Slide 1: March 2015
March 2015 www.biglariholdings.com
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER This presentation may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These statements are based on current expectations and are subject to a number of risks and uncertainties that cou
Slide 3: Table of Contents
TABLE OF CONTENTS Page I. Executive Summary 3 II. Biglari Holdings Overview 18 – Steak n Shake 20 – First Guard 37 – Maxim 40 – Investments 45 III. Biglari Holdings’ Corporate Governance 49 IV. Board of Directors 57 V. What’s Wrong with Groveland? 65 2
Slide 4: I. Executive Summary
I. Executive Summary BIGLARI HOLDINGS Inc.
Slide 5: About Biglari Holdings
ABOUT BIGLARI HOLDINGS Biglari Holdings Inc. (“BH,” “Biglari Holdings,” or the “Company”) is a holding company owning wholly owned subsidiaries Steak n Shake Operations, Inc. (“Steak n Shake”), Western Sizzlin Corporation (“Western”), First Guard Insurance Company (“First Guard”), and Maxim Inc. (
Slide 6: A Track Record of Creating Shareholder Value
A TRACK RECORD OF CREATING SHAREHOLDER VALUE 350% Since Sardar Biglari became CEO, our total shareholder return 300% has outpaced the S&P 500 by 175% 266.8% 250% Total Shareholder Return 200% 150% 100% 91.8% 50% 0% -50% Biglari Holdings S&P 500 Index -100% Aug-08 Feb-09 Sep-09 Mar-10 Oct-10 May-11
Slide 7: Building Long-Term Shareholder Value
BUILDING LONG-TERM SHAREHOLDER VALUE Biglari Holdings is a dynamic enterprise with an entrepreneur at the helm whose objective is to build long-term shareholder value SINCE 2008, SARDAR HAS BEEN EXTREMELY TRANSPARENT ABOUT THE COMPANY’S LONG-TERM OBJECTIVES AND HAS CAUTIONED THAT ONLY LONG-TERM
Slide 8: Building Long-Term Shareholder Value (Cont.)
BUILDING LONG-TERM SHAREHOLDER VALUE (CONT.) “We are honored to be stewards of your capital, we value your long-term allegiance, and we anticipate a continuing, prosperous partnership.” Letter from the Chairman, December 7, 2012 (emphasis added) “BH is an exceedingly adaptive organization; because s
Slide 9: The Evolution of Biglari Holdings
THE EVOLUTION OF BIGLARI HOLDINGS $550 Aug.-Sep. 2013 Aug.-Sep. 2014 Biglari Holdings Biglari Holdings $500 completes completes rights offering rights offering $450 March 2010 266.8% Biglari Holdings $400 acquires Western Price Per Share $350 $300 February 2014 March 2014 Biglari Holdings Biglari H
Slide 10: Our Performance vs. the S&P 500
OUR PERFORMANCE BIGLARI HOLDINGS’ PERFORMANCE VS. THE S&P 500 INDEX Annual Percentage Change Share price of Year(1) Biglari Holdings(2) S&P 500 Index(3) 2008 . . . . . . . . . . . . . . . . . . . . . -12.1 -26.8 2009 . . . . . . . . . . . . . . . . . . . . . 172.4 26.5 2010 . . . . . . . . . . . . .
Slide 11: Our Business Is Capital Allocation
COMPOSITION OF BIGLARI HOLDINGS Investments Premium burger, A restaurant chain Our investments are Acquired in February Acquired in March fries, and milkshake known for steak, managed by Biglari 2014 2014 restaurant chain seafood, and buffet- Capital Media business Underwriter of 545
Slide 12: Capital allocation quote
“Our economic objective is to allocate capital based upon maximizing per-share intrinsic value.” – Sardar Biglari Letter from the Chairman, December 6, 2013 11
Slide 13: Biglari Holdings Versus Other Leading Capital Allocators
BIGLARI HOLDINGS VERSUS OTHER LEADING CAPITAL ALLOCATORS 350% Biglari Holdings Berkshire Hathaway Icahn Enterprises 300% Loews Corporation 266.8% 250% Total Shareholder Return 200% 150% 100% 89.8% 86.0% 50% 0% 2.0% -50% -100% Aug-08 Feb-09 Sep-09 Mar-10 Oct-10 May-11 Nov-11 Jun-12 Dec-12 Jul-13
Slide 14: Our Plan for Continued Success
OUR PLAN FOR CONTINUED SUCCESS Biglari Holdings is a dynamic enterprise with an entrepreneur at the helm whose objective is to build long-term shareholder value We are devoted to pursuing acquisitions to expand our ownership of other businesses THE PROPOSITION FOR SHAREHOLDERS OF BIGLARI HOLDING
Slide 15: Biglari Holdings Corporate Governance
BIGLARI HOLDINGS CORPORATE GOVERNANCE Diverse Board with the applicable skills and experience needed to oversee the Company Transparent articulation of Company objectives and expectations to shareholders (e.g., Chairman’s Letters, lengthy Q&A sessions at Annual Meetings) Executive compensation direc
Slide 16: Our Board of Directors
OUR BOARD OF DIRECTORS Sardar Biglari Chairman & CEO – Entrepreneur, Operator, and Investor Philip L. Cooley Vice Chairman – Financial Expertise William L. Johnson Lead Independent Director – Insurance Expertise Kenneth R. Cooper Independent Director – Real Estate and Legal Expertise James P. Mastri
Slide 17: Groveland's Takeover Scheme
GROVELAND’S TAKEOVER SCHEME A small firm called Groveland Capital LLC (“Groveland”) with an immaterial position (0.167%) in Biglari Holdings is currently attempting a takeover of the Company for its own benefit GROVELAND HAS NO SKIN IN THE GAME – Groveland and Nick Swenson have a miniscule stake
Slide 18: Questions for Groveland
QUESTIONS FOR GROVELAND ind What qualifications do the Grovela id what is minees have for the Board an ~ their plan? an ho on the Groveland slate has restaur: @ Whoo ; ° ting experience: = 2 ho vany restaurants did they opera e@ How -store sales What was their record of same-st e growth? @ What expe
Slide 19: II. Biglari Holdings Overview
II. Biglari Holdings Overview
Slide 20: Composition of Biglari Holdings
COMPOSITION OF BIGLARI HOLDINGS Biglari Holdings uses a capital allocation strategy that redeploys cash generated at its subsidiaries to enhance the Company’s intrinsic value growth Investments Premium burger, A restaurant chain Our investments are Acquired in February Acquired in March fr
Slide 21: Steak n Shake within 90 days of insolvency
Under prior management Steak n Shake was within 90 days of insolvency 20
Slide 22: Steak n Shake Was Failing
STEAK N SHAKE WAS FAILING After the Company was unable to retain an outside candidate as CEO, Sardar Biglari assumed the role of CEO in August 2008 – one month before the collapse of Lehman Brothers in the midst of the Great Recession $350 Steak n Shake Same-Store Sales Declines 2005 2006 2007 200
Slide 23: Steak n Shake resurrected from near bankruptcy
In the face of daunting economic headwinds, Sardar Biglari resurrected Steak n Shake from near bankruptcy and initiated one of the great brand turnarounds in the history of the restaurant industry 22
Slide 24: Sardar Biglari Resurrected Steak n Shake
SARDAR BIGLARI RESURRECTED STEAK N SHAKE As CEO of Steak n Shake, Cumulative Same-Store Customer Traffic Growth 40% Sardar was and continues to 37.8% be involved in all key day-to- day management decisions, 35% 35.1% including supply chain 32.3% logistics, marketing, menu offerings, training, and
Slide 25: Steak n Shake's Remarkable Turnaround
STEAK N SHAKE’S REMARKABLE TURNAROUND When Sardar assumed management responsibilities, Steak n Shake was losing nearly $100,000 per day However, by FY 2010, the chain was making over $100,000 per day As a result of Sardar’s focused turnaround strategy, Steak n Shake was awarded the Golden Chain
Slide 26: Same-Store Sales Growth Versus the Knapp-Track Index
SAME-STORE SALES GROWTH VERSUS THE KNAPP-TRACK INDEX Cumulative Same-Store Sales 30% Prior Management Current Management 27.3% 25% 23.7% 21.0% 20% 16.6% 15% 11.9% 10% 5% 4.1% 1.7% 0.5% 0% -0.2% -2.1% -2.3% -5% -3.0% -5.8% -5.9% -5.5% -6.4% -6.6% -7.6% -7.5% -10% Steak n Shake Knapp-Track Index (1) -
Slide 27: 6-Year Cumulative Same-Store Sales Growth
6-YEAR CUMULATIVE SAME-STORE SALES GROWTH 6-Year Cumulative Same-Store Sales 27.3% 17.7% 13.1% 6.4% 5.8% 4.2% 0.0% -0.3% -2.2% -2.3% -2.4% -4.0% -5.5% -6.4% -7.5% -11.3% -17.9% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% Source: Public filings 26
Slide 28: Cumulative Same-Store Customer Traffic Growth
CUMULATIVE SAME-STORE CUSTOMER TRAFFIC GROWTH Cumulative Same-Store Customer Traffic Growth 40% 37.8% 35.1% 35% 32.3% 30% 27.6% 25% 21.8% 20% 15% 10.1% 10% 5% 2009 2010 2011 2012 2013 2014 Note: Fiscal year 27
Slide 29: Customer-centric quote
“We want to excite our present diners so they will visit our stores more often, and we want to attract new patrons. To capture a larger clientele, we will work vigorously with a relentless and tireless eye on the customers’ preferences. Every decision we make is customer-centric in order to build an
Slide 30: Sales Growth Without Large Capital Expenditures
SALES GROWTH WITHOUT LARGE CAPITAL EXPENDITURES Cumulative Capital Expenditures $350,000 Prior Management $321,533 Current Management Cumulative Capital Expenditures Cumulative Capital Expenditures $300,000 $290,090 $321,533 $62,152 $250,000 Capital Expenditures ($ in thousands) $221,447 WE GREW STE
Slide 31: Repositioning the brand on burgers, fries and shakes
While many restaurants, including Steak n Shake under prior management, expanded their menus in an effort to increase sales, Sardar Biglari had the foresight to reposition the Steak n Shake brand to focus on burgers, fries, and shakes 30
Slide 32: Customer-Centric Approach
CUSTOMER-CENTRIC APPROACH Because of Steak n Shake’s relentless pursuit of maximizing efficiency in its operations, the Company has maintained constant prices despite rising commodity costs $7.25 Average Check vs. Consumer Price Index Growth 14% $7.07 12% $7.00 10% Cumulative Change in CPI(1) $6.7
Slide 33: Consistent Focus on Cost Efficiencies
CONSISTENT FOCUS ON COST EFFICIENCIES 34% Food & Paper Cost Percentage 33.7% 33.4% 33% 32.7% 31.9% 32% 31.2% 30.9% 31% 30% 29.8% 29% 28.8% 28% 27% 26% Source: Public filings Note: Food & paper cost percentage calculated by dividing food & paper costs for company-operated restaurants by sales for com
Slide 34: Consistent Focus on Cost Efficiencies (Cont.)
CONSISTENT FOCUS ON COST EFFICIENCIES (CONT.) Sardar Biglari reengineered the cost structure with a focus on operational and strategic initiatives to increase efficiency and improve cash flow Restaurant-level labor costs have improved 430 bps since FY 2008 Improved labor management systems Adj
Slide 35: The Future of Steak n Shake Is Franchising
THE FUTURE OF STEAK N SHAKE IS FRANCHISING The franchise model provides Franchise Fees and Royalties annuity-like cash flow that reduces $14.0 operating risks and increases return Prior Management Current Management on invested capital In FY 2014, 124 franchised $12.2 restaurants generated $209.
Slide 36: Creation of Non-Traditional Units
CREATION OF NON-TRADITIONAL UNITS We have opened additional avenues of growth and diversification in nontraditional venues, including airports, motorways, and universities San Antonio International Airport Western Kentucky University We are further leveraging the Steak n Shake brand through licens
Slide 37: Expanding the Steak n Shake Brand
EXPANDING THE STEAK N SHAKE BRAND Steak n Shake is growing its global brand awareness through disciplined expansion in high-profile locations Cannes, France STEAK N SHAKE’S BRAND VALUE HAS DRAMATICALLY IMPROVED UNDER BIGLARI HOLDINGS 36
Slide 38: First Guard
FIRST GUARD On March 19, 2014, we entered the property/casualty insurance business by acquiring First Guard, a gem of a company, which is a direct underwriter of commercial trucking insurance First Guard is a low-cost operator with extraordinary efficiency FIRST GUARD HAS NEVER REGISTERED AN U
Slide 39: Ed Campbell quote on First Guard
“Having fielded numerous inquiries over the years about selling First Guard Insurance Company, the only pitch that ever resonated was Sardar Biglari’s. The framework for our deal came together during our first meeting and basically boiled down to ‘keep doing what you’re doing.’” – Ed Campbell, Found
Slide 40: First Guard (Cont.)
FIRST GUARD (CONT.) In their nearly 50 years in the insurance business, the Campbell family has maintained a noteworthy record and earned an extraordinary reputation Over the years, Ed III had been approached by other buyers, but the idea of his creation left in the hands of a “strategic” buyer
Slide 41: Maxim Transformation
MAXIM TRANSFORMATION On February 27, 2014, we acquired Maxim, a cash-depleting business that we are attempting to convert into a cash-generating business Although our preference is to purchase a well-managed business with terrific economic dynamics and at a prudent price, we will also venture in
Slide 42: Maxim Transformation (Cont.)
MAXIM TRANSFORMATION (CONT.) Over the past year there have been numerous upgrades March 2014 March 2015 $5.99 cover price $3.99 cover price 7 ¾ x 10 ½ paper size 8 ¾ x 10 ⅞ paper size Improved paper quality 41
Slide 43: Maxim Has Undergone a Major Upgrade
MAXIM TRANSFORMATION (CONT.) – New Team Member MAXIM HAS UNDERGONE A MAJOR UPGRADE 42
Slide 44: Maxim Is a Global Brand
MAXIM IS A GLOBAL BRAND Russia Czech Republic Ukraine Italy Croatia United States South Korea India Mexico Thailand Maxim Indonesia publishes 13 international South Africa Australia editions MAXIM IS DISTRIBUTED IN OVER 70 COUNTRIES AND IN EIGHT LANGUAGES 43
Slide 45: Maxim's Brand Is Being Invigorated
MAXIM’S BRAND IS BEING INVIGORATED Print Ad Revenue March 2014 vs. March 2015 $2,500 $2,100.6 $2,000 215% $ in thousands $1,500 $1,000 $666.3 $500 $0 March 2014 March 2015 UNDER OUR OWNERSHIP, MAXIM’S PRINT ADVERTISING REVENUE HAS INCREASED DRAMATICALLY 44
Slide 46: Investments
Investments Because of our successful turnaround at Steak n Shake, we were able to reallocate its surplus cash into investments The investment of that cash has led to substantial returns for our shareholders INVESTMENT RETURNS: 364.3% 45
Slide 47: Biglari Holdings' Investment Track Record
BIGLARI HOLDINGS’ INVESTMENT TRACK RECORD Investments Annual Returns 69.1% 70% 60% 50% 40% 33.5% 32.4% 30% 25.1% 19.9% 20.6% 20% 16.0% 14.0% 15.1% 13.7% 13.7% 10% 2.1% 0% 2009(1) 2010 2011 2012 2013 2014 Biglari Holdings Investment Portfolio(2) S&P 500 Index (3) (1) Non-annualized partial year retur
Slide 48: Cumulative Returns
CUMULATIVE RETURNS Investments Cumulative Returns 400% Biglari Holdings’ Investments Gains to Loss Ratio(1) 364.3% 350% Realized & Unrealized Gains: $491.6 million Realized & Unrealized Losses: $1.2 million 300% 285.0% 250% 200% 150% 133.9% 127.7% 105.8% 100% 82.0% 60.1% 55.4% 50% 34.0% 31.2% 19.9%
Slide 49: Cumulative Investment Gains
CUMULATIVE INVESTMENT GAINS Investments Investment Gains $490.4 $500 $450 $400 $342.7 $350 $300 $250 $200 $150 $98.9 $100 $50 $38.1 $22.8 $1.3 $0 2009 2010 2011 2012 2013 2014 Note: Calendar year, except 2009 which is a partial period of August 20, 2009 through December 31, 2009 48
Slide 50: III. Biglari Holdings' Corporate Governance
III. Biglari Holdings’ Corporate Governance
Slide 51: Summary of Our Corporate Governance Practices
SUMMARY OF OUR CORPORATE GOVERNANCE PRACTICES We have made a concerted effort to ensure that our corporate governance culture is in alignment with our stated financial goals Diverse Board with applicable skills and experiences needed to oversee the Company Lead Independent Director Executive c
Slide 52: Overview of Compensation
OVERVIEW OF COMPENSATION March 2014 March 2015 Sardar Biglari receives compensation as Sardar Biglari receives fees as manager of CEO of Biglari Holdings and for managing Biglari Capital, which oversees our our operations investments B IGLARI C APITAL C ORP. INVESTMENTS HAVE INCREASED IN VALUE BY 36
Slide 53: The CEO Incentive Agreement
BIGLARI HOLDINGS CEO INCENTIVE AGREEMENT The Incentive Agreement is solely for Sardar’s role as CEO CEO Incentive Agreement Design Sardar Biglari receives incentive compensation equal to 25% of the incremental adjusted book “Measuring Point” +6% value over the Measuring “Hurdle Rate” Growth Point “H
Slide 54: CEO Incentive Agreement (Cont.)
BIGLARI HOLDINGS CEO INCENTIVE AGREEMENT (CONT.) Overall, we believe the incentive design for our CEO: Aligns with our objective of increasing the per-share intrinsic value of the enterprise Serves as both a short- and long-term incentive through the required purchase of our common stock in the
Slide 55: Biglari Capital's Fees
BIGLARI CAPITAL’S FEES Our investments are managed by Biglari Capital, which has a fee structure that comprises no management fee but only a 25% performance fee after a 6% hurdle rate and subject to a high-water mark Biglari Capital only earns fees for performance since there is no management fe
Slide 56: Biglari Capital's Fees Versus Comparable Public Companies
BIGLARI CAPITAL’S FEES VERSUS COMPARABLE PUBLIC COMPANIES Illustrative Fees Paid Per $100 Million Invested $10 Biglari Capital The Carlyle Group $9 Fortress Investment Group $8 Greenlight Capital Re Oaktree Capital Group $7 Steel Partners Holdings Third Point Reinsurance $6 ($ in millions) $5 $4 $3
Slide 57: Biglari Capital Fees Versus "2 & 20" Fees
BIGLARI CAPITAL FEES VERSUS “2 & 20” FEES $14 $12 BIGLARI CAPITAL ONLY RECEIVES 2 & 20 Fund FEES FOR PERFORMANCE Biglari Capital $10 $8 $6 $4 $2 $0 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% BIGLARI CAPITAL’S FEE STRUCTURE IS CONSIDERABLY MORE FAVORABLE TO THE LIMITED PARTNER THAN THE STANDARD 2 & 20
Slide 58: IV. Board of Directors
IV. Board of Directors BIGLARI HOLDINGS Inc.
Slide 59: Sardar Biglari
SARDAR BIGLARI Experience ■ Chairman & CEO at Biglari Holdings ■ Chairman, President & Chief Executive Officer at Western ■ Chairman, President & Chief Executive Officer at Steak n Shake ■ Chairman & CEO at Biglari Capital Corp. “Biglari Holdings is an enterprise embodying entrepreneurship. Our unwa
Slide 60: Philip L. Cooley – Financial Expertise
PHILIP L. COOLEY – FINANCIAL EXPERTISE Experience ■ Vice Chairman of Biglari Holdings ■ Former Director of CCA Industries ■ Former Vice Chairman of Western ■ Holds a Ph.D. from the Ohio State University, an M.B.A. from the University of Hawaii, and a B.M.E. from Kettering University “It has been a p
Slide 61: William L. Johnson – Insurance Expertise
WILLIAM L. JOHNSON – INSURANCE EXPERTISE Experience ■ Lead Independent Director of Biglari Holdings ■ President & CEO at Berean Group ■ Former Vice Chairman of Fremont Michigan InsuraCorp ■ Former Chairman, President & CEO of SEMCO Energy ■ Holds Bachelors and Masters degrees from Central Michigan U
Slide 62: Kenneth R. Cooper – Real Estate and Legal Expertise
KENNETH R. COOPER – REAL ESTATE AND LEGAL EXPERTISE Experience ■ Independent Director of Biglari Holdings ■ Former Director of Western ■ Attorney in the private practice of real estate law at the Kenneth R. Cooper Law Office ■ Holds a J.D. from St. Mary's University “It was quite a privilege to have
Slide 63: James P. Mastrian – Marketing Expertise
JAMES P. MASTRIAN – MARKETING EXPERTISE Experience ■ Independent Director of Biglari Holdings ■ Former COO at Rite Aid ■ Held senior marketing positions at Revco D.S., Inc. and The Sherwin-Williams Company ■ Former Director of CCA Industries ■ Holds a B.S. from the University of Pittsburgh “I have s
Slide 64: Ruth J. Person – Management Expertise
RUTH J. PERSON – MANAGEMENT EXPERTISE Experience ■ Independent Director of Biglari Holdings ■ Professor and former Chancellor at the University of Michigan- Flint ■ Former Member, Board of Managers, of Hurley Medical Center ■ Former Chancellor and Professor at Indiana University Kokomo ■ Holds a Ph.
Slide 65: Our Directors Have Never Sold a Single Share
OUR DIRECTORS HAVE NEVER SOLD A SINGLE SHARE OF BIGLARI HOLDINGS STOCK 64
Slide 66: V. What's Wrong with Groveland?
V. What’s Wrong with Groveland?
Slide 67: Timeline of Events
TIMELINE OF EVENTS January 25, 2015 November 21, 2014 Biglari Holdings’ Lead Groveland, a holder of Independent Director, on 3,345 shares, or $1.2 behalf of the Board, notifies million of Biglari Holdings January 9, 2015 Groveland that the Board stock, publicly announces Biglari Holdings arranges a
Slide 68: Groveland's ownership of Biglari Holdings = 0.167%
Groveland’s ownership of Biglari Holdings = 0.167% 67
Slide 69: Who Is Groveland?
WHO IS GROVELAND? Groveland is a small business started by Nick Swenson in 2009 Groveland is too small to be required to disclose its assets under management with the SEC Swenson has had no success managing other public companies, yet he is running a full slate to take over the Company Grove
Slide 70: Groveland: No Skin, No Plan, Unqualified Nominees
Groveland: NO SKIN IN THE GAME NO PLAN UNQUALIFIED NOMINEES ULTERIOR MOTIVES
Slide 71: What Does Groveland Want?
WHAT DOES GROVELAND WANT? On January 13, 2015, Groveland delivered a letter to the Board proposing the following actions: A redemption of the Company’s interest in The Lion Fund Our investments have generated returns of 364.3% since August 2009, when Sardar Biglari started managing our portfol
Slide 72: Nick Swenson quote on skin in the game
“We believe the Board may not have acted in the best interest of shareholders because its interests are not aligned with the interests of the Company’s shareholders, shareholders like us who have put a significant amount of their own capital at risk by buying the Company's stock in the open market.
Slide 73: Swenson Has a Dreadful Track Record of Stewardship
WHY WOULD SHAREHOLDERS EVER VOTE FOR NICK SWENSON? Nick Swenson is a 46-year-old manager with Groveland Holds three board positions and is trying to get elected to a fourth – Biglari Holdings would be his fifth public company board position Has seven current positions at five different organiz
Slide 74: Relationship with Convicted Felon Tom Petters
RELATIONSHIP WITH CONVICTED FELON TOM PETTERS In 2006 Nick Swenson‘s former firm, Whitebox, invested with fellow Minneapolis native Tom Petters to acquire Sun Country Airlines SWENSON AND PETTERS SERVED TOGETHER ON SUN COUNTRY’S BOARD OF DIRECTORS FROM 2006 TO 2007 On September 24, 2008, Pette
Slide 75: Nick Swenson's Takeover of Air T
NICK SWENSON’S TAKEOVER OF AIR T In March 2012, Nick Swenson requested that the company appoint both Swenson and Seth Barkett to the board of Air T In June 2012, the company announced that it would nominate Swenson to the board at the 2012 annual meeting (the board was expanded from nine to 10 s
Slide 76: Swenson's governance track record
Swenson has a track record of using corporate governance arguments as the basis for his proxy fights to gain control of companies But once he has assumed control he implements governance practices far worse than those he previously criticized Air T: Swenson ran a campaign against the Company’s poi
Slide 77: Timeline of Nick Swenson's Takeover of Air T
TIMELINE OF NICK SWENSON’S TAKEOVER OF AIR T Apr. 4, 2013 Apr. 25, 2013 Swenson discloses letter asking for Swenson asks for an increase in Mar. 9, 2012 Mar. 30, 2012 Jun. 5, 2012 a reconstituted board, removal of the poison pill’s threshold from Swenson Mar. 26, 2012 Swenson formally Air T appoints
Slide 78: Why Would Shareholders Trust Swenson?
NICK SWENSON’S TAKEOVER OF AIR T (CONT.) How much time does Swenson spend acting as CEO of Air T? Swenson holds three board positions and is trying to get elected to a fourth Biglari Holdings would be his fifth public company board position HOLDS SEVERAL POSITIONS AT FIVE DIFFERENT ORGANIZAT
Slide 79: Are There Other Undisclosed Members of Groveland's Group?
SWENSON’S RELATIONSHIP WITH BIGLARI HOLDINGS SHAREHOLDER ANDREW OSBORNE Groveland’s settlement with Air T included Nick Swenson recommending Andrew Osborne from Kingsbury Run Capital, LLC to the board Osborne is a Biglari Holdings shareholder Osborne began calling Biglari Holdings shareholders
Slide 80: Swenson's Attempt to Take Advantage of Pro-Dex Shareholders
SWENSON’S ATTEMPT TO TAKE ADVANTAGE OF PRO-DEX SHAREHOLDERS In 2014, Pro-Dex, Inc., under the leadership of Nick Swenson as Chairman, launched a rights offering on terms that we believe were less than favorable to shareholders In the rights offering, shareholders had to exercise their rights or
Slide 81: Why Would Shareholders Ever Vote for Seth Barkett?
WHY WOULD SHAREHOLDERS EVER VOTE FOR SETH BARKETT? Seth Barkett is a 31-year-old employee of Groveland He appears to have had four jobs in six years after graduating from Wheaton College in 2006 He writes articles promoting stocks on a Seeking Alpha blog He has no financial commitment to the
Slide 82: Seth Barkett's Facebook profile
WHY WOULD SHAREHOLDERS EVER VOTE FOR SETH BARKETT? (CONT.) From Seth Barkett’s public Facebook profile facebook.com (as of March 6 2015) DOES BARKETT HAVE GOOD JUDGMENT? 81
Slide 83: Seth Barkett's Trading in Biglari Holdings
SETH BARKETT’S TRADING IN BIGLARI HOLDINGS Number Purchased Holdings Post- Transaction Date (Sold) Transaction December 13, 2012 20 20 December 14, 2012 80 100 February 28, 2013 25 125 March 4, 2013 March 15, 2013 10 135 Sold his entire position 15 150 March 20, 2013 10 160 one month prior to his Ma
Slide 84: Groveland's Trading in Biglari Holdings
GROVELAND’S TRADING IN BIGLARI HOLDINGS Number Holdings Post- Number Holdings Post- Transaction Date Purchased (Sold) Transaction Transaction Date Purchased (Sold) Transaction October 24, 2012 352 352 April 2, 2013 100 2,400 October 26, 2012 298 650 April 3, 2013 100 2,500 November 8, 2012 25 675 Au
Slide 85: Groveland's "Proven Track Record"
GROVELAND’S “PROVEN TRACK RECORD” Why does Groveland not file a Form 13F? What is Groveland’s actual performance? Why did Swenson leave Whitebox if he was a “founder” and grew AUM by more than 1,000%? Why has Swenson been unable to replicate his “Whitebox success” at Groveland? www.grovelandcapital.
Slide 86: Groveland's Other Nominees
GROVELAND’S OTHER NOMINEES Groveland assembled a low-quality slate of proposed directors for shareholders to consider Outside of Nick Swenson, the Groveland slate owns no shares and has remarkably little public board experience HOW DID GROVELAND RECRUIT THIS SLATE? WHAT WAS ITS RATIONALE FOR
Slide 87: Would Anyone Entrust Their Investment to This Group?
GROVELAND NOMINEES LACK EXPERIENCE AND KNOWLEDGE TO RUN BIGLARI HOLDINGS 5+ Years 5+ Years on a as a Public Restaurant Number of BH Public Board Company CEO Operator Insurance Marketing Publishing Shares Owned Nick Swenson 345 Seth Barkett ZERO Tom Lujan ZERO Jame
Slide 88: Groveland Has Attempted to Mislead Shareholders
GROVELAND HAS ATTEMPTED TO MISLEAD BIGLARI HOLDINGS SHAREHOLDERS Consistent with its overall lack of financial sophistication and poor judgment, Groveland has grossly misrepresented numerous facts about Biglari Holdings in its public proxy statement Groveland makes numerous misrepresentations; h
Slide 89: Misrepresenting Our Performance
MISREPRESENTING OUR PERFORMANCE Groveland Misrepresentation “THE COMPANY’S STOCK PRICE HAS UNDERPERFORMED ITS BENCHMARK INDICES AND PEER GROUP.” Groveland Schedule 14A, March 12, 2014 BIGLARI HOLDINGS’ PERFORMANCE VS. THE S&P 500 INDEX Annual Percentage Change Share price of Year(1) Biglari Holdings
Slide 90: Misrepresenting Our Revenue Growth
MISREPRESENTING OUR REVENUE GROWTH Groveland Misrepresentation Revenue Growth as Presented by Groveland Revenue 2002 2003 2004 2005 2006 2007 2008 (Old Mgmt.) $459.0 $499.1 $553.7 $606.9 $638.8 $654.1 $611.3 CAGR 4.9% Revenue 2008 2009 2010 2011 2012 2013 2014 (Current Mgmt.) $611.3 $628.7 $673.8 $7
Slide 91: Misrepresenting Our SG&A
MISREPRESENTING OUR SG&A Groveland Misrepresentation Groveland did not add the “selling” part of SG&A into a majority of the comps they provide Groveland left out advertising expense for the following companies: In failing to properly derive SG&A for a majority of their comps, was Groveland attempti
Slide 92: Misrepresenting Our SG&A (Cont.)
MISREPRESENTING OUR SG&A (CONT.) Groveland Misrepresentation Groveland compares a diversified holding company’s unadjusted SG&A margin, which includes the expenses of an insurance company and a publishing firm in a turnaround stage, to that of restaurant companies 91
Slide 93: Misrepresenting Our Restaurant G&A
MISREPRESENTING OUR RESTAURANT G&A Groveland Misrepresentation Groveland uses FY 2009 as the baseline, even though FY 2009 represents current management’s first full year Adjusted G&A Percentage(1) 8.0% Our G&A percentage has declined 7.6% substantially since FY 2008 7.5% Since FY 2008 our G&A overh
Slide 94: Misrepresenting Our Operating Performance
MISREPRESENTING OUR OPERATING PERFORMANCE Groveland Misrepresentation “Over the past year, the Company’s Operating Income has declined from $20.7 million in fiscal 2013 (a 2.7% margin) to $14.3 million in fiscal 2014 (a 1.8% margin), a decline of 30.9%. Over the past three years, the Company’s Opera
Slide 95: Misrepresenting Our Fractional Ownership of Corporate Aircraft
MISREPRESENTING OUR FRACTIONAL OWNERSHIP OF CORPORATE AIRCRAFT Groveland Misrepresentation “According to the FAA Registry, since Mr. Biglari became CEO the Company has acquired interests in three Gulfstream Aerospace G-IVs, as well as an interest in one Cessna Citation X-750. BH’s interests in four
Slide 96: Misrepresenting Our Stock-Based Compensation Practices
MISREPRESENTING OUR STOCK-BASED COMPENSATION PRACTICES Groveland Misrepresentation Groveland’s proxy statement contains a pledge that Groveland’s nominees intend to agree to “not issue any stock or options to the board” We suspended indefinitely all stock option awards to Directors in 2009 and have
Slide 97: Misrepresenting Our Operating Performance
MISREPRESENTING OUR OPERATING PERFORMANCE Groveland Misrepresentation “The Company’s operating performance with Mr. Biglari at the helm has been worse than that of those predecessors he so criticized in 2008!” Groveland Schedule 14A, March 12, 2014 Cumulative Same-Store Sales 30% 27.3% Prior Managem
Slide 98: Questions for Groveland
QUESTIONS FOR GROVELAND ind What qualifications do the Grovela id what is minees have for the Board an ~ their plan? an ho on the Groveland slate has restaur: @ Whoo ; ° ting experience: = 2 ho vany restaurants did they opera e@ How -store sales What was their record of same-st e growth? @ What expe
Slide 99: Closing quote from Sardar Biglari
“We are honored to be stewards of your capital, we value your long-term commitment, and we anticipate a continuing, prosperous partnership.” – Sardar Biglari 98
Slide 100: Contact Information
CONTACT INFORMATION Shareholders Bruce H. Goldfarb/Charles Garske/Michael Fein (212) 297-0720 / (877) 279-2311 info@okapipartners.com 99