Biglari Holdings Sends Letter To Cracker Barrel's Board On Discovery Of
Discrepancy In Professed Experience Of Designated Chairman James Bradford
SAN ANTONIO, TX, Oct. 8, 2012
SAN ANTONIO, TX, Oct. 8, 2012 /PRNewswire/ --Biglari Holdings Inc. (NYSE: BH)
today sent the following letter to the Board of Directors of Cracker Barrel
Old Country Store, Inc. (NASDAQ: CBRL) regarding public filings and statements
made by Cracker Barrel, including Chief Executive Officer Sandra B. Cochran,
that highlight designated Chairman James W. Bradford's former experience as
CEO of a New York Stock Exchange-listed company:
October 8, 2012
Board of Directors
Cracker Barrel Old Country Store, Inc.
305 Hartmann Drive
Lebanon, Tennessee 37087
Dear Board of Directors:
Cracker Barrel's proxy statement filed with the Securities and Exchange
Commission in connection with the Company's 2012 annual shareholders' meeting
contains the following statement regarding the qualifications of James W.
Bradford, Cracker Barrel's designated Chairman of the Board: "An experienced
corporate executive, Mr.Bradford previously served... from 1992 to 1999 as
President and Chief Executive Officer of AFG Industries Inc., which during his
tenure was North America's largest vertically integrated glass manufacturing
and fabrication company and was traded on the New York Stock Exchange (the
This assertion was repeated to investors at the Wells Fargo Retail &
Restaurants Conference on October 2, 2012 by Cracker Barrel's Chief Executive
Officer, Sandra Cochran, who stated that "Jim Bradford, who was the former CEO
of [a] New York Stock Exchange company, and he's now the Dean of the Business
School at Vanderbilt...."
Then on October 4, 2012, Ms. Cochran wrote a letter to shareholders
highlighting the changes to the Board by stressing the experience of the
incoming Chairman: "[Michael Woodhouse] will be succeeded by Jim Bradford, a
former NYSE company CEO...."
As the largest shareholder of the Company, owning approximately 17.3% of the
outstanding shares, we felt it was important for us to understand Mr.
Bradford's performance as a purportedly former CEO of a public company, in
view of his recent appointment as the incoming Chairman of the Board, as well
as Ms. Cochran's statements underlining his position as "a former NYSE company
CEO." However, a public search reveals that Mr. Bradford has never been CEO of
a New York Stock Exchange company. In fact, we found that AFG Industries in
1988 was taken private, four years before Mr. Bradford was appointed CEO.
The Company has claimed that Mr. Bradford was CEO of a NYSE company by way of
SEC disclosures and statements from Ms. Cochran. The question for shareholders
is whether Mr. Bradford was indeed CEO of a NYSE-listed company. If the answer
is negative, then misrepresentations have been made in SEC filings, investor
presentations, and a letter to shareholders. If Mr. Bradford has embellished
his professional record, we believe this undermines his credibility.
Therefore, the Board must determine whether Mr. Bradford should continue in
his present capacity. After all, it is Mr. Bradford's, Ms. Cochran's and the
full Board's responsibility to ensure the accuracy of the Company's public
filings and statements. A Board must exercise diligence and care; such a
material inaccuracy would be a failure on the part of the Board of Directors,
especially the Nominating and Corporate Governance Committee, reflecting
poorly on the entire Board's governance process.
In its proxy statement, Cracker Barrel claims to have strict procedures and
standards and to have engaged in "significant efforts" to identify qualified
candidates for director. Echoing its Corporate Governance Guidelines, Cracker
Barrel states in its proxy statement:
"The Nominating and Corporate Governance Committee assesses a candidate's
independence, background and experience.... The Nominating and Corporate
Governance Committee recommends appropriate candidates with the goal that
the Board of Directors be comprised of qualified individuals.... Individual
directors and any person nominated to serve as a director should possess the
highest moral integrity and should generally have had significant managerial
experience in the form of being a current or former senior executive of a
publicly traded or privately held company or similar business experience or
We certainly understand why the Board, in the midst of a proxy contest, would
be interested in highlighting an accomplishment of a director, especially an
incoming Chairman, who would have led a NYSE-listed company in the capacity of
CEO. Initially we had no reason to doubt the Board or Mr. Bradford. We assumed
that the Nominating and Corporate Governance Committee would have conducted a
thorough background check on the incoming Chairman. It is certainly the
obligation of the full Board, including that of Ms. Cochran, to be fully
versed about Mr. Bradford's professional accomplishments. Assuming Mr.
Bradford was required to complete Cracker Barrel's 22-page, 33-question
director-and-officer questionnaire that Phil Cooley and I were required to
submit in connection with our nomination to the Board, we believe that, at the
very least, his responses to questions 3 and 33 should have shed light on his
experience at the public company. (Enclosed with this letter is Cracker
Barrel's questionnaire, which is especially voluminous.)
Should our concerns about the accuracy of Mr. Bradford's experience prove
correct, then shareholders should seriously question the level of diligence
and oversight exercised by Cracker Barrel's Board of Directors in the vitally
important vetting process for identifying qualified directors, including the
one director possessing the essential character and experience to serve as
Chairman of the Board.
We hope that the Board can provide shareholders with a satisfactory
explanation. In order to do so, we call upon the Board to conduct immediately
an independent investigation to understand whether Mr. Bradford misrepresented
his prior position to the Board and thereby led Ms. Cochran to misrepresent
Mr. Bradford's credentials to the public. The investigation should also
determine whether the Company's Code of Business Conduct and Ethics has been
violated. We believe shareholders have a basic right to know the facts,
including the correct answers to the following questions:
1.Did Mr. Bradford mislead the Board regarding his past experience and
qualifications to serve as a director of Cracker Barrel?
2.Did Mr. Bradford's misrepresentations lead Ms. Cochran to misinform
investors of his credentials in her October 4, 2012 letter to shareholders
as well as during her presentation at the Wells Fargo conference on
October 2, 2012?
3.Why would CEO Sandra Cochran not be aware of the credentials of the
Company's designated Chairman of the Board?
4.By including Mr. Bradford's inaccurate biography in its proxy statement,
did any officers or directors of the Company violate its Code of Business
Conduct and Ethics, which contains the following requirements:
"Directors, officers and employees who are involved in the process of
preparing the periodic reports required by applicable securities laws and
rules are responsible for ensuring that the disclosure in the Company's
periodic reports is full, fair, accurate, timely and
understandable....Knowingly making or maintaining false, misleading or
incomplete entries, records or documentation is strictly prohibited."
A separate review should also be conducted to understand fully the process by
which background checks and the vetting are conducted by the Nominating and
Corporate Governance Committee, which bears responsibility for the accuracy of
the credentials of Board members. Incidentally, Mr. Bradford is not only the
designated Chairman of the Board, but also is the current Chairman of the
Nominating and Corporate Governance Committee.
We urge the Cracker Barrel Board to report the results of this investigation
to shareholders in sufficient time for them to cast their votes for directors
at the 2012 annual meeting. Shareholders have a fundamental right to know that
the stewards of their investment have been chosen with great care and possess
the requisite qualities of leadership.
Furthermore, this proxy contest should have been avoided, for, in our view, we
bring shareholder representation of 17.3%, including a long-term perspective,
relevant industry experience, yet no business or legal conflicts. Because we
are independent, we would critically and objectively discuss business issues.
Patently, as the Company's largest shareholder, we are interested in finding
ways to advance shareholder value. Moreover, the current proxy contest is
centered on Phil Cooley's and my holding two board seats out of ten; that is,
we are neither asking nor seeking board control or ownership control of
We await your immediate response.
/s/ Sardar Biglari
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Biglari Holdings Inc., an Indiana corporation ("BH"), together with the other
participants named herein, has made a preliminary filing with the Securities
and Exchange Commission ("SEC") of a proxy statement and an accompanying proxy
card to be used to solicit votes in connection with the solicitation of
proxies for the election of individuals to the Board of Directors of Cracker
Barrel Old Country Store, Inc. (the "Company") at the 2012 annual meeting of
shareholders of the Company.
BH ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND
OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON
THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE
PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE
UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS'
PROXY SOLICITOR, MORROW & CO., LLC, TOLL-FREE AT (877) 849-0763, BANKS AND
BROKERS CALL COLLECT AT (203) 658-9400.
The participants in the proxy solicitation are BH, Biglari Capital Corp., a
Texas corporation ("BCC"), The Lion Fund, L.P., a Delaware limited partnership
("Lion Fund"), Steak n Shake Operations, Inc., an Indiana corporation ("Steak
n Shake"), Sardar Biglari and Philip L. Cooley (the "Participants").
As of the close of business on October 5, 2012, BH owned directly 3,650,952
shares of Common Stock.As of the close of business on October 5, 2012, the
Lion Fund owned directly 140,100 shares of Common Stock.As of the close of
business on October 5, 2012, Steak n Shake owned directly 299,985 shares of
Common Stock.Each of BCC, as the general partner of the Lion Fund, and BH,
as the parent of BCC, may be deemed to beneficially own the shares of Common
Stock directly owned by the Lion Fund.BH, as the parent of Steak n Shake,
may be deemed to beneficially own the shares of Common Stock directly owned by
Steak n Shake.Mr. Biglari, as the Chairman and Chief Executive Officer of
each of BH, BCC and Steak n Shake, may be deemed to beneficially own the
shares of Common Stock directly owned by BH, the Lion Fund and Steak n Shake.
As members of a "group" for the purposes of Rule 13d-5(b)(1) of the Securities
Exchange Act of 1934, as amended, each of the Participants is deemed to
beneficially own the shares of Common Stock of the Company beneficially owned
in the aggregate by the other Participants. Each of the Participants disclaims
beneficial ownership of such shares of Common Stock except to the extent of
his or its pecuniary interest therein.
SOURCE Biglari Holdings Inc.
Contact: Morrow & Co., LLC, Tom Ball or John Ferguson, +1-203-658-9400 or
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