This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Starboard Escalates Darden Proxy Fight

NEW YORK (The Deal) -- Activist investor Starboard Value late Monday pressed ahead with its proxy contest to take control of Darden Restaurants' (DRI - Get Report) board despite the restaurant chain's offer of concessions and move to axe its CEO - Clarence Otis.

"To be clear, the company still requires a major overhaul at the board level," Starboard Value's Managing Member Jeff Smith said in a statement "This board has proven over an extended period of time that it is unable to respectfully and capably represent the best interests of the shareholders they were elected to represent and cannot be trusted to make the incredibly important decision as to the selection of the next CEO of Darden."

In addition to the announcement of the departure of Otis, which took place late Monday as well, Darden also offered to give up three seats to Starboard on the company's 12-person board, a move that did not appease Smith. Charles Ledsinger, Darden's Independent Non-Executive Chairman, said the offer provides both "continuity of experience and expertise in the midst of our turnaround efforts as well as additional new directors proposed by Starboard." He added that Darden is committed to taking all appropriate steps to serve the interests of Darden and all Darden shareholders.

The announcement came the same day as the company completed a sale of its Red Lobster chain to Golden Gate Capital for $2.1 billion. As part of that deal, Red Lobster's real estate assets were sold to American Realty Capital Properties (ARCP - Get Report) for $1. 5 billion as part of a sale-lease back arrangement.

Smith has called the two-part spin-off sale value destructive. He noted previously that a large vote in April of shareholders - 57% -- to call for a special meeting for the purpose of having a nonbinding vote on the sale demonstrated that investors never wanted the transaction to take place. Starboard had been seeking to have Darden delay its sale of Red Lobster but it eventually called off its effort to hold the meeting after it appeared the sale was going to go through.

The proxy contest still may have a long and winding path -- Darden has scheduled its annual meeting to take place September 30. Any effort to delay it, as targeted companies often do, could result in a lawsuit filed by Starboard seeking to compel a meeting.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
ARCP $9.90 0.00%
DRI $69.05 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs