Darden Restaurants

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Darden bills itself as the “world’s largest full-service restaurant company,” operating 1,501 restaurants in the U.S. and Canada as of May 2014, including "837 Olive Garden, 464 LongHorn Steakhouse, 54 The Capital Grille, 52 Yard House, 38 Seasons 52, 37 Bahama Breeze, and 15 Eddie V's." This was down from 2,138 restaurants in 2013. Darden employed around 206,000 people, and served more than 400 million meals annually. Total sales in 2012 were $8.00 billion with $8.3 billion projected in 2013.

Fox Business reported in 2013 that Darden "spends more on campaign contributions than any of its peers other than the far larger McDonald’s."

In 2011, Darden was fined for underpaying its employees and violating the Fair Labor Standards Act’s minimum wage and record keeping provisions.

Darden brands

News and Controversies

Embattled Darden Drops Red Lobster in "Fire Sale," CEO Resigns Under Investor Pressure

In 2013 and 2014, Barington Capital Group and Starboard Value, activist investors in Darden, brought pressure against the company on a number of issues. The two hedge funds had argued that the company was being poorly managed and called for it to be broken up.

In December 2013 Howard Penney, a director at Hedgeye Risk Management focused on the restaurant industry, told Fox Business, "It may not be apparent to a lot of people but I think the writing is on the wall. The structure of the company will not exist a year from today." In its May 2014 SEC filing, Darden even named the "actions of activist shareholders" and the "potential proxy contest for the election of directors" as "risk factors" that could potentially harm its business.Darden Restaurants, Form 10-K, SEC filing, May 25, 2014. Accessed September 9, 2014.</ref>

On May 16, 2014 Darden announced a plan to sell Red Lobster to Golden Gate Capital, an equity firm, for $2.1 billion. The New York Times described the deal as "perhaps the biggest rebuke so far to the activist investors, who have called for a more drastic breakup of the casual dining company. The deal does not require the approval of shareholders, making it unlikely that the disaffected hedge funds can stop the transaction." Darden planned to use $1 billion to pay down existing debt and an additional $700,000 to buy back stock. Representatives of Barington and Starboard complained that the price was too low, with Starboard executive Jeffrey Smith commenting "This board’s value-destructive and self-serving actions fly in the face of corporate democracy" and Barington CEO James Mitarotonda calling the deal a "fire sale."

In July 2014, the Orlando Business Journal reported that Barington Capital Group had proposed the company split the roles of CEO and chair and pressed for naming an independent board chair. Barington wrote in its proposal, "We believe that the combination of the chairman and CEO roles in a single person weakens a company’s corporate governance, which can harm shareholder value." According to USA Today, Barington had repeatedly expressed concern about the company's "financial and operational performance" under Otis.

ROC United, a non-profit organization that addresses workplace justice issues for restaurant workers, has said that "The activist investor strategy being pushed on Darden leadership follows the same asset-stripping playbook that has sunk other vulnerable restaurant chains." The group has advocated for Darden's 130,000 workers to "have a say in Darden’s future."

On July 28, CEO Clarence Otis Jr. announced his resignation. He was replaced as chair by Charles Ledsinger Jr. At that time, Darden also announced that it would only nominate nine directors to the board instead of twelve, leaving three seats to be filled by Starboard.

Opposition to Paid Sick Days

Restaurant Opportunities Centers (ROC) members and allies at the Peabody Hotel during Darden Restaurants Inc annual shareholder's meeting in Orlando, FL

Darden has fought hard against new laws and regulations on paid sick days policies, which would allow workers to stay at home when sick without risking their paycheck or their job. In Florida, Darden helped write and pass a bill that would ban local governments from requiring paid sick days for workers. Forty percent of all workers do not have paid sick days; existing federal law covers only employees working 25 hours or more at businesses with at least 50 workers, applies only to serious and not routine illnesses, and is unpaid.

Lobbying and Political Contributions

In December 2013, Fox Business reported that Darden "spends more on campaign contributions than any of its peers other than the far larger McDonald’s."

According to Open Secrets, Darden spent $1,320,000 on lobbying in 2013, $1,280,000 in 2012, and $1,450,000 in 2011. It had spent $610,000 through July 2014.

As of August 19, Darden had spent $610,350 on political contributions for the 2014 election cycle, with 45% going to Democrats and 54% to Republicans. The majority ($552,000) was given to PACs. Top individual recipients were Ron Wyden (D-OR), John Boehner (R-OH), Vernon Buchanan (R-FL), and Steny H. Hoyer (D-MD).

Through the end of 2013, Influence Explorer reports that the Darden had spent $3,512,349 on political campaigns, with 66% going to Republicans and 29% going to Democrats. Top recipients included former U.S. Rep. Bill McCollum (R-Fl), former U.S. Rep. Ric Keller (R-Fl), former Sen. Connie Mack (R-Fl) (who now serves on the board of directors of Darden), and former Presidential candidate and Gov. Mitt Romney (R). Connie Mack

The majority of NRA PAC contributions (90%) go to federal entities. Top PAC recipients include: Republican Party of Florida, National Republican Senatorial Committee, and the National Republican Congressional Committee.

Ties to ALEC and the National Restaurant Association (NRA)

Darden told CMD in 2013 that they dropped their membership with ALEC in 2010. Robert McAdam is Darden’s head of government affairs and was on the board of ALEC from 2008 to 2010.

In its lobbying disclosure, the NRA lists Darden as one of its national corporate members, and the NRA gave Darden a diversity award in 2007. In 2008, Darden CEO Clarence Otis Jr. addressed members at the NRA annual meeting on public affairs. In 1992, McAdam worked at the Tobacco Institute and attended an ALEC meeting in Colorado Springs.

About ALEC

ALEC is a corporate bill mill. It is not just a lobby or a front group; it is much more powerful than that. Through ALEC, corporations hand state legislators their wishlists to benefit their bottom line. Corporations fund almost all of ALEC's operations. They pay for a seat on ALEC task forces where corporate lobbyists and special interest reps vote with elected officials to approve “model” bills. Learn more at the Center for Media and Democracy's ALECexposed.org, and check out breaking news on our ExposedbyCMD.org site.

Head of Government Affairs Ties to Tobacco

Bob McAdam

Robert “Bob” S. McAdam became Senior Vice President, Government and Community Affairs for Darden Restaurants in December 2006. He oversees government and environmental affairs, foundation and community affairs, and media and communications. McAdam’s biography at Darden mentions his work as a campaign manager and grassroots organizer at the state and local level, and notes that he has worked at Walmart where he undertook “critical business initiatives, and improved local government and community relations critical to opening new stores.”

At Walmart in the mid 2000s, McAdam ran the war room, which was created to counter criticism from small business owners and unions. McAdam told the NY Times that Wal-Mart "has to run a campaign.” He added, “It's simply nonsense for us to let some of these attacks go without a response." The war room was a departure from prior policies, as Wal-Mart has traditionally spent little on public relations.

McAdam’s biography at Darden mentions that he was an employee at the public relations firm Fleishman-Hillard, with industry associations, and was formerly a staffer in the U.S. House of Representatives.

His biography makes no mention of his work at the Tobacco Institute, where he ran their states activities, meaning his job was to beat back taxes and regulations on tobacco. There are over 400 files in the Legacy Tobacco Documents that list his name.

Questionable Ranking by Fortune

Fortune’s rankings are created by partnering with the Great Place to Work Institute (“Institute”) and by conducting the “most extensive employee survey in corporate America.” Almost 300 firms participate in the survey, called the Trust Index. Two-thirds of each company’s score is based on this survey. The other third comes from responses to the Institute’s Culture Audit© “which includes detailed questions about pay and benefit programs, as well as a series of open-ended questions about hiring practices, methods of internal communication, training, recognition programs, and diversity efforts.”

Activists in NY work on successful paid sick days campaign, 2012. Credit: Marcy Franklin.

The Institute is a for-profit consulting firm that was started in the 1980s by two business journalists. According to their website:

Other firms may offer competitive products and services, but Great Place to Work has no competitors. No other organization shares our unique social mission. Others may help companies make marginal improvements in their workplaces, but we endeavor to help organizations transform their cultures. Great workplaces are qualitatively different because of the impact of trust on workplace relationships. We believe in changing the quality of work life for all employees throughout the world. As pioneers of this social movement, we encourage all those who wish to create their own great workplaces. Like us, they wish to build a better society for all employees everywhere.

The Institute’s website does not list prices for services, nor does it identify Darden as a customer. However, Otis was listed as a speaker at the Institute’s conference in Atlanta, GA, in March 2012.

Personnel

Former CEO Clarence Otis Jr.

Clarence Otis Jr. is Darden’s CEO and Chairman of the Board. Otis has a rags to riches story and was presented with a Horatio Alger award. He grew up in Watts, a poor, predominantly African-American section of Los Angeles that exploded in riots in the sixties and after the Rodney King decision. However, Otis reportedly made over $5 million in 2007. Otis announced his resignation as CEO and chair on July 28, 2014. According to the Orlando Business Journal, investors had been calling for his resignation for several months. At that time, the roles of CEO and chair were separated and Charles Ledsinger, Jr. was appointed independent chair.

Clarence Otis Jr.

Otis was the valedictorian of his high school and is reported by friends and family to be an incredibly hard worker. He graduated from Stanford Law and practiced in securities before moving into finance. He joined Darden in 1995, became CEO in 2004, and Chairman of the Board of Directors in 2005.

In the Orlando area, Otis has served on the board of the Association to Preserve the Eatonville Community. He has been praised by the Executive Director of the Association for helping to raise the profile of the group’s annual Zora Neale Hurston Festival, and has hosted some of their artists at his home. Otis has also been lauded by the CEO of his local development commission for helping to lure the Burnham Institute to his local area for securing funding for the UCF College of Medicine. He has recruited minority business leaders and companies to the Orlando area.

Otis is married to Jacqueline Bradley a former banking executive at Sun Trust and now a stay at home mother. They have three children: Calvin, age 23, and twin daughters Allison and Randall, age 20. The family lives in Isleworth, which is also home to professional athletes, entrepreneurs, and heads of business. Otis and his wife are very active in the arts and have sponsored a fundraiser for the Orlando Philharmonic at their home. They attend services at The Life Center Church in Eatonville.

Together, Otis and Bradley have one of the most extensive private collections of African-American art. With over 100 pieces, the collection includes renowned African-American artists, including Romare Beardon, Sam Gilliam, and William Johnson.

Otis also serves on the board of directors of The Metro Orlando Economic Development Commission, VF Corporation, Verizon Communications, Inc., the Federal Reserve Bank of Atlanta, and the Central Florida YMCA. His is an honorary member of the Mennello Museum of American Art.

ROC members and allies during Darden Restaurants Inc annual shareholder's meeting in Orlando, FL

Otis is a speaker for Celebrity Talent Promotions, where he is categorized on their website as a business speaker and CEO. In November 2011, he gave a talk at the Emory University business school on corporate social responsibility.

In 2011, he wrote a piece for CNN bemoaning regulations and their impact on jobs. According to Otis:

Regulatory mandates flowing from federal health care reform may be the most visible, but the list also includes measures such as new mandatory paid leave provisions that require us to change the way we accommodate employees who need to take time off when they are ill and ever more unrealistic requirements regarding employee meal and rest breaks that, in California for example, force our employees to take breaks in the middle of serving lunch or dinner.

This reality is the result of the best intentions. Policymakers working in silos at every level are pushing through regulations that on their face seem to address admirable goals -- that are each directed at outcomes that seem desirable.

The cumulative effect of these regulations, however, is significant damage to the hard-working Americans who are the intended beneficiaries.

Executive Leadership

• Clarence Otis Jr., Chairman of the Board and Chief Executive Officer
• Ronald Bojalad, Senior Vice President Group Human Resources
• David George President, Olive Garden
• Valerie Insignares, President LongHorn Steakhouse
• Jim Lawrence, Senior Vice President, Chief Supply Chain Officer
• Eugene Lee President, Specialty Restaurant Group
• Kim Lopdrup, Senior Vice President Business Development
• Dave Lothrop, Senior Vice President Corporate Controller
• Robert McAdam, Senior Vice President Government and Community Affairs
• Andrew H. Madsen, President and Chief Operating Officer
• Daisy Ng, Senior Vice President Chief Human Resources Officer
• David Pickens, Senior Vice President Chief Restaurant Operations Officer
• Patti Reilly-White, Senior Vice President Chief Information Officer
• C. Bradford Richmond, Senior Vice President Chief Financial Officer
• Teresa Sebastian Senior Vice President, General Counsel and Secretary
• Will Setliff Senior Vice President, Chief Marketing Officer
• Salli Setta President, Red Lobster
• Suk Singh, Senior Vice President Chief Development Officer

Board of Directors

As of July 2013:

• Charles A. Ledsinger Jr., Chairman of the Board as of September 2014. Chairman of Realty Investment Company, Inc., a private operating and investment company. Chairman of Sunburst Hospitality Corporation, a private hotel and real estate operator. Retired Vice Chairman and Chief Executive Officer of Choice Hotels International, a lodging franchisor.
• Clarence Otis Jr., former Chairman of the Board and CEO
• C. Bradford Richmond, Senior Vice President and CFO
• Michael W. Barnes, Chief Executive Officer of Signet Jewelers Limited, a specialty retail jeweler.
• Dr. Leonard L. Berry, Presidential Professor for Teaching Excellence, Distinguished Professor of Marketing, and M.B. Zale Chair in Retailing and Marketing Leadership, Mays Business School, Texas A&M University.
• Christopher J. (CJ) Fraleigh, Chairman and Chief Executive Officer of Shearer’s Foods, Inc., a global snack food company.
• Victoria D. Harker Chief Financial Officer of Gannett Co., Inc., an international media and marketing solutions company.
• David H. Hughes Retired Chairman of the Board of Hughes Supply, Inc., a building supply company.
• William M. Lewis Jr. Managing Director and Co-Chairman of Investment Banking for Lazard Ltd., an investment banking firm.
• Connie Mack III (legal name: Cornelius McGillicuddy, III), Partner and senior policy advisor for Liberty Partners Group, a public policy consulting firm. Former U.S. Senator.
• Michael D. Rose Private investor and Chairman of the Board of Midaro Investments, Inc., a privately held investment firm.
• Maria A. Sastre President and Chief Operating Officer of Signature Flight Support Corporation, a fixed based operation and distribution network for business aviation services.
• William S. Simon Executive Vice President of Wal-Mart Stores, Inc., a global retailer, and President and Chief Executive Officer of Walmart U.S.

Contact

1000 Darden Center Drive
Orlando, FL 32837
407-245-4000

Related PRWatch articles

Brendan Fischer, Efforts to Deliver "Kill Shot" to Paid Sick Leave Tied to ALEC, April 3, 2013.
Mary Bottari, The "Other NRA," the National Restaurant Association, Pushes Preemption of Paid Sick Days, July 24, 2013.
Rebekah Wilce, Darden Restaurants Dumps ALEC in Favor of ALEC-Affiliated Group, April 15, 2013.

External Articles

Philip Mattera, Darden Restaurants: Corporate Rap Sheet, January 17, 2014.