Cracker Barrel’s controversial bylaw amendments: Challenging the board twice is fine — but two failed campaigns could come with a $5 million bill

Traditionally, proxy contests are straightforward—challenge the board, and if you win, your costs are reimbursed. Lose, and you eat the costs.

Cracker Barrel has just changed the rules of that game.

Under its newly amended bylaws, losing twice could come with a $5 million bill.

Here’s a closer look at what changed — and why it matters.

Bylaw Amendments

On May 16, 2025, the Cracker Barrel board approved and adopted a restatement of its bylaws, effective immediately. A couple of amendments caught my attention.

First is the “Ineligibility Provision.” If a director nominee gets less than 20% of the vote, they’re barred from being nominated again for three years. Score between 20% and 25%? That’s still a penalty—two years off the ballot.

Second—and the real highlight—is the “Reimbursement Provision.”

If a shareholder nominates directors at two meetings within five years, and those nominees receive less than 25% of the vote (without board support), the shareholder must reimburse the company up to $5 million for proxy-related costs.

On the flip side, if any nominee actually gets elected, the company will reimburse the shareholder up to $5 million.

In short, Cracker Barrel has added real financial stakes to repeat proxy fights. One failed attempt? Fine. Two? Be ready to write a big check.

Company targets activist fatigue

Why would a board adopt such a controversial bylaw? Well, there’s a reason.

The Board adopted the Ineligibility and Reimbursement Provisions in response to ongoing proxy challenges. The trigger? Sardar Biglari, who owns 9.3% of Cracker Barrel, has launched seven proxy contests since 2011, including six contested director elections.

According to the company, several shareholders expressed concern that a single investor could continue to pursue board seats and impose significant cost and distraction, despite being repeatedly rejected by the broader shareholder base.