Noble Roman’s CEO to remain on company’s board for now

Noble Roman’s CEO Scott Mobley will remain on the Indianapolis-based restaurant company’s board of directors until next year, stymieing a fellow shareholder’s attempt to have him replaced.

For the past several months, Noble Roman’s has been battling with one of its largest shareholders, West Fargo, North Dakota-based BT Brands, over whether Mobley should remain on Noble Roman’s board.

BT Brands had proposed replacing Mobley with its own CEO, Gary Copperud, arguing that “a fresh perspective” was needed to turn things around at Noble Roman’s, which has seen its share price and shareholder equity decline and its long-term debt increase under Mobley’s leadership.

The issue was to have been decided at the Noble Roman’s annual shareholders meeting Thursday, but the meeting was adjourned for lack of quorum, Noble Roman’s announced later that day. No action was taken before adjournment, and the next meeting will be scheduled in 2024.

“Under those circumstances, the current board members remain in place,” Mobley told IBJ via email.

Copperud said he was disappointed in the company’s actions. “They’ve shown no respect for the shareholders,” he said.

Copperud noted that Mobley will be up for reelection again next year. If someone had been elected at this week’s board meeting, that person would have served for a full three-year term.

“We consider it a win that Scott will not be able to serve on the board for another three-year term,” Copperud said.

Mobley was the only member of the five-member Noble Roman’s board whose seat was up for election this year.

Noble Roman’s said shares representing 9,074,749 votes were represented either in person or by proxy at Thursday’s shareholders meeting, falling short of the 11,107,757 shares required to constitute a quorum.

Noble Roman’s has 22,215,512 total shares outstanding and about 210 shareholders. Between them, BT Brands and Copperud own about 9% of the company’s stock.

The lack of quorum relates to a Noble Roman’s decision to disregard all votes cast in favor of Copperud.

In late June, Noble Roman’s said it had determined that BT Brands was not qualified to nominate Copperud because the company had not been a shareholder of record at the time it made the nomination.

In response, BT Brands characterized the Noble Roman’s position as a “technical interpretation of its bylaws,” because BT Brands’ and Copperud’s shares were held in brokerage accounts rather than in certificate form.

Then, last week, BT Brands filed a federal lawsuit against Noble Roman’s. In that lawsuit, filed in U.S. District Court in the Southern District of Indiana, BT Brands said its tally showed that Copperud had received 10,194,885 proxy votes as of Aug. 1, far surpassing the 2,851,046 votes cast for Mobley.

In its complaint BT Brands had asked the court to, among other things, permit it to vote in the board election and “permit Mr. Copperud to take the [board] seat to which he will have been duly elected.”

But the court denied this request, saying that “no Indiana case supports the proposition that directors must allow shareholder votes to go forward even against the corporation’s bylaws.”

The ruling also noted, “While the Court is not prepared to say that Plaintiffs’ case is entirely hopeless, it is at the outset an uphill battle.”

Copperud said he and BT Brands haven’t yet decided whether to continue with their lawsuit, but they will continue to press the matter even if they drop the lawsuit. “We’re not going away,” he said.