Buffalo Wild Wings execs have 'not put their money where their mouth is,' activist says
Activist hedge fund manager Mick McGuire is lobbying for changes at popular wing restaurant Buffalo Wild Wings.
McGuire, who runs Marcato Capital Management, has been pushing for the company to franchise more of its restaurants since July and even nominated four directors to the company's board in February.
On Wednesday, McGuire once again took aim at Buffalo Wild Wings, publishing a presentation for investors that argued the executives' interests were not closely aligned with the wing chain's shareholders.
"Since its IPO in 2003, Buffalo Wild Wings' Board and Management team have sold the vast majority of all stock ever owned," McGuire said in a statement. "In our view, this lack of long-term ownership has contributed to failures of governance and oversight, poor capital allocation discipline and the severe lack of urgency in navigating the difficult operating environment. Shareholders deserve a Board and management team that is willing to commit its own capital alongside them."
McGuire noted that none of the Buffalo Wild Wings executives currently owns shares in the company and only one director has ever executed an open-market purchase of the stock.
He also argued that B-Dubs management team has been using equity incentive plans to purchase shares at a lower price and then sell them on the market to make cash.
"Buffalo Wild Wings leadership has not put their money where their mouth is," McGuire said.
Buffalo Wild Wings responded by saying that its directors' interests are "closely aligned" with those of its shareholders, noting that its team owns "significant equity interests" in the company.
"Virtually all trading of the company's common stock owned by management — who receive approximately half of their compensation in performance-based stock awards — is executed under preexisting plans that are commonly adopted for personal financial planning purposes," the company said in a statement.
Marcato owns 5.6 percent of the company and is hoping to get McGuire and three other nominated directors onto the board.
The other nominees are Scott Bergren, former CEO of Yum Brands, Sam Rovit, who has 20 years of experience in the food service industry and Lee Sanders, who held leadership roles at TGI Fridays and Johnny Rockets. In February, when the directors were proposed, Buffalo Wild Wings said it would evaluate the nominees independently.
Buffalo Wild Wings also took issue with Marcato's characterization of its stock performance, saying in the last five years, its shares appreciated more than 80 percent and rose more than 470 percent over the last 10 years.
"We believe the stock performance is compelling evidence of the effectiveness of the board and management, and their focus on the creation of long-term shareholder value," the company said.