Show your claws to the owner of Red Lobster, and you may get thrown into a box.
The struggling seafood chain’s corporate parent Darden Restaurants wants to spin off Red Lobster into a separate company, but critics claim that some analysts and investors are being stonewalled after questioning the plan.
Starboard Value LP, a New York hedge fund that owns 5.5 percent of Darden shares, blasted the Red Lobster spinoff last month as an inadequate strategy for boosting the company’s shares.
Last week, Starboard called for a special shareholder meeting about Red Lobster after demanding that the spinoff be put to a vote.
On Wednesday, Darden countered in a letter to investors that it “strongly believes that Starboard’s special meeting is an unsatisfactory alternative to direct, ongoing engagement between the Company and its shareholders.”
In reality, however, some investors are protesting that Darden’s idea of “direct engagement” amounts to returning the phone calls of analysts and investors who agree with its strategy while ignoring calls from dissenters.
“They’ve got a history of only engaging with investors and analysts who are supportive of their views,” said one Darden shareholder, who declined to give his name for fear of retribution from the company.
“If the board is so convinced [a Red Lobster spinoff] is such a great idea, then put it to a vote,” the investor added. “What’s the downside?”
A spokesman for Orlando-based Darden, which also owns the Olive Garden, insisted that the Wednesday letter didn’t amount to a “recommendation” about a prospective shareholder meeting, despite the fact that the letter called it an “unsatisfactory alternative.”
In a statement, Darden likewise denied it has shut out analysts and investors who have questioned its plans.
“The claims cited are inconsistent with Darden’s practice of treating analysts equally and the numerous awards the Darden investor relations program has received from investors and analysts alike,” the company said.