Cracker Barrel Proxy Fight Sparked as Biglari Demands Board Seat

Cracker Barrel Old Country Store Inc. (CBRL), a U.S. restaurant and retail chain, said today it denied a board seat to its largest shareholder, sparking a proxy fight.

Biglari Holdings Inc. (BH), which owns 9.3 percent of Cracker Barrel, intends to nominate its Chief Executive Officer, Sardar Biglari, for a directorship this year, according to a regulatory filing. The Lebanon, Tennessee-based restaurant chain and Biglari have disagreed over how to report financial results of Cracker Barrel’s business units.

Cracker Barrel offered Biglari two independent board seats of his choosing, provided they met the company’s corporate governance guidelines, Cracker Barrel said today in a statement. Cracker Barrel’s offer was too restrictive, Biglari said in a letter he wrote to CEO Michael Woodhouse dated Sept. 1 and included in the filing. Both sides said they had hoped to avoid a costly proxy fight.

“Your actions prove to us that now is the hour to place real owners in the boardroom to deliver real value for all owners,” Biglari said in his letter.

Biglari is also CEO of restaurant chains Steak N Shake Co. and Western Sizzlin Corp., according to Bloomberg data.

In a separate letter last month, Biglari said he was “deeply disturbed” by Cracker Barrel’s not reporting separately the results of its restaurant and retail units. Cracker Barrel restaurants, which serve everything from scrambled eggs and biscuits to meat loaf, each have souvenir gift shops that customers pass through while paying their tab.

Cracker Barrel said today it denied seats to Biglari and his firm’s vice chairman because of concerns over conflicts of interest and qualifications.

“The Board is disappointed that Mr. Biglari refused our good faith offer and, instead, determined to initiate a disruptive and costly proxy contest at the expense of all of Cracker Barrel’s shareholders and his own,” Woodhouse said in the statement.

Cracker Barrel fell 83 cents, or 2 percent, to $41.53 today in Nasdaq Stock Exchange trading. The shares have declined 24 percent this year.

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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