Chipotle Mexican Grill Inc. (CMG) founder and co-CEO Steve Ells said on Tuesday the company will soon reveal a new slate of directors. He indicated that Chipotle is taking a close look at current board members and, in particular, is evaluating long director tenures and considering new candidates well-versed in areas such as marketing, crisis management, and corporate governance. The announcement comes amid pressure from shareholders to shake up the board and improve sales following last year's food safety debacles. Billionaire investor William Ackman, who disclosed a nearly 10% stake in the burrito chain three months ago, is seeking several board seats with the goal of boosting food safety and marketing, sources have said. Ackman and Chipotle reportedly signed an agreement last month to engage in confidential discussions, a sign he may pursue change at the company without a costly and protracted proxy contest. Chipotle's board has also been criticized by pension funds and other shareholders for being insular, entrenched, and too generous with pay. Investors Amalgamated Bank and CtW in November called for shareholders to name an independent chairman to replace Ells on the board. Shares in Chipotle dipped 7.8% on Tuesday when Ells expressed uncertainty about meeting full-year targets. Executives blamed poor customer service and underperforming restaurants for a unexpectedly sluggish sales recovery.
Dethroned Tata Sons chairman Cyrus Mistry on Monday called for the government to investigate the governance structure at Tata Trusts and penalize those who violated it. In a 14-page representation to the shareholders of six Tata Group firms ahead of their extraordinary general meetings (EGMs) to determine his fate, Mistry argued the governance charter across the Tata Group needs to be fixed. "The Tata Group is no one's personal fiefdom: it does not belong to any individual, not to the trustees of Tata Trusts, not to the Tata Sons directors, and not to the directors of the operating firms. It belongs to all the stakeholders, including every one of you," he said. "Without governance reform, without checks and balances and without accountability for conduct of the trustees, serious value erosion for you as members of your company is inexorable." Mistry also asked Tata shareholders not to be influenced by Tata Sons' decision to fire him as chairman of the conglomerate on Oct. 24. "I have made this representation with a sense of pride in what I have done in the past four years, putting out of my mind the unfairness I have recently experienced at the Tata Sons board," he declared. Tata Sons has already removed Mistry as chairman of Tata Consultancy Services (TCS) and Tata Global Beverages Ltd. EGMs have been called for December to oust Mistry as director at these firms as well as at Tata Motors and Indian Hotels Co Ltd.
SpringOwl Asset Management claims that a $4.1 billion takeover bid for online gaming company Amaya Inc. (AYA) by the company's founder, David Baazov, lacks credibility and has distracted management. In a letter to Amaya's current CEO and chairman, SpringOwl CEO Jason Ader urged Amaya to move on unless Baazov increases his cash bid and makes his sources of funding more transparent. Ader also recommended adding three directors to represent shareholders. Shares in Montreal-based Amaya are trading about 20% below Baazov's C$24 a share bid on concerns about the financing for his offer. "If we have a credible bid with transparency, then we should consider it," Ader said. "But the current price seems low and the lack of transparency and the information about the sources of funding raises a lot of questions." He added that the uncertainties surrounding the offer are holding back a valuable company and delaying hiring. In addition, Ader said Amaya should consider placing Baazov's shares in a divestiture trust. Baazov is Amaya's second-largest shareholder with a 17% stake, according to regulatory filings. New York-based SpringOwl, which owned less than 1% of Amaya as of Sept. 30, has more than doubled its stake since then, according to Ader.
Hedge fund Scopia Capital Management has been urging Forest City Realty Trust Inc. (FCE.A) to do away with its two-tiered stock structure. Forest City has agreed to dispense with the structure, reducing the Ratner family's control over the firm. The board has agreed to a proposal to shed the company's class B common stock, controlled by members of the Ratner, Miller, and Shafran families through RMS Limited Partnership. If shareholders approve the restructuring, each class B share will be converted to 1.31 shares of class A common stock. RMS plans to vote in favor of the proposal at Forest City's annual shareholder meeting in 2017, and the conversion would occur mid-year. Forest City also announced major board changes, including the retirement of Chairman Charles Ratner on Dec. 31 after 50 years at the company. "It has always been my intention to retire in 2016 at age 75," Ratner said in a statement. "And with the strong leadership of president and CEO David LaRue, ongoing guidance and oversight of our majority-independent board, and continued commitment from and involvement by members of the founding family, we have set Forest City on a strong path. I know the company is in good hands." James Ratner, executive vice president of development, will be appointed by the board as the next chairman, and he will give up his management role at the company. Bruce Ratner, the former CEO and current executive chairman of Forest City's New York operations, also will leave the board by the end of 2016. He will continue to work for the New York subsidiary. Meanwhile, longtime board member Stan Ross has decided not to stand for reelection. Ross' seat and Bruce Ratner's seat will be filled with independent directors; eight of the board's 13 directors will then be independent.