After the close and ahead of the Memorial Day holiday The Chefs’ Warehouse (CHEF), a specialty food products retailer, disclosed it plans to ignore the outcome of a key shareholder vote cast two weeks ago at the annual meeting.

At the meeting, Board Director Richard Peretz did not receive the required vote of a majority of the votes cast, having received more than a half-million more votes “against” his election than votes “for” his election.

The Chef’s Warehouse has a majority vote policy for director reelection so Peretz offered to resign.

However, in the after-hours filing The Chef’s Warehouse revealed that two days ago its Board had decided not to accept Peretz’s resignation, arguing Peretz is particularly qualified to serve despite his less than stellar attendance of Board meetings.

The Chef’s Warehouse blamed ISS Proxy Advisory Services since it recommended shareholders withhold votes for Peretz due to Peretz’s failure to attend at least 75% of Board and Committee meetings.

The company says since the issue was due to Peretz’s attendance rather than qualifications, the Board decided:

“...unanimously that it would not be in the best interests of the Company and its stockholders to accept Mr. Peretz’s resignation. Since Mr. Peretz’s conditional resignation, offered in accordance with the Majority Vote Policy, was not accepted, Mr. Peretz will continue to serve as a member of the Board.”

Peretz has been on the Board just one year.

The Board met just seven times in that year— only three of which were in-person— which suggests Peretz missed at least two meetings.

The late fling does not provide an explanation for Peretz’s attendance issues.

It’s unclear to us how Peretz’s expertise benefits the company if he’s not routinely at meetings he’s paid more than $200,000 a year to attend.

Likewise, Peretz also twice failed to file insider trading forms with the Securities and Exchange Commission (SEC) on time.

With an Enterprise Value (EV) of approximately $3.3 billion, The Chefs’ Warehouse is priced as if it will grow annual sales to more than $13.2 billion, up from an estimated $4 billion in 2025. To justify its current share price of $62.13 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates Chefs’ must:

—Grow sales 15% annually between 2027-2034, faster than the company’s estimated 2025 and 2026 sales growth of 6.4% and 7%, respectively
—Increase NOPAT margin to 6%, versus our 2024 estimate of 2.69% and three-year average estimate of 2.67%
—Increase Invested Capital (IC) Turns to 2.5, up from our three-year average estimate of 2.35

Notably, the current share price also implies Chefs’ increases Return on Invested Capital (ROIC) to 15% from our three-year average estimate of 6.25%: