October 20, 2014 Bruce Goldfarb Explains the Proxy Fight at Darden Restaurants

Will We See More Wholesale Board Changes Like Darden?

By Michael Ide, ValueWalk

Last week, shareholder activism showed just how far it’s come when Starboard Value LP won a decisive proxy fight against Darden Restaurants, Inc. (NYSE:DRI)’a now-former management, replacing the entire board with its own nominees. Darden’s decision to sell Red Lobster earlier this year despite heavy shareholder opposition played a big role in the board’s replacement, but according to proxy solicitor Bruce Goldfarb, the President and CEO of Okapi Partners, we may be seeing more results like it in the coming years.

“Shareholders overwhelmingly indicated that they wanted to vote on any transaction involving Red Lobster. That consent campaign in many ways galvanized investors who just wanted to have an ability to make decisions about this company. The company ignored the wishes of shareholders to have a vote, and they sold Red Lobster for what turned out to be very little value,” Goldfarb explained in an interview with ValueWalk.

Darden – Counting the votes

As proxy solicitor, Goldfarb plays a similar role as a campaign manager would in the political arena. Whether he’s working with a corporate board or activist investors (and he works with the former more often than the latter), he helps his client understand who a company’s shareholders are, what issues they care about, whether they rely on shareholder advisory services like ISS and Glass Lewis, and anything else that might impact their votes. In some cases he even vets candidates for a proxy fight, but the exact job requirements vary from client to client.

Okapi also tracks voting throughout a campaign, making Goldfarb one of the first people to know with some certainty that Darden Restaurants, Inc.’s (NYSE:DRI) board was on the way out.

“You never know how a result will come in until close to the end, in part because these campaigns are very dynamic. A company could take action prior to the election that could change the results, but as the meeting date approached it became pretty clear that Starboard’s nominees were going to get very high support and we certainly knew before the polls closed that Starboard’s nominees were going to win every seat,” says Goldfarb.

Read the Full Story HERE [ValueWalk]