Chipotle says new director slate due 'shortly,' recovery lags

Tue Dec 6, 2016 1:31pm EST
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By Lisa Baertlein

LOS ANGELES (Reuters) - Chipotle Mexican Grill Inc (CMG.N: Quote), amid activist pressure to revamp its board and revive sales following last year's string of food safety lapses, will "shortly" announce a new slate of directors, founder and co-chief executive Steve Ells said on Tuesday.

Billionaire investor William Ackman, who took a nearly 10 percent stake in the burrito chain three months ago, wants several board seats with the aim of beefing up food safety and marketing, three people familiar with the matter have told Reuters.

Shares in Chipotle tumbled 7.8 percent to $365.33 on Tuesday when Ells said he was nervous about meeting full-year targets. Executives blamed poor customer service and underperforming restaurants, particularly in the Northeastern United States, for a slower-than-expected sales recovery.

Shares in Chipotle have lost 40 percent of their value since Halloween weekend 2015, when the company's food safety problems began grabbing national headlines.

Chipotle co-CEO and director Monty Moran did not join fellow executives at Tuesday's Barclays investor conference in New York, fueling speculation by investors and analysts that he may be ousted in the shakeup. Moran has been co-CEO since January 2009 and rarely misses a presentation.

Moran oversees operations at Chipotle. The company's operational challenges "make you wonder about his absence at an investor meeting," Hedgeye Risk Management analyst Howard Penney said.

Chipotle spokesman Chris Arnold said company management has not changed.

Ells said Chipotle is taking a careful look at existing directors, with an eye toward what can be strengthened. In particular, he said the company is assessing long director tenures and considering new candidates with expertise in areas such as marketing, crisis management and corporate governance.   Continued...

A Chipotle Mexican Grill is seen in Los Angeles, California, U.S. on April 25, 2016. REUTERS/Lucy Nicholson/File Photo