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Luby’s tries to stave off activist with board shake-up

Facing a proxy fight, the struggling casual-dining chain is adding two new board members and modifying its governance rules.
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Embattled casual-dining chain Luby’s Inc., facing a proxy fight from an activist investor, is taking steps to shake up its board as it prepares for next week’s potentially contentious annual shareholders’ meeting.

Luby’s will add two new faces to its board, to replace two incumbent directors, and will install a new board chair, the company announced Friday. It will also require a plurality voting standard for all elections after the one at the 2019 annual meeting. And the new rules will require board members who do not receive a majority of votes in uncontested elections to resign.

“Luby’s has recently been engaged in in-depth discussions with many of our shareholders, and based on the feedback we have received, we have chosen to accelerate our plans to transform the board and to move forward with several corporate governance changes,” Luby’s current chairman, Gasper Mir III, said in a statement.

Luby’s is currently searching for those two new directors.

Meanwhile, New York City-based investment firm Bandera Partners LLC, led by Jefferson Gramm, is pushing four candidates for Luby’s board of directors. Bandera Partners owns 9.8% of the company’s stock.

Bandera published a letter to Luby’s stockholders Friday, urging them not to support the company’s latest moves.

“Don’t let them fool you twice with their latest round of promises,” the letter says, referencing a similar Luby’s proxy fight a decade ago. “Today’s announcement from Luby’s is simply too little too late.”

Gramm, in an interview with Restaurant Business, said he is personally calling stockholders to urge them to vote and to support Bandera Partners’ calls for reforms.

“It’s really about turnout,” he said. “Can we motivate enough of those people to vote? … Our primary goal is to improve accountability at the board level.”

Texas-based Luby’s, which operates 84 Luby’s restaurants, 60 Fuddruckers units and one Cheeseburger in Paradise location, has shuttered units, laid off corporate staff and issued a “going concern warning,” raising the prospect that it may not be able to remain in business given its high debt load.

Luby’s will hold its annual shareholders’ meeting Jan. 25.

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