Sandell Asset Management Corp. (“Sandell”), the beneficial owner of approximately 1.7 million shares, or 6.5%, of Bob Evans Farms, Inc. (NASDAQ:BOBE) (“Bob Evans” or the “Company”), filed a complaint in the Court of Chancery of the State of Delaware seeking a declaratory judgment that the unilateral attempt by the Board of Directors (the “Board”) to strip shareholders of their rights to amend the Company’s Bylaws (the “Bylaws”) by majority vote was invalid.
Thomas Sandell, CEO of Sandell Asset Management, stated, “We find it outrageous that the Board unilaterally adopted, without shareholder approval, a requirement that an 80% supermajority shareholder vote be obtained in order for shareholders to amend the Bylaws. This amendment was made less than three months after shareholders had overwhelmingly voted to reduce such a supermajority requirement to a majority threshold, and in any event was made in contravention of the terms of the then existing, Board-proposed bylaw. We believe that the Board’s unilateral action to strip shareholders of their rights demonstrates this Board’s complete contempt for its shareholders.”
Mr. Sandell further stated, “As we have previously indicated, it is our intention to pursue a consent solicitation to empower the shareholders to seek change at Bob Evans. This remains our intention irrespective of the outcome of this litigation. Assuming this lawsuit is resolved successfully, however, we intend to ask the shareholders to expand the size of the Company’s Board and fill such vacancies with new directors who are more focused on delivering value to the shareholders, who are the true owners of Bob Evans.”
Mr. Sandell also noted, “The more we investigate this Board, the more concerned we are at the numerous connections both among Board members themselves, as well as between various Board members and Steven Davis, that in our view reek of cronyism. We have become convinced that dramatic governance change is necessary to reign in what we believe are the irresponsible spending habits and poor decisions made by Mr. Davis, the Company’s Chairman and CEO. It is unfortunate that we are forced to go to court to preserve and enforce our rights, but we believe it is important that shareholders have as expansive an ability as possible to pursue meaningful change at Bob Evans. Fortunately, shareholders do not have to wait until the Company’s Annual Meeting to seek change, as they can take action by written consent.”