October 10, 2014 4:08 pm
Starboard sweeps away entire Darden
By Stephen Foley in New York
Starboard Value scored a sweeping final victory in its ten-month fight to
Darden Restaurants, owner of Olive
Garden, in another example of institutional investors’ willingness to back
activists at underperforming
nominees, including the hedge fund’s founder Jeff Smith, won all 12 seats on
Darden’s board at the company’s annual meeting on Friday.
activists often seek board seats to push their plans, it is rare for them to
put up a full slate of candidates to replace existing directors, and rarer
still for them to find support among other shareholders.
had argued that Darden mismanaged Olive Garden and failed to pursue
shareholder-friendly plans such as splitting the business or restructuring
its property portfolio.
sale of its
Red Lobster chain earlier this year,
just ahead of a shareholder vote that might have stopped it, angered some
shareholders. The company also said that its long-time chief executive
Clarence Otis would step down, but Starboard continued to press its case for
more sweeping change in the boardroom.
all the right ingredients to regain the strength and prominence it once
enjoyed,” Mr Smith said, in a statement issued jointly with the company,
adding that the new board would move quickly to find a “transformational
leader to be Darden’s CEO”.
was the second activist investor to alight on Darden, whose shares had
lagged behind the market as Olive Garden and Red Lobster succumbed to
competition from fast-food chains such as
Chipotle. Earlier last year,
Barington Capital demanded the company break itself up.
activists bombarded Darden shareholders with letters attacking existing
management and setting out menus of proposals for improving the business,
from revamping restaurant managers’ bonuses to changing the way Olive Garden
In a last
gasp attempt to prevent Starboard’s victory, Darden had conceded a
minority of seats to its nominees
but argued that handing full control of the board to a hedge fund would hurt
shares rose slightly to $49.34. The shares peaked at $57.20 two years ago.
of victory for Starboard’s candidates was not immediately available.
© The Financial Times Ltd 2014