Earlier this month, CEO Peter Schoenfeld of P. Schoenfeld Asset Management claimed a victory in his proxy battle with Saks Incorporated (NYSE: SAKS). In an effort to bolster transparency and improve the department store’s corporate governance practices, the hedge fund successfully persuaded shareholders to endorse the New England Carpenter’s Pension Fund proposal to declassify the names of Saks board members and adopt a majority voting standard. The victory, acknowledged by estimates provided by proxy solicitation firm Mackenzie Partner’s Inc, would essentially remove the staggered board form in order to provide a more accountable board structure. It would also require Saks board members to attain a majority 50% rather than the prior plurality vote structure in order to win election.
Sell-side analysts have also applauded the results of the proxy battle. Yesterday, Deutsche Bank’s analyst Bill Dreher Jr. responded by upgrading Saks Inc. stock from “Hold” to “Buy” with a $7 target. Dreher believes that greater upward trends in the macro-economy will boost consumer spending to recoup losses incurred over the past year in the consumer goods sector. Alongside cost cutting measures at Saks, he believes the increased demand will provide greater profits due to higher margins and greater revenue generation, respectively.
The proxy proposal was overwhelmingly accepted as a means to end the ongoing proxy battle. In a statement that highlighted shareholder concern over current corporate governance, Peter Schoenfeld, whose firm currently holds about 1.5% (about $3 Billion) interest in Saks noted, “Saks' shareholders have sent a strong message that they would like a Board that is more accountable to them and more rigorous in its oversight of management.” Furthermore, he called for further cooperation between shareholders and board by stating, “We trust the Board will respect the wishes of shareholders and implement the declassification recommendation on an expedited basis.”
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