One of the dissident shareholders that pushed for dismissal of Darden Restaurants CEO Clarence Otis said the officer’s announced departure would not be enough to right the company’s direction.
Starboard Value LP said further remedies should include giving it a majority of seats on Darden’s board of directors. In announcing Otis’ departure and the completion of a $2.1 billion divestiture of Red Lobster, Darden said yesterday that it would nominate only nine directors for the 12-person board. The action was widely seen as a concession to Starboard and another vocal shareholder, Barington Capital Group, for a voice in Darden’s strategic direction.
But Starboard called the gesture “a transparent tactic to maintain the problematic status quo” and said it would proceed with a securities filing to seek at least seven seats on the board.
The current seat holders “cannot be trusted to make the incredibly important decision as to the selection of the next CEO of Darden,” Starboard CEO Jeffrey Smith said in a statement released this morning.
Darden announced yesterday that Otis would relinquish his duties as CEO no later than Dec. 31, and sooner if a replacement is found before that time. Otis also serves as chairman, a post that would be uncoupled from the CEO post and filled separately, Darden said.
“Unfortunately, Mr. Otis leaving represents just one small step in the transformation that is urgently needed at Darden,” Smith said. He called Otis’ retirement “overdue,” adding, “it is surprising to us that it took this long.”
Starboard has been a loud critic of Otis, Darden’s board, and their decision to sell Red Lobster to Golden Gate Capital for $2.1 billion, blasting the price as woefully low. It sued Darden last week to block the deal, but failed. The transaction closed yesterday.
Starboard, with an 8.1 percent stake in Darden, is one of the company’s largest stakeholders.
Darden has yet to react publicly to Starboard’s comments.