(New throughout, adds investor comment)
By Lisa Baertlein
March 17 Chipotle Mexican Grill Inc,
which has been under pressure from activist shareholder Bill
Ackman, on Friday said four of its 12 directors would not stand
for re-election at the burrito chain's upcoming shareholder
John Charlesworth, Patrick Flynn, Darlene Friedman and
Stephen Gillett have opted to stay off the ballot for the May 25
election, Chipotle said.
Shareholders, frustrated with the long tenures of Chipotle
directors and their cozy ties to management, have agitated for a
major corporate overhaul as the chain fights to recover from a
string of food safety stumbles in late 2015 that battered its
reputation and stock price.
The company said the latest move was not the result of
influence from Ackman's New York-based hedge fund, Pershing
Square Capital Management LP, with a 10 percent stake that makes
it Chipotle's largest shareholder.
"These departures are the product of individual decisions,
and are in no way part of our agreement with Pershing Capital
and Mr. Ackman," Chipotle spokesman Chris Arnold said in a
Pershing declined to comment.
Friedman is the Denver-based company's longest-serving
director, with a 22-year tenure. Charlesworth and Flynn have
served on the board for nearly two decades, while Gillett has
been a director for about two years.
Chipotle in December appointed four new members to its
board, including one from Pershing.
Dieter Waizenegger, executive director at CtW Investment
Group, called the board changes good first steps.
"However, they don't alleviate our concerns about the lack
of truly independent board leadership. An independent chair
would make it clear that the board is serious about oversight,"
CtW and Amalgamated Bank in November filed a shareholder
resolution seeking an independent chairman at the company, where
founder Steve Ells serves as both chairman and chief executive.
CtW also is calling on the company to create an advisory
council to help it manage its people and supply chain to improve
performance and minimize risk.
In late 2015 Chipotle was linked to outbreaks of E. coli,
salmonella and norovirus that sickened hundreds of people.
It responded by beefing up its food safety expertise and
giving away millions of free burritos to woo back diners.
Sales in the latest quarter grew for the first time since
the high-profile outbreaks.
Chipotle shares, which hit a record high of around $758 in
the summer of 2015, were up 0.3 percent at $402.20 in afternoon
trading on Friday.
(Reporting by Lisa Baertlein in Los Angeles, Svea
Herbst-Bayliss in Boston and Richa Naidu in Bengaluru; Editing
by Sai Sachin Ravikumar and Dan Grebler)