OVERLAND PARK Kan. Applebee’s International Inc. said an offer to give dissident shareholder Breeden Capital two of the four board seats it is seeking in a proxy challenge has been rejected by the 5-percent stakeholder, setting the stage for continuing conflict.
The two seats offered to the hedge fund would have been additions to Applebee’s current 12-person board. Breeden is vying for four of the current 12 seats, or one-third of the board’s voting power.
Applebee’s, operator or franchisor of 1,942 casual-dining restaurants, indicated that it had initially offered Breeden only one seat. When that overture was rejected on March 2, the company said, it offered a second seat on March 8. But that, too, was rebuffed, Applebee’s disclosed.
Later, in an interview with The Wall Street Journal, Applebee's chief executive Dave Goebel revealed that the company had also offered to inform Breeden Capital chairman and CEO Richard Breeden of deliberations about the possible sale of the company. But Breeden declined the offer, Goebel said. He expressed doubts that further negotiations will bring an agreement with Breeden, and called the matter "adistraction that, quite frankly, I wish we didn't have."
Applebee’s commented that Breeden, the one-time chairman of the U.S. Securities and Exchange Commission, apparently prefers “to continue his proxy fight.”
"We believe that the best way to improve Applebee's declining performance and to reform unhealthy governance practices is for shareholder interests to have a strong voice in Applebee's boardroom," Breeden said in a statement released Friday. "Our discussions with Applebee's failed to persuade us that their proposals were sufficient to effect the meaningful changes that we believe are required to increase long term shareholder value. In the coming election, shareholders will have a choice to vote for the four incumbents representing the status quo, or for our four nominees seeking positive change."
Applebee’s said it had held “numerous conversations” with Breeden and other officials of his hedge fund during the past eight months and “continues to thoughtfully consider Breeden Capital’s comments regarding its business strategies.”
Breeden Capital has criticized the financial performance of the casual-dining giant and publicly chastised Applebee’s management for such policies as its use of a company plane to visit a resort area where it has no restaurants and a former chief executive maintains a beach house.
Last month, Applebee’s said it was considering a sale of the company and other ways of boosting the value of shareholders’ investments. Two days later, it reported a 9.8 percent decline in earnings for the fourth quarter, continuing two years of sliding results.
