Kohl’s Corp. is continuing to defend its board as a group of activist investors seek changes.
The retailer has sent a letter to its shareholders urging them to vote for the reelection of current members of its board as the activist group looks to replace five out of Kohl’s 12 directors at the company’s annual meeting on May 12. The group, which together have a combined 9.5% stake in Kohl’s, is made up of Macellum Advisors GP LLC, Ancora Holdings Inc., Legion Partners Asset Management LLC and 4010 Capital LLC (the same companies previously teamed up to remake the Bed Bath & Beyond board). They had initially proposed running a slate of nine members, but reduced it to five after pushback from Kohl’s. But the retailer also rejected that move.
In the letter, Kohl’s said its board members are better equipped than the activists’ nominees to lead the “company through retail industry disruption.” The retailer also noted its “clear business momentum,” citing a 200% increase in its stock price since October.
“Simply put, Kohl’s board, working closely with management, has acted decisively to put the company on a new trajectory to enhance value for shareholders,” Kohl’s stated. “Your board has the right skills and experience to drive continued momentum. The activist slate, in contrast, lacks key skills and expertise critical for Kohl’s.”
For example, the retailer continued, four of five of the activists’ nominees have no meaningful digital experience, an area that now represents 40% of its business.
“Kohl’s Board has broader and deeper experience, while the Activist Investors’ slate has overseen significant value destruction, including four companies which filed for bankruptcy,” the company stated. “Do not allow a group of activist hedge funds to disrupt our momentum.”