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Biglari for CBRL board!


Gopinath
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Actually, according to the letter Cracker Barrel sent to Sardar, I think they were more than fair.  If he's not agreeable to what they offered, I too would tell him to go to hell.  Woodhouse was much more polite!  ;D

 

http://finance.yahoo.com/news/Cracker-Barrel-Responds-to-bw-2034856243.html?x=0&.v=1

 

Also, they've done their homework on him by the looks of it.  Cheers!

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I think Bigs has done himself some major damage with his premature moves.  All the things he's done basically are making it easier for companies to fight him off, and harder for him to take the high ground and go after 'crappy boards'.  This article shows this perfectly.. Nice letter by the CBRL CEO:

 

"Biglari Holdings is currently seeking approval by its shareholders to create a two-class capital structure, including Class B shares with only 1/100th of a vote. As stated in its July 5, 2011 proxy statement, “Biglari Holdings is in the business of acquiring other businesses,” and it intends to issue the low-vote Class B shares in acquiring other companies without significantly diluting the voting power of Biglari Holdings shareholders who retain Class A shares. Although Mr. Biglari stated to senior management and members of the Nominating and Corporate Governance Committee on several occasions that he had a significant agenda in seeking to join the Board, he consistently refused to articulate that agenda. In this context, the Board is concerned that Mr. Biglari may place the interests of Biglari Holdings above the interests of Cracker Barrel shareholders.

The Board views Mr. Biglari’s actions as chairman and chief executive officer of Biglari Holdings as shareholder-unfriendly and inconsistent with the highest standards of corporate governance, including:

engineering a reverse stock split in a manner that precluded many individual investors from owning the stock (and attempting a second reverse stock split that was abandoned only after substantial investor criticism);

attempting to create a two-class stock ownership system that would permit Mr. Biglari and others owning a relatively small economic stake to control the company’s vote; and

attempting to institute an excessive and uncapped compensation scheme for Mr. Biglari that was only modified after substantial investor objections.""

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I think his goal is to just scare companies into either adding him to the board (CCA Industries) or forcing them to seek strategic intiatives (Fremont Michigan, Friendly's, Penn Miller).  If he gets either option in 50% of his attempts, then he is going to do well relative to the time, effort and cost of the activism.  He knows that.  It's the same thing Ackman and Icahn do, and he admires both. 

 

It doesn't really matter what the argument is.  For example, the criticisms of Cracker Barrel's CEO were pretty weak.  So they didn't fully break out the disclosure of the two lines of business.  Big deal!  He's just throwing any sort of gas he can find, and then lights a little match using the threat of a proxy.  You'd think at least there would be some comparables in salary, bonuses and option grants relative to competitors, poor operating performance, low return on invested capital...something of more substance.  But he doesn't need it anymore.  His reputation is almost enough now, and all he has to do is pick a fight.  Cheers! 

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Just to stir the pot a little on this one.

 

I sure hope the CBRL people keep digging. With that in mind, I've made it easy for them.

 

I hope they read this board (or someone passes their PR people these links!)

 

There was this hilarious parable (joke only, any resemblance to actual events is purely coincidence): http://cornerofberkshireandfairfax.ca/forum/index.php?topic=2347.0

 

and of course there was this... they are overpaid but I'd pay them more...

...The current compensation arrangement, if applied retroactively to prior Steak ‘n Shake management, would increase the very rewards Mr. Biglari claimed were already excessive in light of their poor performance.

 

We suspect Mr. Biglari’s thinking towards compensation has changed now that he’s in charge. How else could he desire a pay package that violates his own, purported, tenets?... (source: http://www.noisefreeinvesting.com/blog/2010/05/letter-to-the-board-of-biglari-holdings/

 

And this thread... with a lot of info. http://cornerofberkshireandfairfax.ca/forum/index.php?topic=2331.0

 

And someone might want to look closely at this and determine if anything improper transpired -- http://www.sec.gov/Archives/edgar/data/93859/000092189510000667/form8k07428_04302010.htm

 

:)

 

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Sardar published a letter to the shareholders of Cracker Barrel:

 

http://finance.yahoo.com/news/Sardar-Biglari-Issues-Letter-prnews-708520119.html?x=0&.v=1

 

The first half sounds like he just changed the company name from the old Steak'n Shake letter to shareholders and published it verbatim.  The second half is much more original and actually hits the Cracker Barrel board pretty hard.

 

He also fired up the old proxy website:

 

http://www.enhancecrackerbarrel.com/

 

Cheers!

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Sardar published a letter to the shareholders of Cracker Barrel:

 

http://finance.yahoo.com/news/Sardar-Biglari-Issues-Letter-prnews-708520119.html?x=0&.v=1

 

The first half sounds like he just changed the company name from the old Steak'n Shake letter to shareholders and published it verbatim.  The second half is much more original and actually hits the Cracker Barrel board pretty hard.

 

He also fired up the old proxy website:

 

http://www.enhancecrackerbarrel.com/

 

Cheers!

 

AHA! The plot thickens!

 

It will be interesting to read the plan that Biglari lays out this time...

 

It will also be interesting to see what happens in the vote. Especially with where the institutional guys come down.

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    Sardar lays out some legitimate issues with reporting and board incentives, but the investment case is nowhere near the slam dunk of SNS.  So far, Sardar is dwelling on CBRL's second order issues that when solved will not immediately enhance intrinsic value.  When making the case for SNS, Sardar correctly made the case that SNS's already gushing cash simply needed to be re-directed away from unprofitable expansion.  Further, SNS had plenty of downside protection in the form of real estate assets that where obfuscated by capital leases listed as debt on the balance sheet. 

 

    Unless Sardar has better reasons than he has so far given for this effort, it looks to me like would be better off finding a target with long-hanging fruit.

 

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    Sardar lays out some legitimate issues with reporting and board incentives, but the investment case is nowhere near the slam dunk of SNS.  So far, Sardar is dwelling on CBRL's second order issues that when solved will not immediately enhance intrinsic value.  When making the case for SNS, Sardar correctly made the case that SNS's already gushing cash simply needed to be re-directed away from unprofitable expansion.  Further, SNS had plenty of downside protection in the form of real estate assets that where obfuscated by capital leases listed as debt on the balance sheet. 

 

    Unless Sardar has better reasons than he has so far given for this effort, it looks to me like would be better off finding a target with long-hanging fruit.

 

 

I agree.  Steak'n Shake was just a few months away from going under when he began the proxy fight.  Cracker Barrel is in no such shape.  He's going to have to start pushing hard on how he can improve the company.  So far, the only thing he has is compensation, share ownership and "inter alia" a purported allegation of insider trading.  ;D  Cheers!

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  • 11 months later...

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