Saks shareholders favor proposals on board

Shoppers look into a display window along Fifth Avenue at luxury goods retailer Saks Fifth Avenue in New York November 21, 2007.

CHICAGO (Reuters) - Saks Inc (SKS.N) shareholders voted on Wednesday to call on the struggling upscale retailer to put directors up for election annually, eliminating a staggered board with three-year terms, in a move to make the board more accountable.

Shareholders also voted for a proposal that would require directors to receive at least a majority of votes to be elected, rather than allowing directors to be elected with less than 50 percent of the vote.

Hedge fund P. Schoenfeld Asset Management, with a 1.5 percent stake in Saks, made the proposals in May.

Schoenfeld's plea to fellow shareholders cited a decline in Saks' share price and its weak sales, which the hedge fund said was not just due to the problems faced by all luxury stores.

While consumer penny-pinching in the recession had led to weak sales for many upscale chains, Saks' troubles during the 2008 holiday season were due in large part to it having stores in many locations that did not generate a satisfactory return, Schoenfeld founder and Chief Executive Peter Schoenfeld had said.

The fund had also pushed shareholders to withhold their votes for C. Warren Neel, but Neel was reelected, Saks Chairman Steve Sadove said at the company's annual meeting, which was also webcast.

Sadove said the board of directors would consider what actions to take following the shareholder votes, which were nonbinding, and would also have discussions with Schoenfeld.

The results announced by Sadove were preliminary, with the final tally expected to be released in two weeks.

Saks has been badly hurt in the recession that has sapped discretionary spending and sent shoppers scurrying to discount chains for essential items such as groceries.

Saks itself had to resort to deep discounts to attract customers during last year's holiday season. Its sales fell 26.9 percent in the first quarter, after falling nearly 15 percent in the fourth quarter.

Its shares have lost nearly 70 percent of their value in the past 12 months, touching a low of $1.50 in March.

The hedge fund's efforts come just days after activist investor William Ackman lost a closely watched proxy battle at discount retailer Target Corp (TGT.N) [ID:nN28321308].

While Schoenfeld is not seeking new management or specific changes in how Saks is run, he has complained about its consistently weak results and thinks a more responsive board could mean a better-run company.

Saks shares fell 22 cents, or 5.08 percent, to $4.11 at mid-afternoon on the New York Stock Exchange.

(Reporting by Brad Dorfman and Aarthi Sivaraman; Editing by Andre Grenon, Richard Chang)