All the bravado was gone when William Ackman walked into Target Corporation's annual shareholder meeting here Thursday. For months, the activist investor had been angling to put himself and four others on Target's board of directors, but there was no sense of that combativeness as he mingled with attendees in the soon-to-be opened Target store where the shareholders gathered.

Target CEO Gregg Steinhafel rushed over and shook his hand. "It felt like the old days," Ackman said later.

Whether the two sides can continue to let bygones be bygones will become clear in the coming days and weeks, after shareholders resoundingly rejected Ackman's move. A preliminary tally announced by Steinhafel showed that 70 percent of shareholders voted to keep Target's four incumbent members in their seats and keep the board at 12 members.

"It's a referendum on the strategic direction of the company, and management and the board obviously made a more compelling case," said Claudia Allen, a corporate governance expert with Chicago-based law firm Neal Gerber & Eisenberg.

For Minneapolis-based Target, the victory brought an end to its first proxy challenge, in which it spent $11.1 million and a lot of jet fuel to fend off Ackman, a once-friendly investor whose Pershing Square Capital Management owns the third-largest stake in the retailer through stock and options.

Ackman's initial $2 billion investment has dropped significantly in value since he began acquiring shares in 2007, however, and he said he is reviewing whether to sell any of his fund's stake. Earlier this week, he pledged he would hold shares for at least five years, had he landed a seat on the board.

After the meeting, Ackman said that "shares will go up and down" but that he expects an "even better relationship with Target going forward."

"More likely than not, we'll still own the stock a number of years from now as a result," Ackman said.

"That's the big fear among Wall Street investors: that the Target stock is going to come under pressure because he's going to drop his shares," said Piper Jaffray analyst Jeff Klinefelter, who attended the meeting. "There's no way he's going to drop all of his shares. Not after all he's been through."

The vote also caps a heck of a first year as CEO for Steinhafel. He took over the company on May 1, 2008, when legendary leader Robert Ulrich hit mandatory retirement age. Since then, the stock has gone from around $55 when Steinhafel became CEO to the mid-20s in early March. Rival Wal-Mart has outpaced Target in sales among existing stores since late 2007.

The stock closed Thursday at $39.14, down 46 cents.

Steinhafel said the proxy battle has "required a little extra energy" and "multitasking" but acknowledged there were some benefits -- such as meeting with virtually all of Target's 50 biggest shareholders.

"I'm a new CEO at Target, and I haven't had the opportunity to spend that kind of time with our shareholders," he said to reporters after the meeting. "As I think back over the last couple of months, it has so accelerated my relationship with our important shareholders. I look at that as a plus."

The annual meeting took place on Steinhafel's home turf. He grew up near Milwaukee, where his family's furniture chain advertises prominently on local television. He attended Carroll College in Waukesha, just miles from the prototype store where nearly 250 people gathered for the meeting.

Addressing shareholders at the meeting before the vote was announced, Ackman twice choked up when quoting John F. Kennedy and Martin Luther King Jr. He used their words to help explain his belief in the importance of giving shareholders choices and pushing for a more transparent and open voting process. He said he was willing to "pay the price" for "doing what is right."

"We launched this contest to make sure Target is never known in the future as a once-great company," he said.

The battle over Target's board seats was closely watched, not just because of the price tag, but because Target is widely viewed as a healthy company with a solid management team. Typically, troubled companies are the focus of such battles.

But Allen said Ackman's strategy of offering a "short slate" as opposed to a full-fledged board takeover is becoming more common. If the Securities and Exchange Commission acts to make it easier for activists to add their candidates to the company's ballot, giving shareholders the ability to pick and choose among candidates, it will make it easier for shareholders such as Ackman to get a voice.

As a result of Ackman's challenge, Steinhafel said, Target would look broadly at "corporate governance," which he underscored was a broad term that could include length of service and whether to split the CEO and board chair duties, as well as a host of other options.

Klinefelter agreed the costly contest could have some lingering benefits.

"This has clearly mobilized Target management and crystallized a lot of their strategies," he said. "I'll bet they'll come out of this process with an even stronger conviction regarding their merchandising philosophy long term, and also some of their near-term opportunities in perhaps adjusting their promotional game and pricing to combat their negative spending and traffic sales trends."

For first-time attendees such as shareholder Betty Rasmussen, who drove in from Madison, Wis., the meeting provided a chance to see how the contentious vote turned out, plus a chance to meet executives. (She said she talked to Steinhafel about the pharmacy department at her local Target.)

Rasmussen said she was pleased with the vote.

"We love Target. We supported management absolutely," she said. "We started with Dayton-Hudson, and that was a long time ago."

Jackie Crosby • 612-673-7335