Proxy Battle Forming at Denny’s

I have to admit that I’m not a big fan of Denny’s (DENN), but I’m almost always sympathetic to any proxy battle. There aren’t nearly enough of these.
Stock certificates aren’t just pieces of paper, they’re legal ownership in a company. If the owners don’t like how the company is being run, they have every right to try and make a change. The incumbent board usually acts offended by a proxy battle which I never understand.

Spartanburg-based Denny’s Corp. issued a scathing response Wednesday to a group of investors waging a proxy fight against the company’s executive leadership.
In a letter to shareholders, Denny’s slammed members of the Committee to Enhance Denny’s, saying they are “playing fast and loose with the truth,” and pursuing their own personal interests rather than the company’s.
On Tuesday, the group issued its own letter to shareholders more than a month after first publicizing its views in a news release. The letter blasted leadership on a number of issues, including the company’s declining stock price, drop in guest traffic, failure to grow system-wide restaurants and ceding the top market spot to competitor IHOP.
“To this date, there still has been no formal communication from this group despite the fact that the company proactively reached out to them directly in response to their public filings,” Denny’s said in its letter. “Instead, these very recent stockholders chose to launch a costly and distracting hostile proxy contest in the hopes of changing the company’s course to pursue actions that we believe serve only their own narrow interest and not those of Denny’s stockholders.”
Led by investment firms Oak Street Capital Management and Dash Acquisitions, the group owns 6.3 percent of the company’s outstanding shares.
Shareholder voting rights allows for investors to state their case for change once they obtain 5 percent interest.

Posted by on April 15th, 2010 at 2:39 pm


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