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Starboard Files Definitive Solicitation Statement To Call A Special Meeting Of Darden Shareholders

Believes Special Meeting is the Best Way for Shareholders to Formally Express Their Views and Influence the Red Lobster Separation

NEW YORK, March 20, 2014 /PRNewswire/ -- Starboard Value LP (together with its affiliates, "Starboard"), one of the largest shareholders of Darden Restaurants, Inc. ("Darden" or the "Company") (NYSE:DRI), with ownership of approximately 5.5% of the outstanding common stock of the Company, announced today that it has filed a Definitive Solicitation Statement with the Securities and Exchange Commission seeking to call a Special Meeting of the Company's shareholders in order to provide shareholders with a democratic forum for expressing their views on the proposed separation of Red Lobster.  Starboard has stated that if it is successful in calling the Special Meeting, it intends to solicit shareholder support to approve a non-binding resolution urging the Darden Board not to approve any agreement or proposed transaction involving a Red Lobster separation or spin-off prior to the 2014 Annual Meeting unless such agreement or transaction would require shareholder approval.

Starboard expects to mail the Definitive Solicitation Statement and the accompanying WHITE request card to shareholders on or about March 20, 2014.  Starboard also expects that the record date for the Special Meeting solicitation will be March 20, 2014, the date that Starboard anticipates delivering a signed WHITE written request card to the Company. 

Starboard has also delivered a letter to Darden shareholders together with the Solicitation Statement, the full text of which is available for viewing at the following link: http://tinyurl.com/Letter-To-Darden-Shareholders

Important Excerpts From Starboard's Letter to Shareholders include:

On Why Starboard is Seeking to Take This Extraordinary Step of Calling a Special Meeting to Approve a Non-Binding Resolution:

"Management appears to be targeting completion of the Red Lobster Separation prior to the Company's 2014 Annual Meeting of Shareholders (the "2014 Annual Meeting").  Under the Company's restrictive Bylaws, the only practical way for shareholders to influence or seek to change the composition of the Board is at an annual meeting . . . We are concerned that one reason Darden may be hurrying to complete the Red Lobster Separation prior to the 2014 Annual Meeting is to limit shareholders' ability to influence this critical transaction through the election of an alternate slate of directors."

"If the Board wishes to avoid multiple potential solicitations, they can easily avoid this by (i) deferring any final decision on the Red Lobster Separation until after the 2014 Annual Meeting, (ii) agreeing to put any specific Red Lobster transaction up to a shareholder vote, or (iii) engaging with Starboard now to discuss Board composition and ensure that shareholders have adequate representation to assist in the decision making around Red Lobster and other initiatives."

On How Starboard Would Expect the Board to Respond if Shareholders Support the Calling of the Special Meeting:

"If we are successful in calling the Special Meeting, we believe that it would be incumbent upon the Board to defer any final decision regarding the Red Lobster Separation until after the Special Meeting is held.  Further, if shareholders support our resolution at the Special Meeting, we are hopeful that the Board will not proceed with the Red Lobster Separation prior to the 2014 Annual Meeting without shareholder approval.  It is important to understand that Darden's entire Board is up for election just a few months after the expected date of the Special Meeting.  We do not believe that the Board would sanction what we would view as an egregious violation of good corporate governance, like proceeding with the Red Lobster Separation in direct opposition to a clear shareholder directive, especially just months before a potential election contest."

On How Management Has Failed to Present the Case for Separating Red Lobster Now:

"Although management did release an investor presentation on March 3, 2014 (the "Investor Presentation") discussing some of the reasons that the Company chose to separate Red Lobster and other alternatives that management considered, we believe that the Investor Presentation (i) is missing numerous critical details necessary to facilitate a constructive dialogue with shareholders regarding the Red Lobster Separation and possible alternatives, (ii) does not provide sufficient proof that the Red Lobster Separation will create value for shareholders or is better for shareholders than other alternatives, and (iii) contains numerous incomplete and highly misleading statements.  Further, we have serious concerns that the interests of management and the Board are not entirely aligned with the interests of shareholders as it relates to the Red Lobster Separation."

"To be clear, we are not saying that the Company should never separate Red Lobster, or any other concept, but rather that now is not the right time to separate Red Lobster."

On Starboard's Lack of Trust in Management and the Board to Make This Critical and Irreversible Decision to Separate Red Lobster: 

"Darden has underperformed both its closest competitors and the group of companies it identifies as peers for purposes of setting executive compensation by approximately 300% over the last five years."

"Given what we believe to be their track record of poor decision making and execution, we do not think management and the Board should be trusted to make this significant decision without shareholder involvement."

"According to a recent poll conducted by sell-side research firm Hedgeye Risk Management ("Hedgeye"), 84% of respondents said that they did not believe that management's plan to spin-off Red Lobster would create value."

"In a separate survey, sell-side research firm Bernstein Research found that, 'nearly all survey respondents (78%) evinced dissatisfaction with management; most (69%) would support an activist slate of BOD nominees including 80% of current shareholders.'" 

"Given the doubts that shareholders seem to have about the Red Lobster Separation and what appears to be a broad-based lack of trust and confidence due to management's past decisions and performance, it is critical that shareholders be given an opportunity to formally express their views on the proposed separation before it is too late."

On Darden's Disregard for Shareholder Concerns and a Propensity to Silence Critics:

"Darden has a long history of silencing critics and trying to avoid an active dialogue on the key issues facing the Company.  A recent CNBC article titled Darden Uses Lobster Claws On Critical Analysts chronicles tactics used by Darden to put a muzzle on analysts who provide critical analysis....Similarly, we believe Darden has avoided addressing shareholder concerns to-date regarding the Red Lobster Separation...We are troubled by the Company's continued attempts to avoid open discussion on the most important and difficult issues facing the Company."

"Since the Company has little interest in letting shareholders have their say regarding the Red Lobster Separation, the Special Meeting will provide an alternative forum for shareholders to show the Board that Darden's shareholders will not stand to be silenced on this critical issue."


About Starboard Value LP
Starboard Value LP is a New York-based investment adviser with a focused and differentiated fundamental approach to investing in publicly traded U.S. small cap companies. Starboard invests in deeply undervalued small cap companies and actively engages with management teams and boards of directors to identify and execute on opportunities to unlock value for the benefit of all shareholders.

Investor contacts:
Peter Feld, (212) 201-4878
Gavin Molinelli, (212) 201-4828

Okapi Partners LLC
Patrick McHugh / Lydia Mulyk
(212) 297-0720
(877) 285-5990 (toll-free)
[email protected]

SOURCE Starboard Value LP

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