Target has hit back in its battle with Bill Ackman, with the US discount retailer accusing the activist shareholder and his fund of being “risky” and urging shareholders to re-elect the company’s board nominees.

Gregg Steinhafel, Target’s president and CEO, wrote to the retailer’s shareholders attacking Ackman and his Pershing Square fund.

Ackman is nominating himself and four others to the Target board but Steinhafel believes the company’s shareholders should re-elect four board members at the retailer’s annual meeting in May.

In a six-page letter, Steinhafel defended Target’s rejection of earlier proposals from Ackman for the retailer to restructure its real estate portfolio.

The Target boss also said Pershing Square had so far booked substantial losses due to over half the fund’s shares being held as derivative securities.

Steinway said a “substantial percentage” of Pershing Square’s stake in Target was in derivative securities, which, he claimed, could hit the retailer’s long-term ambitions.

“We believe this form of investment is likely to cause Pershing Square to emphasise short-term performance in Target’s stock – and perhaps to entertain significant risk in an effort to increase the value of those derivatives before they expire – at the expense of Target’s longer-term prospects,” Steinhafel said.

“As a result, we believe Pershing Square’s interest in Target is not aligned with our shareholders.”

Target wants to re-elect 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.

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.

Ackman is the founder and CEO of 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.