News

Pizza Inn board 'frustrating' Newcastle proxy solicitation by delaying annual meeting again

January 14, 2004

DALLAS—Newcastle Partners, which owns a 36-percent stake in 410-unit Pizza Inn, is accusing the company of frustrating its attempts to solicit shareholder approval for proposed board member and bylaws changes by postponing its annual meeting of shareholders for the second time in three months.

Originally scheduled for Dec. 16, 2003, the meeting first was postponed by Pizza Inn until Jan. 21, 2004, and then again until Feb. 11.

In a Jan. 14 filing with the Securities and Exchange Commission (SEC), Newcastle Partners said Pizza Inn's second delay of the meeting has increased the cost of its current proxy solicitation, and shown that Pizza Inn hasn't filed its own "definitive proxy statement" with the SEC.

Via its proxy, Newcastle is seeking: 1. to elect its slate of three nominees to Pizza Inn's board; 2. adopt its proposals to repeal amendments made to Pizza Inn's bylaws just days after Newcastle became the majority shareholder; and 3. be reimbursed for all expenses incurred with its proxy solicitation.

Tension flared between Newcastle and Pizza Inn almost immediately after Newcastle bought a 35-percent share of the company in December 2002, from former Pizza Inn CEO Jeff Rogers. According to SEC filings, Newcastle accused Pizza Inn's current board of changing the company's bylaws to protect the current executive team's jobs.

Should "a change of control" occur (such as shareholder approval of Newcastle's proposals), Pizza Inn would be liable for $7.4 million in parachute payments to its top executives. Current CEO Ronald Parker would receive $5.4 million and three other executives would divide the remaining $2 million.

See related stories ...
* Battle for the Board at Pizza Inn
* Pizza Inn postpones annual meeting for a second time
* SEC filing details battle for Pizza Inn board
* Pizza Inn reschedules annual meeting as proxy battle looms
* Largest Pizza Inn shareholder wants to expand board with two pizza veterans
* Pizza Inn's Q1 '03 comp-sales drop 4.8%