In a major victory for Target Corporation, shareholders have rejected a slate of board candidates put up by activist hedge fund manager Bill Ackman.
In preliminary results, Target's incumbent board members all received more than 70 percent of the votes cast. Ackman's slate of 4 allies and himself got tallies ranging from less than 10 percent to the low 20-percent range.
Shareholders also rejected Ackman's proposal to expand the board to 13 seats from the current 12.
"On behalf of Target's Board of Directors and management team, we thank our shareholders for their overwhelming support throughout this process," said Gregg Steinhafel, Target's Chairman, President and Chief Executive Officer.
Target and Ackman have been tangling for months over the company's board. While Ackman praises the company's management, he has accused the company's board of being insular, and lacking expertise in key areas: real estate, credit cards and groceries.
Target supporters have sharply criticized Ackman's effort as an ill-advised attempt to save face after his derivatives-based investment in Target lost 90 percent of its value earlier this year.
In a recent article, the financial publication Barron's slammed Ackman with this assessment: "Ackman's initiative could be one of the worst-conceived efforts in recent years by an activist investor...."
But RiskMetrics, an influential firm that advises big institutional shareholders on such proxy contests, gave Ackman partial support, recommending that shareholders elect Ackman and one of his allies, Jim Donald. Donald's career includes stints at Wal-Mart, grocery chain Pathmark Stores, and at the helm of Starbucks.
"In our opinion, given the atypical strategies of the company with respect to credit cards and real estate, the board would benefit from new blood with the specific skill sets and incentives to ensure that the company is able to quickly capitalize on future opportunities," RiskMetrics wrote in its report.
The recommendations of other advisory services have been split.
Prior to board battle, Ackman has pressured Target on two issues, credit cards and real estate. The company agreed to sell slightly less than half of its credit card portfolio, giving Ackman part of what he wanted. But it has rejected his proposal to sell the land under its stores to a special real estate investment trust.
Target's slate of nominees included: Richard Kovacevich, chairman of Wells Fargo & Co., Mary Dillon, global chief marketing officer at McDonald's Corp.; George Tamke, a partner at private-equity firm Clayton, Dubilier & Rice Inc.; and Solomon Trujillo, former CEO of Telstra Corp., an Australian telecommunications company.
In addition to Donald, Ackman, 43, proposed himself; Richard Vague, a former bank executive; Michael Ashner, chairman and CEO of Winthrop Realty Trust; and Ronald Gilson, a law professor who specializes in corporate governance at Stanford University and Columbia University.