Cracker Barrel says Biglari can name 2 directors

September 6, 2012

LEBANON, Tenn. (AP) -- Cracker Barrel Old Country Store Inc. said Thursday that it offered activist investor Sardar Biglari the chance to nominate two directors to its board, but the move was dismissed by Biglari as a "faux offer."

The restaurant business executive, who has a minority stake in Cracker Barrel, has pressed for changes on the company's board. Biglari was denied a seat on Cracker Barrel's board in December during the annual shareholders meeting. His firm, Biglari Holdings Inc., owns the Steak 'n Shake and Western Sizzlin restaurant chains.

Cracker Barrel said it was notified by Biglari of his plans to nominate himself and Philip Cooley for election to the company's board at its annual meeting in November. Biglari previously ran for a seat on the board at the company's annual meeting last year, but failed to get elected.

Cracker Barrel said it sent a letter to Biglari earlier this week, saying that as a result of possible potential conflicts of interest and legal issues related to his role with Steak 'n Shake, as well as other issues, it had decided not to appoint him and Cooley to the board.

But in order to prevent a battle for control of the board, the company offered two appoint two qualified independent directors nominated by Biglari Holdings, as long as they were not affiliated with Biglari or served as executives or directors of any restaurant company that competes with Cracker Barrel.

Biglari called the offer "not serious" and "an obvious attempt to posture and mislead shareholders," saying that the restrictions prevent them from selecting anyone with relevant restaurant experience or significant ownership of Cracker Barrel stock.

"In our view, an offer with such defeatist, detrimental conditions is not a real offer," Biglari said in a statement.

Cracker Barrel, based in Lebanon, Tenn., has 620 company-owned restaurants in 42 states. Its stock rose 99 cents to $64.49 in afternoon trading amid a broader market rally.