HOUSTON, June 7, 2017 /PRNewswire/ -- JCP Investment Management, LLC (together with its affiliates, "JCP"), a significant stockholder of Fiesta Restaurant Group, Inc. ("Fiesta" or the "Company") (NASDAQ: FRGI), with ownership of approximately 3.0% of the Company's outstanding shares, commented on Fiesta's 2017 Annual Meeting held earlier today and the positive developments that have occurred at the Company in connection with JCP's proxy contest.
For nearly a year, JCP has relentlessly fought to bring attention to (i) Fiesta's significant financial and operational underperformance under the leadership of an unengaged Board of Directors (the "Board"), (ii) the lack of restaurant industry experience on the Board, (iii) the strategic shortcomings of the Company, (iv) the Company's poor corporate governance practices and (v) the apparent lack of alignment between the Board and Fiesta stockholders.
Although JCP is disappointed with the election results, it is pleased that its campaign has served as the catalyst for the following positive developments, all of which occurred after JCP's public involvement:
- New Chief Executive Officer
- Richard C. Stockinger replaced Timothy P. Taft as Chief Executive Officer and President
- Three new directors with restaurant industry experience were added to the Board
- Paul E. Twohig, Nicholas P. Shepherd and Mr. Stockinger joined the Board
- Fiesta released a Strategic Renewal Plan
- Devised a plan in an effort to create value for stockholders
- Intention to declassify the Board
- Fiesta has announced that it will put forward a proposal to declassify the Board at the 2018 Annual Meeting
- An incumbent director actually purchased Fiesta shares
- Mr. Twohig was the first director to make a personal investment in the Company
- New Chairman of the Board
- Stacey Rauch replaced Jack A. Smith as Chairman of the Board
- Majority voting standard in uncontested elections
- Based on preliminary voting results, the adoption of a majority voting standard in uncontested elections was approved at the 2017 Annual Meeting
While these are steps in the right direction, JCP believes there is significant work to be done and more changes are necessary to drive stockholder value. Given the continued refusal of any incumbent director to step down from the Board despite the significant destruction of stockholder value over the past several years, JCP continues to believe that accountability is lacking in the boardroom. JCP intends to closely monitor Fiesta's performance and the execution of its Strategic Renewal Plan. In its evaluation of the Company moving forward, JCP calls on Fiesta to answer the following questions:
- Will Fiesta seek immediate declassification of the Board so that all directors are standing for election at the 2018 Annual Meeting?
- To accomplish this, the declassification of the Board should be the first agenda item at the 2018 Annual Meeting and the directors with terms expiring in 2019 and 2020 should agree to stand for election at the 2018 Annual Meeting. If the Board is truly committed to strong governance practices as it has claimed, it will take such action. JCP will interpret anything short of immediate declassification as a sign of the Board's continued resistance to accountability and willingness to utilize the Company's corporate machinery for entrenchment purposes.
- Will Fiesta adopt EBITDA guidance?
- Fiesta's Strategic Renewal Plan is void of stated EBITDA goals and other performance metrics – JCP encourages Fiesta to adopt EBITDA guidance as JCP set forth for 2021 in its detailed investor presentation.
- Will the members of the Board make store visits to Fiesta's brands?
- After learning that certain members of the Board have not visited Taco Cabana in the past 12 months, JCP encourages the members of the Board to make frequent store visits so they have familiarity with the brands they are overseeing.
It is JCP's hope that significant progress is made without further need for public pressure from JCP; however, JCP will not hesitate to take further action that it believes is necessary to maximize stockholder value and ensure that the Company is being run in the best interests of stockholders.
About JCP Investment Management:
JCP Investment Management, LLC is an investment firm headquartered in Houston, TX that engages in value-based investing across the capital structure. JCP follows an opportunistic approach to investing across different equity, credit and distressed securities largely in North America.
James C. Pappas
JCP Investment Management, LLC
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SOURCE JCP Investment Management, LLC