Battle for shareholders' votes continues as Luby's denounces Ramius' nominees

By Lisa Kerner

Charlotte, N.C., Jan. 2 - Luby's, Inc. reached out to its shareholders, once again urging them to reject Ramius Capital Group, LLC's slate of nominees for election to the company's board on Jan. 15. The company sent a similar letter to its shareholders on Dec. 6.

Ramius' nominees are "conflicted and incentivized" to act on the dissident shareholder's behalf rather than in the interest of Luby's shareholders, according to the Dec. 31 open letter to shareholders.

"Each of the Ramius nominees signed an agreement with Ramius under which they have received an upfront payment from Ramius and stand to be paid even more money only after Ramius sells all of its Luby's stock," the letter stated.

Luby's asked its shareholders to vote for its nominees: Dr. Judith B. Craven, Arthur R. Emerson, Frank Markantonis and Gasper Mir III, citing their "relevant and critical expertise."

Craven has health and food safety experience as the head of the Health Department in Houston and as a current board member of Sysco Foods, the company said.

Emerson has been influential in introducing Luby's Spanish-speaking commercials and developing the company's children's programs.

Luby's said Markantonis, with 30 years of restaurant experience, has been instrumental in implementing policies and procedures that save the company millions of dollars per year.

Board chairman Mir has public accounting expertise and has been a member of the board of Hermann Memorial Healthcare. His health care facility experience "complements Luby's culinary services business," according to the company.

Ramius' nominees are:

• Stephen Farrar, former senior vice president, Western Region of Wendy's International, Inc.;

• William J. Fox, a certified public accountant, business adviser and strategy consultant, formerly executive chairman of the board of Nephros, Inc.;

• Brian G. Grube, former chief executive officer and president of Baja Fresh Mexican Grill, a subsidiary of Wendy's; and

• Matthew Q. Pannek, former president and CEO of Magic Brands, LLC and Fuddruckers, Inc.

Luby's claims that Grube presided over a failed expansion strategy at Baja Fresh that was followed by a sale of the company for "only $31 million," or some $250 million less than its original purchase price five years earlier.

Pannek's stint at Fuddruckers was brief, according to Luby's, and the circumstances of his departure from the company have yet to be explained by Ramius.

As for Farrar, Luby's believes his experience at franchise-based Wendy's has little relevance to Luby's "from-scratch cooking and casual dining offering."

Luby's called Fox a director "for hire" with no restaurant experience. Ramius has nominated Fox to four different boards and he was recently rejected by Datascope Corp. shareholders, the letter said.

In addition, Luby's said Ramius "has failed to disclose that Fox was sued for federal securities fraud relating to his role as an executive officer at Revlon and its subsidiary, the Cosmetics Centers."

The election of Ramius' nominees would enable the investor to pursue "its short-term, self-serving financial releveraging scheme at the expense of all shareholders," Luby's letter cautioned.

Luby's board also strongly disagrees with Ramius' idea that the company should sell and leaseback its Luby's-owned real estate, stating that owning provides better operating margins and cash flow returns.

Luby's is a Houston-based restaurant operator.

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