Jeffrey Smith’ Starboard Value Sends Another Letter To Darden Restaurants Inc.’s (DRI) Board of Directors

Starboard Value LP, managed by Jeffrey Smith, has revealed, in a newly amended filing with the U.S. Securities and Exchange Commission, a letter sent to the board of directors of Darden Restaurants Inc. (NYSE:DRI). In the letter, Starboard underlined the need for a new direction and new leadership at the company.

Darden Restaurants, Inc. (NYSE:DRI)

According to the new filing, Starboard holds 9.45 million shares of Darden Restaurants Inc. (NYSE:DRI), the stake is up from 8.20 million shares the fund held previously. The new position represents 7.1% of common stock outstanding.

In the letter, the investor condemned the board for the recent value destruction at Darden Restaurants Inc. (NYSE:DRI), including the loss of $1 billion in market value relative to the company’s peers since the sale of Red Lobster was announced, which could have easily been avoided had the board paused and listened to its shareholders.

Starboard states that the sale of Red Lobster is the latest in a string of bad decisions by management and the board that have led to the company’s massive stock price underperformance relative to its peers over the past five years. The fund urged the board to allow Starboard’s highly qualified slate of restaurant industry veterans, real estate experts, and corporate governance stewards to begin to take Darden Restaurants in a new and dramatically improved direction without unnecessary delay.

“It has been clear to us for some time that something is horribly wrong at Darden. There isn’t any one silver bullet that can now easily transform Darden. After suffering for many years under failed leadership, it is going to take much more than a new Olive Garden logo or minor adjustments to its compensation program to right the ship. Rather, we believe Darden needs to employ a collection of disciplined operational improvements and strategic actions from top to bottom in line with Bill Darden’s core values. With the right leadership in place, we can once again see an incredibly bright future for the Darden franchise,” Starboard states.

In February of this year, Starboard disclosed an open letter it sent to the shareholders of Darden Restaurants Inc. (NYSE:DRI). The fund stated in the letter that it filed the preliminary solicitation statement in furtherance of seeking shareholder support to demand that Darden Restaurants Inc. (NYSE:DRI) call a special shareholders meeting in order to provide them with a democratic forum for expressing their views on the proposed separation or spin-off of the company’s Red Lobster business. Earlier, the fund sent a letter to Darden Restaurants Inc. (NYSE:DRI) Chairman and CEO Clarence Otis regarding the company’s plans to spin off its Red Lobster business.

Aside from Starboard, Israel Englander’s Millennium Management owns 905,740 shares, and Ken Griffin’s Citadel Investment Group disclosed ownership of 276,467 shares of Darden Restaurants Inc. (NYSE:DRI).

Disclosure: none

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!