Starboard Statement On Darden CEO Stepping Down
Starboard Value LP (together with its affiliates, "Starboard"), one of the largest shareholders of Darden Restaurants, Inc. ("Darden" or the "Company") (NYSE: DRI), with beneficial ownership of approximately 8.1% of the outstanding common stock of the Company, today announced it has issued a statement in response to Darden's announcements that Clarence Otis will be stepping down as Chairman and Chief Executive Officer of Darden and that the Company is running a reduced slate of nine director nominees for twelve spots at the 2014 Annual Meeting. Starboard also announced that it expects to file Preliminary Proxy Materials with the SEC today seeking the election of at least a majority of the available seats on Darden's Board at the 2014 Annual Meeting.
Jeffrey C. Smith, Managing Member, Chief Executive Officer and Chief Investment Officer of Starboard Value LP, stated, "The overdue retirement of Clarence Otis is obviously in the best interest of Darden and its shareholders. It is surprising to us that it took this long. It is a shame for all Darden shareholders that this change happened only after the Board sanctioned the destruction of a billion dollars in shareholder value by approving the Red Lobster sale against the vehement objections of its shareholders."
Mr. Smith continued, "We also do not believe it is a coincidence that Darden announced that Mr. Otis is stepping down and that the Board has conceded three seats at this early stage of the proxy contest on the very day that the Company announced the closing of the irreversible and value-destroying Red Lobster sale. Unfortunately, Mr. Otis leaving represents just one small step in the transformation that is urgently needed at Darden. To be clear, the Company still requires a major overhaul at the Board level. This Board has proven over an extended period of time that it is unable to respectfully and capably represent the best interests of the shareholders they were elected to represent and cannot be trusted to make the incredibly important decision as to the selection of the next CEO of Darden. There needs to be a true and complete process to vet both internal and external talent in order to find a truly great, transformational, operationally-focused restaurant leader. This Board has a history of repeatedly making the easy decision, rather than the decision that is best for shareholders. Darden needs a majority change to the Board as soon as possible to jumpstart and complete the process of recruiting a truly great leader.
Further, we view the Company's decision to nominate nine of twelve director candidates as a transparent tactic designed to manipulate and maintain the problematic status quo majority following the 2014 Annual Meeting. This is yet another example of the Board attempting to make an easy decision. Rather than working toward the best possible Board for shareholders, the Board is only willing to offer representation for vacancies created by retiring directors. It is clear that such token Board change is not sufficient given the depth of the value destruction and the abominable corporate governance that this Board has overseen. That this Board would think that the retirement of just two independent directors would erase years of poor performance and oversight demonstrates once again that this Board is out of touch with reality and unwilling to take responsibility for its mistakes or to make the difficult decisions that are necessary to benefit shareholders."
Mr. Smith concluded, "We look forward to the day when the Board is reconstituted with supremely-talented and capable new directors. We fully understand our responsibility to work with any remaining directors, the management team, and all of the great employees of Darden to respect and represent the best interest of shareholders as we improve value and performance at Darden."
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