Darden Restaurants overhauls governance policy

Darden Restaurants, the company that recently had its entire 12-member board replaced after a fight with activist investor Starboard Value, announced a series of governance reforms including the scrapping this month of its ‘poison pill’ and greater disclosure of lobbying and political spending.

The new board of the company, which owns the Olive Garden and LongHorn Steakhouse restaurant chains, also aims to amend the charter to give shareholders the ability to call a special meeting with a minimum 10 percent voting threshold as well as adopting a majority voting standard for uncontested elections.

‘The board has a responsibility to be responsive to our shareholders and align with corporate governance best practices,’ Jeff Smith, the board’s new chairman, says in a statement on the company web site. ‘We have already implemented a number of changes and we will seek shareholder approval for several more – chief among them being increased transparency, improved accountability, and enhanced shareholder engagement.’

The elimination of the company’s poison pill – and other provisions designed to protect itself against takeovers – is being brought forward to November 28 from May of next year. The board also decided to eliminate supermajority voting requirements for certain charter amendments.

Last month, Starboard Value gained full control of the board when all 12 members were replaced following a nine-month proxy battle over claims of poor management at the company. Starboard, which received the backing of proxy advisory firms Glass Lewis and ISS in the board elections, called for the sale of real estate assets, menu changes, the spin-off of chains including the Capital Grille, Bahama Breeze and Yard House and a series of other measures.

Investor dissatisfaction with Darden Restaurants was running high after the company sold the Red Lobster chain in July for $2.1 bn to Golden Gate Capital Group. Many investors claimed the sale sacrificed too much value.