On October 10, 2014, Darden Restaurants, Inc. (NYSE: DRI) released a statement announcing that shareholders had elected all twelve of the directors nominated by activist shareholder, Starboard Value, L.P., to replace its current board of directors. The announcement, based on the preliminary results of Darden’s Annual Meeting, signaled the end of an enduring proxy fight between the current board and Starboard. The voting results can be found here.
Starboard, Darden’s second largest shareholder holding 8.8% of the restaurant conglomerate, openly criticized the corporate strategies implemented by the current board. In December 2013, Starboard began petitioning the current board to implement various strategies it thought would help improve Darden’s overall governance, operational efficiency, and shareholder value. In May 2014, Darden announced its plan to sell the Red Lobster chain and ignored investors’ request that the company split-off its real estate assets prior to sale. Starboard had previously argued for the creation of another publicly traded company consisting of Darden’s real estate.
Starboard responded by officially launching its campaign to overthrow Darden’s current board. After plans to sell Red Lobster were announced, Starboard nominated twelve new directors to be elected in Darden’s upcoming proxy. On September 11, 2014, Starboard released nearly 300-pages of recommendations for improving Darden’s business. The document listed Starboard’s top priorities for Darden, with the first being: “Infusing a major upgrade in the leadership at Darden.”
Darden’s current board then attempted to prevent a complete overturn by nominating eight new candidates, four of which were also nominated by Starboard. Investor dissatisfaction with the current board, however, was so significant that all twelve of Starboard’s nominees were elected as new directors. Speaking on behalf of the newly elected board, Starboard’s Chief Executive Officer, Jeffrey Smith, emphasized the new board is enthusiastic about putting Darden on track for long-term success and maximum shareholder value.
The new directors elected include: Betsy S. Atkins, Margaret Atkins, Jean Birch, Bradley Blum, Peter Feld, James Fogarty, Cynthia Jamison, William Lenehan, Lionel Nowell III, Jeffrey Smith, Charles Sonsteby, and Alan Stillman.
Darden is the world’s largest company-owned and operated full service restaurant company. The company manages and oversees several casual dining subsidiaries which include, among others: Olive Garden, Longhorn Steakhouse, The Capital Grill, and Yard House.