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SEC Filings

S-1/A
CHIPOTLE MEXICAN GRILL INC filed this Form S-1/A on 12/23/2005
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6.     Stock Based Compensation (Continued)

        In 2002, the Company granted options to purchase 356,000 shares of common stock with an exercise price of $4.99 per share which have a weighted-average remaining contractual life of approximately 2.8 years. In 2003, the Company granted options to purchase 368,000 shares of common stock with an exercise price of $5.83 per share which have a weighted-average remaining contractual life of approximately 3.8 years. In 2004, no options were granted to employees. At December 31, 2004, no options had expired, were forfeited or exercised. In addition, none of the options outstanding at December 31, 2004 are vested or exercisable. During the nine months ended September 30, 2005, options to purchase 337,000 shares of common stock at $4.99 per share vested and became exercisable and options to purchase 38,000 shares of common stock were forfeited. Vested options had an intrinsic value of $509 (unaudited) with a remaining weighted-average contractual life of 2.1 years. Options expected to vest in 2006 had an intrinsic value of $234 (unaudited) with a remaining weighted average contractual life of 3.1 years.

        In 2004, the Company adopted the Chipotle Stock Appreciation Rights Plan (the SAR Plan). The Company granted stock appreciation rights on 501,300 shares of common stock which vest three years from the date of grant and expire after five years and six months. The fair value of the common stock on the date of grant was $7.45 per share. Compensation expense is recognized over the vesting period and is included in general and administrative expenses in the consolidated statement of operations. The liability is included in other liabilities in the consolidated balance sheet. Compensation expense related to grants under the SAR Plan was $193 for the year ended December 31, 2004 and $321 ($193 after tax) (unaudited) for the nine months ended September 30, 2005. At December 31, 2004, no SARs granted had expired, were forfeited or exercised. In addition, none of the SARs outstanding at December 31, 2004 are vested or exercisable. At September 30, 2005, there was $466 of total unrecognized compensation cost related to non-vested SARS that is expected to be recognized over the remaining 1.8 year vesting period.

        In 2005, the Company granted 460,000 shares of common stock with a fair value of $6.50 per share (a related party contemporaneous valuation) which vest evenly over three years. Compensation expense is recognized over the vesting period and is included in general and administrative expenses in the consolidated statement of operations. The Company recognized $912 ($549 after tax) (unaudited) of related compensation expense for the nine months ended September 30, 2005. At September 30, 2005, there was $2,078 (unaudited) of total unrecognized compensation cost related to the non-vested portion that is expected to be recognized over the next 2.5 years.

        McDonald's issues stock options under the McDonald's Stock Ownership Incentive Plan (McDonald's Plan) to certain employees of McDonald's Corporation and its subsidiaries. On February 2, 2001, stock option grants were issued to certain employees of the Company. The options became exercisable equally over four years, expire 10 years from the date of grant and have an exercise price of $29.43 per share of McDonald's stock. The Company has agreed to pay McDonald's $2,356 for its cost of participating in McDonald's Plan which was expensed equally over the four-year vesting period.

7.     Employee Benefit Plans

        McDonald's sponsors a 401(k) plan which covers eligible employees of the Company. The Company matches 100% of the first 3% of pay contributed by each employee and 50% on the next 2% of pay contributed. For the years ended December 31, 2002, 2003 and 2004, Company matching contributions totaled approximately $470, $436 and $747, respectively.

F-18


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