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Stock-Based Compensation and Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2022
Stock-Based Compensation and Employee Benefit Plans [Abstract] |
Stock-Based Compensation And Employee Benefit Plans | 8. Sto ck-Based Compensation and Employee Benefit Plans Pursuant to the 2022 and 2011 Stock Incentive Plans, we grant stock options, SOSARs, restricted stock units (“RSUs”), or performance and/or 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 both plans, f or purposes of calculating the available shares remaining, 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 one share. We also have an employee stock purchase plan (“ESPP”), Defined Contribution Plan, and a Deferred Compensation Plan. Stock-Based Compensation Under the 2011 Stock Incentive Plan, 6,830 shares of common stock were authorized and reserved for issuance to eligible participants. As of December 31, 2021 there were 2,141 shares of common stock that remained available for future issuances under this plan. On March 23, 2022, the Board approved the 2022 Stock Incentive Plan, which was then approved by the shareholders on May 18, 2022. Once the shareholders approved the 2022 Stock Incentive plan, the remaining shares available for issuance under the 2011 Stock Incentive plan were terminated. The numbers of shares authorized for issuance under the 2022 Stock Incentive Plan will not exceed 2,431. There were 2,318 shares that were authorized for issuance but not issued or subject to outstanding awards as of December 31, 2022. The following table sets forth total stock-based compensation expense:
| Year ended December 31,
| 2022 |  | 2021 |  | 2020
Stock-based compensation | $ | 99,821 |  | $ | 178,703 |  | $ | 84,463
Stock-based compensation, net of income taxes | $ | 84,928 |  | $ | 159,972 |  | $ | 69,904
Total capitalized stock-based compensation included in leasehold improvements, property and equipment, net on the consolidated balance sheets | $ | 1,791 |  | $ | 2,311 |  | $ | 1,837
Excess tax benefit on stock-based compensation recognized in benefit/(provision) for income taxes on the consolidated statements of income and comprehensive income | $ | 24,689 |  | $ | 47,958 |  | $ | 49,690
SOSARs A summary of SOSAR activity was as follows (in thousands, except years and per share data):
| Shares |  | Weighted-Average Exercise Price per Share |  | Weighted-Average Remaining Contractual Life (Years) |  | Aggregate Intrinsic Value
Outstanding, January 1, 2022 |  | 364 |  | $ | 838.62 |  |  |  |  | $ | 331,352
Granted |  | 98 |  |  | 1,556.14 |  |  |  |  |  |
Exercised |  | (84) |  |  | 626.94 |  |  |  |  |  |
Forfeited or cancelled |  | (23) |  |  | 1,361.84 |  |  |  |  |  |
Outstanding, December 31, 2022 |  | 355 |  |  | 1,053.84 |  |  | 4.4 |  |  | 142,916
Exercisable, December 31, 2022 |  | 149 |  |  | 593.52 |  |  | 3.0 |  |  | 118,514
Vested and expected to vest, December 31, 2022 |  | 344 |  |  | 1,038.25 |  |  | 4.3 |  |  | 142,743
The total intrinsic value of SOSARs exercised during the years ended December 31, 2022, 2021, and 2020, was $77,124, $498,399, and $236,573, respectively. Unrecognized stock-based compensation expense for SOSARs as of December 31, 2022 was $29,474 and is expected to be recognized over a weighted average period of 1.6 years. SOSARs expire 7 years after the day they were granted. The weighted average assumptions utilized in the Black-Scholes option-pricing model to estimate the fair value of SOSARs granted each year were as follows:
|  | 2022 |  | 2021 |  | 2020
Risk-free interest rate |  |  | 2.1 | % |  |  | 0.3 | % |  |  | 1.3 | %
Expected life (years) |  |  | 3.6 |  |  |  | 3.7 |  |  |  | 3.8 |
Expected dividend yield |  |  | 0.0 | % |  |  | 0.0 | % |  |  | 0.0 | %
Volatility |  |  | 36.0 | % |  |  | 35.2 | % |  |  | 32.4 | %
Weighted-average Black-Scholes fair value per share at date of grant |  | $ | 456.44 |  |  | $ | 403.01 |  |  | $ | 231.52 |
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 RSU award activity was as follows (in thousands, except per share data):
|  |  |  |  |  | Shares |  | Weighted-Average Grant Date Fair Value per Share
Outstanding, January 1, 2022 |  |  |  |  |  |  |  | 58 |  | $ | 1,064.67
Granted |  |  |  |  |  |  |  | 30 |  |  | 1,559.73
Vested |  |  |  |  |  |  |  | (24) |  |  | 798.11
Forfeited or cancelled |  |  |  |  |  |  |  | (9) |  |  | 1,369.09
Outstanding, December 31, 2022 |  |  |  |  |  |  |  | 55 |  |  | 1,396.78
Vested and expected to vest, December 31, 2022 |  |  |  |  |  |  |  | 50 |  |  | 1,382.72
The weighted average grant date fair value per RSU granted during the years ended December 31, 2021 and 2020, was $1,492.15 and $905.96, respectively. Unrecognized stock-based compensation expense for non-vested RSU stock awards we have determined are probable of vesting was $26,881 as of December 31, 2022, and is expected to be recognized over a weighted average period of 1.5 years. The fair value of shares earned as of the vesting date during the years ended December 31, 2022, 2021, and 2020, was $33,959, $73,540, and $47,649, respectively. Non-Vested Performance Stock Awards (PSUs) A summary of PSU award activity was as follows (in thousands, except per share data):
|  |  |  |  |  | Shares |  | Weighted-Average Grant Date Fair Value per Share
Outstanding, January 1, 2022 |  |  |  |  |  |  |  | 105 |  | $ | 928.28
Granted |  |  |  |  |  |  |  | 24 |  |  | 1,569.39
Vested |  |  |  |  |  |  |  | (54) |  |  | 791.65
Expired |  |  |  |  |  |  |  | (6) |  |  | 1,117.45
Outstanding, December 31, 2022 |  |  |  |  |  |  |  | 69 |  |  | 1,194.80
Vested and expected to vest, December 31, 2022 |  |  |  |  |  |  |  | 116 |  |  | 1,097.75
The weighted average fair value per PSU granted during the years ended December 31, 2021 and 2020, was $1,479.55 and $853.03, respectively. The unrecognized stock-based compensation expense for non-vested PSU stock awards we have determined are probable of vesting was $29,792 as of December 31, 2022, and is expected to be recognized over a weighted average period of 1.3 years. The fair value of shares earned as of the vesting date during the years ended December 31, 2022, 2021, and 2020, was $177,293, $97,496, and $60,081, respectively. During the year ended December 31, 2022, we awarded performance share awards that are subject to service, market, and performance vesting conditions. The quantity of shares that will vest will range from 0% to 300% of the target number of shares based on performance factors related to restaurant cash flow dollars earned over a three-year period beginning on January 1, 2022. If the defined minimum targets are not met, then no shares will vest. Further, in no event may more than 100% of the target number of PSUs vest if our 3-year total shareholder return is below the 25 th percentile of the constituent companies comprising the S&P 500 on the day of the grant. During the year ended December 31, 2021, we awarded performance share awards that are subject to service, market, and performance vesting conditions. The quantity of shares that will vest will range from 0% to 300% of the target number of shares based on performance factors related to our growth in comparable restaurant sales and average restaurant margin over a three-year period beginning on January 1, 2021. If the defined minimum targets are not met, then no shares will vest. Further, in no event may more than 100% of the target number of PSUs vest if our 3-year total shareholder return is below the 25 th percentile of the constituent companies comprising the S&P 500 on the day of the grant. During the year ended December 31, 2020, we awarded performance share awards that are subject to service, market, and performance vesting conditions. The quantity of shares that will vest will range from 0% to 300% of the target number of shares based on performance factors related to our growth in comparable restaurant sales and average restaurant margin over a three-year period beginning on January 1, 2020. If the defined minimum targets are not met, then no shares will vest. Further, in no event may more than 100% of the target number of PSUs vest if our 3-year total shareholder return is below the 25 th percentile of the constituent companies comprising the S&P 500 on the day of the grant. The information contained in this paragraph describing the modification of the 2018 Performance Share Awards is included in the PSU table above. On December 30, 2020, due to the impact that the COVID-19 pandemic had on the growth in comparable restaurant sales and restaurant margin relative to the trajectory of both of these performance factors prior to the pandemic, and also due to the significant shareholder value created over the performance period of the original award, the Compensation Committee of the Board of Directors modified the 2018 PSU award. This modification pertained to all seven recipients of this award, and resulted in incremental compensation expense of $71,441, of which $7,255 was recognized during the year ended December 31, 2022, and $0 remains unamortized as of December 31, 2022. The incremental compensation cost is calculated by multiplying the number of incremental shares generated though the modification by the stock price on the modification date. The stock price on the modification date of December 30, 2020 was $1,374.17. To receive all incremental shares generated through the modification, the employees had to remain employed through December 31, 2022, and the incremental shares vested in four installments over this period. The first two installments of the modification vested during 2021, which included the vesting of 33 PSUs, and the second two installments of the modification vested during 2022, which included the vesting of 16 PSUs. One employee terminated employment during July 2022, which resulted in the forfeiture of 1 PSU. On July 27, 2022, we modified certain equity awards of an employee in connection with a separation agreement to allow short-term extension of vesting of these certain equity awards that would have otherwise vested within eight months of the separation date. This modification impacted one individual and resulted in incremental compensation expense of $6,701, which was recognized in July 2022. ESPP On May 18, 2022, the shareholders of Chipotle approved a new employee stock purchase plan, or “2022 ESPP”, to replace the prior ESPP which expired in early 2022. A total of 250 shares are authorized for issuance under the 2022 ESPP. Similar to the previous ESPP, the 2022 ESPP contains eligibility requirements of one year of service with Chipotle and a maximum contribution of 15% of an employee’s earnings, subject to an annual maximum dollar amount. However, under the previous ESPP the offering period was monthly and the purchase price for our common stock was 95% of the fair market value on the last trading day of the offering period, while the 2022 ESPP offering period is quarterly and the purchase price for our common stock is 92.5% of the lower of the fair market value on the first and last trading days of each offering period. During the years ended December 31, 2022, 2021, and 2020, the number of shares issued each year under the ESPP were less than one. There were 249 shares available for issuance under the ESPP as of December 31, 2022. Employee Benefit Plans Defined Contribution Plan We maintain the Chipotle Mexican Grill 401(k) Plan (“401(k) Plan”) for eligible U.S.-based employees. The 401(k) Plan allows participants to make cash contributions from payroll deductions. Employees become eligible to receive matching contributions after one year, and at least 1,000 hours, of service with Chipotle. We match 100% of the first 3% of pay contributed by each eligible employee and 50% on the next 2% of pay contributed each pay period (with an annual true-up) through cash contributions. For the years ended December 31, 2022, 2021, and 2020, matching contributions totaled approximately $12,923, $10,527 and $8,490, respectively and are included in general and administrative expenses on the consolidated statements of income and comprehensive income. Certain subsidiaries outside the U.S. also offer other similar benefits and are immaterial to the consolidated statements of income and comprehensive income. Deferred Compensation Plan We also maintain the Chipotle Mexican Grill, Inc. Supplemental Deferred Investment Plan (the “Deferred Plan”) for 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 obligations under the Deferred Plan as of December 31, 2022 and 2021, were $21,140 and $19,330, respectively, and are included in other liabilities on the consolidated balance sheets and was fully funded as of December 31, 2021. 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. The following table summarizes estimated current and long-term material cash requirements for our deferred compensation plan as of December 31, 2022:
|  | Payments Due by Fiscal Year
|  | Total |  | 2023 |  | 2024-2025 |  | 2026-2027 |  | Thereafter
Deferred compensation(1) |  | $ | 21,140 |  | $ | 4,153 |  | $ | 5,074 |  | $ | 4,665 |  | $ | 7,248
(1) Includes scheduled payments from our deferred compensation plan where payment dates are determinable for employed participants in accordance with the account’s election, and the assumption that active participants will retire at the age of 65 and begin distributions from their accounts at that time. This does not include future contributions, investment earnings, or future participants. Timing and amounts of payments may vary significantly.

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- Definition The entire disclosure for compensation costs, including compensated absences accruals, compensated absences liability, deferred compensation arrangements and income statement compensation items. Deferred compensation arrangements may include a description of an arrangement with an individual employee, which is generally an employment contract between the entity and a selected officer or key employee containing a promise by the employer to pay certain amounts at designated future dates, usually including a period after retirement, upon compliance with stipulated requirements. This type of arrangement is distinguished from broader based employee benefit plans as it is usually tailored to the employee. Disclosure also typically includes the amount of related compensation expense recognized during the reporting period, the number of shares (units) issued during the period under such arrangements, and the carrying amount as of the balance sheet date of the related liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 710 -URI https://asc.fasb.org/topic&trid=2127225 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 710 -SubTopic 10 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6409950&loc=d3e20396-108366 + Details
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