Starboard Value LP (together with its
affiliates, "Starboard"), one of the largest shareholders of Darden
Restaurants, Inc. ("Darden" or the "Company") 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.
Best Regards,
Jeffrey C. Smith
Managing Member
Starboard Value LP
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