Sandell comments on reversal of improper bylaw amendments at Bob Evans

Sandell Asset Management, one of the largest shareholders of Bob Evans Farms, commented on the company’s decision to reverse the Bylaw changes made unilaterally by the Board of Directors of Bob Evans in 2011 that severely restricted the rights of shareholders to amend the Bylaws. As a result of this reversal, Sandell announced its intention to withdraw its pending lawsuit against Bob Evans in the Court of Chancery of the State of Delaware that had been filed in order to restore the rights of shareholders to amend the company’s Bylaws by majority vote. Thomas Sandell, CEO of Sandell Asset Management, stated, “We are encouraged that the Board of Directors took steps to restore the rights of shareholders to amend the company’s Bylaws by majority vote. It is unfortunate that we had to go to court to preserve and enforce the rights of shareholders and its clear to us the company would not have implemented these changes without us taking these measures. However, we are pleased with this result and view it is as a victory for shareholders against a company whose Board had taken entrenching actions that we believe demonstrated complete contempt for the shareholders, who are the true owners of Bob Evans.” Sandell further stated, “The other proposed changes that the company intends to present to shareholders at the 2014 Annual Meeting should have been implemented a long time ago and in our opinion reflect a cynical attempt to portray the company as embracing good governance practices. We are particularly skeptical about the company’s sudden mention of “a search process for additional, independent directors” that the company states has been ongoing for 5 months, and take great issue with the company’s idea of “independent” directors. While the company’s 2013 proxy statement claims that the Board is “comprised of nine independent directors,” we categorically reject this notion and believe that the numerous connections both among Board members themselves, as well as between various Board members and Chairman and CEO Steven Davis, reflect one of the most insidious examples of cronyism demonstrated by a publicly-traded company. For a more detailed illustration of the many troubling relationships among Directors we refer to pages 5 through 8 of the recent lawsuit filed on January 22, 2014 by the Oklahoma Firefighters Pension & Retirement System against Bob Evans in the Court of Chancery of the State of Delaware.” Sandell also noted, “We remain convinced that further, comprehensive strategic change is necessary at Bob Evans in order to unlock the company’s true value for shareholders. In addition, we believe it is imperative to reign in what we believe are the irresponsible spending habits (the $46.5 million new corporate headquarters being a particularly glaring example) and poor decisions made by management and sanctioned by this Board. Indeed, we have profound concerns regarding the company’s cost structure and mis-management of the company’s core restaurant brand. It is our belief that there may be over $30 million in excess general and administrative expenses at the company, which, coupled with the company’s significant real estate value, is a factor that we believe has resulted in recent private equity interest articulated to us. We do not believe that this Board of Directors has demonstrated any ability to effectively extract value from the company’s unique assets or oversee the management of Bob Evans. Fortunately, the shareholders now have had their rights to additional avenues to effectuate change restored.”

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