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UPDATE 3-Buffalo Wild Wings CEO to retire as activist Marcato wins board seats

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NEW YORK, June 2 (Reuters) - Buffalo Wild Wings Inc said on Friday that Chief Executive Officer Sally Smith would retire before the end of the year, a move that came as shareholders voted three activist hedge fund nominees onto the company's board.

Smith's move to stand down from the leadership helm and the wing and beer chain's board showed that despite the nearly year-long effort by the company to fend off activist Marcato Capital Management, shareholders wanted a change.

Smith oversaw a ten-fold increase in the company's stock since its 2003 debut, but "BDubs" - as it is known among loyal sports loving patrons - struggled to jolt its market value since shares hit a peak of $201.14 in September 2015.

"Now's the time where some new blood is needed," said restaurant analyst Stephen Anderson, who added that the company needed to keep menu prices down and to add more discipline around cost controls.

Marcato owns more than 9 percent of the company's shares. Buffalo Wild Wings, based in Minneapolis, Minnesota, has a market value of $2.6 billion.

Marcato publicly launched its Buffalo Wild Wings campaign last July, pressuring Smith and the board to pursue strategies that the activist believed would boost the company's stock price, which had lagged in the year prior compared with peers.

Among the demands voiced by Marcato, founded by ex-Pershing Square partner Mick McGuire, was for the company to franchise 90 percent of its more than 1,200 restaurants - up from the current 50-50 ratio - and to speed up its international and tech expansion.

Marcato's board nominees elected at Friday's shareholder meeting were McGuire, former Pizza Hut CEO Scott Bergren and restaurant industry veteran Sam Rovit, Buffalo Wild Wings said in a statement, shortly after its announcement that Smith was stepping down.

A fourth Marcato nominee, restaurant industry veteran Lee Sanders, was not elected to the board.

Buffalo Wild Wings had nine directors up for election at the meeting, three of whom Marcato targeted to replace: Cynthia Davis, Oliver Maggard and Jerry Rose.

The other company nominees were Rovit, who was a nominee for both Marcato and Buffalo Wild Wings, Andre Fernandez, Janice Fields, Harry Lawton and Harmit Singh, who all ran uncontested.

According to a person familiar with the matter, Rose and Davis will remain on the board, with one of them filling Smith's empty seat until next year's election, while Maggard will step down. The board will remain at nine members. (Additional reporting by Lisa Baertlein; editing by Andrew Hay and Marguerita Choy)