Oklahoma Firefighters Pension and Retirement System, Oklahoma City, sued Bob Evans Farms Inc. directors claiming the board improperly stripped investors of their rights to use a majority vote to amend the restaurant chain's bylaws.
The board of Columbus, Ohio-based Bob Evans unilaterally reinstated a requirement that investors get an 80% supermajority shareholder vote to amend the company's bylaws as part of an effort to help directors keep their seats, the Oklahoma pension fund said in a complaint filed in Delaware Chancery Court in Wilmington. Another investor is seeking support to oust directors.
“When directors of a publicly traded company take such brazen action to render themselves immune from a consent solicitation, the only logical conclusion is that they are motivated by deceit and entrenchment,” the Oklahoma fund said in the Jan. 22 complaint.
The pension fund's case is the second to be filed in Delaware over Bob Evans directors' decision to back the bylaw-supermajority rule. Sandell Asset Management Corp., a New York-based hedge fund that owns 6.5% of the 561-restaurant chain's shares, sued Jan. 14 over the board bylaw decision.
Scott Taggart, a spokesman for Bob Evans, declined to comment Thursday on the Oklahoma pension fund's suit.
Sandell officials have pushed Bob Evans to spin off its food-packaging business, sell real estate and buy back shares to return cash to shareholders. Steven A. Davis, the chain's CEO, rejected Sandell's requests in December. Sandell has said it hired a proxy solicitor while it readies a consent solicitation designed to bring in new board members.
Investors such as Sandell and the Oklahoma pension fund want to be able to change the company's bylaws through a simple majority vote so they can make all directors stand for election at once. Directors' terms are now staggered so a majority of board members don't face a vote at the same time.
Some Bob Evans shareholders have pushed for more than 15 years to have directors all stand for election at once. In 2011, shareholders met the 80% requirement to change the company's bylaws to have a single board election and to wipe out the supermajority rule for such changes.
Later that year, the board overrode those changes without any explanation, according to the Oklahoma pension fund's complaint.