Target Corp (TGT) is going on the offensive against activist investor Bill Ackman’s slate of director nominees. In a letter and presentation to shareholders this week, the company put into question the backgrounds of Ackman’s nominees. It was also critical of the commitment some of the nominees echibited while working for other public companies. The statements were particularly harsh when reviewing Mr. Ackman’s past, as well as nominee Jim Donald, who is the former CEO of both Starbucks (SBUX) and grocery chain Pathmark. The highly anticipated investor vote will occur in just two weeks on May 28. Below is a list of the activist hedge fund’s nominees and some of the statements that were made about them by Target:
Jim Donald, former CEO of Starbucks and Pathmark:
( 1 ) Starbuck’s share price declined by 28% during his tenure, meanwhile the S&P 500 rose by 21%
( 2 ) Pathmark filed for bankruptcy during his tenure as CEO
( 3 ) Mr. Donald purchased no shares of Starbucks on the open market while he was CEO
( 4 ) Mr. Donald purchased no shares of Rite Aid on the open market while he was a Director of the company
( 5 ) “Has Bill Ackman discussed with his corporate governance expert, Professor Ronald Gilson, Jim Donald’s plan to abandon Rite Aid’s Board after only one year if Mr. Donald is successful in getting onto Target’s Board? What does that say about Jim Donald’s and Bill Ackman’s commitment to shareholders and good corporate governance? In addition, we are curious why Jim Donald’s willingness to drop from the Rite Aid Board, if elected to Target’s Board, was not included in Pershing Square’s bio of Jim Donald in the RiskMetrics Group presentation.”
Richard W. Vague, CEO of Energy Plus
( 1 ) Was ousted from Bank One after problems at the credit card unit that he led. Mr. Vague had joined Bank One when he firm that he founded was acquired by the company.
Michael L. Ashner, Chief Executive Officer and Chairman of Winthrop Realty Trust
( 1 ) Winthrop has a market cap of only $161 million (5/11/09)
Ronald J. Gilson, Professor at Stanford and Corporate Governance Expert
( 1 ) Has never served on the board of a public company
Bill Ackman, Founder of Pershing Square Capital Management:
( 1 ) “Pershing Square’s first proposal to Target on August 2, 2007, was for the Company to repurchase $15 billion in stock, which would have required billions of dollars in incremental borrowings. We believe this would have meaningfully degraded Target’s credit rating and significantly impaired its ability to raise capital. With the benefit of hindsight, does Pershing Square agree that its proposed course of action would have been financially irresponsible for Target?”
( 2 ) “The share price of Borders Group, Inc. has declined by 73% since one of Pershing Square's partners was appointed to the board on January 17, 20082. Is this the reason Borders was not included in the list of Pershing Square investments in the Pershing Square definitive proxy statement?” |
