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What happened to the SNS board?


Mark Jr.
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What did I miss. I saw the thread where the board was hacked and Parsad had to restore some data. But I was pretty sure I saw the SNS board still after that.

 

SNS now BH, the board is gone, what happened?

 

 

It went POOF! And good riddance IMO.  :)

 

One of the cardinal tenets of value investing is having trustworthy management.  That is sadly lacking with a certain unmentionable company. 

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We have turned a hero to a zero at the speed of light, on this board.

 

I have not pulled the trigger, willing to give more time to Sardar. He needs to improve his communication skills. Added more BH.

 

Is there a particular thread that outlines what happened? I am combing the archives and see some references to "the compensation package" but that's about it.

 

 

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Hi Mark,

 

There were a ton of posts immediately after the compensation package announcement.  We were subsequently hacked twice and lost the posts from May 2nd to May 7th.  It was probably the greatest reaction we've had to any single incident on the board, including the old MSN Message Board. 

 

Basically, the compensation structure is being changed, and there is no intention of working with shareholders on this...either you agree or disagree.  We chose to remove the SNS board since shareholders have no input outside of the actual vote on the proposal.  Who is working exactly for whom here?  Thus, we have no interest in supporting this type of behavior.  Cheers!

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We have turned a hero to a zero at the speed of light, on this board.

 

It takes a lifetime of work to build a reputation and only five minutes to ruin it.  From the drop in the stock price, it seems as though management's actions have everything to do with the change in sentiment.  This was a failure of the board of directors.  A massively delusional idea that wasn't thought through completely.  The company will do fine long-term, but this leaves a bad taste in the mouths of shareholders who were there from the beginning.  With no input, how are shareholders to perceive this change?  With management not interested in listening to shareholders, what does this tell them?  All they can do is wait and see how the vote turns out.  Cheers!

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I agree with your sentiment completely. 

 

What do you think the chance is that Sardar comes out and says 'hey guys I screwed up, now that I look at it more closely the compensation package is asking too much here is what I should have done....etc. etc.'

 

I think this type of response would put him back on top in some of the shareholders minds, but I'm not sure it will happen.

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What do you think the chance is that Sardar comes out and says 'hey guys I screwed up, now that I look at it more closely the compensation package is asking too much here is what I should have done....etc. etc.'

 

I think this type of response would put him back on top in some of the shareholders minds, but I'm not sure it will happen.

 

This is what I would hope he would do, but from everything I've seen and heard, I think it has a very, very slim chance of happening.  Cheers!

 

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To be correct:  He gave a response to the collective concerns of those who wrote.  It basically amounted to a great big "f___ you".  The Guru has no interest in hearing from you.  No mistake was made.  Take it or leave it. 

 

Be happy you found out now and can choose to sell, hold, or in some cases buy.  Take another 80 or so off the stock price and it will starting to look like good value assuming existing management is turfed before they can do too much damage. 

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Not sure if someone posted this before but I haven't seen it.. Looks like they got the recommendation from an outside firm? 

 

http://www.sec.gov/Archives/edgar/data/93859/000092189510000848/form10q07428_04142010.htm

from the 10Q:

 

" The Committee engaged Towers Watson to assist in formulating an appropriate incentive compensation arrangement for Mr. Biglari. The Committee considered data provided by Towers Watson regarding the total remuneration of chief executives at a peer group of 36 companies, consisting of restaurants, asset managers, and diversified holding companies, with responsibilities similar in scope to Mr. Biglari’s. The Committee determined that book value gain was the fitting benchmark for calculating Mr. Biglari’s incentive compensation, for growth in book value (adjusted for accounting and other noneconomic factors) is the best proxy for value creation because it incorporates earnings/loss as well as  unrealized gains and losses on investments. Without factoring in the benefits of the Biglari Capital acquisition, the Committee recognized that the incentive compensation formula it selected would provide Mr. Biglari with generally competitive compensation, as compared with the peer group’s remuneration when annual book value growth is between 8% and 18%. However, Mr. Biglari’s compensation would rest in the lower ranges of the peer group when annual book value growth is below 8%; when book value rises above 18%, Mr. Biglari’s compensation would be in the higher ranges of the peer group. The Committee believed that this structure creates a powerful economic incentive for Mr. Biglari to increase the Company’s per-share book value over the long term. In addition, the Committee believed that the compensation structure is in accord with the Company’s entrepreneurial culture of pay for performance."

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Not sure if someone posted this before but I haven't seen it.. Looks like they got the recommendation from an outside firm?  

 

http://www.sec.gov/Archives/edgar/data/93859/000092189510000848/form10q07428_04142010.htm

from the 10Q:

 

" The Committee engaged Towers Watson to assist in formulating an appropriate incentive compensation arrangement for Mr. Biglari. The Committee considered data provided by Towers Watson regarding the total remuneration of chief executives at a peer group of 36 companies, consisting of restaurants, asset managers, and diversified holding companies, with responsibilities similar in scope to Mr. Biglari’s. The Committee determined that book value gain was the fitting benchmark for calculating Mr. Biglari’s incentive compensation, for growth in book value (adjusted for accounting and other noneconomic factors) is the best proxy for value creation because it incorporates earnings/loss as well as  unrealized gains and losses on investments. Without factoring in the benefits of the Biglari Capital acquisition, the Committee recognized that the incentive compensation formula it selected would provide Mr. Biglari with generally competitive compensation, as compared with the peer group’s remuneration when annual book value growth is between 8% and 18%. However, Mr. Biglari’s compensation would rest in the lower ranges of the peer group when annual book value growth is below 8%; when book value rises above 18%, Mr. Biglari’s compensation would be in the higher ranges of the peer group. The Committee believed that this structure creates a powerful economic incentive for Mr. Biglari to increase the Company’s per-share book value over the long term. In addition, the Committee believed that the compensation structure is in accord with the Company’s entrepreneurial culture of pay for performance."

 

 

Many companies do this with respect to executive compensation. It is obvious based on the unusual specific characteristics of the package, and the type of explanation (defending) to shareholders in the letter to shareholders, that the compensation package was Biglari's idea. Rarely is the recommendation of a third party truly independent, void of exec/bod influence, unbiased, or logical. I wonder what Towers Watson's incentive agreement was to approve Biglari's incentive agreement. After all, if you opine against too many compensation agreements you won't get too much business in the future.

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I have always wondered... why would any companies hire compensation consultants... How hard is it to look at a peer group and determine a good compensation package. Sometimes it looks like the BOD doesn't even want to do it's job. I wish I could be a director, you know.. get paid 5k per meeting, 10 meetings a year. It's the best job on earth.

 

BeerBaron

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My only nit with the article is this:

"Mr. Biglari’s preference for targeting underperformers and insulting their leaders, however, is a marked difference from the approach of Mr. Buffett, who seeks companies with strong competitive advantages and solid management."

 

Buffett does what the article describes now, but he didn't back when he was running his hedge fund.  He certainly was a bit more like Biglari back in the day when he had less money.

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Buffett does what the article describes now, but he didn't back when he was running his hedge fund.  He certainly was a bit more like Biglari back in the day when he had less money

 

bargainman,

 

Do you have some Buffett quotes or something to show us that?

 

I don't remember having seeing him publicaly trying to replace managers of public companies by publicaly insulting them.

 

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