The above number is how many shares Cracker Barrel shareholders not named or affiliated with Sardar Biglari voted in favor of the activist investor's bid for a board seat at the local restaurant and retail chain. That's only about a third of the support Biglari won a year ago. Also, note two ironic details in the final vote tallies from last week's shareholder meeting: President and CEO Sandy Cochran received the most votes of any director candidate and Biglari actually received 463 fewer shares than did his No. 2, Phil Cooley.
Shareholders of Cracker Barrel Old Country Store will this morning have their say in the lengthy governance tussle between the company and Sardar Biglari, who owns 18 percent of its shares. To recap, Biglari is contesting the board's recommendations on three fronts: He wants board seats for himself and his No. 2 at Biglari Holdings, he wants investors to vote down the proposed extension of the company's poison pill — they did so last year — as well as the executive compensation plans. Look for some sort of news from the shareholders' meeting around lunch. In the meantime, if you're so inclined, download the company's full proxy here. Biglari's competing proxy is here.
Sardar Biglari says he's glad proxy advisory firm Institutional Shareholder Services thinks the ROI of Cracker Barrel Old Country Store's new restaurants is an important factor for investors to consider as they weigh their options ahead of this Thursday's annual shareholders' meeting. But Biglari, who wants two board seats to represent his 18 percent stake in Lebanon-based Cracker Barrel, disagrees with how ISS interprets the data Cracker Barrel has disclosed.
ISS' above statement is factually wrong. An estimate of $270,000 per store of incremental G&A expense rather than $235,000 per store in our analysis would reduce return on investment. Yet ISS concludes that return increased from 3.7% to 10.7% — a mathematical impossibility! We urge shareholders to do their own analysis.
Entities controlled by Sardar Biglari last week spent another $3.7 million to increase their stake in Cracker Barrel Old Country Store to almost 18 percent. (The board earlier this year voted to adopt a poison pill with a 20 percent threshold.) The purchases were made just before proxy advisory firms ISS and Glass Lewis recommended for the second straight year that investors side with the Cracker Barrel board.
From Jonathan Maze at Restaurant Finance Monitor comes an interesting take on the upcoming Cracker Barrel Old Country Store annual shareholders' meeting. Some of the investors being asked to put top shareholder Sardar Biglari and his lieutenant Phil Cooley on the board may vote to do so, Maze says, purely out of fear.
It seems unlikely Biglari would try a third straight proxy — two straight contested proxies is rare as it is. While Biglari has said publicly that his company is a Cracker Barrel shareholder for the long-term, it seems unlikely to us that he would tolerate the outsider activist role. That means the most likely scenario following a Biglari loss would be a sale of his stock — and suddenly all of these advantages would go away as the market gets flooded with shares.
Biglari, seeking to win the endorsement of Institutional Shareholder Services, has sent the proxy advisory firm Maze's piece.
Sardar Biglari is not wavering in his pursuit of Cracker Barrel board representation or with his steady purchases of shares in the Lebanon-based restaurant chain. On Wednesday, the day before he delivered his formal platform for board election, Biglari bought 26,000 Cracker Barrel shares to take his stake in the company to 17.6 percent. Wednesday's tab came to $1.65 million, lifting to $184 million the money he has invested in Cracker Barrel (Ticker: CBRL) since the spring of 2011.