Board Fires Arby CEO in Buyout Bid Dispute
Leonard H. Roberts has been fired as president and chief executive of Arby’s Inc., a few hours after announcing he had broken ranks with Miami financier Victor Posner over a $200-million buyout offer from a group of the fast-food restaurant chain’s franchisees.
Roberts, who indicated that he favored the buyout offer that was rejected by Posner, sent a sharply worded letter to Posner on Monday in which he resigned as vice chairman and a director of Posner’s DWG Corp. That company owns 60% of Chesapeake Financial Corp., of which Arby’s is a wholly owned subsidiary.
A short time after he released the letter Tuesday, Roberts was dismissed by the Arby’s board, said DWG Senior Vice President Renee Mottram.
“‘We are not in a position to comment in detail on Mr. Roberts’ letter because of pending litigation, but it is our opinion that statements in the letter are untrue in all material respects,” Mottram said.
No successor was immediately named, but Mottram said one would be announced “in the very near future.”
Roberts said he was not really surprised by the firing.
“I knew I had to take certain risks to stand up to a gentleman like Posner,” he said. “I feel good about my separation from Posner, but I feel concerned about Arby’s.”
He said he would be willing to help the franchisees with their takeover attempt if asked.
Before the dismissal, Roberts had said he intended to stay on as president and chief executive of Atlanta-based Arby’s, which has about 2,100 outlets nationwide.
Joe Smaltz, chairman of the 500-member Arby’s Franchise Assn., said he was “shocked and outraged” at the decision to fire Roberts, crediting him with turning the company into a highly profitable one. He said more than 900 new restaurants had been built and profits were up 50% since Roberts took over four years ago.
Roberts was named CEO of Arby’s in July 1985 after 11 years at Ralston Purina Co. Before that, he headed product development programs at Armour & Co. and the Central Soya Co.
Eight Arby’s franchisees, who have incorporated under the name R. B. Partners Ltd., have offered to buy the chain from Posner for $200 million in cash. Last week, Posner rejected the offer, saying DWG has “no interest in pursuing such a sale.”
Roberts said Posner’s refusal to talk with R. B. Partners went against the wishes of some other DWG directors, including himself. And Roberts, in his letter, accused Posner of trying to bully the board into seeing things his way.
“I have seen every form of intimidation displayed by you, including vicious personal attacks on certain board members who have tried to express their opinions,” Roberts told Posner in the letter. “Board members, including myself, are intimidated by you during the meeting to acquiesce and sit idly by and quickly approve your predetermined decisions.”
Among those “predetermined decisions,” Roberts said in the interview, are a proposal to move Arby’s corporate headquarters from Atlanta to Miami and one that would mandate executives to publicly announce support for Posner and use intimidation to force R. B. Partners to withdraw its offer.
R. B. Partners, whose members operate more than 500 of Arby’s outlets, last week expressed concern over Posner’s existing legal and financial problems. Posner pleaded no contest in 1987 to federal income tax evasion charges and was sentenced to five years probation, with the condition that he repay his back taxes, penalties and interest and create a $3-million fund for the homeless.
Dezanne Phillips, a spokeswoman for R. B. Partners in New York, said the decision to fire Roberts “bolsters the R. B. argument. Posner’s got too many problems to keep Arby’s going. He’s just fired the person who is most responsible for their success.”
She said the R. B. Partners offer stands.
In 1988, Arby’s operating profit was $20.7 million on $153.8 million in total revenue.
