Shareholder Activism in US

Shareholder Activisim  Darden Restaurants,  owner of the Olive Garden, lost a more than nine-month battle against Starboard Value LP, which persuaded investors to replace the company’s entire board at its shareholder meeting today.

Investors voted for the 12 directors at Darden’s annual meeting in Orlando, Florida, where the company is based.Starboard’s victory followed a carefully orchestrated campaign against Darden that included an almost 300-page list of recommendations for improving the business. Starboard criticized the company for selling off the Red Lobster chain and lobbied instead for Darden to separate its real-estate assets. The investment firm also knocked Olive Garden for giving out too many breadsticks to customers and not selling enough wine.

Starboard has been pushing for changes at Darden since December. Barington Capital Group LP, another activist shareholder, had also lobbied Darden to consider other options to boost value.

Starboard announced the board slate in May, saying Darden’s management had shown “contempt for shareholder interests.” The directors voted in today include the former CEO of Office Depot Inc.;the CEO of Checkers Drive-In Restaurants Inc.; and  the chairman and CEO of Smith & Wollensky Restaurant Group Inc.

Today’s result is “extraordinary” because shareholders typically shy away from replacing an entire board over concerns about continuity.

“Following the Red Lobster sale they seem to have lost touch with their investors,” Elson said in an interview. “You shouldn’t get to this point. Obviously the dissatisfaction level was so significant.”

 Red Lobster Running

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