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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange
Act of 1934 (Amendment No. 1)
Filed by the Registrant
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Filed by a Party other than
the Registrant [ ] |
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Check the appropriate
box: |
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Preliminary Proxy
Statement |
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Soliciting Material Under Rule
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Confidential, For Use of
the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy
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Definitive Additional
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BIGLARI HOLDINGS
INC. |
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(Name of Registrant as
Specified In Its Charter) |
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(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant) |
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the appropriate box): |
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) and
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Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
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statement number, or the form or schedule and the date of its
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Table of Contents
Notice of 2015 Annual Meeting of
Shareholders and Proxy Statement |
1 pm Eastern Daylight Time - April 9,
2015
The St. Regis Hotel, Two East 55th Street at
Fifth Avenue, New York, New York 10022
Table of Contents
Table of
Contents
Table of Contents
Table of Contents
PRELIMINARY COPY – SUBJECT TO COMPLETION, DATED FEBRUARY 24, 2015
BIGLARI HOLDINGS
INC.
17802 IH 10 WEST, SUITE
400
SAN ANTONIO, TEXAS
78257
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
April 9,
2015
To the Shareholders of
Biglari Holdings Inc.:
You are cordially invited
to attend the annual meeting (the Annual Meeting) of the shareholders of
Biglari Holdings Inc. (the Corporation or Biglari Holdings) to
be held at The St. Regis Hotel, Two East 55th Street at Fifth Avenue, New York,
New York 10022, on April 9, 2015, at 1:00 p.m., Eastern Daylight Time, for the
following purposes:
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1. |
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To elect six
directors. |
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2. |
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To ratify the
selection by the Audit Committee of the Board of Directors (the Board)
of Deloitte & Touche LLP as the Corporations independent registered
public accounting firm for the 2015 fiscal year. |
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To vote on a
non-binding advisory resolution to approve the compensation of the
Corporations Named Executive Officers, as described in the enclosed proxy
statement. |
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4. |
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To transact such
other business as may properly be brought before the Annual Meeting or any
adjournment or postponement thereof. |
The Board has fixed the
close of business on [__________], 2015 as the record date for determining which
shareholders have the right to vote at the Annual Meeting or at any adjournment
thereof.
YOUR VOTE IS IMPORTANT.
We urge you to read the accompanying proxy statement carefully and vote FOR the
nominees proposed by the Board of Directors of Biglari Holdings and in
accordance with the Boards recommendations on the other proposals by using the
enclosed BLUE proxy card. You may either vote by telephone or by Internet
by following the instructions on the BLUE proxy card, or sign,
date and return the enclosed BLUE proxy card in the
enclosed postage-paid envelope provided. If you are a beneficial owner or you
hold your shares in street name, please follow the voting instructions
provided by your bank, broker or other nominee.
Please note that Groveland
Capital LLC and certain of its affiliates (collectively, Groveland) have
presented notice to the Company that Groveland intends to nominate six alternative
director candidates for election at the Annual Meeting in opposition to, and to replace all of, the nominees recommended by our Board of Directors. Our Board of Directors does not endorse the
election of Grovelands nominees. You may receive proxy solicitation materials from Groveland, including
its proxy statements and proxy cards. We are not responsible for the accuracy of
any information provided by or related to Groveland or its nominees contained in
any proxy solicitation materials filed or disseminated by, or on behalf of,
Groveland or any other statements that Groveland may otherwise make.
OUR BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF OUR BOARD NOMINEES USING THE
ENCLOSED BLUE PROXY CARD AND URGES YOU NOT TO SIGN OR RETURN OR VOTE ANY PROXY
CARD SENT TO YOU BY GROVELAND.
www.biglariholdings.com 1
Table of Contents
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
Even if you have previously
voted a proxy card sent by Groveland, you have the right to change your vote by
telephone or by Internet by following the instructions on the BLUE proxy card, or by signing, dating and returning the enclosed
BLUE proxy card in the provided postage-paid envelope.
Only the latest dated proxy card you vote will be counted. If you are a
beneficial owner or you hold your shares in street name, please follow the
voting instructions provided by your bank, broker or other nominee to change
your vote.
We look forward to seeing
you at the Annual Meeting.
By order of the
Board,
Sardar
Biglari
Chairman and Chief
Executive Officer
San Antonio,
Texas
[__________], 2015
If you are a
shareholder of record and you plan to attend the meeting, please keep the
admission ticket that is attached to the enclosed BLUE proxy card because you
must present this ticket to be admitted to the meeting. Each shareholder will be
asked to present valid picture identification, such as a drivers license or
passport. Shareholders who do not present an admission ticket must present proof
of ownership of shares. Those shareholders holding shares in brokerage accounts
will need to bring a copy of a brokerage statement, a legal proxy or a letter
from the broker confirming ownership of Biglari Holdings Inc.s shares.
Registration will begin at 12:00 p.m. Cameras, recording devices, and other
electronic devices will not be permitted at the meeting.
2 Biglari Holdings 2015 Proxy
Statement
Table of Contents
BIGLARI HOLDINGS
INC.
17802 IH 10 WEST, SUITE
400
SAN ANTONIO, TEXAS
78257
PROXY
STATEMENT FOR
ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD ON APRIL 9, 2015
This proxy statement is
furnished in connection with the solicitation by the Board of Directors (the
Board) of Biglari Holdings Inc. (hereinafter we, our, BH, Biglari
Holdings, Corporation or Company) of proxies in the accompanying form for
the Annual Meeting of Shareholders to be held at The St. Regis Hotel, Two East
55th Street at Fifth Avenue, New York, New York 10022, on April 9, 2015, at 1:00
p.m., Eastern Daylight Time, and at any adjournment or postponement thereof (the
Annual Meeting). This proxy statement and the enclosed form of proxy are first
being sent to shareholders on or about [________], 2015.
GENERAL
INFORMATION
Why am I receiving a
proxy statement?
You are receiving this
document because you were one of our shareholders on [__________], 2015, the
record date for our Annual Meeting. We are sending this proxy statement and the
form of BLUE proxy card to you in order to solicit your proxy
to vote your shares of Biglari Holdings common stock, stated value $0.50 per
share (the Common Stock), upon certain matters at the Annual
Meeting.
What does it mean if I
receive more than one proxy statement or BLUE proxy card?
If you receive multiple
proxy statements or BLUE proxy cards, that may mean that you have more than
one account with brokers or our transfer agent. Please vote all of your
shares.
If Groveland proceeds with
its previously announced alternative director nominations, we will likely
conduct multiple mailings prior to the Annual Meeting date to ensure
shareholders have our latest proxy information and materials to vote. We will
send you a new BLUE proxy card with each mailing, regardless of
whether you have previously voted. The latest dated proxy you submit will be
counted, and if you wish to vote as recommended by the Board, then you should
only submit BLUE proxy cards.
What information is
available on the Internet?
This proxy statement, our
Annual Report on Form 10-K and other financial documents are available free of
charge at the Securities and Exchange Commissions (the SEC) website,
www.sec.gov. Our proxy statement and annual report to shareholders are available on our
corporate website, www.biglariholdings.com.
Are you householding
for shareholders sharing the same address?
Yes. The SECs rules
regarding the delivery of proxy materials to shareholders permit us to deliver a
single copy of these documents to an address shared by two or more of our
shareholders. This
method of delivery is
called householding, and it can significantly reduce our printing and mailing
costs. It also reduces the volume of mail you receive. This year, we are
delivering only one set of proxy materials to multiple shareholders sharing an
address, unless we receive instructions to the contrary from one or more of the
shareholders. We will still be required, however, to send you and each other
Biglari Holdings shareholder at your address an individual BLUE proxy voting card. If you would like to receive more than one set of
proxy materials, we will promptly send you additional copies upon written or
oral request directed to our Corporate Secretary at 17802 IH 10 West, Suite 400,
San Antonio, Texas 78257. The same phone number and address may be used to
notify us that you wish to receive a separate set of proxy materials in the
future, or to request delivery of a single copy of our proxy materials if you
are receiving multiple copies.
Is there any other
information that I should be receiving?
Yes. You should have
already received a copy of our 2014 annual report to shareholders, which
contains financial and other information about the Company and our most recently
completed fiscal year, which ended September 24, 2014.
Who pays for the
Companys solicitation of proxies?
We will pay for the entire
cost of soliciting proxies on behalf of the Company. We will also reimburse
brokerage firms, banks and other agents for the cost of forwarding the Companys
proxy materials to beneficial owners. In addition, our directors, officers and
other employees may solicit proxies in person, by mail, by telephone, via the
Internet, press releases or advertisements. Directors, officers and other
employees will not be paid any additional compensation for soliciting proxies.
Okapi Partners LLC (Okapi), our proxy solicitor, will be paid a fee, estimated
to be about $[_________], plus reimbursement of expenses, for rendering
solicitation services.
Okapi expects that
approximately [____] of its employees will assist in the solicitation. Okapi
will ask brokerage houses and other custodians and nominees whether other
persons are beneficial owners of our Common Stock.
www.biglariholdings.com
3
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PROXY
STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
We have also engaged
Alliance Advisors, LLC (Alliance) to perform certain services for a fee
estimated to be about $[__________], plus reimbursement of expenses. Alliance
expects that approximately [____] of its employees will assist in its
efforts.
Our aggregate expenses
related to our solicitation of proxies in excess of those normally spent for an
Annual Meeting as a result of the potential proxy contest, and excluding
salaries and wages of our regular employees, are expected to be approximately
$[___________], of which approximately $[____________] has been spent to date.
Annex A sets forth information relating to our directors, officers and other
employees who are considered participants in our solicitation under the rules
of the SEC by reason of their position as directors of the Company or because
they may be soliciting proxies on our behalf.
You may obtain information
from Okapi as follows:
OKAPI PARTNERS LLC
437
Madison Avenue, 28th Floor
New York, NY 10022
(212)
297-0720
Shareholders Call Toll-Free at: (877) 279-2311
E-mail:
info@okapipartners.com
Who may attend the
Annual Meeting?
The Annual Meeting is open
to all of our shareholders. To attend the meeting, you will need to register
upon arrival. If you are a shareholder of record and you plan to attend the
meeting, please keep the admission ticket that is attached to the
enclosed BLUE proxy card because you must present this ticket to
be admitted to the meeting. Each shareholder will be asked to present valid
picture identification, such as a drivers license or passport. Shareholders who
do not present an admission ticket must present proof of ownership of shares.
Those shareholders holding shares in brokerage accounts will need to bring a
copy of a brokerage statement, a legal proxy or a letter from the broker
confirming ownership of Biglari Holdings shares. If we cannot verify that you
own Biglari Holdings shares, you will not be admitted to the meeting.
Who will count the votes
cast at the Annual Meeting?
The Board will appoint an
independent inspector of election to serve at the Annual Meeting. The
independent inspector of election for the Annual Meeting will determine the
number of votes cast by holders of the Common Stock for all matters. Preliminary
voting results will be announced at the Annual Meeting, if
practicable.
How can I find the
voting results of the Annual Meeting?
We will include the voting
results in a Current Report on Form 8-K, which we will file with the SEC no
later than four business days following the completion of the Annual
Meeting.
VOTING
MATTERS
What am I voting on at
the Annual Meeting?
You will be voting on the
following matters:
● |
The election of six
directors. |
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● |
The ratification of
the selection by the Audit Committee of Deloitte & Touche LLP as the
Companys independent registered public accounting firm for the 2015
fiscal year. |
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● |
The approval of a
non-binding advisory resolution regarding the compensation of the
Companys Named Executives Officers, as described in this proxy
statement. |
Has the Company been
notified that a shareholder intends to propose alternative director nominees at
the Annual Meeting?
Yes. Groveland Capital LLC
and certain of its affiliates (collectively, Groveland) have notified the
Company of their intention to propose six alternative director nominees for election
at the Annual Meeting in opposition to, and to replace all of, the nominees recommended by our Board. Our Board of Directors unanimously recommends a
vote FOR each of the Boards nominees for director on the
enclosed BLUE proxy card. The Groveland nominees have
NOT been endorsed by our Board of Directors. We are
not responsible for the accuracy of any information provided by or related to
Groveland or its nominees contained in any proxy solicitation materials filed or
disseminated by, or on behalf of, Groveland or any other statements that
Groveland may otherwise make.
Who is entitled to
vote?
You may vote if you owned
shares of our Common Stock at the close of business on [___________], 2015. As
of [___________], 2015, there were [___________] shares of our Common Stock
outstanding.
4 Biglari Holdings 2015 Proxy
Statement
Table of Contents
PROXY
STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
How many votes must be
present to hold the Annual Meeting?
The presence at the Annual
Meeting, in person or by proxy, of the holders of Common Stock holding in the
aggregate a majority of the voting power of the Corporations stock entitled to
vote shall constitute a quorum for the transaction of business.
How many votes do I have
and can I cumulate my votes?
You have one vote for every
share of our Common Stock that you own. Cumulative voting is not
allowed.
May I vote my shares in
person at the Annual Meeting?
Yes. You may vote your
shares at the meeting if you attend in person, even if you previously submitted
a proxy card or voted by Internet or telephone. Whether or not you plan to
attend the meeting in person, however, in order to assist us in tabulating votes
at the Annual Meeting, we encourage you to vote by returning your
BLUE proxy card or by using the telephone or
Internet.
How do I vote before the
meeting?
Before the meeting, you may
vote your shares in one of the following three
ways:
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by completing, signing and
returning the enclosed
BLUE proxy card in the postage-paid
envelope |
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by telephone (within
the United States and Canada) by calling the toll-free number
located on your BLUE proxy card |
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by Internet by
following the directions on your BLUE
proxy
card |
Please use only one of the
three ways to vote. Please follow the directions on your BLUE proxy card carefully. If you hold shares in the name of a broker, your
ability to vote those shares by Internet or telephone depends on the voting
procedures used by your broker, as explained below under the question How do I
vote if my broker holds my shares in street name?
How do I vote if my
broker holds my shares in street name?
If your shares are held in
a brokerage account in the name of your bank or broker (this is called street
name), your bank or broker will send you a voting instruction form that
requests directions for voting those shares. Many (but not all) brokerage firms
and banks provide Internet and telephone voting options.
What is a broker
non-vote?
If you own shares through a
broker in street name, you may instruct your broker how to vote your shares. A
broker non-vote occurs when you fail to provide your broker with voting
instructions at least ten days
before the Annual Meeting and the
broker does not have the discretionary authority to vote your shares on a
particular proposal because the proposal is not a routine matter under
applicable rules. See How will abstentions and broker non-votes be treated?
and Will my shares held in street name be voted if I do not provide my proxy?
below. If, as expected, Groveland initiates a proxy contest, there will be no
routine matters.
How will abstentions and
broker non-votes be treated?
Abstentions and broker
non-votes will be counted as present and entitled to vote for purposes of
determining a quorum at the Annual Meeting, but will not count as votes cast.
Therefore, abstentions and broker non-votes will have no effect on Proposal 1,
the election of directors. However, abstentions and broker non-votes will have
the same effect as a vote against Proposals 2 and 3.
Will my shares held in
street name be voted if I do not provide my proxy?
If your shares are held in
street name, your shares might be voted even if you do not provide the brokerage
firm with voting instructions. On certain routine matters, brokerage firms
have the discretionary authority to vote shares for which their customers do not
provide voting instructions. Unless Groveland initiates a proxy contest, the
proposal to ratify the selection of Deloitte & Touche LLP as our
independent registered public accounting firm will be considered a routine
matter for this purpose. The election of directors and the approval, on an advisory basis, of the compensation of our Named
Executive Officers are not considered routine matters, and,
therefore, your shares will not be voted on these matters unless you instruct
your brokerage firm to vote in a timely manner.
www.biglariholdings.com 5
Table of Contents
PROXY
STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
How will my proxy be
voted?
The individuals named on
the BLUE proxy card will vote your proxy in the manner you
indicate on the BLUE proxy card.
What if I return my BLUE
proxy card or vote by Internet or telephone but do not specify my
vote?
If you sign and return
your BLUE proxy card or complete the Internet or telephone
voting procedures but do not specify how you want to vote your shares, we will
vote them:
● |
FOR the election of each of the
six nominees named in this proxy statement. |
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● |
FOR
ratification of the selection of
Deloitte & Touche LLP as our independent registered public accounting
firm for the 2015 fiscal year. |
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● |
FOR
the non-binding advisory resolution to
approve the compensation of our Named Executive Officers, as described in
this proxy statement. |
Can I change my mind and
revoke my proxy?
Yes. Shareholders who
submit a proxy may revoke their proxy or change their vote at any time prior to
the Annual Meeting by:
● |
submitting a new
proxy bearing a later date in accordance with the instructions on your proxy card or provided by
your broker or bank; |
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● |
sending our Corporate
Secretary a written notice of revocation dated later than the date of the
proxy; |
● |
re-voting by telephone by calling the toll-free
number located on your BLUE proxy card; |
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● |
re-voting by the
Internet by following the directions on your BLUE proxy card; or |
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● |
attending the Annual
Meeting and voting in personnote that attendance at the Annual Meeting
will not revoke a proxy if you do not actually vote at the Annual
Meeting. |
If you have previously
signed a WHITE proxy card sent to you by Groveland, you may change your vote by
marking, signing, dating and returning the enclosed BLUE proxy card in the accompanying postage-paid envelope or by voting by
telephone or via the Internet by following the instructions on your BLUE proxy card. Submitting a Groveland proxy card will
revoke votes you have previously made via the Companys BLUE proxy card.
What vote is required to
approve each proposal?
Proposal 1: Election of
six directors.
As a result of Grovelands
declared intention to propose alternative director nominees, and assuming
nominees of Groveland are in fact proposed for election at the Annual Meeting
and have not been withdrawn by Groveland, there will be more than six nominees.
This means that the six candidates receiving the highest number of FOR votes
will be elected. This number is called a plurality. A properly executed proxy
card marked WITHHOLD with respect to the election of a director nominee will
be counted for purposes of determining if there is a quorum at the Annual
Meeting, but will not be considered to have been voted for the director
nominee.
THE ONLY WAY TO SUPPORT
ALL SIX OF YOUR BOARD OF DIRECTORS NOMINEES IS TO VOTE FOR THE BOARDS
NOMINEES ON THE BLUE PROXY CARD. PLEASE DO NOT SIGN, RETURN OR
OTHERWISE VOTE GROVELANDS WHITE PROXY CARD, EVEN IF YOU VOTE WITHHOLD ON ITS
DIRECTOR NOMINEES. DOING SO MAY CANCEL ANY PREVIOUS VOTE YOU CAST ON THE
COMPANYS BLUE PROXY CARD.
Proposal 2: Ratification
of selection of Deloitte & Touche LLP as our independent registered public
accounting firm for the 2015 fiscal year.
The affirmative vote of a
majority of the Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting is required to approve Proposal 2,
ratification of the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm for the 2015 fiscal year.
Proposal 3: Non-binding
advisory resolution to approve the compensation of our Named Executive Officers,
as described in this proxy statement.
The affirmative vote of a
majority of the Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting is required to approve Proposal 3, the
advisory vote on executive compensation.
How do you recommend
that I vote on these items?
The Board of Directors
recommends that you vote:
● |
FOR the
election of each of the six nominees named in this proxy statement. |
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● |
FOR
ratification of the selection of
Deloitte & Touche LLP as our independent registered public accounting
firm for the 2015 fiscal year. |
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● |
FOR
the non-binding advisory resolution to
approve the compensation of our Named Executive Officers, as described in
this proxy statement. |
6 Biglari Holdings 2015 Proxy
Statement
Table of Contents
PROXY STATEMENT FOR ANNUAL
MEETING OF SHAREHOLDERS
What should I do if I
receive a proxy card from Groveland?
Groveland has proposed six alternative director nominees for election at the Annual Meeting in opposition to, and to replace all of, the nominees recommended by our Board. We expect that
you will receive proxy solicitation materials from Groveland, including an
opposition proxy statement and WHITE proxy card. Our Board of Directors
unanimously recommends that you disregard it. We are not responsible for the
accuracy of any information provided by or related to Groveland or its nominees
contained in any proxy solicitation materials filed or disseminated by, or on
behalf of, Groveland or any other statements that Groveland may otherwise
make. If you have already
voted using the WHITE proxy card, you have every right to change your vote by
executing and returning the enclosed BLUE proxy card or by
voting by telephone or via the Internet by following the instructions provided
on the enclosed BLUE proxy card. Only the
latest dated proxy you submit will be counted. If you withhold your vote on the
Groveland nominees using the WHITE proxy card, your vote will not be counted as
a vote for all six of the Boards nominees and will result in the revocation of
any previous vote you may have cast on the Companys BLUE proxy card . If you wish to vote pursuant to the recommendation of the
Board of Directors, you should disregard any proxy card that you receive other
than the BLUE proxy card.
If you have any
questions or need assistance voting, please call Okapi Partners
LLC, our proxy solicitors |
(877)
279-2311 |
May other matters be
raised at the Annual Meeting?
We have not received proper
notice of, and are not aware of, any business to be transacted at the Annual
Meeting other than as indicated in this proxy statement. If any other proposal
properly comes before the Annual Meeting, the proxies received will be voted on
such matter in accordance with the discretion of the proxy
holders.
IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD
ON APRIL 9, 2015.
The Proxy Statement for
the Annual Meeting of Shareholders to be held on April 9, 2015 and the
Corporations 2014 Annual Report to Shareholders are available at
www.biglariholdings.com/annualmeeting.
www.biglariholdings.com 7
Table of Contents
PROPOSAL ONE: ELECTION OF
DIRECTORS
At the Annual Meeting, a
Board consisting of six members will be elected, each director to hold office
until a successor is elected and qualified, or until the director resigns, is
removed or becomes disqualified.
Upon the recommendation of
the Governance, Compensation and Nominating Committee, the members of the Board
have nominated for election the six current directors of the Corporation, four
of whom are independent within the meaning of the listing standards of the New
York Stock Exchange.
We believe that each of our
six nominees has professional experience in areas relevant to our business and
operations and offers the experience, leadership and continuity that is critical
to protecting and advancing the long-term interests of our shareholders.
Information with respect to our nominees for election as directors, including
the experience, qualifications, attributes and skills that led to the selection
of each nominee by the Governance, Compensation and Nominating Committee, is
contained in the following table:
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Age |
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37 |
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Director
Since |
|
2010 |
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Current
Position |
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Chairman of the Board and Chief Executive
Officer |
Chairman of the Board,
Chief Executive Officer and a director of Biglari Holdings since 2010. Mr.
Biglari was elected Chairman of the Board of the predecessor to Biglari Holdings
(the Predecessor) in June 2008 and appointed Chief Executive Officer in August
2008 following his election to the Board in March 2008. He has been Chairman,
Chief Executive Officer and President of Steak n Shake Operations, Inc. (Steak
n Shake) since August 2008. He has also served as a director, since December
2005, Chairman, since March 2006, and Chief Executive Officer and President,
since May 2007, of Western Sizzlin Corporation (Western), a diversified
holding company, which was acquired by the Company in March 2010. In addition,
Mr. Biglari has served as Chairman and Chief Executive Officer of Biglari
Capital Corp. (Biglari Capital) since its inception in 2000. Biglari Capital
is the general partner of The Lion Fund, L.P. and The Lion
Fund II, L.P. (collectively, The Lion Fund), private investment funds. Mr. Biglari served
as a director of CCA Industries, Inc. (CCA Industries), a manufacturer and
marketer of health and beauty aids, from August 2011 to July 2014. Mr. Biglari
has extensive business, managerial and investing experience in a broad range of
businesses. He also has experience serving on the boards of directors of public
companies.
|
Age |
|
71 |
|
Director
Since |
|
2010 |
|
Current
Position |
|
Vice Chairman of the Board |
Vice Chairman of the Board
and a director of Biglari Holdings since 2010. Dr. Cooley was appointed Vice
Chairman of the Predecessor in April 2009 following his election to the Board in
March 2008. Prassel Distinguished Professor of Business at Trinity University,
San Antonio, Texas, from 1985 until his retirement in May 2012. Served as an
advisory director of Biglari Capital since 2000 and as Vice Chairman and a
director of Western from March 2006 and December 2005, respectively, until its
acquisition by the Company in March 2010. Director of CCA Industries from August
2011 to July 2014. Dr. Cooley has extensive business and investment knowledge
and experience. He also has experience serving on the boards of directors of
public companies.
8
Biglari Holdings 2015 Proxy Statement
Table of Contents
PROPOSAL ONE: ELECTION OF
DIRECTORS
|
Age |
|
72 |
|
Director
Since |
|
2012 |
|
Current
Position |
|
Lead Independent Director |
Director of Biglari
Holdings since February 2012 and Lead Independent Director since December 2014.
President and Chief Executive Officer of The Berean Group, LLC, a business
consulting firm providing strategic planning, marketing, leadership development
and other support services, since June 2002. Vice Chairman of the Board of
Fremont Michigan InsuraCorp, Inc., a property and casualty insurance provider,
from 2003 until 2011. Former Chairman (from May 1996 to February 2002) and President and Chief Executive Officer (from May 1996 to June 2001) of
SEMCO Energy, Inc., a regulated public utility company, and Chief Executive
Officer of Northern Pipeline Construction Company, a natural gas construction
company, from 1994 to 1996. Mr. Johnsons board-level experience also includes serving as Chairman of UPL Pipeline, LTD, a natural gas distribution company, Lead Director of Granger Group, Inc., a senior living developer, and a board member of Charter Capital Partners, an investment banking firm. Mr. Johnson has leadership, business management, insurance and public
company experience.
|
Age |
|
69 |
|
Director
Since |
|
2002 |
|
Current
Position |
|
Independent Director |
Director of Biglari
Holdings since 2010 and of the Predecessor from 2002 to 2010. Chancellor,
University of Michigan-Flint, from 2008 to 2014 and Professor of Management from
2008 to present. Chancellor, Indiana University Kokomo, and Professor of
Management from 1999 to 2008. President, American Association of University
Administrators, from 2003 to 2004. Dr. Person previously held positions as
President, Board of Directors, Workforce Development Strategies, Inc. and as a
member of the Key Bank Advisory Board Central Indiana and the Board of
Managers, Hurley Medical Center, Flint, Michigan. Dr. Person has years of
experience in leadership and board positions at various institutions. Dr. Person
has extensive knowledge of Steak n Shakes business.
|
Age |
|
70 |
|
Director
Since |
|
2010 |
|
Current
Position |
|
Independent Director |
Director of Biglari
Holdings since October 2010. Attorney in the private practice of law at the Kenneth R. Cooper Law Office since 1974, with over
40 years of legal and business experience in real estate transactions and
related matters. Served as a director of Western from February 2007 until its
acquisition by the Company in March 2010. Mr. Cooper has extensive experience in
real estate, business and financial analysis, as well as significant knowledge
of Westerns business.
|
Age |
|
72 |
|
Director
Since |
|
2012 |
|
Current
Position |
|
Independent Director |
Director of Biglari
Holdings since August 2012. Mr. Mastrian was the special advisor to the Chairman and
Chief Executive Officer of Rite Aid Corporation (Rite Aid) from August 2007 until his retirement in August 2008. Chief Operating Officer of Rite Aid from October 2005
to August 2007. Senior Executive Vice President, Marketing of Rite Aid from
October 2000 to October 2005. Mr. Mastrian also held senior marketing positions
at Revco D.S., Inc., prior to its acquisition by CVS, from 1990 to 1997 and The Sherwin-Williams
Company from 1986 to 1989. Director of CCA Industries from 2009 to August 2012. Mr. Mastrian
served in a leadership role in the retail sector, has extensive marketing
experience and over 40 years of experience in corporate management.
www.biglariholdings.com 9
Table of Contents
PROPOSAL ONE: ELECTION OF
DIRECTORS
The Governance,
Compensation and Nominating Committee of the Board has concluded that the
following directors are independent in accordance with the director independence
standards of the New York Stock Exchange, and has determined that none of them
has a material relationship with the Corporation which would impair his or her
independence from management or otherwise compromise his or her ability to act
as an independent director: Kenneth R. Cooper, William L. Johnson, James P.
Mastrian and Ruth J. Person.
When the accompanying
BLUE proxy card is properly executed and returned, the
shares it represents will be voted in accordance with the directions indicated
thereon or, if no direction is indicated, the shares will be voted
FOR the election of the six nominees identified
above. Each of our nominees has consented to being named in this proxy statement
and has agreed to serve, if elected. The Corporation expects each nominee to be
able to serve if elected, but if any nominee notifies the Corporation before the
Annual Meeting that he or she is unable to do so, then the proxies will be voted
for the remainder of those nominated and, as designated by the directors, may be
voted for a substitute nominee or nominees.
OUR BOARD
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE COMPANYS
SIX NOMINEES FOR DIRECTOR ON THE ENCLOSED BLUE PROXY
CARD. |
Background to Potential Contested
Solicitation |
On November 21, 2014,
Groveland Master Fund Ltd. delivered to the Company a notice nominating six
persons for election to the Board at the Annual Meeting (the Notice). As of
the date of the Notice, Groveland and its nominees collectively beneficially
owned approximately 0.16% of the Companys outstanding shares. Prior to
delivering the Notice, Groveland had never communicated with nor reached out to
the Company.
On December 3, 2014,
Biglari Holdings counsel delivered a letter to Nicholas J. Swenson of Groveland
requesting that, in connection with the Companys evaluation whether the Notice
satisfies applicable legal and disclosure requirements relating to the
nomination of directors, Groveland should re-confirm certain information,
including that no persons or entities other than Groveland and its nominees were
known to be supporting Grovelands nominees and that the Notice includes all
information regarding Grovelands nominees and their associates required by
Regulation 14A under the Exchange Act. Biglari Holdings received no response
from Groveland to this letter. Accordingly, Biglari Holdings counsel followed
with another letter to Grovelands nominees one week later. Following receipt of
this second letter, Groveland responded in writing, asserting its contention
that the Notice was accurate and complete.
On December 17, 2014,
Biglari Holdings reached out by delivering a letter to Groveland,
stating that the Company believes it would be in the best interests of
shareholders for the principals of the Company and Groveland to meet in-person
whereby Groveland can discuss its views on the Company. The Companys letter
continued that it was interested in understanding Grovelands specific concerns
and determining how they may be appropriately addressed. The Company arranged
for an in-person meeting to be held in New York City on January 9,
2015.
On January 9, 2015, Sardar
Biglari, Chairman and Chief Executive Officer of the Company, and Philip L.
Cooley, Vice Chairman of the Company, held an in-person meeting in New York City
with Mr. Swenson, Seth G. Barkett and Thomas R. Lujan, representatives of
Groveland. The parties discussed certain proposals proffered by Groveland. Mr.
Biglari inquired concerning Grovelands ideas regarding the Companys operating
businesses, but the Groveland representatives claimed they did not want to
divulge them at that time. Mr. Biglari requested that Groveland set forth its
proposals in writing, in reasonable detail, so that these assertions could be
shared with and considered by the entire Board. On January 13, 2015, Mr. Swenson
delivered a letter addressed to the Board that outlined some of the proposals
that had been discussed at the January 9 meeting.
During the next scheduled
meeting of the Board, the directors discussed each of the Groveland proposals,
including the actions the Board had taken to enhance shareholder value and
corporate governance. After a comprehensive discussion, the directors
unanimously concurred that the proposals reflected within the Groveland letter
were not in the best long-term interests of the Companys
shareholders.
On January 25, 2015,
William L. Johnson, in his capacity as Lead Independent Director and on behalf
of the Board, delivered a letter to Mr. Swenson advising him that the Board had
considered the proposals contained in Grovelands January 13, 2015 letter and
unanimously determined that their implementation is not in the best interests of
the Companys long-term shareholders. The letter reinforced the conviction that
the economic objective of the Company is to maximize per-share intrinsic value
over the long term, as well as to reaffirm that the Boards actions have all
been in furtherance of this purpose. The letter concluded that it is abundantly
clear to the Board that Groveland neither shares the Companys concern for this
objective nor appreciates the substantial long-term value that has been created
for all shareholders.
Board Meetings, Committees and
Nominations |
The Board held two formal meetings during fiscal year 2014. Each director during
fiscal year 2014 attended at least 75% of all meetings of the Board and of the
committees of the Board on which he or
she served. Directors are
encouraged but not required to attend annual meetings of the Corporations
shareholders. All directors of the Corporation attended the 2014 Annual Meeting
of Shareholders.
10
Biglari Holdings 2015 Proxy Statement
Table of Contents
PROPOSAL ONE: ELECTION OF
DIRECTORS
The Board has established
an Audit Committee in accordance with Section 3(a)(58)A of the Securities
Exchange Act of 1934, as amended (the Exchange Act). The Audit Committee
consists of Kenneth R. Cooper, William L. Johnson, James P. Mastrian and Ruth J.
Person. The Board has determined that each of William L. Johnson, James P.
Mastrian and Ruth J. Person meets the definition of audit committee financial
expert as that term is used in Item 407(d)(5) of Regulation S-K promulgated
under the Exchange Act. All current members of the Audit Committee meet the
criteria for independence set forth in Rule 10A-3 under the Exchange Act and in
Section 303A of the New York Stock Exchange Listed Company Manual. The Audit
Committee assists the Board with oversight of a) the integrity of the
Corporations financial statements, b) the Corporations compliance with legal
and regulatory requirements and c) the qualifications and independence of the
Corporations independent public accountants and the Corporations internal
audit function. The Audit Committee meets periodically with the Corporations
independent public accountants, internal auditors and members of management and
reviews the Corporations accounting policies and internal controls. The Audit
Committee also selects the firm of independent public accountants to be retained
by the Corporation to perform the audit. The Audit Committee held four formal
meetings during fiscal year 2014. The Audit Committee Charter is available on
the Corporations website at www.biglariholdings.com and may also be obtained at
no charge by written request to the attention of the Secretary of the
Corporation at 17802 IH 10 West, Suite 400, San Antonio, Texas 78257.
The Board has established a
Governance, Compensation and Nominating Committee and adopted a charter to
define and outline the responsibilities of its members. A copy of the
Governance, Compensation and Nominating Committee Charter is available on the
Corporations website at www.biglariholdings.com and may also be obtained at no
charge by written request to the attention of the Secretary of the Corporation
at 17802 IH 10 West, Suite 400, San Antonio, Texas 78257. The Governance,
Compensation and Nominating Committee consists of Kenneth R. Cooper, William L.
Johnson, James P. Mastrian and Ruth J. Person, all of whom are independent
directors in accordance with the New York Stock Exchange director independence
standards.
The role of the Governance,
Compensation and Nominating Committee is to assist the Board by a) recommending
governance guidelines applicable to the Corporation; b) identifying, evaluating
and recommending the nomination of Board members; c) setting the compensation of
the Corporations Chief Executive Officer and performing other compensation
oversight; d) reviewing related persons transactions; and e) assisting the Board
with other related tasks, as assigned from time to time. The Governance,
Compensation and Nominating Committee held three formal meetings during fiscal
year 2014.
The Corporation does not
have a policy regarding the consideration of diversity, however defined, in
identifying nominees for director. Instead, in identifying director nominees,
the Governance, Compensation and Nominating Committee looks for individuals who
possess integrity, ownership mentality, business expertise and enterprise
qualities that support an entrepreneurial culture. With respect to the selection
of director nominees at the Annual Meeting, the Governance, Compensation and
Nominating Committee recommended the Board nominate the six directors currently
serving on the Board.
The Governance,
Compensation and Nominating Committee has a policy under which it will consider
recommendations presented by shareholders. A shareholder wishing to submit such
a recommendation should send a letter to the Secretary of the Corporation at
17802 IH 10 West, Suite 400, San Antonio, Texas 78257. The mailing envelope must
contain a clear notation that the enclosed letter is a Director Nominee
Recommendation. The Secretary must receive the recommendation not less than 120
days prior to the date we released our proxy materials for the preceding years
annual meeting for it to be considered by the Governance, Compensation and
Nominating Committee for the 2016 Annual Meeting of Shareholders. The letter
must identify the author as a shareholder and provide a brief summary of the
candidates qualifications. At a minimum, candidates recommended for nomination
to the Board must meet the director independence standards of the New York Stock
Exchange. The Governance, Compensation and Nominating Committees policy
provides that candidates recommended by shareholders will be evaluated using the
same criteria as are applied to all other candidates.
Board Leadership Structure and Role in Risk
Oversight |
Sardar Biglari is the
Corporations Chairman of the Board and Chief Executive Officer. The Corporation
is a holding company owning subsidiaries engaged in a number of diverse business
activities, including media, property and casualty insurance, as well as
restaurants. The Corporations largest operating subsidiaries are involved in
the franchising and operating of restaurants. All major operating, investment,
and capital allocation decisions are made by Mr. Biglari on behalf of the
Company and its main operating subsidiaries. Because of the Companys holding
company structure, along with the centralization of significant managerial and
capital allocation decisions to Mr. Biglari, the most effective leadership model
for the Corporation is to designate Mr. Biglari as holding both positions of
Chairman and Chief Executive.
Since our 2014 Annual
Meeting of Shareholders, we have met with a number of investors to solicit their
feedback on issues of importance to shareholders. In response to our active shareholder engagement,
the Board appointed William L. Johnson as Lead Independent
Director. Mr. Johnsons
responsibilities include presiding over Board meetings at which the Chairman is
not present, including executive sessions of the independent directors, and
serving as a liaison between the Chairman and the independent directors. Mr.
Johnsons role thus facilitates effective communication between the Chairman and
the independent directors, as well as our independent directors involvement in
significant matters concerning our shareholders long-term interests. Mr.
Johnsons duties also include ensuring the Boards emphasis on issues of
corporate governance.
www.biglariholdings.com 11
Table of Contents
PROPOSAL ONE: ELECTION OF
DIRECTORS
The full Board has
responsibility for general oversight of relevant risks. Mr. Biglari bears
responsibility for managing various risks faced by the Company. Furthermore, Mr.
Biglari reviews with the
Board relevant possible
risks. In addition, as part of its Charter, the Audit Committee reviews and
discusses the Corporations policies concerning risk assessment and risk
management.
Directors of Biglari
Holdings do not receive grants of Company stock. We discontinued the practice of issuing stock
options and restricted stock awards to avoid equity dilution of our
shareholders. Effective April 1, 2009, all annual retainers have been paid in
cash only.
Directors of the
Corporation who are employees do not receive fees for attendance at directors
meetings. During fiscal year 2014, a director who was not an employee received
an annual cash
retainer of $45,000, and
the Chairs of the Audit Committee and the Governance, Compensation and
Nominating Committee each received an annual cash retainer of $50,000. For his
role as Vice Chairman of the Board and such other duties as designated by the
Board, Dr. Cooley received an annual cash retainer of $210,000. In addition,
non-employee directors receive cash meeting attendance fees as
follows:
● | $3,500 for each in-person Board meeting attended |
| |
● | $1,250 for each committee meeting attended in-person not held in conjunction with a Board meeting |
| |
● | $500 for each committee meeting attended held in conjunction with a Board meeting and |
| |
● | $500 for any meeting (Board or committee) in which the director participated by phone |
We have retained Farient
Advisors, LLC, an independent compensation consulting firm, to review our
directors compensation program.
The following table
provides compensation information for the fiscal year ended September 24, 2014
for each non-management member of the Board who served on the Board during such
fiscal year:
Name |
Fees Earned or Paid
in Cash |
All Other
Compensation |
Total |
Philip L. Cooley |
$217,500 |
$ |
$217,500 |
Kenneth R. Cooper |
$61,000 |
$ |
$61,000 |
William L. Johnson |
$61,000 |
$ |
$61,000 |
James P. Mastrian |
$56,000 |
$ |
$56,000 |
Ruth J. Person |
$55,000 |
$ |
$55,000 |
Meetings of Independent
Directors |
In addition to the four meetings held by the Audit Committee and the three meetings
held by the Governance, Compensation and Nominating Committee, both of which are
comprised of all of the independent directors of the Company, the independent directors
held one additional meeting during fiscal year 2014. A shareholder or
other interested party wishing to contact the independent
directors, as
applicable, should send a letter to the Secretary of the Corporation at 17802 IH
10 West, Suite 400, San Antonio, Texas 78257.
The mailing envelope should contain a clear notation that the enclosed letter is
to be forwarded to the Corporations independent directors.
Shareholder Communications with the
Board |
Shareholders who wish to
communicate with the Board or a particular director may send a letter to the
Secretary of the Corporation at 17802 IH 10 West, Suite 400, San Antonio, Texas
78257. The mailing envelope should contain a clear notation that the enclosed
letter is a Shareholder-Board Communication or Shareholder-Director
Communication. All such letters should
identify the author as a
shareholder and clearly state whether the intended recipients are all members of
the Board or just certain specified individual directors. The Secretary will
make copies of all such letters and circulate them to the appropriate director
or directors.
12
Biglari Holdings 2015 Proxy Statement
Table of Contents
PROPOSAL ONE: ELECTION OF
DIRECTORS
Corporate Governance
Guidelines |
The Board has adopted
Corporate Governance Guidelines to promote effective governance of the
Corporation. The Corporate Governance Guidelines are available on the
Corporations website at www.biglariholdings.com. A copy of the Corporate
Governance
Guidelines also may be
obtained at no charge by written request to the attention of the Secretary of
the Corporation at 17802 IH 10 West, Suite 400, San Antonio, Texas
78257.
Code of Business Conduct and
Ethics |
The Corporation has adopted
a Code of Conduct for all directors, officers and employees as well as
directors, officers and employees of each of its subsidiaries. The Code of
Conduct is available on the Corporations website at www.biglariholdings.com. A
copy of the
Code of Conduct may also be
obtained at no charge by written request to the attention of the Secretary of
the Corporation at 17802 IH 10 West, Suite 400, San Antonio, Texas
78257.
Non-Employee Director Stock Ownership
Guidelines |
Also stemming from the
discussions we have held with our shareholders, and because the Company does not
grant options or other stock awards to non-employee directors to avoid the
dilution of our shareholders ownership interests, the Board adopted stringent
Stock Ownership Guidelines for our non-employee directors to ensure that the
interests of our non-employee directors
are aligned with the
interests of our shareholders in maximizing the long-term value of the Company.
The policy requires our non-employee directors to own shares equal in value to
at least five times their annual cash retainer. Directors have until four years
from the adoption of the policy to meet this guideline.
Our executive officers are
appointed annually by the Board, or at such interim times as circumstances may
require. Other than Mr. Biglari, the only executive officer of the Corporation
during fiscal year 2014 was Bruce Lewis.
Mr. Lewis, age 50, joined
the Company and was named Controller in January 2012. From 2007 to 2011, Mr.
Lewis was Senior Vice President and Controller of Blockbuster
Inc.
www.biglariholdings.com 13
Table of Contents
PROPOSAL TWO: RATIFICATION
OF SELECTION
OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee has
selected Deloitte & Touche LLP as our independent registered public
accounting firm for fiscal 2015. Deloitte & Touche LLP has served in that
capacity since fiscal 2003. A representative of Deloitte & Touche LLP will
be present at the Annual Meeting, will have an opportunity to make a statement
if he or she desires to do so, and will be available to respond to
questions.
If the shareholders do not
ratify the selection of Deloitte & Touche LLP, the Audit Committee will
reconsider its choice, taking into consideration the views of the shareholders,
and may (but will not be required to) appoint a different firm to serve in that
capacity for fiscal 2015.
If a quorum is present,
approval of the ratification of Deloitte & Touche LLP as the Corporations
independent registered public accounting firm for fiscal 2015 will require the
affirmative vote of a majority of the Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting.
Our Board
unanimously recommends that shareholders vote FOR the ratification of the
selection by the Audit Committee of Deloitte & Touche LLP as the
Corporations independent registered public accounting firm for fiscal
2015. Properly dated and signed proxies will be so voted unless
shareholders specify otherwise. |
14
Biglari Holdings 2015 Proxy Statement
Table of Contents
PROPOSAL THREE: ADVISORY
VOTE ON EXECUTIVE
COMPENSATION
The Corporation is
providing shareholders an advisory vote on executive compensation as required by
Section 14A of the Exchange Act. Section 14A was added to the Exchange Act by
Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(the Dodd-Frank Act).
The advisory vote on
executive compensation is a non-binding vote on the compensation of the
Corporations Named Executive Officers, as disclosed in this proxy statement
pursuant to the compensation disclosure rules promulgated by the Securities and
Exchange Commission (the SEC), including the Compensation Discussion and
Analysis, the Summary Compensation Table and the other related tables and
disclosure. The advisory vote on executive compensation
is not a vote on the Corporations general compensation policies, compensation
of the Board, or the Corporations compensation policies as they relate to
risk
management. Pursuant to an advisory vote at our 2014 annual meeting, our shareholders elected to hold the advisory vote on executive compensation on an annual basis, and the Company intends to include an advisory shareholder vote on executive compensation in its proxy materials each year until the next shareholder vote on the frequency of the advisory vote to approve executive compensation.
The Governance,
Compensation and Nominating Committee believes the Corporations executive
compensation program, including the Incentive Agreement with Mr. Biglari,
reflects a strong pay-for-performance philosophy and is closely aligned with
shareholders long-term interests. The Compensation Discussion and Analysis
section starting on page [___] of this proxy statement provides a more detailed
discussion of the Corporations executive compensation policies and
practices.
Non-Binding Advisory
Resolution |
We are asking our
shareholders to indicate their support for the Companys executive compensation
program as described in this proxy statement. This proposal, commonly known as a
say-on-pay proposal, gives our shareholders the opportunity to express their
views on our Named Executive Officers compensation. This vote is not intended
to address any specific item of compensation, but rather the overall
compensation of our Named Executive Officers and the philosophy, policies and
practices described in this proxy statement. Accordingly, we will ask our
shareholders to vote FOR the following resolution at the Annual
Meeting:
RESOLVED, that the
compensation paid to the Companys Named Executive Officers, as disclosed
pursuant to the compensation disclosure rules of the Securities and Exchange
Commission, including the Compensation Discussion and Analysis, the compensation
tables and any related material disclosed in this proxy statement is hereby
APPROVED.
This advisory vote on
executive compensation is not binding on the Board. However, the Board values
the opinion of our shareholders and will take into account the result of the
vote when making future decisions regarding executive
compensation.
If a quorum is present, the
affirmative vote of a majority of the Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting is required to
approve this resolution.
Our Board
recommends a vote FOR adoption of the advisory resolution approving the
compensation of the Corporations Named Executive Officers. Properly dated
and signed proxies will be so voted unless shareholders specify
otherwise. |
www.biglariholdings.com 15
Table of Contents
EXECUTIVE
COMPENSATION
Compensation Discussion and
Analysis |
The Compensation Discussion
and Analysis is designed to provide shareholders with a better understanding of
our compensation philosophy, core principles, and decision-making process. It
explains the compensation-related actions taken regarding the
executive officers
identified in the Summary Compensation Table (the Named Executive Officers).
Details regarding the compensation we paid to the Named Executive Officers for
fiscal 2014 are found in the tables and narrative that follow them.
Biglari Holdings is
composed of two distinct components: operating businesses and investments. The
Company conducts its operations through its wholly-owned subsidiaries, including
Steak n Shake Operations, Inc., Western Sizzlin Corporation, First Guard
Insurance Company and Maxim Inc. The Company holds its investments mainly by
means of limited partner interests in The Lion Fund. The general partner of The
Lion Fund is Biglari
Capital Corp., a private investment firm owned by Mr.
Biglari, who is both CEO of the Company and serves as the managing partner of
The Lion Fund. As CEO of Biglari Holdings, he oversees the Companys operating
businesses, and as Chairman of Biglari Capital, the general partner of these
investment partnerships, he is responsible for their investment
decisions.
Highlights for fiscal 2014
include:
Operating
Businesses
● |
Steak n Shake
recorded its 23rd consecutive quarterly increase in same-store
sales. |
|
|
● |
Purchased First Guard
Insurance Company, a direct underwriter of commercial trucking insurance.
First Guard has never experienced an underwriting loss in its 17-year
history. |
|
|
● |
Acquired Maxim, a
leading mens magazine published in approximately 75
countries. |
Compensation and Governance
Enhancements and Response to Shareholder Engagement
Biglari Holdings
views our shareholders as true long-term partners in its business and
wants their questions and suggestions to be considered fully, clearly, and
accurately. We are committed to engaging with our shareholders on
executive compensation and corporate governance matters. Since the
Companys 2014 annual meeting, including its response concerning the
results of the say on pay vote at the meeting, we have significantly
increased our efforts to obtain feedback from our shareholders in order to
gain an increased understanding of, and facilitate our responsiveness to,
our shareholders views on these important issues. Our active engagement
included in-depth discussions with shareholders representing approximately
40% of our Common Stock. These efforts were led by our Chairman, Vice
Chairman and Lead Independent Director, following his appointment as such.
We value the opinions of our shareholders, and, as a result of these
discussions, the Board has implemented the following
changes: |
Actions |
● |
Appointed William
L. Johnson as Lead Independent Director |
|
|
● |
Mr. Johnsons
responsibilities include presiding over Board meetings at which the
Chairman is not present, including executive sessions of the independent
directors; serving as a liaison between the Chairman and the independent
directors; and ensuring the Boards focus on issues of corporate
governance |
● |
Retained Farient
Advisors, LLC (Farient), an independent compensation consulting firm, to
conduct a comprehensive review of the Companys executive compensation
program for 2015, including
peer group development, incentive compensation design, pay and performance
alignment, and foremost governance practices |
|
|
● |
A description of the
analyses conducted by Farient is included below |
● |
Enhanced our
Compensation Discussion & Analysis (CD&A) as better to describe our compensation
philosophy and more clearly explain the way in which Mr. Biglari is
compensated |
|
|
● |
Clarified the
long-term design elements of the Incentive Agreement, which requires our CEO to purchase shares
in the open market with pre-tax incentive dollars and hold those shares
for a minimum of three (3) years |
16
Biglari Holdings 2015 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
Actions |
● |
Our disclosure
separates the discussion of our operating businesses and investments
business |
|
|
● |
The incentive agreement
with Mr. Biglari (the Incentive Agreement) was amended in July 2013 more
closely to tie Mr. Biglaris incentive compensation to the earnings of our
operating businesses, by excluding any
realized or unrealized gains or losses, earnings and all other amounts
attributable to any investments by Biglari Holdings and its subsidiaries
in funds managed by Biglari Capital |
● |
Adoption of stock
ownership guidelines for our non-employee directors |
|
|
● |
Because the Company does not grant
options or other stock awards to non-employee directors to avoid the
dilution of our shareholders ownership interests, the Board adopted
stringent Stock Ownership Guidelines for our non-employee directors to
ensure that the interests of our non-employee directors are aligned with
the interests of our shareholders in maximizing the long-term value of the
Company |
|
|
● |
Our non-employee directors
are required to own shares equal in value to at least five times their
annual cash retainer. Directors have until four years from the adoption of
the policy to meet this guideline |
● |
Implementation of a
clawback policy related to our CEOs incentive
compensation |
|
|
● |
Provides for the ability of
the Company to recover incentive compensation amounts paid to our CEO in
the event of a financial restatement |
Summary of Executive
Compensation Practices
Below we summarize certain
elements of our compensation program that seek to align compensation with the
interests of our shareholders, avoid excessive risk taking, foster sustainable
long-term shareholder value creation, and adhere to high corporate governance
standards.
What We Do |
What We Dont Do |
☑Align
executive compensation with the long-term interests of our
shareholders by adhering to a pay for performance compensation
philosophy that incorporates both short- and long-term
elements
☑Avoid
dilution to shareholders by requiring our CEO to use pre-tax cash
incentive dollars to purchase shares in the open market, rather than
through equity grants
☑Require
minimum 3-year holding periods on equity purchased by our CEO in
the open market under the Incentive Agreement
☑Utilize
an independent compensation consulting firm that provides no
other services to the Company
☑Have a
Lead Independent Director serve as a liaison between the Chairman
and the independent directors, facilitating more effective communications
and corporate governance
☑Maintain
stringent Stock Ownership Guidelines for our non-employee
directors
☑Provide
the ability to clawback incentive compensation from our
CEO
☑Prohibit
our executive officers and directors from engaging in any hedging or
pledging transactions related to our Common Stock, pursuant to
our insider trading policy. |
We DO
NOT:
☒Have
Employment Agreements with our CEO and other named executive
officer
☒Grant
stock options
☒Issue
restricted stock or other forms of equity
awards
☒Bestow
traditional executive perquisites, such as auto allowances,
health club memberships, executive physicals, country club memberships, or
personal financial planning services
☒Award
discretionary bonuses to our CEO
☒Provide
excise tax gross-ups
☒Maintain
a staggered Board. The Board amended our bylaws to opt out of the
mandatory staggered board requirement prescribed by Indiana
law. |
www.biglariholdings.com 17
Table of Contents
EXECUTIVE COMPENSATION
Compensation of Chief Executive
Officer |
Chief Executive Officer Compensation for Managing the Operating
Businesses
In his
capacity as CEO of the Company, Mr. Biglari earned $900,000 in total direct
compensation for fiscal 2014, inasmuch as he did not receive any incentive
compensation.
Operating Business Peer Group
In
connection with the compensation review being conducted by the Governance,
Compensation and Nominating Committee of the Board (the Committee) for 2015,
Farient evaluated potential peers for our operating businesses. In order to
establish this peer group, the following criteria were used: publicly traded
restaurant
companies, with revenues
ranging from $350 million to $2.5 billion, and possessing business models
similar to ours (e.g., operating similar dining concepts with a comparable mix
of company-owned to franchised locations).
This evaluation resulted in
a peer group consisting of the following 14 companies:
BJs
Restaurants, Inc. |
DineEquity, Inc. |
Ruby
Tuesday, Inc. |
Bob
Evans Farms, Inc. |
Fiesta Restaurant Group, Inc. |
Sonic Corp. |
Bravo Brio Restaurant Group, Inc. |
Ignite Restaurant Group, Inc. |
Texas Roadhouse, Inc. |
Buffalo Wild Wings, Inc. |
Lubys, Inc. |
The
Wendys Company |
Dennys Corporation |
Red
Robin Gourmet Burgers, Inc. |
|
The operating business peer
group will be integral to the Committees review of CEO compensation for 2015.
Specifically, this peer group will be used to assess competitive levels
of
compensation, to evaluate
pay program design, and to validate whether our compensation programs are
aligned with the performance of the Companys operating businesses.
Chief Executive Officer Compensation from
Operations
The
table below presents the amount of total direct compensation realized by our CEO
over the preceding three-year period related to our operating businesses,
including as compared to the above peer group.
Compensation
Element |
Three-Year
Average |
Base
Salary |
$900,000 |
Incentive from Operations |
$533,333 |
Operations Total Direct Compensation |
$1,433,333 |
|
|
Percent Rank Relative to Peer Group |
11th Percentile |
Based on Farients
analysis, Mr. Biglaris three-year average realized total direct compensation
for the operating component of our business ranked in the 11th percentile when
compared to the CEO compensation target levels of our operating business peer
group.
Base Salary
Mr. Biglaris current base salary of $900,000 was set by the Compensation
Committee of the Board of Directors (prior to being merged with the Governance
and Nominating Committee).
Mr. Biglaris salary has
not been increased since 2009.
Incentive Agreement
Philosophy. In designing the Incentive Agreement with Mr.
Biglari, the Committee sought to embody the pay-for-performance ethos of the
Company and its focus on maximizing long-term shareholder value. The Companys
singular long-term strategic objective is to maximize its per-share intrinsic
value, a subjective gauge of the progress of the business that the Company
believes will eventually be reflected in its stock price. Therefore, the
Committee conceives it was most appropriate to determine Mr. Biglaris
compensation for our operating businesses by reference to the objective measure
adjusted book value growth that most closely tied to the increase in
intrinsic value. The book value metric is adjusted, as further described below,
so that Mr. Biglari is compensated solely for the Companys true economic
gains.
The Incentive
Agreement operates as both a short- and long-term incentive plan.
As a result of the High Water Mark and
Hurdle Rate components of the Incentive Agreement discussed below, Mr. Biglari
must build long-term, sustainable value for our shareholders in order to
continue to receive compensation under the plan. In addition, the Company does
not grant options or other stock awards to Mr. Biglari, thereupon avoiding the
significant dilution of our shareholders interests in the Company that could
otherwise occur. Rather, the
Incentive Agreement obligates Mr. Biglari to purchase, in the open market, the
Companys Common Stock using his own pre-tax incentive dollars (discussed in
more detail below) and requires him to retain those shares for a period of three
(3) years. His compensation
18 Biglari Holdings 2015 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
is thus closely
correlated to the long-term performance of the Companys Common Stock, firmly
aligning Mr. Biglaris interests with the long-term interests of all
shareholders. Furthermore,
inasmuch as the Company does not grant equity to our named executive officers,
our shareholders receive the benefit of immediate tax deductibility under
Section 162(m) of the Internal Revenue Code, rather than at the time of vesting
or exercising equity awards.
Incentive
Design. The Incentive Agreement
establishes a performance-based annual incentive payment for Mr. Biglari
contingent upon the growth in adjusted book value in each fiscal year
attributable to our operating businesses. The adjusted book value metric adopted by the Committee measures the
Companys economic performance and thus is unaffected by non-economic
factors. For example, the
consummation of the rights offerings conducted by the Company (despite having
raised significant capital to further the Companys business objectives) had no
impact on Mr. Biglaris compensation under the Incentive
Agreement.
In order for Mr. Biglari to
receive any incentive, our operating businesses must achieve annual adjusted
book value growth in excess of 6% (the Hurdle Rate) above the previous highest
level of book value (the High Water Mark). Mr. Biglari will receive 25% of any
incremental book value created above the High Water Mark plus the Hurdle Rate
(collectively, the Measuring Point). For example, if the previous highest
recorded book value was $100,000,000, the Companys operating businesses would
need to attain adjusted book value of $106,000,000 before any incentive could be
earned. In any fiscal year in which book value declines, our operating
businesses must completely recover their deficit from the previous High Water
Mark, along with attaining the Hurdle Rate, before Mr. Biglari becomes eligible
to receive any further incentive payment. The Incentive Agreement limits Mr.
Biglaris incentive compensation to $10 million in any one-year performance
period.
www.biglariholdings.com 19
Table of Contents
EXECUTIVE COMPENSATION
Further, the Incentive
Agreement provides that Mr. Biglari must use at least 30% of his pre-tax
incentive compensation (which equates to approximately 50% after tax, assuming a
40% tax rate) to purchase shares of the Companys Common Stock in the open
market. Mr. Biglari is then required to hold such shares for a minimum of three
years from the date of purchase, subject to
the Incentive
Agreement. These features
ensure that the Incentive Agreement operates as both a short- and long-term
incentive plan, with roughly 50% serving as a cash-based short-term incentive
and 50% serving as an equity-based long-term incentive, on an after-tax
basis.
For example, if Mr. Biglari
earned $1,000,000 under the Incentive Agreement, he would have to purchase
shares for an aggregate price of at least $300,000. Assuming a 40% tax rate, Mr.
Biglari would need to commit half of his after-tax cash incentive payment
($600,000) to the purchase of shares. Thus, the program is split between cash
and equity incentives on an after-tax basis. As a result of this provision of
the Incentive Agreement, Mr. Biglari has purchased a total of 17,210 shares of
our Common Stock. Mr. Biglari has never sold a share of stock accumulated under
the Incentive Agreement or otherwise.
Economic Terms of
Agreement. The Corporation
initially entered into the Incentive Agreement with Mr. Biglari on April 30,
2010, but it was amended and restated on September 28, 2010. The Incentive
Agreement was approved by 82% of the votes cast by our shareholders at our
special meeting held on November 5, 2010. In connection with the sale of Biglari
Capital to Mr. Biglari (the Biglari Capital Transaction), Biglari Holdings and
Mr. Biglari
entered into the First
Amendment, dated as of July 1, 2013, to the Incentive Agreement (the Incentive
Agreement Amendment). The Incentive Agreement Amendment was designed to reflect
the bifurcation of the Companys operating and investing activities as a result
of the Biglari Capital Transaction which would more closely tie Mr. Biglaris
incentive compensation to the Companys operating earnings. Accordingly, the
Incentive Agreement Amendment excludes from the calculation of Biglari Holdings
adjusted book value, and therefore from the calculation of Mr. Biglaris
incentive compensation, any realized or unrealized gains or losses, earnings and
all other amounts attributable to any investments by Biglari Holdings (and its
subsidiaries) in The Lion Fund (as well as any other investment partnerships of
which Mr. Biglari or his affiliate is the general partner). To assure a fair,
objective, and reasoned compensation system, the Committee retained Towers
Watson, a nationally recognized compensation consultant, to assist in
formulating the Incentive Agreement, including the
amendment thereto.
20 Biglari Holdings 2015 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
Reconciliation of Adjusted Book Value. The following tables set forth a reconciliation of
(i) the change in adjusted book value to the change in total shareholders
equity for fiscal 2014 and 2013 and (ii) adjusted book value to total
shareholders equity as of the end of fiscal 2014 and 2013. With respect to
fiscal 2013, the following tables also show the adjustments made to reflect and
give effect to the Biglari Capital Transaction and the Incentive Agreement
Amendment.
(amounts in thousands) |
|
Fiscal
2014 |
|
Fiscal
2013 |
Change in shareholders equity: |
|
|
|
|
Net Earnings |
|
$28,804 |
|
$140,271 |
Other comprehensive
income, net |
|
(21,979) |
|
(22,440) |
Deconsolidation of
affiliated partnerships |
|
|
|
37,864 |
Adjustment to treasury
stock for holdings in investment partnerships |
|
(18,594) |
|
(11,033) |
Issuance of stock for
rights offering |
|
85,873 |
|
75,595 |
Exercise of stock
options |
|
24 |
|
17 |
Adjustment of redeemable
noncontrolling interest to maximum redemption value |
|
|
|
(4,810) |
Change in shareholders equity |
|
74,128 |
|
215,464 |
|
Reconciling of change in adjusted book value to change in
shareholders equity: |
|
|
|
|
Add accrued CEO
incentive compensation |
|
|
|
6,200 |
Less earnings from
investment partnerships included in net earnings |
|
(12,316) |
|
(13,296) |
Less deconsolidation of
affiliated partnerships |
|
|
|
(37,864) |
Add adjustment to
treasury stock for holdings in investment partnerships |
|
18,594 |
|
11,033 |
Less issuance of stock
for rights offering |
|
(85,873) |
|
(75,595) |
Change in other
comprehensive income due to foreign currency translation
adjustments |
|
582 |
|
(8) |
Less exercise of stock
options |
|
(24) |
|
(17) |
Add adjustment of
redeemable noncontrolling interest to maximum redemption value |
|
|
|
4,810 |
Change in adjusted book
value |
|
$(4,909) |
|
$110,727 |
|
|
|
Fiscal
2014 |
|
Fiscal
2013 |
Beginning Shareholders Equity |
|
$564,589 |
|
$349,125 |
Adjustment for treasury stock and equity in investment
partnerships |
|
(397,699) |
|
(28,025) |
Adjusted book value |
|
$166,890 |
|
$321,100 |
www.biglariholdings.com 21
Table of Contents
EXECUTIVE COMPENSATION
Historical Incentive Payouts. As the chart below illustrates, payouts earned
under the Incentive Agreement have closely aligned with corporate performance.
In fiscal 2014, the decline in our book value resulted, to a significant extent,
from expenses incurred in our continuing efforts to franchise the Steak n Shake
concept and also to revitalize the Maxim brand, which we acquired in February
2014. These expenditures emphasize the Companys focus on creating sustainable
long-term shareholder value, which may come at the expense of short-term
results. Our executive compensation philosophy is intended to
reward and promote such long-term growth for the benefit of all shareholders,
and thus may result in Mr. Biglaris receipt of little or no compensation in
years in which we incur significant expenses or take other actions towards the
pursuit of this ultimate goal.
The CEO incentive payment
is reviewed by the Committee and its advisors.
Overall, the Committee
believes the incentive design for Mr. Biglari:
● |
Aligns with our
overriding objective of increasing the per-share intrinsic value
of the enterprise |
|
|
● |
Provides
challenging goals, since the threshold level of book value needed
to earn an incentive is set at the High Water Mark plus the Hurdle
Rate |
|
|
● |
Serves as both
a short- and long-term incentive through the required purchase of
our Common Stock in the open market and associated three (3)-year holding
period |
|
|
● |
Ensures proper
long-term alignment with our shareholders given the share purchase
provisions and holding requirements, while avoiding the dilution
associated with equity awards |
|
|
● |
Offers
shareholders advantageous tax treatment since pre-tax cash
incentive dollars are used to purchase shares in the open
market |
|
|
● |
Avoids
encouraging excessive risk taking by promoting action intended to
create long-term, sustainable value for the benefit of all
shareholders |
22 Biglari Holdings 2015 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
Management of
Investments |
The Company holds its
investments mainly through limited partner interests in The Lion Fund. The
general partner of The Lion Fund does not charge Biglari Holdings management
fees, only a performance fee; therefore, its fees are predicated solely on
investment gains rather than assets under management. Income
from The Lion Fund is
excluded in the calculation of Mr. Biglaris incentive compensation under the
Incentive Agreement. The investments in The Lion Fund are more fully described
under Related Person Transactions.
Compensation of
Controller |
The Committee has charged
Mr. Biglari with the responsibility of reviewing and confirming the compensation
of other executive officers, including senior executives of the Companys major
subsidiaries. Factors considered are typically subjective, such as the
executives performance and any changes in that executives functional
responsibilities, which were the primary factors used in
determining the salary and
bonus for the Companys Controller in fiscal 2014, 2013 and 2012. We may also
utilize different incentive arrangements, with their terms dependent upon such
elements as the economic potential or capital intensity of the business. The
incentives could be large and will always be tied to the operating results for
which an executive exercises authority.
Employment Agreements, Severance, and
Change-in-Control Arrangements |
Neither Mr. Biglari nor Mr.
Lewis has an employment agreement with the Company and neither has been granted
or holds any stock options or restricted stock awards from the
Company.
Mr. Biglaris Incentive
Agreement continues in effect during his service as Chief Executive Officer of
the Company, but does not alter his at-will employment arrangement with the
Company. If there is a change in control of the Corporation, Mr. Biglari is
terminated by the Corporation without
cause or Mr. Biglari resigns for good reason, Mr. Biglari will be entitled
to receive a severance payment equal to 2.99x his average annual cash
compensation (consisting of his base salary and incentive compensation),
determined from the date of the Incentive Agreement, subject to reduction to the
extent necessary so that no portion of the severance payment will
be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended. For purposes of the Incentive Agreement, a change in control includes the consummation of a merger of the Company in which the Companys shareholders do not own, directly or indirectly, at least 50% of the voting power of the surviving entity, a sale of all or substantially all of the Companys assets, the replacement of a majority of the Board over a two-year period with directors who have not been approved by the Board, or a transaction as a result of which any person, other than Mr. Biglari or his affiliates, becomes the beneficial owner of at least 50% of the voting power of the Companys securities. Accordingly, the election of four or more of Grovelands alternative director nominees to the Board would be deemed to constitute a change in control under the Incentive Agreement.
Benefits Provided, and Not Provided, by the
Company |
The Committee does not
bestow many traditional perquisites on the Named Executive Officers, such as
auto allowances, health club memberships, executive physicals, country club
memberships, personal financial planning services, and other similar benefits
that do not closely relate to shareholder value creation.
During fiscal year 2010, we
resolved to suspend, indefinitely, all future option grants and placed a
moratorium on the issuance of restricted stock. The Committee does not believe
in granting conventional incentives such as stock options and restricted stock,
which would dilute shareholders ownership in the Corporation.
In addition, Mr. Biglari is
not entitled to receive any discretionary bonuses. The Committee therefore
believes that Mr. Biglaris
incentive compensation is correlated solely to the
performance of the Companys operating businesses.
The Company purchases hours
for the use of aircraft for business purposes pursuant to a fractional ownership
program. Any use of the aircraft for personal travel has been fully reimbursed
to the Company; otherwise such amounts would be deemed to be compensation and
reported in the summary compensation table. The use of these aircraft by Company
personnel and the reimbursement of personal travel costs are reviewed by the
Audit Committee and its advisors. This information regarding aircraft usage has
been voluntarily provided to our shareholders.
Deductibility Cap on Executive
Compensation |
Section 162(m) of the
Internal Revenue Code generally disallows a federal income tax deduction to any
publicly held corporation for compensation to the principal executive officer,
principal financial officer, or any of the three other most highly compensated
executive officers in excess of $1 million in any taxable year. Payments made
pursuant to the Incentive Agreement, however, are intended to qualify as
performance based compensation, eligible
for continued deductibility
with shareholder approval. To preserve the tax deductibility of such
compensation, the Corporation sought and obtained approval of the Incentive
Agreement at the November 5, 2010 special meeting of shareholders.
In fiscal 2014, we did not
pay compensation that was not deductible under Section 162(m).
www.biglariholdings.com 23
Table of Contents
EXECUTIVE COMPENSATION
Compensation Policies Relating to Risk
Management |
The Committee believes that
our compensation policies and practices, as a result of their emphasis on
long-term value creation, do not encourage unnecessary or excessive risk taking
and that
any risks arising from our
compensation policies and practices are not reasonably likely to have a material
adverse effect on the Corporation.
Summary Compensation
Information |
The following table shows
the compensation paid to the Companys Chief Executive Officer and Controller,
who are the Companys only executive officers and whom we refer to herein
collectively
as our Named Executive
Officers, for the 2014, 2013 and 2012 fiscal years.
SUMMARY
COMPENSATION TABLE
|
|
Fiscal |
|
|
|
|
|
Non-Equity Incentive |
|
All Other |
|
|
Name and Principal
Position |
|
Year |
|
Salary
($) |
|
Bonus
($) |
|
Plan Compensation
($)a |
|
Compensation($)b |
|
Total
($) |
Sardar Biglari, Chairman / |
|
2014 |
|
$900,000 |
|
$ |
|
$ |
|
$ |
|
$900,000 |
Chief Executive Officer |
|
2013 |
|
$900,000 |
|
$ |
|
$10,000,000 |
|
$42,797 |
|
$10,942,797 |
|
|
2012 |
|
$900,000 |
|
$ |
|
$10,000,000 |
|
$17,788 |
|
$10,917,788 |
|
Bruce Lewis, Controller |
|
2014 |
|
$330,962 |
|
$365,000 |
|
$ |
|
$ |
|
$695,962 |
|
|
2013 |
|
$320,000 |
|
$300,000 |
|
$ |
|
$ |
|
$620,000 |
|
|
2012 |
|
$231,385 |
|
$218,000 |
|
$ |
|
$40,416c |
|
$489,801 |
a. |
Represents incentive
compensation paid in accordance with the terms of the Incentive
Agreement. |
b. |
Prior to fiscal year 2014, the Company had a
direct ownership in CCA Industries and Mr. Biglari served on the Board of
Directors of CCA Industries until July 2014. The value of directors fees
received was $42,500 in 2013 and $17,500 in 2012. |
c. |
Includes reimbursed relocation expenses of
$40,080. |
Narrative Disclosure to Summary Compensation
Table |
As referenced above in the
Compensation Discussion and Analysis section, Mr. Biglari, as CEO of the
Company, oversees all aspects of its restaurant, insurance and media properties.
As a result of the Biglari Capital Transaction and the bifurcation of the
Companys operating and investing businesses, fiscal 2014 was the first full
fiscal year in which there was a clear demarcation between Mr. Biglaris
compensation for operations and fees paid to Biglari Capital for services
related to managing the investments of the Company.
In fiscal 2014 Mr. Biglari
was paid solely his base salary of $900,000 for his multifaceted role as CEO of
the Companys operating businesses. Mr. Biglari did not receive any compensation
under the Incentive Agreement for fiscal 2014. Fees paid to Biglari Capital in
fiscal 2014 are fully described under Related Person
Transactions.
Plan-Based Award Grants; Outstanding Equity
Awards; Award Exercise and Vesting |
The Corporation does not
grant any stock options or other awards under its equity incentive plans, which
have been suspended indefinitely. Accordingly, neither of the Named Executive
Officers has been granted or holds any stock options or restricted stock awards
from the Company.
Under the terms of the
Incentive Agreement, the maximum incentive payment that Mr. Biglari may receive
with respect to fiscal 2015 is $10 million.
We maintain a 401(k) plan
in which one of our Named Executive Officers participates. The Steak n Shake
401(k) Savings Plan (the 401(k) Plan) is a defined contribution plan covering
substantially all employees, including the Named Executive Officers, after they
have attained age 21 and completed six months of service and allows employees to
defer up to 20% of their salaries. Discretionary
matching contributions were
made in each of fiscal years 2014, 2013 and 2012. Discretionary contributions
are based on the profitability of the Corporation and subject to quarterly
revision. The Named Executive Officers and other highly compensated employees
(as that term is defined by IRS regulations) are limited to contributing 1% of
their cash compensation to the 401(k) Plan.
24 Biglari Holdings 2015 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
Potential Payments Upon Termination of
Employment |
For a description of the
rights to which Mr. Biglari is entitled in the event of a change in control of
the Corporation, Mr. Biglaris termination by the Corporation without cause or
Mr. Biglaris resignation for good reason, see Compensation Discussion and
Analysis Employment Agreements, Severance and Change-in-Control Arrangements
and Related Person Transactions. Mr. Biglari has not received any stock awards
from the Corporation.
Mr. Lewis does not have any
agreement with the Company providing for payments upon termination or in the
event of a change in control of the Corporation. Mr. Lewis has not received any
stock awards from the Corporation.
Section 16(a) Beneficial Ownership Reporting
Compliance |
Section 16(a) of the
Exchange Act requires the Corporations officers and directors, and persons who
own more than ten percent of a registered class of the Corporations equity
securities, to file reports of ownership and changes in ownership with the SEC
and the New York Stock Exchange. Officers, directors and greater than
ten-percent shareholders are required by SEC regulation to furnish the
Corporation with copies of all Section 16(a) forms they file.
Based solely on its review
of the copies of such forms received by it, and written representations from
certain reporting persons that no Section 16(a) forms were required for those
persons, the Corporation believes that during fiscal 2014 all filing
requirements applicable to its officers, directors and greater than ten-percent
shareholders were complied with.
Securities Authorized for Issuance Under Equity
Compensation Plans |
The following table details
information regarding our existing equity compensation plans as of September 24,
2014:
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
remaining available for |
|
|
Number of securities to |
|
|
|
future issuance under |
|
|
be issued upon exercise |
|
Weighted-average exercise |
|
equity compensation plans |
|
|
of outstanding options, |
|
price of outstanding options, |
|
(excluding securities |
Plan
category |
|
warrants and
rights |
|
warrants and
rights |
|
reflected in column
(a)) |
|
|
(a) |
|
(b) |
|
(c) |
Equity compensation plans approved |
|
7,323 |
|
$275.08 |
|
|
by
security holders |
|
|
|
|
|
|
|
Equity compensation plans not |
|
|
|
$ |
|
|
approved by security holders |
|
|
|
|
|
|
|
Total |
|
7,323 |
|
$275.08 |
|
|
During fiscal year 2010, we
resolved to suspend, indefinitely, all future option grants and placed a
moratorium on the issuance of restricted stock.
COMPENSATION COMMITTEE
INTERLOCKS AND
INSIDER PARTICIPATION
During fiscal year 2014,
the Governance, Compensation and Nominating Committee of the Board consisted of
Kenneth R. Cooper, Ruth J. Person, William L. Johnson and James P. Mastrian.
None of these individuals has at any time been an officer or employee of the
Corporation. During fiscal year 2014, none of our
executive officers served
as a member of the board of directors or compensation committee of any entity
for which a member of our Board or Governance, Compensation and Nominating
Committee served as an executive officer.
www.biglariholdings.com 25
Table of Contents
GOVERNANCE, COMPENSATION,
AND NOMINATING
COMMITTEE REPORT
The Governance,
Compensation and Nominating Committee of the Board (the Committee) is
currently composed of the persons identified below. The Committee has reviewed
and discussed with management the Compensation Discussion and Analysis contained
in this proxy statement on pages [___] to [___]. Based on the Committees review
and discussions with management, it recommended to the Board that the
Compensation Discussion
and Analysis be included in
the Corporations Annual Report on Form 10-K/A for the fiscal year ended
September 24, 2014 and this proxy statement. Submitted by the members of the
Committee:
Kenneth R. Cooper, William
L. Johnson, James P. Mastrian and Ruth J. Person
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows
as of [_________], 2015 the number and percentage of outstanding shares of our
Common Stock beneficially owned by each person or entity known to be the
beneficial owner of more than 5% of our Common Stock:
Name & Address of Beneficial
Owner |
|
Amount and Nature of Beneficial
Ownership |
|
Percent of Class |
Sardar Biglari |
|
392,123(1) |
|
[___] |
17802 IH 10 West, Suite 400 |
|
|
|
|
San
Antonio, TX 78257 |
|
|
|
|
|
|
|
|
|
GAMCO Investors, Inc. |
|
196,967(2) |
|
[___] |
One
Corporate Center |
|
|
|
|
Rye,
NY 10580-1435 |
|
|
|
|
|
|
|
|
|
BlackRock, Inc. |
|
157,666(3) |
|
[___] |
40
East 52nd Street |
|
|
|
|
New
York, NY 10022 |
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP |
|
129,932(4) |
|
[___] |
Palisades West, Building One |
|
|
|
|
6300
Bee Cave Road |
|
|
|
|
Austin, TX 78746 |
|
|
|
|
|
|
|
|
|
The
Vanguard Group |
|
120,970(5) |
|
[___] |
100
Vanguard Blvd. |
|
|
|
|
Malvern, PA 19355 |
|
|
|
|
|
|
|
|
|
Janus Capital Management LLC |
|
112,930(6) |
|
[___] |
151
Detroit Street |
|
|
|
|
Denver, CO 80206 |
|
|
|
|
1) |
This information was
obtained from a Schedule 13D/A filed with the SEC on January 9, 2015 by
The Lion Fund, L.P., Biglari Capital, Sardar Biglari, Philip L. Cooley, the
401(k) Plan and the Steak n Shake Non-Qualified Savings Plan, and the most
recent Form 4 filed with the SEC by certain of the foregoing persons. By
virtue of his relationships with the other reporting persons discussed in
the Schedule 13D/A, Mr. Biglari may be deemed to have the sole power to
vote and dispose of the shares beneficially owned by the reporting
persons, other than the shares held under each of the 401(k) Plan and the
Deferred Compensation Plan and the shares beneficially owned by Dr.
Cooley. Mr. Biglari has sole power to direct the voting of the shares held
under each of the 401(k) Plan and the Deferred Compensation Plan. Mr.
Biglari shares with Dr. Cooley the power to vote and dispose of the shares
beneficially owned by Dr. Cooley. Mr. Biglari disclaims beneficial
ownership of the shares that he does not directly own. |
2) |
This information was obtained from a
Schedule 13D/A filed with the SEC on February 20, 2015. |
3) |
This information was obtained from a
Schedule 13G/A filed with the SEC on January 26, 2015. |
4) |
This information was obtained from a
Schedule 13G/A filed with the SEC on February 5, 2015. |
5) |
This
information was obtained from a Schedule 13G/A filed with the SEC on February 11, 2015. |
6) |
This information was obtained from a Schedule 13G filed with the SEC on February 18, 2015. |
26 Biglari Holdings 2015 Proxy Statement
Table of Contents
GOVERNANCE, COMPENSATION, AND NOMINATING COMMITTEE
REPORT
The following table shows
the total number of shares of our Common Stock beneficially owned as of
[_________], 2015 and the percentage of outstanding shares for (i) each
director, (ii) each Named Executive Officer, and (iii) all directors and
executive officers, as a group:
|
Name & Address of
Beneficial Owner |
|
Amount and
Nature of Beneficial Ownership |
|
|
Percent of
Class |
|
|
Sardar Biglari |
|
|
392,123(1) |
|
|
|
[___] |
|
|
Philip L. Cooley |
|
|
7,475(2) |
|
|
|
* |
|
|
Ruth
J. Person |
|
|
512 |
|
|
|
* |
|
|
Kenneth R. Cooper |
|
|
313 |
|
|
|
* |
|
|
William L. Johnson |
|
|
360 |
|
|
|
* |
|
|
James P. Mastrian |
|
|
336(3) |
|
|
|
* |
|
|
Bruce Lewis |
|
|
|
|
|
|
|
|
|
All
directors and executive officers |
|
|
393,644 |
|
|
|
[___] |
|
|
as a group (7 persons) |
|
|
|
|
|
|
|
|
* |
Less than 1% |
1) |
Includes 31,019 shares
owned directly by Mr. Biglari, 352,141 shares owned directly by The Lion
Fund, L.P., 1,000 shares held under the 401(k) Plan, 488 shares held under the
Steak n Shake Non-Qualified Savings Plan and 7,475 shares beneficially
owned by Dr. Cooley. See footnote 1 above. |
2) |
Includes 814 shares owned
by Dr. Cooleys spouse. Dr. Cooley disclaims beneficial ownership of such
shares except to the extent of his pecuniary interest
therein. |
3) |
Shares owned
by Mr. Mastrians spouse. Mr. Mastrian disclaims beneficial ownership of
such shares except to the extent of his pecuniary interest
therein. |
www.biglariholdings.com 27
Table of Contents
RELATED PERSON
TRANSACTIONS
Policy Regarding Related Person
Transactions |
The Governance,
Compensation and Nominating Committee (the Committee) reviews each related
person transaction (as defined below) and determines whether it will approve or
ratify that transaction based on whether the transaction is in the best
interests of the Company and its shareholders. Any Board member who has any
interest (actual or perceived) will not be involved in the
consideration.
A related person
transaction is any transaction, arrangement or relationship in which we are a
participant, the related person (defined below) had, has or will have a direct
or indirect material interest and the aggregate amount involved is expected to
exceed $120,000 in any calendar year. Related person includes (a) any person
who is or was (at any time during the last fiscal year) an officer, director or
nominee for election as a director; (b) any
person or group who is a
beneficial owner of more than 5% of our voting securities; (c) any immediate
family member of a person described in provisions (a) or (b) of this sentence;
or (d) any entity in which any of the foregoing persons is employed, is a
partner or has a greater than 5% beneficial ownership interest.
In determining whether a
related person transaction will be approved or ratified, the Committee may
consider factors such as (a) the extent of the related persons interest in the
transaction; (b) the availability of other sources of comparable products or
services; (c) whether the terms are competitive with terms generally available
in similar transactions with persons that are not related persons; (d) the
benefit to us; and (e) the aggregate value of the
transaction.
Related Person
Transactions |
Investments in The Lion Fund
Since the year 2000, Mr. Biglari has served as
Chairman of Biglari Capital, general partner of The Lion Fund. Biglari Capital,
in its capacity as general partner, receives an annual incentive reallocation
equal to 25% of the net profits allocated to the limited partners of The Lion
Fund in excess of their applicable hurdle rate (6% for Biglari Holdings and its
subsidiaries pursuant to the Shared Services Agreement (as described below) and
5% for other limited partners) over the previous high-water mark. Biglari
Capital does not receive any fees based on assets under management; its fees are
predicated solely on investment gains.
During the fiscal year that
ended September 24, 2014, the Company contributed cash and securities owned with
an aggregate value of $174,418,240 in exchange for additional limited partner
interests in The Lion Fund. For the year that ended December 31, 2013 (which
coincides with the Companys 2014 fiscal year), the Company earned $74,526,170
on its investment in The Lion Fund, which equaled approximately 33% return on
capital. An incentive reallocation to Biglari Capital is determined as of
December 31
of each year. For the
year that ended December 31, 2013, the incentive reallocation from Biglari
Holdings and its subsidiaries was $14,701,852.
The Committee believes that
The Lion Funds fee structure demands greater performance for the incentive
reallocation to be earned instead of the traditional 2 and 20 hedge fund model
in which many of the hedge fund managers charge a flat fee equal to 2% of assets
under management plus 20% of any profits (without having to exceed a hurdle
rate). Thus, the Committee believes that the incentive reallocation under the
terms of The Lion Funds partnership agreements is consistent with the Companys
pay-for-performance culture and philosophy.
For comparison purposes, if
Biglari Capital were paid fees based on the typical 2 and 20 model for hedge
fund managers, it would have received a management fee of $4,488,508 plus a
performance fee of $14,007,532, for a total of $18,496,040.
Comparison of
Fees |
Typical 2 and 20
Hedge Fund |
The Lion
Fund |
December 31, 2013 |
$18,496,040 |
$14,701,852 |
In order to gauge the
competitiveness and the appropriateness of the incentive reallocation to Biglari
Capital, Farient conducted a review of incentive arrangements at other
diversified financial institutions and companies with similar investment
businesses. Because the purpose of this group was to benchmark
incentive
fee design but not to
compare management or performance fee amounts, Farient evaluated companies with
total assets under $50 billion to yield an appropriate representative sample.
The following 13 companies were selected based on an evaluation of business
model:
Calamos Asset
Management, Inc. |
|
Greenlight Capital
Re, Ltd. |
|
Silvercrest Asset
Management Group LLC |
The Carlyle Group
L.P. |
|
Lazard Ltd |
|
Steel Partners
Holdings L.P. |
Cohen & Steers,
Inc. |
|
Oaktree Capital
Group, LLC |
|
Third Point
Reinsurance Ltd. |
Evercore Partners
Inc. |
|
Och-Ziff Capital
Management Group LLC |
|
Virtus Investment
Partners, Inc. |
Fortress Investment
Group LLC |
|
|
|
|
28 Biglari Holdings 2015
Proxy Statement
Table of Contents
RELATED PERSON
TRANSACTIONS
The majority of this peer
group employs a fee-based structure, with fees earned premised on assets under
management and/or investment gains. The competitive analysis of these fee
arrangements showed that, unlike Biglari Capital, most of these companies
compensated those responsible for capital allocation and investment decisions
using both a management fee based on assets under management and a performance
fee dependent on investment gains. Furthermore, few peer companies required
investment performance to exceed a specified hurdle rate to
trigger payment of an
incentive fee, and even fewer specified a hurdle rate in concert with
achievement of a high water mark. Therefore, the Company believes that this competitive analysis
demonstrates that Biglari Capitals fee structure, whereby it does not charge a
management fee and receives only an incentive reallocation from Biglari Holdings
if its investment performance exceeds the previous high-water mark plus a 6%
hurdle rate, represents industry best practices.
Shared
Services Agreement
Biglari
Holdings and Biglari Capital have a Shared Services Agreement in which Biglari
Holdings provides certain services to Biglari Capital, including use of space at
the Companys corporate headquarters in San Antonio, in exchange for a 6% hurdle
rate for Biglari Holdings and its subsidiaries (as compared to a 5% hurdle rate
for all other limited partners) in order to determine the incentive reallocation
to Biglari Capital, as general partner of The Lion Fund,
under their respective partnership agreements. The incentive reallocation to
Biglari Capital is equal to 25% of the net profits allocated to the limited
partners in excess of their applicable hurdle rate over the previous
high-water mark. The
Shared Services Agreement runs for an initial five-year term, and automatically
renews for successive five-year periods, unless terminated by either party
effective at the end of the initial or renewed term, as applicable. The term of
the Shared Services Agreement coincides with the lock-up period for the
Companys investments in The Lion Fund under their
respective partnership agreements. During the fiscal year that ended September
24, 2014, the Company provided services for Biglari Capital under the Shared
Services Agreement having an aggregate cost of $1,590,000.
License
Agreement
On January 11, 2013,
the Company entered into a Trademark License Agreement (the License Agreement)
with Mr. Biglari. The License Agreement was unanimously approved by the
Committee. In addition, the license under the License Agreement is provided on a
royalty-free basis in the absence of specified extraordinary events described
below. Accordingly, the Company
and its subsidiaries have paid no royalties to Mr. Biglari under the License
Agreement since its inception.
Under the License
Agreement, Mr. Biglari granted to the Company an exclusive license to use the
Biglari and Biglari Holdings names (the Licensed Marks) in association with
various products and services (collectively the Products and Services). Upon
(a) the expiration of twenty years from the date of the License Agreement
(subject to extension as provided in the License Agreement), (b) Mr. Biglaris
death, (c) the termination of Mr. Biglaris employment by the Company for Cause
(as defined in the License Agreement), or (d) Mr. Biglaris resignation from his
employment with the Company absent an Involuntary Termination Event (as defined
in the License Agreement), the Licensed Marks for the Products and Services will
transfer from Mr. Biglari to the Company, without any compensation, if the
Company is continuing to use the Licensed Marks in the ordinary course of its
business. Otherwise, the rights will revert to Mr. Biglari.
If (i) a Change of Control
(as defined in the License Agreement) of the Company; (ii) the termination of
Mr. Biglaris employment by the Company without Cause; or (iii) Mr. Biglaris
resignation from his employment with the Company due to an Involuntary
Termination Event (each, a Triggering Event) were to occur, Mr. Biglari would
be entitled to receive a 2.5% royalty on Revenues with respect to the Royalty
Period. The royalty payment to Mr. Biglari would not apply to all revenues
received by Biglari Holdings and its subsidiaries nor would it apply
retrospectively (i.e., to revenues received
with respect to the period prior to the Triggering Event). The royalty would
apply to revenues recorded by the Company on an accrual basis under GAAP, solely
with respect to the defined period of time after the Triggering Event
equal to the Royalty
Period, from a covered Product, Service or business that (1) has used the
Biglari Holdings or Biglari name at any time during the term of the License
Agreement, whether prior to or after a Triggering Event, or (2) the Company has
specifically identified, prior to a Triggering Event, will use the name Biglari
or Biglari Holdings.
For purposes of the License Agreement, a change of control includes the consummation of a merger of the Company in which the Companys shareholders do not own, directly or indirectly, at least 50% of the voting power of the surviving entity, a sale of all or substantially all of the Companys assets, the replacement of a majority of the Board over a two-year period with directors who have not been approved by the Board, or a transaction as a result of which any person, other than Mr. Biglari or his affiliates, becomes the beneficial owner of at least 50% of the voting power of the Companys securities. Accordingly, the election of four or more of Grovelands alternative director nominees to the Board would be deemed to constitute a change of control under the License Agreement.
Revenues means all
revenues received, on an accrual basis under GAAP, by the Company, its
subsidiaries and affiliates from the following: (1) all Products and Services
covered by the License Agreement bearing or associated with the names Biglari
and Biglari Holdings at any time (whether prior to or after a Triggering Event).
This category would include, without limitation, the use of Biglari or Biglari
Holdings in the public name of a business providing any covered Product or
Service; and (2) all covered Products, Services and businesses that the Company
has specifically identified, prior to a Triggering Event, will bear, use or be
associated with the name Biglari or Biglari Holdings.
The Committee unanimously
approved the association of the Biglari name and mark with all of Steak n
Shakes restaurants (including Company operated and franchised locations),
products and brands. On May 14, 2013, the Company, Steak n Shake, LLC and Steak
n Shake Enterprises, Inc. entered into a Trademark
www.biglariholdings.com 29
Table of Contents
RELATED PERSON TRANSACTIONS
Sublicense Agreement in
connection therewith. Accordingly, revenues received by the Company, its
subsidiaries and affiliates from Steak n Shakes restaurants, products and
brands would come within the definition of Revenues for purposes of the License
Agreement.
The Royalty Period is a
defined period of time, after the Triggering Event, calculated as follows: (i)
if, following three months after a Triggering Event, the Company or any of its
subsidiaries or affiliates continues to use the Biglari or Biglari Holdings name
in connection with any covered product or service, or continues to use Biglari
as part of its corporate or public company name, then the Royalty Period will
equal (a) the period of time during which the Company or any of its subsidiaries
or affiliates continues any such use, plus (b) a
period of time after the Company, its subsidiaries and affiliates have ceased
all uses of the names Biglari and Biglari Holdings equal to the length of the
term of the License Agreement prior to the Triggering Event, plus three years.
As an example, if a Triggering Event occurs five years after the date of the
License Agreement, and the Company ceases all uses of the Biglari and Biglari
Holdings names two years after the Triggering Event, the Royalty Period will
equal a total of ten years (the sum of two years after the Triggering Event
during which the Biglari and Biglari Holdings names are being used, plus a
period of time equal to the five years prior to the Triggering Event, plus three
years); or (ii) if the Company, its subsidiaries and affiliates cease all uses
of the Biglari and Biglari Holdings names within three
months after a Triggering
Event, then the Royalty Period will equal the length of the term of the
License Agreement prior to the Triggering Event, plus three years. As an
example, if a Triggering Event occurs five years after the date of the License
Agreement, and the Company ceases all uses of the Biglari and Biglari Holdings
names two months after the Triggering Event, the Royalty Period will equal a
total of eight years (the sum of the period of time equal to the five years
prior to the Triggering Event, plus three years). Notwithstanding the above
methods of determining the Royalty Period, the minimum Royalty Period is five
years after a Triggering Event.
Except as set forth above,
there are no transactions that would be required to be disclosed pursuant to
Item 404(a) of Regulation S-K promulgated under the Exchange Act.
Services Provided by
Family Members of Mr. Biglari
Ken Biglari, Sardar Biglaris father, performs consulting services for
Steak n Shake in the areas of cost management, outdoor advertising, and
international franchise development. In addition, Shawn Biglari, Sardar
Biglaris brother, is employed as a Director, Business Development for Steak n
Shake. Each of Ken Biglari and Shawn Biglari received less than
$120,000 in compensation from the Company during fiscal 2014; accordingly, this
information is not required to be disclosed in this proxy statement. Nevertheless, the Company has
opted to provide the foregoing disclosure.
30 Biglari Holdings 2015 Proxy Statement
Table of Contents
INDEPENDENT PUBLIC
ACCOUNTANTS
Deloitte & Touche LLP
has advised us that they have billed or will bill us the following amounts for
services for each of the last two fiscal years.
Type of
Fee |
|
Fiscal
2014 |
|
Fiscal
2013 |
Audit Fees(1) |
|
$682,800 |
|
$676,500 |
Audit-Related Fees(2) |
|
77,700 |
|
58,200 |
Tax
Fees |
|
|
|
|
Total Fees for the Applicable Fiscal Year |
|
$760,500 |
|
$734,700 |
(1) |
Audit fees include fees for services
performed for the audit of our annual financial statements including
services related to Section 404 of the Sarbanes-Oxley Act and review of
financial statements included in our Form 10-Q filings, Form 10-K filing,
Registration Statements, comment letters and services that are normally
provided in connection with statutory or regulatory filings or
engagements. Billings not finalized at time of filing are included in the
year paid. |
(2) |
Audit-Related Fees include fees for
assurance and related services performed that are reasonably related to
the performance of the audit or review of our financial statements. This
includes services provided to audit Steak n Shakes 401(k)
Plan. |
The Audit Committees
policy is to pre-approve all audit and permissible non-audit services provided
by the independent registered public accounting firm. These services may include
audit services, audit-related services, tax services and other services.
Pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is generally
subject to a specific budget. The independent auditor and management are
required to
report periodically to the
Audit Committee regarding the extent of services provided by the independent
auditor in accordance with this pre-approval, and the fees for the services
performed to date. The Audit Committee may also pre-approve particular services
on a case-by-case basis. In each of fiscal 2014 and 2013, the Audit Committee
pre-approved the services reported above as audit-related services and Deloitte
& Touche LLP did not provide any other services during such
years.
REPORT OF THE AUDIT
COMMITTEE
The Audit Committee has
reviewed and discussed the consolidated financial statements of the Corporation
and its subsidiaries set forth in Item 8 of the Corporations Annual Report on
Form 10-K for the fiscal year ended September 24, 2014 with management of the
Corporation and Deloitte & Touche LLP, independent public accountants for
the Corporation.
The Audit Committee has
discussed with Deloitte & Touche LLP the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended (Codification of Statements
on Auditing Standards, AU 380), as adopted by the Public Company Accounting
Oversight Board (the PCAOB) in Rule 3200T. In addition, the Audit Committee
has received the written disclosures and the letter from Deloitte & Touche
LLP required by the applicable PCAOB requirements for independent accountant
communications with audit committees with respect to auditor independence and
has discussed with Deloitte & Touche LLP its independence from the
Corporation.
Based on the review and
discussions with management of the Corporation and Deloitte & Touche LLP
referred to above, the Audit Committee recommended to the Board that the
Corporation include the consolidated financial statements of the Corporation
and subsidiaries for the
fiscal year ended September 24, 2014 in the Corporations Annual Report on Form
10-K for the fiscal year ended September 24, 2014.
It is not the duty of the
Audit Committee to plan or conduct audits or to determine that the Corporations
financial statements are complete and accurate and in accordance with generally
accepted accounting principles; that is the responsibility of management and
the Corporations independent public accountants. In giving its recommendation
to the Board, the Audit Committee has relied on (i) managements representation
that such financial statements have been prepared with integrity and objectivity
and in conformity with generally accepted accounting principles and (ii) the
reports of the Corporations independent public accountants with respect to such
financial statements.
Submitted by the members of
the Audit Committee of the Board.
William L. Johnson,
Chairman
Kenneth R. Cooper
James P. Mastrian
Ruth J.
Person
www.biglariholdings.com 31
Table of Contents
SPECIAL NOTE REGARDING
FORWARD-LOOKING
STATEMENTS
Certain statements
contained in this proxy statement constitute forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. We intend such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained
in the Private Securities Litigation Reform
Act of 1995, and are
including this statement for purposes of invoking these safe harbor provisions.
You can identify these statements from our use of the words plan, forecast,
estimate, project, believe, intend, anticipate, expect, target,
is likely, will, and similar expressions. These forward-looking statements
may include, among other things:
● |
statements and assumptions relating to
financial performance; |
|
|
● |
statements relating to the anticipated effects
on results of operations or financial condition of recent or future
developments or events; |
|
|
● |
statements relating to our capital raising
activities, business and growth strategies; and |
|
|
● |
any
other statements, projections or assumptions that are not historical
facts. |
Forward-looking statements
involve known and unknown risks, uncertainties and other important factors that
could cause our actual results, performance or achievements to differ materially
from our expectations of future results, performance or achievements expressed
or implied by these forward-looking statements. In addition, our past results of
operations do not
necessarily indicate our
future results. We discuss these and other uncertainties in the Risk Factors
section of our Annual Report on Form 10-K for the fiscal year ended September
24, 2014, as may be updated in our Quarterly Reports on Form 10-Q filed with the
SEC. We undertake no obligation to update publicly any of these statements in
light of future events.
ANNUAL REPORT
The Corporations Annual
Report on Form 10-K for the fiscal year ended September 24, 2014 has been
previously mailed to our shareholders, and is not deemed a part of the proxy
soliciting material.
A copy of the
Corporations Annual Report on Form 10-K for the fiscal year ended September 24,
2014, as amended, as required to be filed with the SEC, excluding exhibits, will
be mailed to shareholders without charge upon written request
to the Secretary of the
Corporation at 17802 IH 10 West, Suite 400, San Antonio, Texas 78257. Such
request must set forth a good-faith representation that the requesting party was
either a holder of record or a beneficial owner of the Common Stock of the
Corporation on the record date for the Annual Meeting. Exhibits to the Form 10-K
will be mailed upon similar request and payment of specified fees. The
Corporations Form 10-K, as amended, is also available through the SECs website
(www.sec.gov).
PROPOSALS BY
SHAREHOLDERS
Any shareholder proposal
intended to be considered for inclusion in the proxy statement for presentation
at the 2016 Annual Meeting must be received by the Corporation by [__________],
2015. The proposal must be in accordance with the provisions of Rule 14a-8
promulgated by the SEC under the Exchange Act.
In addition, the Companys
Restated Bylaws contain an advance notice provision requiring that, if a
shareholder wants to present a proposal (including a nomination) at an annual
meeting of shareholders, the shareholder must give timely notice thereof in
writing to the Secretary of the Corporation and must have been a shareholder of
record entitled to vote at such meeting at the time of giving of such notice. To
be timely, notice must be delivered to or, if mailed, received at the principal
executive offices of the Corporation not less than 120 calendar days in advance
of the anniversary of the date
the Corporations proxy
statement was released to shareholders in connection with the previous years
annual meeting of shareholders. In the event that the date of the annual meeting
has been changed by more than 30 days from the date of the previous years
annual meeting, to be timely, notice must be received by the Corporations
Secretary at the principal office of the Corporation not later than the close of
business on the later of 120 calendar days in advance of such annual meeting or
10 calendar days following the date on which public announcement of the date of
the annual meeting is first made.
It is suggested that any
proposal be submitted by certified mail return receipt requested. The
Corporation reserves the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not comply with the
foregoing and other applicable requirements.
32 Biglari Holdings 2015
Proxy Statement
Table of Contents
OTHER MATTERS
As of the date of this
proxy statement, our Board does not know of any matter that will be presented
for consideration at the Annual Meeting other than as described in this proxy
statement. As to other business that may properly come before the Annual
Meeting,
it is intended that proxies
properly executed and returned will be voted in respect thereof at the
discretion of the person voting the proxies in accordance with his best
judgment.
By order of the
Board,
Sardar
Biglari
Chairman and Chief
Executive Officer
San Antonio, Texas
[__________], 2015
www.biglariholdings.com 33
Table of Contents
ANNEX A: INFORMATION
CONCERNING PARTICIPANTS
IN THE COMPANYS SOLICITATION OF PROXIES
Directors and Executive
Officers |
The name and present
principal occupation of each of our directors and executive officers who, under
the rules of the SEC, may be considered to be participants in our solicitation
of proxies from our shareholders in connection with our Annual Meeting are
set
forth in the proxy
statement under PROPOSAL ONE: ELECTION OF DIRECTORS and Executive Officers.
The address of each of our directors and executive officers is c/o Biglari
Holdings Inc., 17802 IH 10 West, Suite 400, San Antonio, Texas
78257.
Information Regarding Ownership of Company
Securities by Participants |
The number of shares of our
Common Stock held by the participants listed above as of [__________], 2015 is
set forth under the Security Ownership of Certain Beneficial Owners and
Management section of this proxy statement.
Information Regarding Transactions in Company
Securities by Participants |
The following table sets
forth information regarding purchases and sales of our securities by each of the
participants listed above during the past two years. Unless otherwise indicated,
all transactions were in the public market and none of the
purchase
price or market value of
the shares is represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities.
Class of Security |
|
Securities Purchased/(Sold) |
|
Date of Purchase/Sale |
Sardar Biglari |
Common Stock |
|
758(1)(2) |
|
07/03/2013 |
Common Stock |
|
4,190 |
|
09/03/2013 |
Common Stock |
|
2,050 |
|
09/04/2013 |
Common Stock |
|
905 |
|
09/05/2013 |
Common Stock |
|
2,016(4) |
|
09/16/2013 |
Common Stock |
|
41,149(2)(4) |
|
09/16/2013 |
Common Stock |
|
242(4) |
|
09/20/2013 |
Common Stock |
|
4,923(2)(4) |
|
09/20/2013 |
Common Stock |
|
4,500 |
|
03/24/2014 |
Common Stock |
|
836 |
|
03/25/2014 |
Common Stock |
|
740 |
|
03/26/2014 |
Common Stock |
|
5,110(4) |
|
09/12/2014 |
Common Stock |
|
50,037(2)(4) |
|
09/12/2014 |
Common Stock |
|
357(4) |
|
09/18/2014 |
Common Stock |
|
3,502(2)(4) |
|
09/18/2014 |
Common Stock |
|
1,660(2)(3) |
|
12/18/2014 |
Common Stock |
|
1,660(2)(3) |
|
12/19/2014 |
Common Stock |
|
1,929(2)(3) |
|
12/22/2014 |
Common Stock |
|
1,731(2)(3) |
|
12/23/2014 |
Common Stock |
|
1,832(2)(3) |
|
12/24/2014 |
Common Stock |
|
2,000(2)(3) |
|
12/26/2014 |
Common Stock |
|
1,947(2)(3) |
|
12/29/2014 |
Common Stock |
|
1,970(2)(3) |
|
12/30/2014 |
Common Stock |
|
1,966(2)(3) |
|
12/31/2014 |
Common Stock |
|
1,902(2)(3) |
|
01/02/2015 |
Common Stock |
|
2,147(2)(3) |
|
01/05/2015 |
Common Stock |
|
2,094(2)(3) |
|
01/06/2015 |
34 Biglari Holdings 2015
Proxy Statement
Table of Contents
ANNEX A:
INFORMATION CONCERNING PARTICIPANTS IN THE COMPANYS SOLICITATION OF
PROXIES
Class of Security |
|
Securities Purchased/(Sold) |
|
Date of Purchase/Sale |
Common Stock |
|
2,170(2)(3) |
|
01/07/2015 |
Common Stock |
|
2,200(2)(3) |
|
01/08/2015 |
Common Stock |
|
2,143(2)(3) |
|
01/09/2015 |
Common Stock |
|
3,559(2)(3) |
|
01/12/2015 |
Common Stock |
|
2,748(2)(3) |
|
01/13/2015 |
Common Stock |
|
3,615(2)(3) |
|
01/14/2015 |
Common Stock |
|
3,589(2)(3) |
|
01/15/2015 |
Common Stock |
|
439(2)(3) |
|
01/16/2015 |
Common Stock |
|
250(2)(3) |
|
01/30/2015 |
Common Stock |
|
2,034(2)(3) |
|
02/02/2015 |
Common Stock |
|
282(2)(3) |
|
02/03/2015 |
Common Stock |
|
18(2)(3) |
|
02/04/2015 |
Common Stock |
|
10(2)(3) |
|
02/05/2015 |
Common Stock |
|
4(2)(3) |
|
02/06/2015 |
Common Stock |
|
1,497(2)(3) |
|
02/09/2015 |
Common Stock |
|
200(2)(3) |
|
02/10/2015 |
Common Stock |
|
809(2)(3) |
|
02/11/2015 |
Common Stock |
|
10(2)(3) |
|
02/13/2015 |
Philip L. Cooley |
Common Stock |
|
880(4) |
|
09/16/2013 |
Common Stock |
|
110(4)(5) |
|
09/16/2013 |
Common Stock |
|
107(4) |
|
09/20/2013 |
Common Stock |
|
13(4)(5) |
|
09/20/2013 |
Common Stock |
|
100 |
|
05/21/2014 |
Common Stock |
|
1,096(4) |
|
09/12/2014 |
Common Stock |
|
134(4)(5) |
|
09/12/2014 |
Common Stock |
|
76(4) |
|
09/18/2014 |
Common Stock |
|
7(4)(5) |
|
09/18/2014 |
Kenneth R. Cooper |
Common Stock |
|
100 |
|
09/11/2013 |
Common Stock |
|
24(4) |
|
09/16/2013 |
Common Stock |
|
3(4) |
|
09/20/2013 |
Common Stock |
|
48(4) |
|
09/12/2014 |
Common Stock |
|
4(4) |
|
09/18/2014 |
Common Stock |
|
14 |
|
12/15/2014 |
William L. Johnson |
Common Stock |
|
90 |
|
08/13/2013 |
Common Stock |
|
38(4) |
|
09/16/2013 |
Common Stock |
|
72 |
|
06/02/2014 |
Common Stock |
|
60(4) |
|
09/12/2014 |
James P. Mastrian |
Common Stock |
|
150(5) |
|
08/22/2013 |
Common Stock |
|
30(4)(5) |
|
09/16/2013 |
Common Stock |
|
100(5) |
|
03/26/2014 |
Common Stock |
|
56(4)(5) |
|
09/12/2014 |
Ruth J. Person |
Common Stock |
|
70(4) |
|
09/16/2013 |
Common Stock |
|
85(4) |
|
09/12/2014 |
www.biglariholdings.com 35
Table of Contents
ANNEX A:
INFORMATION CONCERNING PARTICIPANTS IN THE COMPANYS SOLICITATION OF
PROXIES
(1) |
Effective July 3, 2013, Western
Acquisitions, L.P. (Western Acquisitions), a limited partnership in
which the Company had a substantive controlling interest, made a pro-rata
distribution of the 2,386 shares of Common Stock of the Company then owned
by Western Acquisitions to its limited partners, whereupon 758 of such
shares were contributed to The Lion Fund, L.P. |
|
(2) |
Shares owned directly by The Lion Fund, L.P.
Biglari Capital is the general partner of The Lion Fund, L.P. Mr. Biglari is
the Chairman and Chief Executive Officer of Biglari Capital and has
investment discretion over the securities owned by The Lion Fund, L.P. By
virtue of these relationships, Biglari Capital and Mr. Biglari may be
deemed to beneficially own the shares of Common Stock of the Company owned
directly by The Lion Fund, L.P. |
|
(3) |
Represents shares acquired pursuant to a
Rule 10b5-1 trading plan. |
|
(4) |
Represents shares acquired pursuant to the
exercise of subscription privilege in connection with a subscription
rights offering conducted by the Company. |
|
(5) |
Shares acquired by the respective directors
spouse. Each such director disclaims beneficial ownership of such shares
except to the extent of his pecuniary interest
therein. |
Miscellaneous Information Concerning
Participants |
Other than as set forth in
this Annex A or the proxy statement, none of the participants or their
associates (i) beneficially owns, directly or indirectly, any shares or other
securities of the Company or any of our subsidiaries or (ii) has any substantial
interest, direct or indirect, by security holdings or otherwise, in any matter
to be acted upon at the Annual Meeting. In addition, other than as set forth in
this Annex A or the proxy statement, neither we nor any of the participants
listed above has been within the past year a party to any contract, arrangement
or understanding with any person with respect to any of our securities,
including, but not limited to, joint ventures, loan or option arrangements, puts
or calls, guarantees against loss or guarantees of profit, division of losses or
profits or the giving or withholding of proxies. Other than as set forth in this
Annex A or this proxy statement, neither we nor any of the participants or any
of their associates has any arrangements or understandings with any person with
respect to any future employment by us or our affiliates or with respect to any
future transactions to which we or any of our affiliates will or may be a
party.
Other than as set forth in
this Annex A or the proxy statement, neither we nor any of the participants
listed above or any of their associates has or will have (i) any arrangements or
understandings with any person with respect to any future employment by us or
our affiliates or with respect to any future transactions to which we or any of
our affiliates will or may be a party or (ii) a direct or indirect material
interest in any transaction or series of similar transactions since the
beginning of our last fiscal year or any currently proposed transactions, or
series of similar transactions, to which we or any of our subsidiaries was or is
to be a party in which the amount involved exceeds $120,000.
36 Biglari Holdings 2015
Proxy Statement
Table of Contents
PRELIMINARY COPY – SUBJECT TO COMPLETION, DATED FEBRUARY 24, 2015
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: ☒
THIS BLUE PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
THE
BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE FOLLOWING:
1. |
Election of
Directors |
|
Nominees: |
|
|
|
01 |
Sardar Biglari |
|
02 |
Philip L. Cooley |
|
03 |
Kenneth R. Cooper |
|
04 |
William L. Johnson |
|
05 |
James P. Mastrian |
|
06 |
Ruth J. Person |
|
|
|
|
FOR ALL |
|
WITHHOLD ALL |
|
FOR ALL EXCEPT |
To withhold authority to vote for any
individual nominee(s), mark For All Except and write the number(s) of the
nominee(s) on the line below. |
|
|
|
|
|
|
|
|
|
|
|
|
THE BOARD OF
DIRECTORS RECOMMENDS YOU VOTE FOR PROPOSALS 2 AND 3: |
|
|
2. |
To ratify the selection by the Audit
Committee of the Board of Directors of Deloitte & Touche LLP as the
Corporations independent registered public accounting firm for the 2015
fiscal year. |
|
|
|
FOR AGAINST ABSTAIN |
|
|
3. |
Non-binding advisory resolution to
approve the Corporations executive compensation, as described in these
proxy materials. |
|
|
|
FOR AGAINST ABSTAIN |
|
|
|
|
|
|
|
In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof. |
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX] |
|
Date |
|
|
|
|
|
Signature (Joint Owners) |
|
Date |
|
Please sign exactly as your name(s)
appear(s) hereon. When signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners should each sign
personally. All holders must sign. If a corporation or partnership, please sign
in full corporate or partnership name, by authorized officer
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may
choose one
of the two
voting methods outlined below to vote your proxy.
Proxies submitted by the Internet or
telephone must be received by 11:59 p.m., Eastern Daylight Time, on April 8, 2015.
|
|
Vote by Internet |
|
|
¥ ¥ |
Log on to the
Internet and go to www.okapivote.com/bh Follow the steps outlined on the secured
website. |
|
|
Vote by telephone |
|
|
¥ |
Call toll free
877-386-4269 within the USA, US territories & Canada any time on a touch tone
telephone. There is NO CHARGE to you for the
call. |
Table of Contents
ANNUAL MEETING OF SHAREHOLDERS
THIS BLUE PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY.
The undersigned appoints Sardar Biglari
and Philip L. Cooley, and each of them, the proxies of the undersigned with full
power of substitution, to vote all shares of common stock of Biglari Holdings
Inc. (the Corporation), which the undersigned is entitled to vote at the
annual meeting of the shareholders of the Corporation (the Annual Meeting) to
be held at The St. Regis Hotel, Two East 55th Street at Fifth Avenue,
New York, New York 10022, on April 9, 2015, at 1:00 p.m., Eastern Daylight Time,
or at any adjournment or postponement thereof, as indicated on the reverse side
on Proposals 1, 2 and 3 and as said proxies may determine in the exercise of
their best judgment on any other matters which may properly come before the
meeting.
THIS BLUE PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS BLUE PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
Your vote is important. If you do not
expect to attend the Annual Meeting or if you plan to attend but wish to vote by
proxy, please sign, date and mail this blue proxy. A return envelope is provided for
this purpose.
Continued and to be signed on
reverse side
DETACH AND RETURN THIS PORTION
ONLY |
KEEP THIS PORTION FOR YOUR RECORDS |
BIGLARI HOLDINGS INC.
You must present this admission
ticket in order to gain admittance to the annual meeting of the shareholders of
Biglari Holdings Inc. (the Annual Meeting) to be held at The St. Regis Hotel,
Two East 55th Street at Fifth
Avenue, New York, New York 10022, on April 9, 2015, at 1:00 p.m., Eastern
Daylight Time, or at any adjournment or postponement thereof. This ticket admits
only the shareholder(s) listed on the reverse side and is not transferable. If
shares are held in the name of a broker, trust, bank, or other nominee, you must
bring with you a statement, legal proxy or letter from the broker, trustee, bank
or nominee confirming the beneficial ownership of the shares. Cameras, recording
devices and other electronic devices will not be permitted at the meeting.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting To Be Held on April 9,
2015: The Proxy Statement and 2014 Annual
Report are available at www.biglariholdings.com/annualmeeting.
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