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BH meeting questions.


ragnarisapirate
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Since the meeting starts in a few hours, I thought that we might want to make a list of questions that attendees might look at, and potentially ask for us? (cough, ragu, cough).

 

I for one, would be really interested to know what the company thinks about ITEX as well as hearing thoughts on the recent tender...

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Your question was asked and Biglari actually shared his view on ITEX . I am sure Ragu has better notes than me but essentially Sardar is against current management now due to their excessive compensation..lol

 

Sanjeev, you were right about compensation. Biglari hinted that the 10 million cap would eventually go away and he urged folks to sell the stock if that was a problem.

 

Sardar and Phil were very defensive on compensation questions.

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I for one, would be really interested to know what the company thinks about ITEX as well as hearing thoughts on the recent tender...

 

This was the last of my questions to Sardar. I figured I'd get a "no comments" in response. I didn't, thankfully for you:). I don't know ITEX, so please keep that in mind as you read what I believe he said:

 

He is pleased with the results of the tender because he believes ITEX  is undervalued, but he does not agree with the reasons behind the tender offer. BH and/ its subsidiaries still hold all of their shares and, as a result, they now own a higher percentage of ITEX than before.

 

He said that he'd spoken to Steven White about the compensation arrangement at ITEX. The gist of it was that Sardar would not support White unless there was a shareholder vote on the compensation proposal. In the absence of a shareholder vote, this was akin to corporate looting.

 

HTH,

Ragu

 

 

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I for one, would be really interested to know what the company thinks about ITEX as well as hearing thoughts on the recent tender...

 

This was the last of my questions to Sardar. I figured I'd get a "no comments" in response. I didn't, thankfully for you:). I don't know ITEX, so please keep that in mind as you read what I believe he said:

 

He is pleased with the results of the tender because he believes ITEX  is undervalued, but he does not agree with the reasons behind the tender offer. BH and/ its subsidiaries still hold all of their shares and, as a result, they now own a higher percentage of ITEX than before.

 

He said that he'd spoken to Steven White about the compensation arrangement at ITEX. The gist of it was that Sardar would not support White unless there was a shareholder vote on the compensation proposal. In the absence of a shareholder vote, this was akin to corporate looting.

 

HTH,

Ragu

Thanks Ragu. Did he give any indication as to how he was voting in the proxy?

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Your question was asked and Biglari actually shared his view on ITEX . I am sure Ragu has better notes than me but essentially Sardar is against current management now due to their excessive compensation..lol

 

Sanjeev, you were right about compensation. Biglari hinted that the 10 million cap would eventually go away and he urged folks to sell the stock if that was a problem.

 

Sardar and Phil were very defensive on compensation questions.

 

He doesn't need the shareholders anymore, as he controls more votes than anyone else.  That was the master plan.  Anyone who thinks that the intrinsic value of BH is anywhere near where it is trading right now is mistaken, because over time a greater and greater portion will go to him.  You have to discount it by at least 30%!  Cheers! 

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By the way, when Sardar said that he would eventually remove the $10M cap at the AGM, did any of you guys ask why the $10M cap was instituted in the first place? 

 

There is no ethical answer for that is there?  It was simply to get the votes to approve the compensation plan.  How anyone can remain a shareholder after he said that is beyond me?  Do you guys really put money that far ahead of ethics?  Actually hearing this now makes my stomach turn.  Cheers! 

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By the way, when Sardar said that he would eventually remove the $10M cap at the AGM, did any of you guys ask why the $10M cap was instituted in the first place? 

 

There is no ethical answer for that is there?  It was simply to get the votes to approve the compensation plan.  How anyone can remain a shareholder after he said that is beyond me?  Do you guys really put money that far ahead of ethics?  Actually hearing this now makes my stomach turn.  Cheers!

 

If the company is earning a billion dollars a year (which, I have little doubt that it eventually will) to me, it seems reasonable that the guy would arguably deserve more than $10 million bucks. Also, as Sardar is forced to buy stock with his compensation and there are fewer shares outstanding, he will be bidding the price up for the remaining shareholders. Not exactly an intrinsic value thing, but, a nice plus for remaining shareholders.

 

All things equal, if there was a single share remaining, under Biglari's compensation agreement, it would basically have unlimited worth, as he would have to buy it. Granted, at that point, they could reverse split out of it, but, it's an interesting thing to think about.

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By the way, when Sardar said that he would eventually remove the $10M cap at the AGM, did any of you guys ask why the $10M cap was instituted in the first place? 

 

There is no ethical answer for that is there?  It was simply to get the votes to approve the compensation plan.  How anyone can remain a shareholder after he said that is beyond me?  Do you guys really put money that far ahead of ethics?  Actually hearing this now makes my stomach turn.  Cheers!

 

If the company is earning a billion dollars a year (which, I have little doubt that it eventually will) to me, it seems reasonable that the guy would arguably deserve more than $10 million bucks. Also, as Sardar is forced to buy stock with his compensation and there are fewer shares outstanding, he will be bidding the price up for the remaining shareholders. Not exactly an intrinsic value thing, but, a nice plus for remaining shareholders.

 

All things equal, if there was a single share remaining, under Biglari's compensation agreement, it would basically have unlimited worth, as he would have to buy it. Granted, at that point, they could reverse split out of it, but, it's an interesting thing to think about.

 

Wow!  Do you really believe that Jeff?  The $10M cap is in place, but he said that will probably disappear.  Do you think he's really going to continually buy stock above intrinsic value?  You don't think that requirement could disappear as easily as the cap? 

 

The only reason he's buying any stock in BH is because he wants to make sure he controls as many votes as he can.  Once he's got enough votes to permanently secure his position, and actually then justify the name he implemented, it's going to be to hell with all of you and any restrictions on his conduct.

 

In response, you're going to tell me that it's ok, because you'd be out by then and would have made alot of money.  But the truth is, any existing BH shareholder from now till that point, would have simply facilitated this whole unholy mess.  I have no doubt Sardar will be a billionaire one day...but he's going to do it on the backs of corporate shareholders...and none of those shareholders will be worth a fraction of what he will. 

 

Frankly, I can't believe he actually said that the cap would eventually be removed.  That's just nuts to even say it.  Cheers! 

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Some people want to make money at all cost. All cost for this guy means  -- make a promise to get support to get done something and as soon as you don't need the support, break the promise. Rinse, repeat and keep taking money from shareholders. Given his history, how anyone can trust anything this guys has to say is beyond my comprehension.

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By the way, when Sardar said that he would eventually remove the $10M cap at the AGM, did any of you guys ask why the $10M cap was instituted in the first place? 

 

There is no ethical answer for that is there?  It was simply to get the votes to approve the compensation plan.  How anyone can remain a shareholder after he said that is beyond me?  Do you guys really put money that far ahead of ethics?  Actually hearing this now makes my stomach turn.  Cheers!

 

If the company is earning a billion dollars a year (which, I have little doubt that it eventually will) to me, it seems reasonable that the guy would arguably deserve more than $10 million bucks. Also, as Sardar is forced to buy stock with his compensation and there are fewer shares outstanding, he will be bidding the price up for the remaining shareholders. Not exactly an intrinsic value thing, but, a nice plus for remaining shareholders.

 

All things equal, if there was a single share remaining, under Biglari's compensation agreement, it would basically have unlimited worth, as he would have to buy it. Granted, at that point, they could reverse split out of it, but, it's an interesting thing to think about.

 

Wow!  Do you really believe that Jeff?  The $10M cap is in place, but he said that will probably disappear.  Do you think he's really going to continually buy stock above intrinsic value?  You don't think that requirement could disappear as easily as the cap? 

 

The only reason he's buying any stock in BH is because he wants to make sure he controls as many votes as he can.  Once he's got enough votes to permanently secure his position, and actually then justify the name he implemented, it's going to be to hell with all of you and any restrictions on his conduct.

 

In response, you're going to tell me that it's ok, because you'd be out by then and would have made alot of money.  But the truth is, any existing BH shareholder from now till that point, would have simply facilitated this whole unholy mess.  I have no doubt Sardar will be a billionaire one day...but he's going to do it on the backs of corporate shareholders...and none of those shareholders will be worth a fraction of what he will. 

 

Frankly, I can't believe he actually said that the cap would eventually be removed.  That's just nuts to even say it.  Cheers!

 

Parsad, I think that you might have read a little bit too much into my comment (and I mean that with the utmost amount of respect). I certainly believe that if a guy makes a company more than a billion dollars a year that there is nothing wrong with him getting $10 million dollars (but don't get me wrong, a Buffett salary is pretty nice for shareholders if the guy is good!). If he makes the company that much money, there was a cap, and if I were a shareholder, I would feel like I wasn't giving him what he was due and would probably vote to have the cap lifted. However, if he doesn't preform, he shouldn't make money.

 

In regards to the share purchases by Biglari, I would imagine that if he had to pay an unlimited amount of money for a share, he would find some way to get out of it (which is why I brought up the share split and should have brought up that he is supposed to make open market purchases) but who could blame him?. I think that it is an interesting thing to think about, because once you start thinking about it in terms like that, if you truly think that the compensation package is out of whack and designed to get Biglari control of the company, you start seeing what he is incintivized to do. I do think that he would make a limited amount of purchases above IV, just due to the logistics of re-doing the compensation package... He might do some sort of hedge or something though. I remember him saying at an annual that there would be things done to keep the stock price relatively close to IV (don't remember the exact wording though)

 

Anyway, as I've said before, I don't really have much of a strong opinion in either direction on the guy's ethics (certainly, there are arguments both ways here). Due to his actions though, I won't own the stock unless it is significantly discounted from it's present price.

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I was at the BH meeting and took some notes

 

Thank you Hawk4Value for the notes. Some of the statements in the notes are amazing, can't believe he can get away with it.

 

This is going to be a case study for a generation.

 

I too agree that this will be a heck of a case study.

 

Cooley's comments on never selling stock strike me as a bit grandiose, almost on the verge of either over promising or misguided. Just because they bind him to a very narrow road. Granted, I would have liked to hear the exact quote.

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Jeff, thanks for the reply.  My main point was that for anyone investing in BH...be careful!  It's all or nothing with this guy.  He goes in 100% with every idea, and one day it is going to backfire. 

 

The true reason behind the compensation package was because he would have had nothing if Steak'n Shake did go under.  Everything would have been lost...Lion Fund, Western, all of it.  Now he's taken debt out at Steak'n Shake, so that he can plunder Cracker Barrel.  Either he becomes very, very rich...or we watch an implosion one day on some idea.  And if that happens, left in the carnage will be all of his words and all of the other shareholders. 

 

There was no valid reason for the name change.  There was no valid reason for the increased compensation package.  There was no valid reason to take out debt at Steak'n Shake.  And now there is no valid reason to remove the compensation cap.  It's not about incentives and aligning interests...there is only one interest and he is running the company!  Cheers! 

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I know some of you will get a chuckle from

this.

 

During the meeting, Sardar mentioned that initially the SNS board offered him a higher salary and he told them to reduce the compensation offer. Sardar said he thought SNS could not afford at that time a higher salary for him due to SNS financial condition so he asked for a reduced offer.

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One of the biggest insights into Sardar has been his collection of sports cars, I heard he has a Ferrari a Lamborghini and Bentleys. I don't believe any value investor in their right mind would be caught so early in their career with even one of these cars, later on maybe one but never 3, and in Sardar's case, he appears to love the attention.

 

I also believe that the stake in CBRL is being acquired with additional debt, I truly hope its non-recourse.

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One of the biggest insights into Sardar has been his collection of sports cars, I heard he has a Ferrari a Lamborghini and Bentleys. I don't believe any value investor in their right mind would be caught so early in their career with even one of these cars, later on maybe one but never 3, and in Sardar's case, he appears to love the attention.

 

Spot on.  Not a good thing.

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The CEO ratings by the employees show how highly they regard BH management in comparison to something like McDonalds

 

http://www.glassdoor.com/Reviews/McDonald-s-Reviews-E432.htm

 

http://www.glassdoor.com/Reviews/Steak-n-Shake-Reviews-E1296.htm

 

"Employees are dissatisfied". The CEO Bigliari has 14% approval rating.

 

In one quote from NC, they said servers are responsible for dine and dashers. How is it their fault? Ridiculous. Is this the norm at other restaurants? I can't imagine it is.

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The CEO ratings by the employees show how highly they regard BH management in comparison to something like McDonalds

 

http://www.glassdoor.com/Reviews/McDonald-s-Reviews-E432.htm

 

http://www.glassdoor.com/Reviews/Steak-n-Shake-Reviews-E1296.htm

 

"Employees are dissatisfied". The CEO Bigliari has 14% approval rating.

 

In one quote from NC, they said servers are responsible for dine and dashers. How is it their fault? Ridiculous. Is this the norm at other restaurants? I can't imagine it is.

 

I think in most restaurants, the wait staff is responsible.  I do not know if they are financially responsible though.

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In one quote from NC, they said servers are responsible for dine and dashers. How is it their fault? Ridiculous. Is this the norm at other restaurants? I can't imagine it is.

 

I think in most restaurants, the wait staff is responsible.  I do not know if they are financially responsible though.

 

That sucks. I've never worked as a waiter, so I had no clue.

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In one quote from NC, they said servers are responsible for dine and dashers. How is it their fault? Ridiculous. Is this the norm at other restaurants? I can't imagine it is.

 

I think in most restaurants, the wait staff is responsible.  I do not know if they are financially responsible though.

 

That sucks. I've never worked as a waiter, so I had no clue.

 

In my state, it is illegal for employers to force employees to pay for a dine and dash or anything along those lines. They can fire a person, but not dock them pay. Most people don't know this, or are simply too scared to call their employers out on it.

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