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What about Cracker Barrel’s reduction of the size of its board from 10 to nine with the impending retirement of Martha M. Mitchell, who has served on the board since 1993?

I think the board helps itself in one respect, because they are getting someone off who has been on the board for an awful long time. Directors who are perennial directors year after year and decade after decade open themselves up to the criticism that this is a board that has too little fresh blood, too little fresh perspective and too much staid continuity. And that hurts it. I think every time you get a longer-serving director off the board it ends up helping the board’s argument.

The fair question for the board was, ‘If the previous number was 10, and that was the right number, why is nine all of a sudden the right number?’ That seems very geared toward frustrating Biglari.

How would you characterize the situation at this point?

It’s pretty clear after last year’s fight that this is pretty personal, and they are saying, in effect, that they have real issues with him and what they would like to characterize as his potential motivations. I don’t think that they could make it any more clear that this is kind of an ‘over-their-dead-body’ situation for him to get a seat on the board. He has apparently turned down the request to be bought and intends to continue to try and get on that board.

And from Biglari’s standpoint?

He’s plainly sending a very strong message to the market that he’s on the watch and he’s not giving up and that he is going to be a very determined adversary for this board.

What advice would you give the activist investor at this juncture?

Presumably, Biglari is going forward with this and wants a different result. Therefore, I think he is going to have to put forth different arguments and different explanations for why change is needed and why he is the right guy to bring change. He very well may be. But I’m waiting to see what he is going to use to convince the shareholders differently this year from last year.

This year, he has to convince the shareholders that he is the right guy and that he has new ideas that aren’t being implemented. That would be a very strong basis for him to move forward.

Contact Ron Ruggless at ronald.ruggless@penton.com.
Follow him on Twitter: @RonRuggless