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25% of book value gains above 5% for Biglari?

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The Incentive Bonus Agreement provides Mr. Biglari the opportunity to receive annual incentive compensation payments based on the Company’s book value growth for each fiscal year.  If the Company exceeds a 5% annual book value growth hurdle, Mr. Biglari would receive an incentive compensation payment equal to 25% of the Company’s book value in excess of that hurdle.  Mr. Biglari will not receive incentive compensation payments under the Incentive Bonus Agreement unless the Company’s book value exceeds a 5% annual growth rate over the Company’s previous highest book value achieved during the term of the agreement, or the “high water mark.”  Accordingly, in a fiscal year where book value declines, the hurdle for subsequent fiscal years will require the complete recovery of the deficit from the last high water mark, plus a 5% annual growth rate from the last high water mark.  Determinations of book value and the incentive compensation payments to Mr. Biglari under the Incentive Bonus Agreement are subject to the approval of the Governance, Compensation and Nominating Committee of the Board of Directors of the Company.

oh and they bought the lion fund.

An unusual compensation arrangement for a public company or should I say a public hedge fund?  No mention of what is happening with his $900,000 salary.  The existence of a large salary and a potentially very lucrative incentive compensation arrangement appears to be very greedy and to an extent double dipping.


I agree. If he eliminated the 900k salary then this would be applauded and looked upon as a CEO who really cares about his sharehoalders. I am afraid that it didn't take Mr. Biglari very long to show his true colors.
It also shows that those opposed to the name change saw something that some others didn't, a very big ego.
The next thing to be announced will be an annual "Sardar Biglari Day" at the Steak n shake restaurants. Milkshakes double the price: all proceeds to Sardar Biglari and family.


--- Quote from: Dorsia1 on April 30, 2010, 04:02:31 PM --- If he eliminated the 900k salary then this would be applauded and looked upon as a CEO who really cares about his sharehoalders.

--- End quote ---

I would not be clapping.

This is not an alignment of interests with those of shareholders. I''m sure there will be attempts to spin this as shareholder friendly and interest alignment. This is not that. This is greed.

Just think of how aligned his interests would be if he were allowed 75% of book value gains > 5%  ???

While this percentage may not be a large amount initially...With all these mergers he is pursuing (and planning to pursue) BH will be a multi-Billion dollar company in no time. The larger this company gets the larger his compensation will be when he grows book value.

This is fine for a hedge fund, as they have to grow AUM legitimately. BH isn't a hedge fund it is a public corporation. All Biglari has to do is empire build to get a raise if this passes.

I am interested in seeing what some of the guys on the board will say about this one.
Maybe he is aligning his interest with shareholders or something like that. Call a spade a spade.


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