Darden Restaurants Inc lost its standoff with activist shareholder Starboard Value LP at its annual meeting on Friday, when stakeholders tossed out the Olive Garden parent's entire board in a rare victory for dissident investors.

The election of Starboard's 12-person slate is a feather in the cap for the New York hedge fund, which is Darden's second-largest investor with an 8.8 percent stake.

It also is a stinging defeat for Darden, which earlier this year alienated many investors by brushing off their vote requesting a special meeting to debate the merits of the company's then-proposed sale of its struggling Red Lobster chain.

The "extraordinary" and "totally self-inflicted" loss for Darden should not come as a surprise given Darden's "tone deafness" to investor wishes regarding the sale of the Red Lobster, said Charles Elson, director of the Weinberg Center for Corporate Governance in Newark, Delaware.

"It was kind of done deal, wasn't it?" agreed Karl Sooder, a Darden investor and University of Central Florida marketing professor, who attended Darden's annual meeting in an Orlando hotel conference room on Friday.

The board sweep at Darden is notable because of the size of the company, which is the largest U.S. operator of full-service restaurants with $8.55 billion in 2013 sales, experts said.

Still, some smaller U.S. companies recently have suffered a similar fate.

For example, shareholders in ALCO Stores Inc in September replaced the full board at the retailer that serves small U.S. communities. Last year, investors replaced the whole board at Morgans Hotel Group Co.

Shares in Darden touched $50.52, up 2.5 percent, before settling at $49.30 in midday trading on the New York Stock Exchange.

"I feel great and really excited," Starboard Chief Executive and newly elected Darden director Jeffrey Smith told Reuters on the sidelines of the annual meeting.

Starboard last month unveiled a nearly 300-page proposal that included plans to sell Darden's real estate, franchise its restaurants, spin off The Capital Grille, Yard House and other chains and fix its flagship Olive Garden chain.

Starboard also took direct aim at Olive Garden's pasta, which it called poorly handled and generally overcooked.

"Shockingly, Olive Garden no longer salts the water it uses to boil the pasta, merely to get a longer warranty on its pots" Starboard said in the proposal.

Starboard also plans to boost Olive Garden's alcohol sales, use technology to eliminate "false waits" for tables at the Italian-themed chain and employ more cost-effective digital marketing.

James Mitarotonda, CEO of fellow Darden activist Barington Capital Group, in June 2013 approached the company with ideas to improve its results and kicked off what became a 16-month battle for the company's destiny.

"We are extremely pleased that necessary changes have been made," Mitaronda said in a statement.