By Svea Herbst-Bayliss and Lisa Baertlein
BOSTON/LOS ANGELES (Reuters) - Union-affiliated adviser CtW Investment Group on Tuesday stepped up pressure on Chipotle Mexican Grill Inc <CMG.N> by urging billionaire investor William Ackman to play a hand in recruiting new directors to the restaurant company's board.
"Replacing two or more incumbent directors with diverse candidates experienced in effective human capital management should be the highest immediate priority for the company, given that both its downturn and sluggish recovery have stemmed from inadequate training and staffing, as well as excessive operational complexity," Dieter Waizenegger, CtW's executive director, wrote in an open letter to Ackman.
Hedge fund Pershing Square Capital Management, controlled by Ackman, announced a nearly 10 percent stake in the company in September, and Reuters reported at that time that the investor was eager to repair the burrito chain after a food safety lapses by shaking up the board and possibly replacing the company's co-chief executives.
The letter to Ackman from CtW, a Chipotle shareholder, came one day after the company's chief executive and founder, Steve Ells, confirmed that the chain is in talks with the investor about refreshing the board. Ells told Reuters that Chipotle would soon name a few new directors, declining to elaborate. But Waizenegger criticized the process as being painfully slow.
A spokesman for Ackman declined to comment.
CtW's website says it works with union pension funds with more than $200 billion in assets collectively "to enhance long-term shareholder returns through active ownership."
"The current board has not been able to provide the sort of
decisive - and effective - leadership that seems important to put the lingering effects of the food safety crisis behind us," the letter said. Adding new blood to the board has long been a key demand for CtW, and it proposed in November to replace Ells, the company's chairman, with an independent director. Ells on Monday said he would remain board chairman.
CtW said on Tuesday that it welcomes the company's decision to eliminate the co-CEO structure after Monty Moran stepped down on Monday. It previously criticized the arrangement as too expensive and inefficient.
"Whether or not this proves to be a good starting
place for governance reform, we absolutely do not believe that eliminating the co-CEO structure is a suitable stopping
place," the letter said.
(Reporting by Svea Herbst-Bayliss and Lisa Baertlein; Editing by Dan Grebler and Steve Orlofsky)