full value awards,
including restricted stock, restricted stock units,
performance shares, deferred share units, phantom stock
or share-denominated performance units. No grants of
equity awards are permitted under the plan after March 16,
2023.

Share Reserve
The initial share reserve was 3,360,000 shares of common
stock, which was increased to 5,560,000 shares in May
2015, and if the amendment and restatement is approved
by shareholders would be increased by an additional
1,270,000 shares to 6,830,000 total shares. As of
January 5, 2018, 1,557,994 shares remained authorized but
unissued under the plan; as a result, if this proposal is
approved, a total of 2,827,994 shares would have been
available for issuance under the plan as of that date. Shares
issued with respect to full value awards are counted as two
shares for every share that is actually issued. For example,
if 100 shares are issued with respect to a restricted stock
unit award granted under this plan, 200 shares will be
counted against the share reserve. A share subject to a
stock option or stock appreciation right issued under the
2011 Stock Incentive Plan only counts as one share against
the share reserve.

Share Counting Rules
The following rules apply for counting shares against the
applicable share limits of the 2011 Stock Incentive Plan:

• To the extent that an equity award is settled in cash or a

form other than shares, the shares that would have
been delivered had there been no such cash or other
settlement will not be counted against the shares
available for issuance under the 2011 Stock Incentive
Plan.

26 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 4
(continued)

• To the extent that shares are delivered pursuant to the
exercise of a stock appreciation right or stock option,
the number of underlying shares to which the exercise
related shall be counted against the applicable share
limits, as opposed to the number of shares actually
issued. For example, if a stock option relates to 1,000
shares and is fully exercised at a time when the payment
due to the participant is 150 shares (such as due to a net
exercise feature or a participant tendering shares to
exercise a stock option), 1,000 shares shall nevertheless
be the net charge against the applicable share limit.
Shares that are exchanged by a participant to pay the
exercise price of an option or stock appreciation right
granted under the plan, as well as any shares exchanged
or withheld to satisfy the tax withholding obligations
related to any option or stock appreciation right, will not
be available for subsequent awards under the plan.

• Except as otherwise provided below, shares that are
subject to awards that expire or for any reason are
cancelled or terminated, are forfeited, fail to vest, or for
any other reason are not paid or delivered under the
2011 Stock Incentive Plan will again be available for
subsequent awards under the 2011 Stock Incentive Plan.
Any such shares subject to full value awards will
become available taking into account the two to one
share counting rule, discussed above, for these types of
awards. For example, if a 100 share restricted stock unit
award is made under the plan, the award would count as
200 shares against the plan’s share limit after giving
effect to the two to one share counting rule. If the
award is later forfeited before it vests, the 200 shares
that were originally counted against the plan’s share
limit would again be available for subsequent awards
under the plan.

• Shares that are withheld to satisfy the tax withholding

obligations related to any award will not be available for
subsequent awards under the 2011 Stock Incentive Plan.

• Chipotle may not increase the applicable share limits of
the 2011 Stock Incentive Plan by repurchasing shares of
our common stock on the market (including by using
cash received through the exercise of stock options or
otherwise).

• Shares issued in connection with awards that are

granted by or become obligations of Chipotle through
the assumption of awards (or in substitution for awards)
in connection with an acquisition of another company
will not count against the shares available for issuance
under the 2011 Stock Incentive Plan, and such awards
may reflect the original terms of the related award
being assumed or substituted for and need not comply
with other specific terms of the plan.

Award Limits
The maximum number of shares that may be covered by
awards granted under the 2011 Stock Incentive Plan to any
single participant during any calendar year is 700,000.

The maximum number that may be covered by “incentive
stock options” within the meaning of Section 422 of the
Internal Revenue Code may not exceed 300,000.

Vesting and Exercise of Stock Options and Stock
Appreciation Rights
The exercise price of stock options granted under the 2011
Stock Incentive Plan may not be less than the fair market
value of our common stock on the date of grant. The fair
market value is generally the closing price of our common
stock on a specified date, although the Compensation
Committee is permitted to determine fair market value
using any valuation method permitted under the stock
rights exemption available under IRS regulations. The
maximum exercise period may not be longer than ten
years. The committee determines when each stock option
becomes exercisable, including the establishment of
performance vesting criteria, if any. The award agreement
specifies the consequences under the stock option of a
recipient’s termination of employment, service as a director
or other relationship between us and the participant. Unless
otherwise specified in an award agreement for a particular
option, unvested stock options vest in full in the event of a
participant’s termination without cause or resignation for
good reason (as defined in the 2011 Stock Incentive Plan)
within two years following a change in control (as defined in
the plan). Similar terms and limitations apply to stock
appreciation rights under the plan.

Vesting of Full Value Awards
The Compensation Committee may make the grant,
issuance, retention, or vesting of full value awards
contingent upon continued employment with Chipotle, the
passage of time, or such performance criteria and the level
of achievement against such criteria as it deems
appropriate. A full value award may, among other things,
involve the transfer of actual shares of common stock,
either at the time of grant or thereafter, or payment in cash
or otherwise of amounts based on the value of shares of
common stock and be subject to performance-based and/or
service-based conditions. Unless otherwise specified in an
award agreement for a particular award, unvested full
value awards vest in full in the event of a participant’s
termination without cause or resignation for good reason
(as defined in the 2011 Stock Incentive Plan) within two
years following a change in control (as defined in the plan).

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 27

Proposal 4
(continued)

Administration
The Compensation Committee administers the 2011 Stock
Incentive Plan, and has broad authority to do all things
necessary or desirable, in its sole discretion, in connection
with plan administration. The committee will select who will
receive equity awards; determine the number of shares
covered thereby; and, subject to the terms and limitations
expressly set forth in the plan, establish the terms,
conditions, and other provisions of the equity awards. The
committee may interpret the 2011 Stock Incentive Plan and
establish, amend, and rescind any rules related to the plan,
and make remedial changes to the terms of an outstanding
equity award to comply with applicable laws, regulations
and listing requirements and to avoid unintended
consequences resulting from unexpected events. The
committee has the discretion to permit the automatic
exercise of vested in-the-money stock options and stock
appreciation rights, and can delegate this authority to
Chipotle’s management. The committee has the authority
to toll the exercise period for stock options and stock
appreciation rights if such awards held by a former
employee cannot be exercised due to trading or other legal
restrictions, but not beyond the maximum expiration date
of the stock options or stock appreciation rights.

Claw-back Provision for Executive Officers
Equity awards granted to a participant who is determined
by the Board to be an “executive officer” shall be subject to
any right that Chipotle may have under any recoupment
policy or other agreement with such participant, including
any provisions that may be adopted regarding the recovery
of “incentive-based compensation” under the Dodd-Frank
Wall Street Reform and Consumer Protection Act.

Amendments Requiring Shareholder Approval
The Board may terminate, amend, or suspend the 2011
Stock Incentive Plan, provided that no action may be taken
by the Board (except those described in “Adjustments”
below) without shareholder approval to:

• increase the number of shares that may be issued under

the 2011 Stock Incentive Plan;

• reprice, repurchase, or exchange underwater stock

options or stock appreciation rights;

• amend the maximum number of shares that may be

granted to a participant within a single calendar year;

• extend the term of the 2011 Stock Incentive Plan;

• change the class of persons eligible to participate in the

2011 Stock Incentive Plan; or

• otherwise implement any amendment required to be

approved by shareholders under exchange listing rules
as in effect from time to time.

Adjustments
In the event of a stock dividend, recapitalization, stock split,
combination of shares, extraordinary dividend of cash or
assets, reorganization, or exchange of our common stock,
or any similar equity restructuring transaction (as that
term is used in Financial Accounting Standards Board
Accounting Standards Codification Topic 718) affecting our
common stock, the Compensation Committee will equitably
adjust the number and kind of shares available for grant
under the 2011 Stock Incentive Plan, the number and kind of
shares subject to the award limitations set forth in the plan,
the number and kind of shares subject to outstanding
awards under the plan, and the exercise price of
outstanding stock options and of other awards.

The impact of a merger or other reorganization of Chipotle
on outstanding stock options, stock appreciation rights and
full value awards granted under the 2011 Stock Incentive
Plan shall be determined in the Compensation Committee’s
sole discretion. Permitted adjustments include assumption
of outstanding equity awards, accelerated vesting, or
accelerated expiration of outstanding equity awards, or
settlement of outstanding awards in cash.

The Compensation Committee also has the discretion to
modify or waive the performance goals of an outstanding
performance-based award in the event that an
unanticipated change in circumstances renders them
unsuitable.

U.S. Tax Consequences under the 2011 Stock
Incentive Plan
The following summary sets forth the tax events generally
expected for United States citizens under current United
States federal income tax laws in connection with equity
awards under the 2011 Stock Incentive Plan. This summary
omits the tax laws of any municipality, state, or foreign
country in which a participant resides.

Stock Options
A participant will realize no taxable income, and we will not
be entitled to any related deduction, at the time a stock
option that does not qualify as an “incentive stock option”
under the Internal Revenue Code (or the “Code”) is granted
under the 2011 Stock Incentive Plan. At the time of exercise
of such a non-qualified stock option, the participant will
realize ordinary income, and we will be entitled to a
deduction (subject to the limitations of Section 162(m) of

28 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 4
(continued)

the Code), equal to the excess of the fair market value of
the stock on the date of exercise over the option price.
Upon disposition of the shares, any additional gain or loss
realized by the recipient will be taxed as a capital gain or
loss, long-term or short-term, based upon how long the
shares are held.

For stock options that qualify for treatment as “incentive
stock options” under the Code, a participant will realize no
taxable income, and we will not be entitled to any related
deduction, at the time an incentive stock option is granted.
If certain statutory employment and holding period
conditions are satisfied before the participant disposes of
shares acquired pursuant to the exercise of such an option,
then no taxable income will result upon the exercise of such
option, and we will not be entitled to any deduction in
connection with such exercise. Upon disposition of the
shares after expiration of the statutory holding periods, any
gain or loss realized by a participant will be a long-term
capital gain or loss. We will not be entitled to a deduction
with respect to a disposition of the shares by a participant
after the expiration of the statutory holding periods. Except
in the event of death, if shares acquired by a participant
upon the exercise of an incentive stock option are disposed
of by such participant before the expiration of the statutory
holding periods, such participant will be considered to have
realized as compensation, taxable as ordinary income in the
year of disposition, an amount, not exceeding the gain
realized on such disposition, equal to the difference
between the exercise price and the fair market value of the
shares on the date of exercise of the option. We will be
entitled to a deduction at the same time and in the same
amount as the participant is deemed to have realized
ordinary income, subject to the limitations of Section 162(m)
of the Code. Any gain realized on the disposition in excess
of the amount treated as compensation or any loss realized
on the disposition will constitute capital gain or loss,
respectively. Such capital gain or loss will be long-term or
short-term based upon how long the shares were held. The
foregoing discussion applies only for regular tax purposes.
For alternative minimum tax purposes, an incentive stock
option will be treated as if it were a non-qualified stock
option.

payment of the performance shares; and (c) the amount of
such ordinary income and deduction will be the amount of
cash received plus the fair market value of the shares of
common stock received on the date of issuance. The
federal income tax consequences of a disposition of
unrestricted shares received by the participant upon
exercise of a stock appreciation right or in payment of a
performance shares award are the same as described
below with respect to a disposition of unrestricted shares.

Restricted Stock; Restricted Stock Units
Unless the participant files an election to be taxed under
Section 83(b) of the Code: (a) the participant will not
realize income upon the grant of restricted stock; (b) the
recipient will realize ordinary income, and we will be
entitled to a corresponding deduction (subject to the
limitations of Section 162(m) of the Code), when the
restrictions have been removed or expire; and (c) the
amount of such ordinary income and deduction will be the
fair market value of the restricted stock on the date the
restrictions are removed or expire. If the participant files an
election to be taxed under Section 83(b) of the Code, the
tax consequences to the recipient will be determined as of
the date of the grant of the restricted stock rather than as
of the date of the removal or expiration of the restrictions.

A participant will not realize income upon the grant of
restricted stock units, but will realize ordinary income, and
we will be entitled to a corresponding deduction (subject to
the limitations of Section 162(m) of the Code), when the
restricted stock units have vested and been settled in cash
and/or shares of our common stock. The amount of such
ordinary income and deduction will be the amount of cash
received plus the fair market value of the shares of our
common stock received on the date of issuance.

When the participant disposes of shares of stock received
in respect of an award of restricted stock or restricted
stock units, the difference between the amounts received
upon such disposition and the fair market value of such
shares on the date the recipient realizes ordinary income
will be treated as a capital gain or loss, long-term or short-
term, based upon how long the shares are held.

Stock Appreciation Rights; Performance Shares
In general, (a) the participant will not realize income upon
the grant of a stock appreciation right or performance
shares; (b) the participant will realize ordinary income, and
we will be entitled to a corresponding deduction (subject to
the limitations of Section 162(m) of the Code), in the year
cash or shares of common stock are delivered to the
participant upon exercise of a stock appreciation right or in

Section 409A
Section 409A of the Code provides additional tax rules
governing non-qualified deferred compensation. Generally,
Section 409A will not apply to awards granted under the
2011 Stock Incentive Plan, but may apply in some cases to
restricted stock unit, performance shares, deferred share
units, phantom stock or share-denominated performance
units. For such awards subject to Section 409A, certain

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 29

Proposal 4
(continued)

officers of the company may experience a delay of up to six
months in the settlement of the awards in shares of
company stock.

Withholding
The 2011 Stock Incentive Plan permits us to withhold from
awards an amount sufficient to cover withholding taxes. In
lieu of cash, the committee may permit a participant to
cover withholding obligations through a reduction in the
number of shares to be delivered to such participant or by
delivery of shares already owned by the participant.

$1 Million Employer Deduction Limit under
Section 162(m)
For tax years beginning prior to January 1, 2018,
compensation that qualifies as “performance-based
compensation” is excluded from the $1 million deduction
limit under Section 162(m) of the Code, and therefore
remains fully deductible by Chipotle. This deduction
limitation under pre-2018 law applies to the chief executive
officer and the three other most highly compensated
employees employed at the end of the fiscal year other
than the chief executive officer and chief financial officer.
Generally, options and stock appreciation rights granted by
the committee with an exercise price at least equal to 100%
of fair market value of the underlying stock at the date of
grant qualify as “performance-based compensation.” Other
awards subject to attainment of performance goals set by
the committee as provided under the 2011 Stock Incentive
Plan can also be treated as “performance-based
compensation.” However, there is no assurance that these
types of compensation granted under the 2011 Stock
Incentive Plan will be fully deductible under all
circumstances. In addition, other awards under the plan,
such as restricted stock and restricted stock units subject
to only service-based vesting conditions, will be subject to
the $1 million deduction limitation. Thus, compensation paid
to certain named executive officers in connection with such
awards with respect to a tax year beginning before
January 1, 2018 may, to the extent it and other
compensation subject to Section 162(m) exceed $1 million,
not be fully deductible by Chipotle.

Effective for tax years beginning on and after January 1,
2018, the Tax Cuts and Jobs Act significantly changes
Section 162(m). It expands the scope of “covered
employees” to include the chief financial officer and
provides that anyone listed as a named executive officer in
the Summary Compensation Table in a proxy filing during
2017 or a later year will remain a covered employee
regardless of any change in employment. This legislation
also repeals the performance-based compensation

exemption. As a result, awards granted under the 2011
Stock Incentive Plan and deductible in a tax year beginning
on and after January 1, 2018 will be subject to the $1 million
limitation irrespective of whether performance goals must
be met as a condition for payment. However, an award
granted under the 2011 Stock Incentive Plan prior to
November 2, 2017 that qualifies as a “written binding
contract” under the Tax Cuts and Jobs Act will remain
deductible going forward under the pre-2018 law as
described above, provided there is no material modification
to such award. There is no guarantee that any award
granted prior to November 2, 2017 will remain deductible as
performance-based compensation under the transition rule.

Key Metrics Related to the 2011 Stock
Incentive Plan
The following table sets forth the overhang, burn rate and
dilution metrics for 2015 through 2017 under the 2011 Stock
Incentive Plan:

2015

2016

2017

2018

Shares Available for Grant

12/31

Burn Rate

2,988

2,165

1,786

1,558(1)

1.50% 1.88% 1.39% N/A

Current Dilution

5.97% 6.52% 6.64% N/A

Total Potential Dilution

14.41% 12.57% 11.39% N/A

(1) As of January 5, 2018, 1,557,994 shares were available for

grant under the plan

“Current Dilution” is the number of shares subject to equity
awards outstanding but not exercised, divided by the total
number of common shares outstanding as of December 31st
of the applicable year.

The “Burn Rate” measures how quickly we use shares and
is calculated by dividing the number of equity awards
granted during any particular period by the number of
outstanding shares of common stock as of December 31st of
the applicable year. A higher burn rate indicates an
increased number of equity awards being granted to
employees and/or directors. The burn rate is usually
compared to industry data, particularly data furnished by
various shareholder services groups.

“Total Potential Overhang” is the number of shares subject
to equity awards outstanding but not exercised, plus the
number of shares available to be granted, divided by the
total number of common shares outstanding as of
December 31st of the applicable year.

30 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Proposal 4
(continued)

New Plan Benefits
The benefits that will be awarded or paid in the future
under the amended and restated 2011 Stock Incentive Plan
cannot currently be determined. Awards granted under this
plan after the date of our 2018 Annual Meeting are within
the discretion of the Compensation Committee, subject to
limits as described above on the maximum amounts that
may be awarded to any individual. As of March 23, 2018,
2018, the closing price of a share of Chipotle common stock
was $322.30.

As described beginning on page 50, we have entered into
an offer letter with Brian Niccol, our Chief Executive
Officer, under which Mr. Niccol is entitled to awards of
(1) performance shares with a target value of $3.0 million
as of the grant date, which will have the same terms and
conditions as applicable to annual 2018 performance share
awards granted to senior executives of Chipotle generally,
and (2) stock appreciation rights with a grant date value of

$2.0 million and an exercise price equal to the closing price
of our common stock on the grant date, which will vest in
equal amounts on the first, second and third anniversaries
of the grant date, subject to possible acceleration of
vesting in the event of a termination of employment by
Chipotle without cause or by Mr. Niccol for good reason (in
each case as defined in the offer letter), and a seven year
term. These awards will be made under the 2011 Stock
Incentive Plan, regardless of whether this proposal is
approved, but had not been made as of the date hereof. We
expect to make awards of performance shares and stock
appreciation rights with similar terms to those described
above to other executive officers and employees under the
2011 Stock Incentive Plan as well, but those awards also had
not been made as of the date hereof.

The Board of Directors recommends a vote FOR the
approval of the proposed amendment and restatement
of the 2011 Stock Incentive Plan.

Securities Authorized for Issuance Under Equity Compensation Plans
The following table presents information regarding options and rights outstanding under our equity compensation plans as
of December 31, 2017. All options reflected are stock-only stock appreciation rights denominated in shares of our common
stock.

(a)
Number of Securities
to be Issued Upon
Exercise of Outstanding
Options and Rights(1)

(b)
Weighted-Average
Exercise Price of
Outstanding Options
and
Rights(1)

(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans
(excluding securities
reflected in column
(a))(2)

Equity Compensation Plans Approved by Security

Holders

Equity Compensation Plans Not Approved by Security

Holders

Total

2,211,600

$480.09

2,032,484

None

2,211,600

N/A

$480.09

None

2,032,484

(1)

Includes shares issuable in connection with awards with performance and market conditions, which will be issued based on
achievement of performance criteria associated with the awards, with the number of shares issuable dependent on our level of
performance. The weighted-average exercise price in column (b) includes the weighted-average exercise price of SOSARs only.

(2) Includes 1,786,198 shares remaining available under the 2011 Stock Incentive Plan prior to the amendments being proposed herein, and
246,286 shares remaining available under the Chipotle Mexican Grill, Inc. Employee Stock Purchase Plan. In addition to being available
for future issuance upon exercise of SOSARs or stock options that may be granted after December 31, 2017, all of the shares available
for grant under the 2011 Stock Incentive Plan may instead be issued in the form of restricted stock, restricted stock units, performance
shares or other equity-based awards. Each share underlying a full value award such as restricted stock, restricted stock units or
performance shares counts as two shares used against the total number of securities authorized under the plan.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 31

Shareholder Proposal

Proposal 5 is a shareholder proposal. If the shareholder proponent of the proposal, or representative who is qualified under
state law, is present at the annual meeting and submits the proposal for a vote, the proposal will be voted upon. The
shareholder proposal and related supporting statement is included in this proxy statement as submitted by the proponent
and we accept no responsibility for its contents. The Board’s statement in opposition to the proposal is presented
immediately following the proposal and supporting statement. The name and address of the proponent and the amount of
stock owned by such proponent will be promptly provided to any shareholder making an oral or written request for such
information to our corporate Secretary at our headquarters.

Proposal 5

AN ADVISORY VOTE ON A SHAREHOLDER PROPOSAL REQUESTING THAT WE IMPLEMENT
A RIGHT OF SHAREHOLDERS TO ACT BY WRITTEN CONSENT WITHOUT A MEETING

Resolved Chipotle Mexican Grill, Inc. (CMG) shareholders request that our board of directors undertake such steps

as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be
necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting.
This written consent is to be consistent with applicable law and consistent with giving shareholders the fullest power to act
by written consent consistent with applicable law. This includes shareholder ability to initiate any topic for written consent
consistent with applicable law.

Supporting Statement: Shareholder rights to act by written consent and to call a special meeting are two

complimentary ways to bring an important matter to the attention of both management and shareholders outside the
annual meeting cycle. This is important because there could be 15-months between annual meetings.

A shareholder right to act by written consent is one method to equalize our restricted provisions for shareholders

to call a special meeting. For instance it takes 25% of shareholders at our company to call a special meeting when many
companies allow 10% of shareholders to do so.

This proposal topic won majority shareholder support at 13 major companies in a single year. This included 67%

support at both Allstate and Sprint. Last year the topic won majority votes at Western Union, Ryder System, and
BorgWarner Inc.

Given our company’s underperformance relative to the Nasdaq for many years, we believe it is time for this good

governance reform. Hundreds of major companies enable shareholders to act by written consent, including 64% of the S&P
500 and 55% of the S&P 1500.

Increase Shareholder Value. Vote for Right to Act by Written Consent – Proposal 5

Statement in Opposition – Proposal to Allow Shareholder Action by Written Consent

Chipotle’s Board is committed to protecting the rights and interests of all Chipotle shareholders. The Board has carefully
considered this shareholder proposal and determined that the changes sought by the proposal do not further those
interests. Accordingly, the Board recommends a vote AGAINST this proposal.

Allowing shareholder action by written consent as advocated in the shareholder proposal could deprive minority
shareholders of the opportunity to voice their views and vote on an action, or even to receive information regarding the
matter approved by written consent until after the action has been taken. The proposal provides no procedural
protections to provide safeguards for minority shareholders.

For example, the proposal does not require information to be provided to shareholders prior to the consent becoming
effective, such as a description of the proposed action, the reasons for the proposed action, and any potential conflicts of
interest of the shareholder(s) seeking the action. Moreover, if multiple groups of shareholders were able to solicit written

32 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Shareholder Proposal
(continued)

consents at any time and as often as they wish, the solicitation of written consents could create a considerable amount of
confusion and disruption among Chipotle’s shareholders, as well as divert the time and attention of our officers, other
employees, and the Board from the management of the company’s business.

The proposal also does not prevent or limit the potential for abuse in employing this method of approving corporate
actions. For instance, it would not limit the ability of a group of shareholders to accumulate a short-term voting position
by borrowing shares from other shareholders and then taking action without those shareholders knowing that their
voting rights were being used to take such action. Shareholders who have loaned their stock are better able to take
action to protect and exercise their voting rights at a shareholder meeting than if an action is permitted by written
consent without appropriate procedural safeguards. In addition, a group of shareholders could also use a consent
solicitation to remove and replace directors and effectively assume control of Chipotle without having to pay a control
premium to shareholders.

In light of the concerns expressed above, the Board believes that a more open, transparent, and democratic way for
shareholders to exercise their rights regarding important issues affecting our company is through annual or special
shareholder meetings, so that all shareholders have the ability to voice their concerns, the issues can be fully discussed,
and all shareholders can vote on the issues. Under our bylaws, holders of 25% of our outstanding common stock can
request that a special meeting of shareholders be held. Shareholders also have the right to bring business before the
shareholders at annual meetings, as evidenced by this proposal and other shareholder proposals included in our proxy
statements for previous annual meetings.

Moreover, we believe our shareholders have significant access to the Board, and rights and protections that provide
shareholders with ample power to express any concerns, and to move to effect change if they believe it is necessary. For
example:

•

•

•

•

•

Members of the Board are elected annually by majority vote in uncontested director elections, and any
incumbent director who does not receive a majority of the votes cast for his or her election is required to
offer to resign from the Board.

As noted above, holders of 25% of our outstanding common stock can request a special meeting of
shareholders.

As noted above, shareholders may submit proposals for presentation at an annual meeting (including
nominations of director candidates).

Shareholders can communicate directly with any director (including the Lead Independent Director), any
Board committee or the full Board by following the procedures set forth on page 17.

The Board consists of a substantial majority of independent directors.

For the reasons stated above, the Board believes that the proposal is not in the best interests of Chipotle or its
shareholders.

The Board of Directors recommends a vote AGAINST the shareholder proposal.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 33

Executive Officers and Compensation

EXECUTIVE OFFICERS

In addition to Steve Ells, our Executive Chairman, and Brian Niccol, our Chief Executive Officer, whose biographies are
included in Proposal 1 under the heading “Information Regarding the Board of Directors,” our executive officers as of
March 23, 2018, are as follows:

EXECUTIVE OFFICERS

John R. (Jack) Hartung, 60, is Chief Financial Officer and has served in this role
since 2002. In addition to having responsibility for all of our financial and reporting
functions, Mr. Hartung also oversees compensation and benefits, and Chipotle’s
European operations. Mr. Hartung joined Chipotle after spending 18 years at
McDonald’s where he held a variety of management positions, most recently as
Vice President and Chief Financial Officer of its Partner Brands Group. Mr. Hartung
has a Bachelor of Science degree in accounting and economics as well as an MBA
from Illinois State University.

Scott Boatwright, 45, was appointed Chief Restaurant Officer in May 2017, and
shortly thereafter assumed direct accountability for all restaurant operations.
Prior to Chipotle, Mr. Boatwright spent 18 years with Arby’s Restaurant Group in
various leadership positions, including for the last six years as the Sr. Vice
President of Operations, where he was responsible for the performance of over
1,700 Arby’s restaurants in numerous states. Scott holds an MBA from the J. Mack
Robinson College of Business at Georgia State University.

Curt Garner, 48, was appointed Chief Digital and Information Officer in March 2017.
Mr. Garner joined Chipotle in November 2015 as Chief Information Officer, and
prior to that had worked for Starbucks Corp. for 17 years, most recently serving as
Executive Vice President and Chief Information Officer. Mr. Garner has a Bachelor
of Arts degree in economics from The Ohio State University. He serves as a
director of Aerohive Networks, Inc. (NYSE: HIVE).

34 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes the objectives and principles underlying our executive compensation
programs, outlines the material elements of the compensation of our executive officers, and explains the Compensation
Committee’s determinations as to the actual compensation of our executive officers for 2017. In addition, this Compensation
Discussion and Analysis is intended to put into perspective the tables and related narratives regarding the compensation of
our executive officers that appear following this section.

Letter from the Compensation Committee of our Board of Directors

Dear Fellow Shareholder,

2017 was a year of ongoing challenges and turnaround for Chipotle. For 2017 we made significant progress and
reported year-over-year increases across several key metrics:

• Revenue increased 14.7%.

• Comparable restaurant sales increased 6.4%.

• Net income increased from $22.9 million to $176.3 million.

Nevertheless, Chipotle continues to face obstacles and related negative publicity that have had a serious adverse
impact on our brand. As a result, our stock price declined 23% in 2017.

Against this backdrop, Chipotle made considerable strategic changes to both our senior management team and the
Board during the past year, including:

• CEO Transition: In November 2017, the company announced that Steve Ells would be transitioning from Chairman
and CEO to Executive Chairman upon the appointment of a new CEO – and effective March 5, 2018, Brian Niccol
was appointed CEO. See “CEO Transition” below for additional details.

• Appointment of Chief Restaurant Officer (CRO): Scott Boatwright was appointed CRO in May 2017 and has direct

accountability for all restaurant operations.

• Board Refresh: We added four new directors to the Board in December 2016, and each new director was re-elected
to the Board at the 2017 annual meeting. Four of our prior directors did not stand for re-election at the 2017 annual
meeting.

Our executive compensation programs, including the incentives for our new CEO, have been and are essential to our
ongoing turnaround and rebuilding. Our incentive plans explicitly focus on motivating the executives to achieve our
operating objectives – most significantly, increasing comparable restaurant sales and restaurant level cash flow – and
increase our stock price. Importantly, these incentive plans create alignment with our shareholders on both the upside
and downside. Our commitment to performance-based long-term incentives is evidenced by the equity awards we
agreed to make to Mr. Niccol, our new CEO, of which the majority is performance-based, including the following:

• Sign-On Award (to incentivize Mr. Niccol to join us): 100% of the award denominated in stock appreciation rights
with a premium exercise price equal to 125% of the closing price of Chipotle’s common stock on the grant date.

• Make-Whole Award (to replace forfeited unvested equity awards held at his prior employer): 50% of the award
denominated in stock appreciation rights with a premium exercise price equal to 110% of the closing price of
Chipotle’s common stock on the grant date.

• Annual Award for 2018: 60% of the award will be denominated in performance shares with 3-year goals, and
40% of the award will be denominated in stock appreciation rights with an exercise price equal to 100% of the
closing price of Chipotle’s common stock on the grant date.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 35

Executive Officers and Compensation
(continued)

Letter from the Compensation Committee of our Board of Directors

As a result of our incentive plans and the committee’s governance of those plans, we have a history of shareholder
aligned pay for performance. Consistent with that history:

• While our 2017 annual incentive plan formula yielded a payout to the executive officers (below target), the

committee decided that, in light of our share price performance for 2017, our CEO, CFO and Chief Marketing and
Strategy Officer would not receive annual incentive plan payouts.

• This is the third year in a row these executive officers were not paid any cash bonuses.

Further, the committee reviewed Mr. Ells’s realizable pay (for a definition of realizable pay, see “Executive Summary –
Alignment of CEO Realizable Pay and Performance” below) from 2015-2017 to evaluate the alignment of his pay and
Chipotle stock price performance:

• We have reduced Mr. Ells’s annual long-term incentive award over the past several years; his 2017 equity award

grant date value is approximately 61% lower than it was in 2014.

• Realizable pay value for Mr. Ells as of December 31, 2017 was approximately 17% of the 2015-2017 total

compensation value (including target annual bonuses).

Based on all of the foregoing, as well as input from our independent compensation consultant and other factors, the
committee continues to believe that there has been strong alignment between the CEO’s pay and our stock price
performance.

The committee has also conducted substantial shareholder outreach consistently since 2014, including throughout
2017 and into early 2018. We evaluate and modify our equity incentive design and grant sizes in the context of
shareholder perspectives, to ensure motivation of our highly-valued executive team while maintaining alignment with
shareholder interests.

Our say-on-pay proposal is found at Proposal 2, and our Board recommends that you vote “FOR” this proposal. In
support of this recommendation, we invite you to read the Compensation Discussion & Analysis that follows for further
information on our compensation philosophy and decisions. We are confident that our programs are clearly linked to
performance and aligned with shareholder interests, while appropriately incentivizing our management team. We look
forward to maintaining ongoing dialogue with our shareholders.

In closing, the members of the Compensation Committee would like to thank the shareholders with whom we spoke over
the course of 2017 for their insights and candor. We value the support and input of our shareholders, and we look forward
to continuing to have an open dialogue. We have great confidence in the abilities of our new CEO and the entire leadership
team at Chipotle to rebuild shareholder value and continue to grow the company.

Neil Flanzraich, Lead Director and Chair of the Compensation Committee
Ali Namvar
Matthew Paull

Executive Summary

Performance Overview for 2017
2017 was a year of continued turnaround for Chipotle – highlighted by our accomplishments in three key areas:

•

Operations
•
•

Hired Scott Boatwright as our Chief Restaurant Officer in May 2017.
Launched a dedicated centralized training program to ensure our teams’ primary focus will be on delivering an
outstanding guest experience in our restaurants.
Implemented a new guest satisfaction system in our restaurants.
Restructured field support team, and modified field incentives to drive greater accountability for results at all
levels.

•
•

36 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

•

•

Enhancing Guest Experience Through Digital and Catering
•
•

Increased our digital sales by 50% over 2016, which was driven in part by the new version of our mobile app.
Reduced guest wait times as we continue to optimize the digital experience through our Smarter Pickup Times
system.
Offered delivery support for catering in 40% of our restaurants.

•

Reinvesting in Our Existing Restaurants:
•

Developed preliminary designs for new restaurants that will have the ability to be applied to our existing
restaurants.
Completed plans to launch a significant refresh and maintenance upgrades (e.g., replace lighting, upgrade
equipment) in 2018.

•

These and other accomplishments helped us achieve year-over-year increases across several key financial metrics:

• Revenue increased 14.7% on a year-over-year basis.

• Comparable restaurant sales increased 6.4% on a year-over-year basis.

• Net income increased from $22.9 million to $176.3 million.

While these results were encouraging, they did not translate into share price performance in 2017 and we recognize that
there is more work to be done. As a result, in late 2017 and into early 2018, we made additional leadership changes with the
objective of further elevating the Chipotle brand and performance in 2018 and beyond.

Shareholder Outreach in 2017
At our 2017 annual meeting of shareholders, 93% of the votes cast by our shareholders supported our say-on-pay proposal,
which was an increase from the 72% approval at our 2016 annual meeting.

Over the course of 2017, shareholder engagement with members of the Board on compensation and governance issues
reached holders of over 50% of our outstanding common stock. We view these discussions as an important opportunity to
develop broader relationships with investors over the long term and to engage in open dialogue on compensation and
governance related issues.

We took investor feedback into account, and took a number of actions in 2017 to address this feedback, as depicted below:

What We Heard from Shareholders

What Chipotle Did

• Concerned with select features of 2016 performance share

award design.

• Desire to ensure there is balance in performance share
award design and that design is complementary to key
strategic objectives.

• Modified 2016 awards, with agreement from continuing
executive officers, to reduce maximum payout, increase
the duration over which stock price performance must be
sustained in order for awards to vest, and add a cap in
the event our stock price declines after stock price goals
are achieved during the performance period.

• Introduced a key financial metric – comparable

restaurant sales increases – into the 2017 performance
share design in addition to challenging absolute stock
price targets.

• Concerned with the level of equity awards to our CEO.

• Reduced 2017 equity award level for our CEO by 31% (at

target).

• Desire to ensure pay and performance alignment.

• Retained absolute stock price goals in our 2017

performance share awards and also added a comparable
restaurant sales metric.

• As a result of annual incentive plan goals not being met,
our CEO, CFO and Chief Marketing and Strategy Officer
did not earn annual incentive payouts for the 2015, 2016
and 2017 plan years.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 37

Executive Officers and Compensation
(continued)

2017 Pay Actions
As a result of the above, our 2017 executive officer pay was significantly impacted:

Action

Additional Considerations

• No base salary increases for our CEO, CFO or Chief

• Our Chief Restaurant Officer was hired in 2017.

Marketing and Strategy Officer.

• While our annual incentive plan (AIP) formula yielded a
payout, the committee exercised its discretion and, in
light of our share price performance for 2017, decided
that our CEO, CFO and Chief Marketing and Strategy
Officer would not receive payouts.

• Performance shares were awarded to executives tied to
highly challenging absolute stock price and comparable
restaurant sales goals.

• This is the third consecutive year for which our CEO, CFO
and Chief Marketing and Strategy Officer did not receive
an AIP payout.

• The intention of our LTI awards is to clearly align the

largest component of our executive officers’
compensation with the creation of shareholder value.
• As of December 31, 2017, the realizable value of these

awards was $0.

Alignment of CEO Realizable Pay Value and Performance
The Compensation Committee reviews multi-year realizable pay value analyses for the executive officers to inform design
and award levels for annual equity awards. We calculate realizable pay as the sum of annual base salary, actual annual
incentive plan award paid, the “in-the-money” value of SOSARs and of performance shares that are based on achievement
of absolute stock price targets, and, for performance shares that are based on the level of relative achievement versus the
peer group or against internal goals, the current value as determined by measuring performance thus far in the
performance period and determining the resulting level of assumed payout.

•

•

The aggregate realizable pay value of the total base salary, annual incentive payout, and long-term incentives, or
LTI, paid to our CEO for the last three fiscal years (2015-2017) was estimated to be $7.9 million at the end of 2017,
or approximately 17% of the three-year total disclosed compensation value (consisting of total compensation as
disclosed in the Summary Compensation Table, plus target annual bonuses as disclosed in the Grants of Plan-Based
Awards Table, for each years).
The realizable pay value of our last three fiscal years of LTI awards to our CEO was estimated to be $3.3 million at
the end of 2017, or approximately 9% of the three-year total LTI values disclosed in the Summary Compensation
Table. The realizable pay value was attributable to the 2015 performance share award, which was valued at 27.7%
of the value disclosed in the Summary Compensation Table for the award in the year of grant.

38 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

These findings demonstrate alignment of the CEO’s realizable pay with shareholders’ investment performance over the
three-year time period shown in the Summary Compensation Table. During that time, Mr. Ells’s realizable pay value was
80% lower than his total disclosed compensation, and his realizable LTI value was 91% lower than his disclosed LTI
compensation value.

2015-17 Total CEO Compensation
Value and Realizable Pay Value
($000)

$45,738

Base Salary

Target AIP Bonus

LTI

$7,941

2015-17 Total
Compensation
Reported

2015-17 Total
Realizable Pay
Value

2015-17 Disclosed CEO LTI Value
and Realizable LTI Value
($000)

$35,357

$3,335

2015-17
Disclosed LTI
Value

2015-17
Realizable
LTI Value

In addition to company-specific pay-for-performance, the Compensation Committee also reviews multi-year analyses that
compare our CEO’s realizable pay value and our company performance to the CEO realizable pay values and company
performance at our peer group companies. Findings from these analyses, based on three- and four-year realizable pay and
company performance, reflected that Mr. Ells’s realizable pay as a percentage of pay opportunity is the lowest of the peers
during the periods analyzed. The committee believes this is appropriate given our stock price performance during these
time periods, and also believes this further reflects the committee’s commitment to shareholder-aligned pay for
performance.

Alignment of Executive Compensation with Shareholder Interests: What We Do and Don’t Do

What We Do

What We Don’t Do

Í Conduct extensive shareholder engagement on

È Executive officers and directors are prohibited from

compensation and governance related issues. Engage in
careful consideration of the annual say-on-pay results
and respond to shareholder feedback when appropriate.

Í Employ an LTI program based entirely on performance-

based equity awards.

hedging or pledging shares of Chipotle stock or holding
Chipotle stock in margin accounts.

È No stock option repricing, reloads, exchanges or
options granted below market value without
shareholder approval.

Í Maintain a strong link between financial and operational

È No change-in-control agreements.

goals, shareholder value creation and executive
compensation.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 39

Executive Officers and Compensation
(continued)

What We Do

What We Don’t Do

Í Ensure our compensation programs are designed to

discourage excessive risk taking, with design features
including the incorporation of multiple performance
measures in our incentive programs, strong executive
stock ownership guidelines, three-year performance and
vesting periods on LTI awards, payout limitations in
performance share awards in the event of deteriorating
stock price performance, and clawback provisions in LTI
award agreements that incorporate expected SEC
clawback rules.

Í Use an independent compensation consultant who is
engaged directly by the committee to advise on
executive compensation matters.

CEO Transition

È Equity awards include double triggers in order for an
executive to receive benefits in connection with a
change in control.

È Engage the committee’s consultant for additional work

for or on behalf of the executive officers.

Executive Chairman Agreement
On November 28, 2017, we entered into an Executive Chairman Agreement with Mr. Ells that provided for his transition to
the role of Executive Chairman of the Board once Chipotle appointed a new CEO. Following a comprehensive search
process, the Board appointed Brian Niccol as Chipotle’s new CEO, effective March 5, 2018, and in conjunction with this
appointment Mr. Ells assumed the role of Executive Chairman. Under the Executive Chairman Agreement, Mr. Ells will have
an annualized base salary for the 2018 fiscal year of $900,000, a target annual bonus opportunity under the AIP of 100% of
his base salary, and he was awarded a special stock-only stock appreciation right (SOSAR) award on January 7, 2018, with
an exercise price of $500 per share, which equated to a nearly 60% premium to the grant date stock price of $313.79. The
SOSARs are scheduled to vest on July 7, 2019, and if vested, will first be exercisable on January 4, 2021, and will expire on
January 4, 2022. The grant date fair value of this special award was approximately 40% below Mr. Ells’s 2017 annual LTI
award as CEO. Further details of the Executive Chairman Agreement are disclosed below under “– Executive Agreements.”

Executive Officer Retention Awards
On January 9, 2018, we entered into retention agreements with certain employees, including our executive officers other
than Mr. Ells. The retention agreements were intended to encourage the employees’ continued service to Chipotle during the
pendency of a search for Chipotle’s next CEO and the subsequent leadership transition, and were approved by the
Compensation Committee. Specifically, the committee determined that if uncertainty associated with the planned hiring of a
new CEO were to cause one or more executive officers to leave Chipotle, such departures would have a high potential to be
very disruptive to our organization, the morale of our teams, and our turnaround efforts (particularly in the areas of
operations and IT/digital). In determining the award amounts, the committee considered multiple factors, including external
market data, the executives’ historical compensation, and the expected cost to recruit and replace executives in these roles.
Further details of the retention agreements are disclosed below under “– Executive Agreements.”

New CEO Compensation
On March 5, 2018, Brian Niccol assumed the role of CEO at Chipotle. In connection with his joining us as CEO, we entered into
an offer letter with Mr. Niccol providing that Mr. Niccol will have an annualized base salary of $1.2 million, a target annual
bonus for the 2018 fiscal year of 150% of his base salary, a $1.0 million sign-on bonus, and an entitlement to certain equity
awards. Further details of the offer letter are disclosed below under “– Executive Agreements.”

Compensation Philosophy and Objectives
Our philosophy with regard to the compensation of our
employees, including our executive officers, is to reinforce
the importance of performance and accountability at the
corporate, regional and individual levels. We strive to

provide our employees with meaningful rewards while
maintaining alignment with shareholder interests,
corporate values, and important management initiatives. In
setting and overseeing the compensation of our executive
officers, the Compensation Committee believes our

40 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

compensation philosophy to be best effectuated by
designing compensation programs and policies to achieve
the following specific objectives:

• Attracting, motivating, and retaining highly capable
executives who are vital to our short- and long-term
success, profitability, and growth;

• Aligning the interests of our executives and

shareholders by rewarding executives for the
achievement of strategic and other goals that we believe
will enhance shareholder value; and

• Differentiating executive rewards based on actual

performance.

The committee believes that these objectives are most
effectively advanced when a significant portion of each
executive officer’s overall compensation is in the form of

at-risk elements such as annual incentive bonuses and long-
term incentive-based compensation, which should be
structured to closely align compensation with actual
performance and shareholder interests.

The committee’s philosophy in structuring executive
compensation rewards is that performance should be
measured by comparing our company performance to
market-wide performance in our industry, as well as
subjectively evaluating each executive officer’s
performance.

Objectives of our Executive Compensation Program
The overarching objective of our executive compensation
program is to motivate our entrepreneurial and innovative
management team to create long-term shareholder value.
Our success will be driven by our people and their
commitment to our brand.

Executive Compensation Program Components and Structures
Our executive compensation program is comprised of three primary components:

BASE SALARY

ANNUAL CASH BONUS (AIP)

EQUITY COMPENSATION (LTI)

Determined based on
the position’s
importance within
Chipotle, the executive’s
experience, and external
market data.

Determined under our
company-wide Annual
Incentive Plan, or AIP, which
provides for variable payouts
based on achievement against
operating and financial
performance goals approved
by the committee at the
beginning of each year, as
well as evaluations of
performance against
individual goals and
objectives.

Aligns the incentives of our executive officers with
shareholder interests and rewards the creation of
shareholder value.

• For 2017, in response to a decline in the level of

approval of our say-on-pay vote in 2016, and after
significant ongoing dialogue with shareholders, we
amended the 2016 awards to address concerns
expressed by shareholders. We also used a similar
structure for the 2017 awards with lower grant date
values than the 2016 awards.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 41

Executive Officers and Compensation
(continued)

Variable Pay
The Compensation Committee allocates pay among these components in a manner designed to place performance at the
forefront of our overall executive compensation program. This is illustrated in the following graphics, which reflect the
heavy emphasis placed on variable, performance-based pay elements (based on 2017 base salary, target AIP bonus and LTI
grant date value):

Base Salary
12.0%

Base Salary
14.1%

Target Bonus
15.1%

Target Bonus
10.0%

Steve Ells,
Executive
Chairman &
Former CEO

Equity Comp.
72.9%

O

v

e

r

a

l
l 

V

a

riable, Performan c e - B a

e

s

)

%
8

d   P a y (8

Other Named
Executive
Officers
(Average)

Equity Comp.
75.9%

O

v

e

r

a

ll 

V

a

riable, Performan c e - B a

e

s

)

%
6

d   P a y (8

Factors in Setting Executive Officer Pay
The committee sets compensation for the executive officers annually after considering the following factors:

•

•

•

•

•

Chipotle’s performance relative to goals approved by the committee

The business climate in the restaurant industry, general economic conditions and other factors

Each executive officer’s experience, knowledge, skills and personal contributions

Levels of compensation for similar jobs at market reference points

The degree of difficulty in committee-approved goals

The CEO makes recommendations to the committee regarding compensation for the other executive officers after
reviewing Chipotle’s overall performance and each executive officer’s personal contributions. The committee is responsible
for approving executive officer compensation and has broad discretion when setting compensation types and amounts.

With respect to the CEO, the committee annually reviews and approves the corporate goals and objectives relevant to the
CEO’s compensation, evaluates the CEO’s performance against those objectives and makes determinations regarding the
CEO’s compensation level based on that evaluation.

As part of its reviews of executive compensation, the committee reviews tally sheets that show historical pay for each
executive officer (including the CEO), as well as their accumulated equity. These tally sheets are used as a reference point
to assist the committee in understanding the overall compensation provided to each executive officer.

42 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

Roles and Responsibilities of the Committee, Compensation Consultant and the CEO in Setting
Executive Officer Compensation

Compensation Committee
The committee is currently
comprised of three independent
directors and reports to the Board

Consultant to the Compensation
Committee
Pay Governance, an independent
compensation consultant, has been
retained by the committee to
provide consulting advice on
matters of governance and
executive compensation

• Retains independent consultants and counsel to assist it in evaluating
compensation and fulfilling its obligations as set forth in its charter.

• Works with the CEO to set performance goals at the beginning of each year

targeted to positively influence shareholder value.

• Evaluates CEO performance in relation to those goals and Chipotle’s overall

performance.

• Determines and approves compensation for our executive officers.
• Reviews and approves overall compensation philosophy and strategy, as well
as all compensation and benefits programs in which our executive officers
participate.

• Reviews applicable peer group and broader market data as one of multiple

reference points.

• Engages with shareholders and others to receive stakeholder input on

executive compensation matters.

• Provides advice and opinion on the appropriateness and competitiveness of
our compensation programs relative to market practice, our strategy and
internal processes.

• Performs functions at the direction of the committee.
• Attends committee meetings when requested.
• Provides advice regarding compensation decision-making governance.
• Provides market data, as requested.
• Consults on various compensation matters.
• Confers with the committee, the CEO, the CFO and the company’s

compensation and benefits team on incentive goals (annual and long-term).

Chief Executive Officer
With the support of other members
of the management team, including
the internal compensation and
benefits team

• Works with the other executive officers to set performance goals at the

beginning of each year that are targeted to positively influence shareholder
value; goals are reviewed and approved by the Compensation Committee.

• Reviews performance of the other executive officers and makes

recommendations to the committee with respect to their compensation.

• Confers with the committee concerning design and development of
compensation and benefit plans for Chipotle executive officers and
employees.

Role of Market Data and Our Peer Group

Market Data
The committee believes the investment community generally assesses our company performance by reference to a peer
group composed primarily of other companies in the restaurant industry, and our management team and Board also
reference such peer company performance in analyzing and evaluating our business.

Each year, the committee’s independent compensation consultant provides the committee with pay data for executive
officer roles and the incentive plan structures of the companies in our peer group. The committee does not explicitly
benchmark our executive officers’ compensation to the peers, but the peer group data is one of multiple reference points
used to evaluate our executive compensation programs.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 43

Executive Officers and Compensation
(continued)

2017 Peer Group
The peer group used for 2017 was generally comprised of publicly-traded companies in the Restaurants or Hotel, Resorts &
Cruise Line (focus on hotels) primary industries as defined by the Global Industry Classification Standard (GICS), with annual
revenues between $1 billion and $8 billion (0.25x to 2.0x Chipotle). The committee also included select peers with whom we
compete for executive talent above the upper end of this range (for example, our Chief Digital and Information Officer was
formerly an executive at Starbucks Corporation), and excluded companies serving a substantially different market or client
base than we do. The committee expanded the peer group for 2017 beyond solely restaurants to include select companies in
the hospitality industry that had revenues and market capitalization approximating Chipotle’s, given our enhanced focus on
customer service.

$ in millions
Company Name

McDonald’s Corporation

Starbucks Corporation
Darden Restaurants, Inc.

YUM! Brands, Inc.

Wyndham Worldwide Corporation

Bloomin’ Brands, Inc.

Brinker International, Inc.

Cracker Barrel Old Country Store, Inc.

Panera Bread Company

Domino’s Pizza, Inc.

Hyatt Hotels Corporation

The Cheesecake Factory Incorporated

Texas Roadhouse, Inc.

Buffalo Wild Wings, Inc.

Papa John’s International, Inc.

Jack in the Box Inc.

Red Robin Gourmet Burgers, Inc.

The Wendy’s Company

Ruby Tuesday, Inc.

Bob Evans Farms, Inc.

Peer Group Median

Chipotle Mexican Grill, Inc.

Percent Rank

Notes:

(1) Trailing 12 months as of December 31, 2017.
(2) As of December 31, 2017.

Revenues(1)

Market Cap(2)

$22,820

$22,728
$7,631

$5,878

$4,613

$4,213

$3,142

$2,941

$2,838

$2,788

$2,767

$2,261

$2,220

$2,026

$1,783

$1,554

$1,381

$1,223

$913

$440

$137,212

$81, 7 1 1
$11,875

$27,502

$11,741

$1,948

$1,798

$3,813

—

$8,266

$8,748

$2, 1 2 1

$3,746

$2,429

$1,966

$2,888

$730

$3,977

—

$1,580

$2,777

$3,779

$4,476

77%

$8,160

65%

The committee reviews the composition of the peer group periodically and will make adjustments to the peer group in
response to changes in the size or business operations of Chipotle and of companies in the peer group, companies in the
peer group being acquired or taken private, and other companies in the GICS restaurant industry becoming public.

44 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

2017 Compensation Program

Base Salaries
We pay a base salary to compensate our executive officers for services rendered during the year, and also to provide them
with income regardless of our stock price performance, which helps avoid incentives to create short-term stock price
fluctuations and mitigates the impact of forces beyond our control such as general economic and stock market conditions.

The committee reviews the base salary of each executive officer at least annually, and adjusts salary levels as the
committee deems necessary and appropriate in its discretion.

Recommendations for the executive officers (other than the CEO) are provided to the committee by our CEO. The
committee reviews the CEO’s base salary and recommends any changes for review and approval by the full Board.
Adjustments to base salaries, if any, typically occur during the first quarter of each year. Base salaries for each executive
officer are set forth below.

Executive Officer

Steve Ells

Jack Hartung

Mark Crumpacker

Curt Garner(1)

Scott Boatwright(2)

(1) Mr. Garner was not an executive officer in 2016.
(2) Mr. Boatwright was hired in May 2017.

2016

$1,540,000

$ 800,000

$ 600,000

***

N/A

Base Salaries

2017

% Change

$1,540,000

$ 800,000

$ 600,000

$ 489,375

$ 410,000

0%

0%

0%

***

N/A

Annual Incentive Plan
The AIP is our annual cash incentive program for all employees. Our executive officers participate in the AIP alongside other
eligible salaried employees, with slight variations to the plan terms in order to appropriately incentivize our executive
officers to drive superior business results. The formula to determine payouts under the 2017 AIP consisted of a company
performance factor (CPF), a team performance factor (TPF) and an individual performance factor (IPF):

AIP Bonus Target

x

Company Performance Factor
(0-150%)

=

Adjusted AIP Bonus Target

X 30% Weighting
x
Team Performance
Factor
(0-150%)

X 70% Weighting
x
Individual
Performance Factor
(0-150%)

=

Final AIP Bonus Payout

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 45

Executive Officers and Compensation
(continued)

Target goals for business performance metrics used to determine the CPF are set at the beginning of the year. Achievement
at the target level of each performance metric would yield a CPF of 100%, equating to a payout at the target level. The CPF
is adjusted up or down based on the performance versus the underlying performance metrics. As a result of our
underperformance versus the AIP performance metrics in 2017, as depicted below, the CPF was 47% of target.

$ in millions
Metric

AB Grade

Max 15 Minute Trans.

Comparable Restaurant Sales

Out of Store ADS

Restaurant Cash Flow Margin

Target

86%

29.0

9.0%

$450

19.3%

Actual

84%

25.8

6.4%

$444

16.9%

A. Beginning CPF:
B. Actual Perf. Impact to CPF:
C. Final CPF (A + B)*

*Cannot be less than 0%

Impact on CPF

(5)%

(11)%

(9)%

(1)%

(28)%

100%
(53)%
47%

The TPF uses the same underlying performance measures as the company performance measure, but is based on
regional-or corporate office-specific goals. For 2017, the TPF that was applicable to the executive officers was based on a
weighted-average of regional results and was 56% of target.

The IPF is a function of an individual employee’s performance rating for the year. The committee evaluates the
performance of the CEO to determine his individual performance factor, and approves individual performance factors for
each of the other executive officers after considering recommendations from the CEO.

While our AIP formula yielded a payout based on our operating and financial results for 2017, the committee made a
determination that, in light of our share price performance for the year, our CEO, CFO and Chief Marketing and Strategy
Officer would not receive AIP payouts. The committee further concluded that Messrs. Garner and Boatwright, each of whom
were recent appointees to their position and have not achieved the level of historical rewards that our other officers have,
but whom we nonetheless expect to be important contributors to our ongoing turnaround, would receive the payouts as
specified under the 2017 AIP formula and our actual performance.

Executive Officer

Steve Ells

Jack Hartung

Mark Crumpacker

Curt Garner

Scott Boatwright(1)

Target 2017 AIP Bonus

% of Base Salary

Dollar Value

CPF

TPF

IPF

Actual
2017 AIP
Bonus

125%

85%

65%

65%

65%

$1,925,000

47% 56% N/A $

$ 680,000

47% 56% N/A $

$ 390,000

47% 56% N/A $

0

0

0

$ 318,079

47% 56% 125% $139,786

$ 156,979

47% 56% 125% $ 69,624

Actual
as %
of
Target

0%

0%

0%

60%

61%

(1) Dollar amounts for Mr. Boatwright are pro-rated, based on his start date of May 30, 2017.

46 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

Long-Term Incentives – 2017 Performance Share Award Design
In early 2017, we conducted shareholder outreach and discussed our potential 2017 performance share award design with
several of our largest shareholders. The 2017 performance share award design uses a stock price performance goal similar
to the 2016 design, while adding a comparable restaurant sales increase goal as well.

• As a result of our trailing one-year stock price range of approximately $350 to $540, the committee determined that it
would be appropriate to establish a stock price performance goal of $600 for threshold payout and $650 for target
payout, in order to ensure the awards would be aligned with the restoration of substantial shareholder value while also
being achievable enough to provide meaningful incentive value to our executive officers. The stock price goal was well
above the stock price of $427.61 on the date of grant and will require the restoration of substantial shareholder value
before the awards pay out at all. As a result, the committee determined that the stock price goal was appropriately
challenging.

• Comparable restaurant sales is a metric closely followed by our management, our shareholders, and securities analysts

and is a key measure for any growth-oriented restaurant or retail organization. Restoring our industry-leading economic
model will be substantially dependent on comparable restaurant sales growth, and including this measure in the award
ties any payout to a strong company sales recovery, rather than tying the payout solely to stock price performance.

The absolute stock price goals have similar parameters as the 2016 awards:

• 60-day average to determine stock price goal achievement.

• End-of-period performance modifier providing that if the average stock price for the last 60 days in the performance
period is below $600, then the final payout will be no higher than target, even if an above-target average stock price
was achieved during the performance period.

Metric

Weighting

Absolute Stock Price

CRS 3-Year Compound Annual
Growth Rate

2/3

1/3

Performance
Period

Feb. 19, 2017
to
Feb. 19, 2020

Jan. 1, 2017
to
Dec. 31, 2019

Performance Level

Stock Price /
3-Year CRS CAGR
Goals

Payout
(as % of target)

Threshold

Target

Maximum

Threshold

Target

Maximum

$600

$650

$900

5%

7%

11%

50%

100%

350%

50%

100%

300%

Given stock price performance and financial results, the committee believed a reduction in the target value of the 2017
performance share award as compared to 2016 was appropriate, and reduced Mr. Ells’s target award value significantly:

Target 2017 Award Value

Percentage Change versus 2016 (at target)

$8.6 million

-31%

“Target value” refers to the number of shares payable at target level performance, multiplied by the stock price as of the
grant date. The target value of the 2016 performance share award for Mr. Ells was $12.5 million. The grant date fair value
shown in the Summary Compensation Table for 2016 was $14.0 million as a result of the accounting expense valuation
required by SEC reporting requirements, which differs from the target value; the grant date fair value reflected in the
Summary Compensation Table for Mr. Ells for 2017 was $9.3 million.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 47

Executive Officers and Compensation
(continued)

Other Bonus Payments
In addition to the AIP bonus paid to Mr. Garner for 2017, we also paid a portion of Mr. Garner’s sign-on bonus, totaling
$250,000, following the second anniversary of Mr. Garner’s commencement of employment with us. This sign-on bonus was
provided for in the offer letter we entered into with Mr. Garner at the time he joined us in 2015.

Additionally, in May 2017, the committee authorized the payment to Mr. Garner of a one-time discretionary bonus totaling
$176,501 (intended to approximate an actual after-tax payout of $100,000) in recognition of the expanding importance of
Mr. Garner’s role with the company and outstanding performance by Mr. Garner individually as well as his team.

Long-Term Incentives – 2015 Performance Share Award Vesting
The 2015 performance share award was based on our relative performance compared to the 2015 restaurant industry peer
group in average annual revenue growth, net income growth and total shareholder return during the three-year
performance period from January 1, 2015 through December 31, 2017. In March 2018, the awards paid out between threshold
and target; the value of the shares received as of the payout determination date was approximately 31% of the values
disclosed in the Summary Compensation Table for each executive officer who received the award, driven by our below-
target performance as well as the decline in our stock price during the performance period. Shares paid out under this
award will be disclosed in the Option Exercises and Stock Vested table of our proxy statement for the 2019 annual meeting
of shareholders.

Benefits and Perquisites
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 with perquisites and other personal
benefits that we believe are reasonable and consistent with our compensation objectives, and with additional benefit
programs 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. Executive officers have also used company-owned or chartered airplanes for personal trips, in which case
we require the executive officer to fully reimburse us for the cost of personal use of the airplane, 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, and
use of company-provided drivers. 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 senior employees, including our executive officers.
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.

48 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

Executive Stock Ownership Guidelines
Our Board of Directors has adopted 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 those of our
shareholders. Alignment of our employees’ interests with
those of our shareholders is a principal purpose of the
equity component of our compensation program.

The ownership guidelines, reflected as a targeted number
of shares to be owned, are presented below for each
current named executive officer as well as our newly -
appointed CEO. The guidelines are reviewed for possible
adjustment each year and may be adjusted by the
committee at any time.

Officer

Steve Ells

Brian Niccol

Jack Hartung

Curt Garner

Scott Boatwright

Requirement
(# of Shares)

Actual
Ownership(1)

31,000

31,000

7,000

3,000

3,000

196,802

30,141

30,427

4,780

3,824

Actual
Ownership as
Multiple
of Base
Salary(2)

70X

8X

12X

3X

3X

Includes unvested RSUs.

(1)
(2) Based on the closing stock price and base salary rates in effect

as of March 23, 2018.

Shares underlying unvested restricted stock or restricted
stock units count towards satisfaction of the guidelines,
while shares underlying SOSARs (whether vested or
unvested) and unearned performance shares do not count.
Executive officers who do not meet the guidelines are
allowed five years to acquire the requisite number of
shares to comply. All of our executive officers meet the
stock ownership guidelines.

Stock ownership guidelines applicable to non-employee
members of our Board of Directors are described on
page 15.

Prohibition on Hedging and Pledging
To further align the interests of our officers with those of
our shareholders, we have adopted a policy prohibiting our
directors and certain employees, including all of the
executive officers, from hedging their Chipotle stock
ownership, pledging their shares of Chipotle stock as
collateral for loans, or holding shares of Chipotle stock in
margin accounts.

Executive Agreements
Historically, we have generally not entered into written
employment, change-in-control, severance or similar
agreements with any of our employees, including our
executive officers. Accordingly, in 2017 and prior years we
typically have not had any written agreements requiring
that we make post-employment severance payments to
executive officers in the event of termination of
employment of any executive officer. In addition, payouts
under the AIP are conditioned on the employee being
employed as of the payout date.

As previously described, in connection with the transition of
Mr. Ells to Executive Chairman and our CEO search and
subsequent appointment of Mr. Niccol as CEO, we have
entered into agreements with each of the executive
officers, as described below. As described on page 40, we
believe these agreements were necessary to ensure a
smooth and orderly CEO transition. The structures of these
agreement were based on an extensive review of external
market practices and the specific circumstances of each
executive.

In addition, we have entered into an Executive Agreement
with Mr. Boatwright, which provides that if Mr. Boatwright’s
employment is terminated by us, other than for cause, at
any time prior to May 29, 2019, Mr. Boatwright will be
entitled to a severance payment of up to 12 months of his
then-current base salary. The number of months’ salary to
which he would be entitled would be reduced by one for
each month of employment following May 29, 2018.

Executive Chairman Agreement
On November 28, 2017, we entered into an Executive
Chairman Agreement with Mr. Ells that provided for his
transition to the role of Executive Chairman of the Board
once Chipotle appointed a new CEO. Following a
comprehensive search process, the Board appointed Brian
Niccol as Chipotle’s new CEO, effective March 5, 2018, and
in conjunction with this appointment Mr. Ells assumed the
role of Executive Chairman. Under the Executive Chairman
Agreement, Mr. Ells will have an annualized base salary for
the 2018 fiscal year of $900,000, a target annual bonus
opportunity under the AIP of 100% of his base salary, and a
maximum annual bonus opportunity of 225% of his base
salary. Further, under the agreement, Mr. Ells was awarded
a special stock-only stock appreciation right (SOSAR)
award on January 7, 2018, with an exercise price of $500
per share, which equated to a nearly 60% premium to the
grant date stock price of $313.79. The SOSARs will vest on
July 7, 2019, subject to Mr. Ells’s continued employment
through the vesting date, and possible accelerated vesting

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Executive Officers and Compensation
(continued)

upon Mr. Ells’s earlier termination of employment by
Chipotle without cause, by Mr. Ells with good reason, or due
to his death or disability. The SOSARs, if vested, will first be
exercisable on January 4, 2021, and will expire on
January 4, 2022. The grant date fair value of this special
award was approximately 40% below Mr. Ells’s 2017 annual
LTI award as CEO.

Under the agreement, Mr. Ells has agreed that, while he is
employed by Chipotle and for a two-year period thereafter,
he will not, (a) directly or indirectly, own, manage, operate,
control, be employed, or engaged in any capacity (whether
or not for compensation) by, or render services, advice, or
assistance in any capacity to, a business competing with
Chipotle in the continental United States, (b) recruit, hire,
or solicit Chipotle’s employees, or (c) induce any of
Chipotle’s suppliers, licensees, or other business relations
to cease doing business with Chipotle or interfere with the
relationship between any such supplier, licensee, or other
business relation and Chipotle. The agreement also includes
customary confidentiality provisions and a mutual
non-disparagement covenant. If Mr. Ells’s employment is
terminated by Chipotle without cause or by Mr. Ells with
good reason, then, subject to his continued compliance with
the restrictive covenants set forth in the agreement, the
company will continue to pay Mr. Ells his then-current base
salary during the applicable restricted period.

Executive Officer Retention Awards
On January 9, 2018, we entered into retention agreements
with certain employees, including our executive officers
other than Mr. Ells. The retention agreements were
intended to encourage the employees’ continued service to
Chipotle during the pendency of a search for Chipotle’s
next Chief Executive Officer and the subsequent leadership
transition, and were approved by the Compensation
Committee.

The agreement for Mr. Hartung provides for a cash
retention bonus of $1,000,000, scheduled to vest and
become payable on the first anniversary of the
appointment of a permanent successor to Steve Ells as
Chipotle’s Chief Executive Officer. The agreement for
Mr. Crumpacker provides for a cash retention bonus of
$600,000, scheduled to vest and become payable on the
first anniversary of the execution of the agreement. The
agreements for Messrs. Garner and Boatwright provide for
cash retention bonuses of $500,000 for Mr. Garner and
$400,000 for Mr. Boatwright, scheduled to vest and
become payable in equal installments at the conclusion of
each calendar quarter of 2018. The foregoing vesting and
payment provisions are subject to the employee recipient’s

continuous employment with Chipotle through the vesting
date, and the employee recipient’s not having given
Chipotle notice of the employee’s termination of
employment with Chipotle (other than resignation with
“good reason” as defined in the agreement) on or prior to
the vesting date. If Chipotle terminates the employee
recipient’s employment for “cause” (as defined in the
agreement) following the vesting date but prior to payment
of the retention bonus, the retention bonus will be
automatically forfeited. If, prior to the vesting date,
Chipotle terminates the employee recipient’s employment
without cause (and other than due to the employee’s death
or disability, as defined in the agreement) or the employee
recipient terminates the employee’s employment with good
reason, provided the employee timely executes a general
release of claims in favor of Chipotle and such release
becomes irrevocable, the retention bonus will fully vest as
of the date on which the release becomes effective, and be
paid to the employee recipient in a cash lump-sum at the
same time as the bonus would have been paid if the
employee had remained actively employed with the
Chipotle through the payment date. If the employee
recipient’s employment terminates for any other reason
(including as a result of the employee’s death or disability,
termination by Chipotle for cause, or termination by the
employee without good reason), or the employee gives
Chipotle notice of resignation without good reason, in
either case prior to the vesting date, the employee will
automatically forfeit the retention bonus.

Additionally, the agreements for Messrs. Garner and
Boatwright provided for awards of SOSARs in respect of
18,386 shares for Mr. Garner and 14,709 shares for
Mr. Boatwright, and RSUs in respect of 4,780 shares for
Mr. Garner and 3,824 shares for Mr. Boatwright. The
SOSARs have an exercise price of $313.79 per share, which
was the closing price of Chipotle common stock as of the
grant date, and both the SOSARs and RSUs are scheduled
to vest equally on the second and third anniversaries of the
grant date, subject to possible acceleration of vesting in the
event of the recipient’s termination without cause or
resignation for good reason, or a change in control of
Chipotle without issuance of a replacement award to the
recipient.

New CEO Compensation
On March 5, 2018, Brian Niccol assumed the role of CEO at
Chipotle. In connection with his joining us as CEO, we
entered into an offer letter with Mr. Niccol providing that
Mr. Niccol will have an annualized base salary of
$1.2 million, a target annual bonus opportunity for the 2018
fiscal year of 150% of his base salary, and a maximum

50 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

annual bonus opportunity for the 2018 fiscal year of 225%
of his base salary, and further provides that payment of his
2018 target annual bonus is guaranteed, subject to his
continued employment through the date annual bonuses
are paid to Chipotle’s senior executives generally. In
addition, the offer letter entitled Mr. Niccol to receive the
following equity awards: (i) an annual equity award grant
for 2018 consisting of (A) performance shares with a target
value of $3.0 million as of the grant date, which will have
the same terms and conditions as applicable to annual 2018
performance share awards granted to senior executives of
Chipotle generally; and (B) stock appreciation rights with a
grant date value of $2.0 million and an exercise price equal
to the closing price of Chipotle’s common stock on the
grant date, which will vest in equal amounts on the first,
second and third anniversaries of the grant date, subject to
possible acceleration of vesting in the event of a
termination of employment by Chipotle without cause or by
Mr. Niccol for good reason, and a seven-year term; (ii) a
sign-on award, which was made to Mr. Niccol on his start
date, consisting of stock appreciation rights in respect of
53,086 shares and an exercise price equal to 125% of the
closing price of Chipotle’s common stock on the grant date,
which will vest in equal amounts on the first, second and
third anniversaries of the grant date, subject to possible
acceleration of vesting as previously described, and a
seven-year term; and (iii) a make-whole award – to replace
forfeited unvested equity awards held at his prior
employer – that was awarded to Mr. Niccol as of his start
date and consisting of (A) stock appreciation rights in
respect of 114,840 shares and an exercise price equal to
110% of the closing price of Chipotle’s common stock on the
grant date, which will vest in equal amounts on the first,
second and third anniversaries of the grant date, subject to
possible acceleration of vesting as previously described,
and a seven-year term; and (B) restricted stock units
totaling 30,141 shares, which will vest in equal amounts on
the first, second and third anniversaries of the grant date,
subject to possible acceleration of vesting as previously
described. The offer letter further provides that if
Mr. Niccol’s employment is terminated by Chipotle without
cause, or by Mr. Niccol with good reason, in either case
prior to the fifth anniversary of the commencement of his
employment with the company, Mr. Niccol will be entitled to
a severance payment of two times the sum of his annual
base salary and target annual bonus opportunity (or, if
higher, the amount of the annual bonus paid to him for the
fiscal year immediately preceding the fiscal year in which
such termination of employment occurs). The offer letter
also entitles Mr. Niccol to employee benefits generally
offered by Chipotle from time to time, and further provides
for the payment to Mr. Niccol of a $1.0 million signing

bonus, which must be repaid if Mr. Niccol’s employment is
terminated by Chipotle for cause or by Mr. Niccol without
good reason, in either case prior to the first anniversary of
his start date with Chipotle.

Under the offer letter, Mr. Niccol has agreed that, (i) while
he is employed by Chipotle and for a one-year period
thereafter, he will not, directly or indirectly, own, manage,
operate, control, be employed, or engaged in any capacity
(whether or not for compensation) by, or render services,
advice, or assistance in any capacity to, a business
operating fast-casual, quick-service or casual dining
restaurants in the continental United States where Chipotle
or any of its affiliates conduct business, and (ii) while he is
employed by Chipotle and for a two-year period thereafter,
he will not (a) solicit or hire Chipotle’s employees, or
(b) induce any of Chipotle’s suppliers, licensees, or other
business relations to cease doing business with Chipotle or
interfere with the relationship between any such supplier,
licensee, or other business relation and Chipotle. The offer
letter also includes customary confidentiality and mutual
non-disparagement provisions.

Separation Agreement
On March 13, 2018, we entered into a Separation Agreement
with Mr. Crumpacker in connection with the termination of
Mr. Crumpacker’s employment with Chipotle, effective
March 15, 2018. The agreement entitles Mr. Crumpacker to
cash severance totaling 26 weeks of pay at his base salary,
and related benefits pertaining to post-employment
extension of health insurance benefits, and also allows him
a period of 12 months to exercise vested SOSARs, rather
than the 90-day period provided in the award agreements.
The agreement further provides that Mr. Crumpacker
releases any legal claims against Chipotle, will not
disparage Chipotle or interfere with our relationships with
customers, suppliers, shareholders or the public, and
agrees to hold certain information about Chipotle
confidential, subject to exceptions to ensure compliance
with applicable law. The agreement also provides that for a
one-year period following his resignation, Mr. Crumpacker
will not (i) directly or indirectly, own, manage, operate,
control, be employed, or engaged in any capacity (whether
or not for compensation) by, or render services, advice, or
assistance in any capacity to, a business operating
fast-casual, quick-service or casual dining restaurants in
the continental United States where Chipotle or any of its
affiliates conduct business, or (ii) solicit or hire Chipotle’s
employees, or induce any of Chipotle’s suppliers, licensees,
or other business relations to cease doing business with
Chipotle or interfere with the relationship between any
such supplier, licensee, or other business relation and
Chipotle.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 51

Executive Officers and Compensation
(continued)

Compensation Program Risk
In structuring and approving our executive compensation
programs, as well as policies and procedures relating to
compensation throughout our company, the Committee
also considers risks that may be inherent in such programs,
policies and procedures. The Committee has determined
that it is not reasonably likely that our compensation
programs, policies and procedures will have a material
adverse effect on our company.

Tax and Other Regulatory Considerations

Code Section 162(m)
Section 162(m) of the Internal Revenue Code provides that
compensation of more than $1,000,000 paid to the chief
executive officer or to certain other executive officers 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 is
to support and encourage the achievement of our
company’s strategic goals and to enhance long-term
shareholder value. For these and other reasons, the
committee has determined that it will not necessarily seek
to limit executive compensation 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 amount 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 the bonus
amount determined under the AIP for participants in the
2014 plan is lower than the maximum 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.

Effective for taxable years beginning after December 31,
2017, qualifying performance-based compensation is
generally no longer excluded from the limits on
deductibility under Section 162(m). The committee has not
changed its primary objective in designing executive
compensation, and while it intends to continue to align
executive compensation with company performance and
shareholders interests, it does not currently expect to
significantly alter its approach to executive compensation
in light of the changes in law regarding Section 162(m).

Accounting Rules
Various rules under generally accepted accounting
principles determine the manner in which we account for
equity-based compensation in our financial statements. The
committee may consider the accounting treatment under
Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (FASB Topic 718) of
alternative grant proposals when determining the form and
timing of equity compensation grants to our executive
officers. The accounting treatment of such grants, however,
is not generally determinative of the type, timing, or
amount of any particular grant of equity-based
compensation the committee determines to make.

COMPENSATION COMMITTEE REPORT
The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis included in this Proxy
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 Statement for filing with the SEC.

The Compensation Committee.

Neil W. Flanzraich, Chairperson
Ali Namvar
Mathew Paull

52 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

2017 COMPENSATION TABLES

SUMMARY COMPENSATION TABLE

YEAR

SALARY

BONUS(1)

STOCK
AWARDS(2)

OPTION
AWARDS(3)

NON-EQUITY
INCENTIVE PLAN
COMPENSATION(4)

ALL OTHER
COMPENSATION(5)

TOTAL

NAME AND
PRINCIPAL POSITION

STEVE ELLS

Executive Chairman;
former Chief Executive
Officer(6)

2017 $1,540,000

2016 $1,540,000

2015 $1,526,000

JACK HARTUNG

2017 $ 800,000

Chief Financial Officer

2016 $ 792,308

2015 $ 745,769

MARK CRUMPACKER(7) 2017 $ 600,000

Former Chief Marketing
and Strategy Officer

2016 $ 590,000

2015 $ 532,077

—

—

—

—

—

—

—

—

—

$ 9,324,505

$14,002,740

$12,030,036

$ 4,196,010

$ 5,886,337

$ 5,052,179

$ 3,450,091

$ 4,200,822

$ 3,608,930

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

$ 187,675

$ 11,052,180

$ 120,356

$15,663,096

$ 281,858

$ 13,837,891

$ 209,150

$ 5,205,160

$ 175,559

$ 6,854,204

$ 235,361

$ 6,033,309

$ 125,347

$ 4,175,438

$ 109,914

$ 4,900,736

$ 141,581

$ 4,282,588

CURT GARNER(8)

2017 $ 483,299 $426,501

—

$2,653,500

$139,786

$206,468

$ 3,909,555

Chief Digital and
Information Officer

SCOTT BOATWRIGHT(9) 2017 $ 236,538

—

—

$ 1,194,757

$ 69,624

$ 215,486

$ 1,716,406

Chief Restaurant Officer

(1) Amounts under “Bonus” represent a $250,000 sign-on bonus paid to Mr. Garner on the second anniversary of his joining Chipotle, as
agreed at the time he joined us in 2015, as well as a discretionary bonus as further described under “Compensation Discussion and
Analysis – 2017 Compensation Program – Other Bonus Payments.”

(2) Amounts under “Stock Awards” represent the grant date fair value under FASB Topic 718 of performance shares awarded in 2015, 2016

and 2017, and for the 2015 award, for which vesting was considered probable as of the grant date. See Note 6 to our audited
consolidated financial statements for the year ended December 31, 2017, which are included in our Annual Report on Form 10-K filed
with the SEC on February 8, 2018, 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 2016 performance share awards will not pay
out or have any value unless the price of our common stock exceeds an average of $700 for a period of 60 consecutive trading days,
before February 3, 2019, and the 2017 performance share awards will not pay out or have any value unless the price of our common
stock exceeds an average of $600 for a period of 60 consecutive trading days, before February 19, 2020. For further discussion, see
above under “Compensation Discussion and Analysis – 2017 Compensation Program – Long Term Incentives – 2017 Performance Share
Award Design.”

(3) Amounts under “Option Awards” represent the grant date fair value under FASB Topic 718 of SOSARs awarded in 2017. See Note 6 to

our audited consolidated financial statements for the year ended December 31, 2017, as referenced in footnote 2, 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. The SOSAR awards reflected in this table have the exercise prices reflected in the Grants of Plan-Based Awards
table below, and expire in February 2024 for Mr. Garner and May 2024 for Mr. Boatwright.

(4) Amounts under “Non-Equity Incentive Plan Compensation” represent the amounts earned under the AIP for the relevant year.
(5) Amounts under “All Other Compensation” for 2017 include 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 $61,600 for Mr. Ells, $32,123 for
Mr. Hartung, and $27,198 for Mr. Crumpacker. See “Non-Qualified Deferred Compensation for 2017” 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, or a car allowance paid to
officers who choose not to receive a company car. Company car costs for Mr. Ells were $49,585, for Mr. Hartung were $45,210, for
Mr. Crumpacker were $34,123, for Mr. Garner were $35,100, and for Mr. Boatwright were less than $25,000.

• Housing costs, including monthly rent and utilities payments, of $43,200 for Mr. Hartung and $45,300 for Mr. Crumpacker, and a

net $54,000 housing allowance for Mr. Garner.

• Relocation costs, including moving expenses, of $169,069 for Mr. Boatwright.

• $57,776 for Mr. Hartung, $18,186 for Mr. Crumpacker, $84,691 for Mr. Garner, and $25,909 for Mr. Boatwright for reimbursement of

taxes payable in connection with taxable perquisites under rules of the Internal Revenue Service.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 53

Executive Officers and Compensation
(continued)

• Commuting expenses, which include air fare, airport parking and ground transportation relating to travel between home and our

company headquarters, totaling $30,302 for Mr. Hartung and $32,156 for Mr. Garner.

• $75,950 in personal legal fees and disbursements paid to counsel for Mr. Ells in connection with the Executive Chairman

Agreement.

(6) Mr. Ells became Executive Chairman effective upon our appointment of Mr. Niccol as Chief Executive Officer on March 5, 2018.
(7) Mr. Crumpacker was appointed Chief Marketing and Strategy Officer in September 2017, after previously serving as Chief Marketing

and Development Officer. Mr. Crumpacker’s employment terminated on March 15, 2018.

(8) Mr. Garner was appointed Chief Digital and Information Officer, and designated as an executive officer, in March 2017, after previously

serving as Chief Information Officer.

(9) Mr. Boatwright was appointed Chief Restaurant Officer in May 2017, and designated as an executive officer in September 2017.

GRANTS OF PLAN-BASED AWARDS IN 2017

ESTIMATED POSSIBLE PAYOUTS
UNDER NON-EQUITY INCENTIVE
PLAN AWARDS(1)

ESTIMATED POSSIBLE PAYOUTS
UNDER EQUITY INCENTIVE
PLAN AWARDS(2)

NAME

GRANT
DATE

AWARD
DESCRIPTION

THRESHOLD
($)

TARGET
($)

MAXIMUM
($)

THRESHOLD
(# shares)

TARGET
(# shares)

MAXIMUM
(# shares)

STEVE ELLS

n/a

AIP

$0

$1,925,000 $ 4,331,250

ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS(2)
(# shares)

EXERCISE OR
BASE PRICE
OF OPTION
AWARDS
($)

GRANT
DATE FAIR
VALUE
OF STOCK
AND OPTION
AWARDS
($)

2/19/17 Performance

Shares

JACK HARTUNG

n/a

AIP

$0

$680,000

$1,530,000

2/19/17 Performance

Shares

MARK CRUMPACKER

n/a

AIP(3)

$0

$390,000

$ 877,500

2/19/17 Performance
Shares(3)

CURT GARNER

n/a

AIP

$0

$318,079

$ 715,679

2/20/17

SOSARs

SCOTT BOATWRIGHT

n/a

AIP(4)

5/30/17

SOSARs

$0

$156,079

$ 353,204

10,000

20,000

66,667

$9,324,505

4,500

9,000

30,000

$ 4,196,010

3,700

7,400

24,667

$ 3,450,091

25,000

$ 427.61

$2,653,500

10,090

$475.70

$ 1,194,757

(1) Each executive officer was entitled to a cash award to be paid under our 2014 Cash Incentive Plan, although as a matter 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 – 2017 Compensation Program – Annual Incentive Plan.” Amounts under Threshold
reflect that no payouts would be paid under the AIP if achievement against company targets under the AIP were sufficiently below
target. Amounts under Target reflect the target AIP bonus, which would have been 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. Amounts
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 been at the maximum level. Actual AIP bonuses paid are reflected in the “Non-Equity
Incentive Plan Compensation” column of the table labeled Summary Compensation Table above.

(2) All equity awards are denominated in shares of common stock, and were granted under the Amended and Restated Chipotle Mexican
Grill, Inc. 2011 Stock Incentive Plan. See “Terms of 2017 Performance Share Awards” and “Terms of 2017 SOSAR Awards” below for a
description of the vesting terms for the Performance Shares and SOSARs granted during 2017. See Note 6 to our audited consolidated
financial statements for the year ended December 31, 2017, which are included in our Annual Report on Form 10-K filed with the SEC on
February 8, 2018, for descriptions of the methodologies and assumptions we used to value equity 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 2017, and the grant date fair value of SOSARs awards is included in the “Option Awards” column of
the Summary Compensation Table above for each executive officer for 2017.

(3) In connection with the termination of Mr. Crumpacker’s employment in March 2018, these awards were cancelled and forfeited.
(4) AIP amounts for Mr. Boatwright are pro-rated, based on his start date of May 30, 2017.

54 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

Terms of 2017 Performance Share Awards
Vesting of the performance share awards granted to the executive officers in 2017 will be based on Chipotle’s stock price
performance and growth in comparable restaurant sales over the three-year performance term.

Two-thirds of the awards will pay out only if the average closing price of Chipotle’s common stock for any period of 60
consecutive trading days during performance term is at least $600, which is approximately 52% higher than the closing
price of Chipotle’s common stock as of 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 60 consecutive trading days
during the performance term. Additionally, if the average closing stock price of Chipotle’s common stock during the last 60
consecutive trading days of the performance period is below $600, the maximum payout of the award will be no greater
than the target payout, regardless of whether a higher payout level was actually achieved earlier in the performance period.

The other one-third of the awards will pay out only if the average annual growth in Chipotle comparable restaurant sales
during the three fiscal years ending December 31, 2017, 2018 and 2019 is at least 5%.

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. 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 27, 2016.

Terms of 2017 SOSAR Awards
Each SOSAR represents the right to receive shares of common stock in an amount equal to (i) the excess of the market
price of the common stock at the time of exercise over the exercise price of the SOSAR, divided by (ii) the market price of
the common stock at the time of exercise. The exercise price of the SOSARs is equal to the closing price of our common
stock on the date the committee approved the grants. The SOSARs are subject to vesting in equal amounts on the second
and third anniversary of the grant date, subject to potential acceleration of vesting in the event of termination due to death,
disability, or retirement, and to potential accelerated vesting if the SOSARs are not replaced in the event of certain in
control transactions. We filed the form of SOSAR Agreements for these grants as an exhibit to our Quarterly Report on
Form 10-Q filed with the SEC on April 20, 2012.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 55

Executive Officers and Compensation
(continued)

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2017

OPTION AWARDS

STOCK AWARDS

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

7,444(2)

13,500(4)

10,000(5)

3,126(2)

5,675(4)

4,500(5)

$ 2,151,539(3)

$ 3,901,905(3)

$2,890,300(3)

$ 903,508(3)

$ 1,640,245(3)

$ 1,300,635(3)

2,233(2)

4,050(4)(7)

3,700(5)(7)

$ 645,404(3)

$ 1,170,572(3)

$ 1,069,411(3)

87,500

43,750

25,000

25,000

30,000

15,000

4,000

4,000

2,000

15,000

7,500

5,500

—

—

—

—

43,750(1)

$543.20

$543.20

2/3/2021

2/3/2021

—

—

—

15,000(1)

—

—

—

—

7,500(1)

5,500

25,000

25,000

$ 318.45

$ 318.45

$543.20

$543.20

$ 318.45

$ 318.45

$365.80

$543.20

$543.20

$554.86

$ 417.22

$ 427.61

2/7/2020

2/7/2020

2/3/2021

2/3/2021

2/7/2020(6)

2/7/2020(6)

6/8/2020(6)

2/3/2021(6)

2/3/2021(6)

12/15/2022

4/27/2023

2/10/2024

10,090

$475.70

5/30/2024

NAME

STEVE ELLS

JACK HARTUNG

MARK CRUMPACKER

CURT GARNER

SCOTT BOATWRIGHT

(1) Vesting of the unvested portion of these Performance SOSARs was contingent upon our achievement of stated levels of cumulative

cash flow from operations prior to the fifth fiscal year-end following the award date, with vesting to occur no sooner than February 3,
2017. The SOSARs vested in full as of March 12, 2018.

(2) Represents shares issuable under the 2015 performance share awards, assuming achievement at the threshold level. Payout was based
on relative achievement versus our restaurant industry peer group in sales growth, net income growth and total shareholder return
over the three year performance period. In March 2018, the awards paid out between threshold and target.

(3) Based on the closing stock price of our common stock on December 29, 2017 of $289.03 per share.
(4) Represents shares issuable under the 2016 performance share awards, assuming achievement at the threshold level (which would

require that our average closing stock price for any period of 60 consecutive trading days during the performance period is at least
$700).

(5) Represents shares issuable under the 2017 performance share awards, assuming achievement at the threshold level (which would

require that our average closing stock price for any period of 60 consecutive trading days during the performance period is at least
$600, in addition to achievement of comparable restaurant sales goals). The performance terms for the 2017 performance share
awards are further described above under “– Terms of 2017 Performance Share Awards.”

(6) In connection with the termination of Mr. Crumpacker’s employment in March 2018, the expiration date of these awards was amended

to March 19, 2019.

(7) In connection with the termination of Mr. Crumpacker’s employment in March 2018, these awards were cancelled and forfeited.

OPTION EXERCISES AND STOCK VESTED IN 2017
None of our executive officers exercised SOSARs during 2017, and no full-value shares of stock vested during 2017.

NON-QUALIFIED DEFERRED COMPENSATION
FOR 2017
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 participant has maximized his or her contributions to
our 401(k) plan. Contributions are made on the participant’s

behalf through payroll deductions from 1 percent to
50 percent of the participant’s monthly base compensation,
which are credited to the participant’s “Supplemental
Account,” and from 1 percent to 100 percent of awards
under the AIP, which are credited to the participant’s
“Deferred Bonus Account.” We also match contributions at
the rate of 100 percent on the first 3 percent of
compensation contributed and 50 percent on the next

56 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Executive Officers and Compensation
(continued)

2 percent 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
accounts fluctuate in value to track a variety of available
investment choices selected by the participant (which 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, in either (1) 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) a lump sum or installment distribution
following termination of the participant’s service with us,
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
accounts are subject to federal income tax as ordinary
income in the year the distribution is made.

Amounts credited to participants’ deferral accounts are
unsecured general obligations of ours to pay the value of
the accounts to the participants at times determined under
the plan.

The table below presents contributions by each executive officer, and our matching contributions, to the Supplemental
Deferred Investment Plan during 2017, as well as each executive officer’s earnings under the plan and ending balances in
the plan on December 31, 2017.

NAME

Steve Ells

Jack Hartung

Mark Crumpacker

EXECUTIVE
CONTRIBUTIONS
IN LAST FY(1)

REGISTRANT
CONTRIBUTIONS
IN LAST FY(2)

AGGREGATE
EARNINGS)
IN LAST FY(3)

AGGREGATE
WITHDRAWALS/
DISTRIBUTIONS

$ 63,500

$136,000

$ 22,732

$50,800

$ 27,200

$ 16,398

$109,158

$ 86,037

$54,786

$429,654

—

—

AGGREGATE
BALANCE
AT LAST
FYE(4)

$ 800,320

$6,428,117

$ 343,892

(1) These amounts are reported in the Summary Compensation Table as part of each executive’s “Salary” for 2017.
(2) These amounts are reported in the Summary Compensation Table as part of each executive’s “All Other Compensation” for 2017.
(3) These amounts are not reported as compensation in the 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 as “Salary,” “Non-Equity Incentive Plan

Compensation” or “All Other Compensation” for years prior to 2017 (ignoring for purposes of this footnote any investment losses on
balances in the plan and any withdrawals/distributions), in the following aggregate amounts: $2,450,615 for Mr. Ells, $5,631,631 for
Mr. Hartung, and $347,689 for Mr. Crumpacker.

POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE-IN-CONTROL

Mr. Ells would have been entitled to salary continuation
payments totaling $1.8 million.

Certain Agreements
As of December 31, 2017, we were party to an Executive
Chairman Agreement with Mr. Ells, and an employment
agreement with Mr. Boatwright, pursuant to which we
agreed to certain severance payments in the event of
certain terminations of employment. The amount of those
payment entitlements in connection with various
termination events are described below.

In the event Mr. Ells’s employment was terminated as of
December 31, 2017, by Chipotle without cause or by Mr. Ells
with good reason, then subject to his continued compliance
with the restrictive covenants set forth in the agreement,

In the event Mr. Boatwright’s employment was terminated
as of December 31, 2017, for any reason other than by
Chipotle for cause, Mr. Boatwright would have been entitled
to severance payments totaling $410,000.

Agreements we entered into subsequent to December 31,
2017 with executive officers other than Mr. Ells also provide
for severance payments in the event of certain
terminations of employment. Terms of those agreements
are described above under “Compensation Discussion and
Analysis – Executive Agreements.”

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 57

Executive Officers and Compensation
(continued)

We have in the past paid severance to executives or 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.

Payouts under the AIP are conditioned on the employee
being employed as of the payout date.

Equity Awards
The terms of the equity-based awards made to our
executive officers provide for post-employment benefits in
certain circumstances. However, of the unvested equity-
based awards outstanding as of December 31, 2017, all
unvested SOSARs held by the executive officers, as well as
the 2016 and 2017 performance share awards, were
“underwater” based on the closing price of our common
stock on December 31, 2017 and therefore had no value as
of that date. The amount of any potential payout of the
2015 performance share awards as of December 31, 2017
was undeterminable due to the lack of peer group data
against which our relative performance could be compared
in order to determine payout. Actual payout of the 2015
performance shares in March 2018 is described above
under “Compensation Discussion and Analysis – 2017
Compensation Program – Long-Term Incentives – 2015
Performance Share Award Vesting.”

CEO PAY RATIO
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 that of their median employee. This
disclosure is required in this proxy statement and requires
that our median employee be selected from all employees,
including full-time, part-time, seasonal and temporary
employees.

Because 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,
the pay ratio reported by other companies may not be
comparable with the pay ratio that we have reported. In
particular, it is important to bear in mind that Chipotle
employs over 70,000 people in our 2,400-plus restaurants
around the world, all of which are company-owned and not
franchised, which will impact the comparability of our CEO
pay ratio to that of many other restaurant or retail
companies who operate under a franchised model.

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 and guidance.
We identified our median employee by using total 2017
compensation for all individuals, excluding our CEO, who
were employed by us on December 31, 2017 (annualized in
the case of full- and part-time employees who joined
Chipotle during 2017); we excluded from total 2017
compensation certain unusual or non-recurring items not
available to all employees generally, to arrive at a
consistently applied compensation measure. This resulted in
identification of a median employee with total compensation
of $13,582 using the consistently applied compensation
measure. This total compensation figure reflects
employment on a part-time basis, and 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 2017 of $13,582, and annual total
compensation for our CEO in 2017 as reported in the
Summary Compensation Table above of $11.05 million (a
large majority of which represents the grant date value of
performance share awards that had no value as of
December 31, 2017, and that will require the price of our
common stock to more than double from the closing price
on December 31, 2017, and our comparable restaurant sales
to increase significantly, in order to deliver any value to the
CEO), the ratio of our CEO’s annual total compensation to
our median employee’s annual total compensation would be
computed to be 814 to 1. When including total compensation
for our CEO using realizable pay from 2017 compensation as
described above under “Compensation Discussion and
Analysis – Executive Summary – Alignment of CEO
Realizable Pay Value and Performance,” the CEO to median
employee pay ratio would be computed to be 113 to 1. We
believe such realizable pay for our CEO results in a more
meaningful comparison of compensation actually received
in the year by our CEO and median-compensated employee.

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 with the SEC. Based
solely on a review of the copies of such reports furnished to
us and written representations from our officers and
directors, we believe that all Section 16(a) filing
requirements were complied with on a timely basis in 2017.

58 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Certain Relationships and Related
Party Transactions

Agreements With Pershing Square Capital
Management, L.P.
See “Proposal 1 – Election of Directors – Director
Nomination Process – Investor Agreement Regarding Board
Nominations” for details regarding the Investor Agreement
entered into with Pershing Square on December 14, 2016.
Concurrent with the Investor Agreement, we also entered
into a Confidentiality Agreement allowing Pershing Square
to receive non-public information regarding Chipotle,
subject to specified confidentiality obligations.

Pershing Square. The foregoing descriptions of the Investor
Agreement, the Confidentiality Agreement and the
Registration Rights Agreement are qualified in their entirety
by reference to the full text of the Investor Agreement
(including the form of Confidentiality Agreement included as
an exhibit thereto), which is attached as Exhibit 10.1 to our
Current Report on Form 8-K filed with the SEC on
December 19, 2016, and the Registration Rights Agreement,
which is attached as Exhibit 10.11 to our Annual Report on
Form 10-K filed with the SEC on February 7, 2017.

Additionally, on February 3, 2017, we entered into a
Registration Rights Agreement with Pershing Square.
Pursuant to the Registration Rights Agreement, Pershing
Square may make up to four requests that we file a
registration statement to register the sale of shares of our
common stock that Pershing Square beneficially owns,
subject to the limitations and conditions provided in the
Registration Rights Agreement. The Registration Rights
Agreement also provides that we will file and keep effective,
subject to certain limitations, a shelf registration statement
covering shares of our common stock beneficially owned by
Pershing Square, and also provides certain piggyback
registration rights to Pershing Square. We would be
responsible for the expenses of any such registration.

The registration rights provided in the agreement
terminate as to any Pershing Square shareholder upon the
earliest of (i) the date on which such shares are disposed of
pursuant to an effective registration statement, (ii) the date
on which such securities are sold pursuant to Rule 144, and
(iii) such shareholder ceasing to beneficially own at least
5% of our outstanding common stock, provided such
shareholder no longer has a representative serving on our
Board, and is permitted to sell shares of common stock
beneficially owned by such shareholder under Rule 144(b)(1)
of the Securities Act. The Registration Rights Agreement
also contains customary indemnification provisions.

The Investor Agreement, Confidentiality Agreement and
Registration Rights Agreement contain various other
obligations and provisions applicable to Chipotle and

Other Registration Rights
Prior to our initial public offering in 2006, certain of our
current shareholders, including Steve Ells, who is now our
Executive Chairman, and Albert S. Baldocchi, a member 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 are 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 for 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.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 59

Other Business and Miscellaneous

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 in the accompanying
proxy vote the proxy in accordance with their best
judgment on such matters.

AVAILABILITY OF SEC FILINGS,
CORPORATE GOVERNANCE
GUIDELINES, CODE OF CONDUCT,
CODES OF ETHICS AND COMMITTEE
CHARTERS

SHAREHOLDER PROPOSALS AND
NOMINATIONS FOR 2019 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 2019 annual meeting of shareholders pursuant
to SEC Rule 14a-8 must be received by us no later than
December 3, 2018, unless the date of our 2019 annual
meeting is more than 30 days before or after May 22, 2019,
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, Suite 500, Denver, CO
80202, Attn: Corporate Secretary.

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
2019 annual meeting 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 corporate Secretary at the above
address no earlier than the close of business on
January 22, 2019, and no later than the close of business
on February 21, 2019, unless the date of the 2019 annual
meeting is more than 30 days before or 60 days after
May 22, 2019. If the date of the 2019 annual meeting is
more than 30 days before or 60 days after May 22, 2019,
we must receive the proposal or nomination no earlier than
the 120th day before the meeting date and no later than the
90th 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 2019 annual
meeting is made.

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 Committee, the
Compensation 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.com
without charge, or may be requested (exclusive of exhibits),
at no cost by mail to Chipotle Mexican Grill, Inc., 1401
Wynkoop Street, Suite 500, Denver, CO 80202, 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. 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, Suite 500, Denver,
Colorado, or by email to ir@chipotle.com. We will promptly
deliver a separate copy to you upon written or oral request.

ATTENDANCE AT THE MEETING

To attend the meeting, you must be a shareholder on the
record date of March 23, 2018, and obtain an admission
ticket in advance. Tickets will be available to registered and
beneficial owners and to one guest accompanying each
registered or beneficial owner. You can print your own
tickets and you must bring them to the meeting to gain
access. Tickets can be printed by accessing Shareholder
Meeting Registration at www.proxyvote.com and following

60 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Other Business and Miscellaneous
(continued)

the instructions provided (you will need the control number
included on your proxy card, voter instruction form or
notice).

Requests for admission tickets will be processed in the
order in which they are received and must be requested no
later than 11:59 p.m. Eastern Time on May 21, 2018. Please
note that seating is limited and requests for tickets will be
accepted on a first-come, first-served basis.

On the day of the meeting, each shareholder will be
required to present valid picture identification such as a
driver’s license or passport with their admission ticket, and
you may be denied admission if you do not. Seating will
begin at 7:30 a.m. local time and the meeting will begin at
8:00 a.m. Cameras (including cell phones with photographic
capabilities), recording devices and other electronic devices
will not be permitted at the meeting. You may be required
to enter through a security check before being granted
access to the meeting.

MISCELLANEOUS

If you request physical delivery of these proxy materials, we will mail along with the proxy materials our 2017 Annual
Report, including our Annual Report on Form 10-K for fiscal year 2017 (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 will appreciate your prompt response.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT 61

Appendix A

MARKED TO SHOW PROPOSED CHANGES VS. PLAN AS CURRENTLY IN EFFECT

AMENDED AND RESTATED
CHIPOTLE MEXICAN GRILL, INC.
2011 STOCK INCENTIVE PLAN

1. Effective Date; Purpose of the Plan

The purpose of the Amended and Restated Chipotle Mexican Grill, Inc. established, effective2011 Stock Incentive Plan as

of March 6, 2011, the set forth herein (this “Plan”) is to attract and retain Employees, Consultants and Non-Employee
Directors and to provide additional incentives for these persons consistent with the long-term success of the business of
Chipotle Mexican Grill, Inc. (the “Company”) and its Subsidiaries. This Plan was most recently approved by stockholders on
May 13, 2015 as the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan, which is hereby amended
and restated effective as of May 14, 2015, (the “2015 Plan”). This amendment and restatement is subject to stockholderthe
approval of the Company’s stockholders, and shall remain inhave no effect as provided prior to that time.

The amendments made herein shall affect only Awards granted on or after the Effective Date (as hereinafter defined
herein). Awards granted prior to the Effective Date shall be governed by the terms of the 2015 Plan (including any earlier
amendment and restatement that is referred in the 2015 Plan) and Award Agreements as in Section 19 below. effect prior to
the Effective Date. The terms of this Plan isare not intended to promote the interests of the Company and its shareholders
by providing current and prospective directors, officers, employees, consultants and advisors of the Company and its
Subsidiaries, who are largely responsible for the management, growth and protection of the business of the Company, with
incentives and rewards to encourage them to continue in the serviceaffect the interpretation of the Company. The Plan is
designed to meet this intent by providing Eligible Persons (as defined below) with a proprietary interest in pursuing the
long-term growth, profitability and financial success of the Companyterms of the 2015 Plan as they existed prior to the
Effective Date.

2. Definitions

As used in the Plan or in any instrument governing the terms of any Incentive Award, the following definitions apply to

the terms indicated below:

(a)

“Board” or “Board of Directors” means the Board of Directors of Chipotle.

(b)

“Business Combination” means a merger, consolidation, reorganization or similar transaction.

(c)

“Cause” means, when used in connection with the termination of a Participant’s employment with the Company,

unless otherwise provided in the Participant’s award agreement with respect to an Incentive Award or effective
employment agreement or other written agreement with respect to the termination of a Participant’s employment with the
Company, the termination of the Participant’s employment with the Company on account of: (i) a failure of the Participant
to substantially perform his or her duties (other than as a result of physical or mental illness or injury); (ii) the Participant’s
willful misconduct or gross negligence which is materially injurious to the Company; (iii) a breach by a Participant of the
Participant’s fiduciary duty or duty of loyalty to the Company; (iv) the Participant’s unauthorized removal from the
premises of the Company of any document (in any medium or form) relating to the Company or the customers of the
Company; or (v) the commission by the Participant of any felony or other serious crime involving moral turpitude. Any
rights the Company may have hereunder in respect of the events giving rise to Cause shall be in addition to the rights the
Company may have under any other agreement with the Participant or at law or in equity. If, subsequent to a Participant’s
termination of employment prior to a Change in Control, it is discovered that such Participant’s employment could have
been terminated for Cause, the Participant’s employment shall, at the election of the Committee, in its sole discretion, be
deemed to have been terminated for Cause retroactively to the date the events giving rise to Cause occurred.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT A-1

Appendix A
(continued)

(d)

“Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of one or

more of the following events:

(i) Any Person becoming the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange

Act, a “Beneficial Owner”), directly or indirectly, of twenty-five percent or more of the combined voting power of Voting
Securities; provided, however that a Change in Control shall not be deemed to occur by reason of an acquisition of Voting
Securities by the Company or by an employee benefit plan (or a trust forming a part thereof) maintained by the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person becomes the
Beneficial Owner of twenty-five percent or more of the outstanding Voting Securities (A) in connection with a Business
Combination that is not a Change in Control pursuant to sub-clause (iii), below, or (B) as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting Securities deemed to be outstanding, increases the
proportional number of shares Beneficially Owned by such Person, provided, however, that if a Change in Control would
have occurred (but for the operation of this proviso) as a result of the acquisition of Voting Securities by the Company and
at any time after such acquisition such Person becomes the Beneficial Owner of any additional Voting Securities following
which such Person is the Beneficial Owner of twenty-five percent or more of the outstanding Voting Securities, a Change in
Control shall occur;

(ii) The individuals who, as of March 16, 2011 are members of the Board of Directors (the “Incumbent Board”),

cease for any reason to constitute at least a majority of the members of the Board of Directors; provided, however that if
the election or appointment, or nomination for election by Chipotle’s common stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan,
thereafter be considered as a member of the Incumbent Board; provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed office as a result of an actual or
threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors (a “Proxy
Contest”) including by reason of any agreement intended to avoid or settle any Proxy Contest; or

(iii) The consummation of:

(A) a Business Combination with or into the Company or in which securities of Chipotle are issued, unless

such Business Combination is a Non-Control Transaction;

(B) a complete liquidation or dissolution of the Company; or

(C)

the sale or other disposition of all or substantially all of the assets of the Company (on a consolidated

basis) to any Person other than the Company or an employee benefit plan (or a trust forming a part thereof)
maintained by the Company or by a Person which, immediately thereafter, will have all its voting securities owned by
the holders of the Voting Securities immediately prior thereto, in substantially the same proportions.

For purposes of the Plan, a “Non-Control Transaction” is Business Combination involving the Company where:

(x)

the holders of Voting Securities immediately before such Business Combination own, directly or

indirectly immediately following such Business Combination more than fifty percent of the combined voting power of
the outstanding voting securities of the parent corporation resulting from, or the corporation issuing its voting
securities as part of, such Business Combination (the “Surviving Corporation”) in substantially the same proportion as
their ownership of the Voting Securities immediately before such Business Combination by reason of their prior
ownership of Voting Securities;

(y)

the individuals who were members of the Incumbent Board immediately prior to the execution of
the agreement providing for such Business Combination constitute a majority of the members of the board of directors
of the Surviving Corporation, or a corporation beneficially owning a majority of the voting securities of the Surviving
Corporation; and

(z) no Person other than the Company or any employee benefit plan (or any trust forming a part

thereof) maintained immediately prior to such Business Combination by the Company immediately following the time at
which such transaction occurs, is a Beneficial Owner of twenty-five percent or more of the combined voting power of
the Surviving Corporation’s voting securities outstanding immediately following such Business Combination.

A-2 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Appendix A
(continued)

Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Incentive Award that
provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event described in
(i), (ii), or (iii) above with respect to such Incentive Award must also constitute a “change in control event,” as defined in
Treasury Regulation § 1.409A-3(i)(5) to the extent required by Section 409A of the Code. The Committee shall have full and
final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control has
occurred for purposes of this Section 12(d), and the date of the occurrence of such Change in Control and any incidental
matters relating thereto.

(e)

“Chipotle” means Chipotle Mexican Grill, Inc., a Delaware corporation, and any successor thereto.

(f)

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and all regulations,

interpretations and administrative guidance issued thereunder.; provided, however, that references to “performance-based
compensation” under Section 162(m) shall refer to the Internal Revenue Code of 1986 as in effect as of December 31, 2017,
and all regulations, interpretations and administrative guidance issued thereunder.

(g)

“Committee” means the Compensation Committee of the Board of Directors or such other committee as the Board
of Directors shall appoint from time to time to administer the Plan and to otherwise exercise and perform the authority and
functions assigned to the Committee under the terms of the Plan.

(h)

“Common Stock” means Chipotle’s Common Stock, $0.01 par value per share, or any other security into which the

common stock shall be changed pursuant to the adjustment provisions of Section 99 of the Plan.

(i)

“Company” means Chipotle and all of its Subsidiaries, collectively.

(a)
Company.

“Director” means a member of the Board of Directors who is not at the time of reference an employee of the

(j)

“Consultant” means any consultant or advisor to the Company or any of its Subsidiaries who may be offered
securities registrable on Form S-8 under the Securities Act or pursuant to Rule 701 of the Securities Act, or any other
available exemption, as applicable.

(j)(k)

“Dividend Equivalent” means a right to receive the equivalent value (in cash or Common Stock) of dividends paid
on Common Stock. Dividend Equivalents may be granted based on dividends declared on the Common Stock, to be credited
as of dividend payment dates during the period between the date an Incentive Award is granted to a Participant and such
date or dates as determined by the Committee. Such Dividend Equivalents shall be converted to cash or additional shares of
Common Stock by such formula and at such time and subject to such limitations as may be determined by the Committee. In
addition,Dividend Equivalents shall be subject to the same restrictions as the shares subject to the underlying Incentive
Award. Dividend Equivalents with respect to an Incentive Award with performance-based vesting that are based on
dividends paid prior to the vesting of such Incentive Award shall only be paid out to the Participant to the extent that the
performance-based vesting conditions are subsequently satisfied and such award vests. No Dividend Equivalent shall be
payable with respect to any Incentive Award unless specified by the Committee in the agreement evidencing the Incentive
Award. Dividend Equivalents shall not be issued in tandem with Options or stock appreciation rights.

(l)

“Eligible Person” means any (i) individual employed by the Company or any of its Subsidiaries; (ii) director of the

Company or any of its Subsidiaries; (iii) consultant or advisor to the Company or any of its Subsidiaries who may be offered
securities registrable on Form S-8 under the Securities Act or pursuant to Rule 701 of the Securities Act, or any other
available exemption, as applicable; or (iv) prospective employees, directors, officers, consultants or advisors“Effective Date”
means May 22, 2018, subject to shareholder approval at the Company’s 2018 annual shareholders’ meeting (or any
adjournment thereof).

(m)

“Eligible Person” means any (i) Employee; (ii) Non-Employee Director or (iii) Consultant; including persons who

have accepted offers of employment or consultancy from the Company or its Subsidiaries (and would satisfy the provisions
of clauses (i) through (iii) above once such person begins employment with or providing services to the Company or its
Subsidiaries).

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Appendix A
(continued)

(k)(n)

“Employee” means an individual who is on the payroll of the Company or one of its Subsidiaries, and is

classified on the employer’s human resource payroll system as a regular full-time or regular part-time employee.

(l)(o)

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(m)(p)

“Fair Market Value” or “FMV” means, as of any date, the value of a share of Common Stock as determined by

the Committee, in its discretion, subject to the following:

(i) If, on such date, Common Stock is listed on the New York Stock Exchange (“NYSE”) (or such other national
securities exchange as may at the time be the principal market for the Common Stock), then: the Fair Market Value of a
share shall be the closing price of a share of Common Stock as quoted on such exchange, as reported in The Wall Street
Journal or such other source as the Company deems reliable (or, if no such closing price is reported, the closing price
on the last preceding date on which a sale of Common Stock occurred); provided, however, that the Committee may, in
its discretion, determine the Fair Market Value of a share of Common Stock on the basis of the opening, closing, or
average of the high and low sale prices of a share of Common Stock on such date or the preceding trading day, the
actual sale price of a Share, any other reasonable basis using actual transactions involving shares of Common Stock as
reported on an established U.S. national or regional securities exchange, or on any other basis consistent with the
requirements of Section 409A of the Code.

(ii) If the Common Stock is not then listed and traded on the NYSE or other national securities exchange, Fair
Market Value shall be what the Committee determines in good faith to be 100% of the fair market value of a share of
Common Stock on that date, using such criteria as it shall determine, in its sole discretion, to be appropriate for
valuation.

(iii) The Committee may vary in its discretion the method of determining Fair Market Value as provided in this
Section for purposes of different provisions under the Plan. The Committee may delegate its authority to establish Fair
Market Value for purposes of determining whether sufficient consideration has been paid to exercise Options or SARs
or for purposes of any other transactions involving outstanding Incentive Awards.

(n)(q)

“Full Value Award” means any Incentive Award other than an Option or stock appreciation right.

(o)(r)

“Good Reason” means, unless otherwise provided in any award agreement entered between the Company and

the Participant with respect to an Incentive Award or effective employment agreement or other written agreement between
the Participant and the Company with respect to the termination of a Participant’s employment with the Company, the
Participant’s termination of employment on account of: (i) a material diminution in a Participant’s duties and responsibilities
other than a change in such Participant’s duties and responsibilities that results from becoming part of a larger organization
following a Change in Control, (ii) a decrease in a Participant’s base salary, bonus opportunity or benefits other than a
decrease in bonus opportunity or benefits that applies to all employees of the Company otherwise eligible to participate in
the affected plan or (iii) a relocation of a Participant’s primary work location more than 30 miles from the Participant’s work
location on the date of grant of a Participant’s Incentive Awards under the Plan, without the Participant’s prior written
consent; provided that, within thirty days following the occurrence of any of the events set forth herein, the Participant
shall have delivered written notice to the Company of his or her intention to terminate his or her employment for Good
Reason, which notice specifies in reasonable detail the circumstances claimed to give rise to the Participant’s right to
terminate employment for Good Reason, and the Company shall not have cured such circumstances within thirty days
following the Company’s receipt of such notice.

(p)(s)

“Incentive Award” means an Option or Other Stock-Based Award granted to a Participant pursuant to the terms

of the Plan.

(t)

“Non-Employee Director” means a member of the Board of Directors who is not an Employee.

(q)(u)

“Option” means an option to purchase shares of Common Stock granted to a Participant pursuant to

Section 66..

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Appendix A
(continued)

(r)(v)

“Other Stock-Based Award” means an equity or equity-related award granted to a Participant pursuant to

Section 77..

(s)(w)

“Participant” means a Director, consultant, advisor or employee of the Companyan Eligible Person who is

eligible to participate in the Plan and to whom one or more Incentive Awards havehas been granted an Incentive Award
pursuant to the Plan and, following the death of any such Person, his successors, heirs, executors and administrators, as the
case may be.

(t)(x)

“Performance-Based Compensation” means any Full Value Award designated by the Committee as

Performance-Based Compensation underIncentive Award that is granted subject to Section 8 of the Plan.

(u)(y)

“Performance Goals” mean, for a Performance Period, Goal” means the level of performance with respect to
one or more goals established by the Committee for the Performance Period based upon the Performance Measures. that
must be achieved during a Performance Period to earn a payment under an Incentive Award structured as Performance-
Based Compensation.

(v)(z)

“Performance Measures” means suchthe measures as are described in Section 8 on whichthat may be used as

part of a Performance Goals are based in order to qualify certain awards granted hereunder asGoal when granting
Performance-Based Compensation.

(w)(aa)

“Performance Period” means the period of time during which the Performance Goals must be met in order to

determine the degree of payout and/or vesting with respect to a Full Value Award that is intended to qualify as
Performance-Based Compensation.

(x)(bb)

“Person” means a “person” as such term is used in Section 13(d) and 14(d) of the Exchange Act, including any

“group” within the meaning of Section 13(d)(3) under the Exchange Act.

(y)(cc)

“Plan” means this Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan, as it may be

amended from time to time.

(z)(dd)

“Qualifying Termination” means a Participant’s termination of employment by the Company Without Cause or

for Good Reason, in either case during the period commencing on a Change in Control and ending on the second
anniversary of the Change in Control.

(aa)(ee)

“Securities Act” means the Securities Act of 1933, as amended.

(bb)(ff)

“Subsidiary” means any “subsidiary” within the meaning of Rule 405 under the Securities Act.

(cc)(gg)

“Voting Securities” means, at any time, Chipotle’s then outstanding voting securities.

(dd)(hh)

“Without Cause” means a termination of a Participant’s employment with the Company other than: (i) a
termination of employment by the Company for Cause, (ii) a termination of employment as a result of the Participant’s
death or Disability or (iii) a termination of employment by the Participant for any reason.

(ii)

“2015 Plan” means the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan as in effect

prior to the Effective Date.

3. Stock Subject to the Plan

(a)

In General

Subject to adjustment as provided in Section 9 and the following provisions of this Section 3, the maximum number of
shares of Common Stock that may be issued pursuant to Incentive Awards granted under the Plan shall be increased from

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Appendix A
(continued)

3,360,000 to 5,560,000 to 6,830,000 shares of Common Stock in the aggregate, of which 960,000 shares of Common
Stock were available for issuance but were not issued under the Company’s Amended and Restated 2006 Stock Incentive
Plan. Out of such aggregate, the maximum number of shares of Common Stock that may be covered by Options that are
designated as “incentive stock options” within the meaning of Section 422 of the Code shall not exceed 3,000,000 shares
of Common Stock, subject to adjustment as provided in Section 9 and the following provisions of this Section 3. Shares of
Common Stock issued under the Plan may be either authorized and unissued shares or , authorized and issued shares held
in the Company’s treasury shares, or bothor otherwise acquired for purposes of the Plan, at the discretion of the
Committee. Any shares of Common Stock subject to Options or stock appreciation rights shall be counted against the
maximum share limitation of this Section 3(a) as one share of Common Stock for every share of Common Stock subject
thereto. Any shares of Common Stock subject to Full Value Awards shall be counted against the maximum share limitation
of this Section 3(a) as two shares of Common Stock for every share of Common Stock subject thereto. No further Incentive
Awards shall be granted subject to the terms of the 2015 Plan.

For purposes of the preceding paragraph, shares of Common Stock covered by Incentive Awards shall only be counted
as used to the extent they are actually issued and delivered to a Participant (or such Participant’s permitted transferees as
described in the Plan) pursuant to the Plan. For purposes of clarification, if shares of Common Stock are issued subject to
conditions which may result in the forfeiture, cancellation or return of such shares to the Company, any portion of the
shares forfeited, cancelled or returned shall be treated as not issued pursuant to the Plan.Any shares of Common Stock
related to Incentive Awards, whether granted under this Plan or the 2015 Plan, that at any time on or after the Effective
Date, terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such shares (including but not
limited to settlement of an Incentive Award at less than the target number of shares), are settled in cash in lieu of shares of
Common Stock, or are exchanged with the Committee’s permission, prior to the issuance of shares of Common Stock, for
Incentive Awards not involving shares of Common Stock, shall be available again for grant under this Plan. Shares of
Common Stock covered by Incentive Awards granted pursuant to the Plan in connection with the assumption, replacement,
conversion or adjustment of outstanding equity-based awards in the context of a corporate acquisition or merger (within
the meaning of Section 303A.08 of the New York Stock Exchange Listed Company Manual or any successor provision) shall
not count as used under the Plan for purposes of this Section 3. Notwithstanding the foregoing, the following shares of
Common Stock may not again be made available for issuance as Incentive Awards under the Plan: (i) shares of Common
Stock not issued or delivered as a result of the net settlement of an outstanding Option or stock appreciation right,
(ii) shares of Common Stock used to pay the exercise price or withholding taxes related to anany outstanding Incentive
Award, or (iii) shares of Common Stock reacquired by the Company with the amount received upon exercise of an Option.

Subject to adjustment as provided in Section 9, the maximum number of shares of Common Stock subject to Incentive

Awards which may be granted under the Plan to any single Participant in any fiscal year of the Company shall not exceed
700,000 shares per fiscal year, all of which may be granted in the form of incentive stock options under Section 422 of the
Code.

(b) Prohibition on Substitutions and Repricings

Except as provided in this Section 3(b)3(b) in no event shall any new Incentive Awards be issued in substitution for
outstanding Incentive Awards previously granted to Participants, nor shall any repricing (within the meaning of US generally
accepted accounting practices or any applicable stock exchange rule) of Incentive Awards issued under the Plan be
permitted at any time under any circumstances, in each case unless the shareholders of the Company expressly approve
such substitution or repricing. Notwithstanding the foregoing, the Committee may authorize the issuance of Incentive
Awards in substitution for outstanding Full Value Awards, provided such substituted Incentive Awards are for a number of
shares of Common Stock no greater than the number included in the original award, have an exercise price or base price (if
applicable) at least as great as the exercise price or base price of the substituted award, and the effect of the substitution is
(A) solely to add restrictions (such as performance conditions) to the award or (B) to provide a benefit to the Company (and
not the Participant) (which, for the avoidance of doubt, shall include substitutions performed for the purpose of permitting
the Incentive Awards to qualify as “performance based compensation” for purposes of Section 162(m) of the Code).

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Appendix A
(continued)

4. Administration of the Plan; Certain Restrictions on Incentive Awards

The Plan shall be administered by a Committee of the Board of Directors designated by the Board of Directors

consisting of two or more persons, at least two of whom qualify as non-employee directorsNon-Employee Directors (within
the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act), and as “outside directors” within the
meaning of Treasury Regulation Section 1.162-27(e)(3) and as “independent” within the meaning of the rules of any
applicable stock exchange or similar regulatory authority. The Committee shall, consistent with the terms of the Plan, from
time to time designate those employees and non-employee directorsEligible Persons who shall be granted Incentive Awards
under the Plan and the amount, type and other terms and conditions of such Incentive Awards. Except to the extent
prohibited by applicable law or the applicable rules of a stock exchange on which the Company’s shares are traded, the
Committee may (i) allocate all or any portion of its responsibilities and powers to any one or more of its members and
(ii) delegate all or any part of its responsibilities and powers to any person or persons selected by it, provided that no such
delegation may be made that would cause any Incentive Awards or other transactions under the Plan to fail to or cease to
be exempt from Section 16(b) of the Exchange Act, or cause an Incentive Award designated as Performance-Based
Compensation not to qualify for, or to cease to qualify for, any exemption from non-deductibility under Section 162(m) of
the Code.. Any such allocation or delegation may be revoked by the Committee at any time.

The Committee shall have full discretionary authority to administer the Plan, including discretionary authority to

interpret and construe any and all provisions of the Plan and the terms of any Incentive Award (and any agreement
evidencing any Incentive Award) granted thereunder and to adopt and amend from time to time such rules and regulations
for the administration of the Plan as the Committee may deem necessary or appropriate (including without limitation the
adoption or amendment of rules or regulations applicable to the grant, vesting or exercise of Incentive Awards issued to
employees located outside the United States). Without limiting the generality of the foregoing, (i) the Committee shall
determine whether an authorized leave of absence, or absence in military or government service, shall constitute
termination of employment and (ii) the employment of a Participant with the Company shall be deemed to have terminated
for all purposes of the Plan if such person is employed by or provides services to a Person that is a Subsidiary of the
Company and such Person ceases to be a Subsidiary of the Company, unless the Committee specifically determines
otherwise in writing. Decisions of the Committee shall be final, binding and conclusive on all parties.

On or after the date of grant of an Incentive Award under the Plan, the Committee may (i) accelerate the date on which
any such Incentive Award becomes vested, exercisable or transferable, as the case may be, (ii) extend the term of any such
Incentive Award, including, without limitation, extending the period following a termination of a Participant’s employment
with or services as a Director of the Company during which any such Incentive Award may remain outstanding, (iii) waive
any conditions to the vesting, exercisability or transferability, as the case may be, of any such Incentive Award (iv) provide
for the payment of dividends or Dividend Equivalents with respect to any such Incentive Award; or (v) otherwise amend an
outstanding Incentive Award in whole or in part from time-to-time as the Committee determines, in its sole and absolute
discretion, to be necessary or appropriate to conform the Incentive Award to, or otherwise satisfy any legal requirement
(including without limitation the provisions of Section 409A of the Code), which amendments may be made retroactively or
prospectively and without the approval or consent of the Participant to the extent permitted by applicable law; provided,
that the Committee shall not have any such authority to the extent that the grant or exercise of such authority would cause
any tax to become due under Section 409A of the Code.

Notwithstanding anything herein to the contrary, in no event shall a Full Value Award not subject to performance-
based conditions have a vesting schedule resulting in such Full Value Award vesting in full prior to the third anniversary of
the grant date, provided, however, that this restriction will be inapplicable to awards representing no more than 5% of the
total shares of Common Stock authorized for issuance under the Plan. For purposes of clarity, this restriction will not
prohibit any Full Value Award from (i) having partial vesting dates prior to the third anniversary of the grant date in
accordance with a proportionate vesting schedule determined at the discretion of the Committee, so long as such award
does not vest in full prior to the third anniversary of the grant date, or (ii) having provisions for acceleration of the vesting
date within the limitations set forth in the following paragraph.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT A-7

Appendix A
(continued)

Except with respect to a maximum of five percent (5%) of the shares of Common Stock authorized under Section 3(a)

as of the Effective Date, as may be adjusted under Section 9, any equity-based Incentive Award that vests on the basis of
the Participant’s continued employment with or provision of service to the Company shall not provide for vesting before the
first (1st) anniversary of the Grant Date.

Also notwithstanding anything herein to the contrary, in no event shall any Incentive Award provide for acceleration of

the vesting date of such award other than in connection with the death, disability or retirement of the Participant holding
such Incentive Award or a Change in Control, provided, however, that this restriction will be inapplicable to awards
representing no more than 5% of the total shares of Common Stock authorized for issuance under the Plan.

No member of the Committee shall be liable for any action, omission, or determination relating to the Plan, and Chipotle

shall indemnify and hold harmless each member of the Committee and each other Director or employee of the Company to
whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost or
expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the
Committee) arising out of any action, omission or determination relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member, director or employee in bad faith and without reasonable
belief that it was in the best interests of the Company.

5. Eligibility

The Persons who shall be eligible to receive Incentive Awards pursuant to the Plan shall be those employees,

consultants and advisors of the Company and DirectorsEligible Persons whom the Committee shall select from time to time.
All Incentive Awards granted under the Plan shall be evidenced by a separate written agreement entered into by the
Company and the recipient of such Incentive Award.

6. Options

The Committee may from time to time grant Options, subject to the following terms and conditions:

(a) Exercise Price

The exercise price per share of Common Stock covered by any Option shall be not less than 100% of the Fair Market
Value of a share of Common Stock on the date on which such Option is granted. The agreement evidencing the award of
each Option shall clearly identify such Option as either an “incentive stock option” within the meaning of Section 422 of the
Code or as not an incentive stock option.

(b) Term and Exercise of Options

(1) Each Option shall become vested and exercisable on such date or dates, during such period and for such

number of shares of Common Stock as shall be determined by the Committee on or after the date such Option is granted
(including without limitation in accordance with terms and conditions relating to the vesting or exercisability of an Option
set forth in any employment, severance, change in control or similar agreement entered into by the Company with a
Participant on or after the date of grant) and subject to the restrictions set forth in Section 4; provided, however that no
Option shall be exercisable after the expiration of ten years from the date such Option is granted; and, provided, further,
that each Option shall be subject to earlier termination, expiration or cancellation as provided in the Plan or in the
agreement evidencing such Option. In addition, except as otherwise determined by the Committee at or after the time of
grant, unless an Option becomes vested or exercisable pursuant to Sections or hereof, an Option may not become vested or
exercisable in whole or in part during the twelve-month period commencing with the date on which the Option was granted.

(2) Each Option may be exercised in whole or in part; provided, however that the Committee (or its delegatee)

may impose a minimum size for a partial exercise of an Option in its discretion from time to time. The partial exercise of an
Option shall not cause the expiration, termination or cancellation of the remaining portion thereof.

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Appendix A
(continued)

(3) An Option shall be exercised by such methods and procedures as the Committee determines from time to

time, including without limitation through net physical settlement or other method of cashless exercise. With respect to any
Participant who is a member of the Board or an officer (as defined under SEC Rule 16a-1), a tender of shares of Common
Stock or, a cashless or net exercise shall be a subsequent transaction approved as part of the original grant of an Option for
purposes of the exemption under Rule 16b-3 of the Exchange Act.

(4) Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other

than by will or by the laws of descent or distribution and may be exercised, during the lifetime of a Participant, only by the
Participant; provided, however that the Committee may permit Options to be pledged, assigned, hypothecated, transferred,
or disposed of, on a general or specific basis, subject to such conditions and limitations as the Committee may determine,
except that Options may not be sold for consideration or transferred for value (provided further that donative transfers
described in Section A.1.(a)(5) of the general instructions to Form S-8 shall not be deemed transfers for value for purposes
of this section).

(5)

If the exercise of the Option following the termination of the Participant’s employment or service (other than
upon the Participant’s death or disability) would be prohibited at any time solely because the issuance of shares of Common
Stock would violate the registration requirements under the Securities Act, or any other requirements of applicable law,
then the Option shall terminate on the earlier of (i) the expiration of the term of the Option and (ii) the expiration of a period
of 30 days after the termination of the Participant’s employment or service during which the exercise of the Option would
not be in violation of such registration requirements or other applicable requirements.

(6) Notwithstanding the foregoing, the Committee may, in its sole discretion, implement a provision in existing

and future grants of Options and stock appreciation rights providing that if, on the last day that an Option or stock
appreciation right may be exercised, the Participant has not then exercised such Option, such Option shall be deemed to
have been exercised by the Participant on such last day and the Company shall make the appropriate payment to such
Participant after applying minimum required tax withholding. The Committee may delegate this authority to one or more of
the Company’s officers, who may implement this provision by including it in grant agreements or including it in the Plan’s
administrative rules, provided that such officers may not implement it in Incentive Awards to persons (i) who are
Non-Employee Directors or executive officers otherwise subject to reporting obligations under Section 16 of the Exchange
Act or (ii) who are, or are reasonably expected to be, individuals the deductibility of whose compensation is limited by
Section 162(m) of the Code.

(c) Effect of Termination of Employment or other Relationship

The agreement evidencing the award of each Option shall specify the consequences with respect to such Option of the

termination of the employment, service as a directorNon-Employee Director or other relationship between the Company
and the Participant holding the Option, subject to the restrictions set forth in Section 4, provided, however, that except as
expressly provided to the contrary in the agreement evidencing the award of a particular Option, where continued vesting
or exercisability of an Option terminates in connection with the termination of a Participant’s employment relationship with
the Company, such Participant’s employment relationship with the Company will be deemed, for purposes of such Option, to
continue so long as Participant serves as either an employee of the Company or as a member of the Board. Notwithstanding
the foregoing sentence, a Participant’s employment will be deemed to terminate immediately upon such Participant’s
termination for Cause, regardless of whether Participant remains on the Board following such termination.

(d) Effect of Qualifying Termination

If a Participant experiences a Qualifying Termination or a Non-Employee Director’s service on the Board terminates in

connection with or as a result of a Change in Control, each Option outstanding immediately prior to such Qualifying
Termination or termination of a Non-Employee Director’s service shall become fully and immediately vested and exercisable
as of such Qualifying Termination or termination of a Non-Employee Director’s service and shall remain exercisable until its
expiration, termination or cancellation pursuant to the terms of the Plan and the agreement evidencing such Option.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT A-9

Appendix A
(continued)

(e) Special Rules for Incentive Stock Options

(1) The aggregate Fair Market Value of shares of Common Stock with respect to which “incentive stock options”
(within the meaning of Section 422 of the Code) are exercisable for the first time by a Participant during any calendar year
under the Plan and any other stock option plan of the Company (or any “subsidiary” as such term is defined in Section 424
of the Code of Chipotle) shall not exceed $100,000. Such Fair Market Value shall be determined as of the date on which
each such incentive stock option is granted. In the event that the aggregate Fair Market Value of shares of Common Stock
with respect to such incentive stock options exceeds $100,000, then incentive stock options granted hereunder to such
Participant shall, to the extent and in the order required by regulations promulgated under the Code (or any other authority
having the force of regulations) (“Regulations”), automatically be deemed to be non-qualified stock options, but all other
terms and provisions of such incentive stock options shall remain unchanged. In the absence of such Regulations (and
authority), or in the event such Regulations (or authority) require or permit a designation of the options which shall cease to
constitute incentive stock options, incentive stock options granted hereunder shall, to the extent of such excess and in the
order in which they were granted, automatically be deemed to be non-qualified stock options, but all other terms and
provisions of such incentive stock options shall remain unchanged.

(2) No incentive stock option may be granted to an individual if, at the time of the proposed grant, such individual
owns stock possessing more than ten percent of the total combined voting power of all classes of stock of Chipotle or any of
its “subsidiaries” (within the meaning of Section 424 of the Code), unless (i) the exercise price of such incentive stock
option is at least one hundred and ten percent of the Fair Market Value of a share of Common Stock at the time such
incentive stock option is granted and (ii) such incentive stock option is not exercisable after the expiration of five years
from the date such incentive stock option is granted.

7. Other Stock-Based Awards

(a) Authorization of Other Stock-Based Awards

The Committee may grant equity-based or equity-related awards not otherwise described herein in such amounts and

subject to such terms and conditions as the Committee shall determine. Without limiting the generality of the preceding
sentence, each such Other Stock-Based Award may, subject to the restrictions set forth in Section 4 (i) involve the transfer
of actual shares of Common Stock to Participants, either at the time of grant or thereafter, or payment in cash or otherwise
of amounts based on the value of shares of Common Stock, (ii) be subject to performance-based and/or service-based
conditions, (iii) be in the form of cash-settled stock appreciation rights, stock-settled stock appreciation rights, phantom
stock, restricted stock, restricted stock units, performance shares, or share-denominated performance units, and (iv) be
designed to comply with applicable laws of jurisdictions other than the United States, and (v) be designed to qualify as
Performance-Based Compensation. Notwithstanding the foregoing, any Other Stock-Based Award that is a stock
appreciation right (i) shall have a base price of not less than 100% of the Fair Market Value of a share of Common Stock on
the date on which such stock appreciation right is granted, (ii) shall not have an expiration date greater than ten years from
the date on which such stock appreciation right is granted and (iii) shall be subject to deemed exercise rule under
Section 6(b)(6) using a settlement method similar to a net exercise for an Option.

(b) Effect of Qualifying Termination; Other Termination Provisions

Except as may be expressly provided to the contrary by the Committee in an agreement evidencing the grant of an

Other Stock-Based Award or any employment, severance, change in control or similar agreement entered into with a
Participant, if a Participant experiences a Qualifying Termination or a Non-Employee Director’s service on the Board
terminates in connection with or as a result of a Change in Control, each Other Stock-Based Award outstanding immediately
prior to such Qualifying Termination or termination of Non-Employee Director’s service shall become fully and immediately
vested and, if applicable, exercisable as of such Qualifying Termination or termination and shall remain exercisable until its
expiration, termination or cancellation pursuant to the terms of the Plan and the agreement evidencing such Other Stock-
Based Award.

Furthermore, except as expressly provided to the contrary in the agreement evidencing the award of a particular Other
Stock-Based Award, where continued vesting or exercisability of an Other Stock-Based Award terminates in connection with

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Appendix A
(continued)

the termination of a Participant’s employment relationship with the Company, such Participant’s employment relationship
with the Company will be deemed, for purposes of such Other Stock-Based Award, to continue so long as Participant serves
as either an employee of the Company or as a member of the Board. Notwithstanding the foregoing sentence, a
Participant’s employment will be deemed to terminate immediately upon such Participant’s termination for Cause,
regardless of whether Participant remains on the Board following such termination.

8.

Incentive Awards Subject to Performance MeasuresGoals

(b) Performance Measures

The Committee shall have the authority, at the time of to grant of any Full Value Award, to designate it as aIncentive
Awards subject to the provisions of this Section 8 (collectively, “Performance-Based Compensation”). Performance-Based
Compensation intended to qualifysubject to this Section 8 may, but is not required, to be granted as “performance-based
compensation” under Section 162(m) of the Code. Notwithstanding anything to the contrary in the Plan, the Committee shall
not be obligated to grant any Incentive Award in the form of “performance-based compensation” under Section 162(m) of
the Code.

The Performance Measures that willmay be used to establish Performance Goals shall be based on attaining specific
levels of performance (either alone or in any combination, and may be expressed with respect to the Company (and/or one
or more of its Subsidiaries, divisions or operating units or groups or any combination of the foregoing), and may include any
of the following as the Committee may determine: revenue growth; cash flow; cash flow from operations; net income; net
income before equity compensation expense; earnings per share, diluted or basic; earnings per share from continuing
operations, diluted or basic; earnings before interest and taxes; earnings before interest, taxes, depreciation, and
amortization; earnings from continuing operations; net asset turnover; inventory turnover; capital expenditures; income
from operations; income from operations excluding non-cash related entries; income from operations excluding non-cash
adjustments; income from operations before equity compensation expenses; income from operations excluding equity
compensation expense and lease expense; operating cash flow from operations; income before income taxes; gross or
operating margin; restaurant-level operating margin; profit margin; assets; debt; working capital; return on equity; return on
net assets; return on total assets; return on capital; return on investment; return on revenue; net or gross revenue;
comparable restaurant sales; new restaurant openings; market share; economic value added; cost of capital; expense
reduction levels; safety record; stock price; productivity; customer satisfaction; employee satisfaction; and total shareholder
return or any other financial or operational criteria that the Committee determines in its sole discretion to be appropriate.
For any Plan Year, Performance Measures may be determined on an absolute basis or relative to internal goals or relative
to levels attained in years prior to such Plan Year or related to other companies or indices or as ratios expressing
relationships between two or more Performance Measures.

InTo the eventextent that applicable tax and/or securities laws change to permit Committee discretion to alter the
governing Performance Measures without obtaining stockholder approval of such alterations, the Committee shall have sole
discretion to make such alterations without obtaining stockholder approval. The Committee is authorized at any time during
the first ninety (90) days of a Performance Period (or, if longer or shorter, within the maximum period allowed under
Section 162(m) of the Code), or at any time thereafter to the extent the exercise of such authority at such time would not
cause the Performance-Based Compensation granted to any Participant for such Performance Period to fail to qualify as
“performance-based compensation” under Section 162(m) of the Code, in its sole discretion, to adjust or modify the
calculation of a Performance Goal for such Performance Period, based on and in order to appropriately reflect the following
events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws,
accounting principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring
programs; (v) events of an “unusual nature” or of a type that indicates “infrequency of occurrence”, both as described in
Accounting Standards Codification Topic 225-20 (or any successor pronouncement thereto) and/or in management’s
discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to
stockholders for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific unusual or nonrecurring events,
or objectively determinable category thereof; (viii) foreign exchange gains and losses; and (ix) a change in the Company’s
fiscal year. For the avoidance of doubt, the Committee may elect to exercise its authority to adjust an Incentive Award as
described in this paragraph solely under the terms and conditions as set forth in the Incentive Award.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT A-11

Appendix A
(continued)

Performance Periods may be equalof any length. Awards intended to or longer than, but not less than, one fiscal year
of the Company and mayqualify as “performance-based compensation” under Section 162(m) shall be overlapping. Within
90 days after the beginning of a Performance Period, and in any casegranted before twenty-five (25%%) of the
Performance Period has elapsed, thebut in no event later the 90th day after commencement of the Performance Period. The
Committee shall establish (a) Performance Goals for such Performance Period, (b) target awards for each Participant, and
(c) schedules or other objective methods for determining the applicable performance percentage to be applied to each such
target award.

To the extent determined by the Committee at the time the Performance Measures are established, the measurement

of any Performance Measure(s) may exclude the impact of charges for restructurings, discontinued operations,
extraordinary items, and other unusual or non-recurring items, and the cumulative effects of accounting changes, each as
defined by generally accepted accounting principles and as identified in the Company’s audited financial statements,
including the notes thereto., and any other events or circumstances that may render the Performance Goals unsuitable. To
the extent determined by the Committee at the time the Performance Measures are established, any Performance
Measure(s) may be used to measure the performance of the Company or a Subsidiary as a whole or any business unit of the
Company or any Subsidiary or any combination thereof, as the Committee may deem appropriate, or any of the above
Performance Measures as compared to the performance of a group of comparator companies, or a published or special
index that the Committee, in its discretion, deems appropriate.

Nothing in this Section 88 is intended to limit the Committee’s discretion to adopt conditions with respect to any
Incentive Award that is not intended to qualify as Performance-Based Compensation that relate to performance other than
the Performance Measures. In addition, the Committee may, subject to the terms of the Plan, amend previously granted
Incentive Awards in a way that disqualifies them as Performance-Based Compensation.

(a) Committee Discretion

In the event that the requirements of Section 162(m) of the Code and the regulations thereunder change to

permit Committee discretion to alter the Performance Measures without obtaining shareholder approval of such changes,
the Committee shall have discretion to make such changes without obtaining shareholder approval.

9. Adjustment Upon Changes in Common Stock

(a) Shares Available for Grants

In the event of any change in the number of shares of Common Stock outstanding by reason of any stock dividend or

split, recapitalization, merger, consolidation, combination or exchange of shares or similar corporate change, the maximum
aggregate number of shares of Common Stock with respect to which the Committee may grant Incentive Awards and the
maximum aggregate number of shares of Common Stock with respect to which the Committee may grant Incentive Awards
to any individual Participant in any year shall be equitably adjusted by the Committee. In the event of any change in the
number of shares of Common Stock outstanding by reason of any other similar event or transaction, the Committee may,
but need not, make such adjustments in the number and class of shares of Common Stock with respect to which Incentive
Awards may be granted as the Committee may deem appropriate.

(b)

Increase or Decrease in Issued Shares Without Consideration

Subject to any required action by the shareholders of Chipotle, in the event of any increase or decrease in the number

of issued shares of Common Stock resulting from a subdivision or consolidation of shares of Common Stock or the payment
of a stock dividend (but only on the shares of Common Stock), or any other increase or decrease in the number of such
shares effected without receipt or payment of consideration by the Company or the payment of an extraordinary cash
dividend, the number of shares of Common Stock subject to each outstanding Incentive Award and the exercise price per
share of Common Stock of each such Incentive Award shall be adjusted as necessary to prevent the enlargement or dilution
of rights under such Incentive Award.

A-12 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Appendix A
(continued)

(c) Certain Mergers

Subject to any required action by the shareholders of Chipotle, in the event that Chipotle shall be the surviving

corporation in any merger, consolidation or similar transaction as a result of which the holders of shares of Common Stock
receive consideration consisting exclusively of securities of such surviving corporation, the Committee shall adjust each
Incentive Award outstanding on the date of such merger or consolidation to the extent deemed appropriate by the
Committee so that it pertains to and applies to the securities which a holder of the number of shares of Common Stock
subject to such Incentive Award would have received in such merger or consolidation.

(d) Certain Other Transactions

In the event of (i) a dissolution or liquidation of Chipotle, (ii) a sale of all or substantially all of the Company’s assets (on

a consolidated basis), (iii) a Business Combination in which Chipotle is not the surviving corporation, (iv) a Business
Combination in which Chipotle is the surviving corporation but the holders of shares of Common Stock receive securities of
another corporation and/or other property, including cash, or (v) a Business Combination that is a Change in Control, the
Committee shall, in its discretion, have the power to:

(i)

cancel, effective immediately prior to the occurrence of such event, each Incentive Award (whether or not then

exercisable), and, in full consideration of such cancellation, pay to the Participant to whom such Incentive Award was
granted an amount in cash, for each share of Common Stock subject to such Incentive Award equal to the value, as
determined by the Committee in its discretion, of such Incentive Award, provided that with respect to any outstanding
Option or stock appreciation right such value shall be equal to the excess of (A) the value, as determined by the Committee
in its discretion, of the property (including cash) received by the holder of a share of Common Stock as a result of such
event over (B) the exercise price (with respect to an Option) or the base price (with respect to a stock appreciation right);

(ii) provide for the exchange of each Incentive Award (whether or not then exercisable or vested) for an incentive
award with respect to, as appropriate, some or all of the property which a holder of the number of shares of Common Stock
subject to such Incentive Award would have received in such transaction and, incident thereto, make an equitable
adjustment as determined by the Committee in its discretion in the exercise price of the incentive award, or the number of
shares or amount of property subject to the incentive award or, if appropriate, provide for a cash payment to the
Participant to whom such Incentive Award was granted in partial consideration for the exchange of the Incentive Award; or

(iii) a combination of the foregoing, which may vary among Participants.

(e) Other Changes

In the event of any change in the capitalization of Chipotle or corporate change other than those specifically referred

to in paragraphs (b), (c) or (d), the Committee may, in its discretion, make such adjustments in the number and class of
shares subject to Incentive Awards outstanding on the date on which such change occurs and in such other terms of such
Incentive Awards as the Committee may consider appropriate.

(f) No Other Rights

Except as expressly provided in the Plan or the agreement evidencing the grant of an Option or Other Stock-Based
Award, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the
payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of Chipotle or any other corporation. Except as expressly provided in the Plan or the
agreement evidencing the grant of an Option or Other Stock-Based Award, no issuance by Chipotle of shares of stock of any
class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares or amount of other property subject to any Incentive Award.

(g) Code Section 409A

(i) To the extent applicable and notwithstanding any other provision of the Plan, the Company intends to

administer, operate and interpret the Plan and all Incentive Awards granted thereunder in a manner that complies with

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT A-13

Appendix A
(continued)

Code Section 409A, however, the Company and its Subsidiaries (including their respective employees, officers, directors or
agents) shall not have any liability to any Participant (or any other person) that is related to a Section 409A violation, nor
will the Company indemnify or otherwise reimburse Participant (or any other person) for any liability incurred as a result of
a violation of Code Section 409A.

(ii) Notwithstanding any provision in Section 14 of the Plan to the contrary, in the event that the Committee

determines that any amounts payable hereunder will be taxable to a Participant under Section 409A of the Code prior to
the payment and/or delivery to such Participant of such amount, the Company may (A) adopt such amendments to the Plan
and related agreement, and appropriate policies and procedures, including amendments and policies with retroactive effect,
that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided
by the Plan and awards hereunder and/or (B) take such other actions as the Committee determines necessary or
appropriate to comply with the requirements of Section 409A of the Code. No action shall be taken under this Plan which
shall cause an award to fail to comply with Section 409A of the Code, to the extent applicable to such Award.

(iii) With respect to any Incentive Award that is considered “deferred compensation” subject to Section 409A of
the Code, references in the Plan to “termination of employment” (and substantially similar phrases) shall mean “separation
from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the
payments that may be made in respect of any Incentive Award granted under the Plan are designated as separate
payments.

(iv) Notwithstanding any payment provision in the Plan or an agreement evidencing an Incentive Award to the

contrary, if a Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no payments
in respect of any Incentive Awards that are “deferred compensation” subject to Section 409A of the Code and which would
otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code) shall be
made to such Participant prior to the date that is six months after the date of such Participant’s “separation from service”
or, if earlier, the Participant’s date of death. Following any applicable six month delay, all such delayed payments will be paid
in a single lump sum, without interest, on the earliest date permitted under Section 409A of the Code that is also a business
day.

10. Rights as a Stockholder

No person shall have any rights as a stockholder with respect to any shares of Common Stock covered by or relating to

any Incentive Award granted pursuant to the Plan until the date of the issuance of a stock certificate with respect to such
shares. Except as otherwise expressly provided in Section 9 hereof, no adjustment of any Incentive Award shall be made for
dividends or other rights for which the record date occurs prior to the date such stock certificate is issued. Notwithstanding
any other provisions of this Section 10, dividends shall be subject to the same restrictions, including but not limited to
meeting vesting requirements and achieving applicable Performance Goals, as the underlying Incentive Award or such other
restrictions as the Committee may determine.

11. No Special Employment Rights; No Right to Incentive Award

(a) Nothing contained in the Plan or any Incentive Award shall confer upon any Participant any right with respect to
the continuation of his employment by or service to the Company or interfere in any way with the right of the Company at
any time to terminate such employment or to increase or decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Incentive Award.

(b) No person shall have any claim or right to receive an Incentive Award hereunder. The Committee’s granting of an

Incentive Award to a Participant at any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude the Committee from making subsequent
grants to such Participant or any other Participant or other person.

A-14 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Appendix A
(continued)

12. Securities Matters

(a) Chipotle shall be under no obligation to effect the registration pursuant to the Securities Act of any shares of
Common Stock to be issued hereunder or to effect similar compliance under any state laws. Notwithstanding anything
herein to the contrary, Chipotle shall not be obligated to cause to be issued or delivered any certificates evidencing shares
of Common Stock pursuant to the Plan unless and until Chipotle is advised by its counsel that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded. The Committee may require, as a condition to the
issuance and delivery of certificates evidencing shares of Common Stock pursuant to the terms hereof, that the recipient of
such shares make such covenants, agreements and representations, and that such certificates bear such legends, as the
Committee deems necessary or desirable.

(b) The exercise of any Option granted hereunder shall only be effective at such time as counsel to Chipotle shall have

determined that the issuance and delivery of shares of Common Stock pursuant to such exercise is in compliance with all
applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of
Common Stock are traded. Chipotle may, in its discretion, defer the effectiveness of an exercise of an Option hereunder or
the issuance or transfer of shares of Common Stock pursuant to any Incentive Award pending or to ensure compliance
under federal or state securities laws or the rules or regulations of any exchange on which the Shares are then listed for
trading. Chipotle shall inform the Participant in writing of its decision to defer the effectiveness of the exercise of an Option
or the issuance or transfer of shares of Common Stock pursuant to any Incentive Award. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant may, by written notice, withdraw such exercise
and obtain the refund of any amount paid with respect thereto.

13. Withholding Taxes

(a) Cash Remittance

Whenever shares of Common Stock are to be issued upon the exercise of an Option or the grant or vesting of an
Incentive Award, Chipotle shall have the right to require the Participant to remit to Chipotle in cash an amount sufficient to
satisfy federal, state and local withholding tax requirements, attributable to such exercise, grant or vesting prior to the
delivery of any certificate or certificates for such shares or the effectiveness of the lapse of such restrictions. In addition,
upon the exercise or settlement of any Incentive Award in cash, Chipotle shall have the right to withhold from any cash
payment required to be made pursuant thereto an amount sufficient to satisfy the federal, state and local withholding tax
requirements, if any, attributable to such exercise or settlement.

(b) Stock Remittance

At the election of the Participant, subject to the approval of the Committee, when shares of Common Stock are to be
issued upon the exercise, grant or vesting of an Incentive Award, the Participant may tender to Chipotle a number of shares
of Common Stock (subject to any minimum holding period as the Committee may determine) having a fair market value at
the tender date determined by the Committee to be sufficient to satisfy the minimum federal, state and local withholding
tax requirements, if any, attributable to such exercise, grant or vesting but not greater than such minimum withholding
obligations. Such election shall satisfy the Participant’s obligations under Section 13(a) hereof, if any.

(c) Stock Withholding

At the election of the Participant, subject to the approval of the Committee, when shares of Common Stock are to be

issued upon the exercise, grant or vesting of an Incentive Award, Chipotle shall withhold asuch number of such shares
having a fair market value at the exercise date determinedelected by the Committee to be sufficient to satisfy the
minimumParticipant not in excess of the maximum amount required for federal, state and local tax withholding tax
requirements, if any, attributable to such exercise, grant or vesting but not greater than such minimum withholding
obligations. . Such election shall satisfy the Participant’s obligations under Section 13(a) hereof, if any.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT A-15

Appendix A
(continued)

(d) Section 16 Approval

With respect to any Participant who is a member of the Board of Directors or an officer (as defined under SEC Rule

16a-1), a withholding or tender of shares of Common Stock shall be a subsequent transaction approved as part of the
Incentive Award for purposes of the exemption under Rule 16b-3 of the Exchange Act.

14. Amendment or Termination of the Plan

The Board of Directors may at any time suspend or discontinue the Plan or revise or amend it in any respect
whatsoever; provided, however, that to the extent any applicable law, regulation or rule of a stock exchange requires
shareholder approval in order for any such revision or amendment to be effective, such revision or amendment shall not be
effective without such approval. The preceding sentence shall not restrict the Committee’s ability to exercise its
discretionary authority hereunder pursuant to Section 4, which discretion may be exercised without amendment to the
Plan. No provision of this Section 14 shall be given effect to the extent that such provision would cause any tax to become
due under Section 409A of the Code. Except as expressly provided in the Plan, no action hereunder may, without the
consent of a Participant, reduce the Participant’s rights under any previously granted and outstanding Incentive Award.
Nothing in the Plan shall limit the right of the Company to pay compensation of any kind outside the terms of the Plan.

15. No Obligation to Exercise

The grant to a Participant of an Incentive Award shall impose no obligation upon such Participant to exercise such

Incentive Award.

16. Transfers Upon Death

Upon the death of a Participant, outstanding Incentive Awards granted to such Participant may be exercised only by

the executors or administrators of the Participant’s estate or by any person or persons who shall have acquired such right
to exercise by will or by the laws of descent and distribution. No transfer by will or the laws of descent and distribution of
any Incentive Award, or the right to exercise any Incentive Award, shall be effective to bind Chipotle unless the Committee
shall have been furnished with (a) written notice thereof and with a copy of the will and/or such evidence as the Committee
may deem necessary to establish the validity of the transfer and (b) an agreement by the transferee to comply with all the
terms and conditions of the Incentive Award that are or would have been applicable to the Participant and to be bound by
the acknowledgements made by the Participant in connection with the grant of the Incentive Award.

17. Expenses and Receipts

The expenses of the Plan shall be paid by Chipotle. Any proceeds received by Chipotle in connection with any Incentive

Award will be used for general corporate purposes.

18. Governing Law

The Plan and the rights of all persons under the Plan shall be construed and administered in accordance with the laws

of the State of Delaware without regard to its conflict of law principles.

19. Duration of Plan

Effective with this amendment and restatement of the Plan, unless sooner terminated as provided herein, the Plan shall

terminate on March 16, 2021 May 22, 2023. After the Plan is terminated, no new Incentive Awards may be granted but
Incentive Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and
the Plan’s terms and conditions.

A-16 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

Appendix A
(continued)

20. Company Recoupment of Incentive Awards

The rights contained in this Plan shall be subject to (i) any right that the Company may have under any other Company

recoupment policy or other agreement or arrangement with a Participant, or (ii) any right or obligation that the Company
may have regarding the recovery of “incentive-based compensation” under Section 10D of the Exchange Act, as amended
(as determined by the applicable rules and regulations promulgated thereunder from time to time by the U.S. Securities and
Exchange Commission) or other applicable law. The Committee may determine, as late as the time of such recoupment or
recovery, regardless of whether such method is stated in the Incentive Award agreement, whether the Company shall effect
any such recoupment or recovery: (i) by seeking repayment from the Participant; (ii) by reducing (subject to applicable law
and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be payable
to the Participant under any compensatory plan, program or arrangement maintained by the Company, (iii) by withholding
payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of
compensatory awards that would otherwise have been made in accordance with the Company’s otherwise applicable
compensation practices, (iv) by holdback or escrow (before or after taxation) of part or all the Common Stock, payment or
property received upon exercise or satisfaction of an Incentive Award or (v) by any combination of the foregoing.

21.

International Participants.

With respect to Participants who reside or work outside of the United States of America and subject to Section 88
above, the Committee may in its sole discretion grant Incentive Awards on such terms and conditions different from those
specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and, in furtherance of such purposes, the Committee may make such
modifications, amendments, procedures, or subplans as may be necessary or advisable to comply with such legal or
regulatory provisions and/or to obtain more favorable tax or other treatment for a Participant, the Company or its
Subsidiaries. For avoidance of doubt, the Committee may delegate its authority under this Section 21 with respect to any
Participant; provided, however that only the Committee (or a subcommittee) thereof shall be authorized to grant Incentive
Awards or otherwise provide additional benefits to a member of the Board of Directors or officer (as defined under SEC
Rule 16a-1).

22. Provisions Relating to Termination of Consultants and Non-Employee Directors.

To the extent that an Incentive Award is made to a Non-Employee Director or Consultant, the provisions of the Plan

relating to termination of employment shall be deemed to refer to the termination of such individual’s service with the
Company or a Subsidiary.

23. Certain Terminations of Employment, Hardship and Approved Leave of Absence.

Notwithstanding any other provision of this Plan to the contrary, in the event of a Participant’s termination of

employment (including by reason of death, disability or retirement) or in the event of hardship or other special
circumstances, the Committee may in its sole discretion take any action that it deems to be equitable under the
circumstances or in the best interests of the Company, including, without limitation, waiving or modifying any limitation or
requirement with respect to any Award under this Plan. The Committee shall have the discretion to determine whether and
to what extent the vesting of Awards shall be tolled during any leave of absence, paid or unpaid; provided however, that in
the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon a Participant’s
returning from military leave (under conditions that would entitle him or her to protection upon such return under the
Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to the
Award to the same extent as would have applied had the Participant continued to provide services to the Company
throughout the leave on the same terms as he or she was providing services immediately prior to such leave. Any actions
taken by the Committee shall be taken consistent with the requirements of Section 409A of the Code.

24. Tolling of Exercisability of Options and Stock Appreciation Rights.

In the event a Participant is prevented from exercising an Option or stock appreciation right or the Company is unable

to settle an Incentive Award due to either any trading restrictions applicable to the Company’s shares of Common Stock,

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT A-17

Appendix A
(continued)

the Participant’s physical infirmity or administrative error by the Company relied upon and not caused by the Participant,
then unless otherwise determined by the Committee, the length of time applicable to any such restriction, condition or
event shall toll any exercise period (i) until such restriction lapses, (ii) until the Participant (or his representative) is able to
exercise the Incentive Award or (iii) until such error is corrected, as applicable.

25. No Duty to Inform Regarding Exercise Rights.

Neither the Company, its Subsidiaries, the Committee nor the Board of Directors shall have any duty to inform a

Participant of the pending expiration of the period in which a stock appreciation right may be exercised or in which an
Option may be exercised.

26. No Constraint on Corporate Action.

Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or a Subsidiary’s right or
power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge
or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power
of the Company or a Subsidiary to take any action which such entity deems to be necessary or appropriate.

27. Effect of Disposition of Facility or Operating Unit.

If the Company or any of its Subsidiaries closes or disposes of the facility at which a Participant is located or the

Company or any of its Subsidiaries diminish or eliminate ownership interests in any operating unit of the Company or any of
its Subsidiaries so that such operating unit ceases to be majority owned by the Company or any of its Subsidiaries then,
with respect to Incentive Awards held by Participants who subsequent to such event will not be Employees, the Committee
may, to the extent consistent with Section 409A (if applicable), take any of the actions described in Section 9 with respect
to a Change in Control. If the Committee takes no special action with respect to any disposition of a facility or an operating
unit, then the Participant shall be deemed to have terminated his or her employment with the Company and its Subsidiaries
and the terms and conditions of the award agreement and the other terms and conditions of this Plan shall control.

28. Limitations Period.

Any person who believes he or she is being denied any benefit or right under this Plan may file a written claim with the
Committee. Any claim must be delivered to the Committee within forty-five (45) days of the specific event giving rise to the
claim. Untimely claims will not be processed and shall be deemed denied. The Committee, or its designated agent, will notify
the Participant of its decision in writing as soon as administratively practicable. Claims not responded to by the Committee
in writing within ninety (90) days of the date the written claim is delivered to the Committee shall be deemed denied. The
Committee’s decision shall be final, conclusive and binding on all persons. No lawsuit relating to this Plan or an Incentive
Award granted hereunder may be filed before a written claim is filed with the Committee and is denied or deemed denied,
and any lawsuit must be filed within one year of such denial or deemed denial or be forever barred. The venue for any
lawsuit relating to this Plan or an Incentive Award shall be Wilmington, Delaware.

A-18 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

MANAGEMENT TEAM

Steve Ells 
(cid:41)(cid:82)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:15)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)

Curt Garner
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:39)(cid:76)(cid:74)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)

Brian Niccol
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)

Scott Boatwright
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:53)(cid:72)(cid:86)(cid:87)(cid:68)(cid:88)(cid:85)(cid:68)(cid:81)(cid:87)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)

Jack Hartung
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)

Laurie Schalow
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:88)(cid:81)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)(cid:3)

BOARD OF DIRECTORS

Brian Niccol
(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)(cid:86)(cid:76)(cid:81)(cid:70)(cid:72)(cid:3)(cid:21)(cid:19)(cid:20)(cid:27)
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)(cid:15)
(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)(cid:3)(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:68)(cid:81)(cid:3)(cid:42)(cid:85)(cid:76)(cid:79)(cid:79)

Steve Ells
Director since 1996
(cid:41)(cid:82)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:15)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:15)
(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)(cid:3)(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:68)(cid:81)(cid:3)(cid:42)(cid:85)(cid:76)(cid:79)(cid:79)

Neil Flanzraich
Director since 2007(cid:3)
(cid:51)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:15)(cid:3)
(cid:38)(cid:68)(cid:81)(cid:87)(cid:72)(cid:91)(cid:3)(cid:51)(cid:75)(cid:68)(cid:85)(cid:80)(cid:68)(cid:70)(cid:72)(cid:88)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)

Albert Baldocchi
Director since 1997
(cid:54)(cid:72)(cid:79)(cid:73)(cid:16)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:71)(cid:3)(cid:111)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:79)(cid:87)(cid:68)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
strategic advisor

Paul Cappuccio
Director since 2016
(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:88)(cid:81)(cid:86)(cid:72)(cid:79)(cid:15)(cid:3)(cid:55)(cid:76)(cid:80)(cid:72)(cid:3)(cid:58)(cid:68)(cid:85)(cid:81)(cid:72)(cid:85)

Robin Hickenlooper
Director since 2016
(cid:54)(cid:72)(cid:81)(cid:76)(cid:82)(cid:85)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)
(cid:39)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:47)(cid:76)(cid:69)(cid:72)(cid:85)(cid:87)(cid:92)(cid:3)(cid:48)(cid:72)(cid:71)(cid:76)(cid:68)

Kimbal Musk
Director since 2013
(cid:40)(cid:81)(cid:87)(cid:85)(cid:72)(cid:83)(cid:85)(cid:72)(cid:81)(cid:72)(cid:88)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:68)(cid:88)(cid:85)(cid:68)(cid:87)(cid:72)(cid:88)(cid:85)

Ali Namvar
Director since 2016
(cid:51)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)

Matthew Paull
Director since 2016
(cid:54)(cid:72)(cid:81)(cid:76)(cid:82)(cid:85)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)(cid:3)(cid:11)(cid:85)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:71)(cid:12)(cid:15)(cid:3)(cid:48)(cid:70)(cid:39)(cid:82)(cid:81)(cid:68)(cid:79)(cid:71)(cid:10)(cid:86)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:17)

STOCK EXCHANGE LISTING

New York Stock Exchange
Symbol: CMG

AUDITORS

Ernst & Young LLP | Denver, Colorado

By phone:
1-800-401-1957

STOCK TRANSFER AGENT

By mail:
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120

(cid:50)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:29)
www.shareowneronline.com

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AS REAL AS IT GETS
FOOD WITH INTEGRITY

In July, we launched A Love Story, a film that’s a parable of how the 

fast food industry has devolved over the years. In it, the moment 
Chipotle offers a delicious menu made from fresh, 
We prepare our delicious ingredients simply, using classic 
high-quality ingredients, prepared using classic 
young Ivan saw Evie, it was love at first sight. Needing money to ask 
cooking techniques, without added sugar, artificial 
cooking techniques and served in a way that allows 
her to a movie, Ivan starts innocently competing with Evie’s food 
sweeteners, flavors, or colors. This includes meat raised 
people to get exactly what they want. Our real 
stand. The result devolves into a thirty-year-long fast food rivalry. 
without antibiotics or added hormones, pasture-raised  
ingredients are raised with respect for animals, 
Using every trick in the book, they unwittingly abandon their integrity 
dairy, and only non-GMO ingredients.
farmers and the environment. 
to win customers. But when they can no longer recognize their 

monstrous creations, they ultimately discover what truly matters, 

their love for real food...and each other.

- Watch it at - 

CHIPOTLE.COM/A-LOVE-STORY