Shareholders kept the current board, leaving a search process for a new chief executive intact.
DALLAS - Target Corp. shareholders re-elected the company’s 10-member board of directors Wednesday despite an influential proxy adviser campaigning for most of the board to be rejected.
In doing so, the shareholders signaled support for the company’s handling of the data breach, its efforts to turn around its struggling Canadian operations and its work to reverse sales declines in U.S. stores.
The board election results, announced during the company’s annual meeting, had come under greater scrutiny recently after Institutional Shareholder Services recommended that investors oust seven board members. The proxy firm said the board failed to protect the company from last year’s data breach, during which hackers seized the card data and personal information of tens of millions of shoppers.
“We have already taken decisive action,” said Roxanne Austin, the board’s interim chairwoman.
Speaking to the crowd of about 100 people at the event above Dallas’ Union Station, Austin noted that the company recently hired Bob DeRodes to be chief information officer. And Target announced the previous day that Brad Maiorino would become the company’s first chief information security officer.
In addition, the company has accelerated its plan to enhance its Redcards with chip-and-pin technology and is undergoing a total re-examination of its risk management structure, Austin said.
“We’re going to set the bar high,” she said. “We strive to be not just the best in retail but to be among the best, period.”
The board also announced Wednesday that it has raised Target’s quarterly dividend by 21 percent to 52 cents a share.
David Larcker, a Stanford University professor who focuses in corporate governance, said it’s not surprising that all board members kept their seats, since such elections are usually landslides. And he noted that there’s a lot going on at Target, including the search underway for a new CEO.
“But they put the management on notice,” he said. “If there are more problems going forward ... then it could be more serious next time.”
He added that it will be interesting to see the official vote totals when they are released to see how close some of those directors came to being defeated.
During the meeting, Austin said the challenges in the last year have tested the company’s resilience. But she said the board has taken action to fix some of the problems, including finding new leadership. Gregg Steinhafel was pushed out as CEO last month, and John Mulligan, Target’s chief financial officer, was named his interim replacement.
‘Total confidence’ in CEO
Austin added that the board has “total confidence” in Mulligan and the management team, and has given them a clear mission: “We need to aggressively move Target forward and significantly improve our performance.”
In addition to re-electing board members, shareholders also approved the company’s executive compensation plan. In the past year, the company has tweaked its plan to tie it more closely to performance after shareholders only approved it by 52 percent the previous year in the say-on-pay vote.
But shareholders rejected a proposal, opposed by the board, to require an independent chairman.
In the past few months, Target has been addressing various challenges. Amid continuing problems with its year-old Canadian division, which lost nearly $1 billion last year, it fired the president of Target Canada and named a replacement. It has also begun a search for a nonexecutive chairman of its Canadian division to advise the retailer how to better adapt to that country’s retailing landscape.
And in recent weeks Mulligan has been more open in acknowledging that the company hasn’t been quick enough to roll out new initiatives and sometimes has gotten bogged down in bureaucracy.