For years, Olive Garden’s marketing campaign revolved around the theme: “When you’re here, you’re family.” Well it looks like Olive Garden–or more specifically, it’s parent company Darden–has a new family at the helm.
Reports are out that Starboard Value L.P. has successfully routed the entire incumbent board of directors, replacing them with its own slate of 12 new members. This is the culmination of a lengthy dispute about recent strategic decisions and the future direction of Darden Restaurants and its portfolio of restaurants that includes Olive Garden, Longhorn Steakhouse, The Capital Grille, Bahama Breeze, and others.
I don’t have data, but my sense is that such complete board turnover is very rare outside of a change in corporate ownership. I tried to find some evidence on how frequently complete board turnovers happen. The closest thing I found thus far is a report by Equilar looking at board turnover among the Fortune 1500 for the fiscal year ending April 2012. They found only 54% of the 1,445 companies they looked at had any turnover at all. Only 1% had more than 50% of board members turn over. The don’t report whether any firm had 100% turnover. Perhaps someone with out there has numbers handy (or some time to do the digging) to shed light on this?
Outcomes like this certainly reinforce the idea that Lucian Bebchuk and company have been promoting with the Shareholder Rights Project at Harvard Law School; namely, that eliminating staggered boards (i.e., having the full board stand for election every year) can allow for more effective changes in corporate control even without a change in corporate ownership, making companies more responsive to their current shareholders.