ISS Endorses All Cracker Barrel Nominees to Board; Rejects Biglari Bid for Board Seat
Leading Proxy Advisory Firm Cites Cracker Barrel's Performance Trends, Executive Succession and Board Renewal Efforts
Calls Biglari's Arguments "Poorly-Founded"
In endorsing the Cracker Barrel nominees, ISS rejected Biglari Holdings'
nomination of
In its report, ISS stated, "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. Shareholders should vote FOR the management slate of nominees on the WHITE card."1
Key excerpts from the report follow:
- "Corporate operating margin and operating income have improved in the past two fiscal years; revenue has grown without degrading gross margin through pricing incentives; SG&A has actually fallen as a percentage of revenue, indicating the company has asserted some cost discipline to improve operating efficiency."
- "Return on invested capital, as one primary measure of the wisdom of the board's capital allocation decisions, is substantially higher than peer mean or median."
- "...[I]t is particularly meaningful that the company has spent the past two years implementing a thoughtful executive succession plan which introduced a new CEO and CFO with significant prior experience in those roles at other companies, and which gave the incoming CEO — who was new to the industry — two years' experience in the key operating positions of CFO and COO before electing her to the top executive role in September. This was neither a kneejerk reaction to the dissident's campaign nor a belated recognition that someone had been asleep at the wheel; it was a two-year process which coincided with the beginning of the company's recovery on key operating metrics, and which shareholders should reasonably expect to produce stronger performance in the near as well as the long term."
"Our initiatives are already generating positive momentum, and the ISS announcement further strengthens our belief that Mr. Biglari's presence on our Board would jeopardize our progress and ultimately result in the destruction of shareholder value," Ms. Cochran added. "While Mr. Biglari has used his experience at Steak ‘n Shake to support his candidacy, we agree with ISS's perspective that ‘the primary consideration [for Board membership] ought not to be what the dissident nominee achieved at Steak 'n Shake, which was a broken company on a downward trend when he gained a board seat.'"
"We urge our shareholders to vote FOR Cracker Barrel's nominees on the WHITE proxy card."
Cracker Barrel also said today that the Company strongly disagrees with the recommendation of ISS regarding a vote on a shareholder-friendly rights plan at the Annual Meeting. ISS acknowledged that the rights plan "contains some reasonable features that protect shareholders from entrenchment risk," but objected to the 10% threshold.
"The rights plan is important because it helps ensure that neither
About Cracker Barrel
Headquartered in
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 2011 Annual Meeting. On
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1 Permission to use quotes from the ISS report was neither sought nor obtained.
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