Edgar Filing: STEAK & SHAKE CO

dfan14a06824004_02222008.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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o Soliciting Material Under Rule 14a-12

THE STEAK N SHAKE COMPANY

(Name of Registrant as Specified in Its Charter)

THE LION FUND L.P.

BIGLARI CAPITAL CORP.

WESTERN SIZZLIN CORP.

WESTERN ACQUISITIONS L.P.

WESTERN INVESTMENTS INC.

SARDAR BIGLARI

PHILIP L. COOLEY

(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)

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The Lion Fund L.P. (“Lion Fund”) and Western Sizzlin Corp. (“Western Sizzlin”), together with the other participants named herein, are filing materials contained in this Schedule 14A with the Securities and Exchange Commission (“SEC”) in connection with the solicitation of proxies for the election of two nominees as directors at the next annual meeting of stockholders (the “Annual Meeting”) of The Steak n Shake Company (the “Company”). Lion Fund and Western Sizzlin have filed a definitive proxy statement with the SEC with regard to the Annual Meeting.

Item 1. Letter from Sardar Biglari to the stockholders of the Company, dated February 21, 2008, to be mailed to stockholders and posted on www.enhancesteaknshake.com:

THE LION FUND, L.P.

9311 SAN PEDRO AVENUE, SUITE 1440

SAN ANTONIO, TEXAS 78216

TELEPHONE (210) 344-3400

FAX (210) 344-3411

SARDAR BIGLARI, CHAIRMAN

February 21, 2008

Dear Fellow Shareholders:

The annual meeting of stockholders for The Steak n Shake Company can be a highly productive turning point for the company’s customers, employees, franchisees, and shareholders. Your vote is imperative, irrespective of the number of shares you own. My colleague Philip L. Cooley and I plan to replace Alan B. Gilman and James Williamson, Jr. at the annual meeting scheduled for March 7, 2008. We are seeking your support for the permanent removal of Messrs. Gilman and Williamson and your endorsement of our plan for the company as laid out in my January 23, 2008 letter, a copy of which I have enclosed.

The long-term record — during any period over the last decade — has been dismal for owners of Steak n Shake stock. Current business prospects are no better. Over the last several months, we have visited Steak n Shake restaurants and spoken to current and former employees, franchisees, shareholders, and other constituents, whose opinions confirm ours that the company is handicapped by a lack of leadership, lack of execution, and lack of strategic direction from headquarters. Furthermore, we have found that Gilman and Williamson, through past and present actions, are a main source of the company’s myriad problems. We believe that because of the influential positions they hold on the board and their roles as past CEOs, they have set the wrong tone at the top. They advocate rules for the company, which, when these stipulations work against them, they quickly alter for their own self-interest. Here is an example:

I disclosed in my January 23rd letter that it is our objective to replace Gilman and Williamson at the annual meeting and then seek to call a special meeting to make further changes in board composition. The following week the board amended the bylaws to require 80% of the shares outstanding to call a special meeting instead of the former 25%. This change effectively eliminates a shareholder’s ability to call a special meeting. To require 80% of the votes cast by the shareholders to call a meeting when only 50% is needed to replace directors strips shareholders of a fundamental right they ought to enjoy. Thus, this ill-advised amendment provides the board with immunity, not the accountability they should embrace. Their actions designed to disenfranchise shareholders do not deter us; rather, they reinforce the presence of the firm’s problems and energize our desire to solve them.

The board, led by Gilman and Williamson, wrote you a letter on February 14 with the headline, “Don’t let short-term investors gain control of your company.” The board is being less than candid with you. I have repeatedly said both privately to the current company leaders as well as publicly to you via my letters that we have invested in Steak n Shake stock for the long-term.