Remember this letter where Biglari railed against prior management?
He put in a chart showing financial data from 1998. Well, I went back and looked at SNS's growth in book value per share over that time period.
Here's the record:
2008: -6.80% (this is the year Sandar took over)
10 year annual compound growth: 8.50%
Annual compound growth from 2000 - 2007: 11.48%
So, does anyone still think that 5% bogey is going to be hard to hit?
I didn't bother figuring out what Sandar would have earned over this period.
You poor shareholders are giving up 25% of that growth over 5% for an asset that earned $4 million bucks over 10 years.
If it wasn't so sad, it'd be funny.
I would think Professor Cooley would keep him in check if he was getting out of hand...
he's not so bad of a guy, i like his style, hey Mr. B if you're ever in northern california, email me firstname.lastname@example.org
I sold my shares today, not because I had lost all hope Sardar's compensation package would be voted down, but because this was the last red flag that I needed to see that he won't be acting in the interest of his partners (shareholders).
It's one thing to be the standard CEO who tries to maximize his compensation package and doesn't express either way how shareholder friendly he/she is. It is a totally different story to proclaim how shareholder friendly you are; and then shortly after the shareholder's meeting, you try to jam through a comp plan that would make an emperor blush.
Below is my list of red flags:
1- Changed the name of the company after himself.
2- Has placed other share exchange offers to other companies that have failed.
3- Has been willing to issue shares to exchange for other not attractively price companies (AAP a very good example)... Seriously, what does he think he is doing to his own shares. That is why he needs to be compensated with 25% of book value (who cares if he puts ONLY 30% of that into new shares).
4- Issuing notice of the comp plan less than 30 days after the shareholder meeting. No word of this at the meeting... I am sure it was in the plans at that time.
5- His desire to empire build, trying to take control of each company by investing only 10% in company and then kicking out pre-existing management.
This all seems very deceptive to me, which is reason enough to sell. I typically am much more quantitative about my stock purchases, so I'm surprised that I'm making this on such a qualitative basis.
I hope for those that are still holding shares, that the comp plan gets voted down, but for me, even if it does, there are major concerns about the person currently in place to manage my money.
I'll do a similar post about FMMH's growth in book value the last 5 years. I think it may surprise some people....especially since Biglari wants the CEO of FMMH fired.
Anyone care to guess as to FMMH's compounded annual growth rate the last 4-5 years?
If the CEO deserves to be fired, then surely it must be below Biglari's 5% bogey. Right?