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Wed, 01 Oct 2014 08:05:00 -0400

Letter Highlights Significant Progress on Operating Priorities, Including Olive Garden Brand Renaissance
Darden's Director Nominees Are Confident in Darden's Future and Their Ability to Drive Superior Growth and Value Creation - For the Benefit of ALL Darden Shareholders
Darden Recommends Shareholders Vote "FOR ALL" on BLUE Proxy Card - the Only Card that Provides for Majority Change and a Balanced Approach of Fresh Perspectives, Continuity and Representation for Starboard Nominees
Warns Shareholders that Any Vote on the White Card Could Result in Giving Total Control of the Board to Starboard and Its Nominees

ORLANDO, Fla., Oct. 1, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that it is mailing a letter to shareholders in connection with the Company's 2014 Annual Meeting of Shareholders.  This letter and other materials regarding the Board's recommendation for the 2014 Annual Meeting can be found on the Company's website and at www.DardenAnnualMeeting.com.

October 1, 2014

Dear Darden Shareholder:

We are pleased to report that the actions we have taken to reinvigorate restaurant performance, reduce costs and focus on opportunities we view as offering the highest value-creating potential are delivering positive results across the Company, including at Olive Garden®, LongHorn Steakhouse® and our Specialty Restaurants, which include The Capital Grille®, Bahama Breeze®, Seasons 52®, Eddie V's® and Yard House®.

At Olive Garden, we are successfully implementing a far-reaching Brand Renaissance plan that includes:

  • A new menu to reinforce value, improve quality, expand choice and variety, and capitalize on the convenience trend by rolling out online To-Go sales, with excellent results thus far;
  • Enhancing the service and experience we provide to our guests.  The introduction of tabletop tablets and enhanced guest service training are two examples of the initiatives underway that we expect will continue to improve guest service and drive efficiencies with minimal capital investment;
  • More impactful and motivating advertising and promotions that emphasize brand-building for Olive Garden, rather than price points; and
  • A re-imaging program to enhance the dining experience, including new plate ware and server uniforms, a new logo and exterior signage, new table top merchandising, and a remodeling plan that contemplates 75 remodeled restaurants in fiscal 2015.

In our view, Gene Lee, Darden's President and Chief Operating Officer, and Dave George, President of Olive Garden, have done an excellent job executing the Olive Garden Brand Renaissance plan since being appointed to their new roles by Darden's Board of Directors in January and September 2013, respectively. 

The progress we are making at Olive Garden is reflected in the operating performance and improvements we reported in the Company's fiscal first quarter 2015 results:

  • Guest experience and satisfaction scores are improving across the system, including Overall, Attentiveness, Pace of Meal and Food Taste, as a result of an intensified focus on service and food quality.  We expect these results to translate into higher traffic trends over time.
  • Online ordering is underway and strengthening the take-out business.  In the first quarter of fiscal 2015, Olive Garden achieved a 13% increase in its take-out business compared to the first quarter last year.  In recent weeks, To-Go sales have grown at approximately 20% on a year-over-year basis.  Notably, the Company continues to see a 30% increase in check average when guests order online, which will drive margin growth should these trends continue.
  • Initial tests of tablet technology are generating positive results, including increased add-on sales, table turnover, guest survey response rates, and tip percentage for servers. 
  • The pilot remodel program is supporting higher traffic and sales momentum.  The Company has completed three remodels, which introduce significant interior and exterior improvements.  This has resulted in a more than 10% increase in traffic as well as an increase in alcohol and beverage sales.

Our progress is encouraging.  While system-wide improvement will take time given Olive Garden's size and already high unit sales volumes and returns, we have great confidence in Olive Garden's long-term success – and believe our shareholders have reason to be confident too.  The management team that is currently executing the Olive Garden Brand Renaissance has a strong record with Darden's other brands, having overseen tremendous growth at LongHorn Steakhouse and our Specialty Restaurants, all of which are continuing to deliver solid results.

  • At LongHorn Steakhouse, efforts to build the brand into America's favorite steakhouse are on track.  In fiscal 2014, LongHorn's same-restaurant sales (SRS) grew 2.7% year-over-year and exceeded the industry by 3.8 percentage points. This momentum carried into the 2015 fiscal first quarter with SRS up 2.8%.
  • At Darden's Specialty Restaurants, we continue to achieve solid growth.  In fiscal 2014, total sales exceeded $1.2 billion, a 25.2% increase from the prior year, and blended SRS grew 1.6%.  In the 2015 fiscal first quarter, blended SRS grew 2.1%.  We are confident that we will reach our goal of $1 billion in incremental sales from our Specialty Restaurant brands over the next five years.  

In addition to these brand initiatives, we have meaningfully reduced operating support costs.  In fiscal 2015, selling, general and administrative expenses as a percentage of sales are expected to be the lowest since Darden became a public company.

Even with this progress, we recognize that more must be done – and is being done – to return Darden to the superior growth and value creation for which it has historically been known.  We have made important enhancements to the Company's leadership structure, including announcing a search for a new Chief Executive Officer and the previously discussed appointments of Messrs. Lee and George.  In addition, we have announced a new slate of director nominees, who if elected, would result in eight of Darden's 12 independent directors being new to the Board this year, the election of a new independent Board chair and the reconstitution of all the Board's committees.  Darden's new slate includes four new, highly qualified independent nominees unaffiliated with the Company or Starboard; four continuing director nominees, all of who are committed to the positive change Darden is undertaking and to working constructively with the other members of the reconstituted Board; and four seats to be filled by candidates nominated by Starboard.  We believe Darden's slate provides the optimal balance of fresh perspectives and continuity of experience and insight into Darden's operations and industry trends overtime. 

Darden is a global company with a complex business that includes unique supply chain requirements, multiple consumer segments, specific brand needs and 150,000 employees.  It requires long-term vision and long-term strategic planning to drive sustainable value creation.  Darden's director nominees have experience and proven records directly overseeing complex operations similar to Darden's, guiding successful strategic execution, operational turnarounds and asset optimization initiatives. Collectively, we believe we have the expertise needed to continue the progress Darden is making and to capture the opportunities ahead for additional value creation.  This expertise includes:

  • Leading global consumer and retail companies with skill sets in operations, food service and restaurants, hospitality, consumer marketing/brand building, supply chain and distribution management, and consumer packaged goods;
  • Developing and executing significant corporate turnarounds through operational improvements, increased financial discipline and exiting of non-core businesses;
  • Optimizing asset portfolios through franchising, real estate development, and mergers and acquisitions, with many of Darden's independent directors directly overseeing or guiding the strategic direction of real estate portfolios;
  • Serving as senior executive leaders at other publicly traded companies, including in the roles of Chairman, Chief Executive Officer, Chief Operating Officer, as well as serving in Board committee leadership roles and as individual directors; and
  • Developing strategies and policies in other key areas, including technology, human resources, and corporate governance.

All of us on Darden's slate – our four new independent directors and our four continuing independent directors – are focused on enhancing shareholder value.  We are open to exploring all options for Darden's assets to ensure that we deliver on this objective, and we are united in our commitment to representing the best interests of ALL Darden shareholders.

In contrast, we are concerned that ceding total control of Darden's Board to Starboard and its preferred nominees would be disruptive to the Company and to the value of your investment in Darden.  Further, we do not believe that it is in the interests of all shareholders to have 86% of the Board be composed of directors selected and nominated by a single minority shareholder who holds 8.8% of the shares. 

We believe that decisions critical to Darden's success and its ability to maintain its industry-leading $2.20 per share annual dividend – including decisions regarding capital allocation, strategic direction and the selection of Darden's next Chief Executive Officer – should be made by a truly independent, well-rounded Board that represents the interests of all Darden shareholders.

We urge you: Vote for the benefits and balance provided by fresh perspectives and continuity.  Vote for experience.  Support progress and value creation.  Vote "FOR ALL" of Darden's highly qualified and independent nominees on the BLUE proxy card today.

Sincerely,

/s/ Michael W. Barnes

Michael W. Barnes

/s/ Gregory L. Burns

Gregory L. Burns

/s/ Jeffrey H. Fox

Jeffrey H. Fox

/s/Christopher J. Fraleigh

Christopher J. Fraleigh





/s/ Steve Odland           

Steve Odland               

/s/ Michael D. Rose

Michael D. Rose          

/s/ Maria A. Sastre

Maria A. Sastre

/s/ Enrique Silva

Enrique Silva

 

YOUR VOTE IS IMPORTANT!

 

To ensure that your instructions are received timely, we urge you to vote by telephone or Internet by following the easy instructions on the enclosed BLUE proxy card.

 

CAUTION: Any vote on the white card could result in the full turnover of Darden's Board.  Darden urges shareholders – DO NOT SIGN OR RETURN ANY WHITE CARD. SIMPLY DISCARD IT.

 

If you have questions or need assistance in voting your shares,
please contact our proxy solicitor:

 

INNISFREE M&A INCORPORATED

 

Stockholders call toll-free: (877) 825-8631
Banks and Brokers call collect: (212) 750-5833

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's and Yard House – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

Contacts:


(Analysts) Matthew Stroud

(407) 245-5288

(Media) Bob McAdam

(407) 245-5404

SOURCE Darden Restaurants, Inc.

Tue, 30 Sep 2014 14:12:00 -0400

Egan-Jones Again Recognizes the Benefits of Fresh Perspectives and Continuity of Experience and Insight as Provided by Darden's Slate as Well as the Risks of Ceding Control to Starboard

ORLANDO, Fla., Sept. 30, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that leading independent proxy advisory firm, Egan-Jones Proxy Services ("Egan-Jones"), has reaffirmed its recommendation that Darden shareholders vote on the Company's BLUE proxy card "FOR ALL" of Darden's nominees to the Board of Directors at the Company's 2014 Annual Meeting of Shareholders to be held on October 10, 2014.

In its September 25, 2014 report, and reaffirmed in its September 30, 2014 report, Egan-Jones stated[1]:

We believe that support for voting the management ballot is merited and that voting the management ballot (BLUE PROXY CARD) is in the best interest of the Company and its shareholders. In arriving at that conclusion, we have considered the following factors:

  1. We applaud the Company having proposed that its 12-member board include eight new nominees for director including four picked by the dissidents. We believe that this balanced approach would give Starboard significant input on board deliberations and decisions with a board representation percentage of 33%, generously far exceeding its reported 8.8% interest in the Company.
  2. We believe that the total turnover of the board, as proposed by the dissidents, would have an extremely disruptive effect upon the Company's implementation of its current plans and search for a new CEO. We also note that we believe it would be unwise to turn over complete control of the board to a shareholder which has not paid shareholders a control premium for their shares.
  3. We believe that the new slate proposed by management is comprised of individuals who have a broad base of skills and expertise needed to support the Company going forward.

The nominees appear qualified, and we recommend that clients vote "FOR ALL" the nominees.

Darden stated:

We are pleased that this proxy advisory firm has again recognized the importance of continuity, the benefits of Darden's balanced slate, and the experience and qualifications of our nominees, and has reaffirmed its recommendation that Darden shareholders vote "FOR ALL" of the Company's director nominees on the BLUE proxy card.   

We have heard from many of our shareholders who do not support ceding total control of the Board to Starboard and its nominees. While these shareholders support new perspectives, they also recognize the risks of the full board turnover that Starboard is seeking.  Darden's slate of director nominees is the only slate that provides the benefit and balance of new perspectives as well as continuity of experience and insights with four new independent nominees unaffiliated with the Company or Starboard, four highly qualified continuing independent nominees, and four seats to be filled by Starboard – resulting in eight of 12 new independent directors this year. 

In addition to Egan-Jones and many industry analysts and shareholders, another proxy advisory firm, Glass Lewis & Co. ("Glass Lewis"), has also acknowledged the benefits of continuity as well as the improvements underway in Darden's operations, governance and leadership that are already showing positive results, including at Olive Garden®.  Although Glass Lewis did not recommend voting on the blue card, in its September 24, 2014 report, Glass Lewis stated1:

"In our view, the strongest argument for considering support of the Company's proposed slate is that it would facilitate a degree of continuity, which could help to maintain positive momentum that Darden has going for it."

"shareholders should be encouraged by some of Darden's actions during recent months -- including a new comprehensive plan to enhance shareholder value, governance improvements, leadership changes and an operational turnaround plan for its largest brand."

Darden noted that by attempting to replace all 12 members of Darden's Board with its own preferred nominees, Starboard is seeking effective control of the Company.  Darden does not believe that it is in the best interests of all shareholders for a single minority shareholder to control 86% of the Board's representation when it holds 8.8% of the shares2

Darden shareholders are reminded that their vote is important, no matter how many or how few shares they own.  The Darden Board urges shareholders to vote ONLY on the BLUE proxy card "FOR ALL" of Darden's highly qualified, experienced and independent director nomineesMichael W. Barnes, Gregory L. Burns, Jeffrey H. Fox, Christopher J. Fraleigh, Steve Odland, Michael D. Rose, Maria A. Sastre and Enrique Silva.  Shareholders may vote by mail, phone or internet following the instructions on the BLUE proxy card. 

CAUTION: Any vote on the white card could result in the full turnover of Darden's Board.  Darden urges shareholders – DO NOT SIGN OR RETURN ANY WHITE CARD. SIMPLY DISCARD IT.

Innisfree M&A Incorporated is serving as the Company's proxy solicitor and can be contacted toll-free at (877) 825-8631.

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse®, Bahama Breeze®, Seasons 52®, The Capital Grille®, Eddie V's® and Yard House® – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

1 Permission to use quotations neither sought nor obtained

2 Assumes 14-member Board.

NEWS/INFORMATION

Corporate Relations

P.O. Box 695011

Orlando, FL 32869-5011


Contacts:

(Analysts) Matthew Stroud

(407) 245-5288

(Media) Bob McAdam

(407) 245-5404

 

SOURCE Darden Restaurants, Inc.

Fri, 26 Sep 2014 07:00:00 -0400

Darden Says Many Shareholders Have Expressed Support for New Perspectives But Also Recognize the Risks of Ceding Total Control of the Board to Starboard and Its Nominees
Darden Recommends Shareholders Vote "FOR ALL" on BLUE Proxy Card - the Only Card that Provides for Majority Change and a Balanced Approach of Fresh Perspectives, Continuity and Representation for Starboard Nominees
Warns Shareholders that Any Vote on the White Card Could Result in Giving Total Control of the Board to Starboard and Its Nominees

ORLANDO, Fla., Sept. 26, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today issued the following statement regarding a September 25, 2014 report by Institutional Shareholder Services ("ISS").  The report relates to the election of directors to Darden's Board of Directors at the Company's 2014 Annual Meeting of Shareholders to be held on October 10, 2014.

We believe that shareholders should be alarmed that ISS has recommended wholesale change with virtually NO regard in its report to the positive improvement underway in Darden's operations, the risks associated with the full Board turnover that Starboard Value L.P. and its affiliates ("Starboard") is seeking, and the meaningful enhancements made to Darden's leadership structure, including the search for a new Chief Executive Officer and the Company's new slate of independent director nominees, which would result in eight of 12 directors new this year.  Instead, the ISS report places large reliance on mistaken perceptions regarding the Red Lobster transaction that are inconsistent with the facts.

The sale of Red Lobster was the culmination of a robust and deliberate review process that began in early 2013.  This process was designed to enable Darden to maximize value and minimize risks associated with continuing to own the business, including risks from the brand's ongoing deterioration and uncertain pathway for recovery.  The sale is also consistent with Darden's strategy of increasing its focus on its Olive Garden® Brand Renaissance.  The $2.1 billion all cash consideration from the Red Lobster sale provided Darden with immediate and certain value to reduce debt and support our capital return initiatives, including a significant share repurchase and maintaining the Company's annual dividend at $2.20 per share.  The flawed analysis upon which ISS relies results in $107 million of incorrect costs that were never incurred and undervalues the amount of the deal consideration attributable to Red Lobster's operating business and related assets by nearly half a billion dollars, as detailed in the presentation and associated press release issued by Darden on August 4, 2014.     

Contrary to ISS's view, we have heard from many shareholders who do not support ceding total control of the Board to Starboard and its nominees. While these shareholders support new perspectives, they also recognize the risks of the full board turnover that Starboard is seeking – risks that ISS appears to have ignored.  Darden's slate of director nominees is the only slate that provides the benefit and balance of new perspectives as well as continuity of experience and insights with four new independent nominees unaffiliated with the Company or Starboard, four highly qualified continuing independent nominees, and four seats to be filled by Starboard – resulting in eight of 12 new independent directors this year.

There are critical and value-impacting decisions facing Darden – including the selection of Darden's next Chief Executive Officer and strategic decisions regarding our brands, cost structure and operating initiatives.  We believe these decisions are best made by an independent, balanced Board that is comprised of directors who are best-positioned to represent the interests of ALL Darden shareholders.  Indeed, we believe it would be a mistake to entrust these decisions to the handpicked nominees of one minority shareholder, Starboard. In doing so, the ISS recommendation would replace the robust boardroom debate required of sound corporate governance and enabled by independent thinkers with Starboard's 12 director nominees who are already committed to following Starboard's point of view. 

In determining their vote, we urge all Darden shareholders to consider the following:

  • We are making significant progress on our operating priorities, including the Olive Garden Brand Renaissance.  In a "people facing" business where relationships matter, too much turnover, particularly at the leadership level, can be distracting and disruptive.  Darden has already announced a search for a new Chief Executive Officer.  We do not believe it is in shareholders' best interests to elect an entirely new Board, which could impede initiatives that are largely underway and delivering results.
  • We believe Darden's four continuing independent directors provide critical knowledge and insights about the Company, the industry and what has made Darden's brands successful over time and through various economic cycles.  This institutional knowledge cannot be replaced or replicated by any of Starboard's nominees; we believe that removing all of Darden's continuing nominees, and the knowledge they provide, would hinder the progress we are making and successful decision making going forward.
  • New, independent perspectives are valuable.  Darden's slate contemplates four new independent nominees unaffiliated with the Company or Starboard as well as four seats to be filled by candidates proposed by Starboard.  All of Darden's director nominees share the common goal of enhancing shareholder value and are prepared to work collaboratively with the four Starboard nominees to consider all alternatives to achieve this objective.   

In contrast, in addition to what we believe are significant experience gaps in the Starboard slate, four of Starboard's nominees have been nominated and added to at least one other Board through Starboard (Peter Feld, James Fogarty, Cynthia Jamison and Jeff Smith), and several nominees have previously led their own activism campaigns or served as dissident director candidates (Betsy Atkins, Brad Blum, Peter Feld, William Lenehan and Jeff Smith).  In addition, as previously detailed in a prior press release, a review of the public record shows a web of numerous other connections that Starboard's director nominees have to Starboard, to Jeff Smith and to each other, and Starboard's nominees have already publicly pre-committed themselves to following Starboard's plan.  These factors raise concerns to us about the independence of Starboard's nominees and their willingness to serve the best interests of ALL Darden shareholders.

We do not believe Starboard's director nominees are best suited to take total control of Darden's Board of Directors.

In another contest for control, even ISS has recognized the value of a truly independent dissident slate comprised solely of nominees who have no prior affiliation with the dissident and are "independent of the large dissident shareholder…so that the proposed change in control of the board is not a de facto shift of control to that shareholder itself.  The willingness of that shareholder to keep any of its employees out of the nomination, moreover, strongly suggests an appropriate attentiveness on [the dissident's] part to the independent fiduciary role of the board, and a sharp focus on optimizing the chances for the company's success under the reconstituted board."1

  • While ISS suggests that Starboard will add back two of Darden's current directors, we do not believe that two isolated voices – against twelve nominees already predisposed and pre-committed to one shareholder's point of view – will provide for the meaningful, independent and robust boardroom debate and direction that is required to drive sustainable value creation, particularly given the strategic decisions that Darden faces.  Further, we see no reason for shareholders to entrust Starboard and its nominees to make these selections; we believe shareholders should decide for themselves which directors should be elected.
  • Darden is a global company with a complex business that includes unique supply chain requirements, multiple consumer segments, specific brand needs and 150,000 employees.  It requires long-term vision and long-term strategic planning to drive sustainable value creation.  Darden's director nominees have experience and proven records directly overseeing complex operations similar to Darden's, guiding successful strategic execution, operational turnarounds and asset optimization initiatives.
  • By attempting to replace all 12 members of Darden's Board with its own preferred nominees, Starboard is seeking effective control of the Company.  We do not believe that it is in the interests of all shareholders for a single minority shareholder to control 86% of the Board's representation when it holds 8.8% of the shares2

Darden shareholders are reminded that their vote is important, no matter how many or how few shares they own.  The Darden Board urges shareholders to vote ONLY on the BLUE proxy card "FOR ALL" of Darden's highly qualified, experienced and independent director nomineesMichael W. Barnes, Gregory L. Burns, Jeffrey H. Fox, Christopher J. Fraleigh, Steve Odland, Michael D. Rose, Maria A. Sastre and Enrique Silva.  Shareholders may vote by mail, phone or internet following the instructions on the BLUE proxy card. 

CAUTION: Any vote on the white card could result in the full turnover of Darden's Board.  Darden urges shareholders – DO NOT SIGN OR RETURN ANY WHITE CARD. SIMPLY DISCARD IT.

Innisfree M&A Incorporated is serving as the Company's proxy solicitor and can be contacted toll-free at (877) 825-8631.

1 ISS Recommendation in Glenview Capital Management's Consent Solicitation to Replace the Entire Board of Health Management Associates (HMA), 08-Aug-2013. Permission to use quotations neither sought nor obtained.
2 Assumes 14-member Board.

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse®, Bahama Breeze®, Seasons 52®, The Capital Grille®, Eddie V's® and Yard House® – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

Contacts:


(Analysts) Matthew Stroud

(407) 245-5288

(Media) Bob McAdam

(407) 245-5404

SOURCE Darden Restaurants, Inc.

Thu, 25 Sep 2014 15:02:00 -0400

Egan-Jones Recognizes the Benefits of Fresh Perspectives and Continuity of Experience and Insight as Provided by Darden's Slate as Well as the Risks of Ceding Control to Starboard

ORLANDO, Fla., Sept. 25, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that leading independent proxy advisory firm, Egan-Jones Proxy Services, has recommended that Darden shareholders vote on the Company's BLUE proxy card "FOR ALL" of Darden's nominees to the Board of Directors at the Company's 2014 Annual Meeting of Shareholders to be held on October 10, 2014.

In its September 25, 2014, report, Egan-Jones stated[1]:

We believe that support for voting the management ballot is merited and that voting the management ballot (BLUE PROXY CARD) is in the best interest of the Company and its shareholders. In arriving at that conclusion, we have considered the following factors:

  1. We applaud the Company having proposed that its 12-member board include eight new nominees for director including four picked by the dissidents. We believe that this balanced approach would give Starboard significant input on board deliberations and decisions with a board representation percentage of 33%, generously far exceeding its reported 8.8% interest in the Company.
  2. We believe that the total turnover of the board, as proposed by the dissidents, would have an extremely disruptive effect upon the Company's implementation of its current plans and search for a new CEO. We also note that we believe it would be unwise to turn over complete control of the board to a shareholder which has not paid shareholders a control premium for their shares.
  3. We believe that the new slate proposed by management is comprised of individuals who have a broad base of skills and expertise needed to support the Company going forward.

The nominees appear qualified, and we recommend that clients vote "FOR ALL" the nominees.

Darden stated:

We are pleased that this leading proxy advisory firm recognizes the benefits of Darden's balanced slate, the importance of continuity, and the experience and qualifications of our nominees, and has recommended Darden shareholders vote "FOR ALL" of the Company's director nominees on the BLUE proxy card. 

Darden noted that, in addition to Egan-Jones and many industry analysts (as detailed in the Company's September 22, 2014 press release), another proxy advisory firm, Glass Lewis & Co. ("Glass Lewis"), has also acknowledged the benefits of continuity as well as the improvements underway in Darden's operations, governance and leadership that are already showing positive results, including at Olive Garden®.  Although Glass Lewis did not recommend voting on the blue card, in its September 24, 2014, report Glass Lewis stated1:

"In our view, the strongest argument for considering support of the Company's proposed slate is that it would facilitate a degree of continuity, which could help to maintain positive momentum that Darden has going for it."

"shareholders should be encouraged by some of Darden's actions during recent months -- including a new comprehensive plan to enhance shareholder value, governance improvements, leadership changes and an operational turnaround plan for its largest brand."

Darden shareholders are reminded that their vote is important, no matter how many or how few shares they own.  The Darden Board urges shareholders to vote ONLY on the BLUE proxy card "FOR ALL" of Darden's highly qualified, experienced and independent director nomineesMichael W. Barnes, Gregory L. Burns, Jeffrey H. Fox, Christopher J. Fraleigh, Steve Odland, Michael D. Rose, Maria A. Sastre and Enrique Silva.  Shareholders may vote by mail, phone or internet following the instructions on the BLUE proxy card. 

CAUTION: Any vote on the white card is a vote for Starboard's control slate as it could revoke any previous proxy submitted using the BLUE proxy card.  Only the latest-dated proxy counts. Darden urges shareholders – DO NOT SIGN OR RETURN ANY WHITE CARD. SIMPLY DISCARD IT.

Innisfree M&A Incorporated is serving as the Company's proxy solicitor and can be contacted toll-free at (877) 825-8631.

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse®, Bahama Breeze®, Seasons 52®, The Capital Grille®, Eddie V's® and Yard House® – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

[1] Permission to use quotations neither sought nor obtained

Contacts:
(Analysts) Matthew Stroud (407) 245-5288
(Media) Bob McAdam (407) 245-5404 

SOURCE Darden Restaurants, Inc.

Tue, 23 Sep 2014 08:03:00 -0400

Highlights Starboard's Troubling, Inconsistent, Contradictory and Misleading Statements
Recommends Darden Shareholders Vote "FOR ALL" on the BLUE Proxy Card Today

ORLANDO, Fla., Sept. 23, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today issued an open letter to shareholders in connection with the Company's 2014 Annual Meeting of Shareholders.  This and other materials regarding the Board's recommendation for the 2014 Annual Meeting can be found on the Company's website and at www.DardenAnnualMeeting.com.

Dear Darden Shareholder:

As demonstrated by our recent results, the passionate support we have received from tens of thousands of guests, and the continued dedication of our 150,000 employees, we are making significant progress on Darden's operating priorities, including the Olive Garden® Brand Renaissance, for the benefit of our shareholders, employees and guests.  We strongly believe that we are on the right track to achieve the superior levels of growth and value creation for which Darden has been known.

As we work to build on this momentum, there are critical and value-impacting decisions facing the Company – including the selection of Darden's next Chief Executive Officer and strategic decisions regarding our brands, cost structure and operating initiatives.  We believe these decisions are best made by a truly independent Board that is comprised of directors who represent and are committed to serving the interests of ALL Darden shareholders. 

All eight of Darden's independent director nominees, including our four new independent nominees and our four continuing independent directors, are indeed committed to serving the best interests of all Darden shareholders.  We share the common goal of enhancing shareholder value, and we are prepared to work collaboratively with the four Starboard nominees that our slate contemplates to achieve this objective.

We are deeply concerned, however, about the future of Darden if Starboard's slate is elected and believe it is important to correct the record with regard to a number of inconsistent, contradictory and misleading statements made by Starboard as part of its efforts to take control of your company.

The Loyalty Oath of Starboard's Director Nominees – Our View

According to Starboard's proxy statement, which was filed with the Securities and Exchange Commission:

Each of Starboard's director nominees "is committed to the implementation of [Starboard's] comprehensive turnaround plan for Darden. Therefore, in the event that [Starboard's] director nominees comprise a majority of the Board following the Annual Meeting, we[, Starboard,] expect that the Board will implement [Starboard's] comprehensive turnaround plan for Darden." 

This statement was followed by a 294-page slide presentation on Starboard's plan as well as a press release re-affirming that the "only way to ensure" that the plan is enacted is to elect Starboard's slate of director nominees.  These statements make clear to us that Starboard's nominees have already reached a conclusion on Starboard's plan – and devoted themselves to following it, even though it was formulated without access to non-public details on the Company's business, finances and operating initiatives. 

We find it incredulous that Starboard's nominees have now recently tried to assert that they are not in fact committed to Starboard's plan, stating, "We certainly have not pledged to implement a pre-set agenda as board members, nor has Starboard ever asked us to do so," even though their proxy and other public statements say otherwise.  We believe that the nominees' waffling over their commitment to Starboard's plan underscores the danger of giving control to Starboard and its handpicked nominees. 

Starboard's Hollow "Plan" to "Add Back Up to Two" Current Directors if Shareholders Elect All 12 Starboard Nominees – Our View

Starboard attempts to reassure shareholders who are concerned about Starboard taking control of Darden by now indicating that it has a "plan," if all 12 of its nominees are elected, to consider adding back "up to two" of the Board's incumbent directors to join Starboard's Board and, after the Annual Meeting, "would endeavour to meet with certain of the incumbent directors" as part of this plan.1  Of course, Starboard has not disclosed whether, in seeking only the "right kind of continuity" for your Board, it would require the "up to" two unnamed Darden directors to commit to the same loyalty oath to the Starboard agenda that was elicited from all 12 of Starboard's director nominees.  Nor is it clear whether this Starboard "plan" would result in any offers being made or the best directors being willing to serve in this context.  In any event, we do not believe that it is in the interests of all shareholders for a single minority shareholder to control 86% of the Board's representation when it holds 8.8% of the shares. 

Further, we do not believe that "up to two" isolated voices – against twelve already predisposed nominees who have pre-committed to one shareholder's point of view – will provide for the meaningful, independent and robust Board-room debate and direction that is required to drive sustainable value creation, particularly given the strategic decisions that Darden faces. 

We also question Starboard's sincerity in making this claim since it has failed to (1) specify which Darden directors it would appoint or (2) amend its slate to allow for two of Darden's nominees to be added to the Board as Darden has done for four of Starboard's nominees.  By failing to do so, it appears that Starboard intends to control for itself and its nominees which Darden directors are appointed rather than allow shareholders to decide for themselves – once again, putting Starboard's goal of control in the forefront. 

Starboard Is Misleading You By Portraying Many of Darden's Operating Initiatives as Its Own – Our View

Over the past months, members of Darden's Board and leadership team have been in regular dialogue with Starboard regarding our operating plan.  We have had eight meetings and conversations since January.

In reviewing Starboard's operating plan, many of the concepts which Starboard touts and seeks to present as new are in fact already being executed, and Starboard was informed that these were being executed during our earlier discussions with them.  We are pleased that Starboard appears to agree with much of Darden's plan.

We do not believe it is in shareholders' interests to elect an entirely new Board, which could impede operating initiatives that are largely already underway and delivering results.

Starboard's Olive Garden Plan Replicates Actions Already Underway, Which are Delivering Results

We Believe Starboard's Criticisms of Olive Garden's Management Are Inconsistent with the Real and Measurable Progress Being Made at Olive Garden

Darden's Board – and four continuing director nominees – have made important changes to the Company's leadership and strategy to better address industry challenges and position Darden for success.  We believe these changes were well-considered and timely planned; they are delivering positive results across the Company, including at Olive Garden.

  • Gene Lee was named President and Chief Operating Officer of Darden Restaurants in September 2013.  Previously, he served as President of Darden's Specialty Restaurants for six years.  Under Mr. Lee's leadership, Specialty Restaurants grew from 60 to 175 restaurants, including the acquisition of two brands – Eddie V's® and Yard House® – while delivering annualized sales growth of 17 percent and annual restaurant earnings growth of 26 percent.    
  • Dave George was named President of Olive Garden in January 2013.  Previously, he served as president of LongHorn Steakhouse® for nine years.  Since acquiring the brand in fiscal 2008, Mr. George has successfully grown LongHorn from 290 restaurants to a leading national brand with more than 400 restaurants today.

As discussed in the Company's recent conference call for its fiscal 2015 first quarter results, Olive Garden is improving under the direction of Messrs. Lee and George.  For example:

  • Menu changes are reinforcing value and relevance, improving quality and simplifying processes.
  • Guest experience and satisfaction scores are improving.
  • The take-out business is strengthening, leading to higher To-Go sales.
  • Increased use of tablet technology in restaurants is supporting increased add-on sales, table turns, and tip percentage for servers.
  • Our successful reimaging program is increasing traffic and alcohol and beverage sales.
  • A broader media reach is being implemented with a variety of messages and mediums.

This progress, the strength of our management team as well as their proven records with Darden's other brands give us confidence in the actions we are taking and in Olive Garden's continued success.

We have announced a search for a new Chief Executive Officer.  However, we believe that further changes to the management team or structure, particularly at the brand level, would undermine the progress being made. 

We are also perplexed by Starboard's attack on the Olive Garden management.  Gene Lee and Dave George led the very team that delivered the outstanding results at our Specialty Restaurants and LongHorn Steakhouse – brands that Starboard and its nominees tout as "fantastic," and we are working hard to deliver these same fantastic results at Olive Garden.

Starboard Has Cherry Picked Dates and Misrepresents Darden's Actual Stock Performance – Darden Stock Has Increased and Actually Outperformed Peers Since the Red Lobster Sale Was Announced

Starboard's September 11, 2014 presentation materials show misleading stock performance charts.  Buried in the footnotes are details showing that Starboard has cherry picked an end date of March 14, 2014 – over six months ago – which we believe results in a grossly inaccurate and misleading portrayal of Darden's actual comparable stock performance to date. 

Similarly, Starboard has selectively picked dates to inaccurately portray Darden's stock performance following the sale of Red Lobster, here choosing an end date of July 25, 2014 – almost two months ago.  Contrary to Starboard's claims, Darden's stock price has increased and has outperformed its peers since the announcement.

Starboard Claims that the Red Lobster Sale

 

Furthermore, Darden's Stock Has Meaningfully Outperformed Its Peers Since the Red Lobster Announcement

We Believe that the Starboard Nominees' Experience Gaps and Numerous Connections to Starboard, Jeff Smith and Each Other Undermine Starboard's Claim that Its Slate Is the "Best Board" to Control Darden – Our View

  • Five of Starboard's nominees have NO experience as senior executives of large public companies (Betsy Atkins, Peter Feld, James Fogarty, William Lenehan, and Jeff Smith);
  • Four of Starboard's nominees have NO restaurant, retail, or real estate executive experience whatsoever (Betsy Atkins, Peter Feld, Jeff Smith, and Lionel Nowell);
  • Only five of Starboard's nominees have any restaurant operating experience, and some of it appears to us to be unsuccessful or so dated as to make it stale and arguably not relevant in today's operating environment.  For example, Brad Blum worked at Darden a decade ago – when consumer dynamics and the economic and industry environment were very different.  Since then, we believe he has failed to replicate Olive Garden's success at any other Italian casual dining concept.  In fact, sales at Romano's Macaroni Grill fell 3.2% during the time that Mr. Blum served as Chief Executive Officer from 2008 to 2010.  Further, Mr. Blum has worked at or for at least four different restaurant companies since leaving Darden, yet he has not held any of these positions for more than two years.  For example, Starboard touts his two years of experience at Burger King, "which resulted in a successful IPO in 2006," but fails to disclose that Mr. Blum was not actually employed by Burger King at the time of its initial public offering.  While it is not public why Mr. Blum failed to stay in all of these positions, this pattern of short-term tenures is not consistent with the long-term vision and focus needed at Darden;   
  • Of the 70 public company board experiences Starboard's nominees claim, it appears to us that a significant portion is represented by a single serial director nominee and many were of short-term tenure.  Betsy Atkins, for example, has served on more than 30 boards; of the 23 that we can verify through public records, she has served for only an average of 3.7 years (in one case serving only 16 days).  Jeff Smith's average tenure on a public company Board is 15 months.  We believe such records of short tenure are inconsistent with long-term value creation and do not justify the unqualified embrace that Starboard asks you to give all 12 of its nominees; and
  • Four of Starboard's nominees have been nominated and added to at least one other Board through Starboard (Peter Feld, James Fogarty, Cynthia Jamison and Jeff Smith), and several nominees have previously led their own activism campaigns or served as dissident director candidates (Betsy Atkins, Brad Blum, Peter Feld, William Lenehan and Jeff Smith).  In addition, as previously detailed in a prior press release, a review of the public record shows a web of numerous other connections that Starboard's director nominees have to Starboard, to Jeff Smith and to each other.  These connections, combined with their public commitment to implement Starboard's agenda, raise concerns in our view about allowing a single minority shareholder – Starboard – to take control of Darden.

Starboard's Control Slate of Preferred Nominees with Experience Gaps and Questionable Independence v. Darden's Balanced Slate of Highly Qualified Independent Nominees Who Offer New Perspectives and Continuity of Expertise – Our View

The Darden slate provides a balance of new perspectives and continuity of expertise, while also being designed to avoid the risks and destabilization that could result from putting total control of the Board in the hands of a single minority shareholder's nominees through the full Board turnover that Starboard is seeking. 

Darden's slate is committed to looking at the Company with a fresh perspective, to fully optimizing the Company's brands and assets, and to taking all appropriate steps to drive value creation.

We urge shareholders to vote ONLY on Darden's BLUE proxy card "FOR ALL" of Darden's nominees.

On behalf of Darden's Board of Directors, thank you for your continued support.

Sincerely,

/s/ Charles A. Ledsinger Jr.

Charles A. Ledsinger Jr.
Independent Non-Executive Chairman of the Board

CAUTION: Any vote on the white card is a vote for Starboard's control slate as it could revoke any previous proxy you submitted using the BLUE proxy card. Only your latest-dated proxy counts. We urge shareholders – DO NOT SIGN OR RETURN ANY WHITE CARD. SIMPLY DISCARD IT.

Innisfree M&A Incorporated is serving as the Company's proxy solicitor and can be contacted toll-free at (877) 825-8631.

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse, Bahama Breeze®, Seasons 52®, The Capital Grille®, Eddie V's and Yard House – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

1 Source: Starboard press release 'Starboard's Director Nominees Issue Letter to Darden Shareholders' dated 19-September-2014 and Starboard Definitive Proxy Statement filing dated 28-August-2014.

 


NEWS/INFORMATION


Corporate Relations


P.O. Box 695011


Orlando, FL 32869-5011

Contacts:


(Analysts) Matthew Stroud

(407) 245-5288

(Media) Bob McAdam

(407) 245-5404

 

Photo - http://photos.prnewswire.com/prnh/20140923/147759
Photo - http://photos.prnewswire.com/prnh/20140923/147760
Photo - http://photos.prnewswire.com/prnh/20140923/147761

 

SOURCE Darden Restaurants, Inc.

Mon, 22 Sep 2014 08:00:00 -0400

Recommends Darden Shareholders Vote "FOR ALL" on the BLUE Proxy Card Today

ORLANDO, Fla., Sept. 22, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today issued the following statement in connection with the Company's 2014 Annual Meeting of Shareholders:

Darden's leadership is successfully executing an operating plan that we believe will result in exceptional returns for our shareholders and growth for our brands that exceeds industry benchmarks, while still supporting the Company's current $2.20 per share annual dividend.  We are concerned that replacing the entire Darden Board, as Starboard is seeking to do, would be significantly disruptive and destabilizing to the Company, and would introduce significant risks to shareholder value, particularly given the progress we are making.  Many industry analysts are supportive of the actions we are taking and recognize the positive change underway at Darden.[1]

Many industry analysts recognize that Darden's new slate and change in leadership provide the benefits of new perspectives as well as continuity of experience and expertise…

"In our view, DRI's plan of four existing/four new independent/four Starboard board members represents a good balance between continuity and fresh perspectives."  (Susquehanna Financial Group, 15-September-2014)

"We believe Darden's proposed slate represents a prudent approach in that it would yield a group that could bring fresh perspective to DRI while allowing for some continuity that would not be associated with Starboard's plan to replace the entire board." (Robert W. Baird, 12-September-2014)

"We expect shareholders will like this plan as it should provide the change agents shareholders are seeking without giving Starboard complete control." (KeyBanc, 02-September-2014)

"Starboard gets 4 seats (up from 3 prior), along with nomination of 4 new independents & 4 incumbents. We believe a reasonable concession, providing 'benefits of fresh perspectives and continuity while avoiding risks associated with full board turnover.'"
(Barclays, 02-September-2014)

"We generally view this decision favorably, as the new independent and Starboard board members can bring additional perspective in expanding brand reach, improving operations, or exploring potential real estate transactions." (Morningstar Equity Research, 02-September-2014)

"we applaud Darden's Board for making the move to seek new leadership and separate the Chairman and CEO roles as it attempts to restore health and confidence in the company."
(CLSA Americas, 28-July-2014)

…and also recognize the risk and disruption that could result from removing all of Darden's directors – and the knowledge and experience they provide – as Starboard has proposed.

"We see risk that the replacement of the entire Board (as proposed by Starboard) and broader management changes could cause distraction/disruption that could impede progress on improving core operating fundamentals." (Robert W. Baird, 12-September-2014)

"In our view, the disruption is likely to intensify after the October 10th shareholder meeting and vote no matter which side prevails. In our opinion, there is high risk of short-term disruption that could be damaging to the business." (Bank of America Merrill Lynch, 12-September-2014)

"With 1QF15 complete, attention is now squarely on the upcoming '14 Annual Meeting on 10/10. The focus will be board representation, with activist Starboard (8.8% holder) pushing for full board turnover (12 members). We struggle with such drastic change in the midst of a major portfolio transformation, as we are somewhat more conservative in nature, rather believing a hybrid of new and old board members the best approach. This would allow for significant fresh perspective, while maintaining an element of continuity." (Barclays, 12-September-2014)

"In our view, continued pressure from Starboard and other activist investors could disrupt management's strategic action plans and adds another layer of uncertainty to future free cash flow projections." (Morningstar Equity Research, 08-July-2014)

"Activists traditionally aren't geared towards operating companies. Essentially what you now have is a fundamental story where it is all about the turnaround because the sale of Red Lobster is going to move forward in July as planned, and so does Starboard really think that another board or another management team could do it better? I'm not sure. Casual dining has been suffering as a whole." (Rachel Rothman of Susquehanna Financial Group, CNBC, 20-June-2014)

Many industry analysts are supportive of the actions we are taking to improve performance and recognize the progress we are making…

…executing the Olive Garden® brand renaissance…

"Many of the suggestions [for Olive Garden] put forth by Starboard seem similar to initiatives that are either underway or under evaluation at DRI currently, and we believe that DRI's access to more detailed internal information means that it is likely moving forward with the initiatives it feels holds the most promise." (Susquehanna Financial Group, 15-September-2014)

"We are raising our rating on Darden to Outperform from Underperform as we believe intense focus on the restaging of Olive Garden, better visibility into its remodeling effort and the confluence of strategic events, including imminent changes at the C-Suite level, suggest improved performance going forward and merits a change on the stock." (CLSA Americas, 15-September-2014)

"To what degree do these activists know about running some of these companies…Thank you. Thank you JC Penney activists… I think a more focused company without the anvil around the neck of Red Lobster is capable of doing more things than we thought…I think a progression is what we want to see. I love the way Olive Garden is turning here."
(Jim Cramer, Squawk on the Street, 12-September-2014)

"We are maintaining our Buy rating on DRI as we believe change is underway at Olive Garden whether or not activist investor Starboard Value is able to secure a Board majority at the upcoming shareholder meeting. The initial read on the Olive Garden remodel program appears promising and we believe there are considerable operational and cost-cutting opportunities ahead." (Sterne Agee, 12-September-2014)

"Olive Garden same-restaurant sales trends improved throughout the quarter because of expanded value options across multiple menu tiers, increased online and takeout orders, and the use of tablet devices (which improved add-on sales and table turns), with remodeling efforts potentially becoming a more meaningful catalyst in future quarters." (Morningstar Equity Research, 12-September-2014)

"Although early, we believe Olive Garden initiatives have the brand on the right track."
(Piper Jaffray & Co., 02-September-2014)

"Although we remain cautious, we believe fundamental improvement at Olive Garden (~60% of the "New Darden" revenue) can occur slowly with a shift to digital/targeted marketing, reinvestment in food value, and reimaging, all of which appear to be in progress under the new strategic plan." (RBC Capital Markets 23-June-2014)

"Looking ahead to FY15, management is planning to remodel 75 Olive Garden restaurants in an effort to improve the brand. Management indicated that same-store sales at the ~300 Olive Garden units in need of remodeling are over 200 bps below the system average. We note that historically, when brands in casual dining remodel restaurants, the same-store sales lift tends to be 3.0%-5.0%. Furthermore, management is planning to introduce Ziosk tabletop tablets to its Olive Garden restaurants in FY15. We believe the tablets could help improve the average guest check while eventually reducing the front of the house labor expense."
(Telsey Advisory Group, 23-June-2014)

"Olive Garden comps have been flat since the end of May (outpacing casual dining industry averages) and suggest that strategic initiatives are gaining traction."
(Morningstar Equity Research, 20-June-2014)

…developing LongHorn Steakhouse®…

"Longhorn (~22% of revs) performing well. Comps were +2.8%, and operating profits and margins both expanded. This is impressive given beef pressure is driving above-average food cost inflation. (Oppenheimer, 12-September-2014)

"Longhorn posted a healthy +2.4% rise in SSS, which marked the 16th quarter of positive comps of the last 18. Though unit growth will slow somewhat as the Company reassesses its capital plans, we continue to believe the brand has the ability to continue to grow its footprint at a MSD or greater rate and comparable sales at a LSD rate for the foreseeable future."
(Stephens, 23-June-2014)

"Given what we see as continued strength in the mid-scale steakhouse category, as well as DRI's efforts to carve out a niche within the category (i.e., flavor innovation), we think comps will trend closer to +3%. So far in June, comps were running at a +3% pace."
(Miller Tabak + Co., LLC, 20-June-2014)

…building on the solid performance at the Specialty Restaurants, which include Bahama Breeze®, Seasons 52®, The Capital Grille®, Eddie V's® and Yard House®…

"Specialty Restaurant Group possesses significant growth potential…good returns on capital and significant expansion potential for all of the brands (which should help to increase brand awareness and sales volume over time) continues to justify growing this segment at a rate faster than the other brands." (Robert W. Baird, 12-September-2014)

"The SRG piece of the business remains healthy with comps likely in the +LSD territory. Looking forward to the completion of the Red Lobster sale in late July, we see an ability for the SRG concepts to deliver a relatively larger impact to the consolidated business going forward." (Piper Jaffary & Co., 30-June-2014)

"Specialty Restaurant Group: we anticipate positive business spending and demographic trends contributing to solid comp growth. We argue SRG is well situated to take advantage of positive trends in casual dining and fine dining." (Miller Tabak + Co., LLC, 20-June-2014)

…optimizing Darden's cost structure…

"Management has taken steps to strengthen its business model and create shareholder value, including the sale of the Red Lobster to private-equity firm Golden Gate Capital, a 'brand renaissance' for Olive has also prioritized operating cost reductions, tying management compensation to same-store sales and profitability metrics, and maintaining its dividend and investment-grade credit rating. Overall, we view these initiatives as sensible and believe they could enhance intangible assets across the company's brand portfolio while aligning operating costs with peers." (Morningstar Equity Research, 08-July-2014)

"F14 was a challenging year for Darden, though we believe productive. As we begin F15, from a fundamental perspective, the volatile Red Lobster (RL) has been removed, the anchor Olive Garden (OG) has launched a 'Brand Renaissance', and cost optimization is a top priority." (Barclays Bank PLC, 23-June-2014)

"DRI cost-cutting program still on pace. DRI expects G&A of 5% in F14 and F15, but we suspect Alvarez & Marsal engagement will lead to more G&A cuts. To date, DRI has identified ~$60mln of cost savings, of which $17mln will be realized in F14 and $28mln in F15. We estimate $40mln to $45mln of G&A savings at new DRI, or 65bps to 70bps of lower G&A to be fully realized by F16. We estimate new DRI SG&A of 8.9% in F14 and 8.8% in F15, versus the 5.5% to 8.5% range for casual dining peers." (Susquehanna Financial Group, LLP, 19-May-2014)

…and modifying Darden's executive compensation and incentive programs.

"We are also heartened by a clear effort at the top to realign management's incentive comp with same-store sales growth, perhaps the most important metric by which restaurant performance is measured. […] All in all, we think the new compensation structure is a solid move that should assuage concern about executive priorities and allegiances." (CLSA Americas, 15-September-2014)

"Senior management's compensation/incentive programs are being refined to focus on same-store sales growth and the generation of free cash flows. We believe this is positive as incentives should be more aligned with those of shareholders." (Sterne Agee, 19-December-2013)

"Darden has made the strategic decision to realign management compensation to be more correlated with comp growth and free cash growth, versus sales and EPS growth previously. Comp growth correlation will hold management accountable for near-term performance while free cash flow growth over time will align compensation with the long-term success of the portfolio." (Barclays, 19-December-2013)

"we applaud management's recognition of the need for increased brand focus, changes to compensation, and overarching prioritization of FCF return vs. growth in what is now a mature industry" (J.P. Morgan, 20-December-2013)

Darden's strategic plan is designed to address changed industry and consumer dynamics. Improved performance and value creation are expected to be driven by improved operating results over time, not financial engineering…

"Although some of these [Starboard's] strategies may help enhance shorter-term returns and aid investor sentiment, we continue to believe the best way to create long-term shareholder value is to strengthen Olive Garden brand fundamentals, as opposed to financially reengineering the company."  (Robert W. Baird & Co., 12-September-2014)

"we would question the longer-term viability of eliminating some of the guest-facing attributes that help to differentiate the brand. We fear that emphasis on cutting food/labor costs could lead to a more commodity-like offering (an approach that is becoming increasingly common among mature casual dining concepts, which appear to be losing share) and leave Olive Garden vulnerable to competitors that provide a more differentiated customer experience."
(Robert W. Baird & Co., 12-September-2014)

"Darden's success is really dependent on Olive Garden's success."
(Mark Kalinowski of Janney Montgomery Scott LLC, Orlando Sentinel, 02-July-2014)

"We still believe the path to creating long-term shareholder value lies within DRI's ability to drive better core operating performance for remaining brands (particularly Olive Garden), as opposed to financially reengineering the company." (Robert W. Baird & Co., 22-May-2014)

"Despite ongoing challenging fundamentals, we rate shares of Darden Restaurants (DRI) a Buy due to: (1) the attractive dividend yield, and (2) possibilities for unlocking shareholder value – the largest opportunity of which is, in our view, more effective and efficient management of the company's Olive Garden business." (Janney Montgomery Scott LLC, 16-May-2014)

…including a break-up or spinning-off or selling Darden's real-estate.

"While the [Starboard] plan is extremely detailed, at first glance many of Starboard's assumptions—particularly those around the creation of a REIT—appear aggressive, in our view."
(RBC Capital Markets, 12-September-14)

"In our conversations with investors, we believe there was growing skepticism that a REIT transaction could truly live up to its value-creation billing. There was meaningful disagreement on key factors, including expected REIT valuation multiples (single tenant risk, non-investment grade tenant and ground lease discounts) and potential breakage costs on DRI's existing debt." (Wells Fargo Securities, LLC, 16-May-2014)

"We agree a REIT spin would likely not garner the same multiple as other REITs. We believe the fact that the REIT would be a single-tenant REIT with high alternate use costs and generally unfavorable casual dining dynamics would result in it trading at a discount."
(Susquehanna Financial Group, 19-March-2014)

"If you spin off [the profitable] Olive Garden, how do you finance growth of the growing concepts?"
(John Gordon of the Pacific Management Consulting Group, New York Post, 23-December-2013)

"We see limited upside specifically from a Darden break-up: Our sum of- the-parts analysis suggests Darden's stock price has approached fair value following the recent $6.00/share increase, implying that cost cutting largely would offset any dyssynergies from a breakup of the company. We believe other quick upside ideas (e.g., REIT) are less promising since they effectively increase financial leverage and constrain operational flexibility."
(RBC Capital Markets 07-November-2013)

We urge shareholders to vote ONLY on the BLUE proxy card "FOR ALL" of Darden's highly qualified, experienced and independent director nominees:  Michael W. Barnes, Gregory L. Burns, Jeffrey H. Fox, Christopher J. Fraleigh, Steve Odland, Michael D. Rose, Maria A. Sastre and Enrique Silva.  Shareholders may vote by mail, phone or internet following the instructions on the BLUE proxy card.  

CAUTION: Any vote on the white card is a vote for Starboard's control slate as it could revoke any previous proxy you submitted using the BLUE proxy card. Only your latest-dated proxy counts. We urge shareholders – DO NOT SIGN OR RETURN ANY WHITE CARD. SIMPLY DISCARD IT.

Innisfree M&A Incorporated is serving as the Company's proxy solicitor and can be contacted toll-free at (877) 825-8631.

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's and Yard House – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

[1] Permission to use the following quotations was neither sought nor obtained. Underlines added.


Contacts:


(Analysts) Matthew Stroud

(407) 245-5288

(Media) Bob McAdam

(407) 245-5404



SOURCE Darden Restaurants, Inc.

Fri, 19 Sep 2014 08:05:00 -0400

We Love Olive Garden's Pasta, Soup, Salad and Breadsticks Too

ORLANDO, Fla., Sept. 19, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today issued the following statement to the tens of thousands of Olive Garden guests and fans who have recently been so outspoken in their passionate support of Olive Garden and the Italian generosity for which it stands:

Grazie Olive Garden guests and fans! 

All of us at Olive Garden offer our deep appreciation for the passionate support that you have extended to us.  Your tens of thousands of tweets, Facebook and Instagram posts, letters and phone calls expressing your enthusiasm for Olive Garden's pasta, soups, salad and breadsticks have been inspiring and humbling.  We have loved reading about the special memories that so many of you have made at our restaurants. 

Today, the Olive Garden family of 800+ restaurants is evolving the brand with our customers' favorites in mind. With reinvigorated dishes, a refreshed website, a restructured logo, and remodeling of select restaurants, we aim to make every guest experience feel more like today's genuine Italian dining experience.  Your warm enthusiasm reinforces our confidence that we are headed in the right direction – changing for the better and to better serve you. 

We are committed to building on the progress we are making.  Still, as we enhance our menu to reinforce value and relevance, improve quality and simplify processes, you can count on us to stand-by the Italian generosity for which Olive Garden has long been known – including our traditional pasta dishes, homemade soups and endless salad and freshly baked garlic breadsticks.

We urge you to continue to voice your support for Olive Garden.  And again, thank you for being such an engaged and passionate community.  We are incredibly grateful that you have chosen to be a part of our family. Go #TeamBreadsticks!

We look forward to serving you at your local Olive Garden.  See you soon.

Sincerely,

Gene Lee

Dave George

President & Chief Operating Officer of Darden

President of Olive Garden

Darden noted that over the past days, it has received outspoken support from tens of thousands of Olive Garden guests, including a new hashtag #TeamBreadsticks.  On one single day, there were over 34,000 interactions on Facebook alone, with a single posting about Olive Garden's breadsticks resulting in a 1,752% increase over the average amount of commentary on the Company's Facebook page. 

Example posts include[1]:

Example posts

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse®, Bahama Breeze®, Seasons 52®, The Capital Grille®, Eddie V's® and Yard House® – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

[1] Permission to use quotations in these materials was neither sought nor obtained.



Contacts:



(Analysts) Matthew Stroud

(407) 245-5288


(Media) Bob McAdam

(407) 245-5404




Photo - http://photos.prnewswire.com/prnh/20140918/147166

SOURCE Darden Restaurants, Inc.

Thu, 18 Sep 2014 08:00:00 -0400

Board Recommends Darden Shareholders Vote "FOR ALL" of Darden's Eight Highly Qualified, Independent Director Nominees on BLUE Proxy Card Today

ORLANDO, Fla., Sept. 18, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today announced that it is mailing a letter to shareholders in connection with the Company's 2014 Annual Meeting of Shareholders to be held on October 10, 2014.  Darden's letter to shareholders and other materials regarding the Board's recommendation for the 2014 Annual Meeting can be found on the Company's website and at www.DardenAnnualMeeting.com.

Highlights of the letter include:

  • The upcoming Annual Meeting presents Darden's shareholders with the key decision between what we believe are two different approaches – and shareholders' choice could impact the progress we are making and the value of shareholders' investment in Darden, including the Company's $2.20 per share annual dividend.
  • We believe the fresh perspectives from Darden's new director nominees combined with the experience and insights from Darden's continuing directors will support superior growth and value creation going forward. In addition, we are leaving four seats to be filled by Starboard's nominees, ensuring that they will be able to directly participate in Darden's ongoing transformation.
  • Darden's current Board is committed to thoughtful and productive change, and to reviewing all alternatives with a focus on sustainable growth and value creation for all shareholders.
  • Although Darden has left four seats to be filled by Starboard nominees, we believe allowing Starboard to take total control of Darden could introduce significant risks to shareholder value, particularly given the progress we are already making. Further, we do not believe it is necessary for shareholders to elect an entirely new Board to implement the operating initiatives at Olive Garden® that are already underway and delivering encouraging results.
  • We are also troubled by certain other Starboard suggestions for Olive Garden that we believe would undermine progress that is improving both food quality and guest experience. Starboard's advisory team for these suggestions has a mixed track record, which raises additional questions about the actual value potential of these operating suggestions it has proposed.
  • We believe Starboard's proposed directors have significant experience gaps and many ties to Starboard and to each other, which raise further concerns to us about their independence.
  • We believe Darden's new and continuing Board nominees have the qualifications and requisite experience to provide effective and independent oversight and direction, and to recruit and select an exceptionally qualified Chief Executive Officer to build on the momentum we are achieving. All of Darden's director nominees share the common goal of enhancing shareholder value, and are prepared to work collaboratively with all of the new directors, including the Starboard nominees, to achieve this objective.

September 18, 2014

Dear Darden Shareholder:

Positive change and improvement is underway at Darden. 

We have announced a new slate of nominees for Darden's Board of Directors, including four new independent director nominees and four continuing independent nominees.  Following the upcoming Annual Meeting, which will be held on October 10, 2014, the new Board will elect a new independent Board chair and will also reconstitute all of the Board's committees.  As part of this reconstituted Board, eight of Darden's 12 directors would be new to the Board this year.  We are confident that these Board changes, together with the current search for a new Chief Executive Officer, will result in a comprehensive and positive change to Darden's corporate governance. 

However, the positive change underway at Darden goes well beyond corporate governance.  The actions we are taking to reinvigorate restaurant performance, reduce costs, and focus on opportunities with the highest value-creating potential are delivering results:

  • The Olive Garden® Brand Renaissance is underway, and the improvements we are seeing in guest satisfaction and traffic trends reinforce our confidence in Olive Garden's potential.
  • Our efforts to develop LongHorn Steakhouse® into America's favorite steakhouse are on track. In fiscal 2014, LongHorn's same-restaurant sales (SRS) grew 2.7% year-over-year and exceeded the industry by 3.8 percentage points. This momentum carried into the 2015 fiscal first quarter with SRS up 2.8%.
  • We are continuing to build on the solid performance at Specialty Restaurants, which include The Capital Grille®, Bahama Breeze®, Seasons 52®, Eddie V's® and Yard House®. In fiscal 2014, total sales exceeded $1.2 billion, a 25.2% increase from the prior year, and blended SRS grew 1.6%. In the 2015 fiscal first quarter, blended SRS grew 2.1%. We are confident that we will reach our goal of $1 billion in incremental sales from our Specialty Restaurant brands over the next five years.
  • Transformative changes over the past five years in selected operating support areas (including supply chain, labor optimization, and water and energy usage) have reduced costs by $150 million annually. We are on track to further meaningfully reduce operating support costs. In fiscal 2015, selling, general and administrative ("SG&A") expenses as a percentage of sales are expected to be the lowest since Darden became a public company.
  • Strong cash flows and prudent capital allocation have enabled us to return significant capital to shareholders through Darden's industry-leading $2.20 per share annual dividend – which has doubled in the last three years – and a new share repurchase program of up to $700 million in fiscal 2015.

The upcoming Annual Meeting presents Darden's shareholders with the key decision between what we believe are two different approaches – and your choice could impact our ability to continue this progress and the value of your investment in Darden, including the Company's $2.20 per share dividend:

  • Either, vote FOR Darden's new slate of independent director nominees, which we believe provides a balance of fresh perspectives from four new, highly qualified independent nominees, continuity of experience and insight from four continuing independent nominees, and four seats to be filled by Starboard;

  • Or, the Starboard Value L.P. and its affiliates ("Starboard") slate of nominees, which results in a full Board turnover and, in our view, significant associated risks and destabilization, and that also gives a single minority shareholder total effective control over all decisions regarding Darden's strategic direction and leadership, including the selection of Darden's next Chief Executive Officer. Starboard has made clear that it intends to exercise that total control, if the Starboard slate is elected.

WE BELIEVE THE CHOICE IS CLEAR. VOTE FOR DARDEN'S CONTINUED SUCCESS. 
VOTE THE BLUE PROXY CARD TODAY.

We Believe The Choice Is Clear. Vote For Darden's Continued Success. Vote The Blue Proxy Card Today.

We urge you to protect the value of your investment by voting ONLY on the BLUE proxy card "FOR ALL" of Darden's highly qualified, experienced and independent director nominees:  Michael W. Barnes, Gregory L. Burns, Jeffrey H. Fox, Christopher J. Fraleigh, Steve Odland, Michael D. Rose, Maria A. Sastre and Enrique Silva.  Shareholders may vote by mail, phone or internet following the instructions on the BLUE proxy card.  If you have any questions regarding the vote, call our proxy solicitor, Innisfree M&A Incorporated, at (877) 825-8631.

CAUTION:  Any vote on the white card is a vote for Starboard's control slate as it could revoke any previous proxy you submitted using the BLUE proxy card. Only your latest-dated proxy counts. We urge shareholders – DO NOT SIGN OR RETURN ANY WHITE CARD. SIMPLY DISCARD IT.

DARDEN'S CURRENT BOARD HAS A RECORD OF SUPERIOR LONG-TERM PERFORMANCE AND VALUE CREATION.

WE BELIEVE THE FRESH PERSPECTIVES FROM DARDEN'S NEW DIRECTOR NOMINEES COMBINED WITH THE EXPERIENCE AND INSIGHTS FROM DARDEN'S CONTINUING DIRECTORS WILL SUPPORT SUPERIOR GROWTH AND VALUE CREATION GOING FORWARD.

Your company has a solid foundation in place – a portfolio of unique and differentiated brands, a cost-effective operating support platform, a strong management team and 150,000 employees who are working together to continue Darden's legacy of innovation and success. In considering the upcoming director election, we urge shareholders not to let more recent results overshadow Darden's many strengths and long-term achievements.  For example:

  • With consolidated annual sales from continuing and discontinued operations of $8.76 billion in fiscal 2014, the Company achieved a compounded annual growth rate of 6% over the past ten years.
  • Cumulative same-restaurant sales for our continuing brands over this same period were approximately 29.2 percentage points higher than the Knapp-Track casual dining index, our industry's benchmark.
  • Darden's average unit volumes, margins and restaurant-level returns are among the best in the industry. For example, Darden's restaurant-level margins on a continuing basis are 23.5% (excluding rent expense), well ahead of our peer average of 22.6%.[1]
  • Darden's consolidated cash flows from operations have totaled $7.6 billion over the past decade, enabling us to return nearly $4 billion to shareholders through dividends and share repurchases during that period – a level of capital return that has far outpaced the industry – even as we continued to invest in key growth initiatives.
  • For four consecutive years, Darden has been named one of Fortune 100's Best Companies to Work For, reflecting the passion, commitment, support and confidence that Darden's employees have in the Company.

This superior financial performance has supported significant value creation.  Darden has delivered a total shareholder return of approximately 210% over the past decade, outperforming the S&P 500 and the Company's peer group by 133 and 149 percentage points, respectively[2].

Darden has delivered a total shareholder return of approximately 210% over the past decade, outperforming the S&P 500 and the Company's peer group by 133 and 149 percentage points, respectively.

By joining the fresh ideas and new perspectives provided by Darden's four new independent nominees with the experience and insights from Darden's four continuing independent directors, we believe that we can advance the progress we are making to improve performance across our brands.  As we accelerate this progress, we expect it to support the superior financial performance and shareholder returns for which Darden has historically been known.

(CAUTION: Starboard's September 11, 2014 presentation materials show misleading stock performance charts.  Buried in the footnotes are details showing that Starboard has cherry picked an end date of March 14, 2014 – six months ago – which we believe results in a grossly inaccurate and misleading portrayal of Darden's actual comparable stock performance to date.  In addition, we believe Starboard has selectively picked dates to inaccurately portray Darden's stock performance following the sale of Red Lobster, here choosing an end date of July 25, 2014, almost two months ago.  Contrary to Starboard's claims, Darden's stock is nearly unchanged and has outperformed its peers since the announcement.)

DARDEN'S CURRENT BOARD IS COMMITTED TO THOUGHTFUL AND PRODUCTIVE CHANGE AND TO THE EXPLORATION OF ALL ALTERNATIVES. 

WE HAVE A HISTORY OF TAKING DECISIVE ACTION TO TRANSFORM DARDEN TO DRIVE GROWTH AND VALUE CREATION.

Significant changes within the restaurant industry and for casual dining in particular have impacted Darden's results.  To address these challenges, Darden's Board, including its four continuing nominees, has taken a number of proactive steps, including making important corporate governance enhancements, to best position Darden for continued improvement and sustainable, lasting success:

  • In December 2013, prior to Starboard's activist involvement, we announced a comprehensive plan to address changing industry dynamics and leverage the benefits of the Company's industry leadership position. This plan included separating Red Lobster, reducing new unit growth, suspending acquisitions, increasing operating support cost savings, and increasing return of capital to shareholders. We have advanced each of these initiatives and, looking ahead, we believe we have laid the foundation for improved financial performance and an even stronger future;

  • As part of these changes to our strategic direction, the Board and its independent Compensation Committee, following consultation with shareholders, significantly amended compensation and incentives for senior management to more directly emphasize same-restaurant sales growth and free cash flow and create further alignment with shareholder priorities. We are pleased that these changes have been well received by our shareholders and industry analysts since we announced them in December;

  • In March, we announced the Company's priorities for growth and value creation, including the Olive Garden Brand Renaissance, driving profitable growth at LongHorn Steakhouse and the Specialty Restaurant brands, further optimizing the Company's cost structure, and maintaining a balanced approach to capital allocation that is consistent with our commitment to maintain Darden's $2.20 per share annual dividend. We are successfully executing on each of these priorities;

  • In July, we launched a succession plan for Darden, including a search for a new Chief Executive Officer, to identify the best leader to help build on the progress we are making; and

  • In connection with the Company's leadership succession plan, we amended Darden's corporate governance policies to provide for the separation of the Chairman and Chief Executive Officer roles.

WE ARE CONCERNED THAT CEDING TOTAL CONTROL TO STARBOARD WOULD BE SIGNIFICANTLY DISRUPTIVE AND DESTABILIZING, PARTICULARLY GIVEN THE PROGRESS WE ARE MAKING.

As with all aspects of Darden's business, Darden's reconstituted Board will continuously review all alternatives with a focus on delivering long-term enhancements to value for all Darden shareholders.  In this regard, Starboard's ideas have been and will continue to be carefully considered.  Many of the concepts which Starboard touts and seeks to present as new are in fact already being executed.  Similarly, maximizing value from the Company's real estate and brand portfolio is a primary consideration for the Board.  But the optimal timing for taking action on such initiatives is a matter to be seriously discussed, not forced upon the Company, its shareholders, guests and employees by a single, short-term oriented minority investor and its outside consultants.

We are concerned that Starboard's nominees have pre-committed to Starboard's plan and that much of Starboard's agenda is based on short-term financial engineering considerations and supported by optimistic assumptions that could jeopardize Darden's $2.20 per share annual dividend, Darden's credit profile, and the continued progress on the Olive Garden Brand Renaissance.

Further, we are concerned that replacing the entire Darden Board, as Starboard is seeking to do with its pre-committed nominees, would dis-incentivize constructive, creative leadership and create a climate intolerant of independent ideas that could be significantly destabilizing to the Company, particularly considering the "people facing" nature of our industry.  In our view, such immediate, wholesale change, as advocated by Starboard, ignores the risks associated with a Board that has no direct knowledge of Darden's current operations or of the substantial actions underway to improve performance.  Given the positive momentum we are achieving in Darden's operations, we believe it is a very poor time for the radical change that Starboard is seeking.

Such disruptive change, particularly given the ongoing search for a new Chief Executive Officer, could be detrimental to Darden, the experience of our guests, and our ability to continue making the operational improvements that are necessary to drive shareholder value.

Many industry analysts also recognize that removing all of Darden's directors – and the knowledge and experience they provide – could derail the progress we are making.[3]

"We believe Darden's proposed slate represents a prudent approach in that it would yield a group that could bring fresh perspective to DRI while allowing for some continuity that would not be associated with Starboard's plan to replace the entire board. We see risk that the replacement of the entire Board (as proposed by Starboard) and broader management changes could cause distraction/disruption that could impede progress on improving core operating fundamentals." (Baird, 12-Sept-2014)

"management has taken steps to strengthen its business model and create shareholder value, including the sale of the Red Lobster to private-equity firm Golden Gate Capital, a 'brand renaissance' for Olive Garden, and the growth of sales for its SRG brands by $1 billion over the next five years.  Management has also prioritized operating cost reductions, tying management compensation to same-store sales and profitability metrics, and maintaining its dividend and investment-grade credit rating. Overall, we view these initiatives as sensible and believe they could enhance intangible assets across the company's brand portfolio while aligning operating costs with peers…. In our view, continued pressure from Starboard and other activist investors could disrupt management's strategic action plans and adds another layer of uncertainty to future free cash flow projections." (Morningstar Equity Research, 8-Jul-2014)

"We don't expect the activist to succeed given the limited strategic change it can effect as DRI's problems go beyond the company and reflect the ongoing challenges in the casual dining industry." (Susquehanna Financial Group, 23-Jun-2014)

"Activists traditionally aren't geared towards operating companies. Essentially what you now have is a fundamental story where it is all about the turnaround because the sale of Red Lobster is going to move forward in July as planned, and so does Starboard really think that another board or another management team could do it better? I'm not sure." (Rachel Rothman of Susquehanna Financial Group, CNBC, 20-Jun-2014)

"While not surprised by Starboard's move, we see risk that the threat of Board / management changes could cause distraction/disruption that could impede progress on improving core operating fundamentals, which we believe is the primary way for DRI to create shareholder value." (Robert W. Baird & Co., 22-May-2014)

STARBOARD'S ADVISORY TEAM HAS A MIXED TRACK RECORD RAISING FURTHER QUESTIONS TO US ABOUT THE ACTUAL VALUE POTENTIAL OF CERTAIN OPERATING SUGGESTIONS IT HAS PROPOSED.

If Starboard and its nominees do gain control of your company, they have announced their intention to implement a new operating plan. We do not believe it is in shareholders' interests to elect an entirely new Board, which could impede operating initiatives that are largely already underway and delivering results.

We are also troubled by certain other Starboard suggestions for Olive Garden that we believe would undermine progress that is improving both food quality and guest experience.  The questionable track records of the advisors who determined these suggestions further exacerbate the risks and disruption that we believe would result from the full Board turnover that Starboard is seeking.  Of the four "advisors" Starboard is paying:

  • Brad Blum, who worked at Darden more than a decade ago – when consumer dynamics and the economic and industry environment were very different. Thus, Mr. Blum's prior experience at Darden is stale, and neither recent nor relevant.

    Further, since leaving Darden, Mr. Blum has worked at or for at least four different restaurant companies, yet he has failed to hold any of these positions for more than two years.  While it is not public why Mr. Blum failed to stay in all of these positions, this pattern of short-term tenures is not consistent with the long-term vision and focus needed at Darden.

  • Robert Mock, who appears to us to have job-hopped, holding only one restaurant management position since resigning from Darden in 2002, and, holding that position for less than two years. Based on Darden's experience with Mr. Mock and his lack of record elsewhere, Darden would not hire Mr. Mock today, much less rely on him to develop an operations plan for your company. We question Starboard's wisdom in doing so and the value potential of any operating suggestions that would result.

  • Craig Miller, who oversaw significant underperformance during his leadership at Ruth's Chris. From the IPO of that company to the time Mr. Miller departed, the stock price of Ruth's Chris fell 67%.

WE BELIEVE STARBOARD'S PROPOSED DIRECTORS HAVE SIGNIFICANT EXPERIENCE GAPS AND MANY TIES TO STARBOARD AND TO EACH OTHER, WHICH RAISE FURTHER CONCERNS TO US ABOUT THEIR INDEPENDENCE.

  • Five of Starboard's nominees have NO experience as senior executives of large public companies (Betsy Atkins, Peter Feld, James Fogarty, William Lenehan, and Jeff Smith);

  • Four of Starboard's nominees have NO restaurant, retail, or real estate executive experience whatsoever (Betsy Atkins, Peter Feld, Jeff Smith, and Lionel Nowell); and

  • Four of Starboard's nominees have been nominated and added to at least one other Board through Starboard, raising doubts to us about whether these Starboard representatives will serve Starboard's interests ahead of your own (Cynthia Jamison, James Fogarty, Peter Feld, and Jeff Smith).

CAUTION: Shareholders should also be aware that:

  • According to Starboard's proxy statement regarding Starboard's director nominees, "each of [Starboard's] director nominees is committed to the implementation of [Starboard's] comprehensive turnaround plan for Darden. Therefore, in the event that [Starboard's] director nominees comprise a majority of the Board following the Annual Meeting, we expect that the Board will implement [Starboard's] comprehensive turnaround plan for Darden."

  • Through this statement, it appears that each of Starboard's nominees has reached a conclusion on the merits of Starboard's plan – and took a loyalty oath to follow it – without having full knowledge of the Company's operations, financial performance or actions underway. We believe this underscores the devotion of Starboard's handpicked nominees to Starboard, rather than to the best interests of all Darden shareholders.

  • This could have implications for Darden's executive leadership and for objective oversight and stewardship of your company. Indeed, we believe that recruiting an exceptional Chief Executive Officer for Darden could be difficult if all decisions about running the Company were pre-determined and micro-managed by a Board that is lockstep committed to one shareholder's plan – Starboard's plan.

We believe Darden's next Chief Executive Officer should be chosen by an independent Board that represents the interests of all Darden shareholders, not just one.  In considering your vote at the Annual Meeting, we urge you to carefully consider that Starboard's slate is comprised ONLY of nominees hand-picked ONLY by Starboard.  We do not believe that such a slate is really the "best" Darden shareholders can do. 

In contrast, Darden's new slate includes four new independent nominees unaffiliated with the Company or Starboard; four highly-qualified continuing independent director nominees; and four seats to be filled by candidates proposed by Starboard.  All of Darden's director nominees are committed to selecting a Chief Executive Officer who will build upon the progress we are making to improve operations and drive shareholder value – not simply an individual who will act according to the direction of the single minority shareholder, Starboard, who selected him/her.

SUPPORT THE PROGRESS WE ARE MAKING AND REJECT THE RISKS ASSOCIATED WITH STARBOARD'S EFFORTS TO TAKE FULL CONTROL OF DARDEN.

We are making progress on our operating plan and believe we are on the right track to once again deliver the exceptional returns that have set Darden apart from our peers. 

Darden's new slate is committed to looking at the Company with a fresh perspective.  The Darden slate provides a balance of new perspectives and continuity of expertise, while also being designed to avoid the risks and destabilization that could result from the full Board turnover that Starboard is seeking and control in the hands of this single minority shareholder.  All of Darden's director nominees share the common goal of enhancing shareholder value and are prepared to work collaboratively with all of the new directors, including the Starboard nominees, to achieve this objective.

In contrast, given the associated risk and disruption to Darden's business that could result in the event of a full Board turnover, we believe that the value of your investment, including the Company's current $2.20 per share annual dividend, would also be at serious risk were Starboard to take total control of your company and implement its own agenda. 

Darden's Board remains fully committed to acting in the best interests of all Darden shareholders and stands ready to engage with Starboard to resolve this proxy contest. 

We urge you to protect your investment by voting the BLUE proxy card today "FOR ALL" of Darden's nominees.

On behalf of Darden's Board of Directors, thank you for your continued support.

Sincerely,

/s/ Charles A. Ledsinger Jr.

Charles A. Ledsinger Jr.
Independent Non-Executive Chairman of the Board



YOUR VOTE IS IMPORTANT!


To ensure that your instructions are received timely, we urge you to vote by telephone or Internet by following the easy instructions on the enclosed BLUE proxy card.


Please do NOT execute any White proxy card you may receive from Starboard, as it could revoke any previous proxy you submitted. Only your latest-dated proxy counts.


If you have questions or need assistance in voting your shares,
please contact our proxy solicitor:


INNISFREE M&A INCORPORATED


Stockholders call toll-free: (877) 825-8631

Banks and Brokers call collect: (212) 750-5833


About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's and Yard House – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

[1] Source: Most recent 10K filings. Peers throughout include Bloomin' Brands, Inc., Brinker International, Inc., The Cheesecake Factory Incorporated and Ruby Tuesday, Inc.  Reflects latest reported fiscal year, Darden Restaurant Level Margins shown on a continuing basis. Restaurant Level Margins = (Company owned restaurant sales – food & beverage expenses – restaurant labor – restaurant expenses (excluding rent and marketing) - pre-opening expenses) / Company owned restaurant sales.


[2] Source: Bloomberg as of 15-Sep-2014. Bloomin' data since initial public offering on 07-Aug-2012.  Total shareholder return calculated as share price appreciation plus reinvested dividends.


[3] Permission to use quotes was neither sought nor obtained.  Underlines added for emphasis.


Contacts:


(Analysts) Matthew Stroud

(407) 245-5288

(Media) Bob McAdam

(407) 245-5404

Photo - http://photos.prnewswire.com/prnh/20140918/146911
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SOURCE Darden Restaurants, Inc.

Wed, 17 Sep 2014 09:55:00 -0400

Highlights the Web of Numerous Connections that Starboard's Director Nominees Have to Starboard, Jeff Smith and to Each Other
Highly Concerned that Starboard's Allegedly "Independent" and "Open-Minded" Nominees Have Pledged to Starboard That They "Will" Implement Starboard's Agenda Without Full Knowledge of the Company's Operations, Financial Performance or Actions Underway
Believes Darden's Directors Should Represent the Interests of All Shareholders, Not Just One
Recommends Darden Shareholders Vote "FOR ALL" on the BLUE Proxy Card Today
Materials for Darden's Annual Meeting Available at www.DardenAnnualMeeting.com

ORLANDO, Fla., Sept. 17, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today issued the following statement in connection with the Company's 2014 Annual Meeting of Shareholders:

The experience, insights and objectivity of Darden's directors have been – and will continue to be – important drivers to the Company's ability to enhance shareholder value, advance its operating priorities and execute the Olive Garden® Brand Renaissance.  The composition of our Board, including both its independence and diversity of talent and experience, is critical to Darden's future success.  Given the people facing nature of Darden's business, we also believe continuity of knowledge and relationships is important to the engagement, retention and motivation of Darden's management team and to the success of the operating strategies that we are implementing.

Accordingly, we have carefully assembled a new slate of director nominees to ensure that Darden has the right experience, insights, continuity and perspectives that are necessary to successfully execute the Company's strategies, including the Olive Garden Brand Renaissance, and enhance value for ALL Darden shareholders. We believe Darden's new slate provides the optimal balance of fresh perspectives from four new, highly qualified independent nominees, continuity of experience and insight from four highly qualified continuing independent nominees, and four seats to be filled by Starboard Value L.P. and its affiliates ("Starboard"). The slate includes:

  • Four new independent nominees unaffiliated with the Company or Starboard: Gregory L. Burns, Jeffrey H. Fox, Steve Odland, and Enrique Silva.  These new independent nominees, all of whom are current or former Chief Executive Officers with experience driving turnarounds, provide additional international restaurant, franchise, consumer, real estate and operations expertise to support the development, oversight and execution of Darden's operating and brand initiatives, including the turnaround of Olive Garden and the Brand Renaissance plan. Unlike Starboard's nominees, these new independent nominees have not made any unilateral commitments to implement a pre-determined agenda; they will approach opportunities with an open mind and a singular focus on building sustainable value.  Three of these new independent nominees – Mr. Burns, Mr. Odland and Mr. Silva – were first identified through a process that began in January 2014 in the context of identifying highly qualified independent director candidates in the event that Darden spun-off Red Lobster into a standalone publicly traded company with its own Board of Directors. Spencer Stuart, a leading director and executive search and recruiting firm, was hired in March 2014 to evaluate the director nominees.  The fourth new independent nominee, Mr. Fox, was identified by an outside advisor to the Board.  Each of the nominees for election at the Annual Meeting was recommended by the Nominating and Corporate Governance Committee of Darden's Board;
  • Four continuing independent director nominees who provide important and deep understanding of the Company's operations and the shifts in industry and consumer trends over time, who have experience and expertise relevant to both Darden's business and to the strategic decisions it is pursuing and considering, and who have a record of taking proactive, decisive action to best position Darden for continued improvement and success: Michael W. Barnes, Christopher J. Fraleigh, Michael D. Rose, and Maria A. Sastre; and 
  • Four seats to be filled by candidates proposed by Starboard so that its nominees can directly participate in the decisions regarding Darden's strategic direction, including the selection of the Company's next Chief Executive Officer, while also avoiding the risks and disruption that we believe would result from the control that Starboard is seeking. 

As part of this reconstituted Board, eight of Darden's 12 directors would be new to the Board this year

  • All of Darden's director nominees share the common goal of enhancing shareholder value and are prepared to work collaboratively with all of the new directors, including the Starboard nominees, to achieve this objective. 
  • All of Darden's director nominees are committed to selecting a Chief Executive Officer who will build upon the progress we are making to improve operations and drive shareholder value – not simply an individual who will act according to the direction of the single minority shareholder, like Starboard, who selected him/her.

While the Darden Board has left four seats to be filled by Starboard candidates, the Board believes it is appropriate to consider the independence and experience of all 12 of Starboard's director nominees given their role in Starboard's efforts to take effective control of the Company.

A review of the public record shows that Starboard's proposed slate of directors has significant experience gaps and numerous ties to Starboard and to each other, which raises further concerns in our view about allowing a single minority shareholder – Starboard – to take control of Darden.

Click here for multi-media image: "Is This Starboard 12-Person Slate Really the "Best Board" to Independently Represent ALL Shareholders and to Control a Multi-Billion Dollar Consumer-Facing Company with 150,000 Employees?"

Is This Starboard 12-Person Slate Really the

According to Starboard's proxy statement, each of its director nominees "is committed to the implementation of [Starboard's] comprehensive turnaround plan for Darden. Therefore, in the event that [Starboard's] director nominees comprise a majority of the Board following the Annual Meeting, we expect that the Board will implement [Starboard's] comprehensive turnaround plan for Darden."  Through this statement, it appears that each of Starboard's nominees has reached a conclusion on the merits of Starboard's plan – and devoted themselves to following it – without having full knowledge of the Company's operations, financial performance or actions underway.  We believe this underscores the devotion of Starboard's handpicked nominees to Starboard, rather than to the best interests of all Darden shareholders.  This has implications too for Darden's executive leadership and for objective oversight and stewardship of your company.  Indeed, we believe that recruiting an exceptional Chief Executive Officer for Darden would be difficult if all decisions about running the Company were pre-determined and micro-managed by a Board that is lockstep committed to one shareholder's plan – Starboard's plan. 

We believe that decisions critical to Darden's success and its ability to maintain its industry-leading $2.20 per share annual dividend – including decisions regarding capital allocation, strategic direction and the identification of Darden's next Chief Executive Officer – should be made by a truly independent, well-rounded Board. This is the case with Darden's director nominees who are committed to representing the interests of all Darden shareholders, not just one.

In considering the vote at the Annual Meeting, we urge Darden shareholders to carefully consider that Starboard's slate is comprised ONLY of nominees hand-picked directly by Starboard

We urge shareholders to vote ONLY on the BLUE proxy card "FOR ALL" of Darden's highly qualified, experienced and independent director nominees:  Michael W. Barnes, Gregory L. Burns, Jeffrey H. Fox, Christopher J. Fraleigh, Steve Odland, Michael D. Rose, Maria A. Sastre and Enrique Silva.  Shareholders may vote by mail, phone or internet following the instructions on the BLUE proxy card.  

CAUTION: Any vote on the white card is a vote for Starboard's control slate as it could revoke any previous proxy you submitted using the BLUE proxy card. Only your latest-dated proxy counts. We urge shareholders – DO NOT SIGN OR RETURN ANY WHITE CARD. SIMPLY DISCARD IT.

Innisfree M&A Incorporated is serving as the Company's proxy solicitor and can be contacted toll-free at (877) 825-8631.

About Darden's Four New Independent Nominees

Gregory L. Burns is a 26-year veteran of the restaurant industry having led O'Charley's Inc., a multi-concept restaurant company, as Chief Executive Officer for 14 years and serving as its Chairman for 13 years.  Mr. Burns' expertise focuses on brand management through high-quality food and beverage, and service execution.  Mr. Burns also has a track record of successfully developing long-term strategic business plans that encompass and balance operations and new unit growth with capital requirements.

Under Mr. Burns' leadership, O'Charley's grew from a single to multi-brand platform with 371 company-owned restaurants and franchises in 28 states operating under the O'Charley's, Ninety Nine Restaurant and Stoney River Legendary Steaks brands with almost 25,000 employees.  Mr. Burns also oversaw the acquisition, development and expansion of a full service manufacturing, distribution and commissary operation, which the Company sold in 2006.

Mr. Burns currently serves as President and Chief Executive Officer of The Gregory Burns Consulting Group, LLC, and is a member of the Board of Directors of Pinnacle Financial Partners, Inc.  Previously, he was the founder, President and Chief Executive Officer of NeighborMD Management, LLC, developer of branded retail urgent care centers, which was sold to a JV between HCA and CareSpot Express Healthcare in 2013.

Jeffrey H. Fox brings significant leadership, executive management, strategic planning, investment and operations experience to the Darden Board.  Mr. Fox serves as non-executive Chairman of the Board of Convergys Corporation, a market-leading customer management company with $3 billion in revenue, $350 million in EBITDA, and 125,000 global employees.  Prior to becoming Chairman, Mr. Fox served as President and Chief Executive Officer of Convergys and led the Company's transformation from a multi-line business services supplier into a market leader in the customer management business.  This transformation involved divesting approximately $900 million of non-core assets while improving the operating performance of the core customer management business.  Mr. Fox first joined Convergys as a director in February 2009 in connection with an agreement with Convergys' then largest shareholder, JANA Partners LLC.

Prior to joining Convergys, Mr. Fox founded the investment and advisory firm Circumference Group.  As founder, Mr. Fox assembled a team of seasoned operators and led the team through a sector-focused public and private investing platform.  Mr. Fox is actively involved in Circumference Group as its majority owner.

Mr. Fox also provides experience leading consumer facing companies, including serving as a current Director of Avis Budget Group, Inc., and previously as Chief Operating Officer of Alltel Corporation.  Prior to Alltel's acquisition by Verizon Wireless in January 2009, Alltel was the fifth largest wireless company in the United States with over $10 billion in revenues, $3.5 billion in EBITDA and 16,000 employees. 

Prior to Alltel, Mr. Fox worked in investment banking for 10 years with Stephens Inc., preceded by two years with Merrill Lynch; he specialized in merger and acquisition advisory services for public and private companies.

Steve Odland has an extensive background in business and corporate governance, successfully leading major companies, including two Fortune 500 companies, through highly challenging environments.  He has led multiple companies in industries directly related to Darden, such as the food and consumer industries, reinvigorating brands, growing sales through new marketing and merchandising programs, expanding margins and improving customer service metrics.  In addition, he has many years of experience in multi-unit retail, including overseeing real estate site optimization, selection, development and expansion.

Previously Mr. Odland served as Chairman and Chief Executive Officer of Office Depot; Chairman, President, and Chief Executive Officer of AutoZone; Chief Operating Officer of Ahold USA; President and Chief Executive Officer of Tops Markets, Inc.; President of the Foodservice Division of Sara Lee Bakery; and was employed in various executive positions by The Quaker Oats Company.  He currently serves as a Director of General Mills and previously served on the Board of Directors of Peapod, Inc.

Mr. Odland also possesses a strong policy background.  He currently serves as President and Chief Executive Officer of The Committee for Economic Development.  Previously, he was Chairman of the Business Roundtable's Corporate Governance Task Force; a U.S. Presidential appointee as a Commissioner on the National Surface Transportation Policy and Revenue Study Commission; a member of the Committee on Capital Markets Regulation; a U.S. Presidential Appointee on the Council on Service and Civic Participation; a member of the Advisory Council of the Institute for Corporate Ethics; a member of the Advisory Council, University of Notre Dame Mendoza College of Business; and a member of the Florida Council of 100.

Previously, Mr. Odland was also an Adjunct Professor at the Lynn University and Florida Atlantic University graduate schools of business.

Enrique Silva, President, Chief Executive Officer and a member of the Board of Directors of Checkers Drive-In Restaurants, Inc., brings more than 20 years of international restaurant experience and a successful track record of partnering with private equity owners to drive strategic growth and turnaround initiatives.  Checkers is the #1 operator of double drive-through fast-food restaurants, operating approximately 800 units across 30 states under two brands: Checkers and Rally's.  Over 40% of the restaurants are owned and operated as company restaurants and the balance of the restaurants are franchised. 

Since joining the Company in 2007, Mr. Silva has led a comprehensive restructuring and expansion of the Checkers/Rally's business.  He recruited industry-leading talent to the management team, led the development of a new brand strategy, directed the implementation of best-in-class operating and performance management systems, and implemented a set of core values that have become the foundation of the brands' culture.  These actions have resulted in category-leading sales growth, with almost four straight years of consecutive comp sales increases every quarter largely driven by traffic, and substantial improvements across all aspects of operations, including restaurant-level profitability, menu and guest satisfaction. 

Prior to Checkers, Mr. Silva served in a number of leadership roles at Burger King Corporation for more than 13 years.  As President of their Latin American region, he grew the Burger King brand across South & Central America, Mexico and the Caribbean.  Mr. Silva also ran their U.S. Company Operations, where he oversaw more than 600 company restaurants with a team of 15,000 employees and led the financial, operational and cultural turnaround of those restaurants.  As Senior Vice President, Franchise Operations, he was responsible for more than 3,300 franchise restaurants in the U.S. and Canada.

Mr. Silva has received numerous awards and recognitions for his business achievements, including being named by Nation's Restaurant News as one of the 2014 "10 Restaurant Executives to Watch," being a 2013 Ernst & Young Entrepreneur of the Year finalist, and being recognized as one of the "100 Most Influential Hispanics" in the US by Hispanic Business Magazine.

About Darden's Four Continuing Independent Nominees

Michael W. Barnes brings to Darden experience as Chief Executive Officer, Chief Operating Officer and as a director of other consumer branded and retail companies, including Signet Jewelers and Fossil.  In these roles, he has developed, implemented and overseen growth strategies like those underway at Darden, built on superior customer service, compelling product offerings, technology and digital initiatives, and targeted advertising and promotion campaigns.

The success of these strategies is reflected in the value created by the companies in which Mr. Barnes has led.  For example, since becoming Chief Executive Officer of Signet Jewelers, the nation's largest specialty jeweler and parent of Kay Jewelers and Jared, in January 2011, Signet's stock price has increased over 177%[1], the Company has achieved substantial gains in revenue and earnings per share, and expanded its footprint, including the recent $1.4 billion acquisition of Zale CorporationSignet Jewelers' value creation reflects its successful strategic growth initiatives, including creating an outstanding customer experience, delivering compelling merchandise, heightening awareness through advertising investment, and offering customer finance programs to support its customers' purchases and drive sales.

Mr. Barnes was also part of the management team that took Fossil public in 1993 and contributed to the continuing financial success and growth of the business as President and Chief Operating Officer.  In his roles, he oversaw Fossil's state-of-the-art international sourcing and supply chain operations, led business development, and managed the relationships with many of Fossil's retail and licensing/brand partners. In addition, he helped the Company diversify into other businesses and categories outside of its wholesale branded and licensed watches.

Christopher J. Fraleigh brings to Darden 25 years of experience in consumer products, retail and food services, including serving as Chairman and Chief Executive Officer of Shearer's Foods, a global manufacturer of snack foods, where he has doubled the business in the last two years through both organic growth and acquisitions.  In his previous role as Chief Executive Officer of Sara Lee North America, Mr. Fraleigh built a global retail and food-services business around brands such as Jimmy Dean, Ball Park, Sara Lee and Hillshire Farms, and helped lead Sara Lee's 2011 decision to split into two publicly traded companies.

In addition to his strategic achievements as CEO of the $7 billion Sara Lee North America, Mr. Fraleigh's record of value creation is reflected in the Company's financial and operating performance.  In particular, during his 6 ½ year tenure:

  • Operating profit more than doubled with significant gains across operating segments, including Retail, Foodservice and Fresh Bakery;
  • Supply chain was enhanced with improvements in innovation, pricing and plant automation, which resulted in significant cost reductions and increased efficiencies;
  • Sara Lee increased share in 11 of 12 categories, realized 25% growth in key items carried in-store, increased shelf space by 35%, and expanded strategic relationships with top retailers; and
  • The Company restructured all divisions and optimized its brand portfolio through the acquisition of new brands and the sale or shutdown of non-core assets.

Mr. Fraleigh's experience also includes his executive roles at General Motors Corporation's GMC-Buick-Pontiac division and at PepsiCo, where he accelerated both revenue and earnings growth for brands including Cadillac, Pepsi and Mountain Dew.  As a result of his collective experience, Mr. Fraleigh provides Darden with valuable insight in consumer marketing/brand building, franchising, and supply chain management and distribution.

Michael D. Rose brings extensive knowledge of the restaurant, food and consumer industries, gained serving as a director of Darden and as General Mills' current independent Lead Director. Mr. Rose also has extensive experience executing spin-offs and divestitures.  Darden also benefits from his finance and accounting expertise, as well as the considerable executive management and corporate governance experience he has gained through his years of service on the boards and leadership teams of other public companies, including REITs and other hospitality- and restaurant-focused companies.

Over the course of his executive leadership career as Chairman and Chief Executive Officer of other companies, Mr. Rose has overseen and directed:

  • The successful turnaround of a leading regional financial institution through recruiting a new management team, the sale of non-core businesses, completing significant debt refinancings and capital raises, and employee and community engagement;
  • The growth of The Promus Companies (an owner of hotels operating under the Embassy Suites, Hampton Inn and Homewood Suites brands), including its merger with Doubletree Corporation and subsequent sale for $3.7 billion to Hilton Hotels Corporation in 1999;
  • The growth and spin-off of Harrah's Entertainment Inc. from Promus.  Under his leadership, Harrah's became one of the largest casino companies in the world. Promus Companies was created following the divestiture of the Holiday Inn brand for over 13x EBITDA.  During his tenure, Promus was named as the highest performing large cap stock of the NYSE for the decade of the 1980s by Fortune Magazine;
  • The growth and expansion of Holiday Inns Hotel Brands, which was sold in two transactions for more than $3 billion.  Mr. Rose served as Chief Executive Officer of Holiday Inns Inc. when it was the largest hotel chain in the world; and
  • Holiday Inns, Inc.'s acquisition of Perkins Cake & Steak, a national chain of family restaurants.  Perkins was formulated on the same successful strategy as Holiday Inn – identical establishments with similar menus and uniform quality standards.

In light of his many accomplishments and track record in the hospitality industry, Mr. Rose was selected to receive the Lifetime Achievement Award at the inaugural Americas Lodging Investment Summit.  Mr. Rose was also elected to the Lodging Hospitality Hall of Fame, the Gaming Hall of Fame and was named by Corporate America's Outstanding Directors Top 10 Directors of the Year in 2000.

Maria A. Sastre brings to Darden a record of accomplishment leading companies and serving on boards that have been category leaders in the hospitality, retail (supermarkets), transportation, and aviation industries.  Her expertise in North American and International Operations, Supply Chain and Distribution, Customer Service, Mergers and Acquisitions, Corporate Finance, Marketing and Real Estate Management have supported Darden and its brands across numerous strategic business initiatives.

Ms. Sastre has been President and Chief Operating Officer of Signature Flight Support Corporation (Signature), the premier fixed based operations network for private aviation services, since January 2013. She served as Chief Operating Officer of Signature from May 2010 until January 2013.

Ms. Sastre also served as Vice President of International Sales and Marketing, Latin America and Caribbean, for Royal Caribbean International, Celebrity Cruises and Azamara Cruises, all units of Royal Caribbean Cruises, Ltd., a global cruise line company, from January 2005 to September 2008. In this role, she led strategic growth in emerging markets. She held additional Executive roles with Royal Caribbean International, as Vice President of Hotel Operations from 2000 to 2004, managing all aspects of Hotel Operations, Food & Beverage, Entertainment and the Guest Experience for the entire fleet. 

Prior to Royal Caribbean, Ms. Sastre was with United Airlines, where she held Executive positions in North America and Global Customer Services.  At United Airlines, she was also responsible for International Operations and International Expansion and the launch of e-technology systems, completely changing and improving the customer service experience.

In addition to serving on the Board of Darden Restaurants, Ms. Sastre serves on the Board of Publix Super Markets, renowned as a category leader in customer satisfaction.  She also served on the Board of Laidlaw International through its emergence from bankruptcy, its turnaround and ultimate sale.  Ms. Sastre has been recognized as a Top 10 Hispanic American Leader by Hispanic Executive in 2013 and a Top 100 Most Influential Hispanic by Hispanic Business in 2011.

About the Connections Among Starboard's Nominees

Starboard Directors Have A Number of Historical Relationships That May Bias Decision Making

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse®, Bahama Breeze®, Seasons 52®, The Capital Grille®, Eddie V's® and Yard House® – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.


[1] As of August 29, 2014

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SOURCE Darden Restaurants, Inc.

Analysts, Matthew Stroud, (407) 245-5288, or Media, Bob McAdam, (407) 245-5404
Mon, 15 Sep 2014 09:23:00 -0400

Believes Current Initiatives, Which Are Already Delivering Encouraging Results, Address the Majority of Starboard's Operating Suggestions
Remains Open to All Ideas that Support Long-Term Value Creation and Improve Guest Experience
Board Recommends Darden Shareholders Vote "FOR ALL" of Darden's Eight Highly Qualified, Independent Director Nominees on BLUE Proxy Card Today
Materials for Darden's Annual Meeting Available at www.DardenAnnualMeeting.com

ORLANDO, Fla., Sept. 15, 2014 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today filed an investor presentation with the Securities and Exchange Commission ("SEC") in connection with the Company's 2014 Annual Meeting of Shareholders to be held on October 10, 2014. Darden's presentation and other materials regarding the Board's recommendation for the 2014 Annual Meeting can be found on the Company's website and at www.DardenAnnualMeeting.com, which the Company will use for Annual Meeting-related communications going forward.

"We have had numerous conversations over the past months with our shareholders, including Starboard, regarding Darden's operating plan and the Olive Garden Brand Renaissance," said Gene Lee, President and Chief Operating Officer of Darden. "After reviewing Starboard's proposed operating plan, we believe Darden's current initiatives, which are already delivering encouraging results, address the majority of Starboard's suggestions. We are pleased that Starboard agrees with the actions we are taking to reinvigorate restaurant performance, reduce costs, and drive growth."

Mr. Lee continued, "We are also troubled by certain Starboard suggestions for Olive Garden that we believe would undermine progress that is improving both food quality and guest experience, and we believe that implementing these suggestions would derail the brand's turnaround. While we agree that maintaining a close eye on costs is important, we do not agree with actions that may boost margins in the short-term, but sacrifice brand reputation over the long-term. At Darden, we are executing a plan that is delivering meaningful cost savings, with selling, general and administrative expenses as a percentage of sales in fiscal 2015 expected to be the lowest since Darden became a public company. These are sustainable savings that contribute to bottom line growth for our shareholders, while also preserving the superior quality and service for which Darden's brands are known."

Mr. Lee concluded, "People are our most important ingredient, and Darden's people have expressed their affection for, confidence in and commitment to the Company in the clearest ways possible. For four consecutive years, Darden has been one of Fortune's 100 Best Companies to Work For, rankings that heavily reflect a comprehensive and independently administered survey of our frontline employees; Olive Garden, LongHorn Steakhouse and The Capital Grille are recognized by People Report, a leading industry Human Resources organization; and Darden's annual turnover in each front line employee segment is well below the casual dining industry average. These awards and achievements reflect our unified focus on driving sustainable success and value creation for all of Darden's stakeholders, and we remain open to all ideas that support our ability to deliver on this objective."

Darden's Board of Directors stated, "Given the significant risks that we believe could result from allowing Starboard to take control of Darden, we do not believe it is necessary for shareholders to elect an entirely new Board to implement operating initiatives that are largely already underway and delivering encouraging results. In our view, Darden's new slate of director nominees provides the optimal balance of fresh perspectives from four new, highly qualified independent nominees and continuity of experience and insight from four continuing independent nominees, together with four seats to be filled by Starboard – resulting in eight of 12 directors who are new this year. All of Darden's director nominees share the common goal of enhancing shareholder value, and are prepared to work collaboratively with all of the new directors, including the Starboard nominees, to consider the alternatives available to achieve this objective." 

Highlights of the investor presentation, titled "Operating Darden with the Right Talent, Plan and Priorities," are below.

  • Darden's Board and management have built Darden into the premier full-service restaurant company in the industry.
  • Darden is convinced it has the right leaders with proven records in restaurant operations to continue the positive momentum.
  • Since being appointed as President and Chief Operating Officer in September 2013, Gene Lee has sharpened the Company's focus on restaurant-level operations and guest experience through a proven, back-to-basics approach.
  • Darden's employees continue to express their affection for, confidence in and commitment to the Company.
  • Olive Garden® holds an enviable position with leading average unit volumes (AUVs), restaurant level profitability and guest satisfaction scores.
  • The Olive Garden Brand Renaissance turnaround is underway, and Darden expects it to continue to deliver results.
  • Darden's efforts to develop LongHorn Steakhouse® into America's favorite steakhouse are on track.  LongHorn's same-restaurant sales exceeded the industry by 3.8 percentage points in fiscal 2014 and guest counts are exceeding the industry for the 19th consecutive quarter in the first quarter of fiscal 2015. 
  • Darden is continuing to build on the solid performance at Specialty Restaurants, which benefits from strong brands with unique differentiation. The Company's Specialty Restaurants continue to provide strong unit growth and competitively superior same-restaurant sales growth.
  • Many industry analysts are recognizing that Darden's turnaround is gaining momentum.[1]
  • Having reviewed Starboard's operating plan, it appears that Starboard's suggestions replicate initiatives that are already underway and delivering encouraging results.
  • Many industry analysts also recognize the risks of implementing Starboard's plan.[1]

Olive Garden Brand Renaissance First Quarter Fiscal 2015 Highlights

Over the past year, Darden has been implementing far-reaching improvements for all elements of the Olive Garden business to reignite traffic growth, enhance the guest experience and support margin expansion. Key initiatives have included introducing a core menu innovation to reinforce value, improve quality, expand choice and variety, and capitalize on the convenience trend; simplifying restaurant operations and intensifying the emphasis on service; implementing a more integrated communications platform to enhance brand relevance with a new approach to marketing, advertising and promotions to drive continued industry-leading AUVs; and launching a re-imaging program that brings the brand to life with every guest touch point, including plate ware, server uniforms, new logo, exterior signage and new table top merchandising.

The Olive Garden Brand Renaissance is beginning to deliver positive results and reinforces the Company's confidence in the brand's ongoing development. For example, and as further detailed in the investor presentation:

  • Guest experience and satisfaction scores continue to improve across the system, including Overall, Attentiveness, Pace of Meal and Food Taste, as a result of an intensified focus on service and food quality.  Darden expects these to translate into higher traffic trends over time.
  • New menu items have reinforced value, expanded variety and supported increased demand from key customer segments, including Millennials. Through Pronto Lunch, Darden has reduced dine times for guests seeking a quicker lunch experience. In addition, by leveraging metrics made available in Darden's new technology platform, the Company has significantly reduced false waits.
  • The national launch of Darden's Online To-Go Platform is in place, and strengthening the take-out business. In the first quarter of fiscal 2015, Olive Garden achieved a 13% increase in its take-out business compared to the first quarter last year. In recent weeks, To-Go sales have grown at approximately 20% on a year-over-year basis. Notably, the Company continues to see a 30% increase in check average when guests order online, which will drive margin growth should these trends continue.
  • Testing of tablet technology in restaurants is underway and has generated encouraging results.  At locations where the new technology is available, 80% of guests interact with the device, and 60% of them pay the check on the tablet. Tablet use has increased add-on sales, table turnover, guest survey response rates, and tip percentage for servers. The Company expects tablet technology to be installed system-wide by the end of fiscal 2015.
  • Initial sales results from a pilot remodel program are encouraging. The Company has completed three remodels, which introduce significant interior and exterior improvements. This has resulted in a more than 10% increase in traffic as well as an increase in alcohol and beverage sales.

Darden shareholders are reminded that their vote is important, no matter how many or how few shares they own.  The Board urges shareholders to submit their voting instructions ONLY on the BLUE proxy card "FOR ALL" of Darden's highly qualified, experienced and independent director nominees: Michael W. Barnes, Gregory L. Burns, Jeffrey H. Fox, Christopher J. Fraleigh, Stephen Odland, Michael D. Rose, Maria A. Sastre and Enrique Silva.  Shareholders may submit their proxy by mail, phone or internet following the instructions on the BLUE proxy card.  

CAUTION: Any vote on the white card is a vote for Starboard's control slate as it could revoke any previous proxy submitted using the BLUE proxy card. Only the latest-dated proxy counts.  Darden urges shareholders – DO NOT SIGN OR RETURN ANY WHITE CARD. SIMPLY DISCARD IT.

Innisfree M&A Incorporated is serving as the Company's proxy solicitor and can be contacted toll-free at (877) 825-8631.

About Darden Restaurants

Darden Restaurants, Inc., (NYSE: DRI), owns and operates more than 1,500 restaurants that generate approximately $6.3 billion in annual sales. Headquartered in Orlando, Fla., and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2014, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the fourth year in a row. Our restaurant brands – Olive Garden, LongHorn Steakhouse, Bahama Breeze®, Seasons 52®, The Capital Grille®, Eddie V's® and Yard House® – reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com.

Information About Forward-Looking Statements

Forward-looking statements in this communication regarding our ability to improve performance across our brands and enhance shareholder value and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives and expectations regarding the sale of Red Lobster, benefits to Darden and its shareholders from such sale and related matters, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date except as required by law. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). These risks and uncertainties include the ability to achieve Darden's strategic plan to enhance shareholder value including realizing the expected benefits from the sale of Red Lobster, actions of activist investors and the cost and disruption of responding to those actions, including any proxy contest for the election of directors at our annual meeting, food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property, impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

Important Additional Information

The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with the Company's 2014 annual meeting of stockholders (the "Annual Meeting"). Information regarding the names and interests of such participants in the Company's proxy solicitation is set forth in the Company's definitive proxy statement, filed with the SEC on September 9, 2014. Additional information can be found in the Company's Annual Report on Form 10-K for the year ended May 25, 2014, filed with the SEC on July 18, 2013. These documents are available free of charge at the SEC's website at www.sec.gov.

The Company will be mailing its definitive proxy statement and proxy card to the stockholders entitled to vote at the Annual Meeting. WE URGE INVESTORS TO READ ANY PROXY STATEMENT INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able to obtain, free of charge, copies of any proxy statement and any other documents filed by the Company with the SEC in connection with the proxy solicitation at the SEC's website at www.sec.gov. In addition, copies will also be available at no charge at the Investors section of the Company's website at http://investor.darden.com/investors/investor-relations/default.aspx.

[1] See Darden investor presentations filed with the U.S. Securities and Exchange Commission on Form 8-K on September 9, 2014 and September 15, 2014 for illustrative analyst commentary.

Contact:
(Analysts) Matthew Stroud      (407) 245-5288;
(Media) Bob McAdam             (407) 245-5288

SOURCE Darden Restaurants, Inc.