- Associated Press - Friday, October 10, 2014

NEW YORK (AP) - Some changes could be in store for Olive Garden, including how the restaurant chain prepares its soups and pasta.

An activist investor on Friday succeeded in its bid to take control of the board of Olive Garden’s parent company, Darden Restaurants Inc. Starboard Value’s nominees were elected to fill all 12 of Darden’s board seats, according to preliminary voting results.

The unusual handover in control comes as Darden has been struggling to turn around Olive Garden’s declining sales with new marketing and menu items, including “small plates” like crispy risotto balls. Earlier this year, the company completed its sale of Red Lobster - despite objections from Starboard and other shareholders - saying it wanted to focus on fixing the Italian-themed chain.

At the meeting in Florida, Starboard CEO Jeff Smith stood to introduce himself and the new board members before voting results had been announced. Smith noted Starboard has already begun “to work with the management team to ensure a seamless transition.”

In a statement issued later, Smith praised Darden’s “incredibly strong foundation that reflects its iconic and growing brands.” In addition to Olive Garden, Darden owns smaller chains including LongHorn Steakhouse, The Capital Grille and Yard House.

It’s not clear what changes Starboard will push for right away, but the hedge fund issued a 294-page presentation last month saying Darden should spin off its real estate holdings. It criticized Olive Garden for having an overly complicated menu and its failure to salt its pasta water.

“If you google “how to cook pasta,” the first step of Pasta 101 is to salt the water,” Starboard wrote.

Starboard also pointed out numerous ways Darden could slash costs, including reducing its ranks of full-time workers, being more disciplined in how it hands out breadsticks and using an outside supplier to help make soups.

It’s not clear how many people stand to lose their jobs or see their hours scaled back. The restaurant workers group Dignity at Darden, which demonstrated outside Starboard’s office in New York City Thursday, has estimated the firm’s proposal would result in the loss of up to 1,600 workers.

Darden employs about 150,000 workers. Representatives for Starboard didn’t respond to requests for comment.

Sara Senatore, a restaurant industry analyst for Bernstein, said Starboard’s board nominees likely won’t rubber-stamp the firm’s suggestions, even if they’re in agreement on many matters. She noted the nominees have respectable credentials and don’t want to be seen as “patsies” for Starboard.

Although complete board turnovers are rare, the results in the Darden case aren’t entirely surprising. Two large advisory firms, Institutional Shareholder Services and Glass, Lewis & Co. had recommended that shareholders vote in favor of Starboard’s nominees.

Darden had already said it would cede four of the 12 board seats to Starboard, but warned shareholders that handing the entire board over would upend the progress it was making at Olive Garden.

In July, Darden also announced longtime CEO Clarence Otis would step down by the end of this year. A successor hasn’t yet been named.

In a statement, Darden’s most recent board chairman, Charles Ledsinger, said he and the company gave their best wishes to the incoming directors and look forward to “seeing continued progress at Darden.”

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Follow Candice Choi at www.twitter.com/candicechoi

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