Starboard Rejects Darden's Latest Board Proposal

By Dow Jones Business News, 
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Starboard Value LP rejected Darden Restaurants Inc.'s ( DRI ) latest effort to avoid a proxy fight, calling the casual- dining chain's proposed reshuffling of its 12-member board "just another poorly conceived and suboptimal solution."

The activist investor, with an 8.8% stake in Darden, has been aiming to overthrow the restaurant company's board. Starboard on Wednesday reiterated its view that the election of its own slate of 12 candidates represents the best option for shareholders.

The activist investor also said in its statement that any value that is created through better oversight and the implementation of Starboard's transformation plan, which Starboard intends to release next week, will benefit all Darden shareholders equally in proportion to their ownership.

A Darden spokesman wasn't immediately available to comment.

On Tuesday, Darden unveiled a plan that would raise the number of directors that Starboard can elect to four from three and replace four other board members.

The move set up a new choice for shareholders: Back a revamped board that will include eight new board members out of 12 but that will also be two-thirds nominated by the company, or throw out the entire board and elect 12 directors nominated by Starboard.

Darden had attempted to make changes when it announced in late July the retirement of longtime Chief Executive Clarence Otis Jr. and opened three board seats for Starboard. Starboard dismissed that as a "token change."

Darden made the latest move when it concluded its odds of winning the proxy fight with Starboard were low, but also found shareholders feared handing over the board entirely, The Wall Street Journal reported Tuesday. Darden said in a release the change followed "extensive conversations" with shareholders.

Starboard, and fellow activist Barington Capital Group LP, had earlier wanted to break up Darden's chains, urging a spinoff of Olive Garden, LongHorn and Red Lobster into a separate company and putting Darden's real estate holdings into a third publicly traded company.

Darden then agreed in May to sell Red Lobster for $2.1 billion to private-equity firm Golden Gate Capital, a deal that raised tensions and led Starboard to seek to remove the whole board.

--David Benoit and Joann S. Lublin contributed to this article.

Write to Tess Stynes at tess.stynes@wsj.com

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  09-03-141505ET
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