Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Activist Fight Will Complicate Search for New Darden Chief

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Activist Fight Will Complicate Search for New Darden Chief

Article excerpt

An activist investor's efforts to wrest control of embattled Darden Restaurants will make the search for a new CEO even more difficult, industry analysts say.

Analysts and consultants following Darden's recent struggles say the company's Sept. 30 annual shareholder meeting could change the nature of the search if hedge fund Starboard Value accomplishes its plans to take control of the board of directors.

"The situation may scare some people away, and that's just going to be part of the challenge," said Doug Ehrenkranz, managing director at Boyden Global Executive Search. "And I would be very surprised if the next CEO is someone that is currently inside of the company."

On Aug. 15, Darden's board of directors announced that it had hired global search firm Russell Reynolds Associates to find a replacement for departing CEO Clarence Otis, who resigned among continually disappointing sales and profit reports at Olive Garden and other restaurants in the Darden portfolio.

Mr. Otis' term was capped by the controversial $2.1 billion sale of Red Lobster to Golden Gate Capital Partners.

A search of this magnitude typically takes about six months, said Mr. Ehrenkranz, whose firm has participated in other searches for Fortune 500 leaders.

But the search could be interrupted at the shareholders meeting, when Starboard has promised to try to replace the company's entire board of directors with a group of its own.

"Certainly the Darden board of directors has already given the search company a direction on where they want to go with a leader," Mr. Ehrenkranz said. "But that could change here."

Darden spokesman Rich Jeffers said the company did not have anything to add about its executive search efforts.

Starboard has loaded its suggested board of directors with what it says are possible candidates to take over for Mr. Otis, in the interim or even permanently.

Among those are Brad Blum, a former Olive Garden president and once a contender for Darden's CEO spot. There is also Chuck Sonsteby, former chief financial officer at Brinker International, parent company for Chili's Bar & Grill and Maggiano's Little Italy. …

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