It looks as if a possible fight for control of the Kohl’s Corp. board has been averted.
The activist group of investors that wanted to take control of Kohl’s board and push for major changes has reduced the number of directors that it plans to run from nine to five. Together, the investors hold a 9.5% stake in the department store company.
In deciding to reduce the number of nominees, the group cited “the absence of meaningful progress towards a resolution.”
“Since we initially nominated candidates in January, our goal has always been to assemble the best board possible to help Kohl’s reach its full potential,” the investor group said in a statement on Thursday. “In the absence of meaningful progress towards a resolution in advance of a proxy campaign commencing, we have filed revised preliminary proxy materials announcing our slate of five highly qualified directors to run in opposition to five of the company’s long tenured directors who we believe do not have the relevant retail and governance skills to create shareholder value.” (The five Kohl’s incumbents identified by the group include Frank Sica, who has served as a director since 1988 and as board chair since 2018.)
Kohl’s responded quickly to the group’s initial proposal, which was made late last month. The company issued a statement in which it rejected the group’s attempt to seize control of its board, saying it would disrupt its momentum, "especially considering that we are well underway in implementing a strong growth strategy and accelerating our performance, and we have refreshed half our board with six new independent directors since 2016." More recently, on Tuesday, Kohl’s, in an investors’ presentation, highlighted the progress it has made and its plans to boost sales and profitability, fueled by its partnership with Sephora and growth in activewear.
The activist group has nominated the following individuals to the Kohl’s board: Jonathan Duskin, CEO of Marcellum; Margaret Jenkins, former chief marketing officer of Denny’s; Jennrey Kantor, former chief merchandising officer of Macy’s; Thomas Kingsbury, former chief merchandising officer of Burlington Stores; and Cynthia Murray, the former president of Chico’s.
“We are convinced that based on the company’s historical underperformance, without significant board change, Kohl’s will continue to miss the mark with its customers and be unable to bring cost cuts to the bottom line or efficiently allocate capital, resulting in shareholders continuing to suffer subpar long-term return,” the group said.
In addition to chair Frank Sica, the four Kohl’s directors that the group wants to replace include Steven A. Burd, Jonas Prising, John E. Schlifske and Stephanie A. Streeter.