Activist investor Bill Ackman has sparked a boardroom battle at US retail group Target by nominating himself and four others for election to the company’s board.
Ackman is the founder and CEO of the investment group Pershing Square, which bought a stake in Target, the fifth-largest retailer in the US, two years ago. It now controls around 8% of the company.
Go deeper with GlobalData
Ackman is nominating himself; Jim Donald, the former chief executive of Starbucks; Richard Vague, the former CEO of First USA Bank; Michael Ashner, a real estate executive; and Ronald Gilson, a business law professor.
Since becoming a shareholder, Pershing Square has urged Target to sell off its credit card portfolio and put its store leases into a real estate management trust. The retailer sold half of its credit card business to JPMorgan Chase last May for US$3.7bn, but has declined to act on Pershing’s real estate proposal, dismissing the idea as “speculative”.
Ackman believes the people he has nominated would bring expertise currently lacking on the Target board in grocery retailing, credit card development and real estate. “If you look at the board the only executive with retail experience is the CEO,” Ackman said.
Target issued a statement expressing disappointment at the move, saying that it had recently met with Ackman to dicuss his nominations.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“We are disappointed that Pershing Square has decided to pursue a costly and disruptive proxy contest, especially in light of our previous dialogue,” the company said. “Target has a long history of being responsive to shareholders and has engaged in numerous discussions with Pershing Square over a 20-month period.”
The company said it would nominate for re-election at its 2009 annual meeting all four of the current directors whose terms expire this year. They are: Mary Dillon, executive vice president and global chief marketing officer at McDonald’s Corp.; Richard Kovacevich, chairman of Wells Fargo & Co.; George Tamke, partner at Clayton, Dubilier & Rice; and Solomon Trujillo, CEO of Telstra Corp.
The company said it firmly believes the re-election of these four directors is “in the best interest of Target shareholders”.
“Target’s board, with its breadth of relevant and diverse experience, is comprised of 12 highly-qualified directors, 11 of whom are independent,” the company added.
