Why take the $20 bucks and put the company another 400 mill in Debt? Yes they can pay it over time but look at Ruby Tuesday and the other restaurants now taking big hits and they have alot of debt. They might be forced to sell stores to raise cash. CBRL would be better giving more shares back to the long term shareholders that believed in them instead of black mailers/raiders like we saw in the 80's and what happened to those company's. Keep the Div the same and the rate of return goes way up making the stock more valuable for income investors and growth and increases the float. Stock is free to give out but debt only makes the banks and lawyers rich.
And while I'm in an analogies mood, let's do one more:
Let's say your uncle is a recovering alcoholic who is doing great, but occasionally goes on a weekend bender where he goes a little crazy. He also runs the store you own and part of his job is keeping track of the money your store makes. Might not be a bad idea to come through a couple times a week to empty out the cash safe just to avoid incident.
I mean you could leave the cash sitting there longer, but then you run the risk you'll come back one day to find your uncle hungover with a stripper pole installed in the corner, a trained circus monkey, and an empty safe. He'll be happy to tell you how spending the money on those things seemed like a great idea at the time, but now that he's sobered up he is sorry!
I'm not sure if $20/share is the magic number, but probably not a bad idea to clean out that CBRL saving's account before management does something crazy like initiating a share buy-back program when the share price is at record levels or rushing to open new units in less than ideal locations.
My friend worked at a pizza place years ago and he let me in on a little secret: It turns out if you cut a large pizza into twice as many slices you're still getting the same amount of pizza. Shocking, I know!
Turns out the same holds true for shares of stock. A split can make it easier for really small investors (who can only afford a few shares at a time) to trade in and out, but that's about it. Let's not pretend that a split is somehow a "gift" to shareholders. Choosing paper or plastic at the grocery store is probably more meaningful than voting yea or nay on a stock split.
The pizza analogy does not hold true for stock splits.
At the very least stock splits can have an impact in two different ways:
The first way is if a brokers commission is based off of amount of shares sold. If there is a per share charge a split would increase the costs of selling the shares.
The second way is if a person sells covered calls. A stock split would enable them to increase the amount of covered calls they can sell on the holding in question.
CBRL is traded on the options market so a stock split could be very relevant for people who sell covered calls on this holding.