Chipotle Mexican Grill Inc. shareholders approved a proxy-access proposal that was backed by activists, a rebuke to a board that has come under fire following a wide-ranging food-safety scandal.
Shareholders at Chipotle's annual meeting in Denver on Wednesday voted in favor of giving proxy access to shareholders holding 3 percent of the stock, a move that makes it easier for them to submit proposals. The investors voted down a company proposal that would have limited that access to a group of no more than 20 shareholders representing 5 percent of the company's stock.
Institutional Shareholder Services, a proxy advisory firm, and CtW Investment Group, which has union backing, had called for shareholders to vote for the proposal with the lower threshold, which ultimately won.
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ISS had also joined with CtW in calling for the ouster of a total of three directors, arguing the board needed new blood and hadn't properly handled the fallout from the food-safety crisis that erupted in November. The directors were all re-elected, but the proxy vote sent a signal of opposition to the board, said Michael Pryce-Jones, a spokesman for CtW.
"That was a big referendum on this board," he said. "It's a strong oppositional vote."
On the proxy proposal that passed, votes representing more than 12.9 million shares were in favor, with about 9.6 million opposed. The proxy access measure put forward by the company garnered votes representing 5.3 million shares, with 17.2 million opposed, according to a company filing.
The closest direction election was for Pat Flynn, who was targeted by both ISS and CtW. Flynn got votes representing 16.2 million shares, with 6.8 million opposed.
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