The Schlotzsky’s saga continues – former CEO John Wooley, who was ousted from the once-successful, now broke Austin-based sandwich chain in June, sent a letter on Aug. 10 to current company board chairman, Gary Cadenhead, requesting that the board of directors immediately convene its annual shareholders meeting and suspend its bankruptcy proceedings. The sandwich chain’s new management filed for Chapter 11 protection Aug. 3, two months after ousting the Schlotzsky’s Originals – Wooley and his brother Jeff – from their day-to-day management jobs. The brothers resigned from the board shortly thereafter.
In the letter, Wooley complained that major changes in the company’s ownership over the past year necessitate the meeting, which was last held in June 2003. The company’s largest shareholder, Dallas real estate executive Joseph Beard, recently sold all of his Schlotzsky’s stock, leaving Wooley and his brother Jeff as the largest shareholders, with about 12%.
“At the present time,” Wooley writes, “only four of the eight board seats have been duly elected and only three of those elected support the current course of action taken by the Board. The current board members do not own stock in the Company, nor does its CEO [Sam Coats]. Further, the remaining members of management do not own any significant amount of stock in the Company. … The Federal Bankruptcy process is about the assets and liabilities of the Company and it should not be used in any way to suspend fair corporate governance and participation by shareholders.”
The Wooleys are suing the company to regain $2.5 million that they loaned it, and John Wooley told the Austin American-Statesman that he believes he should be given back his CEO position. Meanwhile, a coalition of Wooley and Schlotzsky’s supporters is taking to the Web, at www.saveschlotzskys.com, to lay out their side of a story they say isn’t being told in the local media. The Web site, expected to debut this week, is the collective brainchild of shareholders, creditors, former employees, and longtime patrons.
This article appears in August 20 • 2004.
