A week before Luby’s Inc.’s contested shareholder meeting, the company on Friday announced it would be replacing two independent directors and elect a new chair this year.
The Houston-based parent to the Luby’s cafeteria chain and the Fuddruckers burger brand is in the midst of a proxy fight with dissident investor Bandera Partners LLC, a New York hedge fund that now owns about 9.8 percent of Luby’s shares.
Bandera the past two months has been pressing for changes at Luby’s and put forth a slate of four directors, which the company declined to endorse, citing a lack of “meaningful industry experience.”
But Luby’s on Friday said it was committed to “ongoing board refreshment.”
“Luby’s has recently been engaged in in-depth discussions with many of our shareholders,” said Gasper Mir III, Luby’s chair, in a statement, “and based on the feedback we have received, we have chosen to accelerate our plans to transform the board and to move forward with several corporate governance changes.”
Mir said that with the already-announced addition of Twila Day to the board, the company would have three new independent directors this year, “ensuring that we continue to have the right mix of experience and skillsets, coupled with fresh perspectives.”
Mir, 72, also said he would said he would step down as chair this year and the board would elect a new leader.
“As I am approaching the board’s retirement age limit, I have also decided to hand over the chairmanship to another independent director this year,” he said.
The company said it was searching for the two new independent directors, soliciting shareholder input and looking for “strong, hands-on restaurant operating and turnaround experience.” At the time that each new independent director is appointed to the board, an unidentified incumbent director will retire, the company said.
Other changes Luby’s include a plurality voting standard for contested director elections moving forward and a resignation policy that calls for directors to step down if they do not receive a majority of the votes at the annual meeting. Luby’s nine directors serve one-year terms.
As part of its board slate, Luby's earlier said nominee Day replaced Luby’s general counsel Peter Tropoli as a director. Day is chief information officer of the Huntsman Corp., a Woodlands, Texas-based chemical manufacturer and marketer. Earlier, Day served as chief information officer for Sysco Corp., the food products distributor.
Other company-endorsed nominees, in addition to board chair Mir, include: Gerald Bodzy, president and owner of Houston-based Showcase Custom Vinyl Windows and Doors; Judith Craven, president of JAE & Associates LLC, a physician consulting firm; Jill Griffin, principal at the Austin, Texas-based Griffin Group; Frank Markantonis, general counsel at Pappas Restaurants Inc.; Joe McKinney, vice chairman of San Antonio, Texas-based Broadway National Bank; Chris Pappas, Luby’s CEO and president; and Harris Pappas, former chief operating officer of Luby’s.
Chris Pappas and Harris Pappas own about 36.8 percent of Luby’s shares.
Bandera’s four nominated board candidates include: Jeff Gramm, managing partner of Bandera Capital, who launched the proxy contest, and his father, former U.S. Sen. Philip Gramm (R-Texas), as well as Stacy Hock, chairwoman of Texans for Education Opportunity, and Savneet Singh, managing partner of New York-based Tera Holdings.
Earlier this week, two proxy-vote advisory firms weighed in with varying recommendations to shareholders.
On Monday, Institutional Shareholder Services recommended shareholders elect two of Bandera’s four dissident nominees, urging votes for Jeff Gramm and Philip Gramm, according to Reuters news agency.
On Wednesday, proxy advisory firm Glass Lewis & Co. LLC recommended Jeff Gramm but urged proxy votes against Bandera’s three other nominees.
Luby’s operates 142 restaurants, including 82 Luby’s Cafeterias, 59 Fuddruckers and one Cheeseburger in Paradise unit. The company franchises 104 Fuddruckers in the United States and abroad. In addition, Luby’s culinary contract services division provides foodservice management at 30 sites, including healthcare, higher education, sport stadium and corporate dining locations.
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