Just how big is Target Corporation's board of directors? That might be up to an arbitrator.
Ackman and Target disagree on size of the retailer's board
Activist shareholder William Ackman of Pershing Square Capital Management sent the discount retail chain a letter Thursday insisting the board has 13 members, with five seats that need to be filled, preferably by his slate of nominees. Target maintains there are 12 people on the board, with four up for reelection.
The confusion stems from the retirement of former CEO Robert Ulrich, who resigned from the board in January and was its 13th member. That created a vacancy, but "the size of the Target Board has not been changed to our knowledge," Ackman wrote in a letter addressed to Gregg Steinhafel, Target's chair and CEO.
Ackman's Pershing Square hedge fund owns nearly 8 percent of Target's stock, making it one of the company's largest shareholders. The fund has lost more than 90 percent of its value since 2007, and Ackman has been unsuccessful in getting management to sell the land under the stores, which he believes would improve the stock price.
In the letter, Ackman quoted Target's articles of incorporation, which say the board may be decreased by shareholders.
"If the company continues to believe that the size of the Target Board is 12 and that only four seats are up for election," Ackman suggests "a quick, low-cost resolution of this issue," namely binding arbitration.
Target doesn't agree.
"Obviously, we think Pershing's just trying to pull us into a sideshow that would be an unnecessary distraction," spokeswoman Susan Kahn said. "Our view is that there are only four seats up for election."
JACKIE CROSBY
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A three-member arbitration panel heard arguments from attorneys for Glen Taylor and attorneys for Marc Lore and Alex Rodriguez three months ago.