Denny’s shares climb after CEO departs

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CHICAGO (AP) — Shares of Denny’s Corp. soared Wednesday after the struggling restaurant chain said it was replacing CEO Nelson Marchioli with board Chairwoman Debra Smithart-Oglesby on an interim basis and looking for a permanent replacement.

THE SPARK: Tuesday evening’s announcement came less than a month after the end of bitter proxy fight with investors that had pushed to oust Marchioli, Smithart-Oglesby and former Chairman Robert Marks from the company’s board.

THE BIG PICTURE: For weeks the Spartanburg, S.C. company and investors sparred over the company’s management and direction. An investor group calling itself the Committee to Enhance Denny’s tried to replace the three board members with its own slate of candidates.

The group, led by Oak Street Capital Management and Dash Acquisitions, said its candidates would fight to replace the restaurant chain’s management and make other changes to boost the faltering company’s business.

But executives at the restaurant disagreed with the plan, saying their own efforts were on track to shore up results and claimed in an increasingly furious volley of information to shareholders that the group was only out to improve its own fortunes.

Five other positions on the board were not contested.

They investors didn’t garner enough support during the restaurant’s annual meeting in May to snag the board seats.

THE ANALYSIS: Tuesday’s announcement may signal that the investors’ efforts had a lasting effect on the company. A Denny’s spokesman on Wednesday declined to say when Marchioli left his position and whether his departure was voluntary or if the 60-year-old was forced to resign.

But Patrick Walsh, a partner at Oak Street Capital Management, and David Makula, the firm’s chief investment officer, called the departure a victory for their effort.

“We’re glad he’s gone,” Markula said.

SHARE ACTION: Denny’s stock rose 27 cents, or 10.2 percent, to $2.92 in morning trading Wednesday. Shares have a 52-week range of $2.07 to $3.99.