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observation of professional defense advisor playbook responses

to activist interests in

Darden Restaurants, Inc.

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THIS IS A PRIVATE CASE REVIEW WEBSITE ADDRESSING BOARD RESPONSIBILITIES RELATING TO ACTIVIST PROPOSALS. THE INFORMATION PRESENTED ON THIS PAGE IS NOT INTENDED FOR ANY OTHER USE.

 

     

Forum reference:

Business news summary of Starboard Value proposal for "Transforming Darden Restaurants"

 

Source: The Wall Street Journal | MoneyBeat, September 12, 2014 article

THE WALL STREET JOURNAL   |

 MARKETS & FINANCE



12:24 pm ET
Sep 12, 2014

Deals

Starboard’s Olive Garden Slides: Salting the Water, Custom Straws and More

 


By David Benoit

From the slides: “The actual dish was barely edible…”

How do you spice up an activist fight? Add salt.

Starboard Value LP filed one of the longest activist slide presentations in recent memory late on Thursday night, laying out the steps they would take if they won control of Olive Garden parent Darden Restaurants Inc.

Nearly 300 pages cover their 12 board nominees, the performance of Darden, supposedly lackluster food at Olive Garden and their road map for cutting costs and breaking up the company.

But Starboard’s suggestions also veered into the mundane restaurant kitchen decisions that are rarely talked about in a boardroom fight. Because Starboard is seeking full control of the board, it had to produce a viable plan for what would happen if it took over to attempt to sway influential proxy-adviser Institutional Shareholder Services Inc.

Here are some highlights one may not have considered investor news in the past:

How dare you stop salting the water for the pasta? (Slide 164)

The unlimited salad and breadsticks isn’t being served properly, and therefore is wasteful. (Slides 104-106)

“To-Go bags are made with high-end materials adding 25-30% cost above competitors’ To-Go bags” (Slide 108)

“Darden’s straws are non-industry length, adding cost for a ‘custom run’ from suppliers.” (Slide 108)

Why do the to-go containers need to be dishwasher safe? (Slide 111)

Why is Olive Garden serving Spanish-style Tapas and Burgers? (Slide 162)

And there are plenty of pictures of botched Olive Garden food service to look at.

Darden said it is reviewing the document, which may take some time, but quickly replied that the company was already doing a lot of the things Starboard suggested. Darden has already criticized Starboard for building this plan with former restaurant executives Darden says have a mixed track record of success. Darden’s full plan, which includes its ideas for turning around Olive Garden, is here and its critique of Starboard is here.

Meanwhile, it’s not like the populace doesn’t still clamor for Olive Garden. The website crashed the day they launched the Never-Ending Pasta Pass, which allows the holder to eat as much pasta as humanly possible, every day, for seven weeks. (Soda included!)

Starboard’s full plan, including an FDR-like pledge for the first 100 days, is below. You can click for a full-screen view at the bottom, using the button to the left of the page numbers.

[To view the Wall Street Journal online slides pictured below, click here.]

[To download the original Starboard Value presentation, click here.]

 

 

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