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Asks For YES Votes on All Board Nominees at Annual Meeting Next
Week, as Recommended by ISS and Glass Lewis
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Urges Approval of Shareholder-Friendly Rights Plan Endorsed by ISS
LEBANON, Tenn.--(BUSINESS WIRE)--
Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the
"Company") (Nasdaq: CBRL) today sent a letter to shareholders from
Sandra B. Cochran, President and Chief Executive Officer, urging them to
protect the future of their investment by supporting the Company's
ongoing business success and preventing Sardar Biglari from taking
"creeping control" without paying shareholders a premium.
Ms. Cochran asked shareholders to approve all Board nominees at the
Company's annual meeting on November 15, 2012, in line with
recommendations of leading independent proxy advisory services
Institutional Shareholder Services (ISS) and Glass Lewis & Co. She also
urged approval of the Company's shareholder-friendly rights plan, which
was also endorsed by ISS.
"We believe that Mr. Biglari has used unnecessarily divisive rhetoric,
and has cherry-picked unfavorable data points of questionable relevance
in an effort to distract from our successes over the past year," Ms.
Cochran stated. "We further believe that his presence on our Board would
risk derailing our success and interfere with the Board's ongoing
effectiveness."
She emphasized the importance of shareholders voting for the Shareholder
Rights Plan, which was designed to prevent Mr. Biglari or anyone else
from gaining creeping control of Cracker Barrel without paying
shareholders a premium, while retaining several shareholder-friendly
provisions.
She concluded: "We believe that change at the Board level is not
warranted at this time, and we are pleased that ISS and Glass Lewis
recognize our successful business execution over the past year, as well
as the lack of foundation for Mr. Biglari's arguments. We urge you to
protect your investment and support all ten of your Board's nominees."
Text of Letter from Ms. Cochran to Cracker Barrel Shareholders:
PROTECT THE FUTURE OF YOUR INVESTMENT AND
SUPPORT YOUR
COMPANY'S ONGOING BUSINESS SUCCESS
Leading Proxy Advisory Firms Agree: Reject Biglari and Cooley for
Board Seats;
Vote FOR Cracker Barrel's Highly
Qualified Board Slate
ISS Recommends Voting FOR Shareholder
Rights Plan;
Prevent Biglari from Taking Creeping Control of Your Company
VOTE THE ENCLOSED WHITE PROXY CARD TODAY
November 6, 2012
Dear Cracker Barrel Shareholders:
At Cracker Barrel's November 15, 2012 Annual Meeting of Shareholders,
you will have an important decision to make regarding the future of your
investment. By supporting your Board-designated nominees, you will be
able to reaffirm your support for our ongoing commitment to generating
value for shareholders.
As you review the large amount of correspondence generated thus far, we
encourage you to consider the following key facts: we have successfully
executed on the strategic initiatives we announced last year; we had
strong financial and operational performance during our 2012 fiscal
year; we have added new perspectives, skills and expertise to our Board
through seven new directors over the past 18 months; and we have added
key senior management hires in areas vital to our organization.
Our accomplishments across multiple operational and financial metrics
have translated into not only improvements in sales, operating margins
and earnings per share, but also a 68.4% appreciation in the value of
the Company's shares in the year following the announcement of our
strategic initiatives.1 Since launching our strategic
priorities in September 2011, we have:
• Outperformed the S&P 500 Restaurant Index, S&P 600 Restaurant Index,
S&P 1500 Restaurant Index, S&P 500 Index, and the peer set delineated in
our 2012 proxy statement;
• Doubled our quarterly dividend from $0.25 to $0.50, thereby increasing
our dividend yield to 3%;
• Increased cash and cash equivalent balances by nearly $100 million, or
190%;
• Achieved operating margin expansion of 50 bps for FY 2012;
• Accelerated same store sales growth in the last three quarters; and
• Outperformed casual dining peers in same store traffic and sales
growth for three consecutive quarters, as measured by the Knapp-TrackTM
casual dining index.
Mr. Biglari has distributed materials that attempt to dispute these
facts and distract you from our operational and financial success,
recruitment of new Board members and positive ongoing momentum. However,
we believe he has failed to contribute any new meaningful or original
ideas, and has made assertions about our performance and governance that
we believe are, at best, uninformed, and, at worst, intentionally
misleading. For example, Mr. Biglari has asserted that we changed the
formula used to calculate ROIC for purposes of executive compensation.
This is incorrect. As noted by Institutional Shareholder Services (ISS)
in its report: "Contrary to assertions by the dissidents, the formula
used to calculate ROIC in the executive incentive plans is unchanged
from the one the board adopted in fiscal 2011, when it introduced the
metric for executive compensation plans."2 In its report,
Glass Lewis & Co. noted that Mr. Biglari's most recent solicitation
includes "a series of uncompelling and, at times, specious arguments."
We believe that Mr. Biglari has used unnecessarily divisive rhetoric,
and has cherry-picked unfavorable data points of questionable relevance
in an effort to distract from our successes over the past year. We
further believe that his presence on our Board would risk derailing our
success and interfere with the Board's ongoing effectiveness.
We firmly stand behind the qualifications of our Board, and remain
confident that we have the right members in place to drive continued
execution of our strategic plan. In addition, our nominees have received
the unequivocal endorsement of two leading proxy advisory firms, ISS and
Glass Lewis, both of which recommend that you reject the nominations of
Mr. Biglari and Mr. Cooley to our Board.
In its recommendation to support Cracker Barrel's slate of nominees, ISS
states: "As the most compelling explanation of the company's resurgence
is the leadership change and execution on the new strategic plan by the
existing board and management team-and not suggestions of the dissident
nominees in last year's or this year's proxy contest, however
meritorious—it is clear the dissidents have not made a compelling case
that change at the board level is warranted. ISS therefore recommends
shareholders vote on the WHITE proxy card FOR the management nominees."
In its report, Glass Lewis states that: "We see limited reason for
shareholders to further alter the current board and prospectively hinder
Cracker Barrel's recent progress."
ISS also recommends that shareholders vote FOR the Company's Shareholder
Rights Plan, which was designed to prevent investors like Mr. Biglari,
or anyone else, from gaining creeping control of Cracker Barrel without
paying our shareholders a premium while retaining several
shareholder-friendly provisions. In recommending that you vote in favor
of the Shareholder Rights Plan, ISS states: "A vote FOR this proposal is
warranted because the rights plan contains features that protect
shareholders from entrenchment risk. Specifically, the pill has a
three-year term, a 20-percent trigger, and a robust qualifying offer
clause and there is no dead-hand or slow-hand provision. In addition,
there are no significant governance concerns at the company."
In sum, we believe that change at the Board level is not warranted at
this time, and we are pleased that ISS and Glass Lewis recognize our
successful business execution over the past year, as well as the lack of
foundation for Mr. Biglari's arguments. We urge you to protect your
investment and 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 and "FOR" the Company's
Shareholder Rights Plan. 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.
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
1 From September 12, 2011, the day prior to announcement of
our six strategic priorities, through September 28, 2012.
2 Permission to use quotes from the ISS report or the Glass
Lewis report neither sought nor obtained.
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 621
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
Investors:
Lawrence E. Hyatt, 615-235-4432
Senior Vice
President and Chief Financial Officer
or
MacKenzie Partners,
Inc.
Mark Harnett, 212-929-5877
or
Media:
Julie K.
Davis, 615-443-9266
Senior Director, Corporate Communications
or
Kekstand Company
Ruth Pachman, 212-521-4891
Source: Cracker Barrel Old Country Store, Inc.
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