CMG Chipotle Mexican Grill Inc

CtW Investment Group in a letter Wednesday urged Chipotle Mexican Grill Inc. shareholders to withhold support for the re-election of two directors at the annual meeting in May, saying the burrito chain is in need of "genuinely independent oversight."

"The last three quarters' onslaught of negative headlines, a federal criminal investigation and a nearly 40% share price collapse since October has reminded us that balanced leadership and independent board oversight are critical to sustainable, long-term value creation," CtW, an arm of the union federation Change to Win, said in the letter.

A representative for Chipotle wasn't immediately available for comment.

A CtW spokesperson said funds affiliated with it hold about 55,0000 shares of Chipotle. Chipotle has about 29.6 million shares outstanding.

The investor group asked stockholders to withhold support for long-term incumbents Patrick Flynn and Darlene Friedman, "in light of the board's failure to effectively address governance shortcomings." The company noted that the board has "a startling lack of racial and gender diversity."

Ms. Friedman, whom CtW is asking shareholders not to support, is the only female on Chipotle's board.

The investment group said Mr. Flynn, who has served 18 years on the board, and Ms. Friedman, who has served 21 years, should be held accountable for "failing to sufficiently refresh the board."

CtW works with union-sponsored pension funds with over $250 billion in assets under management.

In 2014, CtW was among investors that advocated against Chipotle's executive pay package in a rebuke to the company's two top leaders over their combined compensation of nearly $50 million the year before.

The rejection of the pay plan by owners of 77% of shares was a potentially worrisome sign for Chipotle because such reproofs reflect shareholder unrest and can draw attention from activist investors.

Chipotle's annual shareholder meeting is scheduled for May 11.

Chipotle, which became a restaurant-industry leader by touting fresher and more virtuous food than competitors, has been working to recover its image after a series of foodborne-disease outbreaks sickened dozens, set regulators on the elusive trail of the cause and sent investors fleeing from the once-hot leader in healthy fast food.

Shares of Chipotle fell 1.3% midday to $439.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

April 13, 2016 12:25 ET (16:25 GMT)

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