Highlights Buffalo Wild Wings’ Recent Board
and Management Refreshment
Notes Marcato’s Board Nominees Have a Poor
Track Record of Success
Reiterates Emil Lee Sanders’s Clear Conflict
of Interest
Urges Shareholders to Vote “FOR” Each of
Buffalo Wild Wings’ Highly Qualified Director Nominees on the
YELLOW Proxy Card
Buffalo Wild Wings, Inc. (NASDAQ:BWLD) today mailed a letter to
its shareholders in connection with the company’s upcoming 2017
Annual Meeting of Shareholders (“Annual Meeting”) to be held on
June 2, 2017. The Buffalo Wild Wings Board of Directors unanimously
recommends that shareholders vote the YELLOW proxy card
“FOR” the election of all nine of the Board’s experienced
and highly qualified director nominees: Cynthia L. Davis, Andre J.
Fernandez, Janice L. Fields, Harry A. Lawton, J. Oliver Maggard,
Jerry R. Rose, Sam B. Rovit, Harmit J. Singh and Sally J.
Smith.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20170522005840/en/
(Graphic: Business Wire)
All materials regarding the Board’s recommendation can be found
at http://www.buffalowildwings.com/en/2017-annual-meeting/.
The full text of the letter follows:
VOTE “FOR” ALL OF BUFFALO WILD WINGS’ HIGHLY
QUALIFIED DIRECTOR NOMINEES USING THE YELLOW PROXY CARD
May 22, 2017
Dear Fellow Shareholder:
The Buffalo Wild Wings 2017 Annual Meeting of Shareholders is
fast approaching. At the meeting, shareholders will have a choice
of directors. We encourage you to consider that choice carefully
and to vote for the Board’s slate of nominees using the
YELLOW proxy card.
One of our investors, Marcato Capital, L.P. (“Marcato”), wants
you to do something different. They want you to remove every
director who has served on the Board for more than one year. In
fact, if you and your fellow shareholders were to vote for
Marcato’s nominees, the average tenure among the independent
directors will be just four months.
And yet, Buffalo Wild Wings has been among the best performing
casual dining companies over the last one, three, five and ten
years (and since its 2003 IPO). Why would you want to radically
change the Board of such a successful company?
BUFFALO WILD WINGS HAS BEEN REFRESHING ITS
BOARD AND STRENGTHENING ITS MANAGEMENT TEAM
The Board and company have not been standing still. Despite our
outperformance and success, the Board has added three new
independent directors and nominated two additional new independent
nominees to its slate, together representing more than 50% of the
total Board. These candidates bring fresh and valuable perspective
to the company. The company's nominees have a mix of tenures and
experience, ensuring that the institutional knowledge and history
of the company are used to avoid pitfalls going forward.
The Board has also been changing and strengthening the
management team as part of its ongoing evaluation of the needs of
the business. In the last year, we have appointed a new Chief
Financial Officer and, recognizing a changing customer demographic
and the importance of our technology strategy in furthering our
innovation and differentiation, we also created the role of Chief
Information Officer. We have also restructured our North American
management team, removing two layers of management and improving
our responsiveness to market developments.
As a Board, we remain committed to the ongoing evaluation of
management and will continue to make changes as appropriate. One
thing we know for certain is that in order to deliver returns for
our shareholders over the next 14 years that come close to the 24%
annual returns we have generated since our IPO, we will need to
continue to innovate, manage our business effectively and tackle
entirely new challenges.
MARCATO’S NOMINEES, OTHER THAN SAM ROVIT,
HAVE VERY SERIOUS WEAKNESSES AND COULD DO LASTING HARM TO BUFFALO
WILD WINGS
As you would expect, the Board has been disciplined in its
evaluation of strategy, management, Board composition and capital
structure. When changes are needed, we have carefully evaluated
opportunities for improvement and, based on rigorous analysis,
sought the path that maximizes value without undue risk.
We have applied this culture of discipline to our review of
Marcato’s candidates for the Board. We concluded that one of
Marcato’s nominees, Sam Rovit, would be a valuable addition to the
Board. In our discussions with Sam, it was clear that he
prioritizes the interests of all shareholders, has a distinguished
record of achievement and brings unique insights and skills in the
food service and consumer sectors. We therefore welcomed him onto
our slate and encourage shareholders to vote for him to join our
Board.
That said, we have serious concerns about Marcato’s other three
nominees.
EMIL LEE SANDERS VASTLY EXAGGERATES HIS
LIMITED ACHIEVEMENTS AND HAS A MAJOR CONFLICT OF INTEREST
We are well acquainted with Mr. Sanders because he used to work
for Buffalo Wild Wings. Marcato’s definitive proxy statement
misrepresents Mr. Sanders accomplishments while at the company. It
falsely states that he was responsible
for opening 486 units in seven years, while driving annual sales of
$2.5 billion.
This is simply not true. During the period Mr. Sanders was
employed by the company, Buffalo Wild Wings only opened
281 units. And, in the year before Mr.
Sanders left by mutual arrangement, the company reported sales of
less than $1 billion.
As importantly, Mr. Sanders has a significant conflict of
interest. He has expressed a strong desire to buy Buffalo Wild
Wings units and become a franchisee. He has been soliciting our
franchisees and attempting to scare them into selling their
restaurants by suggesting that Marcato’s plans for the company will
soon make the restaurant units less valuable: “[T]he timing for you
and your investors [to sell to me] could not be better,” Mr.
Sanders wrote to [several of] our franchisees because “the Marcato
Hedge Fund efforts [mean] too much available product in the market
will cause a commensurate decline in value.”2
To be clear: Mr. Sanders wants to buy our restaurant units. He
has every interest in driving the value of those units lower so he
can buy at a bargain price. And, he has said that Marcato’s plan
will do precisely that.
But none of that is good for shareholders. If you vote for Mr.
Sanders, you are voting to put the proverbial ‘fox in the hen
house.’
Mr. Sanders’s claimed “achievements” are false and his
conflict of interest irrefutable. Shareholders have no reason to
have confidence in his ability to serve their interests.
MICK MCGUIRE’S PRIOR BOARD SERVICE HAS
FAILED TO CREATE VALUE FOR SHAREHOLDERS
Mr. McGuire has no operating or execution experience at a public
company, and he has no track record of success in the
boardroom:
- A few months after joining the Board of
Borders Group, Inc., the company put itself up for sale, and then
failed to find a buyer.
- Subsequently, Mr. McGuire became
Chairman.
- Mr. McGuire resigned from that post
shortly before Borders filed for bankruptcy.
- During Mr. McGuire’s brief one-year
stint on the Board of NCR Corporation – infamously referred to as
“the lost year” by NCR insiders – the company’s share price dropped
8%.
- Since resigning and selling his stake
at the end of 2015, NCR’s share price has risen 69%.
Shareholders should be wary of electing a short-term activist
investor with a poor track record of value creation.
SCOTT BERGREN HAD A POOR PERFORMANCE RECORD
AS THE CEO OF PIZZA HUT AND HIS SKILL SET IS ALREADY WELL
REPRESENTED ON THE BOARD
Scott Bergren’s experience at Yum! Brands is already well
represented on the Board by independent director Harmit Singh, who
served for 14 years at Yum! Brands and held various global
leadership roles, including Chief Financial Officer. In addition,
our nominee, Janice Fields, former President of McDonald’s USA,
LLC, strengthens the Board’s restaurant and franchise
experience.
Mr. Bergren’s record at Pizza Hut between 2011 and 2014 is not
distinguished. During that period, Pizza Hut experienced material
same-store sales weakness compared to Domino’s and Papa John’s, its
two principal competitors. The stock price of Pizza Hut’s parent
company, Yum! Brands, also performed very poorly compared to
Domino’s and Papa John’s during Mr. Bergren’s tenure.
Mr. Bergren's history as a brand CEO is not distinguished and
his experience is duplicative with current members of the Board and
its nominees.
PROTECT THE VALUE OF YOUR INVESTMENT
–VOTE THE YELLOW PROXY CARD TODAY
We do not believe it would be prudent to radically shift the
Board’s composition or the strategy of Buffalo Wild Wings. Marcato
wants you to empty the Board of all institutional knowledge so that
there is room for Mick McGuire (who has no operational experience
and has not added value for shareholders when he has served on
public company Boards), Lee Sanders (who has been less than
accurate about his past and has significant conflicts of interest)
and Scott Bergren (who has no demonstrated record of achievement).
That would be a mistake.
Instead, we encourage you to protect the value of your
investment in Buffalo Wild Wings by using the YELLOW proxy
card to vote by telephone or Internet. No matter how few shares you
own, it is important that all shareholders have their voices heard
in this critically important decision regarding your investment. We
further encourage you to discard any proxy materials sent to you by
Marcato.
We thank you for your continued support.
Sincerely,
Jerry R. Rose
/s/ Jerry R. Rose
Chairman of the Board and Independent
Director
Cynthia L. Davis
/s/ Cynthia L. Davis
Independent Director
Andre J. Fernandez
/s/ Andre J. Fernandez
Independent Director
Harry A. Lawton III
/s/ Harry A. Lawton III
Independent Director
J. Oliver Maggard
/s/ J. Oliver Maggard
Independent Director
Harmit J. Singh
/s/ Harmit J. Singh
Independent Director
Sally J. Smith
/s/ Sally J. Smith
CEO & President and Director
James M. Damian
/s/ James M. Damian
Independent Director (retiring 2017)
Michael P. Johnson
/s/ Michael P. Johnson
Independent Director (retiring 2017)
If you have any questions or require any assistance with
voting your shares, please contact the Company’s proxy solicitor
listed below:
MacKenzie
Partners, Inc.
105 Madison Avenue
New York, New York 10016
Call Collect: (212) 929-5500
or
Toll-Free (800) 322-2885
Email:
proxy@mackenziepartners.com
Lazard Ltd is serving as financial advisor and Faegre Baker
Daniels is serving as legal advisor to the company.
About the Company
Buffalo Wild Wings, Inc., founded in 1982 and headquartered in
Minneapolis, is a growing owner, operator and franchisor
of Buffalo Wild Wings(R) restaurants featuring a variety of
boldly-flavored, made-to-order menu items including its namesake
Buffalo, New York-style chicken wings. The Buffalo Wild
Wings menu specializes in 21 mouth-watering signature sauces
and seasonings with flavor sensations ranging from Sweet BBQ(TM) to
Blazin'(R). Guests enjoy a welcoming neighborhood atmosphere that
includes an extensive multi-media system for watching their
favorite sporting events. Buffalo Wild Wings is the
recipient of hundreds of "Best Wings" and "Best Sports Bar" awards
from across the country. There are currently more than
1,220 Buffalo Wild Wings locations around the world.
To stay up-to-date on all the latest events and offers for
sports fans and wing lovers, like Buffalo Wild
Wings on Facebook, follow @BWWings
on Twitter and visit www.BuffaloWildWings.com.
Cautionary Statement Regarding Certain Information
This communication contains “forward-looking statements” within
the meaning of the federal securities laws. Such statements include
statements concerning anticipated future events and expectations
that are not historical facts. All statements other than statements
of historical fact are statement that could be deemed
forward-looking statements. Actual results may vary materially from
those expressed or implied by forward-looking statements based on a
number of factors, including the factors described under “Risk
Factors” in Part I, Item 1A of our Annual Report on Form 10-K for
the fiscal year ended December 25, 2016, as updated or supplemented
by subsequent reports we file with the SEC. We do not assume any
obligation to publicly update any forward-looking statement after
they are made, whether as a result of new information, future
events or otherwise.
Important Information
Buffalo Wild Wings, Inc., its directors and certain of its
executive officers and employees are participants in the
solicitation of proxies from Buffalo Wild Wings shareholders in
connection with its 2017 annual meeting of shareholders to be held
on June 2, 2017. Information concerning the identity and interests
of these persons is available in the definitive proxy statement
Buffalo Wild Wings filed with the SEC on April 21, 2017.
Buffalo Wild Wings has filed a definitive proxy statement in
connection with its 2017 annual meeting. The definitive proxy
statement, any amendments thereto and any other relevant documents,
and other materials filed with the SEC concerning Buffalo Wild
Wings are (or will be, when filed) available free of charge at
http://www.sec.gov and http://ir.buffalowildwings.com. Shareholders
should read carefully the definitive proxy statement and any other
relevant documents that Buffalo Wild Wings files with the SEC when
they become available before making any voting decision because
they contain important information.
1 Source: Company filings.
2 Source: Lee Sanders, August 2016 email. Permission to use
quotations neither sought nor obtained.
3 Source: Company filings and FactSet. Market data as of
December 31, 2014.
4 Represents U.S. same-store sales for Pizza Hut and North
American same-store sales for Papa John’s and Domino’s.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170522005840/en/
Investor Relations:Buffalo Wild Wings, Inc.Heather
Pribyl, 952-540-2095orAdditional Investor ContactMacKenzie
Partners, Inc.Bob Marese/Paul
Schulman212-929-5500orMedia:Joele Frank, Wilkinson Brimmer
KatcherMeaghan Repko / Nick Lamplough212-355-4449
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