Tom Sandell, CEO of Sandell Asset Management Corporation (“Sandell”), one of the largest shareholders of Bob Evans Farms, Inc. (NASDAQ:BOBE) (“Bob Evans” or the “Company”), commented on the recent announcement that the Company would be delaying its Fiscal 2014 Full-Year and Fourth-Quarter earnings release date from June 17, 2014 to July 8, 2014.
“The decision by Bob Evans to delay its earnings release due to 'weaknesses in internal controls', which we believe relate to matters that should have been resolved some time ago, is further clear evidence of a management team that is incapable of effectively running the Company. We are also deeply concerned that it may reflect a desperate and underhanded attempt to disenfranchise shareholders. In fact, we find it highly suspicious that Bob Evans has scheduled this release for a day shortly after July 3, which we believe is the record date for the Company’s 2014 Annual Meeting. Given the past track record of poor governance established by this current Board, it is difficult for us to take this latest excuse at merely face-value, as it may instead reflect an attempt to prevent investors intent on holding the Board accountable from availing themselves of the true financial picture of the Company prior to the record date.
“In light of this disclosure, which likely relates to matters dating back to those initially disclosed in the Company's 10-K for the fiscal year ended April 26, 2013, we believe that Eileen Mallesch, the Chairperson of the Audit Committee, should immediately resign from the Board of Directors. We note that the Company had spent approximately $1.8 million in the first six months of Fiscal 2014 on 'additional professional expenditures primarily related to ongoing material weaknesses and remediation related activities', an amount that has surely increased. This is yet further evidence of the very real economic damage that has been incurred as a result of Board members that in our opinion have been clearly incapable of providing effective oversight, a fact that will not be lost on institutional and other investors assessing governance matters.