Cracker Barrel announces board changes

Cracker Barrel Old Country Store, Inc. officials said Monday its board received notice from Martha M. Mitchell she will retire at the end of her current term and will not stand for election at the company’s 2013 annual meeting.
Aug 26, 2013
Sardar Biglari

Cracker Barrel Old Country Store, Inc. officials said Monday its board received notice from Martha M. Mitchell she will retire at the end of her current term and will not stand for election at the company’s 2013 annual meeting.

Mitchell served on the board for the past 20 years. She currently serves as chair of the board’s public responsibility committee and as a member of the executive and nominating and corporate governance committees.

“On behalf of the entire board and the Cracker Barrel family, I want to thank Ms. Mitchell for her loyal commitment to the board over these past 20 years. Her dedication to serving our shareholders and to upholding the values of our company has been evident in her wise advice and counsel,” said James W. Bradford, chairman of the board and chairman of the nominating and corporate governance committee of the board. 

Bradford said the board decided to reduce its number of directors to nine at its upcoming annual meeting following Mitchell’s decision. 

The board also voted unanimously against including Sardar Biglari and Philip Cooley on its slate of director nominees for its annual shareholders meeting at the recommendation of its nominating and corporate governance committee. 

The Lion Fund II, L.P., an affiliate of Biglari Holdings Inc., nominated Biglari and Cooley for seats on the company’s board. Biglari Holdings owns the Steak ‘n Shake and Western Sizzlin’ restaurant chains.

In reaching the decision, company officials said the board and committee took into consideration several factors, including shareholders’ votes two years in a row against the proposed candidates presented by Biglari Holdings and its affiliates; the individuals’ backgrounds and qualifications;  uncertainty over Biglari's ultimate agenda; and continued business and legal concerns over conflicts of interest.

After once again thoroughly reviewing the proposed nominations of Biglari and Cooley, the nominating and corporate governance committee determined the election of Biglari and Cooley is not in the best interests of the company or its shareholders, according to a company statement. 

Biglari owns a roughly 19-percent stake in Cracker Barrel.

Cracker Barrel has made a number of unsuccessful attempts to buy back Biglari's stake. Most recently Biglari in February rejected the company's offer to buy out his stake for about $300 million, as Cracker Barrel aimed to avoid the expense and distraction of a third potential proxy battle.

At the time, Biglari wrote a letter, which was filed with the Securities and Exchange Commission to Cracker Barrel board chairman James Bradford Jr.

“The board ought to be preoccupied with optimizing long-term value on a per-share basis, not concerning itself with ‘monetizing’ our stake,” Biglari said in the letter. “By request, I insist that you spend less time on such ineffectual matters and more effort on creating shareholder value through operational improvement and secondarily instituting better capital allocation policies.”

The board also noted the company’s strong performance under the leadership of its current management team, including:

· generating superior returns for shareholders. Cracker Barrel delivered about 65 percent in total Shareholder return in fiscal year 2013 and about 165 percent since the announcement of its six strategic priorities in September 2011.

· returning about $56 million in cash dividends to its shareholders during the past two fiscal years and tripling the quarterly dividend since November 2011.

· returning about $18.5 million in cash through share repurchases during the past two fiscal years.

· six consecutive quarters of positive comparable store traffic, restaurant sales and retail sales, and outperforming the Knapp-Track casual dining index.

· ranking first in the company’s category for Nation’s Restaurant News’ consumer survey three years in a row.

“Despite being rejected by a significant margin of the vote of our shareholders in each of the last two years, Mr. Biglari has again chosen to re-fight the battle to elect himself and Mr. Cooley,” Bradford said. “We believe that we have a strong, independent and highly capable board with the experience and breadth of skills necessary to oversee Cracker Barrel’s business and promote our shareholders’ interests, and we have worked effectively and collaboratively with the executive team to guide the company to its current success.”

About Cracker Barrel Old Country Store®

Cracker Barrel Old Country Store, Inc. was established in 1969 in Lebanon and operates 624 company-owned locations in 42 states.

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