Darden Restaurants: Breakup Battle Heats Up

The gloves are off. Barington Capital Group, which first proposed restructuring Darden Restaurants (DRI) by working with management, has changed course and asked Darden's independent directors to name an independent chairman and consider hiring a new CEO.

Bloomberg

Barington, which previously reported that it controlled more than 2% of Darden shares, also announced its support of Starboard Value's push to allow shareholders to vote on the company's proposed Red Lobster separation. See the details in this morning's press release.

The news comes in the wake of a number of moves by Darden that could be seen as less than shareholder friendly. Earlier this month the company replaced its investor day meeting with individual meetings with shareholders and analysts. Then last week Darden amended its corporate bylaws. The company's SEC filing said the amendments were made as part of its regular corporate governance review and the bylaws were updated to address current market practices.

The amendments require shareholders proposing director nominations or additional business at a shareholder meeting to hold their shares through the date of the meeting. They also have to make additional disclosures regarding their interest in the company, the business being proposed and/or their relationship with the shareholder nominees. Those being nominated for director must also make additional disclosures.

"As we have said previously, our focus is on doing what is in the best interest of all Darden shareholders and the Board is confident in the actions the Company is taking to deliver on this responsibility," the company said in an email. "We have been speaking directly with our shareholders and look forward to continuing that dialogue."

ISS Corporate Services has given Darden's corporate governance a QuickScore of 10 out of a range of 1 (low governance risk) to 10 (high governance risk). ISS highlights fact that the chairman and CEO roles have not been separated that and that 45% of the non-executive board members have lengthy tenure.

Darden shares rose slightly on the Barington news. They’re up 0.3% to $50.86 at 2:09 p.m. today, as by now it's likely a far gone conclusion that the battle over Darden's future is likely to be heated.