Darden Restaurants: Red Lobster and Olive Garden (Orlando Sentinel / May 22, 2014)
This morning’s news release from Darden Restaurants is a unique example of a corporation wading hip deep into a shareholder dispute.
The statement by Orlando-based Darden (NYSE: DRI) praises its own current board of directors and charaterizes a competing board offered by hedge fund-backed Starboard Value as an attempt to seize control of the company. Retail and restaurant writer Sandra Pedicini has been covering the story for months.
The company’s statement today accuses Starboard of “seeking effective control of the Company – representation which is disproportionate to Starboard's recently acquired approximate 6.2% stake in Darden.”
Starboard’s roster of 12 board member replacements is nothing to sneeze at; it includes industry veterans from companies like IHOP and PepsiCo.
At the heart of the dispute is potential replacement of the current CEO, Clarence Otis.
The dispute is capturing attention from national media. Professor and New York Times writer Steven Davidoff noted that Darden is “a bit of a corporate governance disaster” citing the construction of its $152M headquarters, a ranking from ISS Quickscore at the top of its scale for governance risk, and a D rating from proxy advisors Glass Lewis & Company.