Biglari Holdings Inc (NYSE:BH) Investor Files Lawsuit against CEO Over Alleged Breaches Of Fiduciary Duties

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Company Name(s): 
Biglari Holdings
Case Name: 
Biglari Holdings Shareholder Derivative Lawsuit 07/12/2013
Case Status: 
Lawsuit Filed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Shareholder Derivative Action
Date Filed: 

July 12, 2013 (Shareholders Foundation) - An investor, who currently holds NYSE:BH shares, filed a lawsuit against the CEO of Biglari Holdings Inc over alleged breached their fiduciary duties in connection with certain business dealings between Biglari Holdings and the Chairman and CEO, Sardar Biglari.

The plaintiff claims that the CEO of Biglari Holdings Inc breached his fiduciary duty when he made a licensing deal with himself that would make it too expensive for Biglari Holdings Inc to ever fire him.

On November 5, 2010, the board of directors of Biglari Holdings Inc approved a compensation package for its Chairman and CEO, providing for a salary of $900,000 and additional payments of up to $10 million each year the company's book value increases by 6%.

On January 11, 2013, Biglari Holdings Inc announced that the company had entered into a Trademark License Agreement with its Chairman and CEO. According to the agreement, the company must pay its Chairman and CEO 2.5% of the company's gross revenues for five years if there is a change of control at Biglari Holdings Inc, if its Chairman and CEO is terminated from the company without cause, or if its Chairman and CEO resigns from his employment at the company due to an involuntary termination event.

Biglari Holdings Inc reported that its Total Revenue rose from $709.20 million for the 52 weeks period that ended on Sept.28, 2011 to $740.21 million for the 52 weeks period that ended on Sept. 26, 2012 and that its Net Income for those time periods declined from $34.56 million to $21.59 million.

On July 12, 2013, NYSE:BH shares closed at $418.70 per share.