Cracker Barrel-Biglari board fight heating up again

Company sticks to director qualification guidelines; investor doesn't want to 'play the role of a professional search firm'

Those holding out hope for a full-on detente between Cracker Barrel Old Country Store and its largest shareholder look set to be disappointed.

In an open letter to fellow shareholders, Sardar Biglari says the Cracker Barrel board this week offered to endorse two of his nominees for this fall's annual meeting — as long as they were not Biglari and his lieutenant, Phil Cooley. Biglari, who owns almost a fifth of Lebanon-based Cracker Barrel and also runs Steak 'n Shake, says that's a no go.

"Plainly, the Board's proposal is diametrically opposed to our ideas as well as to the research showing that companies with the presence of large shareholders outperform companies that have no such owners overseeing management," Biglari wrote. "We believe logic and research are on our side. It is simply irrational to deny an 18 percent shareholder two board seats."

The letter from Cracker Barrel, penned by incoming Chairman Jim Bradford and CEO and Director Sandy Cochran, gave Biglari the option to nominate two people to the board, which has been largely overhauled in the past year. But the offer came with the conditions that the people meet Cracker Barrel's director qualifications, including that they not be execs or directors of a competing restaurant company or be affiliated with Biglari Holdings. (Cracker Barrel board additions over the past 15 months include Bradford — dean of Vanderbilt's Owen School — as well as former Clarcor CEO Norm Johnson and execs with Starbucks, DiamondRock Hospitality and Walmart on their resumes.)

Biglari said he recently met with two new Cracker Barrel directors and was upbeat about the gathering's tone and the prospects for avoiding a second all-out proxy fight. (He won 36 percent of votes cast last December.) But this week's letter has dashed that prospect.

"Our hope was to join the Board without a proxy contest," Biglari wrote. "In fact, it was such a collegial meeting that we challenge the incoming Chairman to cite any reasons why our presence on the Board would be damaging or destructive to Cracker Barrel."

In their own statement Thursday, Cracker Barrel officials said they were disappointed that Biglari "has once again refused to consider a reasonable settlement offer."

Check out Biglari's full statement, which also includes the offer letter from Bradford and Cochran, here.

Shares of Cracker Barrel (Ticker: CBRL) are up almost 2 percent Thursday morning to about $64.60. They've risen some 28 percent so far in 2012.