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BREAKING: Steak n Shake dissident named chairman

June 19, 2008
A dissident investor who promised to overhaul the struggling Steak n Shake Co. now will get his chance as the company's chairman.

Steak n Shake said today that Sardar Biglari has been appointed chairman, replacing Interim Chairman Wayne L. Kelley.

Biglari and his San Antonio-based Lion Fund have been agitating for tighter cost controls, improved service and a shift to more franchised locations since shortly after they began buying Steak n Shake shares in August 2007.

The 30-year-old investor had sought to take over as chairman immediately after winning two board seats in March, but encountered resistance from sitting board members. The company named board member Wayne Kelley as interim chairman and CEO, and elevated Chief Financial Officer Jeffrey Blade to the post of interim president.

Undeterred, Biglari added former Steak n Shake executives and other investors to his dissident group and continued to buy shares, adding more than 105,000 shares to an 11-percent stake in May alone.

In a statement today, Biglari said one of his and the board's first priorities will be to find a permanent CEO. Until then, Kelley will remain as interim CEO.

"As Steak n Shake's new Chairman, I wholeheartedly look forward to helping lead the company to the creation of value for all its shareholders," Biglari said in the statement. "We will begin by taking needed steps to close the gap between Steak n Shake's intrinsic business value and its stock price, which we believe considerably underrates that value."

Shares in Steak n Shake closed at $6.37 today, down 9 cents. Shares also were down slightly in after-hours trading.

In March, Biglari and adviser Philip Cooley unseated Alan Gilman, the chairman and acting CEO of the chain, and another former CEO, James Williamson Jr., for board seats.

One month later, after he was denied the role of chairman, Biglari revealed that two executives with longtime ties to Steak n Shake and a top Texas restaurant executive had joined his quest to overhaul the chain.

Joining Biglari: S. Sue Aramian, a former board member the company once described as a "modern-day founder" of the restaurant chain; Charles E. Arnett, a former partner in Kelley & Partners Ltd., the investment firm led by company patriarch E.W. Kelley before his 2003 death; and Tim Taft, a former top executive at Whataburger and Pizza Inn, two restaurant chains headquartered in Texas.

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