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Pizza Inn reschedules annual meeting as proxy battle looms

November 12, 2003

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THE COLONY, Texas—Hoping to avoid a potential costly proxy battle over nominations to its board of directors, Pizza Inn has rescheduled its annual meeting from Dec. 16 to Jan. 21, 2004, to fully consider the nominees.

According to multiple filings with the Securities and Exchange Commission, the 410-store buffet chain's largest shareholder, Newcastle Partners LLP, planned to nominate three directors to the company's board. However, doing so would bring the number of directors to nine, two more than the current maximum allowed in the company's bylaws, and that would require a vote by shareholders.

At issue is the pizza chain's concern that the addition of the Newcastle-nominated directors could, according to one filing, "cause a 'Change of Control' as defined in the employment agreements between the Company and each of Ronald W. Parker (president, chief executive officer and a director), B. Keith Clark (senior vice president, corporate development, general counsel and corporate secretary), Ward T. Olgreen (senior vice president of franchise operations and concept development) and Shawn M. Preator (chief financial officer and vice president of distribution).

Such a change could effect the voluntary or forced termination of current executive officers, who would then be entitled to lump-sum payments relative to their employment agreements. Any such payout, the filing said, would "have a material adverse effect on the Company's financial position and results of operations."

In late October, Newcastle nominated Steven J. Pully (a current board member, whose term expires this year), Barry M. Barron and Robert B. Page to Pizza Inn's board. Both Barron and Page have extensive experience as executives with companies such as Pizza Hut and Papa John's (see related story Largest Pizza Inn shareholder wants to expand board with two pizza veterans and commentary OPINION: If you think fiction's interesting, take a look at reality in the pizza news).

However, according to an SEC filing a Nov. 7 letter sent from Newcastle to Pizza Inn stated that Newcastle "intends to substitute Ramon D. Phillips for Robert B. Page as one of its nominees for election at the annual meeting."

On Nov. 11, Pizza Inn received yet another letter from Newcastle stating its intention to substitute Page for Barron as a board nominee.