Editor's note: A previous version of this story has been updated to clarify that Biglari was only seeking a nomination for a board seat for himself, not two seats as originally published.
Cracker Barrel Old Country Store Inc. said Thursday it would continue to oppose activist investor Sardar Biglari’s efforts to gain board seats after the head of Biglari Holdings Inc., and shareholder in Cracker Barrel, vowed a proxy fight.
Biglari, chairman and chief executive of San Antonio, Texas-based Biglari Holdings Inc., which since June has held 9.3 percent of Cracker Barrel’s shares, said in a letter earlier Thursday that he was nominating himself to a board seat. Biglari had, in earlier discussions with Cracker Barrel, sought seats for himself and Philip Cooley, vice chairman of Biglari Holdings.
Lebanon, Tenn.-based Cracker Barrel, which operates 600 family-dining restaurants, released an Aug. 22 letter from Michael A. Woodhouse, Cracker Barrel’s chairman and chief executive, to Biglari that outlined the company’s offer to add – and let Biglari appoint – two independent board members.
Woodhouse said in a statement, “The board is disappointed that Mr. Biglari refused our good faith offer and, instead, determined to initiate a disruptive and costly proxy contest at the expense of all of Cracker Barrel’s shareholders and his own.”
In his separate letter to Woodhouse on Thursday, Biglari said the board had rejected seats for himself and Cooley “even though not a single one of its members has outlaid any considerable money in order to own substantial amounts of company stock; in other words, board members have no real skin in the game.
“Their lack of ownership naturally explains why they’re spending our money on a proxy fight would not pain them. But it pains us because we are in effect paying over $9 for every $100 you spend. In fact, your actions prove to us that now is the hour to place real owners in the boardroom to deliver real value for all owners,” wrote Biglari, who serves as chief executive of Biglari Holdings’ Steak n Shake and Western Sizzlin’ concepts.
In August, Biglari had called for Cracker Barrel to more clearly present its financials by separating its restaurant and retail revenues. Cracker Barrel responded by saying the Securities and Exchange Commission has found its reporting practices appropriate.
Since Biglari’s June investment, Cracker Barrel has eliminated 60 management and staff positions in an effort to reduce costs and in early August it named Sandra B. Cochran, the company’s current president and chief operating officer, as its new chief executive. Cochran is to assume that role later this month and replace Woodhouse, who will become executive chairman.
Cracker Barrel said Biglari made his first demand for a board seat in June, and that led to “numerous discussions” between the two parties.
“The board and the committee took into consideration many factors in deciding that the appointments would not be in the best interests of the company and its shareholders, including significant business and legal concerns over conflicts of interest and governance, the background and qualifications of the individuals, and uncertainty over Mr. Biglari’s ultimate agenda,” Cracker Barrel said Thursday.
In a separate release late Thursday, Biglari Holdings announced it would delay a “special meeting” scheduled for Friday, though details were not released.