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Steak n Shake gives CEO Biglari big raise

INDIANAPOLIS At a time when executive compensation is coming under increasing scrutiny, the Steak n Shake Co. has bumped chief executive Sardar Biglari’s salary by more than 220 percent.

The company’s board of directors voted unanimously to raise Biglari’s annual compensation to $900,000 from $280,000, effective June 19. In its Securities & Exchange Commission filing, the company said Biglari doesn’t have an employment agreement and doesn’t receive separate pay for being a company director. The company also stated that Biglari doesn’t participate in any bonus programs and doesn’t receive stock or stock option grants.

Activist investor Biglari took over Steak n Shake last August and started restructuring the company, resulting in a turnaround in the most recently finished quarter, ended April 8, when it reported a profit of $2.3 million, or 8 cents a share, compared to a loss of 10 cents per share a year earlier. For the six months ended in April, Steak n Shake lost $2.8 million, versus a loss of $4.0 million in the year ago period. And for the year, ended in September 2008, Steak n Shake had total revenue of $610.1 million and a loss $23.0 million, compared with revenue of $654.1 million and net income of $11.8 million in 2007.

In terms of annual revenue generated, California Pizza Kitchen is a publicly traded restaurant company of relatively comparable size with Steak n Shake. For fiscal 2008, CPK had total revenues of $677.1 million, versus $632.9 million a year earlier, and net income of $8.7 million, compared with earnings of $14.8 million in 2007.

In comparison with Biglari’s new total pay of $900,000 per year, CPK pays its co-chief executives, Larry S. Flax and Richard L. Rosenfield, a base salary of $500,000 each, or a total of $1million. But Flax and Rosenfield each received $870,000 in total cash compensation in fiscal 2008, including bonus plan payments, as part of total compensation packages for the year, including stock-related considerations, that exceeded $2.2 million for each executive.

While the sums pocketed by restaurant company chiefs pale in comparison with the eyebrow-raising figures being paid to titans in the financial industry, investors reeling from the market’s meltdown nonetheless are more closely scrutinizing company performance and compensation. In May, NRN reported that the expectation is an increase in the number of “say on pay” proposals as well as turnover on compensation committees.

Based in Indianapolis, Steak n Shake operates 502 restaurants, including 66 franchised units, in 21 states.

Contact Bret Thorn at [email protected].

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