Does Cracker Barrel Have Something to Hide?

Cracker Barrel
Cracker Barrel

If you take enough swings, eventually you'll land a punch.

Cracker Barrel Old Country Store (CBRL) is doing a little backpedalling after activist investor Sardar Biglari caught what appears to be an oversight in the restaurant chain's proxy statement.

Cracker Barrel describes incoming chairman James Bradford as a former CEO of a publicly traded glass maker in its latest proxy statement, but that's not entirely accurate. Bradford was CEO at AFG Industries from 1992 through 1999, but the company was only public until 1988.

When Activist Investors Attack

Armed with a 17.3% stake in Cracker Barrel and hoping to shake things up to increase shareholder value, Biglari Holdings (BH) isn't letting go.

"We believe that Cracker Barrel has an obligation to all its shareholders to respond immediately and to inform them whether Cracker Barrel's public filings and statements regarding Mr. Bradford's purported experience are true or false," Biglari wrote on Tuesday afternoon, a day after his company raised the accusations.

After Cracker Barrel defended the actions on Tuesday night -- saying that it was an honest misunderstanding that led to the description of Bradford as "a former NYSE company CEO" -- Biglari attacked again.

"This inaccuracy is not a misunderstanding," Biglari wrote in response, pointing out that it was repeated in both the 2011 and 2012 proxy statements. "It is misleading."

Much Ado About Dumplings

There have certainly been many cases of lamentable resume embellishments in recent corporate history.

Yahoo! (YHOO) CEO Scott Thompson stepped down earlier this year after it was revealed that he never received the computer science degree that was part of his profile for years.

Six years ago it was RadioShack's (RSH) Dave Edmondson resigning as CEO after it was discovered that he made up his psychology and theology degrees from an unaccredited college in California.

Is the Bradford flap that bad? Even Cracker Barrel skeptics may feel that Biglari is barking up the wrong tree this time. Bradford was CEO at a firm that was technically a "former NYSE company," so it would be understandable if even he missed the misstatement.

Perhaps more importantly, Cracker Barrel is rolling these days.

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The stock hit a fresh all-time high last month. The company has been juicing up its dividend and its share buyback efforts. Shares have soared 68% over the past year alone.

If Biglari's accusations were saucy enough the stock's gains wouldn't matter. Nobody wants a liar making big decisions at a company. However, this appears to be a minor oversight at a company where shareholders aren't exactly clamoring for change after being treated to healthy gains.

Biglari by all means should keep taking his swings, but it seems as if this soft punch has missed its target.

Motley Fool contributor Rick Munarriz does not own shares in Cracker Barrel. The Motley Fool has sold shares of RadioShack short. Motley Fool newsletter services have recommended creating a covered call position in Cracker Barrel Old Country Store.

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