Clarence Otis, the chairman and CEO of Darden Restaurants, Inc. (NYSE:DRI) stepped down after the company completed the sale of Red Lobster to Golden Gate Capital for $2.1 billion in cash.
Darden Restaurants, Inc. (NYSE:DRI) sold Red Lobster as part of its strategy to improve its operations, reduce costs and focus on opportunities to create value.
In a statement, Otis said, “I am proud to have been a part of Darden’s significant growth and expansion, which has enabled us to reach new consumer segments and markets and create significant long-term shareholder value. With the Red Lobster sale complete and progress on our Olive Garden brand renaissance and other strategic priorities underway, this is the right time for me to step down.”
Darden Restaurants separates chairman and CEO roles
According to the restaurant operator, its independent lead director, Charles A. Ledsinger, Jr. has been appointed as independent non-executive chairman of the board effective immediately. Darden Restaurants, Inc. (NYSE:DRI) also amended its corporate governance policies for the separation of the roles of chairman and CEO.
“Given Darden’s many strengths, we expect an expeditious search process. As we work to identify the company’s next CEO, Darden, its shareholders, employees and guests are well-served by the extraordinary depth and talent of our senior management team,” said Ledsinger, Jr. He also stated that the company excelled under the leadership of Otis.
Darden Restaurants, Inc. (NYSE:DRI) said Otis agreed to continue to serve as CEO until the appointment of his successor or until the end of this year. He will remain as director of the board of the company but will not stand for re-election during the 2014 annual meeting of shareholders.
The company also announced that it would nominate nine of its independent directors for election during the annual meeting of shareholders this year.
“The board’s slate of directors would provide both continuity of experience and expertise in the midst of our turnaround efforts as well as additional new directors proposed by Starboard. We are committed to taking all appropriate steps to serve the interests of Darden and all Darden shareholders,” according to Ledsinger, Jr.
Starboard Value demanded leadership change
The decision of Darden Restaurants, Inc. (NYSE:DRI) to sell Red Lobster was strongly opposed by Starboard Value LP, one of its largest shareholders. The activist hedge fund previously stated that the restaurant operator committed one of most egregious violation of shareholder trust when it entered a deal to sell Red Lobster, and demanded a leadership change.
Starboard Value prepared a group of potential board members to replace the current board of directors of Darden Restaurants, Inc. (NYSE:DRI). According to the activist hedge fund, its line-up of executives have a passion for success, a deep knowledge of the restaurant industry, a healthy respect for the interests of shareholders and best practices on corporate governance.