- Shake Shack and Engaged Capital, an activist investor reported to be pursuing changes to the burger chain’s board, have reached an agreement, according to a press release issued Monday.
- Shake Shack has appointed Jeffrey Lawrence, Domino’s former CFO, to its board as part of the agreement. The companies will work in conjunction to pursue the addition of another independent director with restaurant operations experience.
- Shake Shack will take other unspecified actions to improve its profitability as part of the deal. Danny Meyer, founder of Shake Shack, will eventually relinquish his director designation rights as an independent board director.
Engaged Capital reportedly waged a months-long campaign to push Shake Shack to change up its board and implement operational changes. The cooperation agreement between the fast casual brand and its investor may put an end to those efforts, as Engaged has agreed to support the slate of directors nominated by the board at the company’s shareholder meeting later this year.
As part of the agreement, Shake Shack will retain a consulting firm “to support its ongoing operational initiatives to improve restaurant execution, cost structure and profitability.” Shake Shack declined to offer further comment about what those operational initiatives were, or whether they differed from the emphasis on improved staffing, increased hours, changed packaging and kiosk ordering outlined in the company’s most recent letter to shareholders.
“We are executing our strategic plan and share Engaged Capital’s view that Shake Shack can drive additional profit growth,” Randy Garutti, Shake Shack’s CEO, said in a statement.
Although Shake Shack agreed to appoint Lawrence and a new board member, Lawrence was not one of the three candidates The Wall Street Journal reported Engaged planned to nominate. Lawrence, who joined Shake Shack’s board Tuesday morning, was VP and corporate controller during Domino’s IPO in 2004, and continued in financial leadership positions with the pizza giant until late 2020, according to his LinkedIn profile.
Additional board members will yield some of their selection powers in the future, per the press release.
“Danny Meyer and certain of his affiliates have agreed to step down their director designation rights over time,” the companies said in the press release.