Amalgamated Bank and CtW Investment Group Tuesday co-filed a shareholder proposal for Chipotle Mexican Grill Inc.'s 2017 annual meeting, calling for an independent chair of the board of directors of the company, according to an Amalgamated news release.
Chipotle's “highly limited corporate management structure has prevented the necessary accountability to adequately address the recent food contamination,” said the release.
Steve Ells, chairman, also serves as co-CEO with Montgomery Moran, who is also corporate secretary and a director.
The proposal “will go to a vote if we cannot find some common ground between now and then,” Cornish F. Hitchcock, Amalgamated attorney, said in an interview.
“As a matter of practice, we send in a proposal and hope to have a discussion (with company management and board) after that,” Mr. Hitchcock said. “We have not had any discussion prior” to filing the proposal.
“The concern the company has grown very fast, which is great, but corporate governance has not kept up,” Mr. Hitchcock said.
“Chipotle has been a success story but the measure of success is how you handle a crisis as well as building the company up," Mr. Hitchcock said.
The filed proposal follows a food-safety crisis at Chipotle that “sickened hundreds of people and weakened confidence among investors and the general public,” the release said.
Derrick Wortes, lead analyst at CtW, said in the release, “The company's recent earnings confirm that Chipotle is missing key ingredients for a successful turnaround. An independent board chair is an essential part of curing the company's governance and strategic failures that have become more apparent since last year's foodborne illness crisis.”
Chris Arnold, Chipotle spokesman, and CtW executives couldn't be reached for comment.
Amalgamated holds 5,457 shares of Chipotle stock spread out among four of its investment funds, the release said.
Chipotle's annual meeting generally is in May.
CtW Investment Group works with union-sponsored pension funds, whose assets total $250 billion, on corporate governance issues through shareholder activism.