Can anyone intelligently say whether we should vote for or against this? Some of management's points seem to be positive but I know they're pushing for it. What are the reasons to vote no? I hate to say it but I almost feel like I should vote No just because Biggs wants it so badly. I guess that's not a good sign that I don't "trust" the man I'm investing with right now.
If my post from 11/5 doesn't make a whole lot of sense it's because Yahoo somehow "lost" my original reply, which it was a follow-up to.
So starting over:
The stated reasons for the new class of shares don't ad up and contradict previous statements made by Biglari (as pointed out by Art). I see two benefits Biglari could personally obtain by creating the new class of shares with reduced voting rights:
1: He could sell the new shares on the open market and/or use them in an upcoming acquisition. This would increase the market cap of BH and be consistent with "growing an empire," or however you want to look at it. Biglari accomplished something similar years ago with a Western Sizzlin rights offering, which led to a cash infusion that was used to buy up shares of whatever company he was targeting at the time (I believe it was Friendly's, but my memory is a bit hazy).
Barring poison pills, he could then dig deeper into CBRL or seek out additional acquisition targets.
2: I would expect the new shares to be valued at the same level as the old by most investors. This would allow Biglari to exert a larger percentage of control over BH with a smaller percent ownership. Not significant today, but in the future as his net worth (and his number of shares of BH) increase, he will more rapidly gain voting control over BH.
Getting back to your original question of whether or not you should vote in favor of the new share class:
The new share class clearly benefits Biglari, but I believe in doing so it also benefits other shareholders (just to a lesser degree). If you view Biglari as a "stock jockey" and want to give him more funds to actively manage then I would say that voting yes makes sense.
The only caveat I see is that if he has the balls to rename the company after himself at a time when he personally owned a very small percentage of the company, one can only imagine what he'll do when his personal voting share is increased. Watch your back!