Can’t Decide Who To Vote For Target’s Board?

Well, there are plenty of opinions…..my thoughts at the end…

From the FT

Proxy Governance recommended that its clients vote for two of the five nominees supported by Mr Ackman’s Pershing Square funds – Jim Donald, the former chief executive of Starbucks, and Michael Ashner, a real estate executive.

It also advocated voting against Target’s proposal to reduce the size of its board from 13 to 12 members. Since shareholders have to choose between two competing proxy ballot cards, it argued that they should only return the Pershing Square card, in effect withholding votes from Target’s four nominees for re-election.

From the FT:

RiskMetrics recommended on Tuesday that clients vote for Mr Ackman and Jim Donald, the former chief executive of the coffee chain Starbucks, in board elections at Target’s annual meeting on May 28, where four members are up for re-election.

But Glass Lewis, another leading proxy adviser, said it was endorsing Target’s four nominees.

Target said it was “disappointed” with RiskMetrics’ opinion. Gregg Steinhafel, chief executive, said in a statement: “We believe RiskMetrics reached the wrong conclusion . . . We urge Target shareholders not to cast their votes solely on the basis of RiskMetrics’ report and to undertake their own analysis.”

D. F. King, the proxy solicitor working for Pershing Square, estimated that more than 40 per cent of Target’s institutional shareholders vote their shares with reference to RiskMetrics.

RiskMetrics called the proxy battle “atypical”, given the experience of both sets of board nominees, and the fact its management “appears to be universally respected”. “Unlike the majority of other contests, the object of the dissident’s campaign is not a ‘broken’ company,” it said. But it argued Target’s board would “benefit from new blood and incentives to ensure the company is able to quickly capitalise on future opportunities”.

From TheDeal.com:

Former Target board member Bill George takes issue with Ackman’s assertions. Writing a column for The Deal, George, the former CEO of Medtronic Inc. (NYSE:MDT) and a professor of management practice at Harvard Business School, said:

“Ackman is off base in suggesting that the Target board lacks relevant expertise, with no CEO-level expertise in retail, credit cards and real estate. Target’s board includes financial experts with real estate and credit card expertise like Richard Kovacevich of Wells Fargo & Co. and Jim Johnson of Fannie Mae, and marketing experts General Mills Inc.’s Steve Sanger, McDonald’s Corp.’s Mary Dillon, and Coca-Cola Co.’s Mary Minnick.”

Whose advice to take? Simple, if you are relying on these folks to tell you what to do you have two choices:

1- Sell your shares
2- Don’t vote at all

Situations like this are the reason most shareholder control legislation or votes fail. A great number of shareholder own shares in companies they no little about and do not care to educate themselves on the details. If they did, these “advisory” firms would have little power. The simple fact that it is assumed 40% of shareholders will follow the recommendations of one of them is stunning, and sad.

This isn’t really even a tough one. If you own shares just think:

1- Are you happy with the current direction and performance of the company?
2- Do you see a clearly communicated direction/strategy from management?
3- Has mangement been professional in their opposition to Ackman’s slate?
4- Has mangement debated openly and honestly the proposals he submitted?

If you cannot answer YES to all of them, you need to vote for some type of change to the board. If you answered NO to all of them, hell, vote for his whole slate.

Whatever you do, for God’s sakes, do not do what someone else tells you to do. Take 10 minutes and think about it and make up your own mind……or do nothing..