Begins Mailing Proxy Statement for November 15th
Letter to Shareholders Cites Company's Strong Business Performance
and Share Price, New Management and Board Members
Continues to Question Motives and Business Conflicts of Biglari and
LEBANON, Tenn.--(BUSINESS WIRE)--
Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the
"Company") (Nasdaq: CBRL) today began mailing its proxy statement for
the Company's Annual Meeting of Shareholders to be held on November 15,
2012. In addition, President and CEO Sandra B. Cochran sent a letter to
the Company's shareholders urging them to elect the Company's ten
nominees to the Board of Directors, and to vote against the election of
Sardar Biglari and Phil Cooley.
"Despite being rejected by a significant margin last year, Mr. Biglari
has not only chosen to re-fight the same battle to elect himself, but
has also nominated his company's vice chairman, Phil Cooley, for
election, without providing any specific plans or proposals for the
Cracker Barrel business," Ms. Cochran wrote to Cracker Barrel
shareholders. Mr. Biglari is CEO of a restaurant acquisition and holding
company, Biglari Holdings, and CEO of its principal portfolio company,
Steak 'n Shake, a family dining restaurant chain that Cracker Barrel
considers a competitor.
"We believe Mr. Biglari and Mr. Cooley are wrong for Cracker Barrel's
Board and their election could jeopardize the powerful momentum we have
built in the past year," Ms. Cochran stated.
The stock market, she noted, has recognized Cracker Barrel's progress
since the announcement of the Company's six strategic priorities on
September 13, 2011, with a 68.4% appreciation in the value of the
Company's shares through September 28, 2012. In addition, she pointed
out that Cracker Barrel:
Has increased its quarterly dividend 100% over the last year and
continued its share buyback program.
Had an excellent fourth quarter and full-year fiscal 2012 as a result
of successfully implementing key strategic initiatives.
Has a talented new management team, with five senior executives either
new to the Company or serving in new positions since January 2011.
Has benefitted from the effective leadership of its renewed Board of
Directors, with six new independent directors joining the Board within
the last 18 months.
Ms. Cochran noted that Cracker Barrel has successfully delivered on the
strategy it set out last year, stating, "We believe the facts today
provide even stronger support for Cracker Barrel and its management and
"In these challenging economic times, we strongly believe it is in the
best interest of all of our shareholders to allow our cohesive and
revitalized Board to continue our recent and ongoing success, and stay
focused on the execution of our strategic initiatives," Ms. Cochran
wrote. "Our strong results, our commitment to the highest standards of
corporate governance and our determination to serve the best interests
of our shareholders speak for themselves."
Ms. Cochran urged shareholders to vote the WHITE proxy card to vote "FOR
ALL" ten of the Company's nominees to the Board.
Text of Letter from Ms. Cochran to Cracker Barrel Shareholders:
October 4, 2012
Dear Cracker Barrel Shareholders,
Cracker Barrel will hold its annual meeting on November 15, 2012, and we
look forward to reviewing with you our positive results from the year,
as well as the strategic initiatives and key management and Board
changes we believe were instrumental in our success. You supported our
directors with your votes last year, and I'm proud that our Company has
delivered on all of our objectives, as evidenced most recently by the
strong earnings we reported on September 19th. We are confident that
Cracker Barrel is well positioned for the future.
Unfortunately, Sardar Biglari, the chairman and chief executive officer
of Biglari Holdings, a restaurant chain and restaurant acquisition
vehicle, has chosen to rehash last year's proxy fight at this year's
annual meeting. Despite being rejected by a significant margin last
year, Mr. Biglari has not only chosen to re-fight the same battle to
elect himself, but has also nominated his company's vice chairman, Phil
Cooley, for election, without providing any specific plans or proposals
for the Cracker Barrel business.
In an effort to avoid this fight, and in recognition of Biglari
Holdings' position as our largest shareholder, we offered Mr. Biglari
the opportunity to designate two independent and qualified board members
for election at the annual meeting. We made this offer in good faith and
strongly believe it would have served his interests in enabling him to
have input into our Board composition. His rejection of the offer
reinforces our concerns about his intentions.
We believe Mr. Biglari and Mr. Cooley are wrong
for Cracker Barrel's Board and their election could jeopardize the
powerful momentum we have built in the past year.
PROVEN DELIVERY OF SIGNIFICANT SHAREHOLDER VALUE IN 2012
OUTPACED OUR COMPETITORS
Delivering value that benefits all our shareholders is our overriding
focus. I am proud to have served as CEO during the past year, a time of
significant achievements. To that end, we are pleased that the stock
market has recognized our progress since the announcement of our six
strategic priorities on September 13, 2011, with a 68.4% appreciation in
the value of our shares through September 28, 2012. These gains are
substantially higher than those of our peer group and the overall
market, as shown in this chart:
12-Sep-2011 to 28-Sep-2012
Total Percentage Share Price
S&P 500 Restaurant Index
S&P 600 Restaurant Index
S&P 1500 Restaurant Index
S&P 500 Index
We have also increased our quarterly dividend 100% over the last year
and continued our share buyback program as we strive to find additional
ways to deliver value on your investment.
At the heart of these positive shareholder returns were strong operating
results built on the successful execution of the sound business strategy
we announced last year. We had an excellent fourth quarter and full-year
fiscal 2012. This is particularly impressive as many of our competitors
have continued to struggle in this challenging economic environment.
Highlights from our most recent quarter and fiscal year include:
During the fourth quarter of fiscal 2012, comparable store traffic and
restaurant sales increased 1.4% and 3.8%, respectively, marking the
third consecutive quarter of positive year-over-year sales and traffic
and the third consecutive quarter of beating the Knapp-TrackTM casual
dining index. Our new $5.99 lunch specials, which offer consumers a
different price point, generate attractive profitability for us, and
we believe have contributed to our traffic gains.
We increased our focus on retail sales, resulting in three consecutive
quarters of growth. Most recently, comparable store retail sales
increased 3.1% in the fourth quarter.
We also improved our operating profit and margins, despite continued
pressure from commodity prices. These improvements resulted in a
significant increase in earnings per share (both GAAP and as adjusted)1
for the fourth quarter and for fiscal 2012 over the previous
We improved our reach and impact with the new marketing campaign,
"Hand Crafted by Cracker Barrel." This message resonated with
consumers looking for both value and good food that is made from
scratch in real kitchens by real cooks.
Finally, for the second year in a row, we were voted No. 1 in the
Family Dining segment in the 2012 Consumer Picks survey conducted by
Nation's Restaurant News. Cracker Barrel had the highest ranking in
several categories, including service, menu variety, and likely to
EFFECTIVE LEADERSHIP BY A NEW MANAGEMENT TEAM AND NEW DIRECTORS
Our performance is driven by a talented new management team at Cracker
Barrel, with five senior executives either new to the Company or serving
in new positions since January 2011, including a new senior vice
president of retail and new responsibilities for our senior vice
president of operations as of this past spring. Our entire organization
is committed to enhancing the employee and guest experience in order to
drive sustainable, profitable growth and shareholder value.
We have also benefitted from the effective leadership of our renewed
Board of Directors, with six new independent directors joining the Board
along with me within the last 18 months. At the same time, six
long-standing directors have retired from the Board. Our new Board
members bring valuable experience and new energy to Cracker Barrel,
including a diverse and complementary mix of senior management,
marketing, operational and finance expertise both in the restaurant
industry and beyond. We believe these new directors are contributing
substantial leadership and insight to lead Cracker Barrel into the
Among the Board changes, Mike Woodhouse, our Executive Chairman, will
step down in early November. He will be succeeded by Jim Bradford, a
former NYSE company CEO and Dean at Vanderbilt University's Owen
Graduate School of Management, as our new, independent Chairman of the
WHY WE BELIEVE SARDAR BIGLARI AND PHIL COOLEY
FOR OUR BOARD
We do not think it is in our shareholders' best interests to risk
jeopardizing our strong operational momentum by electing Sardar Biglari
or Phil Cooley to our Board. In the past, Mr. Biglari has taken seats on
corporate boards and many existing directors have thereafter departed,
allowing Mr. Biglari to take control. At his own company, Mr. Biglari
has engaged in what we view as poor corporate governance and
self-interested transactions, including his pending proposal to adopt a
dual-class capital structure that could increase his own voting power at
the expense of other shareholders and proposing a compensation package
for himself that we believe was excessive.
Given that they are directors or officers of Biglari Holdings, whose
principal operating subsidiary is Steak ‘n Shake - a company we view as
a competitor operating squarely in our space - we also have significant
concerns about potential conflicts of interest, as well as possible
legal issues that could arise from Mr. Biglari's and/or Mr. Cooley's
presence in our boardroom. At a minimum, we believe the presence of
current key officers or directors of a company that we see as a
competitor could limit the free exchange of ideas by our recently
renewed Board that has been vital to our success.
Moreover, Mr. Biglari describes Biglari Holdings as a restaurant
acquisition vehicle, and he has used it to engineer a "creeping
takeover" to seize control of Steak ‘n Shake through a proxy fight
without paying a control premium to shareholders. He has also made clear
in Biglari Holdings' SEC filings that he seeks to take control positions
in the companies in which he invests. Our concerns about Mr. Biglari's
objectives and corporate governance practices are underscored by the
recent Federal Trade Commission complaint filed against Biglari Holdings
for violations of the Hart-Scott-Rodino Act in connection with its
acquisition of Cracker Barrel stock last year. Biglari Holdings has
agreed to pay $850,000 to settle the complaint.
THE WRONG TIME FOR CHANGE
Last year, proxy advisory services ISS and Egan-Jones both recommended
that shareholders vote for the Company's entire slate of nominees for
the Board. ISS wrote: "In aggregate, the company's key performance
trends, careful executive succession process, and current board renewal
efforts strongly suggest that the dissident's arguments are
poorly-founded, and that there is not a compelling need for shareholders
to effect board change at this time." It is important to note that
ISS reached this conclusion BEFORE we so successfully delivered on the
strategy we had set out, and we believe the facts today provide even
stronger support for Cracker Barrel and its management and Board.
In these challenging economic times, we strongly believe it is in the
best interest of all of our shareholders to allow our cohesive and
revitalized Board to continue our recent and ongoing success, and stay
focused on the execution of our strategic initiatives. Our strong
results, our commitment to the highest standards of corporate governance
and our determination to serve the best interests of our shareholders
speak for themselves.
I urge you to vote the enclosed WHITE card to vote "FOR ALL" ten of the
Company's nominees to the Board. To ensure that your vote is received in
time, I urge you to vote by telephone or Internet by following the
instructions on the Company's WHITE card. I urge you NOT to sign any
gold proxy card sent to you by Mr. Biglari. Even a withhold vote for Mr.
Biglari and Mr. Cooley on his gold proxy card will cancel any previous
proxy that you submitted to vote "FOR ALL" the Company's nominees.
If you have any questions or require assistance with voting your WHITE
proxy card, please call MacKenzie Partners, Inc., toll-free, at (800)
Sandra B. Cochran
President and Chief Executive Officer
About Cracker Barrel
Cracker Barrel Old Country Store restaurants provide a friendly
home-away-from-home in their old country stores and restaurants. Guests
are cared for like family while relaxing and enjoying real home-style
food and shopping that's surprisingly unique, genuinely fun and
reminiscent of America's country heritage…all at a fair price. The
restaurant serves up delicious, home-style country food such as meatloaf
and homemade chicken n' dumplins as well as its signature biscuits using
an old family recipe. The authentic old country retail store is fun to
shop and offers unique gifts and self-indulgences.
Headquartered in Lebanon, Tennessee, Cracker Barrel Old Country Store,
Inc. (Nasdaq: CBRL) was established in 1969 and operates 620
company-owned locations in 42 states. Every Cracker Barrel unit is open
seven days a week with hours Sunday through Thursday, 6 a.m. — 10 p.m.,
and Friday and Saturday, 6 a.m. - 11 p.m. For more information, visit: crackerbarrel.com.
Important Additional Information
Cracker Barrel, its directors and certain of its executive officers may
be deemed to be participants in the solicitation of proxies from Cracker
Barrel shareholders in connection with the matters to be considered at
Cracker Barrel's 2012 Annual Meeting. On October 4, 2012, Cracker Barrel
filed a definitive proxy statement (as it may be amended, the "Proxy
Statement") with the U.S. Securities and Exchange Commission (the "SEC")
in connection with any such solicitation of proxies from Cracker Barrel
shareholders. INVESTORS AND SHAREHOLDERS ARE STRONGLY ENCOURAGED TO
READ THE PROXY STATEMENT AND ACCOMPANYING PROXY CARD AND OTHER DOCUMENTS
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. Detailed
information regarding the identity of potential participants, and their
direct or indirect interests, by security holdings or otherwise, is set
forth in the Proxy Statement, including Annex A thereto. Shareholders
can obtain the Proxy Statement, any amendments or supplements to the
Proxy Statement and other documents filed by Cracker Barrel with the SEC
for no charge at the SEC's website at www.sec.gov.
Copies will also be available at no charge at the Investor Relations
section of our corporate website at www.crackerbarrel.com.
1 As set forth in our September 19, 2012, earnings release
for the fourth quarter of 2012 and the full year, adjusted earnings per
share excludes for the comparable periods the impact of the 53rd week
in fiscal 2012, proxy contest expenses, refinancing expenses in FY 2011,
severance and restructuring charges, and the benefit of store
dispositions net of an impairment.
Cracker Barrel Old Country Store, Inc.
E. Hyatt, 615-235-4432
Senior Vice President and Chief Financial
MacKenzie Partners, Inc.
Julie K. Davis,
Senior Director, Corporate Communications
Ruth Pachman, 212-521-4891
Source: Cracker Barrel Old Country Store, Inc.
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