Activist investor Engaged Capital plans to launch a proxy fight for three board seats at Shake Shack Inc SHAK. Including swaps, Engaged has a roughly 6.6% stake.
Shake Shack shares have lost almost 50% of their value from an early-2021 high, even after gaining more than 50% this year, amid inflation pressures and compressed margins. The stock gained after it reported better-than-expected Q1 earnings.
Engaged Capital has been in talks with Shake Shack’s management for over six months. In March, it sent a letter to the company’s board detailing its proposal for new directors and other changes to help boost the restaurant chain’s lagging stock price.
The parties have failed to reach an agreement, Wall Street Journal reported citing people close to the matter.
“We are executing our strategic plan and making substantial operational and financial progress,” a spokesman for Shake Shack said in a statement. “We are well positioned to continue enhancing value for shareholders.”
“Thus far, management has been reluctant to commit to a timeframe for regaining lost profitability,” Engaged founder and Chief Investment Officer Glenn Welling said in the letter, which was seen by The Wall Street Journal.
“In order for the company to reach its full growth potential and profitably scale this brand across the U.S. and the world, we believe significant adjustments to the company’s real estate strategy, store design, labor planning, and supply chain framework will be required,” Mr. Welling said.
Price Action: SHAK shares are up 5.02% at $68.49 on the last check Monday.
Photo via Wikimedia Commons
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