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Chipotle strengthens independent lead director; shareholders withdraw proposal

Chipotle Mexican Grill Inc. announced in a proxy filing Thursday that it would be strengthening the role of its independent lead director but would not be appointing an independent chair of the board of directors.

Chipotle's CEO Steve Ells serves as board chairman

As a result of Chipotle's agreement to strengthen its independent lead director position, currently held by Neil Flanzraich, Amalgamated Bank and CtW Investment Group have withdrawn their shareholder proposal calling for an independent chair.

Under the agreement, Mr. Flanzraich will write an annual shareholder letter that will be included in the company's proxy statements, beginning in 2018; review and approve board meeting agendas; lead the annual performance evaluation of the company's CEO in conjunction with the chair of the compensation committee; and continue to lead executive sessions of the board's independent directors.

Regarding Mr. Ells' dual role, Chipotle said in the filing it believes “it is not only appropriate but also important for Steve Ells to serve as chairman in addition to serving as chief executive officer.”

In a November news release following the filing of Amalgamated and CtW's proposal, Derrick Wortes, lead analyst at CtW, had argued: “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.”

CtW Investment Group works with union-sponsored pension funds, whose assets total $250 billion, on corporate governance issues through shareholder activism. Officials could not be reached for comment Friday.

As of Nov. 1, Amalgamated held 5,457 shares of Chipotle stock spread out among four of its investment funds.