The Mill: When the shoe began to drop for Steinhafel
- Blog Post by: Evan Ramstad
- May 5, 2014 - 12:40 PM
While analysts this morning described the departure of Target CEO Gregg Steinhafel as abrupt, the first sign of the depth of his trouble came in late January, about a month after the data breach was made public. That's when The Wall Street Journal published a story that, citing "a person familiar with the matter," said Target's board was taking a more active role in the company's management and wanted Steinhafel to be more visible.
For a board that has a reputation of discipline and quiet, that was a flashing signal. Steinhafel's team countered by providing access to another Journal reporter that led to a flattering front-page profile the next month. With that story, Steinhafel's portrayal in the Journal had swung from being "under pressure" to being "aggressive" in disclosing Target's troubles.
Journalistic watchdogs criticized the newspaper for compromising itself after Bloomberg Businessweek in March produced a cover story, headlined "How Target Blew It," that contradicted some of the portrayal of Steinhafel and his team in the Journal profile. The magazine reported that Target's IT systems were warning about the breach for more than two weeks before anything got done. Senior managers finally learned of the matter when federal authorities who monitor cybercrimes sought a meeting with the company.
Even so, when the Star Tribune pressed the company in late March for clarity on Steinhafel's status, Neal St. Anthony reported this statement that a Target spokeswoman attributed to the board: "Gregg Steinhafel has the full confidence of the board. We believe he is the right leader for Target to navigate through the current challenges we are facing."
Neal also quoted Gary Hewitt, head of research at New York-based GMI Ratings, on the difficulty of creating turnover at the top of a big company like Target. “Steinhafel also is chairman of that board … and it takes a lot to push a board over to take independent action against a CEO," Hewitt said.
The final straw isn't yet publicly known. The company has delayed the release of its 2013 proxy, which would reveal Steinhafel's pay package for the year and the progress, or lack of it, against some performance goals. Another potential factor: results for the company's fiscal first quarter, which covers February, March and April. They will be publicly announced on May 21, though Target board members may have week-to-week numbers already.
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