The 663-unit chain finally agreed to appoint one of the stakeholder's nominees, although with certain stipulations.
After years of Sardar Biglari criticizing Cracker Barrel's leadership and decision-making skills, the two sides have finally reached an agreement.
Biglari, also the CEO of Steak 'n Shake, controls close to 9 percent of the chain's shares. For years, he's nominated board members to gain more influence, but attempts were unsuccessful. However, on Wednesday, Cracker Barrel announced a Nomination and Cooperation Agreement in which it will expand the board to 11 members and appoint Jody Bilney, one of Biglari's nominees, effective immediately. She will be voted on by shareholders at the annual meetings in 2022 and 2023.
Bilney previously served as chief brand officer for Bloomin' Brands and as CMO for Humana, a Fortune 500 health insurance company based in Kentucky. She currently works on Chuy's board of directors, in addition to Masonite International, Alignment Healthcare, and other companies.
Cracker Barrel will also reimburse Biglari up to $500,000 for costs related to pursuing previous director nominations. His latest attempt came in 2020 when he tried to push for Raymond Barbrick, co-CEO of The Briad Group, a franchisee of Wendy's. That year, the executive publicly released multiple letters to shareholders digging into Cracker Barrel, such as referring to the chain's prior investment in bankrupt Punch Bowl Social as "one of the worst business blunders in the annals of restaurant history." He also questioned CEO Sandy Cochran's leadership, saying she was "CEO of Books-A-Million, a failed bookstore enterprise, before joining Cracker Barrel in 2009.”
Cracker Barrel didn't remain silent on the battles either. In response to denying Barbrick an appointment, the chain emphasized it used a nationally recognized recruiting firm, and that after thorough interviews, it was determined he didn't have the requisite experience. Cochran also called out Steak 'n Shake's declines in same-store sales and traffic, describing it as the "deterioration of Steak 'n Shake" and a “cautionary tale of poor capital allocation, underinvestment, lack of strategic vision, subpar leadership, and lost brand identity.”
To avoid spats like this in the future, Cracker Barrel had Biglari agree to certain standstill agreements until February 29, 2024, including not making any pubic proposal or request in regard to "advising, controlling, changing or influencing the Board or management of the Company, including any plans or proposals with respect to any change in the Board."