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Chipotle strikes agreement with Pershing Square, names four new board members

Chipotle Mexican Grill named four new members to its board, including two aligned with Bill Ackman's Pershing Square.

New director Ali Namvar is a partner at the hedge fund while McDonald's CFO Matthew Paull serves on Pershing Square's advisory board. They join Paul Cappuccio and Robin Hickenlooper as directors of the burrito chain on Wednesday, the company announced Friday.

"Chipotle has enjoyed extraordinary success for most of our 23-year history, and it is important to us that we structure the company to enjoy similar success in the future," CEO Steve Ells said in a statement. "The addition of these new directors strengthens our Board of Directors, and gives us the oversight, accountability and leadership we need as we continue our efforts to reestablish Chipotle as the leader we have been for much of our history."

Namvar, a partner at Pershing Square, has more than a decade of experience investing in branded consumer products and restaurant companies. He is responsible for aiding the investment company in acquiring shares in McDonald's, Procter & Gamble, Wendy's International and Kraft Foods, among others.

Pershing Square took a 9.9 percent stake in the beleaguered burrito chain in September.

"We are pleased that Chipotle has taken the important step of refreshing its board which will position the company for continued growth and long-term success. We look forward to working with the board and management to create sustained value for all shareholders for many years to come," Ackman said in a statement.

Chipotle has continued to struggle to move on from a string of high-profile foodborne illness outbreaks despite marketing and promotional efforts. Investors hope a board shakeup could help spark a turnaround for the company.

Namvar's appointment could help ease tensions between Chipotle and CtW Investment Group and Amalgamated Bank. These investors own a large stake in the company and have been instigating for changes to the company's board.

Both CtW and Amalgamated Bank criticized the Denver-based company for having an insular board that lacked racial and gender diversity. Critics also said the board doesn't have enough experience in the restaurant industry.

Paull's experience from his time as senior vice president and chief financial officer at McDonald's could also placate Chipotle's investors.

Hickenlooper, too, has experience in the food industry. The senior vice president of corporate development at Liberty Global served in the strategic planning and business development group at Del Monte Foods. She is also the wife of Colorado Gov. John Hickenlooper.

Cappuccio, the executive vice president and general council of Time Warner, brings a different function to the board, however. He previously served as the associate deputy attorney general in the Department of Justice.

Shares in Chipotle were up 2.5 percent in midday trading following the report.