Starboard Value Earns Big Victory Over Darden Restaurants
After a lengthy back and forth battle between Darden Restaurants, Inc. (NYSE: DRI) and activist investor Starboard Value, shareholders made their position clear who they want in charge of making key decisions.
Starboard Value maintains an 8.77-percent stake in Darden and hoped to overthrow the entire board of directors to be replaced with a slate of their own nominees.
During Darden's annual shareholder meeting on Friday morning, investors handed Starboard Value a clear victory with all 12 of its nominees voted in, including Starboard's Chief Executive Jeffrey Smith.
Starboard's slate of directors includes industry veterans who share a belief that Darden Restaurants has mismanaged its properties, including Olive Garden.
Darden made headlines when it released a 294-page presentation in early September on how it can better drive shareholder value and transform its restaurants to better perform in today's difficult climate for food operators.
One of the suggestions the activist investor proposed was to make changes to Olive Garden's famous unlimited breadsticks and salad offerings, which could save up to $5 million per year by eliminating wasted food.
The presentation also stated: "Shockingly, Olive Garden no longer salts the water it uses to boil the pasta, merely to get a longer warranty on its pots. How can management of the world's largest Italian restaurant chain think it is okay to serve poorly prepared pasta."
With the victory, Starboard will have an opportunity to name a new CEO to replace Darden's Clarence Otis, who announced in July he will step down by the end of the year.
"My fellow Board members and I share a common goal for Darden -– to enhance value for all of Darden's stakeholders, including its shareholders, employees, and guests, by focusing on excellence throughout the organization, maintaining and strengthening the investment-grade rating and dividend, and emphasizing a restaurant- and operations-centric culture built around great people," Smith said in a statement following the vote on Friday.
After spiking higher early Friday morning, Darden shares recently traded at $48.85, down about 1 percent.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.