On Friday, both the incumbent board and the dissident slate in the Lubys proxy contest filed their "definitive proxy soliciting materials" with the SEC.
(By the way, the company itself uses the apostrophe, re-positions it, or drops it according to context, so Lubys, Lubys', and Luby's are each correct.)
As I mentioned yesterday, the Pappas brothers run Lubys. I wasn't so clear yesterday about the fact that the Pappas' also run privately owned restaurant chains under variants of the family name: Pappadeaux, Pappasito's, Pappas Bros. Steakhouse, Pappas Seafood House and Pappas Bar-BQ.
The dissidents argue that this creates a conflict. The interests of the shareholders of Lubys might well be served by competitive actions vis-a-vis those privately owned chains that the Pappas' themselves are unlikely to undertake.
Indeed, the Pappas own the land on which some of the Lubys restaurants sit, and within this landlord-tenant relationship there is further room for dealings at the expense of the tenant's shareholders.
The incumbent board replies that the Pappas' are among the largest sharehholders in Lubys, so their interests are aligned with those of the other shareholders, that they are only two members of a ten-member board, which has "worked diligently to supervise the efforts of Management in turning the company around," and that in fact the Pappas' have turned the company around.
"Luby's today has the financial strength to execute on its strategic growth plan...."
Further, the incumbents take the position that the "conflict of interest" shoe is on the other foot. I'll write tomorrow about Luby's case against Ramius.
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