Buffalo Wild Wings Board Cautions Against ‘Fox in the Henhouse’


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The proxy battle for the Buffalo Wild Wing board is getting nasty ahead of the June 2 shareholder meeting.

In a scathing letter to shareholders signed by the current board, the company outlines purported inaccuracies and dangers in Marcato’s board nominations. Marcato, the activist investment firm headed by Bill Ackman protégé Mick McGuire, is pushing four new board candidates. Now in the mix for a board seat are Scott Bergren, a former CEO of Yum! Brands’ Pizza Hut; Sam Rovit, a former CEO of food supplier CTI Foods who Marcato called a “expert in corporate transformation;” Emil Lee Sanders, managing general partner at Rocket Chicks, LP, an area developer for Golden Chick with prior stints at TGI Fridays and Buffalo Wild Wings; and McGuire himself.

The letter pulled no punches, saying three of the nominees “Have very serious weaknesses and could do lasting harm to Buffalo Wild Wings.”

In the letter to shareholders from May 22, McGuire was called out for not having “operating or execution experience at a public company, and he has no track record of success in the boardroom.”

The letter pointed to his past positions at Borders Group (parent of bookstore Borders), which went bankrupt shortly after McGuire resigned as chairman. The letter also swatted McGuire’s performance at NCR Corporation, the hardware and software company best known in the industry for POS systems and self-order kiosks. According to the letter, McGuire was on the board for “the lost year” when NCR share prices dropped 8%.

Bergren was slammed for his performance at Yum!; which the board wrote was “not distinguished,” as during his time at the helm Pizza Hut especially was clobbered Domino’s and Papa John’s. The board also wrote that his talents would be “duplicative” given its nomination of Janice Fields, former president of McDonald’s USA.

The worst was reserved for Sanders.

“If you vote for Mr. Sanders,” read the letter, “you are voting to put the proverbial ‘fox in the hen house.’”

Also included is this graph [right] that shows a wildly different tenure for Sanders than the one pushed by Marcato in prior proxy materials.

The proxy statement “falsely states that he was responsible for opening 486 units in seven years, while driving annual sales of $2.5 billion. This is simply not true. During the period Mr. Sanders was employed by the company, Buffalo Wild Wings only opened 281 units. And, in the year before Mr. Sanders left by mutual arrangement, the company reported sales of less than $1 billion,” read the letter.

As for the fox statement, the letter states that Sanders sent emails and texts in which he sought to buy Buffalo Wild Wings restaurants now before Marcato’s plans degrade company value. 

“He has been soliciting our franchisees and attempting to scare them into selling their restaurants by suggesting that Marcato’s plans for the company will soon make the restaurant units less valuable: ‘[T]he timing for you and your investors [to sell to me] could not be better,’ Mr. Sanders wrote to [several of] our franchisees because ‘the Marcato Hedge Fund efforts [mean] too much available product in the market will cause a commensurate decline in value,’” read the letter.

Another statement from the company from May 23 stated that Sanders had sent such communications as recently as February. In recent statements, Marcato said that Sanders was acting as a consultant when he sent those emails and texts and stopped in 2015, but the May 23 presentation from the company suggested that was not true.

As for Rovit, well, the board loves him.

“It was clear that he prioritizes the interests of all shareholders, has a distinguished record of achievement and brings unique insights and skills in the food service and consumer sectors,” read the letter. “We therefore welcomed him onto our slate and encourage shareholders to vote for him to join our board.”

So far, Marcato hasn’t responded to the letter, or many of what Buffalo Wild Wings calls factual errors in its recent line of messaging. It has put forth a new release lauding an announcement from proxy advisory firm Institutional Shareholder Services Inc. (ISS) that called for shareholders to vote for all four of its board candidates.

"We are pleased that ISS recognizes further change on Buffalo Wild Wings' Board is needed and greater shareholder oversight would help increase Board accountability and avoid any delays in the implementation of strategic projects. ISS's independent recommendation further underscores our view that new voices and fresh perspectives are urgently required in the BWLD boardroom," said McGuire in a statement. 

The board encouraged shareholders “to discard any proxy materials sent to you by Marcato.”

This should all make for an interesting shareholders meeting on June 2. 

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