With a shareholders’ meeting slated for later this month, financially troubled casual-dining company Luby’s Inc. is firing back against an activist investor looking to elect a slate of four candidates to the board.
“Change is already underway at Luby’s and the board and management team are executing on an aggressive turnaround plan to improve the company’s financial results and operating performance,” Luby’s executives wrote in a presentation to investors released Monday in advance of the Jan. 25 shareholders meeting.
The Texas-based company, which operates 84 Luby’s restaurants, 60 Fuddruckers units and one Cheeseburger in Paradise location, faces a proxy fight from Bandera Partners LLC, a New York City-based investment firm that owns 9.8% of the company’s stock.
Luby’s has shuttered nearly two dozen units in recent months and has laid off corporate staff after issuing a “going concern warning,” raising questions about whether it could remain solvent in the face of mounting debt and ongoing losses.
In the latest communication, Luby’s offered shareholders a four-part turnaround plan—which it says is currently in process—that includes raising brand awareness, strengthening core operations, optimizing the business for the future and maintaining strong corporate governance policies.
The company maintains that Bandera Partners’ nominees “do not have the appropriate skillsets, experience or track records to justify replacing Luby’s highly qualified nominees.”
Bandera Partners, in a letter to Luby’s shareholders last week, called out an 84% drop in the company’s stock price over the last five years, high overhead expenses, excessive board compensation and mounting debt as reasons for requesting a change in Luby’s oversight.
The investor group is seeking the ouster from the board of Luby’s President and CEO Christopher Pappas, as well as Harris Pappas, general counsel Frank Markantonis and chairman Gasper Mir III. It seeks to have shareholders fill those seats with former Sen. Phil Gramm, Bandera Partners co-founder Jeff Gramm, tech entrepreneur Savneet Singh and business owner Stacy Hock.