Darden Restaurants did just that, and in a shockingly swift and public fashion. Here’s a look at just how the board of the casual dining giant and parent to brands like Olive Garden and, until recently, Red Lobster, pulled it off.
AP Photo/Alan Diaz, File
Do you know how hard it is to lose control of your entire board? It's really hard. In fact, the vast majority of board members are reelected to their directorships each year. One member getting thrown out by upset shareholders is embarassing, to have all of them chucked is a disaster.
But last week in Orlando, Fla., Olive Garden-owner Darden Restaurants managed to do just that. Activist hedge fund Starboard Value won all 12 seats of Darden's board after a 10-month saga to improve things at the beleaguered restaurant chain.
Board membership is a cushy job. You're paid very well, and only have to show up a few times a year to a meeting and vote on what is usually a small slate of issues. So if you're ever lucky enough to find yourself in one of the comfiest seats in the corporate world, here's what not to do if you want to keep your job.
Investors and analysts had been voicing their concerns over the state of Darden Restaurants, namely its two major brands, Olive Garden and Red Lobster, for months. But it wasn't until the activist hedge fund Barington Capital joined the fray that things got interesting. The fund released a detailed and scathing report on what exactly Darden is doing wrong and asserting that it should spin-off Olive Garden and Red Lobster into a group known as "Darden mature" brands to better focus their efforts for improvement.
Darden announced the day after the Barington report that it would only be spinning off Red Lobster, and putting Olive Garden through a "brand renaissance" of its own devising.
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