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BH Special Meeting Delayed!


Parsad
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Biglari Holdings put out a press release indicating that they are delaying the special meeting of shareholders, and will be issuing revised proxy materials to address misinformation in the investor and analyst communities about the proposed compensation package.  Cheers!

 

http://www.prnewswire.com/news-releases/biglari-holdings-inc-news-release-100300819.html

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I came across this news release which looks very similar to the one Biglari was putting out to oust managements at Friendly, SNS and FMMH.

 

CHICAGO--(BUSINESS WIRE)--As a 2.5% shareholder of Biglari Holdings (BH), formerly The Steak N Shake Company, Oak Street announced today that it intends to vote AGAINST approval of the Incentive Bonus Agreement between Biglari Holdings and Mr. Biglari, the company’s CEO, at the upcoming special shareholder meeting scheduled for August 24, 2010.

 

Oak Street opposes this attempt to redistribute shareholder wealth to Mr. Biglari. Oak Street is concerned that the proposed incentive compensation scheme fails to align Mr. Biglari’s interests with the interests of company shareholders. Book value increases are not always tantamount to shareholder value creation. We believe shareholders would prefer that Mr. Biglari’s remuneration be directly tied to share price performance in order to ensure that shareholders and Mr. Biglari benefit in concert.

 

An Oak Street spokesman stated “This unusual compensation scheme creates potential conflicts whereby Mr. Biglari could enrich himself at the expense of other shareholders. We are concerned that Mr. Biglari and the board are not acting in the best interest of all shareholders and we condemn the Board for this potential governance failure. We believe Mr. Biglari’s proposal has resulted in a significant loss of shareholder wealth already, as evidenced by the $100 share price decline since the compensation scheme was proposed on April 30, 2010. We intend to rigorously defend our interests as shareholders.”

 

I still doubt Biglari would be postponing the shareholder vote if he was winning - definitely there was no need for a modified proxy.

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I still doubt Biglari would be postponing the shareholder vote if he was winning - definitely there was no need for a modified proxy.

 

I wouldn't be shocked if he didn't have the votes needed for the thing to pass. Maybe he is trying to pass the thing with 70%, rather than 55% of the vote, just so there are not as many angry people out there.

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I still doubt Biglari would be postponing the shareholder vote if he was winning - definitely there was no need for a modified proxy.

 

I wouldn't be shocked if he didn't have the votes needed for the thing to pass. Maybe he is trying to pass the thing with 70%, rather than 55% of the vote, just so there are not as many angry people out there.

 

I think thats crazy, if he had the votes locked up he would ram it through. Also how is he going to show a value investor that this is a value adding transaction.

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This news release just goes to show that Biglari is still acting in his usual two-faced, selfish, back-stabbing ways to the shareholders of the company that was once Steak 'n Shake.

Even though it is difficult to know what his true intentions are, I think we can rest assured that it is ALL about HIM.

I would be surprised if in the coming years we don't see him in some hot water for some non-compliance issues.

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Would you think Warren Buffett would do something like that?

 

"Listen, you don't understand my very generous compensaton plan, so I'll delay the occasion for you to vote. So, listen to what I have to say again because you have to agree with it before we do the meeting".

 

No, it's more like:

 

Warren: "I want to be paid 100 000$ per year, and that's all".

 

Shareholder: "That is not enough. Please increase your salary".

 

Warren: "No. That's enough to me".

 

Simple. Clear. Shareholder friendly.

 

 

 

 

 

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Guest Bronco

It is one of the most interesting cases of corporate governance going on right now. 

 

If this was an established, big, multinational company, I bet Biglari would be taking the 10million dollar salary with options and bonuses and limos and planes, etc.  But b/c the company is fairly small, he is exploring other options to pirate the company.

 

 

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I'm still waiting for the mysterious Exhibit A to the comp plan, which to my knowledge has not been released.  This document makes the plan an undisclosed agreement in my opinion, as it includes all the "adjustements" the Board will make for stock issuances, redemptions and the like. 

 

If the vote is looking bad enough, Biglari and the Board, and the Board bears equal responsibility for this mess, might draft Exhibit A to reflect more of a "rise in book value per share" concept instead of book value of the Company.  This would make it seem like it was intended to be shareholder friendly all along, but if that were the case, wouldn't they have said so up front.

 

Not to mention that waiting so long to disclose Exhibit A, causing the stock price to plummet while Biglari purchases shares in bulk smacks so much of manipulation that I'd be shocked if he weren't subjected to a shareholder lawsuit, and/or an SEC investigation.  In fact, I'm shocked already.  I guess the SEC and plaintiffs lawyers are hesitant because since he took the helm, SNS / BH has had a decent to good recovery overall in the stock, which would provide a pretty strong defense on the damages side. 

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Thanks, I hadn't seen that yet.  Haven't digested it fully, but does this shed any new light on how book value will be affected by acquisitions?  Wouldn't issuing shares for acquisitions, for example, increase book value for the company, but potentially reduce book value per share?  Doesn't this just leave the decision of whether to include that in book value up to the discretion of the Compensation Committee, but strongly imply it would likely be included? 

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Guest Bronco

Biglari could get burned on acquisitions with the tough economy and the goodwill impairment rules (not sure if this is covered though).

 

With the impairment rules plus a high watermark, could be tough on his bonus calculation. 

 

I really don't think he would do a deal just to get a bonus though.  As shady as he has been, I don't think that is his intention.  He is an empire builder, for the company and himself.  Just sad to see the route has has taken.

 

 

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