Sardar Biglari has found a fifth person to rubber stamp his decisions. Biglari Holdings(BH) filed an 8-K yesterday noting it had added James Mastrian to its Board, increasing its size to six members. From the filing:
On August 14, 2012, the Board of Directors (the “Board”) of Biglari Holdings Inc. (the “Company”) increased the size of the Board to six members and elected James P. Mastrian as a director of the Company. The Board also appointed Mr. Mastrian to serve on both the Audit Committee and the Governance, Compensation and Nominating Committee.
Mr. Mastrian, age 69, retired from Rite Aid Corporation in August 2008. He was the special advisor to the Chairman and Chief Executive Officer. Prior to that, from October 2005 to August 2007, he was the Chief Operating Officer of Rite Aid Corporation.
Interestingly, the filing fails to note that Mr. Mastrian is also a Director at CCA Industries(CAW), in which Biglari Holdings owns a 12.8% stake, and on whose Board Sardar Biglari and Phil Cooley, Biglari Holding’s Vice Chairman, sit. This is obviously public information, but is a glaring omission in this filing. Mr. Mastrian owns no shares of CCA accoriding to the most recent proxy statement despite having served on the Board for some time.
Mr. Mastrian’s executive experience was almost entirely at Rite Aid(RAD) a perpetually troubled drugstore chain whose stock has underperformed for years while competing with some of the country’s most successful retailers, Walgreens(WAG) and CVS(CVS). In an industry with robust products, Rite Aid has long been headed towards bankruptcy.
There is nothing in Mr. Mastrian’s history to suggest that he will be a strong independent Director at Biglari Holdings, and the failure to mention his service at CCA is a disturbing omission. Mr. Biglari has said that the company should be viewed as a’ jockey stock’ and as such he has packed his Board with sycophantic groomsmen, of whom Mr. Mastrian is only the latest.
Disclosure: The author holds shares in BH and CAW
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What you are talking about is a staggering continual over-riding of corporate governance. When do you turn around and go short rather than long?
Good question. It’s unlikely I’ll go short, because I think betting against him is too risky in this case. I have been steadily reducing my stake in BH, not sure when/if I’ll exit completely, but it this point, it’s quite small.
Your tone is great considering the disclosure.
Interesting development if you own CAW. It would seem to make it more likely there will be some transaction to acquire all of CAW by BH.
As I mentioned below, I have been selling over time. I sold more on Friday, in fact. I think Biglari is all in on CBRL right now, and nothing will happen with CAW until that is resolved.