Starboard Sends Another Letter to Darden Board, Suggests Final Voting Has Confirmed Holders Are Requesting a Meeting
Starboard Value LP (together with its affiliates, "Starboard"), one of the largest shareholders of Darden Restaurants, Inc. ("Darden" or the "Company") (NYSE: DRI), with ownership of approximately 5.5% of the outstanding common stock of the Company, today announced it has delivered a letter to Darden's Board of Directors (the "Board") following the certification by the independent inspector of elections, IVS Associates, Inc., of the written requests delivered by Starboard to call a Special Meeting from the holders of approximately 57% of the Company's outstanding shares. In the letter, Starboard calls on the Board to stop wasting time and to take this extraordinary shareholder action seriously by immediately providing notice of the Special Meeting without further undue delay.
Starboard has filed preliminary proxy materials with the Securities and Exchange Commission in connection with its solicitation of proxies for the Special Meeting, at which Starboard will present a non-binding resolution urging the Board not to approve any agreement or proposed transaction involving a Red Lobster separation or spin-off prior to the 2014 Annual Meeting of Shareholders unless such agreement or transaction would require shareholder approval.
The full text of the letter to the Board follows:
May 7, 2014
Darden Restaurants, Inc. 1000 Darden Center Drive Orlando, FL 32837 Attn: Board of Directors
Dear Board of Directors:
On April 22, 2014, Starboard Value LP ("Starboard") delivered written requests to Darden Restaurants, Inc. ("Darden" or the "Company") to call a special meeting of shareholders (the "Special Meeting") from the holders of more than 55% of the Company's outstanding shares. On April 25, 2014, Starboard delivered a supplement to its April 22^nd letter enclosing additional written requests Starboard received from Darden shareholders. As you are aware, the independent inspector of elections, IVS Associates, Inc. ("IVS"), has issued the final, certified voting report confirming that Starboard delivered valid written requests to call the Special Meeting from the holders of approximately 57% of the Company's outstanding shares.
When we delivered the written requests on April 22^nd, we stated that if the Company had not called the Special Meeting by May 6, 2014, it would be a clear signal that the Board does not have good-faith intent to call the Special Meeting in a timely manner. It has now been more than two full weeks since we first delivered the requisite written consents to call the Special Meeting. As you well know, more than the required 50% of consents came through the Broadridge system making it almost certain that the results would be certified by IVS. Nevertheless, now after IVS' certification of the validly delivered written requests, you have no more excuses for continuing to delay calling the Special Meeting.
The owners of the Company have clearly demonstrated that the calling of the Special Meeting is critical for protecting their investment in Darden, and that the "direct engagement" behind closed doors that the Company continues to advocate is not sufficient. Our successful Special Meeting solicitation is a referendum on the desire and need for shareholders to have a say on the Company's proposed separation of Red Lobster. If the Board truly respects the interests and concerns of its shareholders, it would immediately take the necessary steps to expeditiously hold the Special Meeting. Instead, Darden appears intent on continuing to brush off the clear directive of its shareholders. Since we delivered the valid written requests, Darden has now twice stated:
"Given the value of this direct engagement, Darden expects to continue these conversations with shareholders and will address the Special Meeting request as appropriate."
Your casual and dismissive attitude towards the Special Meeting is disturbing. Shareholders have spoken and we expect you to recognize the will of your shareholders and schedule the Special Meeting without further delay. Your repeated statement that the Company will "address the Special Meeting request as appropriate" is illustrative of the Board's poor governance and poor shareholder engagement practices. The only "appropriate" way to address the Special Meeting request would have been to call the Special Meeting in a timely manner following the delivery of more than sufficient written requests.
Your continued failure to schedule the Special Meeting in a timely manner will leave us and your shareholders no choice but to conclude that it is your willful intent to delay the Special Meeting and disenfranchise the shareholders you were elected to represent. We take our investment in the Company, and the Board's stewardship of all shareholders' capital, very seriously. The Board's continued attempt to delay the Special Meeting is a clear sign that this Board does not take its obligations to its shareholders seriously, and that substantial change to the Board may be necessary. We believe that in order to fulfill your obligations to shareholders, you must call the Special Meeting without further delay.
Jeffrey C. Smith Managing Member Starboard Value LP
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