E-Proxy – An Inside Counsel’s Perspective

Michael McGawnChipotle Mexican Grill, Inc.mmcgawn@chipotle.com

(303) 222-5978

Discussion Outline1) What is “mandatory e-proxy”?2) Making the call: to print or not to print?3) E-proxy in practice4) Thoughts on 2009

What is “mandatory e-proxy”?• As of January 1, 2008, e-proxy was mandatory for large

accelerated filers• As of January 1, 2009, e-proxy will be mandatory for all registrants• Rule 14a-16(a) says that proxy materials must be posted on the

Internet, and a Notice of Internet Availability of Proxy Materials must be sent– Use of this electronic delivery exclusively is the “Notice only” model

• Rule 14a-16(n) allows registrants to, IN ADDITION, use traditional hard copy delivery (in which case the 40-day advance mailing requirement does not apply)– The “Full Set Delivery” model

• Can use different delivery models for different shareholders

Deciding how to handle e-proxy.• Corporate strategy and philosophy• Makeup of shareholder base (retail vs. institutional)• Document prep timeline• Cost considerations

E-proxy in practice.• Posting the materials

– Issuer posts proxy materials on the Internet on or before the day the Notice is sent and leaves them posted until conclusion of the meeting

• Choice of service providers• Usability considerations

• Delivering the notice– Issuer sends notice to shareholders regarding the electronic

availability of its proxy materials at least 40 calendar days prior to the shareholder meeting

• If using e-proxy only for street name holders, must provide the information required on the Notice to nominees in sufficient time for them to prepare, print and send the Notice at least 40 calendar days prior

– Don’t forget to file the notice as Additional Soliciting Material

E-proxy in practice.• Delivering the notice (cont’d)

– Notice must include:• Required legend regarding availability of materials and ability

to request paper or e-mail copies• Date, time and location of meeting• Clear and impartial identification of each separate matter to

be voted on, and issuer recommendation• List of materials available on the Internet• Toll-free number, email address and web site where

shareholder can request materials• Any control/ID numbers needed to access a proxy card• Instructions on how to access the proxy card (but shareholder

cannot execute a proxy without having access to proxy statement)

• Information about attending the meeting and voting in person

E-proxy in practice.

E-proxy in practice.• Providing hard copies upon request

– Issuer must respond to shareholder request for paper or e-mail copies of proxy materials at no charge to shareholder prior to the meeting and for one year after the meeting

• If request is made prior to meeting, issuer must respond by U.S. first class mail (or other reasonably prompt means) within three business days of request

• May (but are not required to) include with the Notice mailing a postage-paid reply card for proxy material requests

• Getting the vote– Issuer must provide means to vote on the Internet web site (e-

voting, printable proxy card, or toll-free telephone number)– Issuer may send a paper or e-mail proxy card without including

proxy materials, at least 10 calendar days after Notice was sent

E-proxy in practice.• Shareholder reception

E-proxy in practice.• Shareholder use of the materials

– Voting results:2008 (198,800,755 votes eligible): 2007 (198,612,240 votes

eligible):

E-proxy in practice.• Cost outcome

Thoughts on 2009.• More scrutiny of costs

• More thought about different providers– In-house fulfillment

• Implications of 2009 as “Year 2”