Target to shareholders: Take the blue pill
Filed under: Shopping, Consumer Complaints
Target is hosting its annual shareholder meeting today and faces a pretty contentious fight from a major shareholder. William Ackman wants to shake things up and has nominated five independent candidates to the board of directors, including himself. Ackman isn't exactly an everyman. He runs Pershing Square Capital Management, a hedge fund that controls nearly 8% of Target's stock. Ackman is pushing for change in the retailer's merchandising strategy to include more low priced items and food, but if successful today, he could change the size, composition and oversight of the board of directors.
I love activist shareholders. If there had been more of them or they were louder, we might have avoided some of the problems plaguing the economy today. Unfortunately the odds are stacked pretty high against Ackman and his ilk.
First off, Target management has not engaged in the conversation at all, beyond telling shareholders to "vote the white card." Meaning, they should just cast their votes for whomever the current board recommends. That's akin to saying, "don't worry your pretty little heads about anything. Just do as we tell you."
Target hasn't historically been very open to criticism, by anyone. In fact, at the shareholder meeting in 2003, management refused to take any questions from those in attendance. None. That meeting lasted something like 12 minutes.
To be fair, most of the questions are along the lines of "You used to sell olive green sweatpants. Why were they discontinued and can you bring them back?" But so what? I'm with Warren Buffet on this. If someone is good enough or brave enough to invest their money in a company, they've earned the right to stand at a microphone and ask about the growth plan. And management has an obligation to listen and answer.
This meeting is likely to take longer that 12 minutes, but how many with voting rights are making the trek to Waukesha, Wis.? Because when making important decisions about the future of a publicly traded, multi-billion dollar corporation the construction site of a future discount store is the logical place to hold a meeting. Instead of say, the corporate headquarters or a nearby facility.
Moving a meeting site to a different state is just one more thing companies do to insulate themselves from the very people who own the stock and might want to participate in its governance.
There are going to be a lot of these shareholder tussles this year, it's just difficult to imagine real change given the resistance from those in power.
Reader Comments (Page 1 of 1)
6-04-2009 @ 7:51PM
dan said...
Laura's column is riddled with inaccuracies. First, Bill Ackman has no interest in the merchandise strategy of Target. His platform has only to do with selling the real estate that is under Target stores. Does this seem like a prudent time to be selling off commercial rea estate to raise share price? Any idiot would agree that it is not. And for Laura's information, the reason the shareholders meeting was held at the new store was to showcase the new strategy/prototype that Target is pursuing in order to refute the claims of Bill Ackman. Laura also seems to miss the simple knowledge that you don't need to be at the share holders meeting in order to cast a vote. Proxy cards are mailed out to every shareholder with a self adressed stamped envelope. No one is being left out by not attending the meeting. And Laura also doesn't probably remember that Target was criticized for hoilding it's annual shareholders meeting in Minneapolis, the international HQ of Target, because most experts agree that it is only fair to move the meeting annually in order to let shareholders from different areas to attend without traveling. Laura needs to do a tiny bit of homework, or at least use common sense before writing such an inane, inaccurate and amateurish piece.
Reply
6-05-2009 @ 4:22PM
Laura said...
Ahem.
Ackman has indeed pushed for Target to compete more directly with Wal-Mart by expanding the selection of consummables (primarily food). The real estate is a separate issue. I personally think it's nonsense, but as stated above, I defend his right to present it.
It's true, shareholders don't need to be present to vote. They can do that BEFORE the meeting as you just said and Target so kindly pointed out in a press release urging them to vote the slate as presented. Thank you for helping make my point.
But this also means shareholders can't participate in any conversation or ask a question of management. Nice for the people in charge, not so much for anyone that likes to do more than buy shares and forget about them. And the meeting wasn't even Web cast. You had to show up in Wisconsin, in person.
As for that move to a half-finished store. I was not present this year, but was several years ago when the meeting was held in a similar facility near Atlanta. There are no store tours when the building is under construction. Visitors aren't seeing anything new. There is no merchandise. Everything but the meeting area is roped off. It's too dangerous to let people wander around a construction site. I could be wrong, but there might actually be laws about that. Certainly, there are liability issues.
I've never heard a company criticized to any measurable degree for holding its shareholder meeting near its headquarters. I have heard it maligned viciously for moving it out of state. First, expense of transporting all the executives is unwarranted (company planes cost money, you know) and second, it's a maneuver companies use to get away from the most interested shareholders. Local, long time investors and employees both past and present. Saying the reason is to open the meeting up to people outside of Minneapolis is like saying a CEO's sudden departure is to spend more time with his family. Believe that, and I've got an unfinished store to sell you ......