Chipotle Mexican Grill Inc. said founder Steve Ells will retake the helm as sole chief executive officer after co-CEO Monty Moran stepped down on Monday amid intense pressure to turn around the burrito chain that has yet to recover from string of food safety lapses that have damaged its sales and reputation.
Ells, who has confirmed that the chain is in discussions with billionaire investor William Ackman about shaking up its long-serving board, told Reuters the Chipotle would "soon" name "a few" new directors. He declined to elaborate.
Ells, 51, also said he would remain board chairman, even as Amalgamated Bank and CtW are urging fellow shareholders to name an independent chairman to replace Ells as leader of the board.
"That's the plan right now," Ells told Reuters.
Shares in Chipotle were up 2.6 percent at $379.50 in afternoon trading. Chipotle's shares traded above $750 before the chain was linked to a series of foodborne illnesses in late 2015.
"Given the ongoing challenges facing the company, the board felt strongly that it was best for Steve to resume leadership of the company going forward," Neil Flanzraich, the company's lead director, said in a statement on Monday.
Derrick Wortes, director of equity strategies at CtW Investment Group, called Monday's news a step in the right direction.
Nevertheless, Wortes said, "it still doesn't resolve the question of independent oversight."
Ells was Chipotle's CEO from 1993 until 2009, when Moran was named co-CEO.
Moran, 50, was Chipotle's chief operating officer prior to being named co-CEO and continued overseeing restaurant operations following that promotion.
Moran also stepped down as a director on Monday. He will be an adviser to the company until 2017, when he will retire.
"This move is not unanticipated," Instinet LLC analyst Mark Kalinowski said.
Given Chipotle's mostly self-inflicted and significant challenges of the last 12 to 15 months, it would have been unusual to see no changes in top management, Kalinowski said.
Ells told Reuters he would oversee a staff incentive and training program aimed at improving customer service.
Chipotle's same-restaurant sales have fallen for four straight quarters, dropping 21.9 percent in the latest quarter, even as the company has issued millions of coupons for free and discounted meals.
Ackman, who reported a nearly 10 percent stake in Chipotle in September, wants several board seats with the aim of improving food safety and marketing, sources have told Reuters.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Anil D'Silva and Lisa Shumaker)