Cracker Barrel proxy fight heats up

Jared Felkins • Updated Oct 8, 2013 at 7:44 PM

In response to a letter to Cracker Barrel Old Country Store Inc. shareholders from President and Chief Executive Officer Sandra Cochran urging them not to vote for the company’s largest shareholder to be placed on the board, Sardar Biglari struck back Tuesday with counterpoints to the argument.

According to filings with the Securities and Exchange Commission, Biglari penned his own letter to shareholders and followed it by unveiling a website, enhancecrackerbarrel.com.

In the letter, Biglari sought support from Cracker Barrel shareholders at its Nov. 13 annual meeting on six action items:

• to elect our director nominees, Sardar Biglari and Philip L. Cooley, to the board of directors of Cracker Barrel in opposition to two of the company’s incumbent directors.

• to conduct an advisory vote on executive compensation, often referred to as a “say on pay.”

• to ratify the appointment of Deloitte & Touche LLP as the company’s independent registered public accounting firm for its 2014 fiscal year.

• to consider and vote upon a shareholder proposal by the Humane Society of the United States, if it is properly presented at the annual meeting.

• to conduct an advisory vote on a proposal made by Biglari that the board declare and the company pay a special cash dividend of $20 per share to all shareholders.

• to transact any other business that may properly be raised before the annual meeting or any adjournment(s) thereof.

“We are seeking two seats on the company’s board of directors,” Biglari said in the letter. “The board is currently composed of 10 directors, one of whom is not standing for re-election at the annual meeting.

“We are not seeking control of the board of directors. With only two board seats, we cannot control the board, and any claim to the contrary would be entirely false and misleading. As the largest shareholder of the company, we will represent all shareholders. We have one and only one agenda: to make money. In doing so, our moneymaking would be in direct proportion to that of all other Cracker Barrel stockholders who invest for the same period as we do.”

Biglari followed his letter announcement by registering the website, enhancecrackerbarrel.com, with the SEC. The website contains links to letters from Biglari Holdings to shareholders, Cracker Barrel management, SEC filings and profiles on Biglari and Cooley listed as board “nominees.”

Cracker Barrel Old Country Store Inc. officials mailed its definitive proxy statement Thursday for the company’s annual meeting.

In a letter to shareholders, Cochran provided an update on the company’s strategic priorities, and highlighted ongoing strong operational performance.

Cochran urged shareholders to elect the company’s nine nominees to the board of directors and, once again, not to vote for the election of Sardar Biglari and Philip Cooley with Biglari Holdings, which owns Steak ‘N Shake and Western Sizzlin’ restaurants.

Biglari owns about 20 percent of Cracker Barrel’s stock, which makes him the largest shareholder in the company.

Cochran also urged shareholders to vote against the non-binding advisory proposal on a $20-per-share special dividend, which was publicly proposed Sept. 16 by affiliates of Biglari Holdings Inc.

On Sept. 26th, Cracker Barrel announced the board decided to include the proposal in the company’s proxy statement with a recommendation shareholders vote against it.

 “Together, the board and management team have in place a long-term plan that is designed to fully realize shareholder value through the promotion of operational excellence and by providing the best possible experience for our customers,” Cochran said in the letter to shareholders. “During the year ahead, we plan to continue to innovate our menu, refine our marketing message, improve the quality and breadth of our retail merchandise, and drive our margins.”

 During the 2013 fiscal year, Cracker Barrel delivered total shareholder returns of about 65 percent, including a 60-percent increase in the company’s stock price and about 5 percent in quarterly dividends.

In addition, since the announcement of the company’s strategic priorities in September 2011, Cracker Barrel’s share price has increased 159 percent.

“We are disappointed that Mr. Biglari has chosen once again to seek to elect himself and Mr. Cooley to our board of directors, despite our shareholders having overwhelmingly voted against Biglari Holdings’ nominees at each of the past two annual meetings,” Cochran said about the proxy fight. “The board is keenly focused on effective capital allocation that delivers long-term value to all our shareholders and considers all methods of returning capital to all shareholders on an ongoing basis.”

Recommended for You