Exhibit 10.2

 

Performance Share Agreement

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Name of Participant:

 

 

Target Number of Performance Shares:

 

                                                                              
Shares Common Stock

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Grant Date:

 

 

Performance Period:

The Thirty-Six Month Period beginning on the Grant Date

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This Performance Share Agreement (“Agreement”) evidences the grant to the
Participant by Chipotle Mexican Grill, Inc. (the “Company”) of the right to
receive shares of Common Stock of the Company, $.01 par value per share (“Common
Stock”), on the terms and conditions provided for herein pursuant to the
Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan (the “Plan”).  Except as
specifically set forth herein, this Agreement and the rights granted hereunder
are expressly subject to all of the terms, definitions and provisions of the
Plan as it may be amended and restated from time to time. Capitalized terms used
in this Agreement and not defined herein shall have the meanings attributed to
them in the Plan.

1. Grant of Performance Shares.  Subject to the terms and provisions of this
Agreement and the Plan, the Company hereby grants to Participant the right to be
issued shares of Common Stock as provided in this Agreement, including Appendix
A hereto (the “Performance Shares”), subject to the following conditions:

(a) Certification by the Committee of the extent to which the Performance Goals
set forth on Appendix A have been achieved;

(b) Participant being continuously employed (subject to the provisions of
Section 2) with the Company (as defined in the Plan) from the Grant Date through
the final day of the Performance Period; and

(c) The satisfaction or occurrence of any additional conditions to vesting set
forth on Appendix A.

The date on which all of the conditions set forth above are satisfied is the
“Vesting Date,” and the Company will issue one share of Common Stock for each
Performance Share earned and vested to the Participant on the March 15th
immediately following the Performance Period or as soon as practicable
thereafter consistent with not violating Section 409A of the Code (the “Payout
Date”), subject to earlier payment in connection with a Change in Control under
Section 3(c).

This Agreement represents the Company’s unfunded and unsecured promise to issue
Common Stock at a future date, subject to the terms of this Agreement and the
Plan.  Participant has no rights under this Agreement other than the rights of a
general unsecured creditor of the Company.

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Subject to the satisfaction of any tax withholding obligations described in
Section 6 below, Participant may elect to defer the receipt of any of the shares
of Common Stock underlying the Performance Shares by submitting to the Company a
deferral election in the form provided by the Company.  In the event Participant
intends to defer the receipt of Performance Shares, Participant must submit to
the Company a completed deferral election form no later than the Final Election
Date (as defined below). By submitting such deferral election, Participant
represents that he/she understands the effect of any such deferral under
relevant federal, state and local tax and social security laws, including, but
not limited to, the fact that social security contributions may be due upon the
Vesting Date notwithstanding the deferral election.  Any deferral election may
be amended or terminated prior to the Final Election Date.  A deferral election
shall become irrevocable on the Final Election Date and any deferral election or
revision of a deferral election submitted after the Final Election Date shall be
void and of no force or effect.  The “Final Election Date” shall be the last
business day occurring on or before the date that is six months prior to the
final day of the Performance Period, provided that in no circumstances will the
Final Election Date be later than the date Participant ceases to provide
services to the Company or the date that the making of such election causes the
Performance Shares to become subject to the excise tax pursuant to Code Section
409A.

2. Termination of Employment. Subject to the provisions that follow in this
Section 2 and Section 3, if at any time prior to the expiration of the
Performance Period Participant’s service with the Company terminates, then
notwithstanding any contrary provision of this Agreement, the Performance Shares
subject to this Agreement will be forfeited and cancelled automatically as of
the date of such termination, and no shares of Common Stock will be issued
hereunder.

Notwithstanding the foregoing or any contrary provision in the Plan, if
Participant’s employment terminates prior to the Vesting Date as a result of
Participant’s death, or the Committee determines that such termination is in
connection with Participant’s Retirement (as defined below), or is as a result
of Participant’s medically diagnosed permanent physical or mental inability to
perform his or her job duties, then the award evidenced by this Agreement will
continue in force following the date of such termination, and, subject to any
then effective deferral election, a pro-rata portion of the shares of Common
Stock underlying the Performance Shares will be issued to Participant (or if
applicable his or her estate, heirs or beneficiaries) reflecting the period of
Participant’s continued service to the Company from and after the Grant Date
through the date of termination of Participant’s service, will be issued to
Participant on the Payout Date.  The Committee will determine the pro-rata
portion of the Performance Shares to be paid out under the following
formula:  Total number of shares of Common Stock issuable on account of
attaining the Performance Goals based upon the actual performance results during
the Performance Period multiplied by a fraction, the numerator of which is the
number of days of service following Grant Date and the denominator of which is
the number of days following the Grant Date through the final day of the
Performance Period).

For purposes of this Section 2, “Retirement” means that a Participant having a
combined Age and Years of Service (as those terms are defined below) of at least
70 (a) has given the Chief Executive Officer of the Company or his or her
designee at least six months prior written notice

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of such Participant’s retirement; (b) has signed and delivered to the Company an
agreement providing for such restrictive covenants, for a period of two years
after such retirement, as may be determined from time to time by the Committee,
based on individual facts and circumstances, to be reasonably necessary to
protect the Company’s interests, (c) has signed and delivered to the Company,
within 21 days of the Executive’s date of employment termination (or such later
time as required under applicable law) a general release agreement of claims
against the Company and its affiliates in a form reasonably acceptable to the
Committee, which is not later revoked, and (d) voluntarily terminates from
service with the Company.  The term “Age” of a Participant means (as of a
particular date of determination), the Participant’s age on that date in whole
years and any fractions thereof, and the term “Years of Service” means the
number of years and fractions thereof during the period beginning on a
Participant’s most recent commencement of employment with the Company or a
subsidiary or parent of the Company (or such other Company-associated entity as
the Committee may determine from time to time) and ending on the date of such
Participant’s termination of service with the Company or a subsidiary or parent
of the Company.  The Participant’s refusal to meet any of the conditions set
forth in (a), (b), (c) or (d) above, or breach of any agreement entered into
pursuant to (b) or (c) above, shall constitute a waiver by the Participant of
the benefits attributable to Retirement under this Agreement.

3. Change in Control.

(a) In the event of a Change in Control that does not also constitute a “change
in the ownership or effective control of a corporation, or a change in the
ownership of a substantial portion of the assets of a corporation” under Treas.
Reg. § 1.409A-3(i)(5), then (i) the Performance Shares subject to this Agreement
shall remain outstanding, (ii) the Performance Shares shall continue to be
subject to the terms of this Agreement, and (iii) the provisions of the
first  paragraph of Section 7(b) of the Plan (regarding rights upon a Qualifying
Termination) shall not apply to such Performance Shares.

(b) In the event of a Change in Control that is also a “change in the effective
control of a corporation” under Treas. Reg. § 1.409A-3(i)(5)(vi), then  (i) the
Performance Shares subject to this Agreement shall remain outstanding, (ii) the
Performance Shares shall continue to be subject to the terms of this Agreement,
(iii) the provisions of the first paragraph of Section 7(b) of the Plan shall
apply to such Performance Shares, and (iv) such Performance Shares shall be paid
out upon the Payout Date based upon the actual level of performance.

(c) In the event of a Change in Control that is also a “change in the ownership
of a corporation” under Treas. Reg. § 1.409A-3(i)(5)(v) or a “change in the
ownership of a substantial portion of a corporation’s assets” under Treas. Reg.
§ 1.409A-3(i)(5)(vii) (a “Special CIC”), the Performance Shares subject to this
Agreement shall immediately vest and the Participant shall receive, within 10
days of such Special CIC, the consideration (including all stock, other
securities or assets, including cash) payable in respect of the Target Number of
Performance Shares (or, if greater, the number of Performance Shares based on
actual performance from the beginning of the Performance Period until the

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Special CIC, as reasonably determined by the Committee based on available
information) as if they were vested, issued and outstanding at the time of such
Special CIC; provided, however, that with respect to Performance Shares that are
otherwise subject to a “substantial risk of forfeiture” under Treas. Reg.
§ 1.409A-1(d) and to the extent permitted by Treas. Reg. § 1.409-3, the
Committee may arrange for the substitution for the Performance Shares with the
grant of a replacement award (the “Replacement Award”) to Participant of shares
of restricted stock of the surviving or successor entity (or the ultimate parent
thereof) in such Change in Control, but only if all of the following criteria
are met:

(i) Such Replacement Award shall consist of securities listed for trading
following such Change in Control on a national securities exchange;

(ii) Such Replacement Award shall have a value as of the date of such Change in
Control equal to the value of the Target Number of Performance Shares (or, if
greater, the number of Performance Shares based on actual performance from the
beginning of the Performance Period until the Special CIC, as reasonably
determined by the Committee based on available information), calculated as if
the Performance Shares were exchanged for the consideration (including all
stock, other securities or assets, including cash) payable for shares of Common
Stock in such Change in Control transaction;

(iii) Such Replacement Award shall become vested and the securities underlying
the Replacement Award shall be issued to the Participant on the second
anniversary of the commencement of the Performance Period or if such Change in
Control occurs following that date shall become vested and shall be issued on
third anniversary of the commencement of the Performance Period, in either case
subject to Participant’s continued employment with the surviving or successor
entity (or a direct or indirect subsidiary thereof) through such date, provided,
however, that such Replacement Award will vest immediately upon and the
securities underlying the Replacement Award shall be issued within 60 days after
the date that (i) Participant’s employment is terminated by the surviving or
successor entity Without Cause, (ii) Participant’s employment is terminated  for
Good Reason, (iii) Participant’s death or (iv) Participant’s medically diagnosed
permanent physical or mental inability to perform his or her job duties;

(iv) Notwithstanding Section 3(c), such Replacement Award shall vest immediately
prior to and the securities underlying the Replacement Award shall be issued to
Participant upon (A) any transaction with respect to the surviving or successor
entity (or parent or subsidiary company thereof) of substantially similar
character to a Change in Control, or (B) the securities constituting such
Replacement

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Award ceasing to be listed on a national securities exchange, in each case so
long as Participant remains continuously employed until such time; and

(v) The Replacement Award or the right to such Replacement Award does not cause
the Performance Shares to become subject to tax under Code Section 409A. 

Upon such substitution the Performance Shares shall terminate and be of no
further force and effect.

4. Rights as Shareholder.  Participant shall not have any of the rights of a
shareholder with respect to the Performance Shares except to the extent that
shares of Common Stock on account of such Performance Shares are issued to
Participant in accordance with the terms and conditions of this Agreement and
the Plan.

5. No Right to Continued Employment.  Nothing contained in this Agreement shall
be deemed to grant Participant any right to continue in the employ of the
Company for any period of time or to any right to continue his or her present or
any other rate of compensation, nor shall this Agreement be construed as giving
Participant, Participant’s beneficiaries or any other person any equity or
interests of any kind in the assets of the Company or creating a trust of any
kind or a fiduciary relationship of any kind between the Company and any such
person.

6. Withholding Taxes.  No later than the date as of which an amount first
becomes includible in the gross income of Participant for federal income or
employment tax purposes with respect to the Performance Shares, Participant
shall pay to the Company or make arrangements satisfactory to the Committee
regarding the payment of, any federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. If approved by the
Committee in its sole discretion, the minimum required withholding obligations
may be settled with a portion of the Performance Shares. The obligations of the
Company under the Plan and this Agreement shall be conditional on such payment,
and the Company shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the Participant.

7. No Fractional Shares.  If any terms of this Agreement call for payment of a
fractional Performance Share, the number of Performance Shares issuable
hereunder will be rounded down to the nearest whole number.

8. Non-Transferability of Award.  The Common Stock underlying the Performance
Shares shall not be assignable or transferable by Participant prior to their
vesting and issuance in accordance with this Agreement, except by will or by the
laws of descent and distribution. In addition, no Performance Shares shall be
subject to attachment, execution or other similar process prior to vesting.

9. Applicability of the Plan.  Except as specifically set forth herein, the
Performance Shares are subject to all provisions of the Plan and all
determinations of the Committee made in accordance with the terms of the Plan.
By executing this Agreement, the

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Participant expressly acknowledges (i) receipt of the Plan and any current Plan
prospectus and (ii) the applicability of the provisions of the Plan to the
Performance Shares.

10. Additional Conditions to Issuance of Performance Shares.  Notwithstanding
the occurrence of the Vesting Date or Payout Date, the Company shall not be
required to issue any Common Stock underlying the Performance Shares hereunder
so long as the Company reasonably anticipates that such issuance will violate
federal or state securities law or other applicable law; provided however, that
in such event the Company shall issue such Performance Shares at the earliest
possible date at which the Company reasonably anticipates that the issuance of
the shares will not cause such violation.

11. Modification; Waiver.  Except as provided in the Plan or this Agreement, no
provision of this Agreement may be amended, modified, or waived unless such
amendment or modification is agreed to in writing and signed by Participant and
by a duly authorized officer of the Company, and such waiver is set forth in
writing and signed by the party to be charged, provided that any change that is
advantageous to Participant may be made by the Committee without Participant’s
consent or written signature or acknowledgement. No waiver by either party
hereto at any time of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. Participant acknowledges and agrees that the Committee
has the right to amend this Agreement in whole or in part from time-to-time if
the Committee believes, in its sole and absolute discretion, such amendment is
required or appropriate in order to conform the award evidenced hereby to, or
otherwise satisfy any legal requirement (including without limitation the
provisions of Section 409A of the Code). Such amendments may be made
retroactively or prospectively and without the approval or consent of
Participant to the extent permitted by applicable law, provided that the
Committee shall not have any such authority to the extent that the grant or
exercise of such authority would cause any tax to become due under Section 409A
of the Code.

12. Notices.  Except as the Committee may otherwise prescribe or allow in
connection with communications procedures developed in coordination with any
third party administrator engaged by the Company, all notices, including notices
of exercise, requests, demands or other communications required or permitted
with respect to the Plan, shall be in writing addressed or delivered to the
parties. Such communications shall be deemed to have been duly given to any
party when delivered by hand, by messenger, by a nationally recognized overnight
delivery company, by facsimile, or by first-class mail, postage prepaid and
return receipt requested, in each case to the applicable addresses set forth
below: 

If to Participant:

to Participant’s most recent address on the records of the Company

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If to the Company:

Chipotle Mexican Grill, Inc.
1401 Wynkoop Street, Suite 500
Denver, CO 80202
Attn: Director – Compensation & Benefits
Facsimile: 303-222-2500

(or to such other address as the party in question shall from time to time
designate by written notice to the other parties).

13.Compensation Recovery.   The Company may cancel, forfeit or recoup any rights
or benefits of, or payments to, the Participant hereunder, including but not
limited to any Shares issued by the Company following vesting of the Performance
Shares under this Agreement or the proceeds from the sale of any such Shares,
under any future compensation recovery policy that it may establish and maintain
from time to time, to meet listing requirements that may be imposed in
connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act or
otherwise.  The Company shall delay the exercise of its rights under this
Section for the period as may be required to preserve equity accounting
treatment.

14.Governing Law.    Except to the extent that provisions of the Plan are
governed by applicable provisions of the Code or other substantive provisions of
federal law, this Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of law thereof.

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CHIPOTLE MEXICAN GRILL, INC.

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                     /s/ Darlene Friedman

_________________________________________
                                            

By: Darlene Friedman
Compensation Committee of the Board of Directors

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Participant Name:

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Participant

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Signature Page to Performance Share Agreement

 

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Appendix A to 2017 Performance Share Agreement

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Name of Participant: 

Summary The Incentive Award under this Agreement consists of the following two
components:

Stock Price Component refers the portion of the Incentive Award that is based on
the Company’s Stock Price (as defined below) during the Performance Period.

CRS Component refers to the portion of the Incentive Award that is based on
growth in Comparable Restaurant Sales (as defined below) during the Performance
Period.  

Two-thirds (2/3rd) of the Target Number of Performance Shares (as defined in the
Performance Share Award Agreement) is allocated to the Stock Price
Component.  One-third (1/3rd)  of the Target Number of Performance Shares is
allocated to the CRS Component.  Each of these components and the performance
goals for threshold, target and maximum performance is described further
below.  The features common to both components are described after that under
the heading “Provisions Applicable to all Performance Shares.”

Stock Price Component

The number of shares earned under the Stock Price Component is equal to 2/3rd of
the Target Number of Performance Shares multiplied by the Payout Percentage
determined under the Performance Goal Table set forth below based on the
Company’s Stock Price:

Performance Goal Table
for the Stock Price Component

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Stock Price
(per share)

Payout Percentage

Threshold

$600

50%

Target

$650

100%

Target Plus

$750

200%

Maximum

$900

350%

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For avoidance of doubt, no Performance Shares will be earned under the Stock
Price Component Performance Goal Table set forth above if the Stock Price during
the Performance Period is less than $600, and no more than 350% of the Target
Number of Performance allocable to the Stock

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Price Component will be earned under the Performance Goal Table set forth above
if the Stock Price is more than $900. 

For purposes of this Appendix A, the Company’s “Stock Price” shall be equal to
the highest rolling average (i.e., the arithmetic mean) of the closing prices of
a share of Common Stock for any period of sixty (60) consecutive trading days
during the Performance Period.  Any day that is not a trading day on the New
York Stock Exchange shall be disregarded when determining the Stock Price.  

Notwithstanding anything to the contrary in this Appendix A, if the rolling
average (i.e., the arithmetic mean) of the closing prices of a share of Common
Stock for the last sixty (60) consecutive trading days of the Performance Period
(disregarding any day that is not a trading day on the New York Stock Exchange
is below $600, then the number of earned Performance Shares shall not be greater
than at Target irrespective of whether a higher Stock Price was achieved earlier
during the Performance Period.

CRS Component

The number of shares that can be earned under the CRS Component is equal to
1/3rd of the Target Number of Performance Shares multiplied by the Payout
Percentage determined under the Performance Goal Table set forth below based on
the Company’s Comparable Restaurant Sales or CRS:

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Performance Goal Table
for the CRS Component

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3-Year CRS Growth

Payout Percentage

Threshold

5%

50%

Target

7%

100%

Target Plus

9%

200%

Maximum

11%

300%

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For avoidance of doubt, no Performance Shares will be earned under the CRS
Component Performance Goal Table set forth above if the 3-Year CRS Growth is
less than 5%, and no more than 300% of the Target Number of Performance
allocable to the CRS Component will be earned under the Performance Goal Table
set forth above if 3-Year CRS Growth is more than 11%.

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For purposes of the Performance Goal Table under this Appendix A, “3-Year CRS
Growth” shall be determined under the following formula:

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(1+X)*(1+Y)*(1+Z)-1

3

Where:

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“X” = the annual percentage change in the Comparable Restaurant Sales for the
fiscal year ending December 31, 2017

“Y” = the annual percentage change in Comparable Restaurant Sales for the fiscal
year ending December 31, 2018

“Z” = the annual percentage change in Comparable Restaurant Sales for the fiscal
year ending December 31, 2019.

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The following terms shall have the respective meanings set forth below when
determining 3-Year CRS Growth:

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“Comparable Restaurant” means a restaurant operated under the Chipotle Mexican
Grill, Pizzeria Locale, and/or TastyMade brands by the Company or its direct or
indirect Subsidiaries, beginning in such restaurant’s 13th full calendar month
of operations.

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“Comparable Restaurant Sales”, with respect to a fiscal year, means the net
sales attributable to Comparable Restaurants that are realized during such year,
as determined in accordance with generally  accepted accounting principles.  For
avoidance of doubt, net sales from a restaurant shall only be counted after it
has become a Comparable Restaurant.

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Provisions Applicable to all Performance Shares

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The Target Number of Performance Shares (and, with respect to the Stock Price
Component, the dollar amounts designed in its Performance Goal Table) shall be
adjusted to prevent the enlargement or dilution of rights under this Award
Agreement due to any increase or decrease in issued shares of the Company’s
Common Stock without consideration consistent with the terms of the Plan.

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Straight-line interpolation shall be used to determine the Payout Percentage
when the level of performance in a Performance Goal Table is between two stated
levels in such table, and the Payout Percentage shall be expressed to the
nearest tenth of a percent. For example, if the highest Stock Price during the
Performance Period is $700, the Payout Percentage is 150%, which is the midpoint
between the Payout Percentage at $650 per share and $750 per share.

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Performance Shares that are earned under this Appendix A shall only be issued to
the Participant to the extent that the continued employment conditions set forth
in the Performance Share Agreement have been satisfied.

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