NEW YORK - The son of Shoney's founder will get a strong voice in running the company as part of an agreement to drop his attempt to force out the chairman and replace the board of directors.
Raymond Schoenbaum and his allies will have three of Shoney's 11 board members and have veto power over a fourth. Mr. Schoenbaum and at least one supporter also will sit on a four-member board committee overseeing the day-to-day operations of the restaurant chain.
Mr. Schoenbaum said he wants to stop the company's strategy of providing big helpings of lower-priced food.
"The consumer wants more and more and you're sitting there trying to make a profit and give them the experience," he said by telephone. "... I think people will be willing to pay a little more money for good quality."
As part of the settlement, Mr. Schoenbaum agreed to drop plans for a shareholder meeting scheduled for next month to seek the ouster of C. Stephen Lynn as chairman and chief executive.
Left out of the talks was Ray Danner, a former chief executive and the company's biggest single shareholder with an 8.7 percent stake. Mr. Danner, who hadn't agreed to support either side in the dispute, didn't have an opinion on the settlement until he reviewed it with his lawyers, said Francis Guess, a spokesman for Mr. Danner.
"I did call him the minute we had an agreement and he said as long as it results in better care of the customers, he's for it," Mr. Schoenbaum said.
Mr. Lynn said the agreement will allow Shoney's to refocus on improving the family restaurant chain best known for its breakfast and salad bars.
"As we began to have meetings, ... it became clear their hearts were in the right place and ours were, too," Mr. Lynn said of Mr. Schoenbaum and his ally Michael Bodnar. "We're all wanting the same finish line."
Mr. Schoenbaum and ãr. Bodnar joined the board on Sunday, immediately expanding it from seven to nine members, Mr. Lynn said.
Within two weeks, a Shoney's nominating committee will chose another member from a list of nominees submitted by Mr. Schoenbaum's group. They include Lawrence A. Cunningham of New York, Nathaniel Goldston III of Atlanta, William Schwartz of Atlanta and Richard Sherman of Louisville, Ky.
The fourth new member will be chosen within two months, Mr. Lynn said.
Schoenbaum, 51, founded the Rio Bravo chain and sold it to Applebee's International two years ago for about $70 million. He said he learned to focus on quality of food and service at Shoney's.
"And it's worked for me every time I've done it," said Schoenbaum.
Under the agreement with Shoney's, The Shoney's Shareholders' Committee formed by Schoenbaum halted solicitation of support for its slate of nominees until at least next May 1.
In addition to the operations committee, Schoenbaum, has been added to the board's executive and nominating committees.
The other members of the operations committee are Bodnar, Lynn and a yet-to-be-named board member. Bodnar is president of an Alabama investment company and former president of a restaurant management company.
Shoney's operates 1,398 restaurants in 34 states, including 898 company-owned and 500 franchised outlets.