Does Cracker Barrel Have Something to Hide?

Cracker BarrelIf you take enough swings, eventually you'll land a punch.

Cracker Barrel Old Country Store (CBRL) is doing a little backpedalling after activist investor Sardar Biglari caught what appears to be an oversight in the restaurant chain's proxy statement.

Cracker Barrel describes incoming chairman James Bradford as a former CEO of a publicly traded glass maker in its latest proxy statement, but that's not entirely accurate. Bradford was CEO at AFG Industries from 1992 through 1999, but the company was only public until 1988.

When Activist Investors Attack

Armed with a 17.3% stake in Cracker Barrel and hoping to shake things up to increase shareholder value, Biglari Holdings (BH) isn't letting go.

"We believe that Cracker Barrel has an obligation to all its shareholders to respond immediately and to inform them whether Cracker Barrel's public filings and statements regarding Mr. Bradford's purported experience are true or false," Biglari wrote on Tuesday afternoon, a day after his company raised the accusations.

After Cracker Barrel defended the actions on Tuesday night -- saying that it was an honest misunderstanding that led to the description of Bradford as "a former NYSE company CEO" -- Biglari attacked again.

"This inaccuracy is not a misunderstanding," Biglari wrote in response, pointing out that it was repeated in both the 2011 and 2012 proxy statements. "It is misleading."

Much Ado About Dumplings

There have certainly been many cases of lamentable resume embellishments in recent corporate history.

Yahoo! (YHOO) CEO Scott Thompson stepped down earlier this year after it was revealed that he never received the computer science degree that was part of his profile for years.

Six years ago it was RadioShack's (RSH) Dave Edmondson resigning as CEO after it was discovered that he made up his psychology and theology degrees from an unaccredited college in California.

Is the Bradford flap that bad? Even Cracker Barrel skeptics may feel that Biglari is barking up the wrong tree this time. Bradford was CEO at a firm that was technically a "former NYSE company," so it would be understandable if even he missed the misstatement.

Perhaps more importantly, Cracker Barrel is rolling these days.

The stock hit a fresh all-time high last month. The company has been juicing up its dividend and its share buyback efforts. Shares have soared 68% over the past year alone.

If Biglari's accusations were saucy enough the stock's gains wouldn't matter. Nobody wants a liar making big decisions at a company. However, this appears to be a minor oversight at a company where shareholders aren't exactly clamoring for change after being treated to healthy gains.

Biglari by all means should keep taking his swings, but it seems as if this soft punch has missed its target.

Motley Fool contributor Rick Munarriz does not own shares in Cracker Barrel. The Motley Fool has sold shares of RadioShack short. Motley Fool newsletter services have recommended creating a covered call position in Cracker Barrel Old Country Store.

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Daryl

I've eaten at Cracker Barrel. The food is OK. The fireplace in Winter is awesome, but when I leave to pay the bill I rarely see anything made in the USA. Most of the products are imported, cheap and meant to put American Folk Art producers out of work. Their confectionery is mostly American...though not all.
Until they put American producers first I will not eat there.

October 26 2012 at 4:49 PM Report abuse rate up rate down Reply
Jay Parker

FYI - Sardar Biglari is an Iranian American businessman and is the Chairman and CEO of Biglari Holdings Inc., a diversified holding company that trades on the New York Stock Exchange under the symbol BH. Why he chooses now to whine only further undermines his thinking and proves his arrogance. Step aside Sardar, and let Bradford continue to do his job.

October 15 2012 at 7:04 PM Report abuse rate up rate down Reply
parthenon1

Cracker Barrel is one of my favorite fast service restaurants so this outside clown should stick with his other investments and dont mess with a successful enterprise. I do have personal complaints about Cracker Barrel, minor but annoying; Headquarters management rarely if ever talks to the people on the firing line, the servers, about what their customers are asking for, in fact my personal inquiries lead me to believe local managment also does not pay any attention to their employees. I know this to be true since I used to eat at least 3 to 4 meals with them every week and have asked. For example; When someone mentions "the South" as in Southern cooking Cracker Barrel thinks of South Easter fare and forgets the South West they need to include Salsa or even Picante sauce as a condiment for those of us who want it for our eggs in the AM. Also they have had in the past some very tasty offerings but with no reason given take them off the menu. Ie., Slice steak salad, if it is not cost effective to offer at their price, raise the price and let the customers make the decision for them. When I visited with servers I asked how often they get questionaires from headquarters management team and local management even a verbal discussion they say managment at all levels feel the servers are less intelligent so dont pay any attention to them. So I again ask add salsa to the condiments and bring back the steak salad, raise the prices for these items if needed but the customers will keep you informed.

October 12 2012 at 1:08 PM Report abuse rate up rate down Reply
donut999

Is he qualified or not?

October 11 2012 at 9:33 AM Report abuse rate up rate down Reply