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GOVERNANCE

Chipotle shareholders approve proxy-access proposal

Chipotle Mexican Grill Inc. shareholders on Wednesday voted 58% in favor of a proxy-access proposal co-sponsored by the $154 billion New City Retirement Systems, the Detroit-based $60 billion UAW Retiree Medical Benefit Trust and the $3.9 billion Philadelphia Public Employees Retirement System, said a news release from Scott M. Stringer, New York City comptroller who oversees the city funds.

“We have a history of taking action in response to shareholder votes, and I don't expect the vote on proxy access will be any different,” Chris Arnold, Chipotle communications director, said in an e-mail in response to a question on whether the company's board will adopt the shareholder proposal.

Chipotle had urged shareholders to vote against the non-binding proposal.

The $293.6 billion California Public Employees' Retirement System, Sacramento, joined the New York City funds in soliciting shareholders urging support of the access proposal.

The C$282.6 billion ($225 billion) Canada Pension Plan Investment Board, Toronto; the $186.8 billion California State Teachers' Retirement System, West Sacramento; the C$171.4 billion Ontario Teachers' Pension Plan, Toronto; and the $126.6 billion Texas Teacher Retirement System, Austin; voted in favor of the proposal, according to their proxy-voting disclosures.

Under the proposal, a shareholder or an unlimited group of shareholders holding a combined 3% of the shares for three years can nominate up to 25% of the board.

The company offered its own proxy-access proposal that would enable a shareholder or group of up to 20 shareholders holding a combined 5% of the stock continuously for three years to nominate up to 20% of the board

The pension funds all opposed the company's access proposal. Mr. Arnold didn't provide voting results for the company access proposal.

“Today's vote serves as a wake-up call for a board that urgently needs to restore investor confidence in the wake of costly risk oversight failures,” Mr. Stringer said in the release. “Chipotle has repeatedly ignored attempts by the lead proponents to engage on the proposal and understand our underlying concerns. The onus is now on the board to move swiftly to engage investors on a meaningful proxy-access bylaw and discuss next steps to ensure a strong and diverse board of directors.”

Anne Simpson, CalPERS investment director of global governance, said in the release, “Shareowners have spoken, again, decisively. Companies benefit when boards are independent, competent and diverse. Proxy access is rapidly becoming the new market standard on board accountability.”

Francis Bielli, executive director of the Philadelphia system, said in the release the vote “comes at a critical time when food safety and executive compensation concerns raise questions about the ability of the current board to protect shareholders interests.”

The New York City, UAW and Philadelphia funds last year co-sponsored a similar access proposal that received 49.9% of the vote in favor.

In other proxy-voting results, shareholders rejected all of the other shareholder proposals, while approving executive compensation in say-on-pay voting and re-electing all directors, Mr. Arnold said.

The CPPIB, CalSTRS, and OTPP voted against the executive pay, while Texas Teachers supported it.