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Adviser recommends Steak n Shake seats for Biglari

INDIANAPOLIS Ahead of Steak n Shake Co.’s annual shareholder meeting on March 7, a proxy advisory firm recommended on Tuesday that the restaurant company’s shareholders nominate two dissident investors, including activist Sardar Biglari, to the company’s board of directors.

Glass Lewis & Co. said Steak n Shake’s current board had failed to hold senior executives accountable for the 490-unit chain’s deteriorating performance. The firm also criticized the chain's move to change corporate bylaws so that their positions on the board were protected regardless of performance.

“New independent voices are needed on the Steak n Shake board to effect change,” Glass Lewis said in its report, which was disseminated by Biglari.

Biglari, chairman of family-dining company Western Sizzlin Corp. and head of The Lion Fund LP investment vehicle in San Antonio, has been actively seeking changes at Steak n Shake since last summer. He currently holds about 8.5 percent of Steak n Shake’s outstanding public shares.

He has nominated himself and Lion Fund colleague Philip L. Cooley to Steak n Shake’s board of directors, and has said that plans for change include an immediate halting of new corporate-store development, reductions in corporate costs and more aggressive refranchising and franchising efforts.

Steak n Shake, which had been undertaking a strategic review of corporate options, said last week that it would not focus on a sale of the chain and instead would continue turnaround efforts and the hiring of a permanent chief executive to succeed acting CEO and president Alan Gilman. Biglari has specifically called for the dismissal of Gilman, who is also chairman of the chain.

Steak n Shake has also said it believed Biglari’s efforts and plan for the company are not in the best interests of shareholders.

Steak n Shake's results for 2007 included a 58-percent drop in net income to $11.8 million, a 2.4-percent uptick in revenues to $654 million and a same-store sales decrease of 3.8-percent.

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