A dissident shareholder won its battle today to seize control of Darden Restaurants’ board, mustering enough votes from fellow shareholders to oust the whole slate of directors put forth by the Olive Garden and Capital Grille parent.
With an ally in every board seat, Starboard Value will likely pursue a dramatic change in the casual-dining giant’s direction. During the highly visible proxy fight, Starboard had said it would pursue the sale of Darden’s emerging brands, including Yard House, the company’s current main expansion vehicle.
It also raised the prospect of franchising Olive Garden, Darden’s largest holding since the sale of Red Lobster earlier this year. Starboard has aired a detailed turnaround plan for the ailing Italian chain, calling for such changes as shortening the menu, changing the standard order of free breadsticks, using a lighter hand to dress salads, and resuming the addition of salt to the water used for boiling pasta.
Controlling the board will almost certainly give Starboard the choice of a new CEO. Clarence Otis, the current holder of that title and a longtime target of Starboard criticism, has agreed to step down when a successor is found, but not later than Dec. 31.
Among the 12 pro-Starboard directors who were elected to the board are a number of prominent industry veterans, including Jean Birch, the former president of IHOP; Alan Stillman, the founder of T.G.I. Friday’s and Smith & Wollensky’s; and Brad Blum, the former president of Olive Garden and a one-time CEO of Burger King. Also winning a seat was Jeffrey C. Smith, the CEO of Starboard.
The board election ends a bitter proxy fight that included the release of extensive slide presentations and communications from both Starboard and Darden about how the company should be run.
Darden’s shareholder meeting is being held today in New York City.