efforts by shareholders and third parties may also prompt even more changes in governance and reporting requirements. We cannot predict or estimate the amount of additional costs we may incur or the
timing of such costs.
Risks Relating to Our Affiliation with McDonald's
We're controlled by McDonald's, whose interests may conflict with yours.
Upon completion of this offering, McDonald's will beneficially own no shares of our class A common stock, but will own
about % of our
outstanding class B common stock, representing % of the combined voting power of our outstanding stock
and % of the economic interest in our outstanding common
stock (or % and %, respectively, if the underwriters' over-allotment option is exercised in full).
Accordingly, as it has since 1998 when we became its
subsidiary, McDonald's will continue to exercise significant influence over our business policies and affairs, including the composition of our board of directors and any action requiring the approval
of our shareholders, including the adoption of amendments to our certificate of incorporation, the issuance of additional shares of equity securities, the payment of dividends and the approval of
mergers or a sale of substantially all of our assets. The concentration of ownership may also make some transactions, including mergers or other changes in control, more difficult or impossible
without the support of McDonald's. McDonald's interests may conflict with your interests as a shareholder. For additional information about our relationships with McDonald's, you should read the
information under the headings "Principal Shareholders" and "Certain Relationships and Related Party Transactions."
Various conflicts of interest between McDonald's and us could arise. Many of our officers own stock in McDonald's, in some cases more than the amount of Chipotle
common stock they own. In addition, one of our directors, Mats Lederhausen, is Managing Director of our controlling shareholder, McDonald's Ventures, LLC. Ownership interests of directors or officers
of McDonald's in the common stock of Chipotle, or a person's service as either a director or officer of both companies, could create or appear to create potential conflicts of interest when those
directors and officers are faced with decisions that could have different implications for McDonald's and Chipotle. These decisions could, for example, relate to:
over corporate opportunities;
between us and McDonald's;
retention or recruiting;
dividend policy; and
services and arrangements from which Chipotle benefits as a result of its relationship with McDonald's.
Potential conflicts of interest could also arise if we enter into any new commercial arrangements with McDonald's in the future. Our directors and officers who have interests in both
McDonald's and us may also face conflicts of interest with regard to the allocation of their time between McDonald's and Chipotle.
addition, under our tax allocation agreement with McDonald's, McDonald's (as our parent) has the sole authority to file federal income tax returns and most state income tax returns on
our behalf and is responsible for administering that agreement until the consummation of this offering. Assuming McDonald's economic interest in our outstanding common stock falls to less than 80%,
this arrangement is expected to terminate for federal and some state income tax purposes for taxable periods following the offering. However, the tax allocation agreement will remain in effect for
taxable years prior to this offering. Consequently, this may result in conflicts of interest between McDonald's and us. For example,