In 2014 Chipotle (CMG) earned the dubious honor of garnering the largest protest vote by shareholders against its executive pay packages of any U.S. company. According to a report by Semler Brossy, an executive pay consulting company, only 23% of Chipotle shareholders voted to back its executive compensation scheme that year, putting it on the bottom of a list of 60 companies that failed their so-called 'say on pay' votes throughout the year.
In 2015 the burrito chain recovered getting 95% shareholder support for executive pay. However, this year, it only received the backing of 72%, putting it in the bottom quartile and raising the specter that shareholders are turning disgruntled again.
Until recently, the company was essentially immune to activist hedge funds because it was protected by a surging stock price, which traded as high as over $700 a share at times last year.
But driven partly by last year's E. Coli and Salmonella outbreaks at the burrito chain, the stock has since dropped significantly and trades lately at around $417 a share. Now, the Wall Street Journal reported Wednesday that short sellers, investors betting against the stock, have increased substantially in recent months, representing 16% of total outstanding shares.
And Chipotle's 2016 second quarter earnings results issued Thursday add to prospects that an activist could target the company. The burrito chain reported earnings of 87 cents a share, which were lower than estimates of 93 cents a share. It also reported revenue of $998.4 million, missing Wall Street's expected $1.05 billion in revenue for the period. https://www.thestreet.com/story/13648449/1/chipotle-cmg-stock-rises-in-after-hours-trading-despite-q2-earnings-miss.html