Target faces Ackman showdown at annual meeting
SAN FRANCISCO (Reuters) - One of the season's most high-profile proxy battles will culminate in an unfinished Target Corp (TGT.N) store in Wisconsin next week as the retailer's shareholders decide whether to elect a slate of directors proposed by activist investor William Ackman.
Ackman, whose Pershing Square Capital Management owns a 7.8 percent stake in the retailer, is seeking a seat for himself and four other nominees on Target's board. In the increasingly contentious battle, Target is running four incumbent directors for election at the May 28 meeting.
If he wins, Ackman will be in a stronger position to push the retailer to sell the rest of its credit card operations or spin off its real estate holdings.
For Target, a win would show support for its current management team, which has argued that it is best suited to position the retailer for success over the long term.
What has made the proxy contest unusual is that analysts and investors have praised Target as a best-in-class retailer with a capable management team -- not the type of company that typically becomes the target of an activist investor.
But some have acknowledged that Ackman, who is known for well-researched and often successful proxy battles, could bring a fresh perspective to Target's board and prod the insular retailer to explore new business opportunities.
Greenwood Capital Associates portfolio manager Walter Todd said he voted for Ackman's slate, except for Ackman himself.
"I don't have a real issue with what management has done and what they are doing," said Todd, who holds roughly 70,000 Target shares, a very small stake in the retailer.
But he added: "I think the idea of having the best possible people, having some new fresh ideas on the board ... I don't think that's a bad thing."
On the other side, the State of Wisconsin Investment Board has voted in support of all of Target's nominees. It owns roughly 2 million Target shares, or a 0.27 percent stake in the retailer, according to regulatory filings.
Determining the outcome of the proxy battle remains uncertain. Headed into the annual meeting, the two sides appeared unwilling to reach a compromise, with Ackman telling Reuters on Thursday that settlement talks were not ongoing.
"If either side believes it has a chance of winning, they won't settle," said Charles Elson, Director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. "You only settle when you're convinced that you're going to lose."
FIGHT AT UNFINISHED STORE
Ackman is planning to attend Target's annual meeting, but he has ribbed the retailer for choosing the location, an unfinished store that has yet to open to the public.
Investors who do not attend the meeting will also be at a loss to follow the action. Although Target has webcast from meetings in the past, it will not provide one this year. Continued...
