After being named CEO of Jersey Mike’s last week, Charlie Morrison is expecting to be a bit busy, so he has dropped out of contention for a board seat at Portillo’s.
But on Monday, the activist investor behind Morrison’s nomination to Portillo’s board has reached a cooperation agreement to work with the Chicago-based chain to identify an alternative board member.
The fast-casual chain in January announced that Chipotle president Jack Hartung had joined Portillo’s board. Hartung was introduced to the brand by Engaged Capital, which last year had warned it would be taking “steps to unlock the intrinsic value” of Portillo’s business, including considering a sale.
Then, in March, Engaged Capital nominated two independent board members, including Nicole Portwood, the former CMO of Salad and Go, but also Morrison, the former CEO of both Salad and Go and Wingstop.
That, however, was before Morrison took the Jersey Mike’s job.
Glenn Welling, founder and chief investment officer of Engaged Capital, said in a statement on Monday, “Although we wish him well in his new role, we were disappointed it resulted in one of our nominees having to withdraw from this process.”
Now, however, Portillo’s and Engaged Capital say they are planning to work together to find a highly qualified director with restaurant operating expertise.
Michael Miles Jr., chair of Portillo’s board, said the company is “committed to overseeing decisive action to drive traffic, improve margins and deliver industry-leading economics for shareholders.”
Welling, however, still sees room for change.
“Portillo’s is one of the most iconic brands in the restaurant industry as demonstrated through industry-leading AUVs in and outside of Chicago,” Welling said. “Through the actions being taken to shrink restaurant size, drive sustainable same-store sales, and improve restaurant margins, we continue to see significant opportunity to create as much value for shareholders as Portillo’s delivers to their customers.”
During the process, Engaged has also agreed to certain customary standstill and voting agreements, the private-equity firm said. That means putting a hold on any other board nominations, proxy solicitation and extraordinary transactions, with some exceptions, according to filings with the U.S. Securities and Exchange Commission.
If a board member hasn’t been selected by Sept. 1, either party can terminate the cooperation agreement.
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