SNS needs to address this, and fast!

[onyx1]

http://gretawire.blogs.foxnews.com/2009/07/02/steak-n-shake-playing-fair/

[JAllen]

They need to increase the size of the fries also.  Same volume, larger individual size. 

 

I ate there last week and the burger and fries were both small.  The burger was tolerable but the fries are no good.  It seems like such an easy fix; I don't get it.

 

 

[keerthiprasad]

this isn't going to look good.

[scottyjukebox]

hey dont mess with my frys...i like em skinny!!

[Parsad]

Let's not overreact.  We don't know if this lady worked for a franchised store or company-owned.  It could very well be that an overeager franchise-owner was trying to cut costs and the company is completely unaware of exactly what happened. 

 

I would say that the optics of the salary combined with the situation of this employee was exactly what I was afraid of.  How out of touch is SNS' compensation committee to raise the salary like this and create a situation that puts the CEO in this light?  I think it was a mistake.  Not that Sardar doesn't deserve the salary for his efforts, but the timing was completely wrong for such a signifcant raise.  Cheers!

[JAllen]

They need to increase the size of the fries also.  Same volume, larger individual size.  

 

I ate there last week and the burger and fries were both small.  The burger was tolerable but the fries are no good.  It seems like such an easy fix; I don't get it.

 

...and I used to respect you as a poster...

 

;D

 

What do you mean John?  Do you agree?

 

The small, thin ones cool off by the time you get back on the road and half of them are like little crumbs in the bottom of the carton.

 

Maybe they should have both options; or maybe they should have curly fries!

[Guest kawikaho]

Yeesh.  Hope SNS has good damage control in PR. 

[Rabbitisrich]

I made the mistake of reading through two pages of comments. The commenters' thought processes jump from unsound induction to unjustified conclusion.

 

 

This is my favorite comment courtesy of MOFarm:

 

I have nothing to offer in the way of help, but this just enraged me, and I had to say something. I'll pray that things get better, turn the bums in, and I will never ever eat at a Steak n Shake. EVER. I am not a racist, but when I read his name, I thought immediately: FOREIGNER!!! Kind of like all the Convenience Store Gas Stations. In CA you cannot get help at the pump because they can't understand. I came home to MO and discovered in our two largest cities, there is some of this as well. Woman are second class citizens in this man's home country...thus his employees. I'm going to email that company,and alert everyone I know to this Blog, and the information. So sorry

[ragnarisapirate]

I made the mistake of reading through two pages of comments. The commenters' thought processes jump from unsound induction to unjustified conclusion.

 

 

This is my favorite comment courtesy of MOFarm:

 

I have nothing to offer in the way of help, but this just enraged me, and I had to say something. I'll pray that things get better, turn the bums in, and I will never ever eat at a Steak n Shake. EVER. I am not a racist, but when I read his name, I thought immediately: FOREIGNER!!! Kind of like all the Convenience Store Gas Stations. In CA you cannot get help at the pump because they can't understand. I came home to MO and discovered in our two largest cities, there is some of this as well. Woman are second class citizens in this man's home country...thus his employees. I'm going to email that company,and alert everyone I know to this Blog, and the information. So sorry

 

 

Why is it that racists always preclude racist statements with "I'm not racist... but..."?

[link01]

Let's not overreact.  We don't know if this lady worked for a franchised store or company-owned.  It could very well be that an overeager franchise-owner was trying to cut costs and the company is completely unaware of exactly what happened.

 

as of the end of the last qtr sns had 415 co owned stores, 74 franchised, so this is probably wishful thinking. i hope against hope you're right, tho. but the odds are against it.

 

the timing of this "expose'" couldnt have been worse, coinciding as it does with a tripling of the ceo's salary, and before the turn around of sns's business has even shown the whites of its eyes, or grown peach-fuzz! in this economy, with the unemployment rate fast & furiously approaching 10% & probably much higher, having just come thru more financial scandals of greed, excess, & hubris spearheaded by a herd of 'me-too' ceo's wanting their share of the plunder while the going was good than since the great depression, it takes a special kind of tone-deafness to do what the board of sns did. combine that with the oft repeated mantra of "as  being among the largest sns shareholders we want to make money with you, not off you" & we're talking about a real doozie. my ears are ringing with the cacophony of a heavy metal concert right now...i was expecting something more like a mozart symphony from sardar & team. wabuffo's point about the recent decision by sns to curtail co matching 401k contributions by the rank & file employees up to the first 6% only adds to the general bad taste.

 

its kind of a shame, because i'm sure sardar is more than worth 900k a year, both for his ability & the long, hard hours spent in what is a herculean task to turn sns around. i dont know whether they crossed the line with a tripling of pay or not, but it sure is close enough to the line for the umpire to call the ball "out!". sadly, it doesnt seem like the sort of thing a true student & admirerer of buffett would indulge in. what's wrong with paying yourself less than market value in the spirit of good governance, irreproachable stewardship,  & unassailable integrity, especially when you are already blessed monetarily, with a chance to compound it beyond your wildest dreams by dint of more hard work, smarts, & with the kind of integrity that pays the very best dividends in the long run?

 

 

[Partner24]

A short question here: If Biglari is so much against this wage increase proposed by the board, could he have first issued a short press release statement basicaly saying that he will refuse it? I mean not now, but right after the announcement by the board.

 

Because at this point, it looks like: "I'll first get the salary increase BEFORE proving that SNS is making dust again because of me AND at the expense of hard working employees and shareholders".

 

 

[link01]

Because at this point, it looks like: "I'll first get the salary increase BEFORE proving that SNS is making dust again because of me AND at the expense of hard working employees and shareholders".

 

this is an unjustifiably cynical viewpoint, imo. but in light of the sudden, large pay increase & the white-hot media glare that looks all but certain to focus in on sardar & his board like a laser beam because of the above employee incident, they'll definately be put on the defensive. public outrage at all things wall street have already been on the boil, now shareholders, including those in the lion fund, are served with this nasty confluence of unfortunate events. sheesh.

[oldye]

You know this may sound crass but working at a fast food joint for 25 years for no money is not noble, its a summer job that got taken way too far.   I was just reading the other day that the average Family plan costs companies north of 12,000$ a year, it is insane to think that a business can afford to provide someone with benefits equal to their entire base salary.  Its the state that is failing these people, not Steak and Shake.

[Parsad]

You know this may sound crass but working at a fast food joint for 25 years for no money is not noble, its a summer job that got taken way too far.  I was just reading the other day that the average Family plan costs companies north of 12,000$ a year, it is insane to think that a business can afford to provide someone with benefits equal to their entire base salary.  Its the state that is failing these people, not Steak and Shake.

 

I agree with you Oldye, but I think the matter is made much worse by the optics of the raise.  I think Sardar will prove to be worth far more than the raise they gave him...in fact, many of these employees are fortunate to have jobs right now, as the business was close to going under with previous management at the helm...but the timing was wrong for the raise. 

 

And I hate curly fries!  So no curly fries.  Either thicker straight cut, or keep'em thin.  I like Red Robin's thick wedge cuts as well!  Cheers!

[Partner24]

link, maybe, maybe not, it's just a confluence of unfortunate events. Maybe the truth is in your perception, maybe it's the one that I've written above, and maybe...it's something between the two!

 

With Prem, Warren, Charlie and some others, I set the bar quite high regarding corporate governance and compensation.

 

In today's world, it's getting harder and harder to "compete" with them regarding corporate governance and compensation. In other words, they have that wide moat surrounding themselves that's getting larger and larger with corporate america as a whole. Idealy, they should be the norm in the corporate governance world, the kind of people that other CEO's would envy and compare themselves to, but unfortunately I guess they are in the top 10%, if not 1%, of their peers and CEO's often envy and compare themselves with the highest paid ones in their respective industry.

 

If anyone wants to get in that ring, good luck to compete with them!

 

Cheers!

 

 

[prevalou]

I am wondering if we are not victims of the consistency bias.

 

Because we had a very high opinion of Sardar, comparing him with Buffett and the likes, it is very difficult to recognize that he is not up to the same standard.

 

We try to rationalize his attitude in a positive way. If Cramer had increased his salary three times (just an example), we would all find this outrageous...

[Parsad]

I think the consistency bias is the other way actually.  I think our perception of Buffett is probably held an unhealthy level.  Thus in turn, we hold other executives to such a level who try and emulate his philosophy or culture...slapping their backs when they do well...then kicking them in the groin when the do something less noteworthy.  

 

Think about it...Bill Miller is suddenly out of everyone's good graces...Mohnish is now suddenly human in investor's eyes...Sardar is deemed to be a greedy wannabee...Tilson is a marketing genius who would sell his mother for publicity...the list goes on and on.  Right now everyone is patting Prem on the back...yet three years ago they wanted to lynch him.  

 

I think we are completely unrealistic in what we expect of Buffett, and then in turn we are equally unrealistic when it comes to those that he has influenced.  I didn't like the Snowball, and that probably had more to do with the tone of the book and how Schroeder shattered our impressions of Buffett.  We all have these innocuous glowing ideas of what Buffett is like, yet the truth is he is just a human being, who went through his own challenges to get to where he is.  He did many things right and he did many things wrong.  

 

Now going back to Sardar, I think he set the bar relatively high with Western Sizzlin.  He didn't do anything wrong there.  He didn't even take a salary.  His original salary at Steak'n Shake, was also well below market value.  Thus I think our expectations of him are based primarily on what he has done in the past and not what he has done relative to Buffett.  Cheers!  

[prevalou]

sorry I made a mistake . I am not an expert in cognitive bias.

 

It is not consistency bias we are suffering but confirmation bias:tendency to search for or interpret new information in a way that confirms one's preconceptions and to irrationally avoid information and interpretations which contradict prior beliefs.

We believed Sardar was a good and thrifty manager and it is difficult to recognize he is either very maladroit or hard on his employees, or both.

 

 

[Parsad]

We believed Sardar was a good and thrifty manager and it is difficult to recognize he is either very maladroit or hard on his employees, or both.

 

Could be, but I prefer to get all the facts before jumping to any conclusions.  We have not heard any of the reasoning behind the salary increase or if Sardar will even accept it.  We have not heard Steak'n Shake's answer to the employee hours issue, nor if they plan on rectifying the situation if they were at fault.  Which bias is it that makes people base their opinions on partial arguments, because I think that is the bias that we are currently facing? 

 

It's kind of like the media saying that Buffett has made huge bets using derivatives and suffered losses.  Is that the whole story?  Of course not.  What the comment should be is that Buffett has made huge bets using derivatives and has suffered losses, but that those losses would only be realized if the S&P500 stayed where it is for 15-18 years.  We should never base our judgement on a circumstance without having all the facts.  Cheers! 

[prevalou]

for me, it is impossible to have all the facts and we have to make inductions all the time with partial facts.

But i hope like you we will have a good explanation soon on his salary increase.

[link01]

With Prem, Warren, Charlie and some others, I set the bar quite high regarding corporate governance and compensation.

 

partner, i do too. i still think sardar belongs in that rarefied co with regard to good corp governance, but its with less confidence & conviction than before. the only reason many of us here at the corner of berkshire & fairfax have reacted with such strong opinions about sardars pay bump is precisely because we hold these guys to a higher standard. i've invested in plenty of co's where i didnt hold the ceo to these kind of standards, and thats ok: only a select few invite comparisons with the best. if any other ceo at any other co was paid 900k a year as pres & ceo i'd personally barely bat an eye-lash. beyond the juicy sensationalism inherent in the media headlines screaming "ceo gets triple pay increase", a ceo making 900k is hardy newsworthy.

[Parsad]

If you want to be one of the best, then undoubtedly you have to be able to take criticism.  I think Sardar will make up his own mind on things, but he is open to criticism because he wants to be one of the best. 

 

I think there were alot of issues that people had questions about before last year's AGM, and he took the time to answer most of them.  People left having a better understanding of what was happening.  He'll probably address some of these issues at the AGM, if not sooner.  Then we can all come to a reasonable conclusion.  Cheers!

[claphands22]

Its the state that is failing these people, not Steak and Shake.

 

Absolutely. After I read that article I felt horrible for Patricia. Getting diagnosed with breast cancer and not having health coverage would be mind boggling. How do Americans handle such an awful and expensive health care system? (I'm an expat)

 

It is too bad SNS is being maligned because of America's inept health coverage.  Yet, from a shareholder perspective I feel this is a small problem.  Sardar could make some public apologies, get down to the root of the problem, decrease his salary, reinstate health coverage at a 30 hours per work week...etc. There are tons of options. If Sardar chooses to none of them, then most likely this whole thing will blow over.

 

Patricia's story is really sad, but hundreds of thousands of Americans declare bankruptcy ever year because of health costs.  Patricia is mostly a statistic with the anectdotal twist of having a CEO that recently had his salary tripled.  In a month, people would have most likely forgotten Patricia's story.

 

If you are interested in national health care policies. Check out http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/  it's a great Frontline special on different health care policies all over the world. Taiwan has done a particularly effective job.

[Guest kawikaho]

Some of the comments made me balk.  If you guys were in the same situation, I'm sure you would be singing a different tune.  The problem for me is the perception of greed and profit mongering at the expense of a tenable basic employee benefit.  Maybe SNS just sucks for employees and she should have found better employment a long time ago, but the perception that this company deviously screwed over an employee to increase their bottom line is inexcusable.  And the opinion that medical coverage shouldn't be the responsibility of the employer is pointless.  I have the opinion that medical coverage should be universal and free, but that's not going to happen anytime soon in the States.  And the last time I checked, the company is incorporated in the States to do business.  As we all know, the modus operandi of the States is for employers and private enterprises to offer medical coverage--the exception being medicare, and the homeless.  It's not a right, but a privilege.  She was offered that privilege, as most employees are via employers that want to remain competitive in the workforce, and it should be honored.  

 

We don't know all of the facts and the story may have been biased, but if this is true, it puts SNS in a shady light.  They would sound like sore Indian givers having to make due on word.  Pretty pathetic, if so.  I'm not interested in investing money with a company that has moral and ethics problems.  

[Packer16]

Why the deafening silence?  There maybe nothing wrong, but the longer the company takes to address this the more it looks like the company is acting counter to its partnership values.  I disagree that this will blow over as SNS is in a competitive consumer market and reaction to this "crisis" will be a reflection of Sadar's leadership.  This could propel SNS forward (if the right thing is done) of hold it back from both a consumer and investing perspective. 

 

Packer