CtW Investment Group is calling for a Board shakeup at Chipotle Mexican Grill (NYSE:CMG) citing the reason that the company’s stock price declined nearly 40% due to negative headlines and federal investigations over the last three quarters.
The investment group said the company failed to effectively address governance and shortcomings, and noted that its flawed recruitment process resulted in an “entrenched and insular Board with a startling lack of racial and gender diversity.”
Chipotle shareholders’ immediate concerns
The investment group said immediate concerns of investors include the following:
- Chipotle is facing slowing momentum and potential growth challenges going forward and needs a genuinely independent oversight.
- The company has persistent governance problems including excessively long director tenures and low demographic diversity
- The Board is refusing to adopt a meaningful form of proxy access despite 49.9% shareholder support
CtW encouraged shareholders to replace two incumbent directors
CtW Investment encouraged Chipotle shareholders not to support the reelection of Patrich Flynn and Darlene Friedman, the long-term incumbents of the Nominating and Corporate Governance Committee of the company’s Board.
According to Dieter Waizenegger, executive director of CtW Investment, Flynn and Friedman “must be held accountable for failing to sufficiently refresh the Board and failing to bring about attentive, independent, and diverse oversight of management that shareholders deserve.”
He encouraged Chipotle shareholders to intervene now. He believes that Chipotle can overcome its problems on effective leadership and growth if the Board is refreshed with new voices.
“We strongly believe that demographic diversity in the boardroom leads to healthier debates, better decisions and greater adaptability to change. Empirical studies have also found a positive relationship between company performance and greater board diversity,” said Waizenegger.
“Chipotle’s long-term outlook depends on a strong, independent and diverse board equipped to provide rigorous and forward-thinking oversight. Refreshment is the first step. To reverse the course of stagnation and implement serious refreshment, I urge you to join us in opposing the reelection of directors Flynn and Friedman on May 11, 2016,” he said.