Target Corp. management got a vote of confidence from a major investor as the California Public Employees' Retirement System posted its proxy vote on the organization website, even as William Ackman and the candidates he backs for the retailer's board went back on the attack with some enthusiasm and one noteworthy gaffe.
CalPERs voted the Target management candidates to the board of directors, rejecting the Ackman candidates. It also voted to cap the company's board at 12 directors, rejecting Ackman's initiative to push the number to 13, which would have been necessary to elect the five candidates, including himself, that are part of his slate.
The proxy fight launched by Ackman and his investment firm Pershing Square, culminates on May 28 at Target's annual meeting in Wisconsin.
In the days leading up to the election, Ackman candidate Richard Vague, a former Barclays executive with extensive credit card experience, sounded off on the retailer's activities in his area of expertise. He said Target's investment in credit cards should be revisited regularly and evaluated for investment efficiency, although, in an article with Bloomberg, he was â€" ironically enough -- vague about what the retailer ought to do with the half of the credit card business it continues to own. Vague also towed the line that all Ackman-backed candidates are independent and under no obligation to him or his agenda.
However, Ackman admits he is paying the election-related expenses of each candidate he approached to run for Target's board. And Ackman certainly was the one who interested them in running. It's hard to believe that he would have approached the four specific individuals he did without a reasonable certainly they would support his plans to sell off Target's remaining credit card business, spin off a proportion of its real estate into a trust and hurry the expansion of food. Those moves, says Ackman, will boost shareholder value long term and aren't intended just as a short-term fix to a Target hedge fund he set up and saw lose 90 percent of its value as the retailer's sales stalled in the deteriorating economy.
Ackman even sent a letter to Baron's decrying an article it published that characterized his proxy fight as "off target." Ackman's letter said the Baron's article "is riddled with numerous materially false and misleading statements."
Ackman went on to say that he only wants to bring constructive expertise to the company's board, declaring at one point:
Insularity and not-invented-here thinking have caused the demise of many of our country's one-time greatest retailers; Sears and Kmart, being but two of many such examples.As someone who wants to bring knowledge to the company's board, Ackman might consider withdrawing his statement about two of Target's primary competitors, both of which remain in operation.