Starboard Value LP, one of the largest shareholders of Darden Restaurants, Inc. (NYSE:DRI) sent a new letter to the board of directors of the restaurant operator demanding for a new direction and leadership.

Darden Restaurants

Jeffrey Smith, managing member of Starboard Value LP emphasized that the current board of Darden Restaurants, Inc. (NYSE:DRI) has proven that it cannot be trusted to oversee its business or to serve as an effective steward of shareholder capital.

Egregious violation of shareholder trust

According to Smith, the board of directors of Darden Restaurants, Inc. (NYSE:DRI) committed one of the most violation of shareholder trust after announcing its agreement to sell Red Lobster’s business and real estate assets in May 16, 2014.

He pointed out that the transaction to sell Red Lobster destroyed substantial shareholder value and contradicted a clear directive supported by majority of the shareholders of Darden Restaurants, Inc. (NYSE:DRI). Smith noted that the stock price of the company declined around 11% since the announcement and the company underperformed its peers by 16%.

Smith said, “This relative performance represents a destruction of over $1 billion in total shareholder value, and we believe should be the last straw in a string of awful decision-making under the leadership of the current management team and board” of Darden Restaurants, Inc. (NYSE:DRI).

Starboard Value emphasized that the destruction of shareholder value was entirely avoidable citing the reason that shareholders urged the board of Darden Restaurants, Inc. (NYSE:DRI) to pause, reconsider its plan and hold a special meeting to vote on the proposed sale of Red Lobster. Smith said the company’s board ignored the request of the shareholders, and ‘decided unilaterally to sell Red Lobster.”

“All the board needed to do to avoid this outcome was simply to listen to its shareholders, and either pause the process to sell Red Lobster or agree to make any final transaction subject to a shareholder vote,” said Smith.

Potential board members for Darden Restaurants

Starboard Value assembled a world-class group of potential board members as a better alternative to the current board of Darden Restaurants, Inc. (NYSE:DRI). According to the activist hedge fund, its line up consists of executives with a passion for success, a deep knowledge of the restaurant industry, and a healthy respect for the interests of shareholders and best practices on corporate governance.

The activist hedge fund believed that a fresh perspective, talented leadership and responsible oversight is required for Darden Restaurants, Inc. (NYSE:DRI) to returns to basics—great people, great food, fair prices and enhanced customer experience.

Starboard Value said the group of potential board members already started working together for months, and they are prepared to start the “arduous task of rebuilding” Darden Restaurants, Inc. (NYSE:DRI) and regaining the trust of its shareholders and employees.