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Darden Board Votes No on Resolution Calling for Greater Political Spending Transparency

October 10, 2014

In the high visibility Darden Restaurants annual shareholders meeting in Orlando, Florida today — which saw activist investor shareholder Starboard Value gain the votes necessary for a complete takeover of the leading restaurant company’s board of directors — Darden shareholder and international human rights organization the Unitarian Universalist Service Committee (UUSC) called for a board vote on its resolution to require greater transparency and accountability concerning Darden’s political spending at local, state and federal levels.

Darden’s board defeated the UUSC resolution, although more than 40 percent of shareholders nationwide voted to approve it.

The UUSC resolution called for actions by Darden including:

• Publish and periodically update information on monetary and non-monetary contributions to political campaigns as well as expenditures related to influencing public opinion around elections and referenda.

• Publish the policies and procedures for making such spending decisions.

Commenting on the decision, UUSC President and Chief Executive Officer Rev. Dr. William Schulz said, “We are deeply disappointed that Darden and its new leaders have not elected to strengthen their commitment to greater transparency concerning their political spending.”

“Darden plays a crucial role in the National Restaurant Association and has successfully influenced blocking legislation that affects thousands of workers in the U.S.,” Schulz said.

“The issue of excessive political spending, we feel, has far reaching implications for the overall profitability of the company, for the restaurant industry, and for American workers and consumers,” he said.

In calling for a vote on the UUSC resolution, as proxy for UUSC, Kindra Muntz, president of the board of UU Justice Florida and a resident of Venice, Florida, said, “UUSC shares the disappointment that many shareholders have expressed with the poor decision-making and oversight shown by the recent Darden boards of directors.”

“This disappointment extends, but is not limited to, insufficient transparency around political expenditures — a practice that represents a potentially grave business risk.  We certainly hope that the new board present here today will swiftly adopt a more rigorous political expenditure policy which includes publishing all payments to trade associations and 501(c)(4) organizations,” said Muntz.

“Fortune 500 companies such as Boeing, Target, Wells Fargo, JP Morgan Chase and Beckton, Dickinson & Company do. It is time that Darden joined their ranks,” Muntz added.

UUSC acknowledged Darden for posting a new political spending policy on its website last year, including its commitment to disclose annually all direct and in-kind political spending to candidates, political parties, political organizations and to disclose independent expenditures in support of or in opposition to particular candidates for office at the federal, state and local levels.

But UUSC said significant gaps remain in the company’s refusal to disclose payments to trade associations used for political purposes, and to so-called “social welfare” organizations under 501(c)(4) section of the Internal Revenue Code that engage in political activities.

“Although our resolution was rejected, we were encouraged to see more than 40 percent of Darden’s shareholders voting yes,” said Schulz.

“Representing a faith community in America that supports social justice, we have a moral message: The weight of inordinate political spending should not influence either the restaurant industry or policymakers in Washington, but consumer power can do so, for the betterment of business and society. We will persist,” said Schulz. “We have strength in numbers.”

For over a decade, UUSC has filed similar disclosure resolutions with other corporations, as a way of addressing potential risk from political expenditures.

For the 2014 proxy season, UUSC filed resolutions similar to the Darden proposal with approximately 50 companies for the 2014 proxy season.

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