Cracker Barrel Questions Qualifications, Motives of Biglari and Cooley in Bids for Board Seats
-
In Letter to Shareholders, CEO Cochran Highlights Exceptional
Performance of Cracker Barrel's Business and Stock Price in Last Year
-
Cites Biglari's History of ‘Creeping Takeover,' Intemperate
Rhetoric and Poor Corporate Governance
LEBANON, Tenn.--(BUSINESS WIRE)--
Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the
"Company") (Nasdaq: CBRL) today sent a letter from Sandra B. Cochran,
President and Chief Executive Officer, to shareholders strongly urging
them to reaffirm their support for the Company and its exceptional
performance over the past year by voting for the Company's highly
qualified slate of nominees to the Board of Directors at the Annual
Meeting on November 15, 2012.
In the letter, Ms. Cochran urged shareholders to reject two
self-nominated candidates — Sardar Biglari and Phil Cooley — who the
Company believes may be attempting to gain creeping control of Cracker
Barrel. She noted that Mr. Biglari, after failing to gain a Board seat
last year, has returned with Mr. Cooley to seek two Board seats,
engaging in what the Company views as intemperate rhetoric, an unknown
agenda, and a record of poor corporate governance.
Ms. Cochran wrote: "Mr. Biglari remains inexplicably insistent in his
campaign against Cracker Barrel and our Board's nominees — despite the
addition of seven new directors in the past 18 months, our
accomplishments on key financial and operational objectives and a 68.4%
appreciation in the value of the Company's shares since the initiation
of our strategic priorities announced in September of last year."1
She concluded: "Your Board of Directors strongly believes that electing
Mr. Biglari or Mr. Cooley to our Board would be contrary to your best
interests at precisely the point when our business is showing strong
performance based on a robust business plan that we continue to
successfully implement. We urge you to support all ten of your Board's
nominees."
Text of Letter from Ms. Cochran to Cracker Barrel Shareholders:
October 18, 2012
Dear Cracker Barrel Shareholders:
We are pleased that on November 15, 2012, you will have the opportunity
to reaffirm your support for Cracker Barrel Old Country Store and our
exceptional performance over the past year by voting for our highly
qualified slate of Board nominees at our annual meeting.
The alternative is a vote for two self-nominated individuals — Sardar
Biglari and Phil Cooley — who are pursuing not one, but two seats on our
Board in what we believe is an attempt at creeping control of Cracker
Barrel. After a failed attempt to gain a Board seat for himself last
year, Sardar Biglari has returned with what we view as intemperate
rhetoric, an unknown agenda and a record of poor corporate governance.
Mr. Biglari remains inexplicably insistent in his campaign against
Cracker Barrel and our Board's nominees — despite the addition of seven
new directors in the past 18 months, our accomplishments on key
financial and operational objectives and a 68.4% appreciation in the
value of the Company's shares since the initiation of our strategic
priorities announced in September of last year1. Our track
record during this time, both at the Board level as well as with regard
to ongoing execution of corporate objectives, leads us to ask the
obvious questions — what is it that Mr. Biglari really wants and why?
First, we believe that Sardar Biglari's true
intentions may be to take control of Cracker Barrel without
paying shareholders a premium.
Mr. Biglari himself has been candid that the primary objective of his
acquisition vehicle through which he owns Cracker Barrel stock, Biglari
Holdings, is about gaining control and exerting power. Consider the
following:
"We, however, are control investors." (BH Letter from the
Chairman, 12/10/11)
"Biglari Holdings is a jockey stock. You are choosing the jockey;
I am choosing the horses. It would be asinine to bet on the jockey and
then deny him the saddle or whip."
(BH Letter from the Chairman, 12/10/11)
After several meetings with management as well as the failed proxy fight
last year, Mr. Biglari continues to produce rhetoric without tangible
ideas or suggestions for what changes he believes are necessary.
Moreover, he remains unwilling to work with us constructively, having
turned down our offer to nominate two independent directors of his
choosing — an offer we believe should have satisfied him if his desire
was really for "shareholder representation." From our perspective,
however, it appears that he is not truly interested in representation,
but rather is looking for a platform to pursue his own agenda and,
potentially, to exercise creeping control resulting in a takeover
without paying you an appropriate premium.
1 Share appreciation calculated from the closing price on
September 12, 2011, the day before the announcement of the
Company's strategic priorities, through September 28, 2012.
At the same time, we believe Mr. Biglari's contradictory statements and
actions create even more questions around his true objectives. In a
press release last year, Mr. Biglari made the following statements:
"Our intention was that even if we were to purchase additional
stock, we would keep ownership well under 20% . . . . [W]e have
purchased stock for investment purposes only." (BH press release,
9/23/11)
Despite these assertions, Biglari Holdings (1) ran a proxy fight last
year for one Board seat, (2) immediately after losing the proxy fight,
began aggressively buying more Cracker Barrel stock, and (3) launched a
new proxy fight this year, seeking two Board seats this time. We believe
these actions speak louder than words, as investors who are buying for
"investment purposes only" do not wage multiple proxy contests,
particularly at a time when the target corporation is performing as well
as we are. With a position that recently reached 17.4%, Biglari Holdings
is getting very close to a 20% stake in Cracker Barrel.
With Mr. Biglari's history of creeping control — having built Biglari
Holdings with the takeover of Steak 'n Shake without paying a premium to
its shareholders, naming himself as Chairman and CEO, and ultimately
creating a holding company named after himself — we are concerned as to
what step would be next should he get a seat or two on our Board. We
urge you to consider whether Mr. Biglari's history suggests an
undisclosed agenda here and whether he and Phil Cooley are right for our
Board.
Second, we believe Mr. Biglari's track record of
poor corporate governance tactics speaks for itself.
While your revitalized Board of Directors at Cracker Barrel has been
overseeing a variety of successful initiatives to drive increasing
shareholder value, Mr. Biglari has been pursuing initiatives at
Biglari Holdings that appear to have been objectionable even to his own
shareholders. Consider the following three proposed actions that have
all been deferred and/or amended in the face of shareholder opposition:
• Excessive compensation. Mr. Biglari
attempted to get shareholder approval for an uncapped compensation
scheme for himself, a deal similar to the profit-sharing compensation
plans often used at hedge funds and private equity investment firms,
even though he runs a publicly traded restaurant holding company. Mr.
Biglari scaled back the plan only after both ISS and his shareholders
expressed their disapproval.
• Disenfranchising capital structure. Mr.
Biglari is once again proposing shareholder approval of a two-class
capital structure so he can make acquisitions that don't dilute his
voting power — after canceling a planned shareholder meeting to consider
the plan last year in response to shareholder objections. The top two
leading proxy advisory firms, ISS and Glass Lewis, have already
recommended that Biglari Holdings shareholders vote against this
proposal.
• Reverse stock splits to freeze out small
shareholders. Mr. Biglari engineered a 1-for-20 reverse stock
split, and announced plans in 2011 for a further 1-for-15 reverse stock
split that would have forced many small investors to be cashed out from
their shares. The second reverse stock split was tabled following
shareholder opposition.
In addition, we believe that Mr. Biglari showed a disregard for federal
law in causing Biglari Holdings to acquire Cracker Barrel stock in
violation of applicable antitrust law. Biglari Holdings paid $850,000 to
settle charges brought by the Federal Trade Commission and the
Department of Justice with respect to this violation, which the chairman
of the Federal Trade Commission characterized as an abuse of the
antitrust law's "passive investment" exemption.
Finally, we believe your current Board's track
record is self-evident and you should not risk disrupting
our positive momentum.
Cracker Barrel's recently revitalized Board of Directors, including Jim
Bradford, our incoming Board Chairman, will continue to oversee our
progress and strong execution. In prior communications, we described one
element of Mr. Bradford's background as a "former NYSE company CEO,"
suggesting that he had served as CEO of that company while it was
publicly traded rather than after it was taken private. We sincerely
regret any misunderstanding this may have caused, but want to stress
that this description does not change the enormous value and vast
experience Mr. Bradford brings to our Board. We are confident that we
can continue to execute on our strategy just as we did last year,
further creating value for you, our shareholders.
In sum, while it's important to recognize why Mr. Biglari is WRONG for
Cracker Barrel, given our extremely successful year and our intent to
leverage our current momentum to drive results, we also want to focus on
why we firmly believe our existing slate of Board nominees is RIGHT for
Cracker Barrel. Together with our Board, Cracker Barrel management will
continue to regularly evaluate opportunities for improvement on all
fronts: financially, operationally and strategically. We have updated
our business priorities to keep the bar high and strive for better
results. Our results for 2012 are evident not only in our bottom line,
but in our stock price, and we hope you've benefited from these
successes. We believe we have a very strong and engaged Board in place,
and the addition of Mr. Biglari or Mr. Cooley would be detrimental to
the functioning of the Board and our ongoing progress.
Your Board of Directors strongly believes that electing Mr.
Biglari or Mr. Cooley to our Board would be contrary to your best
interests at precisely the point when our business is showing strong
performance based on a robust business plan that we continue to
successfully implement. We urge you to support all ten of your Board's
nominees.
To support your Board, vote the enclosed WHITE card and vote "FOR ALL"
of the Company's nominees to the Board. To ensure that your vote is
received in time, vote by telephone or Internet by following the
instructions on the Company's WHITE card. We 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 previously submitted to vote "FOR ALL" the Company's
nominees as it is only the latest dated proxy card that will be counted
at the shareholder meeting.
- end -
If you have any questions or require assistance with voting your WHITE
proxy card, please call MacKenzie Partners, Inc., toll-free, at (800)
322-2885.
Sincerely,
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.
CBRL-F
1 Share appreciation calculated from the closing price on
September 12, 2011, the day before the announcement of the Company's
strategic priorities, through September 28, 2012.
Cracker Barrel Old Country Store, Inc.
Investors:
Lawrence E.
Hyatt, 615-235-4432
Senior Vice President and Chief Financial
Officer
or
Mark Harnett, 212-929-5877
MacKenzie Partners,
Inc.
or
Media:
Julie K. Davis, 615-443-9266
Senior
Director, Corporate Communications
or
Ruth Pachman,
212-521-4891
Kekst and Company
Source: Cracker Barrel Old Country Store, Inc.
News Provided by Acquire Media
Close window | Back to top
Delicious
Digg
Facebook
LinkedIn
Twitter
Mixx
Yahoo! Buzz