BIGLARI HOLDINGS INC. | ||||||||||||||
(Name of Registrant as Specified in Its Charter) |
N/A | ||||||||||||||
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant) |
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BIGLARIBIGLARI HOLDINGS INC.
June 25, 2020
The Shareholders:
If you are a shareholder and plan to attend the meeting, you must present an admission ticket, which can be obtained by registering in advance of the meeting at www.proxyvote.com/register. Shareholders may bring up to two guests; however, each guest must also be registered by the shareholder at www.proxyvote.com/ |
BIGLARI
MAY 27, 2021
2021.
If you are a shareholder and plan to attend the meeting, you must present an admission ticket, which can be obtained by registering in advance of the meeting at www.proxyvote.com/register. Shareholders may bring up to two guests; however, each guest must also be registered by the shareholder at www.proxyvote.com/register as well.register. Shareholders and their guests must each present an admission ticket for admittance to the meeting. If you do not have an admission ticket, you will not be admitted to the meeting.
MAY 27, 2021.
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Name | Age | Business Experience | ||||||||||||
Sardar Biglari | 43 | Chairman of the Board and Chief Executive Officer of Biglari Holdings since 2008. In addition, Mr. Biglari has served as Chairman and Chief Executive Officer of Biglari Capital Corp. (“Biglari Capital”) since 2000. Biglari Capital is the general partner of The Lion Fund, L.P. and The Lion Fund II, L.P., private investment partnerships. Mr. Biglari | ||||||||||||
Philip L. Cooley | 77 | Vice Chairman of the Board of Biglari Holdings since April 2009 and a director since March 2008. Prassel Distinguished Professor of Business at Trinity University, San Antonio, Texas, from 1985 until his retirement in May 2012. He has served as an advisory director of Biglari Capital since 2000. | ||||||||||||
Ruth J. Person | 75 | Director of the predecessor corporation since 2002. Chancellor, University of Michigan-Flint, from 2008 to 2014 and Professor of Management from 2008 to the present. Ms. Person has years of experience in leadership and board positions at various institutions. | ||||||||||||
Kenneth R. Cooper | 76 | Director of the Corporation since October 2010. Attorney in the private law practice of | ||||||||||||
John G. Cardwell | 75 | Director of the Corporation since October 2019. Mr. Cardwell held various positions with Johnson Controls, Inc. from 1986 until his retirement in May 2008. Mr. Cardwell | ||||||||||||
Edmund B. Campbell, III | 60 | Founder and Chairman of the Board of First Guard Insurance Company. Mr. Campbell was the Chief Executive Officer of First Guard Insurance Company from its inception in 1997 until March 2021. Mr. Campbell has over 35 years of experience in the insurance business. |
The Audit Committee held five formal meetings during 2019.2020. The Audit Committee Charter is available on the Corporation’s 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.
2020.
He is Mr. Biglari Holdings’ largest shareholder, and through affiliated entities, beneficially owns 390,764 equivalent Class A shares of the Corporation, that representrepresenting approximately 64.4%63.0% of the economic interest and 67.5% of the voting interest.
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 Corporation’s policies concerning risk assessment and risk management.
Biglari Holdings does not provide directors and officers liability insurance to its directors.
Name | Fees Earned or Paid in Cash | All Other Compensation | Total | |||||||||
Philip L. Cooley | $ | 254,500 | $ | — | $ | 254,500 | ||||||
Kenneth R. Cooper | $ | 82,500 | $ | — | $ | 82,500 | ||||||
James P. Mastrian | $ | 66,500 | $ | — | $ | 66,500 | ||||||
Ruth J. Person | $ | 72,500 | $ | — | $ | 72,500 | ||||||
John G. Cardwell | $ | 10,000 | $ | — | $ | 10,000 |
(All attendance fees paid in 2020 were eliminated in 2021.)
Name | Fees Earned or Paid in Cash | All Other Compensation | Total | |||||||||||||||||
Philip L. Cooley | $ | 253,000 | $ | — | $ | 253,000 | ||||||||||||||
Kenneth R. Cooper | $ | 81,000 | $ | — | $ | 81,000 | ||||||||||||||
John G. Cardwell | $ | 71,000 | $ | — | $ | 71,000 | ||||||||||||||
Ruth J. Person | $ | 67,500 | $ | — | $ | 67,500 | ||||||||||||||
James P. Mastrian | $ | 31,500 | $ | — | $ | 31,500 |
Shareholder Communications with the Board
2021. Mr. Biglari does not have a severance agreement, a change-in-control arrangement, or an employment agreement with the Company and has neither been granted nor holds any stock options or restricted stock awards from the Company. The Corporation does not grant any stock options or other awards. The Board believes its unconventional compensation system is a rational one, creating less, not more, enterprise risk. For each of the last three years, Mr. Biglari earned a total compensation of $900,000. authority. These incentives are never related to measures over which an executive exercises no authority. Transactions.” COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION group. High-water marks are tracked individually for each partner and for each partner contribution. Biglari Holdings and its subsidiaries have made investments into the partnerships over time with each investment separately tracked. The capital contributions made in 2020 earned a profit in excess of the hurdle rate, resulting in an incentive fee of $986,561. An incentive reallocation to Biglari Capital is determined as of December 31 of each year. There were no incentive reallocations from Biglari Holdings to Biglari Capital from 2017 through 2019. The Board reviews the costs against the benefits of the service agreement and is pleased by the Company's total general and administrative expenses since the service agreement went into effect in 2017. 2020. INDEPENDENT PUBLIC ACCOUNTANTS 2019. 2020.2020.2021. 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.2020.20202021 will require the affirmative vote of a majority of the Class A common stock holders present in person or represented by proxy and entitled to vote at the Annual Meeting.2020.2021. Properly dated and signed proxies will be so voted unless shareholders specify otherwise.8philosophy, core principles, and decision-making process.philosophy. 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 20192020 are found in the tables and narrative that follow them.Executive Summarywholly-ownedwholly owned subsidiaries: Steak n Shake Inc., Western Sizzlin Corporation, First Guard Insurance Company, Southern Oil Company, Southern Pioneer Property & Casualty Insurance Company, and Maxim Inc. As CEO of Biglari Holdings, Mr. Biglari oversees the Company’s operating businesses. Mr. Biglari’s incentive compensation is tied to the performance of the operating businesses.of Chief Executive OfficerChief Executive Officer Compensation for Managing the Operating BusinessesIn his capacity as CEOCommittee of the Company,Corporation’s Board of Directors. Because Mr. Biglari earnedwishes that his salary remain unchanged, his annual salary has been $900,000 for more than 10 years and Mr. Biglari has advised the Committee that he would not expect or desire such salary to increase in total directthe future.2019. Mr. Biglari’s salaryeach of the CEOs of Biglari Holdings’ significant operating businesses. He utilizes many different incentive arrangements, with their terms dependent on such elements as the economic potential or capital intensity of the business. The incentives can be large and are always tied to the operating results over which a CEO has not been increased since 2009.Philosophy.with Mr. Biglari (the “Incentive Agreement”), the Compensation Committee of the Board (the “Committee”) sought to embody the pay-for-performance ethos of the Company. The Company’s singular long-term objective is to maximize its per-share intrinsic value. The Company believes that an increase in intrinsic value will eventually be reflected in its stock price. Therefore, the Committee believes it is most appropriate to determine Mr. Biglari’s compensation for our operating businesses by referencewith respect to a return on equityreturn-on-equity methodology. Adjustments are made to the metric sosuch that Mr. Biglari is compensated solely for the Company’s true economic gains.Incentive Design.in each year attributable to our operating businesses.Adjustments are made to changes in shareholders’ equity so the Committee measures only the Company’s economic performance and thus isremains unaffected by non-economic factors.
factors.9(the “Hurdle Rate”)(hurdle rate) above the previous highest level (the “High Water Mark”)(high- water mark). Mr. Biglari will receive 25% of any incremental book value created above the High Water Markhigh-water mark plus the Hurdle Rate.hurdle rate. In any year in which book value declines, our operating businesses must completely recover their deficit from the previous High Water Mark,high-water mark, along with attaining the Hurdle Rate,hurdle rate, before Mr. Biglari becomes eligible to receive any further incentive payment. Our executive compensation philosophy is intended to reward and promote such long-term growth in per-share intrinsic value for the benefit of all shareholders.Incentive Payout. Mr. Biglari did not receive an incentive payment for 2019 and 2018. For 2017, Mr. Biglari received an incentive fee of $7,353,250.Investment Partnershipsfee;fee predicatedsolelyon investment gains, not on assets under management. Income from the investment partnerships is excluded in the calculation of Mr. Biglari’s incentive compensation under the Incentive Agreement. In other words, there is no “double dipping” with fees paid at the partnership level and then at the holding company level. The investments in the investment partnerships are more fully described under “Related Person Transactions”.Compensation of ControllerThe Committee has charged Mr. Biglari with the responsibility of reviewing and determining the compensation of other executive officers, including senior executives of the Company’s major subsidiaries. Factors considered are typically subjective, such as the executive’s performance and any changes in that executive’s functional responsibilities, which were the primary factors used in determining the compensation for the Company’s Controller, Bruce Lewis.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 ArrangementsNeither Mr. Biglari nor Mr. Lewis has a severance agreement, a change-in-control arrangement or an employment agreement with the Company and neither has been granted or holds any stock options or restricted stock awards from the Company. The Corporation does not grant any stock options or other awards.
Transactions.”1020192020, by the Corporation’s Chief Executive Officer and its Controller.Name and
Principal
Position Year Salary Bonus Non-Equity
Incentive All Other
Compensation Total Sardar Biglari 2019 $ 900,000 $ — $ — $ — $ 900,000 Chairman / Chief 2018 900,000 — — — 900,000 Executive Officer 2017 900,000 — 7,353,250 — 8,253,250 Bruce Lewis 2019 $ 455,000 $ 485,000 $ — $ — $ 940,000 Controller 2018 435,000 460,000 — — 895,000 2017 415,000 440,000 — — 855,000 Name and
Principal
PositionYear Salary Bonus Non-Equity Incentive All Other
CompensationTotal Sardar Biglari 2020 $ 900,000 $ — $ — $ — $ 900,000 Chairman / Chief 2019 900,000 — — — 900,000 Executive Officer 2018 900,000 — — — 900,000 2020 $ 480,000 $ 500,000 $ — $ — $ 980,000 Controller 2019 455,000 485,000 — — 940,000 2018 435,000 460,000 — — 895,000 20192020 are fully described under “Related Person Transactions”.ofbetween the annual total compensation of our domestic employees and the annual total compensation of Mr. Biglari, Chairman and Chief Executive Officer.20192020 W-2 wages for all U.S. employees, and equivalent taxable compensation for all non-U.S. employees werewas excluded. The median employee determination included all domestic employees who were employed at December 31, 2019.2020. The compensation of the median employee was $10,000.$9,285. Our median employee works part time.part-time. Therefore, the ratio of the Chief Executive Officer’s compensation ($900,000) to that of the median employee (i.e., part time)a part-time employee) was 90approximately 97 to 1.112019,2020, the Compensation Committee of the Board consisted of Kenneth R. Cooper, Ruth J. Person, John G. Cardwell, and, until his retirement on June 25, 2020, James P. Mastrian. None of these individuals has at any time been an officer or employee of the Corporation. During 2019,2020, 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 Compensation Committee served as an executive officer. (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 910 and 10.11. Based on the Committee’s review and discussions with management, it recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.James P. Mastrian12MayApril 20, 20202021, and the percentage of outstanding shares for (i) each director and nominee, (ii) each Named Executive Officer, and (iii) all directors and executive officers, as a group:Name Title of Class of Stock Shares
Beneficially
Owned Percentage
of Voting Power of Class A Percentage
of Aggregate
Economic
Interest
of Class A
and Class BSardar Biglari Class A 133,171 (1) 64.4 % 58.4 % Class B 1,146,959 (2) Philip L. Cooley Class A 744 (3) * * Class B 7,474 (4) Ruth J. Person Class A 51 * * Class B 511 Kenneth R. Cooper Class A 32 * * Class B 321 James P. Mastrian Class A 32 (5) * * Class B 336 (5) John G. Cardwell Class A — — — Class B — Bruce Lewis Class A — — — Class B — Directors and executive officers as a group (7 persons) Class A
Class B 134,030
1,155,601 64.8 % 58.8 % Name Title of Class of Stock Shares Beneficially Owned Percentage of Voting Power of Class A Percentage of Aggregate Economic Interest of Class A and Class B Sardar Biglari Class A 139,598 (1) 67.5% 63.0% Class B 1,255,830 (2) Philip L. Cooley Class A 744 (3) * * Class B 7,474 (4) Ruth J. Person Class A 51 * * Class B 511 Kenneth R. Cooper Class A 32 * * Class B 321 Edmund B. Campbell, III Class A 27 * * Class B 275 John G. Cardwell Class A — — * Class B 450 (5) Bruce Lewis Class A — — — Class B — Directors and executive Class A 140,452 67.9% 63.4% officers as a group (7 persons) Class B 1,264,861 131)Includes 36,571.7 shares owned directly by The Lion Fund, L.P., 70,937.0 shares owned directly by The Lion Fund II, L.P., 25,663.1 shares owned directly by Biglari Capital Corp., and 0.1 share owned directly by Mr. Biglari. Mr. Biglari has the sole power to vote and dispose of the shares beneficially owned by the foregoing. Mr. Biglari disclaims beneficial ownership of the shares that he does not directly own. See also footnote 1 to the table below.2)Includes 365,726 shares owned directly by The Lion Fund, L.P., 709,377 shares owned directly by The Lion Fund II, L.P., 71,855 shares owned directly by Biglari Capital Corp., and one share owned directly by Mr. Biglari. Mr. Biglari has the sole power to vote and dispose of the shares beneficially owned by the foregoing. Mr. Biglari disclaims beneficial ownership of the shares that he does not directly own.3)Includes 80.0 shares owned by Dr. Cooley’s spouse. Dr. Cooley disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.4)Includes 814 shares owned by Dr. Cooley’s spouse. Dr. Cooley disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.5)Shares owned by Mr. Mastrian’s spouse individually or through the Nancy A. Mastrian Trust dated September 30, 1997. Mr. Mastrian disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.MayApril 20, 20202021, the number and percentage of outstanding shares of our Class A common stock beneficially owned by each person or entity known to be the beneficial owner of more than 5% of our Class A common stock:stock, which is our only class of voting stock.Name & Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class 133,171(1)64.4%67.5% 24,213(2)11.7%1410.6% 1)This information was obtained from a Schedule 13D/A filed with the SEC on November 20, 2019 by The Lion Fund, L.P., The Lion Fund II, L.P., Biglari Capital and Sardar Biglari, and the most recent Form 4 filed with the SEC by certain of the foregoing persons. In aggregate, 36,571.7 shares are directly owned by The Lion Fund, L.P., 70,937.0 shares are directly owned by The Lion Fund II, L.P., and 25,663.1 shares are owned directly by Biglari Capital. Each of Biglari Capital, as the general partner of The Lion Fund, L.P. and The Lion Fund II, L.P., and Sardar Biglari, as Chairman and Chief Executive Officer of Biglari Capital, has the sole power to vote and dispose of the shares owned by The Lion Fund, L.P. and The Lion Fund II, L.P., and Sardar Biglari has sole power to vote and dispose of the shares owned by Biglari Capital. Each of Biglari Capital and Mr. Biglari disclaims beneficial ownership of the shares that he or it does not directly own.2)This information was obtained from a Schedule 13D/A filed with the SEC on May 11, 2020. GAMCO Asset Management Inc. reported that it has sole voting power with respect to 19,500 shares of Class A common stock and sole dispositive power with respect to 20,660 shares of Class A common stock. Gabelli Funds, LLC reported that it has sole voting and dispositive power with respect to 2,650 shares of Class A common stock. Teton Advisors, Inc. reported that it has sole voting and dispositive power with respect to 838 shares of Class A common stock. MJG Associates, Inc. reported that it has sole voting and dispositive power with respect to 25 shares of Class A common stock. Gabelli Foundation, Inc. reported that it has sole voting and dispositive power with respect to 40 shares of Class A common stock. (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.15Investments in the in 2019, 2018 and 2017.2019,2020, the fair value of the Company’s investments in the investment partnerships was $666,123,385. During 2019, the Company received distributions from the investment partnerships of $129,329,000.Services$590,926,016.servicesservice agreement with Biglari Enterprises LLC and Biglari Capital (collectively, the “Biglari Entities”) under which the Biglari Entities provide certain business and administrative related services to the Company. The servicesservice agreement has a five-year term, effective on October 1, 2017. The fixed fee of $700,000 per month can be adjusted annually. The monthly fee remained at $700,000 during 2019.2020. The Company paid Biglari Enterprises $8,400,000 in service fees during 20192020 and 2018.2019. The servicesservice agreement does not alter the hurdle rate connected with the incentive reallocation paid to Biglari Capital by the Company. The Biglari Entities are owned by Mr. Biglari.$239,039$237,156 in compensation from the Company during 2019.2020. Ken Biglari, Sardar Biglari’s father, is a consultant to Steak n Shake. Ken Biglari received $160,000 in consulting fees from the Company during 2019.1620192020 and 2018.Type of Fee 2019 2018 Audit Fees(1) $ 860,350 $ 815,413 Audit-Related Fees(2) 57,500 106,175 Tax Fees(3) 6,471 — All Other Fees(4) — — Total Fees $ 924,321 $ 921,588 (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 Shake’s 401(k) Plan.(3)Deloitte & Touche LLP provided tax consulting services for a transaction during 2019.(4)Deloitte & Touche LLP did not provide any “other services” during the periods.Type of Fee 2020 2019 $ 1,056,000 $ 860,350 132,500 57,500 — 6,471 — — Total Fees $ 1,188,500 $ 924,321 20192020 and 2018,2019, the Audit Committee pre-approved the services reported above.1720192020, with management of the Corporation and Deloitte & Touche LLP, independent public accountants for the Corporation.PCAOB,Public Company Accounting Oversight Board, including those described in Auditing Standard No. 1301, “Communications with Audit Committees.” In addition, the Audit Committee has received the written disclosures and the letter from Deloitte & Touche LLP required by the applicable PCAOBPublic Company Accounting Oversight Board 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.20192020, in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019.James P. Mastrian18·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.2019,2020, 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, except as required by law.192019,2020, 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 Corporation’s Form 10-K is also available through the SEC’s website (www.sec.gov).20212022 Annual Meeting must be received by the Corporation by January 21,December 24, 2021. The proposal must be in accordance with the provisions of Rule 14a-8 promulgated by the SEC under the Exchange Act.20212022 annual meeting of shareholders, notice of a proposal (including a nomination) must be delivered to us no earlier than February 25, 2021January 27, 2022, and no later than March 27, 2021.February 26, 2022. If the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so delivered, or mailed and received, not later than the 90th day prior to such annual meeting or, if later, the 10th day following the day on which public disclosure of the date of such annual meeting was first made.20Sardar Biglari and Chief Executive OfficerMay 21, 202021