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Report: Chipotle and Pershing Square near deal on board changes

Settlement could avert potential battle over leadership

Chipotle Mexican Grill Inc. is close to a deal with activist investor William Ackman that could result in changes to the company’s board, according to a report in the Wall Street Journal Friday.

Citing unnamed sources, the report said Denver-based Chipotle has been discussing a board realignment with Ackman’s Pershing Square Capital Management LP, which holds a 9.9-percent stake in the company.

A deal could head off a potential public fight over board seats, according to the report. In recent months, shareholders have questioned the board’s leadership as Chipotle struggles to recover from a series of foodborne illness outbreaks last year.

Some shareholders have reportedly called for replacing co-CEO Steve Ells as chairman. Other union-affiliated investors have called for a board shakeup that would add diversity, as well as more food-safety expertise.

In August, Chipotle said it was interviewing potential candidates for the nine-member board to meet the company’s longer-term needs, and was considering shareholder input.

John Pinette, director of communications for Pershing Square, said the company had no comment on the report. Chipotle did not respond to requests for comment at press time.

With same-store sales declining 21.9 percent in the third quarter, showing only a modest recovery, Chipotle outlined in October a turnaround plan that included the addition of dessert to the menu, enhancements to digital ordering, and national television ads for the first time.

Contact Lisa Jennings at [email protected]
Follow her on Twitter: @livetodineout

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