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Cracker Barrel CEO to shareholders: Reject Biglari

Jared Felkins jfelkins@lebanondemocrat.com • Dec 15, 2015 at 1:46 PM

Cracker Barrel Old Country Store President and Chief Executive Officer Sandra Cochran sent Monday a letter to company shareholders urging them to reject all advances by Biglari Holdings and its president, Sardar Biglari, to gain two seats on the board of directors and a proposed special dividend.

“At the Cracker Barrel annual meeting of shareholders, to be held Nov. 13, you will be faced with two important decisions that we believe could affect the future of our company and the superior returns that we are delivering to all of our shareholders,” Cochran said in the letter. “I urge you today to vote the white proxy card to elect all of the company's nominees to the board of directors and to vote against the non-binding, advisory proposal on a $20 per share special dividend, which was publicly proposed by affiliates of Biglari Holdings.”

Cochran said in the letter three advisory companies, Institutional Shareholder Services, Glass, Lewis & Co. and Egan-Jones Proxy Services supported Cracker Barrel’s nominees for its board of directors and recommended shareholders vote against the non-binding advisory proposal on a $20-per-share special dividend previously pitched by Biglari.

“[The] advisory firms support [the] company’s position that Biglari and [Philip] Cooley continue to be a wrong fit for Cracker Barrel’s board of directors,” Cochran said in the letter. “Advisory firms support the company’s position that Biglari’s call for special dividend is not in the best interest of shareholders.”

Cochran said 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. The fourth quarter of fiscal 2013 represented the seventh consecutive quarter of year-over-year improvement in comparable store traffic, restaurant sales, and retail sales. We continue to execute on our strategic priorities and are focused on delivering superior returns for all of our shareholders.

“I urge you to sign and return the enclosed white proxy card to vote "for all" nine of the company's nominees to the board and against the advisory vote on the $20 per share special dividend publicly proposed by affiliates of Biglari Holdings,” Cochran told shareholders.

According to filings with the Securities and Exchange Commission, Biglari last month 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 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.”

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