Starboard Sends Another Letter to Darden Board, Believes Board Should Make Deal for Red Lobster Open to Approval

Starboard Value LP (together with itsaffiliates, "Starboard"), one of the largest shareholders of DardenRestaurants, Inc. ("Darden" or the "Company") (NYSE: DRI), with ownership ofapproximately 5.5% of the outstanding common stock of the Company, todayannounced it has delivered a letter to Darden's Board of Directors (the"Board") following statements made last week by Matthew Stroud, Darden's VP,Investor Relations, to a group of shareholders attending a lunch in New YorkCity, that the Company is on a timetable to complete a sale or spin-off of RedLobster in June or July.  Mr. Stroud also informed the group of shareholdersthat the Company believes it can delay calling the Special Meeting as far as60 days from the date of certification of the written requests, and that theCompany is not required to hold the Special Meeting thereafter for anadditional 60 days.  Mr. Stroud's statement is inconsistent with Florida law,which clearly provides that the initial 60 days to call the Special Meetingstarts when the written requests are delivered, not certified.  Starboard isdisturbed that Darden seems more intent on discussing how it can delay theSpecial Meeting rather than taking the steps required to hold the SpecialMeeting. Mr. Stroud's statements have heightened Starboard's concerns that the Companymay now be seeking to hurry through a sale of Red Lobster before holding theSpecial Meeting.  Starboard believes it would be a huge mistake for the Boardto rush an irreversible and potentially value-destructive Red Lobster sale atthis time, and is urging the Board to either immediately call the SpecialMeeting or agree to make any Red Lobster transaction subject to shareholderapproval. The full text of the letter to the Board follows:May 14, 2014Darden Restaurants, Inc.1000 Darden Center DriveOrlando, FL 32837Attn: Board of DirectorsDear Board of Directors:On April 22, 2014, 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'soutstanding shares.  On May 6, 2014, the independent inspector of elections,IVS Associates, Inc. ("IVS"), issued its final, certified voting reportconfirming that Starboard delivered valid written requests to call the SpecialMeeting from the holders of approximately 57% of the Company's outstandingshares. Over the past several months, we have made absolutely clear all the reasonsthat a sale or spin-off of Red Lobster (the "Red Lobster Separation") is thewrong separation, at the wrong time, for the wrong reasons.  Recent statementsby Matthew Stroud, VP, Investor Relations, have heightened our already seriousconcerns that Darden may be focused on a quick sale of Red Lobster prior toholding the Special Meeting.  While we can see how a Red Lobster Separationcould be convenient and beneficial for management, this could be the absoluteworst time to be selling Red Lobster: o same-store-sales are down, food costs are up, and the brand is in desperate need of a turnaround; o significant probable tax leakage in a sale makes it far less attractive than other alternatives; o separating Red Lobster with its real estate is likely to trap significant real estate value  and may permanently impair the value of Darden's real estate portfolio; o selling the real estate owned by Red Lobster concurrently with a Red Lobster sale is inefficient due to unnecessary tax leakage and a lost opportunity to gain significant value by executing a tax-free spin of Darden's entire real estate portfolio or a tax-free merger involving Darden's entire real estate portfolio and a REIT; and o by completing the Red Lobster Separation first, Darden may be significantly increasing the risk of meaningful debt breakage costs in the future that may have been avoidable with more intelligent structuring.  Moreover, since a Red Lobster Separation would be irreversible, it is all themore concerning that you are attempting to rush it through before shareholdersare allowed to formally express their views, as they have validly demandedunder Florida law. It has already been three weeks since we delivered the written requests tocall the Special Meeting.  Substantial time has already lapsed, but there isstill time for the Company to call and hold the Special Meeting prior tocompleting a Red Lobster Separation.  If the Board were to act now on theSpecial Meeting request, there is no reason that the Special Meeting could notbe held in late June or early July.  We remind you that a substantial majorityof the Company's shareholder base has unequivocally demonstrated thatshareholders demand the opportunity to have their voices heard on the RedLobster Separation before it is too late and substantial value is potentiallydestroyed.  Unfortunately, the Board continues to show a blatant disregard forthe views and concerns raised by its shareholders. As you know, approximately 20% of the Company's outstanding shares are held byretail investors (who generally have extremely low vote totals), approximately10% of the outstanding shares are out on loan and are typically not voted, andapproximately 3% of the outstanding shares are held by management and theBoard. Based on the vote results from last year's 2013 Annual Meeting,Darden's voting participation on non-routine items (items where a brokercannot place a vote on a client's behalf) was 72% of the outstanding shares.Therefore, the 57% of the outstanding shares that consented represent anenormous percentage of the estimated 72% of the outstanding shares that wouldbe expected to vote at Darden's meetings.  This is an extremely strong mandatefrom your shareholder base for the calling of the Special Meeting to vote onthe following proposal: to approve a non-binding resolution urging the Board of Directors of Darden 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.  If the Board continues to ignore the will of the shareholders to call theSpecial Meeting in a timely manner and is stubbornly delaying the calling ofthe Special Meeting in order to rush a sale of Red Lobster, then the Boardshould promise the shareholders, consistent with their consents, that theBoard will make any transaction involving Red Lobster subject to shareholderapproval.  Your unwillingness to date to either call the Special Meeting orcommit to requiring shareholder approval of a Red Lobster Separation increasesthe skepticism around your intentions for Red Lobster and raises seriousdoubts as to whether you are representing the best interests of yourshareholders.  To further illustrate the point that the Company continues to disrespect itsshareholder base, we understand that the Company has been misleadingshareholders all along regarding the timing requirements of the SpecialMeeting.  Even before we delivered the written requests, Darden wasincorrectly informing shareholders that the Company is not permitted to callthe Special Meeting for 60 days following the delivery of the demand, andclaiming that there is a built-in "cooling off" period under the FloridaBusiness Corporations Act (the "FBCA").   The significance of the 60 days isnot as a "cooling off" period, or a time for Darden to seek revocations, asDarden has told shareholders, but rather that, under the FBCA, if the Companyhas not called the Special Meeting within 60 days of the date that Starboarddelivered the demand, then a court can intervene to set the time and place ofthe Special Meeting upon application of any requesting shareholder.  It isdisturbing that Darden is even discussing a pushed out timetable for theSpecial Meeting that could cause a shareholder to have to sue to compel acourt to call the Special Meeting.Making matters worse, Mr. Stroud stated to Darden shareholders on Friday thatthe Company views the 60-day clock as starting on the date that the consentswere certified by IVS.  The FBCA is clear that the 60-day clock starts whenthe demand was delivered, not certified.  The Board is playing fast and loosewith Florida law and the corporate machinery to serve its own interests whileignoring the clear will of shareholders. It is time for Darden to stop making a mockery of corporate governance. Instead of misleading shareholders and discussing the latest possible date theCompany can hold the Special Meeting, you should be respecting the clear willof your shareholders by either immediately calling the Special Meeting orpublicly confirming that any Red Lobster transaction will be subject toshareholder approval. We will view any unsatisfactory response as a clear failure of corporategovernance for which the current Board must be held accountable.  As you know,we are presently contemplating the nomination of a slate of directors forelection at the 2014 Annual Meeting.  The current Board's shortcomings todate, both operationally and from a governance standpoint, demonstrate that asignificant level of Board change is required atDarden.                                                           Best Regards,Jeffrey C. SmithManaging MemberStarboard Value LP