3 Min Read
(New throughout, adds investor comment)
By Lisa Baertlein
March 17 (Reuters) - 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 meeting.
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 statement.
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," said Waizenegger.
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)