Biglari Holdings Inc (NYSE:BH) Investor Investigation Over Certain Business Dealings Bbetween Biglari Holdings And Its Chairman And CEO

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Company Name(s): 
Biglari Holdings
Affected Securities: 

June 21, 2013 (Shareholders Foundation) - An investigation on behalf of current long term investors in shares of Biglari Holdings Inc (NYSE:BH) was announced concerning whether certain officers and directors of Biglari Holdings Inc breached their fiduciary duties in connection with certain business dealings between Biglari Holdings and its Chairman and CEO, Sardar Biglari.

The investigation by a law firm focuses on certain business dealings between Biglari Holdings Inc and its Chairman and CEO.

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%.

Then 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.

According to the investigation based on Biglari Holdings Inc 2012 revenue, its CEO and Chairman would receive approximately $18.35 million of the company's $38.82 million operating income if one of the above stated events occurred.

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.

Shares of Biglari Holdings Inc (NYSE:BH) traded in February 2011 as high as $458.31 per share in February 2011 and declined to $296.39 per share in September 2011. In 2012 NYSE:BH shares reached $416.67 per share in April 2012.

The total compensation of certain top officials at Biglari Holdings Inc increased between 2011 and 2012. For instance the Chairman and CEO’s total compensation rose from over $4.92 million in 2011 to over $10.91 million in 2012.

On June 21, 2013, NYSE:BH shares closed at $404.21 per share.