Target will put board size to shareholder vote

March 31, 2009 at 12:35AM

In the latest volley in its proxy fight with hedge fund manager William Ackman, Target Corp. on Monday said it now will let shareholders decide whether the board has 12 members or 13.

Minneapolis-based Target, which issued a revised proxy statement on Monday, insisted the change simply asked shareholders to confirm the company's belief that the board has 12 members. That's the number of members who have been serving since former CEO and chair Robert Ulrich retired from the board in January.

But Ackman, whose Pershing Square Capital fund owns a nearly 8 percent stake in Target, disputes the Minneapolis-based retailer's assertion. Ackman said the departure simply created a vacancy and cited Target bylaws stating that only shareholders could reduce the board size. Ackman threatened to take the dispute to an arbitrator.

Ackman is seeking to put himself and four other candidates on Target's board. Target is backing four of its current board members.

If shareholders don't approve the 12-member board size championed by Target, the company said it will interpret it as an acceptance of Pershing Square's position. The vote would guarantee Ackman would get at least one seat on the board.

But in yet another disagreement between the two, Target said a simple majority will set the board at 12. Ackman said it requires a supermajority of 75 percent, a higher hurdle that gives him greater odds of prevailing.

Said Target spokeswoman Susan Kahn, "We simply believe that by taking this approach, we avoid the excessive cost and the distraction that Bill Ackman's approach would have produced."

Ackman declined to comment on Target's move, but reiterated his views that he seeks a long-term relationship with the retailer. In addition to putting a major shareholder on the board, he said his candidates would expand the retailer's expertise in retail, credit card operations and real estate.

"These are the company's three principle business lines," he said. "We think it will be a net positive."

JACKIE CROSBY

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