The fifth time was not the charm for Sardar Biglari.
The activist investor lost his latest bid to get a representative on the Cracker Barrel board this week when Raymond Barbrick, the co-CEO of the Briad Group, did not receive enough shareholder votes to become a director.
Barbrick received just under 2.5 million votes. Take out the more than 2 million Biglari-controlled votes we are pretty sure went to Barbrick and he got about 400,000 votes—or 2% of the non-Biglari vote. That would generally be considered a blowout.
It’s Biglari’s fifth loss in a proxy vote in 10 years, and this one is the biggest—even though Biglari himself was not a nominee, a move that at least theoretically was designed to ease any concerns the investor would use his position to push a merger between his own company and Cracker Barrel.
This was not quite the knockout punch Biglari hinted at in 2012, when he likened his strategy to the “rope-a-dope” tactic Muhammed Ali used to beat George Foreman in a heavyweight championship boxing match in 1974. He deemed at the time he would “outlast the Cracker Barrel board.”
He certainly outlasted much of the board outside of Cracker Barrel CEO Sandra Cochran—the company has numerous new directors, including Walmart executive Gisel Ruiz. But rather than land any sort of knockout punch Biglari’s own jabs are barely making a dent.
Much of that is due to Biglari himself. His own company is beset by numerous governance and performance problems, particularly at the restaurant chain he operates, Steak ‘n Shake—problems Cracker Barrel was all too happy to point out.
“We do not believe Mr. Biglari’s views are credible given his long-term track record of lagging performance and problematic governance practices at his own company,” Cochran wrote back in October.
Though Biglari called the performance of his own company “irrelevant,” that performance is certainly relevant when the investor is pushing to have a representative on the board.
It helps that Cracker Barrel has done well, at least compared to other family chains, coming out of the pandemic. It also helps that the company received an endorsement from proxy advisory firms such as Institutional Shareholder Services, which said there is “insufficient justification for supporting Biglari’s campaign at this time.” Such endorsements are key because a lot of shareholders use their recommendations as a guide for how to vote.
Though Biglari hoped to use Cracker Barrel’s failed Punch Bowl Social investment as a launch pad for a seat on the board, it’s also perfectly understandable that the company would walk away from that investment to save itself—a sentiment Punch Bowl’s own founder shared.
At some point, one wonders why Biglari keeps doing this. He has now lost on five proxy fights, an average of one every two years, and he’s received less support every time. These fights cost money--Cracker Barrel says it's spent $5 million since August to address the proxy challenge. One would think that such a big shareholder would not want the company wasting money on such fruitless exercises.