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Breeden Tells CNBC He Plans to Shake Up Applebee's Board

Richard Breeden, the former head of the Securities and Exchange Commission turned activist fund manager, told CNBC's David Faber that his fund's plans to shake up the boardroom of Applebee's followed months of discussions with executives at the restaurant chain.

In late March, Breeden Capital filed a proxy solicitation to elect four new board members to Applebee's International.

Breeden said Applebee's management sat on their hands and failed to support the stock with share buybacks, as it fell below $20 amid steady declines in operating performance.

"They weren't looking for how to change the company, they weren't looking for how to fix the problems," Breeden said. "To our eyes, they were pretty much following the status quo. It did become clear to us that they were either unwilling to listen carefully to what we were saying or they were unable to bring themselves to take the necessary actions."

The company had offered two board seats to Breeden and a partner on the 12-seat board. But Breeden Capital, which holds about 4 million, or 5.4% of oustanding shares, turned down the offer, opting to proceed with its proxy campaign.

"Applebee's performance record demonstrates to us that shareholders need a fresh and stronger voice within the Applebee's boardroom," Breeden wrote in a letter to shareholders.

Breeden is seeking to elect a minority contingent that also includes Patton Boggs lawyer Laurence Harris, Breeden Capital founding partner Steven Quamme and Raymond Seitz, non-executive chairman of Sun-Times Media Group. Applebee's is proposing to re-elect four incumbent directors to the board.

Breeden said in the proxy filing that if elected, the nominees will push to "reduce compensation of both senior officers and board members" and link that compensation "directly to comparative success among peer companies in generating shareholder value," reduce costs and other measures.

Applebee's said on March 21 it plans to close 24 of 528 restaurants in an effort to cut costs. Including franchises, there are a total of 1,942 Applebee's restaurants.

The chairman of the SEC from 1989 to 1993, Breeden was the court-appointed monitor of WorldCom following the telecom's infamous accounting scandal, and filled similar roles following blowups at Hollinger and KPMG.