Tuesday, January 13, 2009

Burns out at O'Charley's

I'm a little late with this -- it was on December 24 -- but hey, sue me.

A restaurant operator, O'Charley's Inc., has reaxched agreement with a hedge fund under threat of a proxy contest.

Under the agreement, long-time CEO Gregory Burns is stepping down, effective Fevruary 12.

The hedge fund involved is Crescendo Parties, of which we have ghad cause to speak on this blog before.

O'Charley's operates three restaurant chains, the eponymous O'Charley's, as well as Stone River Legendary Steaks and 99. I'm a regular patron of the Enfield, CT 99 restaurant, so this proxy fight strikes me as more interesting than some I have chronicled.

Burns has been around for a long time. He has been with O'Charley's for 25 years, and has been CEO for 16 of those. What led to his downfall?

An ugly stock chart(Nasdaq: CHUX), for one thing. The common stock was selling for $10 a share at the start of September. Three months later that was down below $2.

Of course, those three months were bad for a lot of listed companies. The Nasdaq 100 and the S&P indexes both show losses of 40% of their respective value over the same period. Still, CHUX lost 80% of its value, so stockholders naturally feel that the loss was twice as bad as it had to be.

More tomorrow.

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