Target asks shareholders to stick with its board
Says Ackman interested in short-term gain over long-term performance
-- Home Textiles Today, 4/30/2009 1:28:00 PM
Minneapolis – The battle for Target rages on ahead of the company’s May 28 shareholder meeting at an unopened store in outside of Milkawukee.
The company announced today it is mailing a letter to shareholders in which chairman, president and ceo Gregg Steinhafel makes the case for four board members who are seeking re-election. Equity firm Pershing Square earlier this week sent out a letter arguing for the election of its slate of candidates. The firm asserts it is Target’s fourth largest shareholder, with a 7.8% stake.
“We believe the qualifications of Pershing Square’s recently selected nominees do not compare to Target’s independent directors standing for election this year. Pershing Square’s assertions of the lack of experience of our board members in retail, credit cards and other aspects of our business is wrong,” Steinhafel wrote.
Steinhafel also took issue with how Pershing Square characterized its ownership position. “Pershing Square owns about 3.3% of Target shares, with short-term derivatives making up an additional 4.5%. Importantly, [Pershing Square founder] Bill Ackman’s recent filing noted that he can only vote the 3.3% block.”
The letter continues: “We believe that Pershing Square’s sizable short-term derivatives positions, which expire in less than two years, create an incentive to favor risk taking to affect short-term share price performance – even if it hurts Target in the long run.”
Pershing Square wants Target to spin off its real estate holdings into a separate company, suggesting the company’s $39 billion in buildings and land is not properly valued by the market. A REIT, Pershing Square argues, would boost return on capital. Target’s board rejected the suggestion.
The equity firm will hold a meeting for shareholders May 11 in New York to introduce its candidates. The meeting will also be webcast.
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