J. Alexander's — Proxy Contest (May 2019)
22 slides from J. Alexander's's proxy contest presentation, May 31, 2019
Slide 1: Ancora Advisors Presentation
Ancora Advisors Presentation May 2019
Slide 2: Ancora Disclaimer
Ancora Disclaimer This presentation is for discussion and general informational purposes only. It does not have regard to the specific investment objective, financial situation, suitability, or the particular need of any specific person who may receive this presentation, and should not be taken as a
Slide 3: Table of Contents
Table of Contents Introduction 4 Executive Summary 5 Company Overview 6 Ancora’s J. Alexander’s Ownership 7 J. Alexander’s Shareholder Returns 8 Strategic Issues 9 Governance Issues 14 Operational Issues 16 Equity Incentive Plan 18 Summary 19 Ancora Overview 20 Ancora Advisors LLC 3
Slide 4: Introduction
Introduction Ancora Advisors, LLC urges shareholders of J. Alexander’s Holdings, Inc. to withhold their votes from the re‐election of Timothy T. Janszen and Ronald B. Maggard, Sr. to the Board of Directors of JAX By withholding their votes for these directors, shareholders will send a clear message
Slide 5: Executive Summary
Executive Summary › The Board unanimously supported the 99 Restaurants deal, which valued JAX at $11.00 per share, but unanimously rejected a preliminary proposal to acquire the Company at $11.75 by Ancora Advisors (“Ancora Proposal”) Strategic › The Board has shown a willingness to pursue strategic
Slide 6: J. Alexander's Company Overview
J. Alexander’s Company Overview Company Description Key Financials ($ in millions, except per share) • J. Alexander’s is an owner and operator of 46 Total enterprise value $300.0 $242.3 restaurants across 16 states, with headquarters in $217.9 $219.6 $233.3 Share price $10.50 $250.0 Shares out 14.7
Slide 7: Ancora's J. Alexander's Ownership
Ancora’s J. Alexander’s Ownership Ancora’s JAX Share Ownership, as Percentage of Total Outstanding (Year End) 12.0% 10.0% 9.2% 8.7% 8.8% 8.0% 6.0% 4.0% 3.2% 3.0% 2.0% 0.0% 0.0% Spin‐Off 2015 2016 2017 2018 Today › Ancora is a long‐term shareholder of J. Alexander’s, acquiring shares shortly after th
Slide 8: J. Alexander's Shareholder Returns
J. Alexander’s Shareholder Returns The major large and small cap U.S. indices and JAX’s peer group have materially outperformed J. Alexander’s since the spin off in 2015 J. Alexander’s Cumulative Price Returns Since Spin‐Off vs. Major Indices J. Alexander’s TSR Since Spin‐Off vs. Peers 60.0% 1-Year
Slide 9: Strategic Issues: Key Dates and Events
Strategic Issues: Key Dates and Events JAX Share Price $14.00 $13.00 $12.00 H I $11.00 B G C D E $10.00 F $9.00 A $8.00 $7.00 $6.00 7/3/17 10/3/17 1/3/18 4/3/18 7/3/18 10/3/18 1/3/19 4/3/19 › A) Aug 2017: Board announces conflicted 99 Restaurants transaction › B) Sept 2017: Marathon sends JAX Board
Slide 10: Strategic Issues: Ancora Proposal
Strategic Issues: Ancora Proposal Ancora Proposal JAX Share Price $13.00 $12.00 Ancora offer $11.75 $11.50 $12.00 $11.00 $11.00 $10.50 24% $10.50 $10.00 $9.45 $10.00 $9.50 $9.00 $9.00 $8.00 $8.50 $8.00 $7.00 $7.50 $6.00 $7.00 Unaffected share price Preliminary offer 11/30/18 12/30/18 1/29/19 2/28/19
Slide 11: Strategic Issues: 99 Restaurants Transaction
Strategic Issues: 99 Restaurants Transaction › Although the Board claimed the Ancora Proposal “dramatically undervalues the company”, it was more than willing to engage in a change of control transaction with 99 Restaurants at $11.00 per share that was riddled with conflicts of interest › In August
Slide 12: Strategic Issues: 99 Restaurants Transaction (cont.)
Strategic Issues: 99 Restaurants Transaction (cont.) › The proposed 99 Restaurants deal would have seen J. Alexander’s public shareholders relinquish control of the Company for $11.00 per share, a 9% premium to the pre‐announced closing price › J. Alexander’s agreed to subject itself to a no shop re
Slide 13: Strategic Issues: 99 Restaurants Transaction (cont.)
Strategic Issues: 99 Restaurants Transaction (cont.) J. Alexander’s and 99 Restaurants – “Before and After” Pre-Transaction Entities Post-Transaction ("JAX NewCo") J. Alexander's 99 Restaurants Group % Equity Stake New port Global Outside shareholders JAX shareholders 47.5% Advisors 99 Restaurants I
Slide 14: Governance Issues: Conflicts of Interest
Governance Issues: Conflicts of Interest In addition to the highly conflicted 99 Restaurants transaction, JAX Board members further enriched themselves at the expense of shareholders through the Black Knight Advisory Services (“BKAS”) agreement › As part of its spin‐off from FNF, JAX entered into a
Slide 15: Governance Issues: Stale Board Composition and Dubious Practices
Governance Issues: Stale Board Composition and Dubious Practices Board composition should be troubling to shareholders › No women or diversity on 6‐member Board › No Board turnover or refreshment since spin‐off from FNF › Average age is 67+ Highly problematic corporate governance practices › Classif
Slide 16: Operational Issues: Deteriorating Returns, Failure to Meet Stated Targets
Operational Issues: Deteriorating Returns, Failure to Meet Stated Targets Management and the board have consistently failed to appropriately set and meet shareholder expectations, with unit growth meaningfully below publicly issued targets and continued deterioration of returns on invested capital s
Slide 17: Board Response Shows Lack of Strategic Initiatives to Drive Value
Board Response Shows Lack of Strategic Initiatives to Drive Value › In the Board’s response to the Ancora Proposal, it stated: › “Allowing Ancora, or any buyer, to acquire the Company at a bargain price in order to reap the benefits of recent substantial investments in new restaurants and the termin
Slide 18: Equity Incentive Plan
Equity Incentive Plan Ancora also recommends that shareholders vote AGAINST the Amended and Restated 2015 Equity Incentive Plan › This amended plan increases the number of shares available to be issued by 1,350,000 shares, or an additional 9.19% of the shares outstanding › We believe this dilution i
Slide 19: Summary
Summary › J. Alexander’s Board of Directors has poorly represented outside shareholders since the 2015 spin off, with manifold examples of the Board engaging in conflicted transactions › TSR underperformance speaks for itself and we believe there is a direct correlation between the industry low EBIT
Slide 20: Ancora Firm Overview
Ancora Firm Overview Ancora Advisors LLC 20
Slide 21: Ancora Firm Overview
Ancora Firm Overview With top‐tier portfolio managers, unique investment FOUNDED AUM strategies and an entrepreneurial spirit, Ancora delivers tailored solutions so you can achieve more … on your terms. 2003 $6.9 billion Our team is attentive, communicative and down to earth OFFICES OWNERSHIP Deep a
Slide 22: Contact Information
Contact Information 6060 Parkland Boulevard Suite 200 Cleveland, OH 44124 216‐825‐4000 www.ancora.net Jim Chadwick 216‐593‐5048 jchadwick@ancora.net Ancora Advisors LLC 22