One-Third Of Chipotle Directors Not Standing For Re-Election

Mar 17 2017 | 9:36pm ET

RS (Reuters) - Chipotle Mexican Grill,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 not to be on the ballot for the May 25 election, Chipotle said.

Chipotle's board long has been under fire for being too entrenched and too cozy with management. Shareholders have sought a major corporate overhaul as the chain battles to recover from a string of food safety stumbles in late 2015 that damaged its sales and reputation.

The company said the latest news represents good corporate governance and is not the result any influence from Ackman's New York-based hedge fund, Pershing Square Capital Management LP, which has a 10 percent stake in Chipotle and is its 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.

Some investors also are lobbying for a change in Chipotle's board leadership. They want an independent chairman at the company, where founder Steve Ells serves as both chairman and chief executive.

Among other things, Chipotle was linked in November 2015 to a multistate E.coli outbreak. The following month, a norovirus outbreak sickened at least 80 Boston College students who dined at the chain.

Following the food-safety lapses, which battered the company's shares, Chipotle abandoned its dual-CEO structure and named Ells the sole CEO.

Chipotle has apologized, offered free and discounted food to regain lost customers and hired two high-profile food-safety experts to help address quality issues.

The company last week won the dismissal of a lawsuit claiming it defrauded shareholders about its ability to protect customers from the outbreaks.

In its latest quarter, the once high-flying Mexican-inspired chain managed to grow sales for the first time since the scandals.

Three months prior to the highly publicized outbreaks, Chipotle's stock hit a record high of around $758. The stock was up 0.1 percent at $401.52 in midday trading on Friday.

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