Hedge Fund Loses Luby’s Proxy Battle

Jan 16 2008 | 6:38am ET

New York hedge fund Ramius Capital Group has been stymied in battle for representation on the board of Luby’s Inc.

Preliminary results show that shareholders have reelected four members of the Houston-based cafeteria operator’s board, rejecting a slate of Ramius-nominated candidates. Luby’s said final results won’t be available for a number of days.

The hedge fund had blasted the existing board for an allegedly sweetheart deal for its CEO and chief operating officer, the brothers Christopher and Harris Pappas, arguing a debt-for-stock deal they made was too favorable. Ramius, which owns 7% of Luby’s, also complained that the board and management have not done enough to boost its stock price.

The defeat for Ramius comes in spite of support for several of its candidates from several proxy services. The hedge fund said it may run another slate of board candidates next year.

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