Starboard CEO Leaves Darden After Shaking Up Olive Gardenby
Jeff Smith, the activist investor who led a revolt at Darden Restaurants Inc. in 2014 and helped revamped its Olive Garden chain, will step down from the board as his firm diminishes its role at the company.
Smith, chief executive officer of hedge fund Starboard Value, resigned from Darden’s board on Monday, the restaurant company said in a statement. Chuck Sonsteby, a current director, replaced Smith as chairman, leaving the board with 10 members.
The move followed a 6.8 percent gain in same-store sales for Olive Garden last quarter. The Orlando, Florida-based company also boosted its annual earnings forecast on Tuesday to $3.48 to $3.52 a share, excluding some items, up from as much as $3.35.
Smith’s departure marks the end of a tumultuous era for Darden, which saw its entire board replaced in a Starboard-led proxy fight in 2014. After the shake-up, Olive Garden debuted a new back-to-basics menu, and the company created a real estate investment trust to capitalize on its land holdings. In recent months, Starboard has been winding down its stake.
“I am able to move on to other projects at this time because of the outstanding chemistry and capabilities of both the board and management,” Smith said in the statement.
Still, the company faces rising labor costs and competition from fast-casual and fast-food restaurants that are doing better now.
“The environment, I would say, continues to remain choppy,” CEO Gene Lee said Tuesday on a conference call.
Darden shares dropped 3.8 percent to $64.80 at 10:09 a.m. in New York. The stock had climbed 5.8 percent this year through Monday.