Luby’s Inc., addressing an activist investor board seat fight, is telling shareholders it is working to improve the company’s financial results and operating performance as the competing sides head toward a Jan. 25 annual meeting and proxy vote.
The Houston-based parent to the cafeteria chain and the Fuddruckers burger brand said in a Christmas Eve letter that shareholders “will be asked to choose between two vastly different paths for the company.”
Bandera Partners LLC, a New York hedge fund that now owns about 9.8 percent of Luby’s shares, in late November said it was putting forward its own slate of four candidates for the company’s nine-member board, citing “bloated corporate expenses” and the company’s sale of real estate.
Bandera’s candidates to the Luby’s board include Bandera managing partner Jeff Gramm and his father, former U.S. Sen. Phil Gramm (R-Texas).
Luby’s said it did not endorse any of Bandera’s nominees.
Luby’s in its most recent shareholder letter said Bandera’s nominees “have almost zero meaningful industry experience” and view the company “as a financial engineering vehicle to further their own interests” at the expense of Luby’s customers and shareholders.
“Luby’s board and management team are in the midst of executing an aggressive plan to improve our financial results and operating performance — against the backdrop of strong industry headwinds and a highly competitive restaurant environment that has challenged many mature restaurant brands, including ours,” the board said.
The board said its turnaround strategy included evaluating ways to lower costs and improve operations, steps to reduce debt and efforts to add new voices to management and the board.
As part of its board slate, Luby's said it added Twila Day to its list of nominees, replacing Luby’s general counsel Peter Tropoli as a director. Day is chief information officer of the Huntsman Corp., a Woodlands, Texas-based chemical manufacturer and marketer. Earlier, Day served as chief information officer for Sysco Corp., the food products distributor.
Other company-endorsed nominees for one-year board terms include: Gerald Bodzy, president and owner of Houston-based Showcase Custom Vinyl Windows and Doors; Judith Craven, president of JAE & Associates LLC, a physician consulting firm; Jill Griffin, principal at the Austin, Texas-based Griffin Group; Frank Markantonis, general counsel at Pappas Restaurants Inc.; Joe McKinney, vice chairman of San Antonio, Texas-based Broadway National Bank; Gasper Mir III, business consultant; Chris Pappas, Luby’s CEO and president; and Harris Pappas, former chief operating officer of Luby’s.
Chris Pappas and Harris Pappas own about 36.8 percent of Luby’s shares.
Bandera’s four nominated board candidates, in addition to the Gramms, include Stacy Hock, chairwoman of Texans for Education Opportunity, and Savneet Singh, managing partner of New York-based Tera Holdings.
Luby’s shareholder letter questioned the experience of Bandera’s nominees and also criticized the hedge fund’s outline for changes at the company.
“So far the full extent of a ‘plan’ for the company offered up by Bandera could fit on a Fuddruckers napkin,” Luby’s said.
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