Marcato Wins Buffalo Wild Wings Board Battle, CEO Smith to Retire
The contentious proxy battle for the Buffalo Wild Wings (NASDAQ: BWLD) board is over, and Marcato is the clear winner. The activist hedge fund of Mick McGuire took three board seats and Sally Smith is set to retire by the end of the year.
McGurie will join the board, as will Sam Rovit, the CEO of food supplier CTI Foods who was called an “expert in corporate transformation” by Marcato. Rovit was also favored by Buffalo Wild Wings, which said in a statement that he “has a distinguished record of achievement and brings unique insights and skills in the food service and consumer sectors.” It was some of the limited common ground between Marcato and the board during the proxy battle.
Also joining the board is Scott Bergren, a former CEO of Pizza Hut, and Janice Fields, the former COO of McDonald's. The full board of directors will be Cynthia Davis, Andre Fernandez, Janice Fields, Harry Lawton, Jerry Rose, Sam B. Rovit, Harmit J. Singh, Scott Bergren and Richard "Mick" McGuire III.
"We are very pleased that our fellow BWLD shareholders recognize that additional change on the Board is warranted to return Buffalo Wild Wings to a path of growth and long-term value creation," said McGuire in a statement. "We will bring the fresh perspectives, restaurant industry expertise and oversight the BWLD Board needs to spearhead improvements at the company. Scott, Sam and I are eager to roll up our sleeves, and work closely with the incumbent directors to drive a strategy to make Buffalo Wild Wings a winning company again."
The shareholders meeting kicked off with an odd start, hinting at the fireworks to come. Immediately, Chairman of the Board Jerry Rose began the meeting by announcing it would be delayed for an hour. When it resumed, McGuire was given the floor, and said again that the company needed “a change in direction. The operating trends are not good.”
It was then that Rose announced Smith would be retiring by the end of the year.
"Sally has delivered countless contributions to Buffalo Wild Wings for more than two decades and much of our success to date is directly attributed to her leadership," said Rose, in a statement. "Under her guidance and stewardship, Buffalo Wild Wings has transformed into an industry leader, and we look forward to continuing to work together to ensure a seamless transition of executive leadership."
Smith joined the company nearly 21 years ago, building it from less than 100 locations to a more than $2 billion company with north of 1,200 restaurants.
"I am proud of Buffalo Wild Wings' tremendous success. We have made great strides in executing our strategic plan and continuing to innovate to stay ahead of the competition," said Smith in a statement after the meeting. "I will focus on leading Buffalo Wild Wings and driving value-creating change until we are ready to make a smooth transition. I am confident that the company, including its excellent management and board, are solidly positioned for its next phase of growth and development. I would like to thank the entire team at the home office, in the field and in the restaurants, as well as all of our franchisees, for their hard work and commitment over our more than 20 year history together and look forward to watching the company's next chapter of growth."
The company announced that a “leading executive search firm” would being helping find a replacement.
The finally proxy tally came in a press release after the meeting. Shares of Buffalo Wild Wings rose more than 5% after the news that Marcato won three of it’s nominations.
It was a contentious battle between the board and Marcato, which holds 9.9 percent of the shares. Advisors and investors were split up until the final hours. There was mixed encouragement from proxy advisors Institutional Shareholder Services (ISS) and Egan Jones; which called for the addition of McGuire. The firms also recommended Bergren, Rovit and Fields.
Proxy advisory firm Glass Lewis put its full endorsement behind the Buffalo Wild Wings nominations. The company franchisee association, Franchise Business Services, also endorsed the Buffalo Wild Wing plan saying, “while we appreciate Marcato Capital’s investment in the business, we believe their proposed 90-percent franchised model is heavily flawed.”