NEW YORK (CNNMoney.com) - Wendy's responded to pressure from activist investor Nelson Peltz by adding three new directors nominated from Peltz's investment fund.

The move quelled tensions between Peltz and Wendy's management over the company's lagging profit margins.

Wendy's profit margins were 5.9 percent over the last 12 months, compared to 12.7 percent for rival McDonald's.

The company announced a strategy called the "3-Year Combo Plan" to focus on improving profit margins.

The restaurant company will also complete an initial public offering of its Tim Hortons coffee and doughnut shop before the end of 2006, according to a statement late Thursday.

Wendy's said it will explore strategic alternatives for its Baja Fresh Mexican eateries.

The new directors, nominated by Peltz's Trian Partners, will join the board on March 6.

"We are focused on growing revenues and improving profitability at the core Wendy's brand," said CEO Jack Schuessler in a statement.

Peltz said he was satisfied with the moves.

"We are now highly supportive of Wendy's management team and their initiatives, and we believe that these new board members will contribute to Wendy's plan to improve its profitability."

Wendy's International owns and operates more than 9,900 total restaurants.

Shares of Wendy's (Research) were down 0.1 percent on the New York Stock Exchange Thursday.

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McDonald's admitted that its french fries have a third more dangerous trans fats than previously disclosed -- full story here.

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