More Kohl’s drama: Activist investor gets partial support
The battle for control of Kohl’s board continues to heat up — on both sides.
Proxy advisory firm Institutional Shareholders Services Investors Inc. on Friday recommended that Kohl’s Corp. shareholders vote for two of the candidates — Jeffrey Kantor and Pamela Edwards — put up by activist investor Macellum Advisors, which is looking to gain control of the retailer’s board.
The firm said that Kantor appears to have “highly relevant expertise” for the board, bringing years of merchandising “as well as leadership experience from Macy's, a key competitor of Kohl's.” With regard to Edwards, ISS said she appears to have “a breadth of skills and experience directly relevant to Kohl's current challenges.” It cited her executive roles at L Brands, board experience at Neiman Marcus, and "strong finance background" with CFO roles at divisions of L Brands and Citi Trends.”
In response to the ISS recommendation, Kohl's issued a statement in which it said that Edwards and Kantor lack the experience necessary to oversee "either the continued execution of Kohl’s strategy or a robust process to evaluate expressions of interest to acquire the company." It added that neither nominee possesses M&A or public board experience.
"Kohl’s believes that adding such directors at this time would be disruptive and negatively impact shareholder value," the retailer stated.
In making its recommendations, ISS also said that shareholders “may consider” the addition of another of Macellum’s nominees, its CEO Jonathan Duskin, as “net positive” in light of his direct ownership stake and “substantial experience” in the retail sector. But it stopped short of recommending Duskin,who has been relentless in his criticism of Kohl’s for not performing as well as he thinks it should.
Last year, Duskin 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.
Also on Friday, Kohl’s sent a letter to shareholders on behalf of incoming chair Peter Boneparth in which he emphasized that the company’s board “has the right experience and expertise to grow and protect the value of your investment.” He called Macellum’s slate of nominees “underqualified,” and directed sharp criticism at Duskin.
“Jonathan Duskin’s short-term focus is further evidenced by his firm’s recent trading of Kohl’s securities,” Boneparth said. “Macellum has sold Kohl’s stock in the low $60s over the last several months while saying the stock is worth at least $100 per share.
He also called out Duskin’s track record at other retailers, which he said has been disappointing for shareholders.
“Mr. Duskin served as director at four companies that declared bankruptcy either during or shortly after his tenure,” Boneparth said.
Kohl’s recently in an investor presentation that Goldman Sachs, which it has hired to explore strategic alternatives, has engaged with more than 25 parties and that “select bidders have been invited to a data room containing over 550,000 pages across over 55,000 documents, as well as meetings with management.” In his letter, Boneparth said that, as part of this process, the board “is thoroughly testing Kohl’s standalone strategic plan against potential alternatives.”
[Read More: Report: Simon, Brookfield offer to buy Kohl’s for $8.6 billion]
Kohl’s annual shareholders meeting scheduled to be held on May 11.