Skip to main content

A compelling case for alternative board

4/27/2009

With a month to go before Target’s annual meeting, Pershing Square Capital Management and investor Bill Ackman continue to agitate for change to the Target board. The most recent example came late last week when Ackman sent to Target shareholders a detailed letter which offered a head-to-head matchup comparing the experience of his alternate slate of directors to those put forth by Target. Ackman asserts in his most convincing effort to data that the Target board lacks sufficient relevant experience and shareholder representation and change is in order.

“The nominees we have proposed bring extensive expertise in food retailing, credit cards, real estate, shareholder value, and corporate governance,” according to the letter. “Target’s board has no independent directors with CEO-level experience dedicated to its two principal business segments, retail and credit cards. Similarly, despite the fact that Target is one of the largest owners of retail real estate in the country, there are no independent directors on the company’s board with CEO-level real estate experience.”

Ackman contends Target’s current board has a deficit of relevant experience and that has contributed to the company’s underperformance during the recession. In addition to what he views as a lack of experience, Ackman also takes issue with the fact that board members own less than 0.1% of the company’s outstanding shares whereas the fund he leads owns approximately 7.8% of outstanding shares, which makes Pershing Square the company’s fourth largest shareholder.

To date, Target has taken exception to all of the points raised by Ackman and argued that shareholders should re-elect existing board members. Shareholders will have an opportunity to decide for themselves as the fund manager is leveraging technology to provide access to proposed board members. On Monday, May 11, Pershing Square plans a town hall meeting in New York where investors can meet board nominees during a live meeting webcast at www.TGTtownhall.com. Expect more fireworks in the weeks to come as this proxy battle comes to head at Target’s annual meeting on May 28.

X
This ad will auto-close in 10 seconds