Darden Restaurants has been making big changes. And the company is on the edge of having to make even bigger ones after completing the sale of Red Lobster and announcing that its CEO will step down on the very same day.
Darden announced yesterday that Clarence Otis is stepping down from his position as chairman and CEO of the company. Otis will continue to serve as CEO until the appointment of a successor, or the end of 2014, but the role of chairman and CEO has now been cleaved into two positions.
The announcement follows the completion of Darden's sale of Red Lobster to Golden Gate Capital, also announced on Monday.
Otis joined Darden in 1995. The company appointed him CEO in 2004, and chairman of the board in 2005.
He has led the company in times of extreme growth – under his tenure, Darden grew its annual sales to more than $8.7 billion from $5.2 billion, and increased the number of restaurants to 2,200 from 1,381. However, in recent years, he's also been forced to lead the company through a period of low profits and embattled investor relations.
Activist investors Starboard Value and Barington Capital Group have been at odds with Darden since the company announced plans to spin off or sell Red Lobster, while keeping Olive Garden, in December 2013. In May, shortly after Darden announced plans to sell Red Lobster to Golden Gate, Starboard announced plans to unseat the entire Darden board through a proxy contest, backed by Barington.
On Monday, seeking compromise, Darden announced that its board of directors would only nominate nine of its directors for election, leaving three spots open for nominees proposed by Starboard. Starboard is apparently still set on unseating the entire board, however, calling the Red Lobster sale the "destruction of a billion dollars in shareholder value."