{ "docId": "019dd923-622b-71dc-a6d9-bf00ae998d16", "docSlug": "4fd9f67bd3da", "documentTitle": "Darden Restaurants, Inc. (DRI)", "authorId": "03_Starboard_Value", "authorName": "Jeffrey C. Smith", "documentKindSlug": "shareholder-letter", "documentKindLabel": "Shareholder letter", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2014-05-22 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 9, "pageCount": 20, "prevPage": 8, "nextPage": 10, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 4, "notes": "The slide uses external analyst quotes to validate the activist's thesis of value destruction.", "elementsJson": [ "quote_block", "paragraph", "headline_text" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6d9-bf00ae998d16/9", "deckHref": "/decks/019dd923-622b-71dc-a6d9-bf00ae998d16", "deckJsonHref": "/decks/019dd923-622b-71dc-a6d9-bf00ae998d16.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6d9-bf00ae998d16#slide-9", "components": [ { "bbox": null, "kind": "callout", "text": "Sadly, the Red Lobster Sale is only the most recent, and most egregious, example of the current Board and management’s extended record of poor performance and value destruction.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0397-72dc-a884-77ac847e9bf2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.7, "x": 0.15, "y": 0.8 }, "kind": "paragraph", "text": "As we discussed in detail in our prior letters and presentations, Darden’s stock has significantly underperformed peers over an extended period of time. For example, over the last five years, Darden has underperformed its closest direct competitors and its proxy peer group by approximately 300%.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "115d3e11-4a1b-400d-823e-52fc682507ba", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.7, "x": 0.15, "y": 0.55 }, "kind": "paragraph", "text": "Sadly, the Red Lobster Sale is only the most recent, and most egregious, example of the current Board and management’s extended record of poor performance and value destruction.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5cf5bc10-3a68-4051-bb7d-e696a5abc151", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.7, "x": 0.15, "y": 0.66 }, "kind": "paragraph", "text": "The current Board has presided over an extended period of poor stock price performance, poor operating performance, poor capital allocation, and poor corporate governance.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b0648835-fe7b-43c3-998f-0c5d332eaf08", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.35, "x": 0.15, "y": 0.45 }, "kind": "quote", "text": "It is unconscionable that the Darden Board would allow the Company to sell its Red Lobster business...", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "23f42e7f-2ebc-4e8b-b7dd-2be53017f0ee", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.35, "x": 0.15, "y": 0.29 }, "kind": "quote", "text": "$2.1billion represents a seemingly compelling 9.0x EBITDA multiple...", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2cf823fe-1307-4186-b941-42f68ee80311", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.35, "x": 0.52, "y": 0.22 }, "kind": "quote", "text": "In short, in our eyes, “the taxman stole the show” by taking 25% of the gross proceeds.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "91ef3f6a-f535-4100-aed2-23f9576422f3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.2, "w": 0.35, "x": 0.15, "y": 0.09 }, "kind": "quote", "text": "We view nearly all aspects of the Red Lobster transaction as not particularly compelling...", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b397ccdd-489f-4303-ac3d-957a85eaa945", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.35, "x": 0.52, "y": 0.45 }, "kind": "quote", "text": "Management's decision to ignore shareholder concerns and go forth with an undervalued sale...", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f752f8fc-71e4-4ad0-b65b-32e44270ca67", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.35, "x": 0.52, "y": 0.29 }, "kind": "quote", "text": "Today, Darden announced that it has entered into a definitive agreement to sell its Red Lobster business...", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "fcfdff35-1791-4b2b-998a-e1e29dc51ae7", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "We view nearly all aspects of the Red Lobster transaction as not particularly compelling. — UBS, May 20, 2014; $2.1billion represents a seemingly compelling 9.0x EBITDA multiple, but it's on artificially depressed F14 ests and offers no premium to a conservative DCF. — Credit Suisse, May 20, 2014; It is unconscionable that the Darden Board would allow the Company to sell its Red Lobster business for what amounts to a 'fire sale' price after shareholders clearly indicated that they did not want the Company to enter into a transaction unless it was subject to their approval. — Barington, May 19, 2014; In short, in our eyes, “the taxman stole the show” by taking 25% of the gross proceeds. — Stifel, May 16, 2014; Today, Darden announced that it has entered into a definitive agreement to sell its Red Lobster business and related assets to Golden Gate Capital for $2.1 billion in cash. Destroying a business and giving it away for free is a familiar practice for CEO Clarence Otis. He first did it with Smokey Bones and has done it again with Red Lobster. — Hedgeye, May 16, 2014; Management's decision to ignore shareholder concerns and go forth with an undervalued sale of Red Lobster as opposed to waiting for operations to improve or entertain monetization without fully disposing the brand during a depressed earning's period will likely result in meaningful changes at the board level and among senior management. — Buckingham, May 16, 2014", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0397-72dc-a884-7831e68a351d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.7, "x": 0.15, "y": 0.6 }, "kind": "title", "text": "DARDEN'S PERFORMANCE UNDER THE CURRENT BOARD HAS BEEN UNACCEPTABLE", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6f278f4e-92c4-4d8b-a0cb-e0a5436667b3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.2, "x": 0.15, "y": 0.76 }, "kind": "title", "text": "Stock Price Performance", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "91ac8a73-b71b-44e0-9c07-9e38b34bcecf", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }