Target Corp. said today (20 May) that boardroom foe, the hedge fund Pershing Square, has presented a “risky” and “speculative” proposal in the battle over nominations to the US retailer’s board.
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Speaking at the company’s first-quarter results conference, chairman and CEO Gregg Steinhafel said Pershing Square had made claims about Target’s food and credit card businesses that “clearly reflect a lack of understanding” of its strategy.
Pershing Square, led by activist investor Bill Ackman is waging a battle against the discount retailer, insisting its nominees to the board would be best for the business.
It has also won the backing of RiskMetrics Group, an adviser to institutional investors on proxy contests.
Steinhafel said the group has reached the “wrong conclusion” and one which is “clearly inconsistent” with its own policies and that its analysis, including numerous statements and comparisons are “inaccurate and misleading”.
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By GlobalData“In our opinion, the report is fundamentally flawed and should be viewed critically by investors”, Steinhafel said.
“We believe Pershing Square has attempted to divert attention from their real agenda with distractions related to the size of the Target board, the integrity of the board nomination process, the quality of the site of our annual shareholders meeting and the suggestion of a universal proxy card.”
Steinhafel added that Target’s four director nominees, Mary Dillon, Richard Kovacevich, George Tamke and Solomon Trujillo, would help create “the right board…to provide continued, effective, independent oversight and direction to the company”.
The retailer today posted a 13% drop in first-quarter profit, but beat analysts’ estimates as a result of cost-control measures. The company saw its net earnings fall to US$522m for the quarter ended 2 May, compared with $602m in the previous year.
Commenting on the results, Steinhafel said the company was “pleased” with its first-quarter results and that it is seeing “encouraging signs of stability” both in its retail and credit segments.
“Broadly speaking, economic conditions appear to be stabilising somewhat and we believe this will proffer greater discretionary spending in the months ahead. We continue to plan conservatively however, as key economic indicators like, unemployment and bankruptcies remain uncertain.
“The actions we have taken during this challenging economic period … are driving sales and profitability and helping us sustain our competitive advantage,” Steinhafel added.
