ORLANDO, FL - Some investors are raising an eyebrow at the latest word out of Darden Restaurants revealing that interm CEO Gene Lee has received a $300,000/year raise, bringing his total compensation package to $1.114 million. While this level of compensation, in and of itself, is not unusual for a CEO of a company the size of Darden, and in fact is similar to the salary of former Darden CEO Clarence Otis, according to the Orlando Sentinel, its timing has raised questions.
As AndNowUKnow covered in a previous story, Darden has just recently seen its entire Board of Directors swept out of office by Starboard nominees. Starboard has made its criticisms of Darden the fixture of news headlines for weeks, criticising the company for everything from its sale of Red Lobster to the amount of salt it puts into its pasta water.
The question has been raised regarding whether now is the appropriate time to give Lee such a sizable raise, considering the myriad of pressing issues on Darden's plate. The company has just instated a new Board of Directors, is in the midst of a major effort to revitalize its Olive Garden chain, and is working to reassure investors of its ability to get back to its former levels of profitability in the industry. With so much still left to be done, the timing of this annoucement has struck some as inappropriate.
While the question is a fair one, it is likely that Darden's Board found such a move necessary in order to be able to attract the best talent during its search for a new CEO. This search had already begun when Lee was appointed interm CEO, with Jeffrey Smith, the Starboard CEO and independent, non-executive Chairman of Darden's Board, telling USA Today at the time that the Board’s search committee will conduct “a full search for the next CEO of Darden.”
The success of Lee and whichever successor Smith and the Board find most suitable to replace him will best tell whether this move was a necessary expenditure or a costly mistake. In the meantime, the industry can only watch and hope that Darden Restaurants' new leadership is able to guide the company into a brighter, more profitable future.
