On April 8th, 2009 Vicuna Advisors made a 13D/A filing with the SEC which revealed a letter they had sent to the B of D of DAVE. It is particularly noteable because Vicuna owns 11.3% of the outstanding shares making it among the largest if not the largest shareholders, a position they have held for several years. They are seeking a seat on the board of directors. ALL SHAREHOLDERS SHOULD SUPPORT THEM because the board has heretofore refused. Why support them? Because the board has done a poor job and the points raised by Vicuna in the letter are on target in my opinion. There are three points: Excessive CEO turnover (5 since 2003) which has numerous negative implications. This is clearly a board issue and reflects poor vetting and bad judgement; Poor decisions on allocation of capital such as share repurchases that are not at meaningful discounts to intrinsic value as they should be and building new company owned restaurants without considering all costs as they should; and third is the failure to make sufficient changes to weather the economic storm such as by slashing overhead. Instead they are cutting as they go which in this environment could be too little too late and thus puts the company at great risk. This is the key reason the shares are trading at such a low price currently. Vicuna owns more shares than the board and management combined. The board has been static for years and has failed the shareholders. They are either complacent or incompetent but whatever the case change is needed. Vicuna would be an asset that would benefit all stakeholders if better decisions are made with our capital. This company has a lot of potential but they are squandering it. Support Vicuna by withholding your vote for the existing board and urging that Vicuna be seated
I wrote this because I have followed DAVE for a long time and agree with Vicuna's points. I have no relationship with Vicuna and don't even know them. I do own shares in DAVE because I think it has great potential. Get involved--it can make more of a differnce than anything else that is talked about on these boards.
Vicuna may do some good to have a say here. It's clear the board doesn't understand proper capital allocation.
They we're buying stock back aggressively when it was expensive, and now they're aggressively paying down debt when it's cheap. I understand they need to paydown some to get comfortable on the covenants, but I don't think I'd be rushing to pay back more than necessary when I'm paying LIBOR + 200 and 3-month LIBOR is 1.09%.
I urge all shareholders to vote against Lane Cardwell and Dean Riesen as directors in the proxy vote. These two individuals are the executive compensation committee and they recruit the CEO's and come up with the compensation package. These two individuals are extremely incompetent and need to be removed from the board. If you vote online, simple say that you want to vote for all individuals except the those listed below and chose Lane Cardwell and Dean Riesen.
I'm actually somewhat comforted by the fact that they got rid of a few CEO's. At least we know who's in charge. Nothing worse than a company who's Board bows down to the CEO.
I do agree, however, that the repurchase program was handled poorly and wildly. They should have been paying off debt or building cash instead of buying back shares. Now is when they should be buying back shares, but they can't because they are scrambling to shore up the balance sheet.