(Adds details, background, shares)
March 26 Activist investor Barington Capital
Group LP urged Darden Restaurants Inc to consider
looking for a new chief executive, stepping up pressure on the
restaurant operator to come up with ways to improve its
The hedge fund and fellow activist investor Starboard Value
LP have opposed Darden's plan to spin off or sell its struggling
705-restaurant Red Lobster chain.
"We are dismayed by (Darden CEO Clarence Otis's) efforts to
separate Red Lobster and its valuable real estate from the
company without shareholder approval," Barington said in a
letter to Darden's independent directors on Wednesday.
Orlando-based Darden was not immediately available for
Barington again urged Darden to reconsider its views on Red
Lobster's real estate, saying it believed Darden should retain
those assets and create a publicly traded real estate investment
Barington represents a group of shareholders that hold more
than 2 percent stake in the largest U.S. operator of
full-service restaurants. Starboard has a stake of about 5.5
Barington had proposed in October that Darden split its
businesses into two - one owning the more-mature Olive Garden
and Red Lobster brands and another controlling its higher-growth
chains including LongHorn Steakhouse and Capital Grille.
Barington said on Wednesday that Otis's background in
finance made him more predisposed to running a restaurant
conglomerate than managing individual chains.
The hedge fund urged the company's board to consider looking
for a CEO with stronger restaurant experience.
Otis orchestrated Darden's acquisitions of LongHorn
Steakhouse, Capital Grille, Eddie V's and Yard House after he
became CEO in November 2004. He took on the additional role of
chairman a year later.
Barington also reiterated that Darden should appoint an
independent chairman to ensure that shareholder interests were
Darden said on Friday that sales at established restaurants
fell at both Red Lobster and Olive Garden chains in the third
quarter ended Feb. 23.
The company's shares were little changed at $50.76 in late
morning trading on the New York Stock Exchange.
(Reporting by Devika Krishna Kumar in Bangalore; Editing by