Red Robin Gourmet Burgers Inc.’s third-largest shareholder, Vintage Capital Management, has called a special meeting to oust five of seven directors at the casual dining chain, setting the stage for a fight for control of a business that has underperformed rivals for years.
“Given the Board’s unwillingness to pursue a transparent and fulsome review of strategic alternatives, in accordance with the certificate of incorporate and bylaws of the Company, we are today providing to the Secretary of the Company a request to convene a special meeting of stockholders,” Vintage said in a letter filed with the SEC Wednesday morning. “At this meeting, we intend to propose, among other things, to remove five directors, representing a majority of the Board, and direct the replacement of those directors with highly qualified directors.”
The move comes after Red Robin refused to meet with Vintage in recent months as the investment fund built an 11.6% position. As CorpGov explained in an article Tuesday, Red Robin elected to implement a poison pill and hire defense advisors including investment bank Evercore and public-relations firm Joele Frank.
“The Board will carefully review Vintage’s request to convene a Special Meeting of Red Robin Stockholders and respond in due course,” Joele Frank said in a statement late Wednesday. “Red Robin’s Board comprises established industry leaders with deep operational, financial, leadership and marketing expertise, among other skillsets, that align with the Company’s strategic plan to position Red Robin for significant, sustained stockholder value creation and long-term success.”
Red Robin likely faces a difficult battle given the company’s poor operating and financial performance in recent years. The restaurant industry has a history of successful activist campaigns at companies that have disappointed shareholders. In 2014, Darden Restaurants, also advised by Joele Frank, engaged in a proxy fight with Starboard Value that resulted in the ouster of all 12 directors.
Vintage could not be reached for comment Wednesday.
John Jannarone, Editor-in-Chief