Clarence Otis Jr.
Darden Restaurants Inc. on Monday said Clarence Otis Jr. would be stepping down this year from both the chairman and chief executive roles of the casual-dining operator.
Orlando, Fla.-based Darden’s board appointed lead independent director Charles A. Ledsinger Jr., who has served since 2005, as independent non-executive chairman of the board, effective immediately. The company said it was also splitting the roles, which activist investors had urged in the wake of the company’s now completed sale of Red Lobster.
The company in a press release said Otis has agreed to continue serving as chief executive until a successor is named or until Dec. 31, which ever comes first, “to ensure a smooth transition.” Otis also will remain a company director but not stand for re-election at the 2014 annual meeting.
Otis joined Darden in 1995 and has served as Darden’s chief executive since November 2004. He added the title of chairman in November 2005. Prior to joining Darden, he served 11 years in investment banking as managing director and manager of public finance for Chemical Securities Inc., now JP Morgan Securities Inc.
The company said the board will initiate a search to identify Otis's successor as CEO and that internal and external candidates will be considered.
"I am proud to have been a part of Darden's significant growth and expansion,” Otis said in a statement, “which has enabled us to reach new consumer segments and markets and create significant long-term shareholder value.
“With the Red Lobster sale complete and progress on our Olive Garden brand renaissance and other strategic priorities underway, this is the right time for me to step down,” he said. “I am confident that they, under the leadership of our board and management team, will continue to make progress on the actions we are taking to reinvigorate restaurant performance and further enhance shareholder value.”
The company pointed out that under Otis’ tenure the company grew from 1,381 restaurants with $5.2 billion in annual sales to more than 2,200 restaurants with more than $8.7 billion in annual sales at the end of its fiscal 2014.
Ledsinger, in additional comments, said “Clarence has played an important role in leading Darden and our industry, successfully expanding Darden's footprint and restaurant portfolio with new brands.”
Ledsinger said the search process for Otis’ successor would “expeditious.”
Also Monday, Darden’s board said it expected to nominate nine of its 12 independent directors as the board's slate of nominees for election at the Sept. 30 annual shareholders’ meeting.
“By nominating a slate of nine directors for the 12 available seats at the annual meeting,” the company said, “Darden has ensured that at least three of the nominees proposed by Starboard Value L.P. and its affiliates would be elected.”
Starboard has put forth a slate of a dozen nominees.
Darden also announced that it has engaged in settlement discussions with Starboard with respect to Starboard's pending proxy contest “but has been unable to reach an agreement with Starboard,” the company said in a press release. “The company remains interested in a mutually acceptable resolution.”
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