Activist investor seeks control of Kohl’s board

An activist investor group has turned up the heat on Kohl’s Corp.

Macellum Advisors, which owns nearly a 5% stake in Kohl’s, is looking to take control of the department store’s board. The group on Thursday nominated a slate of 10 candidates (listed at end of article) for election to the board at Kohl’s 2022 shareholders meeting.  In response, Kohl's called Macellum’s effort to take control of the board "unjustified and counterproductive."

Macellum has criticized Kohl’s in recent years for not performing as well as it could. In January, it called for the company to consider options, including selling itself. Last year, it pushed Kohl’s to expand its board with the addition of three new members.  In a settlement agreement with Macellum and certain other shareholders, the retailer appointed two of Macellum’s designees, along with an additional mutually agreed upon designee, to its board. 

Marcellum's new effort comes after Kohl's,  earlier this month, rejected two takeover offers, saying the deals undervalued its business, and adopted a shareholders rights plan, or “poison pill,” to avoid a hostile takeover. Macellum said it was "disappointed and shocked by Kohl’s hasty rejection of confirmed indications of interest’ and that it would be nominating a slate of directors.

On Thursday, the group sent an open letter to Kohl’s shareholders in which it said that “we are convinced – now more than ever – that a majority of the company’s board needs to be refreshed.”

“The Board’s decision to hastily reject at least two recent expressions of interest to acquire the Company, both of which included sizable premiums, suggests it is no longer operating with impartiality and objectivity,” the letter stated. “The fact that the Board simultaneously adopted what appears to be an onerous, two-tiered poison pill indicates to us it is also no longer prioritizing shareholders’ interests.”

 The investor group's letter also referenced recent speculation that Amazon may be interested in acquiring Kohl’s.

“With reports now swirling about the company’s jet recently flying to Seattle, Washington, where Amazon is headquartered, we hope the incumbents are not losing sight of their fiduciary duties,” Macellum wrote in the letter.

In its response, Kohl's argued that Macellum’s claim that Kohl’s Board is not equipped to evaluate sale opportunities is groundless. It also once again emphasized that its strategy is delivering results. 

"As we previously announced, based on our performance in 2021, we are positioned to exceed our key 2023 financial goals two years ahead of plan," Kohl's stated. "Our work to fundamentally restructure the business allowed us to achieve a nine-year high operating margin in Q3, and record Q3 earnings per share, positioning us to achieve significantly enhanced profitability going forward."

Macellum’s list of board nominees includes the following:

• Jonathan Duskin, CEO of Macellum Capital Management;

• George Brokaw, former managing director (mergers & acquisitions) at Lazard Frères & Co.;

• Francis Duane, former executive vice chairman at Calvin Klein parent PVH Corp.;

• Pamela Edwards, CFO of value retailer Citi Trends; Stacy Hawkins, a vice dean at Rutgers Law School;

• Jeffrey Kantor, a former senior executive at Macy’s, including former chairman of macys.com;

• Perry Mandarino, co-head of investment banking and head of restructuring at B. Riley Securities;

• Cynthia Murray, former president of the Chico’s brand;

•Kenneth Seipel, former president and CEO of Wet Seal and former VP of stores, operations and store design at Old Navy; and

• Craig Young, who has experience in real estate private equity.