Humane Society takes Steak n Shake fight to shareholders

October 27, 2014

The Humane Society of the United States has set its sights on Biglari Holdings, the investment firm that owns Indianapolis-based Steak n Shake, saying it has ignored requests to adopt animal welfare methods like its competitors. But instead of wielding pickets and slaughterhouse photos, the Humane Society is trying a more genteel approach: shareholder activism.

The Humane Society owns about $2,000 worth of shares in Biglari Holdings, which was trading for $362.50 per share Monday afternoon, down 1 percent. Their holdings aren't enough to move the market, but it is the minimum required to file a shareholder motion, and on Friday the animal welfare organization did just that, asking that the board of directors appoint an independent director as chairman.

The proposal is a public swipe at Sardar Biglari, the chief executive and chairman of Biglari Holdings. By holding the title of CEO and chairman, the Humane Society says, Biglari has too much control, an issue that encompasses the operations of the entire company, including his stance on animal welfare.

“Mr. Biglari told me personally that he does not believe animal welfare presents bottom-line risks,” said Matthew Prescott, the Humane Society’s food policy director. “I asked him what he seems to know about the restaurant business that McDonald’s, Burger King, and virtually every other chain apparently are missing and he had no viable answer.”

Biglari could not be reached for comment. Based in San Antonio, he also owns the magazine Maxim and the restaurant chain Western Sizzlin. His attempts to take over Cracker Barrel have been repeatedly rebuffed.

Prescott said he believes that both Steak n Shake and Western Sizzlin buy eggs from caged hens and pork from producers who confine sows in gestation crates, practices that competitors are eliminating as part of their animal welfare policies. The Humane Society’s shareholder effort last year against Tyson Foods led to that company altering its position on gestation crates, Prescott says; it has also introduced shareholder proposals at Kraft and Cracker Barrel praising their animal welfare efforts.

This is not the first time animal rights activists have bought Biglari shares in hopes of changing the company’s practices. In 2010, in perhaps a preview of what’s to come, the Biglari board rejected a shareholder proposal from the People for the Ethical Treatment of Animals, or PETA, to use a more humane method for killing its poultry.

“The corporation is concerned with its customers’ wishes, not adhering to its competitors’ actions,” the board said, in a public filing. “The board will not impose personal views involving shareholders’ money.”


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