Chipotle

2018
ANNUAL REPORT
AND PROXY STATEMENT

WIN TODAY AND CULTIVATE THE FUTURE

DEAR FELLOW SHAREHOLDERS

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Steve Ells
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(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:71)(cid:72)(cid:68)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:88)(cid:79)(cid:87)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:3)(cid:69)(cid:72)(cid:87)(cid:87)(cid:72)(cid:85)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:3)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:76)(cid:80)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:72)(cid:68)(cid:80)(cid:3)(cid:71)(cid:82)(cid:88)(cid:69)(cid:79)(cid:72)(cid:71)(cid:3)(cid:71)(cid:82)(cid:90)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)
(cid:72)(cid:73)(cid:73)(cid:82)(cid:85)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:20)(cid:27)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:80)(cid:76)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:79)(cid:90)(cid:68)(cid:92)(cid:86)(cid:3)(cid:71)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:87)(cid:75)(cid:76)(cid:81)(cid:74)(cid:17)(cid:3)(cid:58)(cid:75)(cid:76)(cid:79)(cid:72)(cid:3)(cid:90)(cid:72)(cid:3)(cid:75)(cid:68)(cid:71)(cid:3)
(cid:70)(cid:75)(cid:68)(cid:79)(cid:79)(cid:72)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:70)(cid:82)(cid:80)(cid:72)(cid:15)(cid:3)(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)(cid:10)(cid:86)(cid:3)(cid:73)(cid:82)(cid:82)(cid:71)(cid:3)(cid:86)(cid:68)(cid:73)(cid:72)(cid:87)(cid:92)(cid:3)(cid:73)(cid:82)(cid:70)(cid:88)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)
(cid:88)(cid:81)(cid:83)(cid:68)(cid:85)(cid:68)(cid:79)(cid:79)(cid:72)(cid:79)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)
(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:74)(cid:82)(cid:3)(cid:69)(cid:72)(cid:92)(cid:82)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:68)(cid:85)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:81)(cid:86)(cid:87)(cid:76)(cid:79)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)
(cid:70)(cid:82)(cid:81)(cid:111)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:74)(cid:68)(cid:76)(cid:81)(cid:17)

DEAR SHAREHOLDERS

(cid:36)(cid:86)(cid:3)(cid:44)(cid:3)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:3)(cid:80)(cid:92)(cid:3)(cid:111)(cid:85)(cid:86)(cid:87)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:68)(cid:86)(cid:3)(cid:38)(cid:40)(cid:50)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)(cid:15)(cid:3)(cid:44)(cid:10)(cid:80)(cid:3)(cid:72)(cid:91)(cid:70)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:70)(cid:68)(cid:83)(cid:3)
(cid:68)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:80)(cid:76)(cid:79)(cid:72)(cid:86)(cid:87)(cid:82)(cid:81)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:90)(cid:72)(cid:10)(cid:89)(cid:72)(cid:3)(cid:75)(cid:76)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:77)(cid:88)(cid:86)(cid:87)(cid:3)(cid:87)(cid:90)(cid:72)(cid:79)(cid:89)(cid:72)(cid:3)(cid:80)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)(cid:17)(cid:3)
(cid:41)(cid:82)(cid:85)(cid:3)(cid:82)(cid:81)(cid:72)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:82)(cid:88)(cid:85)(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:54)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:38)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:3)
(cid:80)(cid:82)(cid:89)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:49)(cid:72)(cid:90)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:37)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:82)(cid:79)(cid:88)(cid:80)(cid:69)(cid:88)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:86)(cid:72)(cid:72)(cid:76)(cid:81)(cid:74)
(cid:74)(cid:85)(cid:72)(cid:68)(cid:87)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:17)(cid:3)(cid:58)(cid:75)(cid:76)(cid:79)(cid:72)(cid:3)(cid:90)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)
(cid:87)(cid:82)(cid:3)(cid:69)(cid:88)(cid:76)(cid:79)(cid:71)(cid:3)(cid:82)(cid:88)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:86)(cid:87)(cid:68)(cid:73)(cid:73)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:73)(cid:111)(cid:70)(cid:72)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:68)(cid:79)(cid:85)(cid:72)(cid:68)(cid:71)(cid:92)(cid:3)
(cid:86)(cid:83)(cid:68)(cid:85)(cid:78)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:89)(cid:76)(cid:69)(cid:85)(cid:68)(cid:81)(cid:87)(cid:3)(cid:70)(cid:88)(cid:79)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:89)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:87)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)
(cid:68)(cid:3)(cid:83)(cid:76)(cid:89)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:87)(cid:76)(cid:80)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)(cid:10)(cid:86)(cid:3)(cid:75)(cid:76)(cid:86)(cid:87)(cid:82)(cid:85)(cid:92)(cid:17)

(cid:58)(cid:72)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:3)(cid:73)(cid:88)(cid:79)(cid:79)(cid:3)(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)(cid:87)(cid:72)(cid:68)(cid:80)(cid:3)(cid:80)(cid:68)(cid:71)(cid:72)(cid:3)(cid:88)(cid:83)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:69)(cid:72)(cid:86)(cid:87)(cid:16)(cid:76)(cid:81)(cid:16)(cid:70)(cid:79)(cid:68)(cid:86)(cid:86)(cid:15)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:88)(cid:68)(cid:79)(cid:86)(cid:3)(cid:90)(cid:75)(cid:82)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:68)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:87)(cid:72)
(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:86)(cid:75)(cid:68)(cid:83)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:88)(cid:79)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:3)(cid:83)(cid:88)(cid:85)(cid:83)(cid:82)(cid:86)(cid:72)(cid:16)(cid:71)(cid:85)(cid:76)(cid:89)(cid:72)(cid:81)
(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:17)(cid:3)(cid:44)(cid:10)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:111)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:74)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:69)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:83)(cid:88)(cid:85)(cid:83)(cid:82)(cid:86)(cid:72)(cid:3)
(cid:82)(cid:73)(cid:3)(cid:38)(cid:88)(cid:79)(cid:87)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:3)(cid:37)(cid:72)(cid:87)(cid:87)(cid:72)(cid:85)(cid:3)(cid:58)(cid:82)(cid:85)(cid:79)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:79)(cid:76)(cid:73)(cid:72)(cid:3)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:68)(cid:78)(cid:72)(cid:3)(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:72)(cid:91)(cid:87)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:79)(cid:17)(cid:3)(cid:3)

(cid:55)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:73)(cid:85)(cid:72)(cid:86)(cid:75)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:74)(cid:85)(cid:82)(cid:88)(cid:81)(cid:71)(cid:90)(cid:82)(cid:85)(cid:78)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:81)(cid:72)(cid:90)
(cid:74)(cid:82)(cid:68)(cid:79)(cid:86)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:21)(cid:19)(cid:20)(cid:27)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:70)(cid:85)(cid:72)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:90)(cid:76)(cid:81)(cid:3)(cid:87)(cid:82)(cid:71)(cid:68)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
(cid:70)(cid:88)(cid:79)(cid:87)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:10)(cid:80)(cid:3)(cid:83)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:86)(cid:88)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)
(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:111)(cid:89)(cid:72)(cid:3)(cid:73)(cid:82)(cid:70)(cid:88)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:68)(cid:86)(cid:29)
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(cid:38)(cid:40)(cid:50) 

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, 2018
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)

610 Newport Center Drive, Suite 1300 Newport Beach, CA
(Address of Principal Executive Offices)

84-1219301
(IRS Employer
Identification No.)

92660
(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 every Interactive Data File required to be
submitted 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 such files). Yes È 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. ‘
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

‘ Non-accelerated filer ‘ Smaller reporting

‘ Accelerated filer

company

‘ Emerging growth
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, 2018, the aggregate market value of the registrant’s outstanding common equity held by non-affiliates was
$8.726 billion, based on the closing price of the registrant’s common stock on June 29, 2018, 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 4, 2019, there were 27,659,270 shares of the registrant’s common stock, par value of $0.01 per share
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates certain information by reference from the registrant’s definitive proxy statement for the 2019 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, 2018.

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 Disclosure 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

24

25

25

25

26

28

29

37

39

61

61

64

65

65

65

65

65

66

69

70

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, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), 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, statements about the
potential impact of catering and delivery offerings and
technology initiatives; statements regarding the
effectiveness of our food safety systems and procedures;
projections of comparable restaurant sales increases and
sales trends we expect for 2019; estimates of restructuring
and restaurant closure costs and accelerated depreciation
to be recognized in 2019; forecasts of the number of
restaurants we expect to open; forecasts of trends in
general and administrative expenses, restaurant
development costs, and other expenses for 2019; 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
feature a relevant menu of burritos, burrito bowls (a burrito
without the tortilla), tacos, and salads. We are passionate
about serving great food and providing a great guest
experience, and we are a longtime leader and innovator in
the food industry. When Steve Ells, founder and Executive
Chairman, first opened Chipotle starting with a single
restaurant in Denver, Colorado in 1993, the idea was simple:
show that food served fast didn’t have to be a typical “fast-
food” experience. Using high-quality real ingredients,
classic cooking techniques, and distinctive interior design,
we brought features from the realm of fine dining to the
world of quick-service restaurants. Over 25 years later, our
devotion to seeking out the very best ingredients, raised
with respect for animals, farmers, and the environment,
remains at the core of our commitment to Food With
Integrity. As of December 31, 2018, we operated 2,452
Chipotle restaurants throughout the United States, 37
international Chipotle restaurants, and two non-Chipotle
restaurants.

Business Strategy
We are committed to making our food more accessible to
everyone while continuing to be a brand with a
demonstrated purpose of cultivating a better world. Our
strategy is to win today and cultivate the future by focusing
on five key pillars which include:

• becoming a more culturally relevant and engaging

brand that builds love and loyalty;

• digitizing and modernizing our restaurant experience to

create a more convenient and enjoyable guest
experience;

• running great restaurants with great hospitality and

throughput;

• being disciplined and focused to enhance our powerful

economic model; and

• building a great culture that can innovate and execute

across digital, access, menu and the restaurant
experience.

2018 Annual Report

1

PART I
(continued)

Relevant Menu. Our restaurants feature a relevant menu of
burritos, burrito bowls, tacos and salads. 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.
Our proteins 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, and
sautéed peppers and onions, to our entrees depending on
each guest’s request. We use various herbs, spices and
seasonings to prepare our meats and vegetables. We also
serve tortilla chips that are fried twice a day in each
restaurant and seasoned with fresh lime juice and salt, with
sides of hand mashed 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.

Food with Integrity. Serving high quality food while still
charging reasonable prices is critical to our purpose so that
guests can enjoy wholesome food every day. We respect
our environment and insist on preparing, cooking, and
serving nutritious food made from natural ingredients and
animals that are raised or grown with care. We spend time
on farms and in the field to understand where our food
comes from and how it is raised. We concentrate on the
sourcing of each ingredient, and this has become a
cornerstone of our continuous effort to improve the food
we serve. The food we serve is made from just 51
ingredients that everyone can both recognize and
pronounce. We’re all about simple, fresh food without the
use of artificial colors or flavors typically found in fast
food — just genuine real ingredients and their individual,
delectable flavors.

In all of our Chipotle restaurants, we endeavor to serve only
meats that are 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 expect to continue to
face challenges in doing so. For example, some of our
restaurants periodically serve conventionally raised chicken

2 2018 Annual Report

or beef due to supply constraints for our Responsibly
Raised brand meats, or stop serving one or more menu
items due to additional supply constraints. When we
become aware of such an issue, we clearly and specifically
disclose this temporary change on signage in each affected
restaurant so that guests can adjust their orders if they
choose to do so.

We also seek to use 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. Some 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. We call these beans “transitional”.
Some of the other produce items we serve are organically
grown as well. Our commitment to better ingredients also
extends to the dairy products we serve. In 2018, all of the
sour cream and shredded cheese served in our U.S.
Chipotle restaurants was made with milk 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 (excluding
beverages) in U.S. Chipotle restaurants contain genetically
modified organisms, or GMOs. While the meat and poultry
we serve is not genetically modified, many of 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 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.

Purchasing and Food Safety
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 suppliers. We’ve

PART I
(continued)

also sought to increase, where practical, the number of
suppliers for our ingredients to help mitigate pricing
volatility and supply shortages. In addition, we closely
monitor 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 Unique to Our 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 food safety and quality
assurance teams work to ensure compliance with our food
safety programs and practices, components of which
include:

• supplier interventions (steps to avoid food safety risks

before ingredients reach Chipotle);

• advanced technologies (tools that eliminate pathogens

while maintaining food quality);
• small grower support and training;
• enhanced restaurant procedures (protocols for handling
ingredients and sanitizing surfaces in our restaurants);

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

These and other food safety practices underscore our
commitment to being a leader in food safety while
continuing to serve high quality food that our guests love.
Our food safety and quality assurance teams establish and
monitor our quality and food safety programs and work
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 whom are among the top
suppliers in the industry. In addition, we have a team
approach where our training, operations, legal 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 also
establish Chipotle as an industry leader in food safety. To
help achieve this goal, 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.

Guest Experience and Operations
Serving great food, with great service in a safe, quick, clean
and happy environment is always our highest priority, and
we take pride in making the Chipotle experience
exceptional. We invest in training to consistently deliver an
outstanding guest experience, and in our facilities to
improve the appearance of our restaurants and modernize
tools. These investments enable faster throughput, better
efficiency and a better team member experience in our
restaurants. In 2018, we hired a Chief People Officer to
support our approximately 73,000 team members. We
believe creating an excellent guest experience starts with
hiring great people and creating great teams.

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), 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 employees. We generally have
two shifts at our restaurants, which simplifies scheduling
and provides stability for our employees. We also cross-
train our team members so that each can work a variety of
stations, allowing us to work efficiently during our busiest
times, while giving our employees 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
guests throughout the day. In addition to the employees
serving our guests 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, digital order pick-up shelves, digital
order pick-up lanes we call “Chipotlanes”, delivery and
catering, that allow our guests to engage with us in
whatever fashion is most convenient for them. By allowing
our guests to order and receive their food in a variety of
ways, we believe we can attract more guests and
encourage them to choose us more frequently. In order to
successfully deliver a great experience for more guests, we
are emphasizing the optimization of second make lines and
the ability to pay using Apple Pay or Android Pay for

2018 Annual Report 3

PART I
(continued)

digital/mobile orders. These initiatives allow us to fulfill
catering or digital/mobile 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
further improve these results. Additionally, we have
enhanced our data capabilities to allow us to better identify
individual guests 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 seek to make it as
convenient as possible for our guests to enjoy Chipotle
when and how they like it. We are also testing new menu
items. We have built a stage-gate process around
innovation where we test, learn and iterate, so that when
we roll out a new initiative, we are highly confident in the
probability of success.

Marketing
Our marketing program and philosophy shifted from a more
promotionally driven, decentralized approach in 2017 to a
more centrally driven model designed to generate higher
consumer awareness and drive guests into our restaurants
in 2018. Our ultimate marketing mission is to make Chipotle
not just a food brand but a purpose driven lifestyle brand
that is more visible, more engaging, and more relevant in
culture. In October 2018, we launched the biggest quarterly
brand campaign in our history with the “For Real” launch,
reflecting our heritage and also reinforcing our
differentiation of using responsibly sourced, real
ingredients and real cooking techniques to make flavorful
food that consumers both love and feel better about
eating.

We utilize multiple marketing channels, including national
television, digital marketing, social media, fundraising,
events and sponsorships to reach consumers.

We have invested and will continue to invest in extensive
customer research that will give us insight into our
consumers in order to inform our business decisions,
media, messaging, and innovation pipeline.

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

4 2018 Annual Report

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, convenience, brand
reputation, cleanliness, and ambience 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
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.

Competition has made it more challenging to maintain or
increase the frequency of customer visits, however we
believe that we can differentiate ourselves with our
purpose of cultivating a better world. 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 long-
term success and growth strategy. As a result, we devote
substantial time and effort to carefully evaluate each
potential restaurant location. Our site selection process is
led by our internal team of real estate managers and
includes external real estate brokers with expertise in
specific markets, as well as support from an internal real
estate strategy and research group. We thoroughly assess
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

PART I
(continued)

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 opening of new
restaurants and expansion into new real estate types, see
“Risks Related to our Plans to Grow Our Sales and
Profitability — 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
Although in 2019 our focus will remain on thoughtfully
growing the Chipotle brand, we believe that the
fundamental principles on which our restaurants are
based — finding better ingredients, preparing them using
classic techniques in front of our guests, 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. We have
invested in innovative concepts such as Pizzeria Locale, a
fast-casual pizza restaurant that has two restaurants in
Denver, Colorado. For a discussion of risks related to
Pizzeria Locale and our possible investment in new
concepts, see “Risks Unique to Our Business Strategy —
Pizzeria Locale and other new restaurant concepts may not
contribute to our growth” in Item 1A. “Risk Factors.”

Information Systems and Cyber Security
We use a variety of applications and systems to securely
manage the flow of information within each of our
restaurants and 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. Our digital ordering
system allows guests to place orders online or through our
mobile app and enables a delivery by a third party service
with which we have entered into a delivery agreement. 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 in order to combat
breaches, as well as provide improved control, security and
scalability.

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 data from payment 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
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 guest and employee
information” in Item 1A. “Risk Factors,” as well as Note 13.
“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.

Government Regulation and Environmental
Matters
We are subject to various federal, state and local laws and
regulations 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, healthcare laws, scheduling
notification requirements and anti-discrimination and anti-
harassment laws.

We are required to collect and maintain personal
information about our employees, and we collect
information about guests 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 evolving and increasingly demanding.

We are subject to the ADA and similar state laws that give
civil rights protections to individuals with disabilities in the
context of employment, public accommodations and other
areas.

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.

2018 Annual Report 5

PART I
(continued)

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 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 use
of straws, utensils, and the types of packaging we can use
in our restaurants.

We offer eligible full-time and part-time U.S. employees the
opportunity to enroll in healthcare coverage subsidized by
us. For various reasons, many of our eligible employees
currently choose not to participate in our healthcare plans.
Under the comprehensive U.S. health care reform law
enacted in 2010, the Affordable Care Act, employers can be
subjected to penalties for failure to provide a healthcare
plan which is deemed to be both “affordable” and offers
minimal essential coverage.

Employees
As of December 31, 2018, we had about 73,000 employees,
including about 5,100 salaried employees and about 67,900
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

6 2018 Annual Report

protect our intellectual property, which could harm the
value of our brand and adversely affect our business.

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 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 and adversely
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,
but not limited to, 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 and adversely affect our business,
financial condition and results of operations.

Risks Related to our Plans to Grow Our Sales
and Improve Profitability

Our sales and profitability growth depends on our
ability to increase comparable restaurant sales, and
there are material risks to our ability to do so.
To grow 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.

PART I
(continued)

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 three 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…”;

• 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 guests or other reductions in average check in
response to such price increases;

• changes in government regulation that may impact

consumer 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 not
achieve our targeted or expected comparable restaurant
sales in the future, or may even experience declines in
comparable restaurant sales in the future. Any 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 2019 than we have in many prior
years, which will adversely impact our sales growth
rate.
We had 2,491 restaurants in operation as of December 31,
2018, and we plan to increase the number of our
restaurants significantly. In 2019 we plan to open between
140 and 155 new restaurants, which is fewer than the
number of restaurants opened per year in many 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

• executing our strategies effectively, including our

sites in locations that we believe to be attractive;

marketing and branding strategies, our initiatives to
expand the use of mobile and other digital ordering and
increase sales from our delivery orders and catering
options, our efforts to improve the overall quality of our
guests’ experience and increase the speed at which our
crews serve each guest, 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

• 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;

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

• any shortages of construction labor or materials;
• difficulty ramping up the growth of our international

• initial sales performance of new restaurants, and the

impact of new Chipotle restaurants in the event guests
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…”;

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 “— Risks Unique to our Business
Strategy — Pizzeria Locale and other new restaurant
concepts may not contribute to our growth”;

• weather, natural disasters and other factors limiting

• difficulty negotiating leases with acceptable terms;

access to our restaurants; and

2018 Annual Report

7

PART I
(continued)

• 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 help ensure we provide an outstanding guest
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 up our construction and leasing costs.
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 2019, given our plan to
decrease the number of new restaurants we open during
the year as compared to the number of restaurants opened
per year in many past years.

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.

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

8 2018 Annual Report

would adversely affect our growth. Any resulting decrease
in our sales growth rate or investor expectations for our
future growth may result in declines in the price of our
common stock.

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 initial
negative 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 2019 and beyond.

We have also opened restaurants in nearly all major
metropolitan areas across the U.S. New restaurants that we
have recently opened, or may open, in existing markets
may adversely impact sales in previously-opened
restaurants in the same market, as guests 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. Alternatively, existing restaurants 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 such new restaurants.

PART I
(continued)

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 such as security costs,
or marketing costs, 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.

Our marketing and advertising strategies may not
be successful, or may pose risks that could
adversely impact our business.
In 2018, we hired a new Chief Marketing Officer and other
senior marketing staff and introduced a new advertising
campaign and media strategies, including increased use of
television advertising. We intend to continue to invest in
marketing and advertising strategies that we believe will
attract guests 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
guests, including buy-one get-one offers and other offers
for free or discounted food, and any such additional
promotional activities could adversely impact our
profitability.

We also plan to continue to emphasize strategies such as
mobile and other digital ordering, delivery orders, and
catering offerings in an effort to increase overall sales.
These efforts may not succeed to the degree we expect, or
may result in unexpected operational challenges that
adversely impact our costs or our brand reputation. We
may also seek to introduce new menu items that may not
generate the sales we expect.

In addition, some of our marketing has incorporated
elements intended to encourage guests 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 guests or potential guests, the value of our brand
may be eroded.

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 consumer
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, and in August 2018,
illnesses believed to be caused by c. perfringens bacteria
from the food in one of our restaurants in Powell, Ohio also
negatively impacted our sales. 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), increased the awareness of these incidents and
negatively impacted perceptions of our restaurants and
brand, notwithstanding the high volume of food-borne
illness cases from other sources across the country every
day.

Because of consumer 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—may have
an even more significant negative impact on our sales and
our ability to regain guests. Although we have followed
industry standard food safety protocols in the past and
have endeavored to continually enhance our food safety

2018 Annual Report 9

PART I
(continued)

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 avoidance of 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
restaurant personnel or suppliers 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 delivery or catering businesses or other
situations in which our food is transported and/or 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, both financially and otherwise, from
any such illnesses is likely to be significant. All of these
factors could have an adverse impact on our ability to
attract and retain guests, which would in turn have a
material adverse effect on our growth and profitability.

Our ability to continue to expand our digital
business, delivery orders and catering is uncertain,
and these new business lines are subject to risks.
For the year ended December 31, 2018, 10.9% of our
revenue was derived from digital orders, which was up
significantly from prior years, and during 2018 the
percentage of revenue derived from digital orders grew
from 8.9% in the first quarter to 12.9% in the fourth
quarter. This growth rate may not be sustainable for even
the short term, and if our digital business does not continue
to expand it may be difficult for us to achieve our planned
sales growth. We have also increased our efforts to
promote delivery orders, which have also grown
considerably. We rely on third party providers to fulfill
delivery orders, and the ordering and payment platforms
used by these third parties, or our mobile app or online
ordering system, could be damaged or interrupted by
technological failures, user errors, cyber-attacks or other
factors, which may adversely impact our sales through
these channels and could negatively impact our brand.
Additionally, our delivery partners are responsible for order
fulfillment and may make errors or fail to make timely
deliveries, leading to customer disappointment that may
negatively impact our brand. We also incur additional costs
associated with using third party service providers to fulfil

10 2018 Annual Report

these digital orders. Moreover, the third party restaurant
delivery business is intensely competitive, with a number of
players competing for market share, online traffic, capital,
and delivery drivers and other people resources. The third
party delivery services with which we work may struggle to
compete effectively, and if they were to cease or curtail
operations or fail to provide timely delivery services in a
cost-effective manner, or if they give greater priority on
their platforms to our competitors, our delivery business
may be negatively impacted. We have also introduced
catering offerings on both a pick-up and delivery basis, and
customers may choose our competitors’ catering offerings
over ours, be disappointed with their experience with our
catering, or experience food safety problems if they do not
serve our food in a safe manner, which may negatively
impact us. Such delivery and catering offerings also
increase the risk of illnesses associated with our food
because the food is transported and/or served by third
parties in conditions we cannot control.

Because all of these offerings are relatively new, it is
difficult for us to anticipate the level of sales they may
generate. That may result in operational challenges, both in
fulfilling orders made through these channels and in
operating our restaurants as we balance fulfillment of these
orders with service of our traditional in-restaurant guests
as well. Any such operational challenges may negatively
impact the customer experience associated with our digital,
delivery or catering orders, the guest experience for our
traditional in-restaurant business, or both. These factors
may adversely impact our sales and our brand reputation.

Our expansion into international markets has been
limited, and may present increased risks due to
lower awareness of our brand, our unfamiliarity with
those markets and other factors.
As of December 31, 2018, 37 of our restaurants were
located outside of the U.S., with 23 in Canada, seven 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.

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 international markets, and
our average restaurant sales and/or transaction counts
may be lower in these international 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

PART I
(continued)

our U.S. markets. As a result, new restaurants outside the
U.S. may be less successful than restaurants in our existing
U.S. markets. Specifically, due to lower consumer familiarity
with the Chipotle brand, differences in consumer 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 or than we need to for a new restaurant in a U.S.
market, which could negatively impact the profitability of
our operations in those international markets.

We may also find it more difficult in international markets
to hire, train and keep top performing employees who can
successfully deliver excellent guest 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 those in the U.S., 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, became
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
up to 4% of our worldwide revenue of the prior financial
year. Our overall results may also be negatively affected by
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.

Our failure to manage our growth and
transformation effectively could harm our business
and operating results.
As described elsewhere in this report, our plans call for a
significant number of new restaurants, new employees, new
suppliers, and new systems to support our business

strategies. 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, including food safety, and
develop additional top performing general managers more
quickly. We may not respond quickly enough to the
changing demands that our growth and transformation
impose on management, crew and existing infrastructure,
and changes to our operating structure may result in
increased costs or inefficiencies that we cannot currently
anticipate. 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. 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
consumers 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

2018 Annual Report

11

PART I
(continued)

guests 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 guest 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
guests 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 guests 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, “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.
We rely on our restaurant employees to provide an
outstanding guest experience, and as a result we believe
good managers and crew and outstanding training are key
parts of our success. Delivering excellent guest experiences
depends substantially on the energy and skills of our
employees and our ability to hire, train, motivate and keep

12 2018 Annual Report

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 guest experiences, which may
adversely impact our sales. Our failure to find and keep
enough high-caliber employees could also delay planned
restaurant openings, which would slow our growth.

In addition, labor is a primary component of our operating
costs. Increased labor costs due to factors such as
competition for workers and labor market pressures,
increased minimum wage requirements, increased
healthcare costs, increased costs to apply with new and/or
changing regulations, 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. During 2018
we increased 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 increased 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 2019
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.

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.

PART I
(continued)

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. Efforts to negotiate with suppliers to limit
any such price increases may not be successful, or may
adversely impact our relationship with suppliers.

Additionally, a substantial volume of produce items are
grown in Mexico and other countries, and a significant
portion 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, including any new or increased export duties, tariffs
or taxes, or other changes in trade or tax policy as a result
of retaliation by the countries from which we source our
ingredients in response to such changes in U.S. trade or tax
policy, or any localized labor disturbances or political
unrest in the areas from which we source our ingredients,
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,
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 consumer
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,
or listeria to certain produce items or other ingredients
have caused us to temporarily suspend serving some
ingredients in our foods or to otherwise alter our menu, or
have resulted in consumers avoiding certain food 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 and could in
the future have an adverse effect on the availability of
affected ingredients. A decrease in guest 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 guests who do not accept those changes, and may
not be able to attract enough new guests to generate
sufficient revenue to make our restaurants profitable.
Guests 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.

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
consumer 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

2018 Annual Report

13

PART I
(continued)

required to prepare and serve our food. If we are not 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 and may not
meet analyst and investor expectations in the future. 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 guest
perceptions of our restaurant operations. To the extent
guests 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 guests 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 Grow Our Sales and
Profitability — We may continue to be negatively impacted
by food safety incidents...”

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

14 2018 Annual Report

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 Unique to Our 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.

Changes in consumer tastes and preferences,
spending patterns and demographic trends could
cause sales to decline.
Changes in consumer 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, including in response to dietary concerns such
as preferences regarding calories, sodium, carbohydrates,
fat, consumption of animal products or other nutritional
considerations. 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 consumers 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 political or economic unrest in the U.S.

PART I
(continued)

and/or abroad. 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 consumer preferences and trends, we may
lose guests 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
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 Unique to Our Business Strategy

We may not persuade consumers of the benefits of
paying our prices for higher-quality food.
Our success depends in large part on our ability to
persuade consumers 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
consumers about the quality of our food, and consumers
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 may be
more difficult for us to persuade the public about the
quality and value of our food following any food-borne
illnesses associated with our restaurants, as further
described above under “Risks Related to our Plans to Grow
Our Sales and Profitability — We may continue to be
negatively impacted by food safety incidents...” If
consumers 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 restructuring activities will increase our
expenses, may not be successful, and may
adversely impact employee hiring and retention.
During 2018, we opened a new headquarters office in
Newport Beach, California, consolidated certain corporate
administrative functions into our existing office in
Columbus, Ohio, closed a corporate office in New York, New
York, and commenced the closure of our previous
headquarters office in Denver, Colorado. As a result of the
foregoing actions, we incurred corporate restructuring
costs totaling $42.6 million in the second, third and fourth
quarters of 2018, and expect to incur additional corporate
restructuring costs in 2019 aggregating approximately
$5 million to $15 million. We also closed/relocated 45
Chipotle restaurants and five Pizzeria Locales throughout
the country during 2018, and as a result we incurred
restaurant exit costs of approximately $35.8 million in the
second, third and fourth quarters of 2018, and expect to
incur additional restaurant exit costs in 2019 aggregating
approximately $1 million to $7 million. These expenses
adversely impacted our results of operations during 2018
and reduced our cash position and will continue to
adversely impact our results of operation and cash position.
Additionally, the amount of the restructuring expenses we
expect to incur in 2019, as well as our ability to achieve the
anticipated benefits of our restructuring activities, are
subject to assumptions and uncertainties. There is no
assurance that we will successfully implement or fully
realize the anticipated benefits of our restructuring
activities. If we fail to realize the anticipated benefits from
these measures, or if we incur charges or costs in amounts
that are greater than anticipated, our financial condition
and operating results may be adversely affected to a
greater degree than we currently expect.

In addition, the relocation of our headquarters office
functions has necessitated that we hire and train a
significant number of new employees to replace corporate
support employees who did not continue with us as a result
of the relocation. Hiring and training significant numbers of
support team employees could distract existing employees,
decrease employee morale, make it more difficult to retain
and hire new talent, and harm our reputation. This turnover
and any resulting distraction could negatively impact the
overall performance of our corporate support teams,
resulting in inefficiencies, higher short- or long-term costs,
failures in risk management or compensating controls, or
decreased productivity in numerous support or
administrative functions. The costs associated with hiring
new talent may also be more significant than we currently
expect. As a result of these or other similar risks, our
business, results of operations and financial condition may
be adversely affected.

2018 Annual Report

15

PART I
(continued)

A substantial portion of our senior management
team is new, which may pose challenges, and our
success may depend on the continued service and
availability of key personnel.
Brian Niccol joined us as Chief Executive Officer in March
2018, and we added a new Chief Marketing Officer, Chris
Brandt, and our first Chief People Officer, Marissa Andrada,
in April 2018; added our first Chief Legal Officer and
General Counsel, Roger Theodoredis, in October 2018; and
added a new Chief Development Officer, Tabassum
Zalotrawala, in December 2018. These officers have, in turn,
hired a substantial number of new direct reports, and as a
result, our senior management team is relatively new and
may face challenges working together as a unit, aligning on
strategic priorities and objectives, or integrating their new
teams with one another. These challenges may be
exacerbated by our ongoing restructuring efforts as further
described above under “— Our restructuring activities will
increase our expenses, may not be successful, and may
adversely impact employee hiring and retention.” Our Board
of Directors has experienced recent changes as well,
including the addition of Mr. Niccol, as well as our founder
and former Chief Executive Officer, Steve Ells, assuming
the position of Executive Chairman, and these changes may
add to the challenges inherent in assimilating a new
management team. Failure to meet these challenges
successfully may adversely impact our operations, business
results or long-term growth prospects.

Additionally, Jack Hartung, our Chief Financial Officer, has
served with us since early in our company’s history and
much of our growth, as well as the development of our
restaurant economic model, has occurred under his
direction. Curt Garner, who joined us as Chief Information
Officer in November 2015, has had a key role in developing
and executing our digital and 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. 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 guests. And Laurie
Schalow, who joined us as Chief Communications Officer in
August 2017, has been responsible for media relations
efforts and other initiatives to improve public perceptions
of our brand. Each of our executive officers is an at-will
employee, and any turnover among our executive officers
may disrupt our progress in implementing our business
strategies or otherwise negatively impact our growth
prospects or future operating results. Additionally, if our
company culture or operations were to deteriorate

16 2018 Annual Report

following any additional changes in leadership, we may be
adversely impacted as well.

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
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
consumer 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. For example, in 2015 we
identified a pork supplier that was not meeting our
standards and suspended purchases of pork from the
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, which adversely
impacted sales. 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 consumer 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,

PART I
(continued)

which could make us less popular among our guests 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 impact guest traffic at our
restaurants and damage our brand. We may also face
adverse publicity or liability for false advertising claims if
suppliers do not adhere to all of the 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 consumers 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 consumers
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 consumer 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
also make it more difficult for us to differentiate Chipotle
and our restaurants, either which could adversely impact
our operating results.

Pizzeria Locale 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
guest, 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 also have a
majority ownership interest in a company that, until late
2018,

operated seven fast casual Pizzeria Locale restaurants in
Denver, Colorado, Kansas City, Missouri and Cincinnati,
Ohio. ShopHouse and TastyMade were not able to achieve a
level of sales and profitability that made them 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. We closed
TastyMade in 2018, and also closed the five Pizzeria Locale
restaurants outside of Denver in 2018 as part of our
program to close underperforming restaurants throughout
the country. Furthermore, Pizzeria Locale has significantly
lower brand awareness, lower sales and less operating
experience than most Chipotle restaurants, and may also
not achieve restaurant economics that make the concept
attractive for further investment in the future. There are
also numerous competitors in the pizza market, 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.

Notwithstanding 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 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 Pizzeria Locale, which may limit our overall
growth potential over the long term. Conversely, any
expansion of Pizzeria Locale or investments in other
restaurant concepts might distract our management, which
could have an adverse impact on our core Chipotle
business.

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 and
regulations 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’

2018 Annual Report

17

PART I
(continued)

compensation rules, healthcare laws, scheduling
notification requirements and anti-discrimination and anti-
harassment laws. Complying with these laws and
regulations subjects us to substantial expense and can be
cumbersome, and can also expose us to liabilities from
claims of 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 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 have increased our labor costs and may have a
further negative impact on our labor costs in the future. In
addition, in November 2017, the Fair Value Workweek
legislation was implemented in New York City, which
requires fast food employers to provide employees with
specified notice in scheduling changes and pay premiums
for changes made to employees’ schedules, amongst other
requirements. Similar legislation may be enacted in other
jurisdictions in which we operate in as well, and could result
in increased 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 required to comply with work authorization
verification requirements. 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. 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 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

18 2018 Annual Report

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. 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. On the other hand, in the event we
erroneously 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. 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.

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
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.

Privacy/Cybersecurity
We are required to collect and maintain personal
information about our employees, and we collect
information about guests 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

PART I
(continued)

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 consumer 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 guest 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 or those of our delivery partners, 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 guest and employee
information.”

Americans with Disabilities Act and Similar State Laws
We are subject to the 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. Regulations requiring that chain
restaurants include calorie information on their menu
boards and make other nutritional information available
went in place across the U.S. in May 2018, and states and

localities have also proposed or adopted regulation of or
taxes on certain beverage products, kids’ meals, and other
food products or practices. These requirements may
increase our expenses, change guest buying habits in a way
that adversely impacts our sales, or subject us to liability if
we make errors in complying with the requirements.

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 use
of straws, utensils, and the types of packaging we can use
in our restaurants. Restrictions on the use of certain
materials in our restaurants may subject us to increased
costs for paper, packaging and other non-food items. In
addition, although we have not conducted a comprehensive
environmental review of our properties or operations,
investigations of some of our properties has identified
contamination caused by third-party operations. While 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 we could be
held liable under certain environmental laws 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. 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.

Healthcare Regulation
We offer eligible full-time and part-time U.S. employees the
opportunity to enroll in healthcare coverage subsidized by

2018 Annual Report

19

PART I
(continued)

us. For various reasons, many of our eligible employees
currently choose not to participate in our healthcare plans.
Under the comprehensive U.S. health care reform law
enacted in 2010, the Affordable Care Act, employers can be
subjected to penalties for failure to provide a healthcare
plan which is deemed to be both “affordable” and offers
minimal essential coverage. We have incurred fines
associated with this regulation in the past, and future costs
associated with these healthcare requirements cannot be
determined with certainty, but may have a material adverse
effect on our financial statements.

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 13. “Commitments and Contingencies” in
our consolidated financial statements included in Item 8.
“Financial Statements and Supplementary Data.” We also
have received numerous claims from guests 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 guests impacted by these incidents, but will continue
to incur significant legal and other costs in doing so. We
have also been sued in two separate shareholder class
action lawsuits in connection with declines in our stock
price in the wake of food safety incidents, and defending
these lawsuits may subject us to significant additional legal
expenses. Additionally, the liabilities from guest claims and
related litigation expenses may be greater than we
anticipate due to the uncertainties inherent in litigation. All

20 2018 Annual Report

of these costs, liabilities and expenses will negatively
impact our operating results. Moreover, publicity regarding
any legal proceedings related to food safety incidents may
heighten consumer awareness of our past food safety
incidents or otherwise negatively impact perceptions of our
brand, which may hamper our ability to increase our sales.

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 guests 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 and other 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 two
shareholder class action lawsuits, each as described
elsewhere in this report, including in Note 13.
“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.

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

PART I
(continued)

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.

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.

General Business Risks

We may be harmed by security risks we face in
connection with our electronic processing and
transmission of confidential guest and employee
information.
We accept electronic payment cards for payment in our
restaurants. During 2018, approximately 76% 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 the ensuing
investigation detected malware designed to access
payment card data from cards used at point-of-sale devices
at most of our restaurants, primarily in the period from
March 24, 2017 through April 18, 2017. We removed the
malware from our systems and continue to work to
enhance our security measures, including a planned
implementation of new payment processing technology in
substantially all of our restaurants during 2019. 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, of which
approximately $29 million remained in accrued liabilities as
of December 31, 2018. We may ultimately be subject to
liabilities greater than or less than the amount accrued. See
Note 13. “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 may be subject to additional lawsuits or other
proceedings in the future relating to the 2017 incident or
any 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,

We also are required to collect and maintain personal
information about our employees, and we collect
information about guests 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 GDPR,
became 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.
Similarly, the California Consumer Privacy Act is due to
take effect January 1, 2020, and will require our instituting
additional new processes and protections.

At the same time, we are relying increasingly on cloud
computing and other technologies that result in third
parties holding significant amounts of guest 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 by 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 as well as our centralized corporate
infrastructure, and to administer a number of significant
business functions. The services available within our
systems and applications include restaurant operations,

2018 Annual Report 21

PART I
(continued)

supply chain, inventory, scheduling, training, human capital
management, financial tools, and data protection services.
Our restaurant IT 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. The point-of-sale system records
sales transactions, receives out of store orders, and
authorizes, batches, and transmits credit card transactions.
It 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. We plan major hardware
upgrades and systems implementations during 2019 that
will encompass all of our restaurants, which may increase
the likelihood of a systems outage or malfunction
negatively impacting 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 consumers’ perception of and
connection to our brand. In addition to the damage to our
reputation from well-publicized food safety incidents as
described elsewhere in this report, we may experience

22 2018 Annual Report

negative publicity from time to time relating to food quality,
guest 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 Integrity protocols,
other issues regarding the integrity of our suppliers’ food
processing, employee relationships, guest 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 regard to the food safety issues
that have impacted us might have the effect of continuing
or increasing consumer awareness of the issue.

The adverse impact of negative publicity on consumers’
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 guest experience we can offer and
our operations generally, and may increase our labor costs
as well.

Our inability or failure to recognize, respond to and
effectively manage the accelerated impact of social
media could have a material adverse impact on our
business.
There has been a widespread and dramatic increase in the
use of social media platforms that allow users to access a
broad audience of consumers and other interested persons.
The availability of information on social media can be
virtually immediate, as can its impact, and users of many
social media platforms can post information without filters
or checks on the accuracy of the content posted. Adverse
information concerning our restaurants or brand, whether
accurate or inaccurate, may be posted on such platforms at
any time and can quickly reach a wide audience. The
resulting harm to our reputation may be immediate,

PART I
(continued)

without affording us an opportunity to correct or otherwise
respond to the information, and it is challenging to monitor
and anticipate developments on social media in order to
respond in an effective and timely manner. As a result,
social media may exacerbate the risks described above
under “— Negative publicity relating to our restaurants or
our company could adversely impact our reputation, which
may significantly harm us.”

In addition, although search engine marketing, social media
and other new technological platforms offer great
opportunities to increase awareness of and engagement
with our restaurants and brand, our failure to use social
media effectively in our marketing efforts may further
expose us to the risks associated with the accelerated
impact of social media. Many of our competitors are
expanding their use of social media and the social media
landscape is rapidly evolving, potentially making more
traditional social media platforms obsolete. As a result, we
need to continuously innovate and develop our social media
strategies in order to maintain broad appeal with guests
and brand relevance, and we may not do so effectively. A
variety of additional risks associated with our use of social
media include the possibility of improper disclosure of
proprietary information, exposure of personally identifiable
information of our employees or guests, fraud, or the
publication of out-of-date information, any of which may
result in material liabilities or reputational damage.
Furthermore, any inappropriate use of social media
platforms by our employees could also result in negative
publicity that could damage our reputation, or lead to
litigation that increases our costs.

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

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,
and any such uninsured losses 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 brand 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, whether in print, on the internet or in other
media, the value of our brands may be harmed, which could
have a material adverse effect on our business. 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 guest

visits, including as a result of perceptions about our
brand, competition, changes in consumer confidence or
discretionary spending, and other factors listed in this
“Risk Factors” section;

2018 Annual Report 23

PART I
(continued)

• additional negative publicity about the occurrence of
food-borne illnesses, the ingredients we use, or other
problems at our restaurants whether as a result of
actions within our control or those outside of our
control such as those by our delivery partners;

• fluctuations in supply costs, particularly for our most

significant food items;

• labor availability and wages of restaurant management
and crew, as well as temporary fluctuations in labor
costs as a result of operational changes or other
factors;

• increases in marketing or promotional expenses as we
introduce new marketing programs and strategies, or
increases pending on existing marketing programs in an
effort to drive sales;

• our ability to raise menu prices without adversely

impacting guest 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;

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

costs;

• variations in general economic conditions, including the

impact of declining interest rates on our interest
income;

• increases in infrastructure 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

24 2018 Annual Report

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 2019, as analyst
and investor expectations for continued 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 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.
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, which could adversely affect the price of our
common stock.

ITEM 1B. UNRESOLVED STAFF
COMMENTS

None.

PART I
(continued)

ITEM 2. PROPERTIES

As of December 31, 2018, there were 2,491 restaurants
operated by Chipotle and our consolidated subsidiaries,
2,489 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

14

80

6

412

77

23

8

19

160

51

4

139

36

10

26

18

9

5

91

56

36

63

38

1

3

9

27

8

64

8

149

62

1

180

12

31

86

Rhode Island

South Carolina

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

Canada

France

Germany

United Kingdom

Total

8

20

22

205

11

1

101

39

5

19

1

23

6

1

7

2,491

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, 2018, we had 1,605 end-cap locations, 398
free-standing units, 348 in-line locations, and 140 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 610 Newport Center Drive,
Suite 1300, Newport Beach, CA 92660 and our telephone
number is (949) 524-4035. 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 11. “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 13.
“Commitments and Contingencies” in our consolidated
financial statements included in Item 8. “Financial
Statements and Supplementary Data.”

ITEM 4. MINE SAFETY
DISCLOSURES

Not applicable.

2018 Annual Report 25

PART II

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

Our common stock trades on the New York Stock Exchange under the symbol “CMG.”

As of January 24, 2019, there were approximately 914 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 2018.

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

8,705

$446.07

8,705

$99,100,835

Purchased 10/1 through 10/31

November

37,178

$475.95

37,178

$81,405,932

Purchased 11/1 through 11/30

December

54,715

$435.98

54,715

$ 57,551,285

Purchased 12/1 through 12/31

Total

100,598

$ 451.62

100,598

$ 57,551,285

(1) Shares were repurchased pursuant to the $100 million repurchase programs announced on October 24, 2017 and April 25, 2018.

(2) This column does not include an additional $100 million in authorized repurchases announced on February 6, 2019. Each repurchase program has no

expiration date. Authorization of repurchase programs may be modified, suspended or discontinued at any time.

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.

26 2018 Annual Report

PART II
(continued)

COMPARISON OF CUMULATIVE TOTAL RETURN

The following graph compares the cumulative annual stockholders return on our common stock from December 31, 2013
through December 31, 2018 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, 2013. 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 or the Exchange Act, 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 Restaurant Index

$250

$200

$150

$100

$50

$0

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

Chipotle Mexican Grill, Inc.

S&P 500

S&P 500 Restaurants

*$100 invested on 12/31/13 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

Source data: S&P Capital IQ

2018 Annual Report 27

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,

2018

2017

2016

2015

2014

$4,864,985 $4,476,412 $3,904,384 $ 4,501,223 $ 4,108,269

Food, beverage and packaging costs

1,600,760

1,535,428

1,365,580

1,503,835

1,420,994

General and administrative expenses

375,460

296,388

276,240

Labor costs

Occupancy costs

Other operating costs

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

1,326,079

1,205,992

1,105,001

1,045,726

904,407

347,123

327,132

293,636

680,031

651,644

641,953

201,979

163,348

146,368

8,546

66,639

12,341

13,345

17,162

23,877

262,412

514,963

250,214

130,368

16,922

13,194

230,868

434,244

273,897

110,474

15,609

6,976

4,606,617

4,205,618

3,869,817

3,737,634

3,397,469

258,368

270,794

34,567

763,589

710,800

10,068

4,949

4,172

6,278

3,503

268,436

275,743

38,739

769,867

714,303

(91,883)

(99,490)

(15,801)

(294,265)

(268,929)

176,553 $ 176,253 $

22,938 $ 475,602 $ 445,374

6.35 $

6.31 $

6.19 $

6.17 $

0.78 $

15.30 $

0.77 $

15.10 $

14.35

14.13

$

$

$

Weighted average common shares outstanding

Basic

Diluted

27,823

27,962

28,491

28,561

29,265

29,770

31,092

31,494

31,038

31,512

Balance Sheet Data:

Total current assets

Total assets

Total current liabilities

Total liabilities

2018

2017

2016

2015

2014

December 31,

$ 814,794 $ 629,535 $ 522,374 $ 814,647 $ 859,511

$2,265,518 $2,045,692 $2,026,103 $2,725,066 $ 2,527,317

$ 449,990 $ 323,893 $ 281,793 $ 279,942 $ 245,710

$ 824,179 $ 681,247 $ 623,610 $ 597,092 $ 514,948

Total shareholders’ equity

$ 1,441,339 $ 1,364,445 $1,402,493 $ 2,127,974 $2,012,369

28 2018 Annual Report

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. See “Cautionary Note Regarding Forward-Looking Statements.” Factors that might cause such
differences include those described in Item 1A. “Risk Factors” and elsewhere in this report.

Overview
As of December 31, 2018, we operated 2,452 Chipotle restaurants throughout the United States, 37 international Chipotle
restaurants, and two non-Chipotle restaurants. We are committed to making our food more accessible to everyone while
continuing to be a brand with a demonstrated purpose.

2018 Financial and Operational Highlights
Sales Trends. Average restaurant sales were $2.004 million for the year ended December 31, 2018, an increase from
$1.940 million for the year ended December 30, 2017. We define average restaurant sales as the average trailing 12-month
sales for restaurants in operation for at least 12 full calendar months.

Comparable restaurant sales increased 4.0% for the full year 2018 and increased 6.1%, which included a 2% increase in
comparable restaurant transactions, for the three months ended December 31, 2018. Comparable restaurant sales and
comparable restaurant transactions represent the change in period-over-period sales or paid transactions for restaurants in
operation for at least 13 full calendar months. We expect our full year 2019 comparable restaurant sales increases to be in
the mid-single digit range.

We continue to invest in improving our digital platforms and equipping select restaurants with an upgraded second make
line dedicated to fulfilling out-of-restaurant orders. Sales from out-of-restaurant orders, including delivery orders, increased
260 basis points to 10.9% of revenue for the full year 2018, an increase from 8.3% of revenue for the full year 2017.

Restaurant Operating Costs. During the full year 2018, our restaurant operating costs (food, beverage and packaging; labor;
occupancy; and other operating costs) as a percentage of revenue decreased 180 basis points to 81.3% compared to the full
year 2017. The decrease was primarily due to comparable restaurant sales increases combined with lower marketing and
promotional expenses, partially offset by wage inflation at the crew level.

Corporate Restructuring. During 2018, we opened a new headquarters office in Newport Beach, California, consolidated
certain corporate administrative functions into our existing office in Columbus, Ohio, closed a corporate office in New York,
New York, and commenced the closure of our previous headquarters office in Denver, Colorado. All affected employees
were either offered an opportunity to continue in the new organization or were offered a severance package. We expect to
incur total corporate restructuring costs, including costs already incurred, aggregating approximately $48 million to
$58 million including (i) employee severance and other employee transition costs of approximately $8 million to $10 million;
(ii) recruitment and relocation costs of approximately $12 million to $14 million; (iii) lease termination and other office
closure costs of approximately $17 million to $22 million; and (iv) third-party and other costs of approximately $11 million to
$12 million. We recognized a total of $42.6 million of the foregoing costs during 2018, and expect to incur additional
corporate restructuring costs into 2019 aggregating approximately $5 million to $15 million. For additional information,
please see Note 5. “Corporate Restructuring Costs” in the notes to the consolidated financial statements included in Item 8.
“Financial Statements and Supplementary Data” as well as “Risks Unique to Our Business Strategy — Our restructuring
activities will increase our expenses, may not be successful, and may adversely impact employee hiring and retention” in
Item 1A. “Risk Factors”.

Restaurant Closures. In June 2018, we announced planned restaurant closures of approximately 55 to 65 restaurants
beginning in the second quarter of 2018 and continuing over the next several quarters. During the twelve months ended
December 31, 2018, we closed or relocated 45 Chipotle restaurants and five Pizzeria Locale restaurants in connection with
this initiative. We expect to incur total restaurant exit costs, inclusive of costs already incurred, aggregating approximately

2018 Annual Report 29

PART II
(continued)

$37 million to $43 million. We recognized restaurant exit costs of approximately $35.8 million during 2018, and expect to
incur additional restaurant exit costs into 2019 aggregating approximately $1 million to $7 million. For additional
information, please see Note 6. “Restaurant Closure Costs and Impairment of Long-Lived Assets” in the notes to the
consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data”, as well as “Risks
Unique to Our Business Strategy — Our restructuring activities will increase our expenses, may not be successful, and may
adversely impact employee hiring and retention” in Item 1A. “Risk Factors”.

Restaurant Development. For the full year 2018, we opened 137 new restaurants. We expect 2019 openings will be
approximately 140 to 155 with a heavier weighting of openings towards the second half of the year.

Management Enhancements. Brian Niccol joined us as Chief Executive Officer and as a member of the Board in March 2018;
added a new Chief Marketing Officer, Chris Brandt and our first Chief People Officer, Marissa Andrada, in April 2018; added
our first Chief Legal Officer and General Counsel, Roger Theodoredis, in October 2018; and added a new Chief Development
Officer, Tabassum Zalotrawala in December 2018.

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

Beginning of period

Openings

Chipotle closures/relocations

TastyMade closures

ShopHouse closures

Pizzeria Locale closures

Total restaurants at end of period

Year ended
December 31,

2018

2017

2016

2,408

2,250

2,010

137

(48)

(1)

—

(5)

183

(10)

—

(15)

—

243

(3)

—

—

—

2,491

2,408

2,250

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,

Percentage Change

2018

2017

2016

2018/2017

2017/2016

(dollars in millions)

$4,865.0 $4,476.4 $3,904.4

$ 2.004 $ 1.940 $ 1.868

8.7%

3.3%

14.7%

3.9%

Comparable restaurant sales increases

4.0%

6.4%

(20.4%)

The significant factors contributing to the increase in revenue in 2018 were new restaurant openings and comparable
restaurant sales increases. Revenue from restaurants not yet in the comparable restaurant base contributed $237.4 million
to the revenue increase, of which $112.1 million was attributable to restaurants opened in 2018, and comparable restaurant
sales increased $151.2 million. The increase in comparable restaurant sales was attributable to an increase in average check,
including a 4.0% benefit from menu price increases, partially offset by 0.8% fewer comparable restaurant transactions.

30 2018 Annual Report

PART II
(continued)

The significant factors contributing to the increase in revenue in 2017 were comparable restaurant sales increases and new
restaurant openings. 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.

Food, Beverage and Packaging Costs

Food, beverage and packaging

As a percentage of revenue

Year ended
December 31,

Percentage Change

2018

2017

2016

2018/2017

2017/2016

(dollars in millions)

$1,600.8

$1,535.4

$1,365.6

32.9%

34.3%

35.0%

4.3%

(1.4%)

12.4%

(0.7%)

Food, beverage and packaging costs decreased as a percentage of revenue in 2018 primarily due to the benefit of menu
price increases taken in select restaurants in 2017 and again at the end of 2018. Food, beverage and packaging costs also
benefitted from favorable avocado prices. These decreases were partially offset by increased freight costs, and to a lesser
extent increased costs for tortillas and rice.

Food, beverage and packaging costs decreased as a percentage of revenue in 2017 primarily due to the benefit of 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.

Labor Costs

Labor costs

As a percentage of revenue

Year ended December 31,

Percentage Change

2018

2017

2016

2018/2017

2017/2016

(dollars in millions)

$1,326.1

$1,206.0

$1,105.0

27.3%

26.9%

28.3%

10.0%

0.3%

9.1%

(1.4%)

Labor costs increased as a percentage of revenue in 2018 primarily due to an increase in wage inflation. The increase was
partially offset by sales leverage as our revenues increased 8.7% in 2018, which included the benefit of menu price
increases.

Labor costs as a percentage of revenue decreased during 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.

Occupancy Costs

Occupancy costs

As a percentage of revenue

Year ended December 31,

Percentage Change

2018

2017

2016

2018/2017

2017/2016

(dollars in millions)

$347.1

$327.1

$293.6

6.1%

7.1%

7.3%

7.5%

(0.2%)

11.4%

(0.2%)

Occupancy costs as a percentage of revenue decreased in 2018 and 2017 primarily due to sales leverage on a largely fixed-
cost base.

2018 Annual Report 31

PART II
(continued)

Other Operating Costs

Other operating costs

As a percentage of revenue

Year ended December 31,

Percentage Change

2018

2017

2016

2018/2017 2017/2016

(dollars in millions)

$680.0

$651.6

$642.0

4.4%

14.0%

14.6%

16.4%

(0.6%)

1.5%

(1.9%)

Other operating costs include, among other items, marketing and promotional costs, bank and credit card processing fees,
and restaurant utilities and maintenance costs. Other operating costs decreased as a percentage of revenue in 2018 due
primarily to sales leverage, including the benefit of menu price increases, and to a lesser extent marketing and promotional
spend decreasing from 3.5% of revenue in 2017 to 2.9% of revenue in 2018. This is partially offset by increased costs
associated with store repairs and maintenance, and delivery.

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.

General and Administrative Expenses

General and administrative expense

As a percentage of revenue

Year ended December 31,

Percentage Change

2018

2017

2016

2018/2017 2017/2016

(dollars in millions)

$375.5

$296.4

$276.2

7.7%

6.6%

7.1%

26.7%

1.1%

7.3%

(0.5%)

General and administrative expenses increased in dollar terms in 2018, due to $32.1 million related to the corporate
restructuring and other unusual charges, $21.4 million related to higher costs associated with our annual incentive cash
bonus program and retention bonuses, $10.9 million associated with the biennial All Managers’ Conference that was held in
September 2018, $3.8 million in higher stock compensation expense, and the remaining increase primarily relates to general
and administrative growth to support our restaurant growth and digitizing our restaurant experience. These increases were
partially offset by the benefit of comparing against a non-recurring charge of $30.0 million recorded in the third quarter of
2017 related to the data security incident in the second quarter of 2017.

General and administrative expenses increased in dollar terms in 2017, due to the liability of $30.0 million for the data
security incident that occurred in 2017, increased bonus costs and higher non-cash stock-based compensation expense of
$11.8 million. The increase was partially offset by a decrease of $10.5 million in legal expenses, and decreased meeting costs
of $9.1 million primarily 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.

Depreciation and Amortization

Depreciation and amortization

As a percentage of revenue

Year ended December 31,

Percentage Change

2018

2017

2016

2018/2017 2017/2016

(dollars in millions)

$202.0

$163.3

$146.4

4.2%

3.6%

3.7%

23.6%

0.5%

11.6%

(0.1%)

Depreciation and amortization increased as a percentage of revenue in 2018 due primarily to accelerated depreciation on
certain restaurant assets in connection with a large restaurant refresh project and from the restaurant closures described
above under “2018 Financial and Operating Highlights — Restaurant Closures.”

32 2018 Annual Report

PART II
(continued)

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

Loss on Disposal and Impairment of Assets

Year ended
December 31,

Percentage Change

2018

2017

2016

2018/2017 2017/2016

(dollars in millions)

Impairment, closure costs, and asset disposals

$66.6

$13.3

$23.9

399.4%

As a percentage of revenue

1.4%

0.3%

0.6%

1.1%

(44.1%)

(0.3%)

Impairment, closure costs, and asset disposals increased in dollar terms in 2018 primarily due to the planned closures of
underperforming restaurants that began in the second quarter of 2018, offices affected by corporate restructuring, and the
write down of a large portion of the associated long-lived asset values, which are discussed above under “2018 Financial and
Operational Highlights—Corporate Restructuring” and “— Restaurant Closures.”

Impairment, closure costs, and asset disposals during 2017 consisted primarily of charges related to the closure of
underperforming Chipotle restaurants and the replacement of certain kitchen equipment. This was a decrease from the
prior year due to the closing of all Shophouse restaurants in 2016.

Income Tax Provision

Provision for income taxes

Effective tax rate

Year ended
December 31,

Percentage Change

2018

2017

2016

2018/2017 2017/2016

(dollars in millions)

$ 91.9

$99.5

$ 15.8

(7.6%)

529.6%

34.2%

36.1%

40.8%

The 2018 annual effective tax rate was lower than the 2017 rate primarily due to the favorable impacts of the Tax Cuts and
Jobs Act that was enacted in December 2017 and federal tax credits offset by unfavorable tax impacts of expirations and
cancellations of various equity awards.

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.

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, 2018. The operating results for any quarter are not necessarily indicative of the results for any
subsequent quarter.

Revenue

Operating income

Net income

2018 Quarters Ended

March 31

June 30

September 30

December 31

$1,148.4

$1,266.5

$ 92.8

$ 68.0

$ 59.4

$ 46.9

$1,225.0

$ 58.0

$

38.2

$1,225.1

$ 39.6

$ 32.0

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

Comparable restaurant sales increase

33

2.2%

26

3.3%

(4)

4.4%

28

6.1%

2018 Annual Report 33

PART II
(continued)

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%

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
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 or promotional activities and other marketing initiatives. 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
Cash flows generated from operating activities are our principal source of liquidity, which we use to finance new restaurant
construction, initiatives to improve the guest experience in our restaurants, working capital, and general corporate needs.
As of December 31, 2018, we had a cash and cash equivalent and short-term investment balance of $676.8 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, 2018, there was $57.6 million remaining available under
previously-announced stock repurchase authorizations approved by our Board of Directors. We announced $100 million in
additional repurchase authorizations in February 2019. Under the 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 have not 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 2018 were $287.4 million. In 2018, we spent on average about $0.9 million in development
and construction costs per new restaurant, or about $0.8 million net of landlord reimbursements of $0.1 million. In 2019, 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 $130 million in capital expenditures related to our construction of new
restaurants, before any reductions for landlord reimbursements. For new restaurants to be opened in 2019, we anticipate

34 2018 Annual Report

PART II
(continued)

average development costs will increase due to strategic initiatives planned in new restaurants such as a pickup lane and an
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, 2018 were as follows:

Operating leases(1)

Purchase obligations(2)

Deemed landlord financing(1)

Total

Payments Due by Fiscal Year

Total

2019

2020-2021

2022-2023

Thereafter

(in thousands)

$3,950,378

$ 294,191

$ 591,520

$586,270

$2,478,397

$ 884,490

$ 584,941

$ 198,337

$ 101,212

$

3,049

$

423

$

889

$

906

$

$

—

831

$ 4,837,917

$879,555

$790,746

$688,388

$2,479,228

(1) See Note 11. “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, including the accrued liability related to the data security incident described elsewhere, due to
uncertainty regarding the timing and amount of payment. See Note 13. “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, 2018 and 2017, 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 or negative consumer responses 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

2018 Annual Report 35

PART II
(continued)

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. In addition, tenant incentives used to fund leasehold improvements are recognized when
earned and recorded in deferred rent and amortized as reductions of rent expense 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.

We record a liability for lease termination costs consisting of the net present value of remaining lease obligations, net of
estimated sublease rentals that could be reasonably obtained, at the date we cease using a property, and measure fair value
using Level 3 inputs (unobservable inputs) based on a discounted cash flow method. Any subsequent adjustments to that
liability as a result of lease termination or changes in estimates of sublease income are recorded in the period incurred. If
the estimate of sublease income was changed, our lease termination expenses could differ materially.

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.

The fair value measurement for asset impairment is based on Level 3 inputs. We first compare the carrying value of the
asset to the asset’s estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than
the carrying value of the asset, we determine if we have an impairment loss by comparing the carrying value of the asset to
the asset’s estimated fair value. The estimated fair value of the asset is generally determined using a discounted cash flow
projection model. In certain cases, management uses other market information, when available, to estimate the fair value of
an asset. The impairment charges represent the excess of each asset’s carrying amount over its estimated fair value. We
make significant judgments to estimate future undiscounted cash flows and asset fair values. Estimates of future cash flows
are highly subjective judgments based on internal projections and knowledge of our operations, historical performance, and
trends in sales and restaurant operating costs, and can be significantly impacted by changes in our business or economic
conditions. The determination of asset fair value is also subject to significant judgment and utilizes valuation techniques
including discounting estimated future cash flows and market-based analyses to determine resale value. If our estimates or
underlying assumptions, including discount rate, change in the future, our operating results may be materially impacted.

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 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
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.

36 2018 Annual Report

PART II
(continued)

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. Predetermined loss limits have been arranged with third party
insurance companies 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. 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.

Reserves/Contingencies for Litigation and Other Matters
We are involved in various claims and legal actions that arise in the ordinary course of business. We record an accrual for
legal contingencies when we determine that it is probable that we have incurred a liability and we can reasonably estimate
the amount of the loss. 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.

Income Taxes
Our provision for income taxes requires the use of estimates in determining the timing and amounts of deductible and
taxable items including impacts on effective tax rates, deferred tax items and valuation allowances based on our
management’s interpretation and application of complex tax laws and accounting guidance. We establish reserves for
uncertain tax positions for material, known tax exposures relating to deductions, transactions and other matters involving
some uncertainty as to the measurement and recognition of the item. While we believe that our reserves are adequate,
issues raised by a tax authority may be finally resolved at an amount different than the related reserve and could materially
increase or decrease our income tax provision in the current and/or future periods.

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 36 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
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, 2018,

2018 Annual Report 37

PART II
(continued)

we had $650.7 million in investments and interest-bearing cash accounts, including insurance-related restricted trust
accounts classified in restricted cash, and $35.3 million in accounts with an earnings credit we classify as interest and other
income, which combined earned a weighted average interest rate of 2.2%.

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.

38 2018 Annual Report

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, 2018 and 2017

40

41

Consolidated Statement of Income and Consolidated Statement of Comprehensive
Income for the years ended December 31, 2018, 2017 and 2016

42

Consolidated Statement of Shareholders’ Equity for the years ended December 31,
2018, 2017 and 2016

43

Consolidated Statement of Cash Flows for the years ended December 31, 2018,
2017 and 2016

Notes to Consolidated Financial Statements

44

45

2018 Annual Report 39

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 sheets of Chipotle Mexican Grill, Inc. (the Company) as of
December 31, 2018 and 2017, 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, 2018, and the related notes (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2018, 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 States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, 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 7, 2019 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.

Irvine, California
February 7, 2019

40 2018 Annual Report

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

Inventory

Prepaid expenses and other current assets

Income tax receivable

Investments

Total current assets

Leasehold improvements, property and equipment, net

Restricted cash

Other assets

Goodwill

Total assets

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable

Accrued payroll and benefits

Accrued liabilities

Unearned revenue

Income tax payable

Total current liabilities

Commitments and contingencies (Note 13)

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, 2018 and 2017, respectively

Common stock, $0.01 par value, 230,000 shares authorized, 35,973 and 35,852 shares
issued as of December 31, 2018 and 2017, respectively

Additional paid-in capital

Treasury stock, at cost, 8,276 and 7,826 common shares at December 31, 2018 and 2017,
respectively

Accumulated other comprehensive income (loss)

Retained earnings

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying notes to consolidated financial statements.

December 31,

2018

2017

$

249,953 $

184,569

62,312

21,555

54,129

—

426,845

814,794

40,453

19,860

50,918

9,353

324,382

629,535

1,379,254

1,338,366

30,199

19,332

21,939

29,601

26,251

21,939

$ 2,265,518 $ 2,045,692

$

113,071 $

82,028

113,467

147,849

70,474

5,129

82,541

95,679

63,645

—

449,990

323,893

330,985

316,498

11,566

31,638

824,179

814

40,042

681,247

—

360

—

359

1,374,154

1,305,090

(2,500,556)

(2,334,409)

(6,236)

(3,659)

2,573,617

2,397,064

1,441,339

1,364,445

$ 2,265,518 $ 2,045,692

2018 Annual Report 41

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

Impairment, closure costs, and asset disposals

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,

2018

2017

2016

$4,864,985

$4,476,412

$3,904,384

1,600,760

1,535,428

1,365,580

1,326,079

1,205,992

1,105,001

347,123

680,031

327,132

651,644

375,460

296,388

201,979

163,348

8,546

66,639

12,341

13,345

293,636

641,953

276,240

146,368

17,162

23,877

4,606,617

4,205,618

3,869,817

258,368

270,794

10,068

4,949

268,436

275,743

(91,883)

(99,490)

176,553

$ 176,253

6.35

6.31

$

$

6.19

6.17

34,567

4,172

38,739

(15,801)

22,938

0.78

0.77

$

$

$

$

$

$

27,823

27,962

28,491

28,561

29,265

29,770

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.

42 2018 Annual Report

Year ended December 31,

2018

2017

2016

$176,553

$ 176,253

$22,938

(2,736)

4,689

291

(132)

(274)

88

(2,577)

4,503

(1,291)

2,251

(849)

111

$173,976

$180,756

$23,049

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, 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

Stock-based compensation

Stock plan transactions and other

121

1

69,947

(883)

Acquisition of treasury stock

Net income

Other comprehensive income
(loss), net of income tax

450

(166,147)

176,553

69,947

(882)

(166,147)

176,553

159

(2,736)

(2,577)

Balance, December 31, 2018

35,973

$360

$ 1,374,154 8,276 $(2,500,556) $ 2,573,617

$ (147)

$(6,089) $ 1,441,339

See accompanying notes to consolidated financial statements.

2018 Annual Report 43

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
Impairment, closure costs, and asset disposals
Bad debt allowance
Stock-based compensation expense
Other

Changes in operating assets and liabilities:

Accounts receivable
Inventory
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued payroll and benefits
Accrued liabilities
Unearned revenue
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
Tax withholding on share-based compensation awards
Stock plan transactions and other financing activities
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents and restricted cash
Net change in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period
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

Year ended December 31,

2018

2017
(as
adjusted)(1)

2016
(as
adjusted)(1)

$ 176,553

$ 176,253

$ 22,938

201,979
10,585
61,987
125
69,164
(2,918)

(8,298)
(1,722)
(3,811)
(2,005)
32,080
29,568
14,831
6,829
14,439
21,297
869
621,552

163,348
(18,026)
13,345
214
65,255
(218)

(140)
(5,250)
(6,710)
(1,476)
10,908
6,188
28,179
4,207
(4,173)
29,996
6,316
468,216

146,368
(14,207)
23,877
(262)
64,166
(1,924)

(1,923)
(91)
(4,259)
1,063
(6,734)
11,416
13,692
8,383
54,340
37,030
1,287
355,160

(287,390)
(485,188)
385,000
—
(387,578)

(216,777)
(199,801)
330,000
—
(86,578)

(258,842)
—
45,000
540,648
326,806

(160,937)
(5,411)
(187)
(166,535)
(1,457)
65,982
214,170
$ 280,152

(285,218)
(702)
26
(285,894)
2,056
97,800
116,370
$ 214,170

(836,760)
(895)
1,372
(836,283)
110
(154,207)
270,577
$ 116,370

$ 67,053

$ 119,787

$ 23,862

$
$

(936) $
$
200

(7,690) $

(1,781)
(900) $ (22,778)

(1) Balances were adjusted due to the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-18, “Statement of Cash Flows
(Topic 230): Restricted Cash” as discussed in further detail in Note 1. “Description of Business and Summary of Significant Accounting Policies Recent
Accounting Standards”

See accompanying notes to consolidated financial statements.

44 2018 Annual Report

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 relevant
menu of burritos, burrito bowls, tacos, and salads, made
using fresh, high-quality ingredients. As of December 31,
2018, we operated 2,452 Chipotle restaurants throughout
the United States as well as 37 international Chipotle
restaurants and two non-Chipotle restaurants. We manage
our operations and restaurants based on eight regions that
aggregate into one reportable segment.

Principles of Consolidation and Basis of
Presentation
Our consolidated financial statements include our accounts
and our wholly and majority owned subsidiaries after
elimination of all intercompany accounts and transactions.

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 the
disclosure of contingent assets and liabilities as of the date
of the financial statements, as well as 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 generally recognize revenue, net of discounts and
incentives, when payment is tendered at the point of
sale. We report revenue net of sales-related taxes collected
from customers and remitted to governmental taxing
authorities. 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 on the consolidated statements of income and in
accrued liabilities on the consolidated balance sheets.

Delivery
We offer our customers delivery in certain geographic
regions. Delivery services are fulfilled by third-party service
providers. In some cases, we make delivery sales through
Chipotle.com or the Chipotle App (“White Label Sales”). In
other cases, we make delivery sales through a non-Chipotle
owned channel, such as the delivery partner’s website or
app (“Marketplace Sales”). With respect to White Label
Sales, we control the delivery services and generally
recognize revenue, including delivery fees, when the
delivery partner transfers food to the customer. For these
sales, we receive payment directly from the customer at
the time of sale. With respect to Marketplace Sales, we
generally recognize revenue, excluding delivery fees, when
control of the food is transferred to the delivery partner
and we receive payment subsequent to the transfer of
food. The payment terms with respect to Marketplace Sales
are short-term in nature.

Gift Cards
We sell gift cards, which do not have expiration dates and
we do not deduct non-usage fees from outstanding gift
card balances. We recognize revenue from gift cards when
the gift card is redeemed by the customer. In addition, we
also recognize revenue when 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. Gift card breakage is recognized in revenue as
the gift cards are used on a pro rata basis over an eight-
month period beginning at the date of the gift card sale and
is included in revenue on the consolidated statement of
income. We have determined that 4% of gift card sales will
not be redeemed and will be retained by us. Gift card
liability balances are typically highest at the end of each
calendar year following increased gift card sales during the
holiday season; accordingly, revenue recognized from gift
card liability balances is highest in the first quarter of each
calendar year.

Chipotle Rewards
Effective October 2018, we launched a loyalty program,
Chipotle Rewards, in three test markets. Eligible customers
who enroll in the program generally earn points for every
dollar spent. After accumulating a certain number of points,
the customer earns a reward that can be redeemed for a
free entrée. We may also periodically offer promotions,
which provide the customer with the opportunity to earn
bonus points or free food. Earned rewards generally expire
one to six months after they are issued, and points
generally expire if an account is inactive for a period of six
months.

2018 Annual Report 45

PART II
(continued)

We defer revenue associated with the estimated selling
price of points earned by program members as each point
is earned. The estimated selling price of each point earned
is based on the estimated value of product for which the
reward is expected to be redeemed, net of points we do not
expect to be redeemed. Our estimate of points we expect to
be redeemed is based on historical company specific data.
We recognize loyalty revenue when a customer redeems an
earned reward. Deferred revenue associated with Chipotle
Rewards is included in unearned revenue in our
consolidated balance sheet.

Cash and Cash Equivalents
We consider 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 that exceed federally-insured limits
with a number of financial institutions.

Restricted Cash
We maintain certain cash balances restricted as to
withdrawal or use. Restricted cash assets are primarily
insurance-related restricted trust assets.

Accounts Receivable
Accounts receivable primarily consists of receivables from
third party gift card distributors, tenant improvement
receivables from landlords, vendor rebates, delivery
receivables 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. The allowance for
doubtful accounts is zero for December 31, 2018 and 2017,
respectively.

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

46 2018 Annual Report

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 $6,285 and $7,507 as of
December 31, 2018 and 2017, 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 include
option periods that are reasonably assured, 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
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

Goodwill
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. No impairment charges were
recognized on goodwill for the years ended December 31,
2018, 2017 and 2016.

Other Assets
Other assets consist primarily of a rabbi trust as described
further in Note 10. “Employee Benefit Plans,” transferable
liquor licenses which are carried at the lower of fair value
or cost, fixed asset deposits, and rental deposits related to
leased properties.

PART II
(continued)

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.

The fair value measurement for asset impairment is based
on Level 3 inputs. See “Fair Value Measurements” below
for a description of level inputs. We first compare the
carrying value of the asset to the asset’s estimated future
undiscounted cash flows. If the estimated undiscounted
future cash flows are less than the carrying value of the
asset, we determine if we have an impairment loss by
comparing the carrying value of the asset to the asset’s
estimated fair value. The estimated fair value of the asset is
generally determined using a discounted cash flow
projection model. In certain cases, management uses other
market information, when available, to estimate the fair
value of an asset. The impairment charges represent the
excess of each asset’s carrying amount over its estimated
fair value.

Income Taxes
We compute income taxes using the asset and liability
method, under which deferred income tax assets and
liabilities are recognized based on the differences between
the financial reporting bases and the respective tax bases
of assets and liabilities. Deferred tax assets and liabilities
are measured using current enacted tax rates expected to
apply to taxable income in the years in which we expect the
temporary differences to reverse. Any effects of changes in
income tax rates or tax laws are included in the provision
for income taxes in the period that includes the enactment
date.

We routinely assess the realizability of our deferred tax
assets by jurisdiction and may record a valuation allowance
if, based on all available positive and negative evidence, we
determine that some portion of the deferred tax assets
may not be realized prior to expiration. If we determine
that we may be able to realize our deferred tax assets in
the future in excess of their net recorded amount, we would
make an adjustment to the deferred tax asset valuation
allowance, which would reduce the provision for income
taxes during the period in which the determination was
made that the deferred tax asset can be realized.

We evaluate our tax exposures associated with our various
tax filing positions and recognize a tax benefit from an
uncertain tax position only if it is more likely than not that
based on its technical merits the tax position will be
sustained upon examination by the relevant taxing
authorities, including resolutions of any related appeals or
litigation processes. The tax benefits recognized in the
financial statements from such a position are measured
based on the largest tax benefit that has a greater than
50% likelihood of being realized upon settlement with a
taxing authority. For uncertain tax positions that do not
meet this threshold, we record a related tax liability in the
period in which it arises. We adjust our unrecognized tax
benefit liability and income tax expense in the period in
which the uncertain tax position is effectively settled, the
statute of limitations expires for the relevant taxing
authority to examine the tax position or when new
information becomes available that requires a change in
recognition and/or measurement of the liability.

We 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 our
consolidated statement of income. Accrued interest and
penalties are included within the related tax liability on our
consolidated balance sheet.

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’
compensation, general liability, employee health, property
and auto damage. Predetermined loss limits have been
arranged with third party insurance companies 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.

2018 Annual Report 47

PART II
(continued)

Reserves/Contingencies for Litigation and Other
Matters
We are involved in various claims and legal actions that
arise in the ordinary course of business. We record an
accrual for legal contingencies when we determine that it is
probable that we have incurred a liability and we can
reasonably estimate the amount of the loss.

Advertising and Marketing Costs
Advertising and marketing costs are expensed as incurred
and totaled $111,695, $106,345 and $102,969 for the years
ended December 31, 2018, 2017 and 2016, respectively.
Advertising and marketing costs are included in other
operating costs on 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 on the consolidated
balance sheet. Pre-opening rent is included in pre-opening
costs on 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.

We record a liability for lease termination costs at the date
we cease using a property, consisting of the net present
value of remaining lease obligations, net of estimated
sublease rentals that could be reasonably obtained, and
measure fair value using Level 3 inputs (unobservable
inputs) based on a discounted cash flow method. Any
subsequent adjustments to that liability as a result of lease
termination or changes in estimates of sublease income are
recorded in the period incurred.

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
Plan”). Stock-only stock appreciation rights, or SOSARs,
and stock awards generally vest equally over two and three

48 2018 Annual Report

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 on the consolidated balance sheet.

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 for the asset or liability.
This includes certain pricing models, discounted cash
flow methodologies and similar techniques that use
significant unobservable inputs.

PART II
(continued)

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) on the
consolidated statement of comprehensive income.

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 are
antidilutive.

Recently Issued Accounting Standards
In August 2018, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update (“ASU”)
No. 2018-15, “Intangibles — Goodwill and Other —
Internal-Use Software (Subtopic 350-40)”: Customer’s
Accounting for Implementation Costs Incurred in a Cloud
Computing Arrangement That Is a Service Contract, which
clarifies the accounting for implementation costs in cloud
computing arrangements. ASU 2018-15 is effective for us in
the first quarter of fiscal 2020, and early adoption is
permitted. The adoption of ASU 2018-15 is still being
evaluated on our consolidated financial statements.

In February 2016, FASB issued ASU 2016-02, “Leases
(Topic 842),” and issued additional clarifications and
improvements throughout 2018. The pronouncement
requires lessees to recognize a liability for lease
obligations, which represents 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 that is intended to give financial statement
users the ability to assess the amount, timing, and potential
uncertainty of cash flows related to leases. We have
adopted the requirements of the new lease standard

effective January 1, 2019. We have elected the optional
transition method to apply the standard as of the effective
date and therefore, we will not apply the standard to the
comparative periods presented in our financial statements.
At the beginning of the period of adoption, we will
recognize a cumulative-effect adjustment in retained
earnings due to impairment of certain right-of-use assets at
the effective date. We will elect the transition package of
three practical expedients permitted within the standard,
which eliminates the requirements to reassess prior
conclusions about lease identification, lease classification,
and initial direct costs. We will not elect the hindsight
practical expedient, which permits the use of hindsight
when determining lease term and impairment of
right-of-use assets. Further, we will elect a short-term lease
exception policy, permitting us to not apply the recognition
requirements of this standard to short-term leases (i.e.
leases with terms of 12 months or less) and an accounting
policy to account for lease and non-lease components as a
single component for certain classes of assets. We are
finalizing the impact of the standard to our accounting
policies, processes, disclosures, and internal control over
financial reporting and have implemented necessary
upgrades to our existing lease system.

The adoption of ASU 2016-02 will have a significant impact
on our consolidated balance sheet as we will record
material assets and obligations primarily related to
approximately 2,500 restaurant operating leases and
corporate office leases. We expect to record operating
lease liabilities of approximately $2.7 billion based on the
present value of the remaining minimum rental payments
using discount rates as of the effective date. We expect to
record corresponding right-of-use assets of approximately
$2.4 billion, based upon the operating lease liabilities
adjusted for prepaid and deferred rent, unamortized initial
direct costs, liabilities associated with lease termination
costs and impairment of right-of-use assets recognized in
retained earnings as of January 1, 2019. We do not expect a
material impact on our consolidated statement of income
or our consolidated statement of cash flows.

Furthermore, we have evaluated our existing sales and
leaseback transactions, which do not qualify for sale
leaseback accounting under ASC 840, and determined that
these transactions do not qualify for sale leaseback
accounting under ASC 842 due to fixed price renewal
options prohibiting sale accounting. These transactions will
continue to be accounted for under the financing method
upon transition to ASC 842.

We reviewed all other recently issued accounting
pronouncements and concluded that they were either not

2018 Annual Report 49

PART II
(continued)

applicable or not expected to have a significant impact to
the consolidated financial statements.

Accrued payroll and benefits were as follows:

Recently Adopted Accounting Standard
During the first quarter of 2018, we adopted ASU 2014-09
“Revenue from Contracts with Customers (Topic 606),”
which 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. The adoption did not have an impact on the
consolidated balance sheet, statements of income, or cash
flows. The primary impact of adoption was the
enhancement of our disclosures related to gift cards and
certain promotional activity included in Note 1. “Description
of Business and Summary of Significant Accounting
Policies” and Note 3. “Revenue Recognition.”

During the first quarter of 2018, we retrospectively adopted
ASU 2016-18, “Statement of Cash Flows (Topic 230):
Restricted Cash,” which requires restricted cash to be
classified with cash and cash equivalents when reconciling
the beginning of period and end of period total amounts on
the statement of cash flows. Accordingly, we reclassified
$29,601 and $28,490 of restricted cash into cash, cash
equivalents, and restricted cash as of December 31, 2017
and December 31, 2016, for a total balance of $214,170 and
$116,370, which resulted in a $1,111 and $5,918 increase in
net cash provided by operating activities in the
consolidated statement of cash flows for the twelve months
ended December 31, 2017 and December 31, 2016,
respectively. Restricted cash assets are primarily insurance
related restricted trust assets.

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

December 31,

2018

2017

Land

$

12,943

$

12,943

Leasehold improvements and
buildings

Furniture and fixtures

Equipment

Construction in Progress

Leasehold improvements,
property and equipment

1,689,873

1,635,422

173,252

543,869

42,824

166,915

460,138

41,872

2,462,761

2,317,290

Accumulated depreciation

(1,083,507)

(978,924)

Leasehold improvements,
property and equipment, net

$ 1,379,254

$1,338,366

50 2018 Annual Report

December 31,

2018

2017

Workers’ compensation liability

$30,878

$ 34,631

Accrued payroll

35,622

19,666

Other accrued payroll and benefits

46,967

28,244

Accrued payroll and benefits

$113,467

$ 82,541

Accrued liabilities were as follows:

December 31,

2018

2017

Transaction tax payable

$ 21,762

$ 18,920

Data security incident liability

29,289

30,000

Other accrued liabilities

Accrued liabilities

96,798

46,759

$147,849

$ 95,679

3. Revenue Recognition
The gift card liability included in unearned revenue on the
consolidated balance sheets is as follows:

December 31,

2018

2017

Gift card liability

$70,474

$63,645

Revenue recognized on the consolidated statements of
income for the redemption of gift cards that were included
in accrued liabilities at the beginning of the year is as
follows:

Year ended December 31,

2018

2017

2016

Revenue recognized
from gift card liability
balance at the beginning
of the year

$36,094 $37,109

$32,744

We offered a limited-time frequency program called
Chiptopia Summer Rewards during the third quarter of
2016, which allowed customers to redeem certain rewards
earned through the first quarter of 2017. We deferred
revenue reflecting the portion of the original rewards that
were earned by program participants and not redeemed,
and we recorded a corresponding liability on the
consolidated balance sheet. The portion of revenue
allocated to the rewards was based on the estimated
standalone selling price of the award earned and took into
consideration company-specific historical redemption

PART II
(continued)

patterns for similar promotions. Revenue was recognized
as an award was redeemed, or upon expiration. During the
twelve months ended December 31, 2017, we recognized
$5,489 in revenue from the deferred liability for the loyalty
rewards balance. No other material amounts related to
loyalty rewards have been recognized in revenue for any
periods presented.

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

Our investments consist of U.S. treasury notes with
maturities of up to one year. Fair value of investments is
measured using Level 1 inputs. We designate the
appropriate classification of our investments at the time of
purchase based upon the intended holding period.

As of September 30, 2018, we transferred the classification
of our investments from available-for-sale (“AFS”) to
held-to-maturity (“HTM”) due to our ability and intent to
hold these securities to maturity. The transfer from AFS to
HTM was recorded at the fair value of the AFS securities at
the time of transfer. The unrealized holding loss of $303,
net of tax, at the date of transfer was retained in other
comprehensive income (loss) on the consolidated
statement of comprehensive income. Such amounts will be
amortized to interest and other income on the consolidated
statement of income over the remaining life of the
securities. The amortization of this unrealized holding loss
will be offset by the discount created as a result of this
reclassification, which will also be amortized over the
remaining life of the securities to interest and other income
on the consolidated statement of income.

HTM securities are carried at amortized cost, which
approximated fair value as of December 31, 2018. We
recognize impairment charges when management believes
the decline in the fair value of the investment is other-than-
temporary. No impairment charges were recognized on our
investments for the twelve months ended December 31,
2018. The fair value of our investments as of December 31,
2017, which were then classified as AFS, was $324,382,
which included an unrealized loss of $493.

Realized gains and losses on AFS 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, 2018 and 2017, and $547 of realized
gains on AFS securities for the year ended December 31,
2016.

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 10. “Employee Benefit Plans.”

Assets and Liabilities Measured at Fair Value on a
Nonrecurring Basis
Assets recognized or disclosed at fair value on the
consolidated financial statements on a nonrecurring basis
include items such as leasehold improvements, property
and equipment, goodwill, and other intangible assets. These
assets are measured at fair value if determined to be
impaired.

Other than as disclosed in Note 5. “Corporate Restructuring
Costs” and Note 6. “Restaurant Closure Costs and
Impairment of Long-Lived Assets” as of December 31, 2018
and 2017, we had no non-financial assets or liabilities that
were measured using Level 3 inputs.

5. Corporate Restructuring Costs
In May 2018, we announced that we would open a
headquarters office in Newport Beach, California,
consolidate certain corporate administrative functions into
our existing office in Columbus, Ohio, and close our existing
headquarters offices in Denver, Colorado, as well as
additional corporate offices in New York, New York. All
affected employees were either offered an opportunity to
continue in the new organization or were offered a
severance package. We record severance as a one-time
termination benefit and recognize the expense ratably over
the employees’ required future service period. We record a
liability for lease termination costs at the date we cease
using property, consisting of the net present value of
remaining lease obligations, net of estimated sublease
rentals that could be reasonably obtained, and measure fair
value using Level 3 inputs. Any subsequent adjustments to
that liability as a result of lease termination or changes in
estimates of sublease income are recorded in the period
incurred. All other costs, including other employee
transition costs, recruitment and relocation costs, other
office closure costs, and third-party costs, are recognized in
the period incurred.

2018 Annual Report 51

PART II
(continued)

Corporate restructuring costs consist of the following:

Employee severance and other employee transition costs(1)

Recruitment and relocation costs(1)

Lease termination and other office closure costs(2)

Third-party and other costs(1)

Stock-based compensation(1)

Total restructuring costs

Year ended
December 31,
2018

$ 6,919

9,952

15,571

8,836

1,345

$42,623

(1) Recorded in general and administrative expenses on the consolidated statement of income.

(2) Recorded in impairment, closure costs, and asset disposals on the consolidated statement of income.

Changes in our restructuring liability which are included in accrued liabilities on the consolidated balance sheet were as
follows:

Balance
December 31,
2017

Charges

Payments

Balance
December 31,
2018

Employee severance and other employee transition costs

$ —

$ 6,919

$ (4,197)

$ 2,722

Recruitment and relocation costs

Lease termination and other office closure costs

Third-party and other costs

Total restructuring liability

—

—

—

9,952

15,571

8,836

(9,728)

—

(8,282)

224

15,571

554

$ —

$41,278

$(22,207)

$19,071

6. Restaurant Closure Costs and Impairment of Long-Lived Assets
During the year ended December 31, 2018, we closed or relocated a total of 48 underperforming Chipotle restaurants, five
Pizzeria Locale restaurants, and one TastyMade restaurant. As a result, we incurred lease termination, asset impairment
and other closure costs, which were recorded in impairment, closure costs, and asset disposals on the consolidated
statement of income as follows:

Lease termination and other restaurant closure costs

Year ended December 31,

2018

2017

2016

$40,522 $3,284 $17,394

Changes in our lease termination costs liability which is included in accrued liabilities on the consolidated balance sheet
were as follows:

Balance
December 31,
2017

Charges

Payments

Balance
December 31,
2018

Lease termination costs for closed restaurants

$1,416

$13,843

$(4,519)

$10,740

In June 2018, we announced planned restaurant closures of approximately 55 to 65 restaurants beginning in the second
quarter of 2018 and continuing over the next several quarters. As a part of this plan, and included in the total lease
termination and other restaurant closure costs discussed above, we have closed or relocated 45 Chipotle restaurants and
five Pizzeria Locale restaurants.

52 2018 Annual Report

PART II
(continued)

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

defined below) and federal tax credits offset by unfavorable
tax impacts of expirations and cancellations of various
equity awards.

Current tax:

Year ended December 31,

2018

2017

2016

The components of the deferred income tax assets and
liabilities as of December 31, 2018 and 2017 for continuing
operations are as follows:

U.S. Federal

$58,878

$98,208

$ 20,765

U.S. State

Foreign

Deferred tax:

U.S. Federal

U.S. State

Foreign

Valuation allowance

Provision for income
taxes

21,780

18,639

637

669

8,687

556

81,295

117,516

30,008

Deferred income tax liability:

Leasehold improvements,
property and equipment

10,541

(16,201)

(11,596)

Goodwill and other assets

479

(1,559)

(2,546)

Prepaid assets and other

(2,261)

(496)

(2,470)

Total deferred income tax liability

149,705

147,438

8,759

1,829

(18,256)

(16,612)

Deferred income tax asset:

230

2,405

Deferred rent

21.0% 35.0% 35.0%

Valuation allowance

(13,524)

(12,270)

December 31,

2018

2017

$ 144,113

$140,908

1,438

4,154

1,339

5,191

49,481

42,859

5,752

323

4,580

324

65,651

80,447

11,871

5,230

13,355

11,376

5,589

13,719

Gift card liability

Capitalized transaction costs

Stock-based compensation and
other employee benefits

Foreign net operating loss carry-
forwards

State credits

Allowances, reserves and other

Total deferred income tax asset

138,139

146,624

Net deferred income tax liability

$ 11,566

$

814

As of December 31, 2018, we have $1,530 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 increase our effective tax
rates in future periods.

As of December 31, 2018 and 2017, the gross foreign net
operating losses were $54,599 and $50,292 as of
December 31, 2018 and 2017, respectively.

As of December 31, 2018 and 2017, we had gross valuation
allowances of approximately $63,509 and $54,675,
respectively, against certain foreign deferred tax assets.
The increase in the valuation allowance was primarily due
to the recording of a valuation allowance on various foreign
tax attributes.

2018 Annual Report 53

$ 91,883

$99,490

$ 15,801

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

Year ended December 31,

2018

2017

2016

Statutory U.S. federal income
tax rate

State income tax, net of related
federal income tax benefit

Federal credits

Executive compensation
disallowed

Meals and entertainment

Enhanced deduction for food
donation

Valuation allowance

Other

Effects of the TCJA

Return to provision and other
discrete items

Equity compensation related
adjustments

6.6

(2.1)

1.4

0.1

4.4

(1.5)

13.3

(10.1)

—

—

—

—

(0.1)

(0.2)

(2.4)

0.7

3.5

—

0.1

1.5

(2.3)

6.0

6.2

—

1.1

(0.9)

(7.2)

2.0

—

—

Effective income tax rate

34.2% 36.1% 40.8%

The 2018 annual effective tax rate was lower than the 2017
rate primarily due to the favorable impacts of the TCJA (as

PART II
(continued)

Unrecognized Tax Benefits
A reconciliation of the unrecognized tax benefits is as
follows:

Year ended December 31,

2018

2017

2016

Beginning of year

$8,937

$ 4,211

$3,776

Increase resulting from
current year tax position

Lapsing of statutes of
limitations

751

4,726

435

(328)

—

—

End of year

$9,360

$8,937

$ 4,211

Interest expense related to uncertain tax positions is
recognized in interest expense, and penalties related to
uncertain tax positions are recognized in income tax
expense. During the years ended December 31, 2018, 2017,
and 2016, we recognized $536, $364, and $430,
respectively, in interest expense related to uncertain tax
positions. These balances are gross amounts before any tax
benefits and are included in other liabilities in the
accompanying consolidated balance sheets. We have
accrued $1,329 and $794 for the payment of interest at
December 31, 2018 and 2017, respectively.

taxes, the amount of those earnings held in cash, and other
specified assets and foreign tax pools. Based on our
analysis of our total post-1986 accumulated foreign
earnings and profits that were previously deferred from
U.S. income taxes, the amount of those earnings held in
cash, and other specified assets and foreign tax pools, we
have determined a one-time transition tax of $0.

8. Shareholders’ Equity
Through December 31, 2018, 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 $2.5 billion.
On February 6, 2019, we announced that our Board of
Directors authorized the repurchase of up to an additional
$100,000 for repurchase of shares of common stock. Under
the remaining repurchase authorizations, shares may be
purchased from time to time in open market transactions,
subject to market conditions.

As of December 31, 2018, $57,551 was available to be
repurchased under previously-announced repurchase
programs. Shares repurchased are being held in treasury
stock until they are reissued or retired at the discretion of
the Board of Directors.

We are no longer subject to U.S. federal tax examinations
by tax authorities for tax years before 2015. 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 2015. Currently, we expect expirations
of statutes of limitations, excluding indemnified amounts,
on reserves of approximately $767 within the next twelve
months.

During 2018, 2017, and 2016, 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.

It is reasonably possible the amount of the unrecognized
benefit with respect to certain unrecognized positions
could significantly increase or decrease within the next
twelve months and would have an impact on net income.

Tax Cuts and Jobs Act
Effective for tax years beginning after December 31, 2017,
the U.S. corporate income tax rate is 21% pursuant to the
Tax Cuts and Jobs Act (“TCJA”), that was signed into law
December 2017. As of December 31, 2018, we have
completed our accounting for the tax effects of the TCJA
and recorded cumulative tax adjustments of $6,446 in
accordance with SAB 118 guidance.

In connection with the TCJA, a one-time transition tax is
assessed on total post-1986 accumulated foreign earnings
and profits that were previously deferred from U.S. income

9. Stock-Based Compensation
Pursuant to the 2011 Incentive Plan, we grant stock options,
SOSARs, restricted stock units (“RSUs”), or performance/
market based restricted stock units (“PSUs”) to employees
and non-employee directors. We issue shares of common
stock upon the exercise of SOSARs and the vesting of RSUs
and PSUs.

Under the 2011 Incentive Plan, 6,830 shares of common
stock have been authorized and reserved for issuance to
eligible participants, of which 2,626 shares were authorized
for issuance but not issued or subject to outstanding
awards at December 31, 2018. For purposes of calculating
the available shares remaining under the 2011 Incentive
Plan, each share issuable pursuant to outstanding full value
awards, such as RSUs and PSUs, counts as two shares, and
each share underlying a stock option or SOSAR count as

54 2018 Annual Report

PART II
(continued)

one share. 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.

Stock-based compensation expense recognized in the consolidated financial statements was as follows:

Stock-based compensation expense

Stock-based compensation expense, net of tax

Year ended December 31,

2018

2017

2016

$69,947

$66,396

$ 65,112

$ 51,544

$40,370

$35,974

Stock-based compensation expense recognized as capitalized development

$

783

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

$ (6,162)

$

$

1,141

448

$

$

946

—

SOSARs
SOSAR activity under the 2011 Stock Incentive Plan (in thousands, except years and per share data) was as follows:

2018

2017

2016

Outstanding, beginning of year

Granted

Exercised

Forfeited or cancelled

Expired

Outstanding, end of year

Weighted-Average
Exercise Price Per
Share

$480.09

$ 396.66

$ 353.98

$ 489.14

$ 437.62

$ 474.51

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

1,999

741

(408)

(180)

(1)

2,151

Outstanding as of December 31, 2018

Vested and expected to vest as of December 31, 2018

Exercisable as of December 31, 2018

Weighted-Average
Exercise Price
Per Share

$ 474.51

$476.09

$538.93

Shares

2,151

2,107

1,047

Weighted-Average
Exercise Price
Per Share

$490.70

$ 457.77

$ 315.87

$ 559.25

$

—

$490.06

Shares

1,694

460

(124)

(113)

—

1,917

Weighted-
Average
Remaining
Years of
Contractual
Life

3.8

3.7

2.3

Aggregate
Intrinsic
Value

$ 49,160

$47,427

$ 10,627

No SOSARs that included performance conditions were granted during 2018, 2017, or 2016, but in previous years, we
granted SOSARs that included such conditions. As of December 31, 2018, 253 SOSARs with performance conditions were
outstanding, and all were determined to have met the performance conditions.

The total intrinsic value of SOSARs exercised during the years ended December 31, 2018, 2017 and 2016 was $35,907,
$4,296, and $15,946, respectively. Unrecognized stock-based compensation expense for SOSARs as of December 31, 2018
was $34,826 and is expected to be recognized over a weighted average period of 1.7 years.

2018 Annual Report 55

PART II
(continued)

The weighted average assumptions utilized in the Black-Scholes option-pricing model to estimate the fair value of SOSAR
awards granted each year were as follows:

Risk-free interest rate

Expected life (years)

Expected dividend yield

Volatility

2018

2017

2016

2.4%

3.9

0.0%

32.2%

1.6%

3.7

0.0%

29.9%

1.0%

3.5

0.0%

32.2%

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

$77.61

$105.97

$117.48

The risk-free interest rate is based on U.S. Treasury rates for instruments with similar terms, and the expected life
assumption is 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 is based on our historical data and implied volatility.

Non-Vested Stock Awards (RSUs)
A summary of non-vested stock award activity under the 2011 Stock Incentive Plan is as follows (in thousands, except per
share data):

Outstanding, beginning of year

Granted

Vested

Forfeited or cancelled

Expired

Outstanding, end of year

2018

2017

2016

Weighted
Average
Grant Date
Fair Value
Per Share

$ 519.62

$305.00

$ 732.65

$ 473.64

$

—

$ 373.32

Weighted
Average
Grant Date
Fair Value
Per Share

$606.24

$ 436.36

$454.84

$502.46

$

—

$ 519.62

Weighted
Average
Grant Date
Fair Value
Per Share

$ 511.88

$509.05

$605.83

$529.54

$

—

$606.24

Shares

116

90

(7)

(74)

—

125

Shares

125

127

(8)

(31)

—

213

Shares

213

141

(39)

(91)

—

224

There were 141 non-vested stock awards with a weighted
average grant date fair value per share of $305 that were
vested and expected to vest as of December 31, 2018.
Unrecognized stock-based compensation expense for
non-vested stock awards we have determined are probable
of vesting was $33,113 as of December 31, 2018, 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 years ended December 31, 2018,
2017, and 2016 was $13,509, $3,524, and $2,787,
respectively.

Non-Vested Performance Stock Awards (PSUs)
As of December 31, 2018, 70 of the outstanding non-vested
stock awards were subject to performance and/or market
conditions, in addition to service vesting conditions. During
the year ended December 31, 2018, we awarded 29
performance shares that are subject to service and
performance vesting conditions. The shares had a
weighted-average grant date fair value was $328.74 per

share and vest based on our growth in comparable
restaurant sales and average restaurant margin over
defined periods. The quantity of shares that will vest range
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, 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

56 2018 Annual Report

PART II
(continued)

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, 2018, 62 stock awards
that were subject to service and performance or market
conditions were forfeited.

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:

Year ended December 31,

2018

2017

2016

Cumulative change in expense $(79) $(1,410) $ (6,031)

Net of tax impact from
cumulative change in expense $(58) $ (857) $(3,332)

Impact on basic earnings per
share

$ —

$ 0.03

Impact on diluted earnings per
share

$ —

$ 0.03

$

$

0.11

0.11

No stock awards with market conditions were granted
during the year ended December 31, 2018. Measurement of
the grant date fair value of stock awards with market
conditions in prior years 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:

Risk-free interest rate

Expected life (years)

Expected dividend yield

Volatility

2018

2017

2016

N/A

N/A

N/A

N/A

1.5% 0.9%

3.0

3

0.0% 0.0%

29.9% 31.4%

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.

In May 2018, as a result of the transition of employees in
connection with the corporate restructuring described in
Note 5. “Corporate Restructuring Costs”, we reduced our
estimate of the number of certain SOSAR and RSU awards
that we expect to vest, resulting in a cumulative adjustment
to reduce expense of $5,360. In July 2018, we modified
service requirements for certain SOSAR and RSU awards
for approximately 340 employees, resulting in additional
expense of approximately $6,900, of which $6,705 has
been recognized during the year ended December 31, 2018.
We expect to incur additional expense of $200 in 2019.

10. 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 Chipotle. For the years ended December 31, 2018, 2017,
and 2016, matching contributions totaled approximately
$6,090, $6,072 and $5,939, 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
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, 2018 and 2017 were $10,872 and $19,887,
respectively, and are included in other liabilities on 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, 2018, 2017, and 2016, we made deferred
compensation matches of $152, $199, and $225,
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 on the
consolidated balance sheet. Fair value of mutual funds is

2018 Annual Report 57

PART II
(continued)

measured using Level 1 inputs (quoted prices for identical
assets in active markets). The fair values of the
investments in the rabbi trust were $10,872 and $19,887 as
of December 31, 2018 and 2017, respectively. The realized
and unrealized holding gains and losses related to these
investments, as well as the offsetting deferred
compensation expense, are recorded in general and
administrative expenses on the consolidated statement of
income.

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. The purchase price is 95% of the fair market value of
the stock on the last trading date of the monthly exercise
period. 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,
2018. For the years ended December 31, 2018, 2017, and
2016, the number of shares issued each year under the
ESPP was less than 1.

11. Leases
Our restaurants are primarily 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
are typically in five-year increments. Typically, our leases
include 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 leases
covering certain offices.

58 2018 Annual Report

Contractually required future minimum cash lease
payments under existing operating leases as of
December 31, 2018 are as follows:

2019

2020

2021

2022

2023

Thereafter

Total minimum lease payments

$

294,191

296,579

294,941

295,290

290,980

2,478,397

$3,950,378

Total minimum lease payments have not been reduced by
minimum sublease rentals of $11,790 due in the future
under our subleases. During fiscal 2018, 2017 and 2016, we
recognized sublease income of $2,530, $2,214, and $2,074,
respectively. Further, minimum lease payments include
$90,484 of legally binding minimum lease payments for
leases executed, but the lease term has not yet
commenced.

Rental expense consists of the following:

Year ended December 31,

2018

2017

2016

Minimum rentals

$294,854 $278,812 $255,955

Contingent rentals

$

2,714 $

2,317 $

1,811

Total

$297,568 $ 281,129 $257,766

We have six sale 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 $2,390 and $2,630 as of
December 31, 2018, and 2017, 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.

PART II
(continued)

12. Earnings Per Share
The following table sets forth the computations of basic
and diluted earnings per share:

Net income

Shares:

Weighted-average
number of common
shares outstanding

Year ended December 31,

2018

2017

2016

$176,553 $176,253 $22,938

27,823

28,491

29,265

Dilutive stock awards

139

70

505

Diluted weighted-
average number of
common shares
outstanding

27,962

28,561

29,770

Basic earnings per share $

6.35 $

6.19 $ 0.78

Diluted earnings per
share

$

6.31 $

6.17 $ 0.77

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,

2018

2017

2016

95

217

263

1,741

1,695

1,316

Total stock awards excluded from
diluted earnings per share

1,836

1,912

1,579

13. 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
associated with the data security incident in future periods.
We will recognize these expenses as services are received.

As of December 31, 2018, we had a balance of $29,289
included in accrued liabilities on the consolidated balance
sheet which represents 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.

Litigation Arising from Data 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 October 24, 2018, the court issued an order
granting in part and denying in part our motion to dismiss
the consolidated complaint, dismissing all claims other than
those brought under state unfair competition laws in
California and New Hampshire and plaintiffs’ request for
declaratory relief. On December 10, 2018, the plaintiffs filed
a second amended consolidated complaint, and on
January 25, 2019 we filed a motion to dismiss the second
amended complaint.

2018 Annual Report 59

PART II
(continued)

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
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. On September 26, 2018,
the court issued an order granting in part, and denying in
part, our motion to dismiss the consolidated complaint,
including a dismissal of the negligence and unjust
enrichment claims in their entirety.

We intend to continue 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
and the amounts included in accrued liabilities in relation to
the data security incident.

Receipt of Grand Jury Subpoenas
On January 28, 2016, 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 required 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 an illness incident associated with a
single Chipotle restaurant in Sterling, Virginia, and another
follow-up subpoena on February 14, 2018 requesting
information related to an illness incident associated with a

60 2018 Annual Report

single Chipotle restaurant in Los Angeles, California. 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 subpoenas were issued.

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 Securities Exchange Act of
1934, as amended, 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 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 March 22,
2018, the court granted our motion to dismiss, with
prejudice. On April 20, 2018, the plaintiffs filed a motion for
relief from the judgment and seeking leave to file a third
amended complaint, and on November 20, 2018, the court
denied the motion. On December 20, 2018, the plaintiff
initiated an appeal to the U.S. Court of Appeals for the
Second Circuit.

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 Chipotle restaurant in
Sterling, Virginia. We filed a motion to dismiss the amended
complaint on February 12, 2018, and a ruling on the motion
remains pending.

We intend to continue to vigorously defend the Ong and
Kelley cases, but it is not possible at this time to reasonably
estimate the outcome of or any potential liability from
either of these cases.

PART II
(continued)

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.

14. 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

Net income

Basic earnings per share

Diluted earnings per share

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

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.

2018

March 31

June 30

September 30

December 31

$1,148,397

$1,266,520

$1,225,007

$1,225,061

$ 92,808

$ 67,957

$

57,991

$

39,612

$ 59,446

$ 46,884

$ 38,204

$ 32,019

$

$

2.13

2.13

$

$

1.69

1.68

$

$

1.37

1.36

$

$

1.15

1.15

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

appropriate, to allow timely decisions regarding required
disclosure.

Evaluation of Disclosure Controls and
Procedures
As of December 31, 2018, 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, 2018 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.

2018 Annual Report 61

PART II
(continued)

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, 2018,
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, 2018, 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, 2018. This report follows.

62 2018 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 Internal Control over Financial Reporting
We have audited Chipotle Mexican Grill, Inc.’s internal control over financial reporting as of December 31, 2018, 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, 2018, 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, 2018 and 2017, 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, 2018, and the related notes and our report dated February 7, 2019 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

Irvine, California
February 7, 2019

2018 Annual Report 63

PART II
(continued)

ITEM 9B. OTHER INFORMATION

None.

64 2018 Annual Report

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

Incorporated by reference from the definitive proxy statement for our 2019 annual meeting of shareholders, which will be
filed no later than 120 days after December 31, 2018.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference from the definitive proxy statement for our 2019 annual meeting of shareholders, which will be
filed no later than 120 days after December 31, 2018.

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, 2018. 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

2,374,955

None

2,374,955

$474.51

N/A

$474.51

2,871,440

None

2,871,440

(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 2,625,516 shares remaining available under the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan, and 245,924 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, 2018, 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 2019 annual
meeting of shareholders, which will be filed no later than 120 days after December 31, 2018.

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

Incorporated by reference from the definitive proxy statement for our 2019 annual meeting of shareholders, which will be
filed no later than 120 days after December 31, 2018.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Incorporated by reference from the definitive proxy statement for our 2019 annual meeting of shareholders, which will be
filed no later than 120 days after December 31, 2018.

2018 Annual Report 65

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†

Form of 2011 Performance-Based Stock
Appreciation Rights Agreement

10-K 001-32731

February 17, 2011

10.2.11

10.1.3

10.2†

Stock Appreciation Rights Agreement between
Steve Ells and Chipotle Mexican Grill, Inc.

10-Q 001-32731 April 26, 2018

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

8-K

001-32731 May 24, 2018

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

10.1

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

66 2018 Annual Report

PART IV
(continued)

Exhibit
Number

10.2.8.1†

Exhibit Description

Form File No.

Filing Date

Amendment to 2016 Performance Share
Agreement

8-K

001-32731 March 30, 2017

10.2.11†

Form of 2017 Performance Share Agreement

10-Q

001-32731

July 26, 2017

Exhibit
Number

Filed
Herewith

10.1

10.2

Description of Exhibit Incorporated Herein by Reference

10.2.13

10.3

10.3.1

10.4†

10.4.2

10.4.3

10.5†

Retention Agreement, dated January 9, 2018,
between Jack Hartung and Chipotle Mexican
Grill, Inc.

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

Retention Agreement, dated January 9, 2018,
between Mark Crumpacker and Chipotle Mexican
Grill, Inc.

8-K

001-32731

January 12, 2018

10.1

10-K

001-32731 March 17, 2006

10.6

8-K

001-32731

January 12, 2018

Board Pay Policies

10-Q

001-32731

July 26, 2017

Board Pay Policies effective May 22, 2018

8-K

001-32731 May 24, 2018

Retention Agreement, dated January 9, 2018,
between Scott Boatwright and Chipotle Mexican
Grill, Inc.

Chipotle Mexican Grill, Inc. Supplemental
Deferred Investment Plan

10-Q

001-32731 April 26, 2018

10.4

10-K

001-32731

February 23, 2007

10.11

10.2

10.1

10.2

10.5.1†

Supplemental Deferred Investment Plan

10-Q

001-32731

July 27, 2018

10.3

10.5.2

10.6†

10.6.1

10.7†

10.7.1

10.8†

10.8.1

10.9

Retention Agreement, dated January 9, 2018,
between Curt Garner and Chipotle Mexican
Grill, Inc.

Form of Director and Officer Indemnification
Agreement

Offer Letter, dated February 11, 2018, between
Brian R. Niccol and Chipotle Mexican Grill, Inc.

Chipotle Mexican Grill, Inc. Employee Stock
Purchase Plan

Non-Plan Inducement SOSARs Agreement
between Brian R. Niccol and Chipotle Mexican
Grill, Inc.

Chipotle Mexican Grill, Inc. 2014 Cash Incentive
Plan

Non-Plan Inducement RSUs Agreement between
Brian R. Niccol and Chipotle Mexican Grill, Inc.

Separation Agreement, dated March 13, 2018,
between Mark Crumpacker and Chipotle Mexican
Grill, Inc.

10-Q

001-32731 April 26, 2018

10.5

8-K

001-32731 March 21, 2007

10.1

8-K

001-32731

February 15, 2018

10.1

10-K

001-32731

February 10, 2012

10.11

S-8

33-223467 March 6, 2018

10-Q

001-32731

July 19, 2013

S-8

33-223467 March 6, 2018

4.3

10.1

4.4

8-K

001-32731 March 14, 2018

10.1

2018 Annual Report 67

PART IV
(continued)

Exhibit Description

Form File No.

Filing Date

Exhibit
Number

Filed
Herewith

Description of Exhibit Incorporated Herein by Reference

8-K

001-32731 December 19, 2016

10.1

10.11.1

Form of 2018 CEO SOSARs Agreement

8-K/A 001-32731 April 3, 2018

10-K 001-32731

February 7, 2017

10.11

10.2

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.

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

Form of 2018 Premium-priced SOSARs
Agreement

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

Offer Letter, dated March 9, 2018, between
Christopher Brandt and Chipotle Mexican
Grill, Inc.

Form of 2018 Stock Appreciation Rights
Agreement

8-K

001-32731 September 15, 2017

10.1

8-K/A 001-32731 April 3, 2018

10.3

8-K

001-32731 December 1, 2017

10.1

10-Q 001-32731 April 26, 2018

10.13

Form of 2018 Restricted Stock Units Agreement

10-Q 001-32731 April 26, 2018

10-Q 001-32731 April 26, 2018

10.14

10.15

Form of 2018 Restricted Stock Units
Agreement — 12 month

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)

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

10-Q 001-32731 April 26, 2018

10.16

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

X

X

X

X

X

X

Exhibit
Number

10.10

10.11

10.12

10.12.1

10.13

10.13.1

10.14

10.15

10.16

21.1

23.1

24.1

31.1

31.2

32.1

68 2018 Annual Report

PART IV
(continued)

Exhibit
Number

101

Exhibit Description

The following financial statements, formatted in XBRL:
(i) Consolidated Balance Sheet as of December 31, 2018
and December 31, 2017, (ii) Consolidated Statement of
Income for the years ended December 31, 2018, 2017
and 2016, (iii) Consolidated Statement of
Comprehensive Income for the years ended
December 31, 2018, 2017 and 2016, (iv) Consolidated
Statement of Shareholders’ Equity for the years ended
December 31, 2018, 2017 and 2016, (v) Consolidated
Statements of Cash Flows for the years ended
December 31, 2018, 2017 and 2016; and (vi) Notes to the
Consolidated Financial Statements

ITEM 16. FORM 10-K SUMMARY

None.

Description of Exhibit Incorporated Herein by Reference

Form File No.

Filing Date

Exhibit
Number

Filed
Herewith

—

—

—

—

X

2018 Annual Report 69

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 7, 2019

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
Brian Niccol 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/ BRIAN NICCOL

Brian Niccol

February 7, 2019

Chief Executive Officer
(principal executive officer)

/S/ JOHN R. HARTUNG

February 7, 2019

Chief Financial Officer
(principal financial and accounting officer)

February 7, 2019

Chairman of the Board of Directors

John R. Hartung

/S/ STEVE ELLS

Steve Ells

/S/ ALBERT S. BALDOCCHI

February 7, 2019

Director

Albert S. Baldocchi

/S/ PAUL CAPPUCCIO

February 7, 2019

Director

Paul Cappuccio

/S/ NEIL W. FLANZRAICH

February 7, 2019

Director

Neil W. Flanzraich

/S/ ROBIN S. HICKENLOOPER

February 7, 2019

Director

Robin S. Hickenlooper

/S/ KIMBAL MUSK

Kimbal Musk

/S/ ALI NAMVAR

Ali Namvar

February 7, 2019

Director

February 7, 2019

Director

/S/ MATTHEW PAULL

February 7, 2019

Director

Matthew Paull

70 2018 Annual Report

Chipotle Mexican Grill, Inc.
610 Newport Center Drive
Newport Beach, CA 92660

Dear Shareholder:

April 1, 2019

You are cordially invited to attend the annual meeting of shareholders of Chipotle Mexican Grill, Inc., which
will be held on May 21, 2019 at 8:00 a.m. local time at the Hyatt Regency Newport Beach, 1107 Jamboree Road,
Newport Beach, CA 92660 in the Garden II ballroom. Details of the business to be conducted at the annual
meeting are given in the notice of meeting and proxy statement that follow.

Your vote is important. Whether or not you plan to attend the annual meeting, we encourage you to vote

by telephone, by Internet or by signing, dating and returning your proxy card by mail. You may also vote in
person at the annual meeting. Full instructions are contained in this proxy statement or in the Notice of Internet
Availability of Proxy Materials that was sent to you.

On behalf of the Board of Directors and Chipotle’s management, thank you for your commitment to

Chipotle.

Sincerely,

Chief Executive Officer

NOTICE OF MEETING

The 2019 annual meeting of shareholders of Chipotle Mexican Grill, Inc. will be held on May 21, 2019 at 8:00 a.m. local time
at the Hyatt Regency Newport Beach, 1107 Jamboree Road, Newport Beach, CA 92660 in the Garden II ballroom.

Shareholders will consider and act on the following matters:

1.

Election of the ten director nominees named in this proxy statement, 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 (known as

“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, 2019; and

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

Information about these matters is contained in the proxy statement that accompanies this notice.

Only stockholders of record at the close of business on March 26, 2019 are entitled to notice of and to vote at the annual
meeting. This Notice and the accompanying Proxy Statement are first being distributed to stockholders on or about April 1,
2019.

If you would like to attend the annual 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.

Your vote is important. Please note that if you hold your shares through a broker, your broker cannot vote your

shares on the election of directors or on the approval, on an advisory basis, of our executive compensation unless
they have your specific instructions on how to vote. In order for your vote to be counted, please make sure that you
submit your vote to your broker.

By order of the Board of Directors

Executive Chairman of the Board

April 1, 2019

Proxy Statement Summary

Date and Time:

Location:

INFORMATION ABOUT THE ANNUAL MEETING

Tuesday, May 21, 2019
8:00 am (PDT)

Garden II ballroom
Hyatt Regency Newport Beach
1107 Jamboree Road
Newport Beach CA 92660

Record Date for Shareholders entitled to vote:

March 26, 2019

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

1. Election of the ten Director nominees named in this proxy statement (page 6)

2. Advisory Say on Pay vote (page 23)

3. Ratification of Ernst & Young LLP as independent auditors (page 24)

For

For

For

HIGHLIGHTS OF DIRECTOR NOMINEES

NOMINATING
& CORPORATE
GOVERNANCE
COMMITTEE

Chairperson

NAME

OF SERVICE INDEPENDENT

YEARS

BOARD
RECOMMENDATION

AUDIT
COMMITTEE

COMPENSATION
COMMITTEE

Albert Baldocchi†

Paul Cappuccio

Steve Ells
Executive Chairman

Patricia Fili-Krushel(1)

Neil Flanzraich
Lead Independent
Director

Robin Hickenlooper

Scott Maw(1)

Ali Namvar

Brian Niccol

Matthew Paull

22

2

23

–

12

2

–

2

1

2

Yes

Yes

No

Yes

Yes

Yes

Yes

Yes

No

Yes

Chairperson

✓

✓

FOR

FOR

FOR

FOR

FOR

FOR

FOR

FOR

FOR

FOR

✓

✓

Chairperson

✓

✓

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

†
(1) Ms. Fili-Krushel and Mr. Maw were elected to the Board on March 13, 2019 and will be considered for appointment to one or more

Committees after the annual meeting.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT i

Proxy Statement Summary
(continued)

SUMMARY OF CORPORATE GOVERNANCE HIGHLIGHTS

Nine of the 11 members on our current Board of Directors are independent.

Independent directors are led by an independent Lead Director.

All directors stand for re-election on an annual basis.

Directors are elected by majority vote in uncontested elections and any director who does not receive a majority of votes
cast is required to submit his or her resignation, for consideration by the Board.

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

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

We do not have a shareholder rights plan or “poison pill.”

All executive officers and directors are prohibited from hedging/pledging shares of our common stock.

Bylaws contain proxy access provisions, which enables qualifying shareholders to nominate directors for election to our
Board.

We have robust stock ownership requirements for executive officers and directors, with the highest CEO and CFO
ownership requirements amongst our peer group of companies, as described in “Compensation Discussion and Analysis”.

Bylaws permit holders of at least 25% of our outstanding common stock to call special meetings of shareholders.

See the “Compensation Discussion and Analysis” section of this proxy statement for significant compensation policies
and procedures we employ to motivate our employees to build shareholder value and promote the interests of all our
shareholders.

ii NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

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

Board Selection and Refreshment

Independence of Directors

Committees of the Board

2018 Director Compensation

Corporate Governance

Chairman of the Board

Lead Independent Director

Board Performance and Self-Evaluation Process

How to Contact the Board of Directors

Executive Sessions

Director Nomination Process

Shareholder Engagement

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

Role of the Board of Directors in Risk Oversight

Sustainability and Corporate Responsibility

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

Executive Officers

Letter from the Compensation Committee of our Board of Directors

Compensation Discussion and Analysis

Executive Summary

CEO Transition: Timeline of Events and Compensation Decisions

i

1

4

6

6

6

11

12

12

13

15

16

16

17

17

17

17

18

19

21

21

22

23

24

25

25

25

27

28

29

29

31

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT iii

Table of Contents
(continued)

Executive 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

2018 Compensation Program

Executive Stock Ownership Guidelines

Prohibition on Hedging and Pledging

Agreements with our Named Executive Officers

Compensation Program Risk

Accounting Considerations

Compensation Committee Report

2018 Compensation Tables

2018 Summary Compensation Table

Grants of Plan-Based Awards in 2018

Terms of 2018 Annual Performance Share Units Awards

Terms of 2018 Annual SOSAR Awards

Outstanding Equity Awards at Fiscal Year End 2018

Option Exercises and Stock Vested in Fiscal 2018

Non-Qualified Deferred Compensation for 2018

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 2020 Annual Meeting

Inclusion of Director Nominations in Our Proxy Statement and Proxy Card under
Our Proxy Access Bylaws

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

iv NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

33

34

34

35

35

36

37

42

43

43

45

45

45

46

46

48

49

49

50

51

51

52

56

57

58

59

59

59

59

60

60

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 21, 2019, beginning at 8:00 a.m. (PDT) at the Hyatt Regency Newport Beach, 1107 Jamboree
Road, Newport Beach, CA 92660 in the Garden II ballroom. 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 1, 2019.

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 26, 2019, 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 26, 2019, there were 27,725,468 shares of common stock outstanding
and entitled to vote.

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

PROPOSAL 1 – Election of the ten director nominees named in this proxy statement

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

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

Board
Recommendation:

FOR

FOR

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

FOR

public accounting firm for the year ending December 31, 2019.

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

meeting without obtaining authorization from your broker,
bank or other nominee.

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

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 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

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.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 1

Annual Meeting Information
(continued)

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 your broker.
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, 610 Newport Center Dr., Suite 1300,
Newport Beach, CA 92660; 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 written
authorization to vote at the meeting.

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 that begin 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 17, 2019. 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 to be
used 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 and 3 — The say-on-pay advisory vote and
ratification of the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the year
ending December 31, 2019 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, which are expected to occur with respect to the
say-on-pay vote (Proposal 2), 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) is advisory, it will
not be binding on the Board or the company. However, the
Board will review the voting results and take them into
consideration when making future decisions regarding

2 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Annual Meeting Information
(continued)

executive compensation. 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,
considering 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, we are distributing to our shareholders of
record and beneficial owners as of the close of business on
March 26, 2019 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.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 3

Beneficial Ownership of our
Common Stock

BENEFICIAL OWNERSHIP OF OUR COMMON STOCK

The following tables shows the beneficial ownership of shares of our common stock as of March 26, 2019 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 2018 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 27,725,468
outstanding shares of common stock as of March 26, 2019. 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 26, 2019 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

The Vanguard Group, Inc.(1)

Pershing Square Capital Management L.P.(2)

BlackRock, Inc.(3)

Susquehanna Securities(4)

Directors and Executive Officers

Brian Niccol(5)

Steve Ells(6)

Jack Hartung(7)

Curt Garner(8)

Scott Boatwright(9)

Christopher Brandt(9)

Albert Baldocchi(10)(11)

Paul Cappuccio(12)

Patricia Fili-Krushel(13)

Neil Flanzraich(10)

Robin Hickenlooper(12)

Scott Maw(13)

Kimbal Musk(14)

Ali Namvar(12)(15)

Matthew Paull(12)

Shares Beneficially
Owned
(Outstanding)

Shares Beneficially
Owned (Right
to Acquire)

Total Shares
Beneficially
Owned

Percentage of
Class Beneficially
Owned

2,911,960

1,880,799

1,615,632

1,441,778

5,065

208,339

35,272

–

–

–

72,918

500

–

3,631

–

–

501

3,000

516

–

–

–

–

55,976

175,000

60,000

48,500

–

–

792

277

–

792

277

–

542

277

277

2,911,960

1,880,799

1,615,632

1,441,778

61,041

383,339

95,272

48,500

–

–

73,710

777

–

4,423

277

–

1,043

3,277

793

10.50%

6.78%

5.83%

5.20%

*

1.38%

*

*

–

–

*

*

*

*

*

*

*

*

*

All directors and executive officers as a group
(19 people)

*

Less than one percent.

324,677

286,734

611,411

2.21%

4 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Beneficial Ownership of our
Common Stock (continued)

(1) Based solely on a report on Schedule 13G/A filed on January 10, 2019. The address of The Vanguard Group, Inc. is 100 Vanguard Blvd.,
Malvern, Pennsylvania, 19355. The Vanguard Group, Inc. has sole voting power with respect to 30,167 shares of common stock, shared
voting power with respect to 6,000 shares of common stock, sole dispositive power with respect to 2,876,031 shares of common stock
and shared dispositive power with respect to 35,929 shares of common stock.

(2) 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 August 30, 2018, as well as a Form 4 filed by Pershing Square on February 14, 2019. The
address of Pershing Square is 888 Seventh Avenue, 42nd Floor, New York, New York, 10019.

(3) Based solely on a report on Schedule 13G/A filed on February 4, 2019. The address of BlackRock, Inc. is 55 East 52nd Street, New York,
New York, 10022. BlackRock, Inc. has sole voting power with respect to 1,407,615 shares of common stock and sole dispositive power
with respect to 1,615,632 shares of common stock.

(4) Based solely on a report on Schedule 13G/A filed on February 14, 2019 by G1 Execution Services, LLC, Susquehanna Investment Group
and Susquehanna Securities. The address of Susquehanna Investment Group and Susquehanna Securities is 401 E. City Avenue, Suite
220, Bala Cynwyd, Pennsylvania, 19004 and the address of G1 Execution Services, LLC is 175 W. Jackson Blvd., Suite 1700, Chicago, IL
60604. G1 Execution Services, LLC, Susquehanna Investment Group and Susquehanna Securities have shared voting power and shared
dispositive power with respect to 1,441,778 shares of common stock; G1 Execution Services, LLC has sole voting power and sole
dispositive power with respect to 900 shares of common stock; Susquehanna Investment Group has sole voting power and sole
dispositive power with respect to 42,578 shares of common stock; and Susquehanna Securities has sole voting power and sole
dispositive power with respect to 1,398,300 shares of common stock.

(5) Shares beneficially owned by Mr. Niccol include 55,976 shares underlying vested stock appreciation rights.
(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 60,000 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. Garner include 48,500 shares underlying stock appreciation rights that are vested or will vest within

60 days of March 26, 2019.

(9) Mr. Boatwright joined us in May 2017 and Mr. Brandt joined us in April 2018. Both have equity awards that will begin to vest later in

2019 or 2020.

(10) Shares beneficially owned by Messrs. Baldocchi and Flanzraich include 792 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 he owns jointly with his spouse.
(12) Shares beneficially owned by Ms. Hickenlooper and Messrs. Cappuccio, Namvar and Paull include 277 shares underlying restricted stock

units that will vest within 60 days of March 26, 2019.

(13) Ms. Fili-Krushel and Mr. Maw were elected to the Board on March 13, 2019. They will receive their first equity grant as directors on the

date of the annual meeting.

(14) Shares beneficially owned by Mr. Musk include 542 shares underlying restricted stock units that are vested or will vest within 60 days

of March 26, 2019.

(15) 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.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 5

Proposal 1

Election of Directors
Our Board of Directors currently has eleven members, with each director serving for a one-year term. At the annual
meeting, shareholders will vote on the ten nominees named below, each of whom is an incumbent member of the Board.
Each of the director nominees was elected at the 2018 annual meeting of shareholders, except for Patricia Fili-Krushel and
Scott Maw, who were elected to our Board of Directors on March 13, 2019.

One of our current directors, Kimbal Musk, has decided to not stand for re-election at the annual meeting. Mr. Musk has
served on our Board since 2013 and Chipotle extends its heartfelt appreciation to Mr. Musk for the tremendous
contributions he has made to our success through his leadership in innovation and experience with fast-growing companies.
It is anticipated that the size of the Board will be reduced from eleven members to ten members following the annual
meeting.

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. Patricia Fili-Krushel initially was
recommended to our Board by one of our incumbent directors, and Scott Maw initially was recommended to our Board by a
member of our executive management team, and both were evaluated by an executive recruiting firm retained by the Board
to assist in identifying, evaluating and conducting due diligence on potential director candidates. There are no family
relationships among our directors, or between our directors and executive officers.

Re-election of each nominee for director requires that such nominee receive a majority of the votes cast FOR 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 each of the director nominees.

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 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. The age of each director is as of May 21, 2019, the date of the annual meeting.

DIRECTORS STANDING FOR RE-ELECTION

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.

Albert S. Baldocchi
Age: 65
Director Since: 1997

6 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

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.

Proposal 1
(continued)

Paul T. Cappuccio

Age: 57

Director Since: 2016

Steve Ells

Age: 53

Director Since: 1996

Background:

Mr. Cappuccio served as Executive Vice President and
General Counsel of Time Warner, Inc., a global media and
entertainment company, from 2001 through 2018. In this
capacity, he oversaw 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 (AOL). 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. He previously served on the board
of directors of Central European Media Enterprises Ltd.
(NasdaqGS: CETV) until December 2018.

Background:

Mr. Ells founded Chipotle in 1993 and served as 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’ 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.

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’ visionary thinking has led
Chipotle to extraordinary
accomplishments, such as
growing from a single restaurant
to over 2,500 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 2019 PROXY STATEMENT 7

Proposal 1
(continued)

Patricia
Fili-Krushel

Age: 65
Director Since: March
2019

Neil W. Flanzraich

Age: 75
Director Since: 2007

Background:

Ms. Fili-Krushel has served as Chief Executive Officer of the
Center for Talent Innovation, a New York City–based think
tank that focuses on global talent strategies since January
2019. From 2011 to 2016, she served as an executive at
Comcast Corporation, a global media and technology
company; as Division Chairman, NBCUniversal News Group;
and as Executive Vice President, NBCUniversal. Prior to
that, Ms. Fili-Krushel served as Executive Vice President
and Chief Administrative Officer of Time Warner Inc., a
global media and entertainment company, from 2001 to
2011; as President & CEO, WebMD Health Division, of
WebMD Health Corp., from 2000 to 2001; as President, ABC
Television Network, and President, ABC Daytime, Disney
ABC Television Group, of The Walt Disney Company, a
diversified worldwide entertainment company; and as
Senior Vice President, Programming of Lifetime
Entertainment Services, an entertainment and media
company, from 1988 to 1992. She serves as a director of
Dollar General Corporation (NYSE: DG). Ms. Fili-Krushel
received a Bachelor’s degree in communications from Saint
John’s University, and an MBA from Fordham University.

Background:

Mr. Flanzraich is the Executive Chairman of Cantex
Pharmaceuticals, Inc. (formerly ParinGenix, Inc.), a
privately-owned biotech company, where he previously
served as Chief Executive Officer and Chairman, and
additionally, is the Executive Chairman of Alzheon, Inc., a
privately-owned biotech company. He also 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 Senior Vice President, General 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)
and served as its Lead Independent Director 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.

Qualifications:

Ms. Fili-Krushel has extensive
leadership experience and her
contributions to the Board
include broad experience in
managing global businesses,
developing business strategy,
talent management and creating
organizational cultures. She also
brings experience serving on the
boards of directors of other
public companies.

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.

8 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Proposal 1
(continued)

Robin Hickenlooper

Age: 40

Director Since: 2016

Scott Maw

Age: 51

Director since: March 2019

Background:

Ms. Hickenlooper is Senior Vice President of Corporate
Development at Liberty Media Corporation, an owner of
media, communications and entertainment businesses, 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.

Qualifications:

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

Qualifications:

Mr. Maw brings to our Board
expert knowledge in finance,
accounting, risk management and
public corporate governance and
has extensive experience leading
global teams.

Background:

Until his retirement near the end of 2018, Mr. Maw was
Executive Vice President and Chief Financial Officer at
Starbucks Corporation, a global roaster and retailer of
specialty coffee, from 2014. He also was Senior Vice
President, Corporate Finance at Starbucks from 2012 to
2013, and Senior Vice President and Global Controller from
2011 to 2012. From 2010 to 2011, he was Senior Vice
President and CFO of SeaBright Holdings, Inc., a specialty
workers’ compensation insurer. From 2008 to 2010, he was
Senior Vice President and CFO of the Consumer Bank at JP
Morgan Chase & Company. Prior to this, Mr. Maw held
leadership positions in finance at Washington Mutual, Inc.
from 2003 to 2008, and GE Capital from 1994 to 2003.
Prior to joining GE Capital, Mr. Maw worked at KPMG’s audit
practice from 1990 to 1994. Since 2016, he has been a
member of the board of directors of Avista Corporation
(NYSE: AVA). Mr. Maw holds a Bachelor of Business
Administration in Accounting from Gonzaga University.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 9

Proposal 1
(continued)

Ali Namvar

Age: 49

Director Since: 2016

Brian Niccol

Age: 45

Director Since: 2018

Background:

Mr. Namvar is a private investor focused on growth
companies. He is also an advisory board member and
partner emeritus of Pershing Square Capital Management,
an investment firm that currently is a significant
shareholder of Chipotle. From January 2006 through April
2018, Mr. Namvar was an active partner and senior member
of the investment team at Pershing Square. Prior to joining
Pershing Square, 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.

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.

Background:

Mr. Niccol has served as our Chief Executive Officer and a
director since March 5, 2018. From January 2015 to
February 2018 Mr. Niccol served as Chief Executive Officer
of Taco Bell, a division of Yum! Brands, Inc., a global
restaurant company. 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)

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.

10 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Proposal 1
(continued)

Matthew H. Paull

Age: 67

Director Since: 2016

Qualifications:

Mr. Paull brings to our Board
substantial restaurant industry
experience and expert knowledge
in finance, accounting, and public
company corporate governance.

Background:

Mr. Paull was Senior Vice President and Chief Financial
Officer of McDonald’s Corp., a global foodservice retailer,
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), and Canadian Pacific Railway Limited (NYSE:
CP). Mr. Paull previously served as a member of the board
of WMS Industries, Inc. until 2013, Best Buy Co. until 2013
and KapStone Paper and Packaging Corp. (NYSE: KS) until
2018. 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.

Board Qualifications, Skills and Attributes
In evaluating current and prospective directors, our Board strives for a highly independent, well-qualified directors, with the
diversity, experience and background to be effective and to provide strong oversight and thought leadership to
management. In addition to the specific qualifications, skills and experience described above, each director is expected to
possess personal traits such as candor, integrity and professionalism and to commit to devote significant time to the
Company’s oversight.

The Board of Directors held six meetings in 2018. Each director who served in 2018 attended at least 75% of the meetings
of the Board and of Committees of which he or she was a member during the time in which they served as a member of the
Board in 2018, except for Kimbal Musk. 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 2018 annual
meeting attended the meeting.

Assuming all directors standing for re-election are elected at the annual meeting, the average age of our directors will be
57, and the Board will possess the skills, experiences and attributes reflected in the following table. We believe these skills,
experiences and attributes are relevant and important to the company’s achievement of its strategic goals, including
making our brand culturally relevant and engaging, digitizing and modernizing the restaurant experience, continuing to
ensure a culture of accountability and creativity throughout our organization, and enhancing our economic model to benefit
our shareholders.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 11

Proposal 1
(continued)

BOARD SKILLS, EXPERIENCE AND ATTRIBUTES

LEADERSHIP

DIGITAL/SOCIAL MEDIA/TECHNOLOGY

(CEO or Executive Officer; Leader of large division, business
unit or organization; public company board service)

(Social Media Strategy; Technology-Based Consumer
Applications; Revenue Opportunities; Cybersecurity)

9/10 directors

3/10 directors

RESTAURANT/FOOD INDUSTRY

6/10 directors
(Restaurant Owner/Manager; Sourcing & Supply; Food
Safety/Quality Assurance)

REAL ESTATE/LEASING

(Site Selection; Property Management and Administration)

4/10 directors

HR/TALENT MANAGEMENT/COMPENSATION

INTERNATIONAL

(Recruiting; Talent Development & Motivation; Management; HR
Compliance)

4/10 directors

(Non-U.S. Regulations, Customs, Organizational Structures and
Tax Implications and Planning)

7/10 directors

FINANCE/ACCOUNTING

(Financial Reporting; Accounting Systems; Public Filings;
Internal Controls)

7/10 directors

SUSTAINABILITY/ESG

(Waste Reduction, Responsible Sourcing, Environmental Impact,
Social & Governance Issues)

3/10 directors

RISK MANAGEMENT

GOVERNMENT RELATIONS

(Evaluation, Assessment and Oversight)

(Lobbying, Regulatory, Investigations & Compliance)

4/10 directors

3/10 directors

BRANDING/MARKETING/MEDIA

INVESTOR RELATIONS

(Branding Strategy & Innovation; Customer Relations; Crisis
Management)

(Engagement regarding strategy, financial results, executive
compensation and corporate governance)

5/10 directors

7/10 directors

Board Selection and Refreshment
We seek to strike the right balance between retaining
directors with deep knowledge of the Company and adding
directors who bring a fresh perspective. Of the directors
who are standing for re-election, three have served on the
board for over 10 years and seven have served for fewer
than five years. In 2018, the Board retained an executive
recruiting firm to assist in identifying, evaluating and
conducting due diligence on potential director candidates
and has instructed the firm to maintain a running list of
potential director candidates. The Board is committed to
actively seeking to include highly qualified women and
individuals from minority groups in the pool from which
new director candidates are selected and, to meet that
goal, has assembled a diverse team within the recruiting
firm to work on Chipotle’s assignment.

The recruiting firm has been instructed to specifically focus
on identifying candidates who, in addition to having
particular skills and experience, also would add to the
gender and diversity of the Board.

Independence of Directors
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
2019 the Board determined that none of our directors has
any relationships, transactions or arrangements that would

12 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Proposal 1
(continued)

compromise his or her independence, except that Mr. Niccol
and Mr. Ells are not independent directors as a result of
their employment with us.

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 an employee until April 1,
2018, and for which Messrs. Namvar and Paull currently
serve 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. In performing its functions, the
Audit Committee acts only in an oversight capacity and
necessarily relies on the work and assurance of the

company’s management and independent auditors which, in
their reports, express opinions on the fair presentation of
the company’s financial statements and the effectiveness
of the company’s internal controls over financial reporting.
The Audit 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 Audit 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 25 of this proxy
statement. The Committee determined that the fees paid to
the independent auditor in 2018, 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 Audit Committee also has 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 Audit
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
performance of its duties. The Audit Committee held eight
meetings in 2018. 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.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 13

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No member of the Audit Committee served on more than
three audit or similar committees of publicly held
companies, including Chipotle, in 2018. A report of the
Audit Committee is found under the heading “Audit
Committee Report” on page 25.

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 and Executive Chairman based
on an evaluation of their 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 –
2018 Compensation Program – Long-Term Incentives – 2018
Performance Share Award Design.” The Committee has for
several years, including 2018, 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 2018 and for the equity
compensation awards made to our executive officers in
February 2018. All of the fees paid to Pay Governance
during 2018 were in connection with the firm’s work on
executive and director 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 2018.
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 45.

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
Compensation 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
2018, 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
as deemed appropriate, and recommending to the Board

14 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Proposal 1
(continued)

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
any potential director candidates recommended by our
shareholders 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.

The Nominating and Corporate Governance Committee
held four meetings in 2018. The members of the Committee
are Messrs. 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 relating to 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, 2018,
the Demand Review Committee consisted of Messrs.
Flanzraich and Cappuccio. The Committee meets as needed
and met once in 2018.

2018 Director Compensation
Following is a description of our 2018 compensation program for non-employee directors. Directors who are employees of
Chipotle do not receive compensation for their services as directors. Directors also are reimbursed for expenses incurred in
connection with their service as directors, including travel expenses for meetings.

NON-EMPLOYEE DIRECTOR COMPENSATION

All non-employee directors

Meeting fees:

Board of Directors meeting

Committee meeting

Committee meeting (telephonic participation at in-person meeting)

Additional Compensation:

Lead Independent Director

Audit Committee Chair

Compensation Committee Chair

Nominating and Corporate Governance Committee Chair

Other Committees, if applicable

CASH RETAINER(1)

RESTRICTED STOCK
UNITS(2)

$75,000

$120,000

$ 2,000

$ 1,500

$

750

$50,000

$20,000

$ 15,000

$ 10,000

$ 5,000

(1) All cash retainers are paid in arrears, on a pro rata basis, at the end of June and December.
(2) A restricted stock units (RSU) represents the right to receive shares of our common stock upon vesting. RSUs are granted to non-

employee directors on the date of our annual shareholders meeting each year. The number of shares subject to the award is based on
the closing price of our common stock on the grant date.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 15

Proposal 1
(continued)

The Compensation Committee of the Board reviews and
makes recommendations to the Board on compensation
provided to non-employee directors at least biennially, as
required by its charter. At the request of the Committee, in
May 2018, its independent compensation consultant (Pay
Governance) conducted an assessment of the competitiveness
of our non-employee director compensation program as
compared to the 2018 peer group disclosed on page 36. Upon
review and consideration, the Committee recommended, and
the Board approved, that no changes would be made to the
non-employee director compensation for 2018.

We also have stock ownership requirements for our
directors, under which we require each non-employee
director to own Chipotle common stock with a market value
of five times the annual cash retainer within five years of
the director’s election to the Board. All directors who
served on our Board during 2018 met this requirement as
of December 31, 2018. Restricted stock units count as
shares owned for purposes of this requirement.

The compensation paid to each non-employee director who served in 2018 is set forth below. Patricia Fili-Krushel and Scott
Maw were elected to our Board in March 2019, so they did not receive any compensation in 2018.

NAME

Albert S. Baldocchi

Paul T. Cappuccio

Neil W. Flanzraich

Robin Hickenlooper

Kimbal Musk

Ali Namvar

Matthew H. Paull

FEES EARNED OR
PAID IN CASH

STOCK AWARDS(1)

TOTAL

$ 117,000

$ 114,500

$166,500

$ 97,000

$ 81,000

$100,000

$ 94,000

$120,063

$120,063

$120,063

$120,063

$120,063

$120,063

$120,063

$237,063

$234,563

$286,563

$ 217,063

$ 201,063

$220,063

$ 214,063

(1) Reflects the grant date fair value under FASB Topic 718 of RSUs awarded for the equity portion of each non-employee director’s annual
retainer. RSUs in respect of 277 shares of common stock were granted to each non-employee director on May 22, 2018. The RSUs were
valued at $433.44 per share, the closing price of Chipotle common stock on the grant date. The RSUs vest on the first anniversary of
the grant date, subject to the director’s continued service as a director through that date. Under the terms of the award agreements,
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 a change in control of Chipotle. Directors may elect to defer receipt upon vesting
of the shares underlying the RSUs; however, none of the directors elected this deferral option with respect to 2018. As of December 31,
2018, Messrs. Baldocchi, Flanzraich and Musk each held 792 RSUs, Messrs. Cappuccio and Paull and Ms. Hickenlooper each held 543
RSUs, and Mr. Namvar held 277 RSUs.

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.

Chairman of the Board
Mr. Ells, our founder, serves as Executive 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 appropriate for Mr. Ells to serve as Chairman.
As the founder of our company, he had been the principal
architect of our corporate strategy and our vision that food
served fast doesn’t have to be low quality and delicious
food doesn’t have to be expensive. The Board has
appointed a Lead Independent Director, whose role is

16 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

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described below, which helps provide an appropriate
counterbalance to the Board’s governance process.

The Board, particularly the Lead Independent Director and
the chairperson of the Nominating and Corporate
Governance Committee, 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, Mr. Niccol as Chief Executive
Officer and as a member of the Board, and Mr. Flanzraich
as Lead Independent Director is in the best interests of
Chipotle and our shareholders.

Lead Independent Director
Mr. Flanzraich was appointed Lead Independent Director in
September 2014. The Board believes that maintaining a
Lead Independent 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 Independent Director are contained in our
Corporate Governance Guidelines and include: (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
In consultation with the independent Lead Director, the
Chairman of the Nominating and Corporate Governance
Committee oversees annual Board and committee self-
assessments. The directors’ self-evaluation process
includes candid, one-on-one discussions between the
Committee Chair and each independent director on topics
such as the overall effectiveness of the Board and its
committees in performing their oversight responsibilities,
the composition of the Board and each committee, the
quality, rigor and effectiveness of meetings, the
qualifications and effectiveness of incumbent directors, and
whether the Board and each committee possess members
with the right skills and experience to fulfill their
responsibilities. Responses and observations from this
process are discussed by the full Board and form the basis
for process changes and setting future agendas. The
Nominating and Corporate Governance Committee believes
that this self-evaluation process best generates candid and
real-time feedback on the efficacy of the Board and its
relationship with management and considers each year
whether changes in the process would be advisable.

How to Contact the Board of Directors
Any shareholder or other interested party may contact the
Board of Directors, including the Lead Independent 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., 610 Newport Center
Dr., Suite 1300, Newport Beach, CA 92660, 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
Corporate 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 2018. The independent

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 17

Proposal 1
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directors also typically hold an executive session prior to
each regularly-scheduled Board meeting as well. The Lead
Independent Director chaired the non-employee executive
sessions of the Board held during 2018. The Board expects
to continue to conduct executive sessions of the
independent directors at each regularly-scheduled Board
meeting during 2019, and independent directors may
schedule additional sessions at 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. Ten
of the eleven members of the Board are nominees for
election as a director at this year’s annual meeting. Each
nominee was recommended to the Board 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 business and professional achievements and

experience and industry background, particularly in light
of our principal business and strategies, and 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;

• Their experience on public company boards and

knowledge of corporate governance practices; and

• Relevant provisions of our Corporate Governance

Guidelines.

These factors may be weighted differently depending on
the individual being considered and the needs of the Board
at the time. We do not have a particular policy regarding
the diversity of nominees or Board members; however, 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 have
assembled a diverse team to work on our assignments and
have been instructed to specifically focus on identifying
candidates who, in addition to bringing particular skills and
experience to the Board, also would add to the gender and/
or ethnic diversity of 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

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(continued)

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.”

Chairman, the Lead Independent 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).

Under our bylaws, shareholders also may 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 2020 Annual Meeting – Bylaw
Requirements for Shareholder Submission of Nominations
and Proposals” on page 59. 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. These provisions are
described under “Other Business and Miscellaneous –
Shareholder Proposals and Nominations for 2020 Annual
Meeting – Inclusion of Director Nominations in Our Proxy
Statement and Proxy Card under our Proxy Access Bylaws”
on page 59.

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 Independent Director,
other directors, senior management or outside advisors
regarding a particular candidate. The committee also
considers 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 appropriate for further consideration.
To the extent feasible, candidates are interviewed by the

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 provided for the nominations of Ali
Namvar and Matthew Paull for election to Chipotle’s Board
at the 2017 and 2018 annual meetings of shareholders, a
procedure for replacing Mr. Namvar with a successor
director in certain cases, and specified voting obligations of
Pershing Square with respect to Chipotle’s annual
shareholder meetings. Pershing Square 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 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.”

Shareholder Engagement
Our management and directors actively engage with
shareholders to seek their input on emerging issues and to
address shareholder questions and concerns. As in prior
years, during 2018 we conducted outreach calls with
shareholders that collectively own almost 30% of our
outstanding shares to solicit their feedback. We engaged
with a diverse mix of shareholders on a wide range of
topics including, among others, business strategy, historical
financial performance, executive compensation, diversity,
corporate governance, sustainability and corporate social

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 19

Proposal 1
(continued)

responsibility. These exchanges were candid and constructive. Most of our engagement has been in person or via telephone,
and Chipotle participants varied depending on the topics the shareholders wanted to discuss and included the Chairs of our
Compensation and Nominating and Corporate Governance Committees and members of our executive leadership team. The
Board or members of the appropriate Committee were updated about the discussions and considered any actions to be
taken in response. The table below generally summarizes our engagement process.

ENGAGEMENT
CHANNEL

TIMING/
FREQUENCY

CHIPOTLE
PARTICIPANTS

Annual
meeting-related
and issue-based
engagement

Early in year,
usually after
fourth quarter and
fiscal year
earnings are
announced and
before our first
quarter Board
meeting

Depending on the
agenda, our Lead
Director, Chair of the
Compensation
Committee, Chair of the
Nominating & Corporate
Governance Committee,
and/or representatives
of our Investor
Relations, Corporate
Secretary/Governance
and Compensation &
Benefits functions may
participate

DISCUSSION
TOPICS

• Executive

compensation,
including award
design & performance
metrics
• Equity plan
parameters

OUTCOMES

• Adjustments to overall
quantum of executive
compensation, in certain
instances

• Revisions to incentive

award designs from year
to year

• Board composition,

• Publication of

refreshment,
nomination & election
procedures and
related matters

• Corporate

governance

• Sustainability and
diversity matters

Investor meetings
and conferences

Earnings calls

Throughout the
year (meetings
with investors at
company or
investor offices, at
analyst-sponsored
conferences

Quarterly and
special calls from
time to time

Senior Management and
Investor Relations

• Company strategy
• Financial results and

outlook

Senior Management and
Investor Relations

• Company strategy
• Financial results and

outlook

20 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

comprehensive
sustainability report

• Adoption of

enhancements to Lead
Director role
• Enhanced proxy

statement disclosures
around Board skills,
recruitment and related
matters
Implementation of proxy
access

•

• Enhanced investor

understanding of our
business and strategy

• Understanding of

financial metrics and
other disclosures that
are most meaningful to
investors

• Enhanced investor

understanding of our
business and strategy

• Understanding of

financial metrics and
other disclosures that
are most meaningful to
investors

Proposal 1
(continued)

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 58.

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:

Board of
Directors

Audit
Committee

Role in Risk Oversight

• Ongoing review of strategic plans,

including associated risks

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

• Oversees succession planning process

for our CEO and other executive
officers

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

Role in Risk Oversight

• 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 and
receives reports on calls to our global
compliance hotline

• 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

Compensation
Committee

• Oversees risks relating to our

compensation programs

Nominating
and
Corporate
Governance
Committee

• Employs an independent compensation

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

• 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 Independent 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 in
2018 of a new Chief Executive Officer, who 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 Independent Director, allow the Board to promptly

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 21

Proposal 1
(continued)

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.

Sustainability and Corporate Responsibility
We are committed to providing leadership in the area of
sustainable business practices. For example, since 2015 we
have made significant strides towards reducing the amount
of food and packaging waste bound for landfills, increasing
our diversion rate from 31% that year to 42% in 2018. In
2018, we announced our goal of diverting 50% of all of our
restaurant waste from landfills by 2020. We also endeavor

to serve only meats that are “Responsibly 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 also seek to use 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. In
2018, we bought over 23.7 million lbs. of organic
ingredients, and 29 million lbs. of local produce. We are
committed to transparency surrounding our sustainable
progress and we publish Sustainability Reports every other
year, with progress reports against our goals published in
the years between full reports. We will issue a new
sustainability report in 2019, which will be available on our
website at www.chipotle.com.

22 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 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 29. 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 2018, 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 2019 PROXY STATEMENT 23

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, 2019 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 2019 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, 2019, 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; in connection
with the relocation of our corporate headquarters, our
audit work for the 2018 audit was transitioned to a new
engagement team and the committee appointed a new lead
engagement partner for the 2019 audit. The next change in
lead engagement partner after the current five-year
rotation period is expected to occur for the 2024 audit.

The Audit Committee has adopted a policy which sets out
procedures that the company 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, 2018 and 2017 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.

24 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 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 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, 2018 and 2017 were:

Fees for Services

Audit Fees(1)

Audit-Related Fees

Tax Fees(2)

All Other Fees

Total Fees

2018

2017

$1,144,002

$943,578

—

—

19,960

37,451

—

—

$ 1,163,962

$ 981,129

(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 Audit Committee and 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, 2019.

AUDIT COMMITTEE REPORT

With regard to the fiscal year ended December 31, 2018, the
Audit Committee (i) reviewed and discussed with
management our audited consolidated financial statements
as of December 31, 2018 and for the year then ended;
(ii) discussed with Ernst & Young LLP, the independent
auditors, the matters required by Auditing Standards 1301,
Communication with Audit Committees and matters
required by applicable requirements of the PCAOB and SEC;
(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, 2018 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 consider 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. The
committee may pre-approve a class of services for the

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 25

Proposal 3
(continued)

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.

26 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

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 April 1,
2019, are as follows:

EXECUTIVE OFFICERS

Marissa Andrada, 51, was appointed Chief People Officer in April 2018. Prior to joining
Chipotle, Marissa was Senior Vice President of Human Resources & Chief Human
Resources Officer at Kate Spade & Company, a fashion company, from July 2016
through October 2017, and Senior Vice President of Partner Resources for Starbucks
Corporation, a global coffee roaster and retailer, from November 2010 to March 2016.
Prior to Starbucks, she served as Senior Vice President of Human Resources at
GameStop Corporation and Head of Human Resources at Red Bull North America.
Marissa holds a Masters of Business degree from Pepperdine University.

Scott Boatwright, 46, 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, a quick serve
restaurant company, 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.

Chris Brandt, 50, was appointed Chief Marketing Officer in April 2018. Prior to
joining Chipotle, Chris was Executive Vice President and Chief Brand Officer of
Bloomin’ Brands, Inc., a casual dining company, from May 2016 through December
2017; Chief Brand Officer/Chief Marketing Officer for Taco Bell, a subsidiary of
Yum! Brands, Inc., a global restaurant company, from May 2013 to May 2016; and
Senior Director and Vice President of Marketing for Taco Bell from November 2010
to May 2013. Chris holds an MBA from the Anderson School at UCLA.

Curt Garner, 49, was appointed Chief Technology Officer in March 2017. Mr. Garner
joined Chipotle in November 2015 as Chief Information Officer, and prior to that
had worked for Starbucks Corporation, a global coffee roaster and retailer, 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).

John R. (Jack) Hartung, 61, 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 supply chain and Chipotle’s European
operations. Mr. Hartung joined Chipotle after spending 18 years at McDonald’s Corp.,
a quick serve restaurant company, 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.

Laurie Schalow, 51, has served as Chief Communications Officer since August 2017.
Prior to joining Chipotle, Laurie served as Vice President of Public Affairs for Yum!
Brands, a global restaurant company, overseeing Global Corporate Social
Responsibility, PR, Crisis Management, Social Listening and Community Diversity
programs for the 44,000 KFC, Pizza Hut and Taco Bell restaurants in 140
countries. Laurie holds an MBA from Case Western Reserve and Wayne State
University. She currently serves on the Board of Directors for The Muhammad Ali
Center and Chairs the Maryhurst Board.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 27

Executive Officers and Compensation
(continued)

Roger Theodoredis, 60, was appointed Chief Legal Officer and General Counsel in
October 2018. Prior to joining Chipotle, Roger was General Secretary of Danone
North America, with responsibility for legal, public affairs, communications,
scientific affairs and corporate security. He previously served as Executive Vice
President, General Counsel and Corporate Secretary of The WhiteWave Foods
Company, a food and beverage company, until its acquisition by Danone, S.A. in
April 2017, having been appointed as General Counsel of WhiteWave Foods in
2005. Prior to joining WhiteWave Foods, Roger served as Division General Counsel
for Mead Johnson Nutritionals, a subsidiary of Bristol Myers Squibb, and in a
number of legal roles for Chiquita Brands International. Roger holds a J.D. from
Boston University School of Law.

Tabassum Zalotrawala, 44, was appointed Chief Development Officer in December
2018. Prior to joining Chipotle, Tabassum spent over seven years at Panda
Restaurant Group, Inc., a fast casual restaurant chain, as Chief Development
Officer and Vice President Design, Construction, Facilities & Strategic Sourcing.
She holds a Bachelor of Fine Arts in interior design from the School of Planning
and Architecture and American Continental University, a Master of Fine Arts in
architecture from Savannah College of Art and Design and an MBA from Emory
University. Additionally, she is a LEED accredited professional. Most recently,
Tabassum completed the Advanced Management Program at Harvard Business
School.

Letter from the Compensation Committee of our Board of Directors

Dear Fellow Shareholder,

In 2018 we made notable organizational, strategic and operational progress that we believe translated into significant
shareholder value creation. One of our major accomplishments was the hiring of Brian Niccol as CEO on March 5, 2018.
He has created a new executive leadership team and jointly developed and has begun to implement a new operating,
branding and digital transformation strategy. We believe this new strategy has already translated into substantial
year-over-year increases across several key metrics:

•

•

•

•

Revenue increased 8.7% to $4.9 billion

Comparable restaurant sales increased 4%

Digital sales increased 42.4% and accounted for 10.9% of total sales

Restaurant level operating margin increased to 18.7% from 16.9%

This strong operating performance and new positioning has resulted in $3.8 billion of increased shareholder value, as
measured by the increase in our market capitalization. During 2018, our stock price increased 49%, which was the
highest percentage gain among our peers and 54% above the return of the S&P 500. Consistent with this strong
performance, the annual cash incentive awards paid to our named executive officers were between 113% to 132% of
their target awards. Our 2018 annual long-term equity incentive awards were 100% performance-based and were
designed to have strong alignment with shareholders.

Consistent with what we have communicated in the past, the Committee carefully reviews our executive compensation
program each year as we believe it is essential to our ongoing turnaround and future success. We have a long history
of motivational executive compensation programs that we believe have contributed to our recent and historical
success and ensured our continued focus on performance and creation of shareholder value. During our CEO
transition in early 2018, we made retention awards to three of our named executive officers to ensure continuity of
our executive leadership team and to give our new CEO time to evaluate the incumbent executive team and make any
necessary personnel changes. We believe that our strong stock price performance during the course of 2018, the
successful transition of the CEO role to Mr. Niccol, and the development of a strong executive leadership team
validated the importance of these awards.

28 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

As in prior years, during 2018 we conducted outreach calls with shareholders that collectively own a significant
percent of our outstanding shares to solicit their feedback on our executive compensation program and other topics
important to them.

Last year we received 96% support from our shareholders on our say-on-pay vote with respect to our 2017
compensation programs. This successful vote confirmed that shareholders are supportive of our executive compensation
program, including the recruiting package for our new CEO, Brian Niccol. In last year’s CD&A, we provided forward-
looking disclosure of the details of Mr. Niccol’s new hire package and compensation actions taken in 2018 with respect to
the other executive officers named in the proxy statement, which we believe provided important context and for which
we believe shareholders expressed support in last year’s say-on-pay vote. Mr. Niccol’s 2018 compensation was primarily
comprised of performance-based and highly motivational stock incentive grants that the Compensation Committee
developed to recruit him to join Chipotle.

While our 2018 say-on-pay support was very strong, we conducted numerous additional shareholder outreach calls in
the first quarter of 2019 to receive input on our 2019 executive compensation program. Based on this feedback and an
assessment conducted by our new Chief People Officer, our 2019 executive compensation program – which will be fully
disclosed in next year’s CD&A – retains many attributes of the 2018 executive compensation program as well as
several key changes that sustain our highly motivating and shareholder aligned focus (for example, we retained our
comparable restaurant sales and restaurant level cash flow metrics and added a food safety metric to our annual cash
incentive plan).

Our say-on-pay proposal is 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 and 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 for
their insights and candor. We value the support and input of our shareholders, and look forward to continuing to have
an open dialogue. We have great confidence in the abilities of our new CEO and the entire executive leadership team
at Chipotle to further enhance shareholder value and continue to grow the company.

Neil Flanzraich, Lead Independent Director and Chair of the Compensation Committee
Ali Namvar
Matthew Paull

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 named in the 2018 Summary
Compensation Table (the “named executive officers” or “NEOs”), and explains the Compensation Committee’s
determinations as to the actual compensation of our named executive officers for 2018. In addition, this Compensation
Discussion and Analysis is intended to put into perspective the tables and related narratives regarding the compensation of
our named executive officers that appear following this section.

Executive Summary

This Compensation Discussion and Analysis is intended to provide shareholders with an understanding of our compensation
policies and practices with respect to our Chief Executive Officer (CEO), Chief Financial Officer (CFO) and our three other
most highly compensated executive officers for the year ended December 31, 2018. Two individuals served as CEO for part
of 2018, so this proxy describes the compensation of both executives. These executive officers, who are referred to as the
“named executive officers” or “NEOs,” and their current positions are:

•

•

Brian Niccol, Chief Executive Officer

Steve Ells, Executive Chairman and former CEO

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 29

Executive Officers and Compensation
(continued)

•

•

•

•

Jack Hartung, Chief Financial Officer

Curt Garner, Chief Technology Officer

Scott Boatwright, Chief Restaurant Officer

Chris Brandt, Chief Marketing Officer

Performance Overview for 2018

In 2018 we made significant organizational, strategic and operational progress that we believe translated into significant
shareholder value creation. Key highlights include:

Organizational
In 2018, we developed a new executive leadership team, beginning with Mr. Niccol’s appointment as CEO and a member of
the Board in March 2018. We believe that each member of the executive leadership team brings a unique set of experiences
that will allow Chipotle to deliver on its strategy of winning today and cultivating a better future. The following executives
were added to the executive leadership team in 2018:

•

•

•

•

•

•

Brian Niccol was hired as our CEO in March 2018

Steve Ells transitioned from Chairman and CEO to Executive Chairman upon Mr. Niccol’s appointment as CEO in
March 5, 2018

Chris Brandt joined as our Chief Marketing Officer in April 2018

Marissa Andrada joined as our Chief People Officer in April 2018

Roger Theodoredis was hired as our Chief Legal Officer in October 2018

Tabassum Zalotrawala was hired as our Chief Development Officer in December 2018

Strategic
•

Launched “For Real” advertising campaign

•

•

•

•

•

•

Opened 137 new restaurants

Digitized make lines are now in over 1,000 restaurants (on track to be in all restaurants by the end of 2019)

Digital pickup shelves are in approximately 1,000 restaurants (on track to be in all restaurant by the end of 2019)

Increased app downloads (+72% versus 2018) and delivery sales

Achieved promising results related to our tests of mobile order pickup lanes

Continued to develop and enhance our food safety practices, including continuous improvement processes,
implementation of quarterly training for all crew members, and planning for improved sanitation of food
preparation equipment.

Operational

• Revenue increased 8.7% to $4.9 billion

• Comparable restaurant sales increased 4%

• Digital sales increased 42.4% and accounted for 10.9% of total sales

• Restaurant level operating margin increased from 16.9% to 18.7%

The above actions and results translated into $3.8 billion of increased shareholder value over 2018, as measured by the
increase in our market capitalization and a 49% return to shareholders. This 49% total shareholder return was the highest
among our peer group and 54% above the S&P 500. From January 1, 2019 through March 15, 2019, our market
capitalization increased an additional $5.8 billion.

Performance Impact on 2018 Compensation
As a result of the aforementioned strong performance in 2018, the annual cash incentive payouts for our named executive
officers ranged from 113% to 132% of target and the premium-priced stock-only stock appreciation rights (“SOSARs”)
granted in 2018 to our executive officers were in-the-money as of December 31, 2018 (although these SOSARs do not start
to vest until the second anniversary of the grant date).

30 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

CEO Transition: Timeline of Events and Compensation Decisions

Date/Event

November 28, 2017
Announced CEO search
and transition of Mr. Ells
to Executive Chair (upon
hire of new CEO)

January 5, 2018
SOSAR award granted to
Mr. Ells per his Executive
Chairman Agreement

January 9, 2018
The Company entered
into retention agreements
with select employees
including three of our
2018 NEOs

Compensation Decision(s)
Approved by the Committee

Rationale for Compensation
Committee Decision(s)

• The Company announced that Mr. Ells
would become Executive Chairman
following the completion of a search
to identify a new CEO.

• Mr. Ells’ entered into an Executive
Chairman Agreement with the
Company that contained
compensation provisions; however,
none of the provisions became
effective until 2018 (see below).

• The Committee wanted to ensure an
effective transition of the CEO role.
Further, Mr. Ells’ knowledge and
understanding of the Company is deep and
the Committee wanted Mr. Ells to continue
to focus on bringing innovation to the way
Chipotle sources and prepares food
through high quality ingredients that are
raised responsibly.

• In-lieu of an annual long-term

• The structure of the SOSAR award was

incentive (“LTI”) award, Mr. Ells was
granted a one-time award of premium-
priced SOSAR 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
SOSAR will vest on July 4, 2019 based
on continued service, and will be
exercisable from January 5, 2021 until
January 5, 2022.

• Mr. Hartung’s agreement provided for
a cash retention bonus of $1 million
that vests on March 5, 2019 (one-year
anniversary of Mr. Niccol’s hire).
• Messrs. Garner and Boatwright’s
agreements provided for cash
retention bonuses of $500,000 and
$400,000, respectively (each vesting
in four quarterly installments during
2018) and equity awards – structured
as 50% RSUs and 50% SOSARs – of
$3 million and $2.4 million,
respectively (vesting on the second
and third anniversaries of the grant
date).

based on the Committee’s desire to align
pay with long-term performance and the
company’s value creation.

• The Committee decided that the strike

price should be set at a significant
premium to the price at the time of grant
to motivate increasing shareholder value.

• The Committee determined that because of
the uncertainty caused by our search for a
new CEO, it was critical to retain Messrs.
Hartung, Garner and Boatwright given their
essential skill sets and organizational
knowledge and to avoid further disruption
to the organization. The Committee also
wanted to give the new CEO time to
evaluate the incumbent leadership team
and decide if changes were warranted.

• The size of the cash retention bonuses and

equity awards for Messrs. Garner and
Boatwright were based on the Committee’s
assessment of (i) their unvested equity
value (which was $0 at the time of the
awards), (ii) historical LTI awards, and
(iii) expected cost and impact on the
organization if they were to leave.

• The size of the cash retention bonus to

Mr. Hartung was based on the Committee’s
assessment that Mr. Hartung was critical to
the organization during the CEO transition
process and it was imperative that he be
retained.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 31

Executive Officers and Compensation
(continued)

Date/Event

March 5, 2018
Mr. Niccol was hired as
CEO

Compensation Decision(s)
Approved by the Committee

Rationale for Compensation
Committee Decision(s)

• Mr. Niccol’s annual compensation package
was based on a competitive compensation
analysis of CEO pay levels at our peer
group.

• The amount of Mr. Niccol’s make-whole

award was based on an assessment by the
Committee’s independent compensation
consultant of the unvested equity awards
that Mr. Niccol would forfeit from his prior
employer. Further, the structure of the
make-whole award was entirely equity in
the form of premium-priced SOSARs given
the Committee’s commitment to aligning
pay with performance and with the
creation of shareholder value.

• The amount and structure of Mr. Niccol’s

inducement award was to further
incentivize Mr. Niccol to join Chipotle and
based on the Committee’s desire to link
pay to shareholder value creation.
• The cash sign-on award provided to

Mr. Niccol was to offset forgone cash and
other compensation at his prior employer
and to facilitate his transition to Chipotle.

Annual Compensation ($000)

Base Salary

Target Annual Incentive(1)

Performance Shares
Target Value

SOSARs

Total

$1,200

150%

$3,000

$2,000

$8,000

Make-Whole Award ($000)

SOSARs
10% premium strike price

RSUs

$9,650

$9,650

Inducement Award(2) ($000)

SOSARs
25% premium strike price

$4,000

Sign-On Award ($000)

Cash

$1,000

(1) Expressed as a percentage of base salary.
(2) ”Inducement” in this instance refers to a

recruitment award and is not describing the
employment inducement exemption under
the NYSE’s Listed Company Manual Rule
303A.08.

March 5, 2018
Changes to Mr. Ells’ role
and compensation are
triggered per his Executive
Chairman Agreement

• Mr. Ells officially transitioned to

• The reductions in Mr. Ells’ base salary and

Executive Chairman given Mr. Niccol’s
appointment as CEO.

• Reduced Mr. Ells base salary from

$1.54 million to $900,000.

• Reduced Mr. Ells target annual incentive

from 150% of base to 100% of base
salary.

annual incentive plan target were
commensurate with his reduced
responsibilities upon Mr. Niccol’s
appointment as CEO.

Shareholder Outreach in 2018
At our 2018 annual meeting of shareholders, 96% of the votes cast by our shareholders supported our say-on-pay proposal.

During 2018, the Chair of our Compensation Committee and members of management conducted outreach calls to discuss
compensation and governance matters with shareholders owning almost 30% 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 matters. See “Corporate Governance – Shareholder
Engagement” for more details about our outreach efforts.

32 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

Based on our interactions with investors, we made the following changes to the 2018 annual long-term incentive award
structure for our NEOs (excluding Mr. Ells):

•

•

•

Added a restaurant level cash flow metric to our performance share design (to complement comparable restaurant
sales growth)

Removed the absolute stock price metric from our performance shares

Added premium-priced SOSARs to the award mix

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, governance and strategy related matters.
Engage in careful consideration of the annual
say-on-pay results and respond to shareholder feedback
when deemed appropriate.

Í Employ an annual 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 Align our executive compensation with achieving

È No change-in-control severance agreements.

meaningful financial and operational goals and creating
shareholder value.

Í Designed our executive compensation program to

discourage excessive risk taking, with design features
including the incorporation of multiple performance
measures in our incentive programs, robust executive
stock ownership guidelines, long-term performance
goals and at least three-year vesting periods on LTI
awards, and a clawback policy related to LTI awards.

Í Retained an independent compensation consultant who
is engaged directly by the committee to advise on
executive compensation matters.

Executive 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 and motivate our
employees to create long-term shareholder value. 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
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;

È No single trigger; equity awards include double trigger
vesting 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.

• 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.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 33

Executive Officers and Compensation
(continued)

Executive Compensation Program Components and Structures
Our executive compensation program is comprised of three primary components:

BASE SALARY

ANNUAL INCENTIVE PLAN (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.

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. Consistent with our performance-driven compensation
philosophy, the Committee allocates a significant portion of our executive officers’ total compensation to variable,
performance-based pay elements (performance-based AIP and LTI programs). As an employee’s responsibilities and ability
to affect our financial results increases, base salary becomes a smaller component of his or her total compensation.

Chief Executive Officer*

Other Named Executive Officers (average)*

Base Salary
12%

Annual
Bonus
29%

e d Pay

s

LTI
59%

T
o

t

a

l

V

a

ri

a

ble, Performan c e - B a

Base Salary
17%

Annual
Bonus
16%

e d Pay

s

LTI
67%

T
o

t

a

l

V

a

ri

a

ble, Performan c e - B a

*

The charts for the Chief Executive Officer and the Other Named Executive Officers exclude one-time inducement, make-whole and
retention awards, since those are not a component of our annual executive compensation program.

Executive Chairman**

Base Salary
13%

Annual
Bonus
15%

LTI
72%

T
o

t

a

l

V

a

ri

a

ble, Performanc e - B a

s

e d Pay

** LTI consists of the one-time premium-priced SOSAR granted to Mr. Ells in lieu of
his 2018 annual LTI award grant and in connection with his transition to Executive
Chairman.

34 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

 
 
 
Executive Officers and Compensation
(continued)

Factors in Setting Executive Officer Pay
The Compensation Committee sets compensation for the executive officers annually after considering the following factors:

•

•

•

•

•

Chipotle’s performance relative to goals approved by the committee

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 business climate in the restaurant industry, general economic conditions and other factors

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.

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

• 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).

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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 35

Executive Officers and Compensation
(continued)

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 recommend 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 and Impact on 2018 Pay Levels
The Compensation 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; as such, the majority of the
companies in our compensation peer group are companies in the restaurant industry. However, the Committee and
management believe the talent pool for executives is broader than the restaurant industry and, for that reason, chose to
include non-restaurant hospitality companies and other consumer brand companies in our compensation peer group.

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 considers this peer data
in setting pay levels but does not explicitly target a specific percentile when setting pay levels for executive officers.

In setting 2018 pay levels, in addition to peer group data, the Committee also considered the progress of our turnaround,
current base salaries, the value of outstanding equity awards and the design of our executive pay program. We believe our
executive pay program has consistently demonstrated strong shareholder alignment and linkage to shareholder value
creation. Our annual equity awards continue to be 100% performance-based and have always been comprised of
performances shares and/or SOSARs (including performance-based SOSARs and, in 2018, SOSARs with premium strike
prices).

2018 Peer Group
The Committee reviews the composition of the peer group on an annual basis and makes adjustments in response to
changes in the size or business operations of Chipotle and of companies in the peer group.

The peer group used for 2018 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 generally between $2 billion and $11 billion (approximately 0.5x to 2.5x Chipotle). The Committee also included
companies with whom we compete for executive talent above the upper end of this range (for example, our Chief
Technology Officer was formerly an executive at Starbucks Corporation) and excluded companies serving a substantially
different market or client base than we do. Chipotle’s revenues rank at the 77th percentile of this peer group, and our
market capitalization ranks at the 65th percentile of this peer group (as of December 31, 2018), which confirmed for the
Committee that this peer group is appropriate.

Data provided by S&P Capital IQ; $ in millions

Company Name

Starbucks Corporation

McDonald’s Corporation

Darden Restaurants, Inc.

YUM! Brands, Inc.

Wyndham Destinations, Inc. (3)

Bloomin’ Brands, Inc.

Domino’s Pizza, Inc.

Brinker International, Inc.

Revenues(1)

Market Cap(2)

$ 25,279

$ 21,025

$ 8,297

$ 5,688

$

$

$

$

5,176

4,126

3,242

3,174

$ 79,895

$ 136,891

$ 12,394

$ 28,707

$

$

$

$

3,493

1,644

10,314

1,698

36 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

Company Name

Cracker Barrel Old Country Store, Inc.

Hyatt Hotels Corporation

Texas Roadhouse, Inc.

The Cheesecake Factory Incorporated

Papa John’s International, Inc.

Jack in the Box Inc.

Peer Group Median

Chipotle Mexican Grill, Inc.

Percent Rank
(1) Trailing 12 months, as of December 31, 2018.
(2) As of December 31, 2018.
(3) Known as Wyndham Worldwide Corporation until June 1, 2018.

Revenues(1)

Market Cap(2)

$ 3,054

$ 2,498

$ 2,397

$ 2,337

$ 1,667

$

870

$ 3,208

$ 3,842

$ 7,264

$ 4,272

$

1,912

$ 1,256

$ 1,998

$ 4,057

$ 4,865

$ 11,998

77%

65%

The Committee reviews the composition of the peer group periodically and adjusts the peer group in response to changes in
the size, business operations or strategic focus 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. For 2019, the
Committee has determined to remove several companies (Jack in the Box, Papa John’s, Wyndham, Cracker Barrel and
Texas Roadhouse) due to lack of revenue alignment and replace them with Hilton Worldwide Holdings Inc., Marriott
International, Inc., Restaurant Brands International, Ulta Beauty, Inc. and Lululemon Athletica Inc. These additional peer
group companies include non-restaurant companies that have some combination of high brand recognition, attractive
growth opportunities, strong customer service and excellent operations, which align with Chipotle’s continued focus on
customer service and operational excellence.

2018 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.

Recommendations for the executive officers (other than the CEO and the Executive Chairman) 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 named executive officer are set forth below.

Name

Brian Niccol(1)

Steve Ells

Jack Hartung

Curt Garner

Scott Boatwright

Chris Brandt(1)

Base Salaries

2018

2017

% Change

$1,200,000

—

N/A

$ 900,000

$1,540,000

(41.6)%

$ 800,000

$ 800,000

$ 523,631

$ 489,353

$ 430,994

$ 410,000

0.0%

7.0%

5.1%

$ 600,000

—

N/A

(1) Messrs. Niccol and Brandt joined Chipotle in 2018. The amounts in the table reflect their annualized base salaries for 2018.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 37

Executive Officers and Compensation
(continued)

Annual Incentive Plan
The AIP is our annual cash incentive program for all employees. The formula to determine payouts under the 2018 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 50% Weighting
x
Team Performance
Factor
(0-150%)

X 50% Weighting
x
Individual
Performance Factor
(0-130%)

=

Final AIP Bonus Payout

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 a mix of
underperformance and outperformance against the AIP performance metrics in 2018, as depicted below, the CPF was
126.8% of target.

Strategic objectives included in the CPF for 2018 were customer satisfaction and site assessment requests, in contrast to
the strategic objectives included in the 2017 CPF of A/B Grade for restaurants, Max 15 Minute Transactions and Out of Store
ADS. The 2018 strategic objectives were based on our 2018 strategic plan, which provided for enhanced focus on customer
service and additional rigor when evaluating new sites for potential geographic expansion.

Financial objectives included in the CPF for 2018 consist of comparable restaurant sales (“CRS”) and restaurant cash flow
(“RCF”) margin, which were the same objectives used in 2017. The CRS target goal is the highest amongst our peers (based
on midpoint CRS guidance available at the time the goals were set) and over double the median midpoint (1.8%) CRS
guidance of our peer group. Both our CRS and RCF goals for 2018 are slightly lower than those for 2017. For CRS, the actual
performance in 2016 was a double-digit decline on a percentage basis and, as a result, the CRS targets for 2017 were
established higher in comparison to our 2016 negative performance in order to reset targets to a more normalized growth
rate. Since we set our 2017 CRS target against a prior year double-digit performance decline, our 2017 CRS performance
metric was too aggressive and was not achieved. We believe that the 2018 CRS target, which uses as a base a more
normalized prior year’s actual performance, is more realistically aggressive. For RCF, our 2018 target RCF margin goal was
50 basis points lower than our 2017 target RCF margin goal but represented a 190-basis point improvement when compared
to our actual 2017 RCF margin performance. We believe that the achievement of the 2018 CRS and RCF targets will result in
strong shareholder value creation if maintained for a three-year period and, for that reason, are appropriately robust
targets.

38 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

$ in millions

Metric

Average CSAT Jan – Jun

Average CSAT July – Dec

Comparable Restaurant Sales

Restaurant Cash Flow Margin

Site Assessment Requests

Target

72.25%

71.84%

4.9%

18.84%

160

Actual

71.59%

73.70%

4.0%

18.74%

172

A. Beginning CPF:
B. Actual Perf. Impact to CPF:
C. Final CPF (A + B)

Impact on
CPF

(4.2%)

12.5%

(4.9%)

(1.7%)

25%

100%
26.8%
126.8%

The TPF uses similar underlying performance measures as the CPF but is measured at the regional level. For 2018, the
corporate TPF applicable to the named executive officers was based on a weighted average of regional results and was
78.7% of target. The TPF uses comparable restaurant sales growth and restaurant cash flow margin metrics, which are
responsible for more than half of the outcome, and also store performance and digital sales. The variations amongst the
targets for each region makes it difficult to summarize all TPF targets; however, the Compensation Committee believes the
TPF targets for 2018 were challenging, evidenced by the below target payout.

In addition to the CPF and TPF, described above, an executive’s AIP bonus also depends on his or her achievement of
individual performance objectives, which are reflected in the individual performance factor (IPF). The individual objectives
for the CEO are approved by the Committee, and the objectives for other executive officers are set by the CEO with
approval by the Committee. After the end of the year, the Committee evaluates the performance of the CEO against his
objectives and approves an IPF from 0-130%, depending on its evaluation. The CEO evaluates the performance of each of
the other executive officers against their objectives and provides a recommendation on IPF for each to the Committee,
which then approves an IPF from 0-130% for each executive officer.

In determining the IPF for the CEO and executive officers, the Committee considered the CEO’s individual accomplishments
and the CEO considered each executive’s individual accomplishments that helped the Company achieve significant progress
on its long-term transformation and growth strategy, including becoming more visible with culturally relevant
communication and innovation, digitizing and modernizing the restaurant experience, running restaurants with great
hospitality and fast throughput, ensuring discipline and focus with innovation through a stage gate process and building a
great culture of accountability and creativity.

The leadership team’s collective efforts resulted in achieving our 2018 financial goals, including increasing revenue by 8.7%,
increasing comparable restaurant sales by 4.0%, net of a 0.8% decline in comparable restaurant transactions, and growing
digital sales by 42.4% to 10.9% of sales. Some of the key accomplishments achieved by our named executive officers during
2018 that the Committee considered when determining the 2018 IPF include:

Brian Niccol

• Recruited and onboarded a full executive leadership team made up of best-in-class, proven leaders in

their fields

• Developed and implemented transformation and growth strategy initiatives and established a pipeline

of validating strategic initiatives across the organization

• Focused continuous improvement on food safety standards and practices

Jack Hartung

• Led Chipotle’s impressive unit economics, as well as a strong and clean balance sheet, and ensured a

disciplined approach to capital deployment to enhance shareholder value

• Effectively communicated near-term and long-term strategy and financial information to investors

Curt Garner

• Continued digital work to support mobile, delivery, catering and loyalty program, resulting in
increased digital sales to over 10% of total sales; increased app downloads by 72% from 2017

• Hired and retained talent to ensure system stability during transition and maintained 99%+ systems

uptime on the digital platform

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 39

Executive Officers and Compensation
(continued)

Chris Brandt

Scott Boatwright

• Strengthened brand narrative through Chipotle “For Real” campaign and piloted new loyalty
program; made Chipotle more visible and culturally relevant in social and traditional media
channels and increased overall digital impressions by nearly 20% and social impressions by nearly
40% year-over-year from 2017

• Established stage gate innovation process and validated product/promotional pipeline

• Strengthened restaurant operations and improved restaurant-related results, including customer
satisfaction scores and restaurant level margin, which increased to 18.7% from 16.9% in 2017.

• Continued focus on food safety strategy and execution of enhanced food safety practices
• Modernized restaurant operations and increased efficiency; redesigned and launched throughput

training

The 2018 AIP payouts for each of our named executive officers, and their performance against their respective CPF, TPF
and IPF, are set forth below.

Name

Brian Niccol(1)

Steve Ells(2)

Jack Hartung

Curt Garner

Scott Boatwright

Chris Brandt

Target 2018 AIP Bonus

% Base Salary

Dollar Value

CPF

TPF

IPF

Actual 2018
Bonus

Actual
as % of
Target

150.0%

104.5%

85.0%

65.0%

65.0%

65.0%

$1,800,000

126.8% 78.7% 130% $2,381,684

$ 1,061,397

126.8% 78.7% 100% $ 1,202,518

$ 680,000

126.8% 78.7% 130% $ 899,747

$ 340,360

126.8% 78.7% 125% $ 439,561

$ 280,146

126.8% 78.7% 120% $ 352,916

$ 390,000

126.8% 78.7% 120% $ 491,306

132%

113%

132%

129%

126%

126%

(1) Mr. Niccol’s AIP bonus for 2018 was guaranteed at 150% of base salary, but his actual payout was higher due to strong company and

individual performance.

(2) Mr. Ells’ target amount was prorated to reflect his two months serving as Chairman of the Board and Chief Executive Officer and 10

months serving as Executive Chairman.

Long-Term Incentives

Fiscal 2018 Annual Long-Term Incentive Awards
Each year, the Committee evaluates the long-term incentive vehicles provided to our NEOs to evaluate whether they are
properly aligned with the long-term growth of the Company and shareholder interests. For 2018, the Committee chose to
grant a combination of performance share awards and stock appreciation rights because these vehicles are performance-
based and reward management for enhancing long-term shareholder value. In March of 2018, the Committee determined a
target grant value for each NEO, and split the value 60% in performance shares and 40% in stock appreciation rights.
Details of these annual grants are provided below.

2018 Performance Share Awards
Annual performance share awards were granted to our NEOs (excluding Mr. Ells), on March 29, 2018. The performance
share awards were subject to a 3-Year Comparable Restaurant Sales Growth (for the period from January 1, 2018 –
December 31, 2020) and 2-Year Average Restaurant Cash Flow Margin (for the period from January 1, 2019 – December
2020). The number of shares that can be earned under the award is determined by multiplying the target number of shares
by the payout percentage, as set forth in the table below:

2-Year Average RCF Margin

3.50%

4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

3-Year CRS Growth

18.50%

19.00%

20.00%

21.00%

22.00%

0%

0%

50%

75%

75%

0%

25%

75%

100%

125%

25%

50%

100%

150%

175%

50%

75%

150%

200%

225%

75%

100%

150%

200%

250%

100%

150%

200%

250%

275%

125%

150%

200%

250%

300%

150%

200%

250%

300%

300%

40 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

In no event will any Performance Shares be earned if either (i) the 2-Year Average RCF Margin is less than 18.5%, or
(ii) 3-Year CRS Growth is less than 3.5%, and no more than 300% of the target number of shares can be earned. If the level
of performance for either 3-Year CRS Growth, 2-Year Average RCF Margin or both falls between two stated performance
levels in the performance goal table, the payout percentage shall be determined using interpolation. The measurement
period for the 2018 PSU grants does not end until December 31, 2020; however, if the CRS and RCF results for 2018 (4.0%
and 18.84% respectively) were applied across the entire performance period, the payout of the 2018 PSUs would be
approximately 17%.

The Compensation Committee utilized comparable restaurant sales growth and restaurant cash flow margin as elements in
both our AIP (one-year measurement period) and our long-term incentive program (two- and three-year measurement
periods). When designing our 2018 executive compensation program, the Committee evaluated a range of performance
metrics for purposes of our incentive programs and determined that because comparable store revenue growth and
restaurant cash flow margin are core drivers of the company’s performance and stockholder value creation, and because of
the different performance periods, these measures remained appropriate for both the short-term and long-term incentive
programs. In addition, the Committee continued its practice of supplementing these measures with additional performance
measures in the AIP to strike an appropriate balance with respect to incentivizing top-line growth, profitability, non-financial
business imperatives and stockholder returns over both the short-term and long-term horizons.

2018 Stock Appreciation Rights
Annual stock appreciation rights were granted to our NEOs (excluding Mr. Ells), on March 29, 2018. These awards were
generally granted with an exercise price equal to 110% of the closing price on the grant date, with the exception of
Mr. Niccol (as further described below under “Agreements with our Executive Officers”), and vest in two equal installments
on the 2nd and 3rd anniversaries of the grant date, subject to continued employment. The stock appreciation rights were
granted with a 7-year term and are disclosed in the Grants of Plan Based Awards Table for Fiscal 2018.

Other Long-Term Incentive Awards in 2018
In addition to the annual equity awards described above, there were other one-time equity awards provided to NEOs in
connection with the hiring, transition, or retention of key management, as described below in the section titled Agreements
with Executive Officers.

Long-Term Incentives – 2016 Performance Share Award Vesting
The vesting of the 2016 performance share award was based on our absolute stock price performance during the three-year
performance period from February 3, 2016 to February 3, 2019. The terms of this award stipulated that in order to receive a
threshold payout, the average closing stock price of Chipotle’s common stock for 60 consecutive days during the
performance period was at least $700, which was approximately 52% higher than the closing price of Chipotle’s common
stock on the grant date. At the end of the performance period, it was determined that the threshold goal was not met and
these awards were cancelled in December 2018 and paid out at 0%.

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, but 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. These perquisites include relocation benefits and commuting expenses, company cars or car
allowances and payment of certain legal expenses. These perquisites are identified in notes to the 2018 Summary
Compensation Table. 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.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 41

Executive Officers and Compensation
(continued)

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.

Actions Taken with Respect to 2019 Compensation
For 2019 the Compensation Committee approved base salaries and AIP targets in amounts consistent with 2018. We also
streamlined our AIP design and added several key features based on feedback from shareholders:

• Result based solely on financial metrics.

• Result is subject to two modifiers: (1) food safety performance and (2) individual performance.

• Increased the weight of corporate and team performance on the overall payout.

Full disclosure of the 2019 AIP design will be provided in our 2020 proxy statement.

In early 2019, the Compensation Committee granted annual equity awards to our executive officers that generally are
consistent with the annual equity awards granted in 2018, including the total grant date fair values and the allocation of
60% PSUs and 40% SOSARs. The 2019 performance share matrix is similar in structure to the 2018 performance share
matrix but (i) requires a minimum level of restaurant cash flow margin of 19% for any payout to occur (this is above the
minimum level of restaurant cash margin of 18.5% that was used in the 2018 performance share matrix), and (ii) both the
RCF margin and the CRS growth metrics have a three-year performance period (versus the RCF margin metric for 2018,
which had a two-year performance period).

In addition, in February 2019, the Compensation Committee granted a one-time performance-based digital transformation
equity award to the executive officers, excluding Mr. Ells, that is intended to incentivize the achievement of strategic business
initiatives focused on expanding digital sales. The Committee believes that the strategic importance of gaining digital market
share over the next three years warranted a one-time digital transformation award as further incentive for management to
achieve the company’s digital goals. The digital transformation PSUs will fully vest in 2023 only if and to the extent that the
executive officer achieves the transformation goals by the end of 2020 and, if vested, will settle in shares of Chipotle
common stock. Chipotle began a transformation in 2018 when Mr. Niccol joined the company and the Compensation
Committee believed a separate incentive was appropriate and beneficial to achieve these longer-term goals. The digital
transformation PSU granted to Mr. Niccol equaled approximately 17.7% of his total annual long-term equity incentive grant
for 2019.

Executive Stock Ownership Guidelines
Our Board of Directors has adopted robust 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. Our stock ownership
guidelines for our CEO and CFO are among the highest
requirements in our compensation peer group. The
guidelines are reviewed for possible adjustment each year
and may be adjusted by the Committee at any time.

Required
# of Shares

Actual
Share
Ownership(1)

Actual Share
Ownership as
Multiple
of Base
Salary(2)

Brian Niccol

Steve Ells

Jack Hartung

Curt Garner

Scott Boatwright

Chris Brandt

31,000

31,000

7,000

3,000

3,000

3,000

30,141

208,339

35,272

4,780

3,824

1,548

10.85x

99.95x

19.04x

3.94x

3.83x

1.11x

Includes unvested RSUs.

(1)
(2) Based on the closing stock price and base salaries as of

February 27, 2019.

42 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

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 have five years from the date they
become subject to the guidelines to acquire the requisite
number of shares. As of March 2018, all of our executive
officers satisfied, exceeded or were on track to meet these
requirements within the requisite time period.

Stock ownership guidelines applicable to non-employee
members of our Board of Directors are described on
page 16.

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.

Agreements with our Named Executive Officers
We do not have a formal severance plan for our employees,
and historically, we generally have not entered into written
employment, change-in-control, severance or similar
agreements with any of our employees, including our
executive officers. In addition, payouts under the AIP and
vesting of equity awards are conditioned on the employee
being employed as of the payout or exercise date. However,
in connection with our public search for a new Chief
Executive Officer, our appointment of Mr. Niccol to that
role, and the transition of Mr. Ells to Executive Chairman,
we entered into agreements with certain of our executive
officers that contain limited, short-term benefits. We
believe these agreements were necessary to ensure a
smooth and orderly CEO transition and to ensure continuity
of leadership during a time of potential uncertainty. We
structured these agreements based on an extensive review
of external market practices and the specific circumstances
of each executive.

Severance Arrangements
In 2017 and 2018, we hired several new executives and, in
connection with their offers of employment, provided them
with limited, short-term severance arrangements.

When Mr. Boatwright joined Chipotle in May 2017, we
entered into an Executive Agreement with him providing
that if his employment is terminated by us, other than for
cause, at any time prior to May 29, 2019, he would 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 is reduced by one for each
month of employment following May 29, 2018 and would be
fully exhausted on May 29, 2019.

In connection with Mr. Niccol’s hiring, we signed an offer
letter providing that if his employment is terminated prior
to March 5, 2023 by us, other than for cause, or by
Mr. Niccol with good reason, he would be entitled to
severance payments equal to two-times the sum of his then
current base salary plus his then current target bonus
opportunity (or, if higher, his bonus payout for the
immediately preceding fiscal year). The severance
payments would be made in equal installments over the 24
months after his termination.

Mr. Brandt joined us in April 2018, and his offer letter
provides that if his employment is terminated by us, other
than for cause, prior to March 9, 2023, he would be entitled
to a severance payment of the sum of his then current base
salary plus his then current target bonus opportunity. The
severance payments would be made in equal installments
over the 12 months after his termination.

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,
effective on March 5, 2018 when Brian Niccol was appointed
as Chipotle’s new CEO. Under the Agreement, Mr. Ells
received an annualized base salary of $900,000 and a
target annual bonus opportunity under the AIP of 100% of
his base salary for 2018, 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 SOSAR will vest on July 7, 2019,
subject to Mr. Ells’ continued employment through the
vesting date, and possible accelerated vesting upon Mr. Ellis’
earlier termination of employment by Chipotle without
cause, by Mr. Ells with good reason, or due to his death or
disability. The SOSAR, if vested, will first be exercisable on
January 5, 2021, and will expire on January 5, 2022. The
SOSAR was granted in lieu of Mr. Ells’ annual long-term
equity grant for 2018 and the grant date fair value of this
special award was approximately $5.6 million, which was
40% below Mr. Ells’ 2017 annual LTI award as CEO. Under
the agreement, Mr. Ells is subject to customary non-
competition and non-solicitation restrictive covenants for
two years. The agreement also includes customary
confidentiality provisions and a mutual non-disparagement

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 43

Executive Officers and Compensation
(continued)

covenant. If Mr. Ells’ 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 in Connection
with CEO Transition
On January 9, 2018, we entered into retention agreements
with certain employees, including Messrs. Hartung, Garner
and Boatwright. The retention agreements were intended
to encourage the executives’ 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 with Mr. Hartung provides for a cash
retention bonus of $1,000,000, payable on March 5, 2019,
which is the first anniversary of the appointment of a
permanent successor to Steve Ells as Chipotle’s Chief
Executive Officer. The agreements with Messrs. Garner and
Boatwright provide for cash retention bonuses of
$500,000 for Mr. Garner and $400,000 for Mr. Boatwright,
which were paid in equal installments at the end of each
calendar quarter of 2018. In each case, retention payments
were subject to the executive’s continuous employment
with Chipotle through the payment date.

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.

Terms of Offer Letter with New Chief Executive
Officer
On March 5, 2018, Brian Niccol was appointed CEO of
Chipotle. In connection with his joining us as CEO, we
entered into an offer letter with Mr. Niccol providing that
for an annualized base salary of $1.2 million, a target annual
bonus opportunity for 2018 of 150% of his base salary
(which was guaranteed for 2018 only), and a maximum

annual bonus opportunity for 2018 of 225% of his base
salary. 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) PSUs 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
PSUs awards granted to senior executives of Chipotle
generally; and (B) SOSARs 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 SOSARs 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) SOSARs
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) RSUs 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, 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
had to be repaid if Mr. Niccol’s employment with Chipotle
terminated before the first anniversary of his start date.

44 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

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 engage in a business competitive
with Chipotle, 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.

Compensation Program Risk
Pay Governance LLC, an independent executive
compensation consulting firm retained by the
Compensation Committee, conducted a risk assessment of
our compensation programs in March 2019 and concluded
that our compensation policies, practices and programs do
not create risks that are reasonably likely to have a
material adverse effect on Chipotle. Pay Governance’s
assessment included a review of our pay and incentive plan
structures, pay practices and policies and governance
processes, including the Compensation Committee’s
oversight of such programs (supported by an independent

consultant). In structuring and approving our executive
compensation programs, as well as policies and procedures
relating to compensation throughout our company, the
Compensation Committee also considers risks that may be
inherent in such programs, policies and procedures. The
Compensation Committee reviewed the 2019 assessment
and discussed the report with management and, based on
its review, determined that any risks arising from the
Company’s compensation policies and practices for its
employees are not reasonably likely to have a material
adverse effect on the company.

Accounting Considerations
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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 45

Executive Officers and Compensation
(continued)

2018 COMPENSATION TABLES

2018 Summary Compensation Table

Name and
Principal Position

Year

Salary

Bonus(1)

Stock
Awards(2)(3)

Option
Awards(3)(4)

Non-Equity
Incentive Plan
Compensation(5)

All Other
Compensation(6)

Total

BRIAN NICCOL

2018 $ 969,231 $1,000,000 $ 12,650,019 $15,683,006

$2,381,684

$ 837,000

$33,520,940

Chief Executive Officer(7)

STEVE ELLS

2018 $ 1,023,077 $

— $

— $ 5,626,075

$ 1,202,518

$ 103,372

$ 7,955,042

Executive Chairman; former
Chief Executive Officer(8)

2017 $1,540,000 $

— $ 9,324,505 $

2016 $1,540,000 $

— $14,002,740 $

—

—

$

$

—

—

$ 187,675

$ 11,052,180

$ 120,356

$ 15,663,096

JACK HARTUNG

2018 $ 800,000 $

— $ 1,800,046 $ 1,231,989

$ 899,747

$ 252,447

$ 4,984,230

Chief Financial Officer

2017 $ 800,000 $

— $ 4,196,010 $

2016 $ 792,308 $

— $ 5,886,337 $

—

—

$

$

—

—

$ 209,150

$ 5,205,160

$ 175,559

$ 6,854,204

CURT GARNER

2018 $ 518,358 $ 500,000 $ 3,119,990 $ 2,666,469

$ 439,561

$ 882,358

$ 8,126,734

Chief Technology Officer(7) 2017 $ 483,299 $ 426,501 $

— $ 2,653,500

$ 139,786

$ 206,468

$ 3,909,555

SCOTT BOATWRIGHT

2018 $ 427,765 $ 400,000 $ 2,219,991 $ 1,944,290

$ 352,916

$ 366,207

$

5,711,169

Chief Restaurant Officer(7) 2017 $ 236,538 $

— $

— $ 1,194,757

$ 69,624

$ 215,486

$ 1,716,406

CHRIS BRANDT

2018 $ 438,462 $ 500,000 $ 1,348,567 $ 2,082,836

$ 491,306

$ 178,115

$ 5,039,286

Chief Marketing Officer(7)

(1) Amounts under “Bonus” for 2018 represent one-time sign on bonuses for Messrs. Niccol and Brandt, who joined the company in 2018,

and one-time retention bonuses granted in January 2018 to Messrs. Garner and Boatwright to induce them to remain with the company
during the pendency of the company’s public search for a new chief executive officer.

(2) Amounts under “Stock Awards” represent the grant date fair value under FASB Topic 718 of performance share units (PSUs) for which

vesting was considered probable as of the grant date. See Note 9 to our audited consolidated financial statements for the year ended
December 31, 2018, which are included in our Annual Report on Form 10-K filed with the SEC on February 8, 2019, 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 2018 PSU awards will not pay out or have any value unless certain performance targets are achieved,
which targets are based on three-year comparable restaurant sales growth from 2018 through 2020, and the two-year average
restaurant cash flow margin over 2019 and 2020. The PSU awards reflect an assumed target outcome of the performance conditions
and do not reflect the value that ultimately may be realized by the executive officer. The grant date fair value of the 2018 PSU awards,
assuming maximum performance, is $9,000,229 for Mr. Niccol, $5,400,137 for Mr. Hartung, $4,860,221 for Mr. Garner, $3,060,175 for
Mr. Boatwright and $2,600,675 for Mr. Brandt. For further discussion, see above under “Compensation Discussion and Analysis – 2018
Compensation Program – Long Term Incentives – 2018 Performance Share Award Design.” The 2017 PSU 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. The 2016 PSU awards expired and did not payout because the price of our common stock did not exceed an average
of $700 for a period of 60 consecutive trading days before February 3, 2019.

(3) In connection with Mr. Niccol joining Chipotle in March 2018, the company granted him (i) a one-time award of stock only stock

appreciation rights (SOSAR) with an exercise price equal to 125% of the closing stock price of Chipotle common stock on the grant date
as a sign-on inducement, and (ii) a one-time award of SOSARs with an exercise price equal to 110% of the closing stock price of Chipotle
common stock on the grant date and a restricted stock unit (RSU) as a make-whole award to replace unvested equity awards Mr. Niccol
forfeited when he terminated employment with his former employer. The SOSARs are reflected in the “Option Awards” column and the
RSU is reflected in the “Stock Award” column. In January 2018, the company granted Mr. Ells a one-time award of SOSARs for 175,000
shares in connection with his agreement to transition from CEO of the company to Executive Chairman of the Board and in lieu of his
annual 2018 long-term equity grant. The SOSARs are reflected in the “Option Awards” column and have an exercise price of $500 per
share, which equated to a nearly 60% premium to the grant date stock price.

(4) Amounts under “Option Awards” represent the grant date fair value under FASB Topic 718 of SOSARs awarded in 2018. See Note 9 to

our audited consolidated financial statements for the year ended December 31, 2018, 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.

(5) Amounts under “Non-Equity Incentive Plan Compensation” represent the amounts earned under the annual incentive plan (AIP) for the

relevant year.

46 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

(6) Amounts shown in the “All Other Compensation” column for 2018 include the following:

COMPANY
CONTRIBUTIONS
TO RETIREMENT
PLANS(a)

PERSONAL
AIRCRAFT USE
AND
COMMUTING
COSTS(b)

$

0

$40,923

$ 32,023

$30,406

$ 7,542

$

0

$145,157

$

0

$ 50,731

$ 23,313

$

0

$ 27,921

NAME

Brian Niccol

Steve Ells

Jack Hartung

Curt Garner

Scott Boatwright

Chris Brandt

HOUSING AND
RELOCATION(c)

HOME
SECURITY(d)

CAR
ALLOWANCE(e)

LEGAL
FEES(f)

TAX
PAYMENTS(g)

$ 26,189

$32,744

$28,350

$563,668

$ 40,894

TOTAL

$837,000

$

0

$ 64,335

$465,633

$ 238,231

$ 48,899

$

$

$

$

$

0

0

0

0

0

$57,503

$ 4,945

$

0

$ 103,372

$24,457

$ 35,100

$ 35,100

$25,660

$

$

$

$

0

0

0

0

$ 80,902

$ 252,447

$327,906

$882,358

$ 85,333

$ 75,635

$ 366,207
178,115
$

(a) Consists of matching contributions made by the company to Chipotle’s 401(k) Plan and the Supplemental Deferred Investment Plan
for the benefit of the executive. The Supplemental Deferred Investment Plan is a nonqualified deferred compensation arrangement
for employees who earn compensation in excess of the maximum compensation that can be taken into account with respect to the
401(k) Plan, as set by the Internal Revenue Code. See “Non-Qualified Deferred Compensation for 2018” for more details on this
plan.

(b) Consists of commuting costs for new executives who joined Chipotle in 2018 and/or executives who commuted from home to our

company headquarters for all or part of 2018, including in connection with Chipotle’s headquarters relocating to California from
Colorado in 2018, and the cost of personal use of company-owned aircraft for commuting. Amounts for commercial travel include
airfare, airport parking and ground transportation relating to travel between home and our company headquarters; amounts for
use of company-owned aircraft include costs billed by a third-party operating company or, for company-operated flights, the hourly
operating cost of the aircraft, consisting of fuel costs, an allocation of maintenance costs, and an allocation of other operating
costs such as crew expenses, catering, landing fees, taxes, and other operating costs. On occasion, Mr. Ells and Mr. Niccol have
used the company-owned aircraft for personal flights and have reimbursed the company for the aggregate incremental costs of
those flights.

(c) Consists of relocation costs for executives who joined the company in 2018 and/or relocated in connection with the relocation of
Chipotle’s headquarters from Colorado to California, as well as temporary housing expenses for executives who were commuting
from home and our company headquarters location. Relocation costs include costs such as transportation, house hunting trips,
packing and transportation of household belongings, and housing costs include monthly rent and utilities payments. The executive
would be required to repay Chipotle for these relocation costs if the executive’s employment terminated before the one year
anniversary of his start date or relocation. The aggregate incremental cost was based on the amount paid to the NEO or the
service provider, as applicable.

(d) Consists of costs to install a security system in Mr. Niccol’s home, which includes one-time advisory fees and equipment

installation, plus monthly monitoring costs. The aggregate incremental cost was based on the amount paid to the service provider.

(e) Consists of costs for company car used by the executive, including 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. Also includes car allowances paid to those executives who choose not to use a company car.

(f) Consists of legal fees and expenses paid by the company arising from a commercial legal proceeding relating to Mr. Niccol’s

employment by Chipotle, and also legal fees paid by the company for legal review of employment-related agreements for Messrs.
Niccol and Ells.

(g) Consists of the company’s reimbursement of taxes payable by the executive in connection with housing, relocation and commuting

costs that are taxable perquisites to the executives under rules of the Internal Revenue Service.

(7) Several executive officers became executive officers of Chipotle within the past two years, and their compensation is reported only for
the years in which they were executive officers of the company: Mr. Niccol joined the company as Chief Executive Officer in March
2018; Mr. Garner was designated as an executive officer in March 2017; Mr. Boatwright was designated as an executive officer in
September 2017; and Mr. Brandt joined the company in April 2018.

(8) Mr. Ells transitioned to Executive Chairman in March 2018, effective upon our appointment of Mr. Niccol as Chief Executive Officer.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 47

Executive Officers and Compensation
(continued)

Grants of Plan-based Awards In 2018

Estimated Future Payouts
Under Non-equity Incentive
Plan Awards(1)

Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)

Name

Award
Type

Grant
Date

Threshold
($)

Target
($)

Maximum
($)

Threshold
(#)

Target
(#)

Maximum
(#)

All Other
Stock
Awards:
Number of
Shares of
Stock
or Units
(#)

All Other
Option
Awards:
Number Of
Securities
Underlying
Options(2)
(#)

Grant
Date Fair
Value
Of Stock
And Option
Awards(3)
($)

Exercise Or
Base Price
Of Option
Awards
($/Sh)

BRIAN NICCOL

AIP(4)

RSUs(5)

—

$1,800,000 $1,800,000 $3,024,000

3/5/18

PSUs(6)

3/29/18

SOSAR(5)

SOSAR(5)
SOSAR(7)

3/5/18

3/5/18

3/29/18

STEVE ELLS

AIP
SOSAR(8)

—

1/5/18

$204,319

$1,061,397 $ 2,388,142

JACK HARTUNG

AIP
PSU(6)

—

$130,900

$680,000 $ 1,428,000

3/29/18

SOSAR(7)

3/29/18

CURT GARNER

AIP
RSU(7)

PSU(6)
SOSAR(7)

—

$65,519

$340,360 $

714,756

1/5/18

3/29/18

1/5/18

SOSAR(7)

3/29/18

SCOTT BOATWRIGHT

AIP
RSU(7)

PSU(6)
SOSAR(7)

—

$53,928

$280,146 $ 588,307

1/5/18

3/29/18

1/5/18

SOSAR(7)

3/29/18

CHRIS BRANDT

AIP
RSU(5)

PSU(6)
SOSAR(5)

—

$75,075

$390,000 $ 819,000

3/29/18

3/29/18

3/29/18

SOSAR(7)

3/29/18

2,321

9,285

27,855

30,141

$9,649,943

$3,000,076

114,840

$ 352.18

$ 9,721,206

53,086

$400.20

$ 4,011,709

21,439

$ 323.11

$ 1,950,091

175,000

$500.00

$5,626,075

1,393

5,571

16,713

$ 1,800,046

14,742

$ 355.42

$ 1,231,989

1,254

5,014

15,042

789

3,157

9,471

697

2,786

8,358

4,780

3,824

1,548

$ 1,499,916

$ 1,620,074

18,386

$ 313.79

$ 1,557,662

13,268

$ 355.42

$ 1,108,807

$ 1,199,933

$ 1,020,058

14,709

$ 313.79

$ 1,246,146

8,354

$ 355.42

$ 698,144

$ 481,676

$ 866,892

22,567

$403.89

$ 1,521,016

7,372

$ 355.42

$ 561,820

(1) Each executive officer was entitled to a cash award to be paid under our 2014 Cash Incentive Plan; however, 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 – 2018 Compensation Program – Annual Incentive Plan.” The “Threshold”
column reflects amounts that would be paid under the AIP if each executive officer achieved the plan goals at the minimum level
required to receive any payout. Amounts under Target reflect the target AIP bonus that 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 that 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 2018 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 2018 Annual Performance Share Unit Awards” and “Terms of 2018 Annual SOSAR
Awards” below for a description of the vesting terms for the Performance Shares and SOSARs granted during 2018.

(3) See Note 9 to our audited consolidated financial statements for the year ended December 31, 2018, 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.

48 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

(4) In connection with his joining Chipotle in March 2018, the company guaranteed Mr. Niccol’s AIP for 2018 at no less than 150% of his

base salary. The guarantee does not apply to 2019 or any future years.

(5) Grants of equity awards as make-whole or inducement awards when the executives joined Chipotle in early 2018. The SOSARs granted

to Mr. Niccol have exercise prices equal to 110% and 125% of the closing stock price of Chipotle common stock on the grant date, and
all awards granted to Mr. Niccol vest ratably over three years beginning on the first anniversary of the grant date. The awards to
Mr. Brandt vest ratably on the second and third anniversary of the grant date.

(6) PSUs vest in March following the end of the performance period (January 1, 2018 — December 31, 2020) if and to the extent that both of

the two performance goals are achieved.

(7) The SOSAR and the RSU awards vests 50% on the second anniversary and 50% on the third anniversary of the date of grant.
(8) The SOSAR vests in full on July 4, 2019 and can be exercised only between January 5, 2021 and January 5, 2022.

Terms of 2018 Annual Performance Share Unit Awards
Performance share unit awards (PSUs) granted to the executive officers in 2018 will vest only if and to the extent that both
of the two performance goals specified in the awards are achieved. The performance goals are comparable restaurant sales
growth over a three-year performance period (2018 through 2020), and average restaurant-level cash flow margin over a
two-year performance period (2019 and 2020). The payout range for the PSUs is 0% to 300%, and none of the PSUs will
vest if either performance goal is below the threshold target of an average of 3.5% for comparable restaurant sales growth
or 18.5% for average restaurant-level cash flow margin.

Vesting and payout of each PSU 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.

Terms of 2018 Annual SOSAR Awards
Each stock only stock appreciation right (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 for
all executive officers, except Mr. Niccol, is equal to 110% of the closing price of our common stock on the date of grant. The
exercise price of the annual grant of SOSARs to Mr. Niccol for 2018 is equal to the closing price of our common stock on the
date of grant. The SOSARs are subject to vesting in two 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. When he joined
the company, Mr. Niccol was granted two one-time SOSAR grants as a make-whole award and an inducement award, and
the exercise price of these SOSARs was 110% and 125% of the closing price of our common stock on the date of grant.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 49

Executive Officers and Compensation
(continued)

Outstanding Equity Awards at Fiscal Year End 2018

Option Awards

Stock Awards

Name

Brian Niccol

Steve Ells

Jack Hartung

Curt Garner

Scott Boatwright

Chris Brandt

Number Of
Securities
Underlying
Unexercised
Options
Exercisable(#)

Number Of
Securities
Underlying
Unexercised
Options
Unexercisable(#)

114,840(3)

53,086(2)

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
Of Other Rights
That Have Not
Vested($)(1)

2,321(3)

30,141(2)

$ 1,002,185

$13,014,582

Option
Exercise
Price($)

Option
Expiration
Date

$ 352.18

3/24/2025

$400.20

3/4/2025

—

—

—

—

87,500

87,500

25,000

—

25,000

30,000

30,000

—

11,000

—

—

12,500

—

—

—

—

—

21,439

$ 323.11

3/28/2025

175,000(4)

$500.00

1/5/2022

10,000(5)

$ 4,317,900

$ 543.20

2/3/2021

$ 543.20

2/3/2021

—

$ 318.45

2/7/2020

14,742

$ 355.42

3/28/2025

1,393(3)

4,500(5)

$ 601,483

$ 1,943,055

—

—

—

$ 318.45

2/7/2020

$ 543.20

2/3/2021

$ 543.20

2/3/2021

18,386

$ 313.79

1/4/2025

—

$554.86

12/15/2022

1,254

4,780

$ 541,465

$2,063,956

25,000

$ 427.61

2/19/2024

13,268

12,500

14,709

8,354

10,090

$ 355.42

3/28/2025

$ 417.22

4/26/2023

$ 313.79

1/4/2025

$ 355.42

3/28/2025

$ 475.70

5/29/2024

22,567(2)

$403.89

3/28/2025

7,372

$ 355.42

3/28/2025

789(3)

3,824

697

1,548(2)

$ 340,682

$ 1,651,597

$ 300,958

$

668,411

(1) Calculated Based on the closing stock price of our common stock on December 31, 2018 of $431.79 per share.
(2) Represents grants of SOSARs and RSUs awarded as make-whole or inducement awards when the executives joined Chipotle in early

2018. The SOSARs granted to Mr. Niccol have an exercise price equal to 110% and 125% of the closing stock price of Chipotle common
stock on the grant date and vest ratably over three years beginning on the first anniversary of the grant date. The awards to
Mr. Brandt vest ratably on the second and third anniversary of the grant date.

(3) Represents the annual grant of performance share units for 2018, assuming achievement at the threshold level (which would require
achievement of threshold comparable restaurant sales growth over a three-year performance period (2018 through 2020) and
threshold average restaurant-level cash flow margin over a two-year performance period (2019 and 2020)). The terms of the 2018
performance share awards are further described above under “– Terms of 2018 Annual Performance Share Unit Awards.”

(4) Represents a one-time SOSAR grant to Mr. Ells under this Executive Chairman Agreement in connection with his transition from Chief
Executive Officer to Executive Chairman. The SOSAR was granted in lieu of Mr. Ells’ annual 2018 long-term equity award, has an
exercise price of $500, which equates to an almost 60% premium to the closing stock price of Chipotle common stock on the grant
date and vests in full on July 4, 2019, subject to Mr. Ells’ continued employment through the vesting date.

(5) Represents the annual grant of performance share awards for 2017, 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 equals at least $600,
in addition to achievement of comparable restaurant sales goals).

50 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

Option Exercises and Stock Vested In Fiscal 2018

Name

Brian Niccol

Steve Ells

Jack Hartung

Curt Garner

Scott Boatwright

Chris Brandt

Option Awards

Stock Awards

Number Of
Shares
Acquired
On
Exercise(#)

Value Realized
On Exercise($)

—

—

—

—

—

—

—

—

—

—

—

—

Number Of
Shares
Acquired
On
Vesting(#)(1)

—

11,537

4,845

—

—

—

Value Realized
On Vesting($)(2)

—

$3,679,265

$ 1,545,119

—

—

—

(1) Reflects the number of shares of Chipotle common stock acquired on vesting of restricted stock units.
(2) Equals closing price the Chipotle’s common stock on the vesting date multiplied by the number of shares vested.

NON-QUALIFIED DEFERRED COMPENSATION
FOR 2018
The Chipotle Mexican Grill, Inc. Supplemental Deferred
Investment Plan permits eligible management employees,
including our executive officers, to make contributions to
deferral accounts once the employee has maximized his or
her contributions to our 401(k) plan. Contributions are
made on the participant’s behalf through payroll
deductions from 1% to 50% of the participant’s monthly
base compensation, which are credited to the participant’s
“Supplemental Account,” and from 1% to 100% of awards
under the AIP, which are credited to the participant’s
“Deferred Bonus Account.” We also match contributions at
the rate of 100% on the first 3% of compensation
contributed and 50% on the next 2% of compensation
contributed. Amounts contributed to a participant’s
deferral accounts are not subject to federal income tax at
the time of contribution, fluctuate in value based on the
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 their accounts 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 a participant’s deferral account 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.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 51

Executive Officers and Compensation
(continued)

The table below presents contributions by each executive officer, and our matching contributions, to the Supplemental
Deferred Investment Plan during 2018, as well as each executive officer’s earnings under the plan and ending balances in
the plan on December 31, 2018.

Name

Brian Niccol

Steve Ells

Jack Hartung

Curt Garner

Scott Boatwright

Chris Brandt

Executive
Contributions
In Last Fy(1)

Registrant
Contributions
In Last Fy(2)

Aggregate
Earnings
In Last Fy(3)

Aggregate
Withdrawals/
Distributions

Aggregate
Balance
At Last
Fye(4)

—

$ 37,404

$135,500

$ 112,041

—

—

—

$29,923

$ 27,100

$ 21,392

—

—

—

$ 4,706

$ 58,799

($20,580)

—

—

—

—

$567,069

$ 302,169

$

$

0

0

—

—

$6,642,131

$ 112,853

—

—

(1) These amounts are reported in the 2018 Summary Compensation Table as part of each executive’s “Salary” for 2018.
(2) These amounts are reported in the 2018 Summary Compensation Table as part of each executive’s “All Other Compensation” for 2018.
(3) These amounts are not reported as compensation in the 2018 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 2018 (ignoring for purposes of this footnote any investment losses on
balances in the plan and any withdrawals/distributions), in the following aggregate amounts: $2,501,415 for Mr. Ells and $5,658,831 for
Mr. Hartung.

POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE-IN-CONTROL

Agreements with our Named Executive
Officers

Agreement with New Chief Executive Officer

On March 5, 2018, Brian Niccol was appointed CEO of
Chipotle. In connection with his hiring, we entered into an
offer letter with Mr. Niccol providing for an annualized base
salary of $1.2 million, a target annual bonus opportunity for
2018 of 150% of his base salary (which was guaranteed for
2018 only), and a maximum annual bonus opportunity for
2018 of 225% of his base salary. 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) PSUs 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 PSU awards granted to senior
executives of Chipotle generally; and (B) SOSARs 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 SOSARs 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) SOSARs 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) RSUs 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, 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

52 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

payment to Mr. Niccol of a $1.0 million signing bonus, which
had to be repaid if Mr. Niccol’s employment with Chipotle
terminated before the first anniversary of his start date.

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 engage in a business competitive
with Chipotle, 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.

Terms of those agreements are described above under
“Compensation Discussion and Analysis – Agreements with
our Named Executive Officers.”

Severance Arrangements
We do not have a formal severance plan for our employees
and, historically, we generally have not entered into written
employment, change-in-control, severance or similar
agreements with any of our employees, including our
executive officers. In addition, payouts under the AIP and
vesting and exercise of equity awards are conditioned on
the employee being employed as of the payout, vesting or
exercise date. However, in connection with our public
search for a new Chief Executive Officer, our appointment
of Mr. Niccol to that role and the transition of Mr. Ells to
Executive Chairman, we entered into agreements with
certain of our executive officers that contain limited, short-
term post-termination benefits. We believe these
agreements were necessary to ensure a smooth and
orderly CEO transition and to ensure continuity of
leadership during a time of potential uncertainty.

When Mr. Boatwright joined Chipotle in May 2017, we
entered into an Executive Agreement with him providing
that if his employment is terminated by us, other than for
cause, at any time prior to May 29, 2019, he would 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 is reduced by one for each
month of employment following May 29, 2018 and the
severance benefit fully lapses on May 29, 2019. Severance
payments are conditioned on Mr. Boatwright’s execution of
a mutual release of claims and a non-competition
agreement with the company.

As described above under “Agreement with New Chief
Executive Officer,” we signed an offer letter with Mr. Niccol
in February 2018 providing that if his employment is
terminated prior to March 5, 2023 by us, other than for
cause, or by Mr. Niccol with good reason, he would be
entitled to severance payments equal to two times the sum
of his then current base salary plus his then current target
bonus opportunity (or, if higher, his bonus payout for the
immediately preceding fiscal year). The severance
payments would be made in equal installments over the 24
months after his termination and are conditioned on
Mr. Niccol’s execution of a general release of claims against
the company.

Mr. Brandt joined us in April 2018, and his offer letter
provides that if his employment is terminated prior to
March 9, 2023 by us, other than for cause, or by Mr. Brandt
with good reason, he would be entitled to severance
payments equal to the sum of his then current base salary
plus his then current target bonus opportunity. Severance
payments would be made in equal installments over the 12
months after his termination and are conditioned on
Mr. Brandt’s execution of a general release of claims
against the company.

Executive Chairman Agreement
On November 28, 2017, we entered into an Executive
Chairman Agreement with Mr. Ells providing for his
transition to the role of Executive Chairman of the Board,
effective on March 5, 2018 when Brian Niccol was
appointed as Chipotle’s new CEO. Under the Agreement,
Mr. Ells receive an annualized base salary of $900,000 and
a target annual bonus opportunity under the AIP of 100%
of his base salary for 2018, 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 SOSAR will vest on July 7, 2019,
subject to Mr. Ells’ continued employment through the
vesting date, and possible accelerated vesting upon Mr. Ells’
earlier termination of employment by Chipotle without
cause, by Mr. Ells with good reason, or due to his death or
disability. The SOSAR, if vested, will first be exercisable on
January 5, 2021, and will expire on January 5, 2022. The
SOSAR was granted in lieu of an annual long-term equity
award for 2018 and the grant date fair value of this special
SOSAR was $5.6 million, which was approximately 40%
below Mr. Ells’ 2017 annual LTI award as CEO. Under the
agreement, Mr. Ells is subject to customary non-
competition and non-solicitation restrictive covenants for
two years. The agreement also includes customary
confidentiality provisions and a mutual non-disparagement

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 53

Executive Officers and Compensation
(continued)

covenant. If Mr. Ells’ 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
two-year restricted period.

Executive Officer Retention Awards
On January 9, 2018, we entered into retention agreements
with certain employees, including Messrs. Hartung, Garner
and Boatwright. The retention agreements were intended
to encourage the executives’ continued service to Chipotle
during the pendency of a public search for Chipotle’s next
Chief Executive Officer and the subsequent leadership
transition, and were approved by the Compensation
Committee.

The agreement with Mr. Hartung provides for a cash
retention bonus of $1,000,000, payable on March 5, 2019,
which is the first anniversary of the appointment of a
permanent successor to Steve Ells as Chipotle’s Chief
Executive Officer. The agreements with Messrs. Garner and
Boatwright provide for cash retention bonuses of $500,000
for Mr. Garner and $400,000 for Mr. Boatwright, which
were paid in equal installments at the end of each calendar
quarter of 2018. In each case, retention payments were
subject to the executive’s continuous employment with
Chipotle through the payment date. Payment of the
retention award for each executive would be accelerated
and paid in full if the executive’s employment was
terminated prior to the scheduled payment date by us, other
than for cause, or by the executive with good reason.

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.

Equity Awards
The terms of some equity-based award agreements,
including for awards granted to our executive officers,
provide for post-employment benefits in certain
circumstances.

Performance Share Units. The award agreements for the
performance share units provide that if the holder’s
employment terminates due to death, disability or retirement,
the PSUs will vest on a pro-rata basis, based on the portion of
the performance period during which the holder was
employed by the company, and will be settled at the same
time the PSUs are settled with respect to other PSU holders.
Retirement is defined as the holder having a combined age
and years of service with the company equal to at least 70. In
the event a change in control of the company occurs, the
PSUs will immediately vest at the greater of target or actual
performance through the date the change in control is
completed; provided that, in lieu of immediate vesting, the
Compensation Committee may approve the replacement of
the company’s PSUs with a comparable performance share
unit issued by the company’s successor.

Stock Appreciation Rights. The award agreements for the
stock-only stock appreciation rights (SOSARs) provide that
if the holder’s employment terminates due to death or
disability, any unvested SOSARs as of the termination date
will immediately vest and will remain exercisable until the
third anniversary of the termination date. If the holder’s
employment terminates due to retirement, any unvested
SOSARs will continue to vest on the regularly scheduled
vesting date as if the holder remained employed by the
company, and the SOSARs will be exercisable until the third
anniversary of the termination date, in the case of any
SOSARs that were vested as of the termination date, and
the third anniversary of the applicable vesting date, in the
case of any SOSARs that were unvested as of the
termination date. Retirement is defined as the holder
having a combined age and years of service with the
company equal to at least 70. In the event a change in
control of the company occurs that results in our common
stock being removed from listing on a national securities
exchange, the Compensation Committee is required to
arrange for the substitution for any unvested SOSARs with
the grant of a replacement award that provides the holder
with substantially the same economic value and benefits
and that vest on the earlier of the date the SOSARs would
otherwise have vested under the terms of this SOSAR
Agreement and the third anniversary of the grant date.

Restricted Stock Units. The award agreements for the RSUs
provide that if the holder’s employment terminates due to
death, disability or the consummation of a change in control
of the company, any unvested RSUs as of the termination
date will immediately vest; however, the vesting of the RSUs
held by Mr. Niccol do not accelerate or continue if the holder’s
employment terminates due to retirement or the occurrence
of a change in control of the company.

54 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

The following table presents the potential estimated
payments to each executive officer named in this proxy
statement if he were terminated as a result of the
indicated triggering event as of December 31, 2018, the
last day of the fiscal year. The table does not include
amounts that we would need to pay regardless of the
occurrence of the indicated triggering event, such as
accumulated balances in retirement plans. In calculating
the amounts reflected in the table, we assumed the
following:

• each triggering event occurred on December 31, 2018,

the last trading day of fiscal 2018, and a price per share
of our common stock $431.79, the closing price of
Chipotle common stock on December 31, 2018;

• the executive earned the AIP at the actual payout
amount for 2018, since he was employed by the
company through the end of the year; and

• with respect to PSUs, awards were earned at target

levels.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL

Officer
BRIAN NICCOL

Salary Continuation(3)

Annual Bonus(3)

One-time Equity Grants(4)

Annual Equity Grants

STEVE ELLS

Salary Continuation(5)

Annual Bonus(6)

One-time Equity Grant(7)

Annual Equity Grants

JACK HARTUNG

Salary Continuation

Annual Bonus(6)

Retention Bonus(8)

Annual Equity Grants

CURT GARNER

Salary Continuation

Annual Bonus(6)

One-time Equity Grant

Annual Equity Grants

SCOTT BOATWRIGHT

Salary Continuation(9)

Annual Bonus(6)

One-time Equity Grant

Annual Equity Grants

CHRIS BRANDT

Salary Continuation(10)

Annual Bonus(10)

One-time Equity Grant

Annual Equity Grants

Termination without
Cause or By Executive
for Good Reason

Change in Control
(Double Trigger)(1)

Retirement(2)

Death
or Disability

$ 2,400,000

$ 3,600,000

$23,833,982

$ 2,329,991

$ 1,800,000

$

$

$

$

$

0

0

0

0

0

$

$

0

0

$10,819,399

$ 6,339,161

$

$

$

0

0

0

$8,635,800

$

$

0

0

$ 1,000,000

$ 1,000,000

$

$

$

$

$

$

$

$

$

$

$

0

0

0

0

0

0

0

0

0

0

0

$

$

0

0

$23,833,982

$

3,431,717

$

$

$

0

0

0

$ 5,362,871

$

$

$

0

0

0

$

$

$

0

0

0

$ 4,233,504

$

$

$

0

179,581

0

$ 3,386,827

$

0

$ 600,000

$

$

$

390,000

0

0

$ 7,417,459

$3,659,706

$ 3,659,706

$

$

0

0

$ 4,233,504

$ 3,464,897

$

$

0

0

$ 3,386,827

$ 2,001,156

$

$

0

0

$ 1,298,030

$ 1,765,967

$

$

$

$

$

$

$

$

$

$

$

$

0

0

0

0

0

0

0

0

0

0

0

0

$

$

$

0

0

0

$ 1,894,846

$

$

$

0

0

0

$ 1,012,594

$

$

0

0

$ 1,298,030

$

893,577

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 55

Executive Officers and Compensation
(continued)

(1) Reflects amounts the executive may receive if both a change in control of Chipotle occurs and the executive’s employment is

terminated (other than for cause or by the executive for good reason). If a successor company grants the executive comparable equity
awards in replacement of the outstanding Chipotle awards, no accelerated vesting would occur.

(2) Retirement is defined as the executive having achieved a combined age and years of service equal to at least 70. Mr. Hartung is the

only executive who is eligible for retirement treatment as of December 31, 2018.

(3) Mr. Niccol’s offer letter provides that if his employment is terminated prior to March 5, 2023 by Chipotle without cause, or by him with

good reason, he would be entitled to severance payments equal to two-times the sum of his base salary plus his target bonus
opportunity (or, if higher, his bonus payout for the immediately preceding fiscal year).

(4) Represents the accelerated vesting of the inducement and make-whole equity awards granted to Mr. Niccol when he joined Chipotle,
assuming he experienced a qualifying termination as of December 31, 2018. Value is calculated based on the closing stock price of
Chipotle common stock on December 31, 2018 of $431.79 per share.

(5) If Mr. Ells’ employment is terminated by Chipotle without cause or by him with good reason, the company has agreed to continue to pay

his base salary for two years.

(6) Assumes the executive fully earned the AIP at the actual payout amount for 2018, so it is not reflected in the table.
(7) Mr. Ells’ one-time SOSAR grant to purchase 175,000 shares would vest upon termination by Chipotle without cause or by him with good

reason; however, the stock option was not in the money as of December 31, 2018 so it is not reflected in the table.

(8) Represents the acceleration of Mr. Hartung’s retention award, which otherwise is payable on March 5, 2019.
(9) Mr. Boatwright’s executive agreement provides that if his employment is terminated prior to May 29, 2019 by Chipotle without cause,

he would be entitled to a severance payment of up to 12 months of his then-current base salary’ however, the number of months’ salary
to which he would be entitled is reduced by one for each month of employment following May 29, 2018.

(10) Mr. Brandt’s offer letter provides that if his employment is terminated prior to March 9, 2023 by Chipotle without cause, or by him with
good reason, Mr. Brandt would be entitled to severance payments equal to the sum of his base salary plus his target bonus opportunity.

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 the median of the annual total
compensation of all employees of the company other than
the CEO. 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. For
example, Chipotle employs almost 73,000 people in our
2,500 restaurants around the world, and about 67,900 are
hourly employees working on our restaurant crew.
Importantly, all of our restaurants are company-owned and
not franchised, which will impact the comparability of our
CEO pay ratio to the ratio of many other restaurant or
retail companies that operate under a franchise model (and
who do not employ all of the restaurant crews).

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
2018 compensation for all individuals, excluding our CEO,

who were employed by us on December 31, 2018
(annualized in the case of full- and part-time employees
who joined Chipotle during 2018). To arrive at a
consistently applied compensation measure, we excluded
from total 2018 compensation certain unusual or
non-recurring items not available to all employees
generally. This resulted in identification of a median
employee with total compensation of $13,779, which is the
annualized compensation for an hourly employee who
works part-time at one of our restaurants in the Midwest
United States. This total compensation figure is not
necessarily representative of the compensation of other
restaurant employees or of our overall compensation
practices.

For our CEO, we used the total compensation for Brian
Niccol, our CEO, as reported in the 2018 Summary
Compensation Table; however, since Mr. Niccol was
appointed CEO in March 2018, we annualized Mr. Niccol’s
base salary as if he had joined Chipotle on January 1, 2018.
Based on an annual total compensation of our median
employee for 2018 of $13,779, and the annualized total
compensation for our CEO in 2018 of $33.6 million, the
ratio of our CEO’s annual total compensation to our median
employee’s annual total compensation is 2,450 to 1.
However, a significant majority of Mr. Niccol’s 2018 total
compensation is attributable to several one-time equity
awards granted to him when he joined the company. In
connection with Mr. Niccol joining Chipotle in March 2018,
the company granted him (i) a one-time award of stock
appreciation rights as a sign-on inducement, and (ii) a
one-time award of stock appreciation rights and a
restricted stock unit as make-whole awards to replace

56 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

Executive Officers and Compensation
(continued)

unvested equity awards Mr. Niccol forfeited when he
terminated employment with his former employer in order
to join Chipotle. These one-time awards had a value of
$23.4 million, based on the closing price of Chipotle
common stock on the date they were granted. Excluding
the value of these one-time equity awards, which were not
repeated in 2019, the CEO to median employee pay ratio
would be 680 to 1. We believe that excluding the one-time
equity awards granted to our CEO when he was hired
results in a more meaningful comparison of ongoing
compensation our CEO will receive and offers a better
comparison to our 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 2018,
except for the following: Chipotle inadvertently failed to file
one Form 4 for each of Messrs. Baldocchi, Cappuccio,
Flanzraich and Musk and Ms. Hickenlooper, directors of the
company, to reflect their receipt of an annual director’s
grant of restricted stock units. The RSUs were granted in
May 2018 and the Form 4s were filed in February 2019,
promptly after the oversight was discovered.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 57

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.

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
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.

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.

58 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

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.

SHAREHOLDER PROPOSALS AND
NOMINATIONS FOR 2020 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 2020 annual meeting of shareholders pursuant
to SEC Rule 14a-8 must be received by us no later than
December 3, 2019, unless the date of our 2020 annual
meeting is more than 30 days before or after May 21, 2020,
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., 610 Newport Center Dr., Suite 1300, Newport
Beach, CA 92660, Attn: Corporate Secretary.

Inclusion of Director Nominations in Our
Proxy Statement and Proxy Card under our
Proxy Access Bylaws
Our proxy access bylaws permit qualified shareholders or
groups of shareholders to include nominations for election
as a director in our proxy statement and form of proxy/
voting instruction card, if the shareholder(s) comply with
the proxy access provisions in our bylaws. For the 2020
annual meeting, notice of a proxy access nomination must
be received at the address provided above no earlier than
November 3, 2019, and no later than December 3, 2019.

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
2020 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, 2020, and no later than the close

of business on February 21, 2020, unless the date of the
2020 annual meeting is more than 30 days before or 60
days after May 21, 2020. If the date of the 2020 annual
meeting is more than 30 days before or 60 days after
May 21, 2020, 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 2020 annual meeting is made.

AVAILABILITY OF SEC FILINGS,
CORPORATE GOVERNANCE
GUIDELINES, CODE OF CONDUCT,
CODES OF ETHICS AND COMMITTEE
CHARTERS

Copies of our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K
and all amendments to those reports filed with the SEC, our
Code of Conduct, Codes of Ethics, Corporate Governance
Guidelines, the charters of the Audit 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., Newport
Center Dr. Suite 1300, Newport Beach, CA 92660, Attn:
Corporate Secretary.

DELIVERY OF MATERIALS TO
SHAREHOLDERS WITH SHARED
ADDRESSES

Beneficial holders who own their shares through a broker,
bank or other nominee and who share an address with
another such beneficial owner are only being sent one
Notice of Internet Availability of Proxy Materials or set of
proxy materials, unless such holders have provided contrary
instructions. 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 writing to Investor Relations, Chipotle
Mexican Grill, Inc., 610 Newport Center Dr., Suite 1300,
Newport Beach, CA 92660, or by email to ir@chipotle.com
or by calling (949) 524-4132. We will promptly deliver a
separate copy to you upon written or oral request.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT 59

Other Business and Miscellaneous
(continued)

ATTENDANCE AT THE MEETING

To attend the meeting, you must be a shareholder on the
record date of March 26, 2019 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
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

MISCELLANEOUS

later than 11:59 p.m. Eastern Time on May 17, 2019. 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.

If you request physical delivery of these proxy materials, we will mail along with the proxy materials our 2018 Annual
Report, including our Annual Report on Form 10-K for fiscal year 2018 (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.

60 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND 2019 PROXY STATEMENT

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)

Marissa Andrada
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:51)(cid:72)(cid:82)(cid:83)(cid:79)(cid:72)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)

Curt Garner
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)

Tabassum Zalotrawala
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(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:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)

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)

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)

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)

BOARD OF DIRECTORS

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)

Chris Brandt
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)(cid:3)

Roger Theodoredis
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:47)(cid:72)(cid:74)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)
Counsel

Steve Ells
(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:20)(cid:28)(cid:28)(cid:25)
(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)

Brian Niccol
Director since 2018
(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:3)(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)
(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
(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:19)(cid:26)(cid:3)
(cid:51)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3)(cid:44)(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:44)(cid:81)(cid:70)(cid:17)

Albert Baldocchi
(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:20)(cid:28)(cid:28)(cid:26)
(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)
and strategic advisor

Paul Cappuccio
(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:25)
(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(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: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:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(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)

Patricia Fili-Krushel
(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:28)
(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:3)(cid:38)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:3)(cid:73)(cid:82)(cid:85)
(cid:55)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:3)(cid:44)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)

Robin Hickenlooper
(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:25)
(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: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)

Ali Namvar
(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:25)
(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)

Scott Maw
(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:28)
(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(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: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: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:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)(cid:15)
Starbucks Corporation

Matthew Paull
(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:25)
(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(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:3)(cid:50)(cid:73)(cid:111)(cid:70)(cid:72)(cid:85)(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:38)(cid:82)(cid:85)(cid:83)(cid:17)

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)

STOCK EXCHANGE LISTING

New York Stock Exchange (Symbol: CMG)

AUDITORS

Ernst & Young LLP | Irvine, California  

By phone:
+1-800-401-1957

STOCK TRANSFER AGENT

By mail:
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100

Online:
www.shareowneronline.com

(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:80)(cid:68)(cid:92)(cid:3)(cid:82)(cid:69)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:83)(cid:76)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:75)(cid:76)(cid:83)(cid:82)(cid:87)(cid:79)(cid:72)(cid:10)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)(cid:16)(cid:46)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:27)(cid:3)(cid:11)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:86)(cid:12)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(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:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)
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(cid:44)(cid:81)(cid:70)(cid:17)(cid:15)(cid:3)(cid:25)(cid:20)(cid:19)(cid:3)(cid:49)(cid:72)(cid:90)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:38)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:3)(cid:39)(cid:85)(cid:76)(cid:89)(cid:72)(cid:15)(cid:3)(cid:49)(cid:72)(cid:90)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:37)(cid:72)(cid:68)(cid:70)(cid:75)(cid:15)(cid:3)(cid:38)(cid:36)(cid:3)(cid:28)(cid:21)(cid:25)(cid:25)(cid:19)(cid:17)

 
 
 
 
 
 
THE ONLY INGREDIENT THAT’S  
HARD TO PRONOUNCE  
AT CHIPOTLE IS “CHIPOTLE.”