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 If your shouts are not heard from outside of the boardroom door, the next step is to kick it down and take over the meeting. Pershing Square Capital Management LP William Ackman's demands for changes at retailer Target Corp. (NYSE:TGT) have fallen on deaf ears. Ackman in mid-November 2008 published a 79-page proposal, calling for the Minneapolis retailer to form a real estate investment trust that would own the land under Target's owned stores and spin off 20% of that REIT in an initial public offering. He claimed that a REIT spinoff could help Target unlock its real estate value and send shares up to about $79 by 2010. Target took the proposal under consideration, yet months have passed and the company has not given him an answer while shares continue to hover around the mid- to high-$20 mark, a little more than half of what it traded for about a year ago. Ackman has suffered dearly from Target's stock decline. His Pershing Square IV fund, an investment vehicle focused exclusively on Target, lost about 68% in 2008 and another 40% in January, according to a February letter to Pershing IV investors from Ackman obtained by The Deal. The fund, which was launched with $2 billion in mid-2007, owns a 2-to-1 leveraged interest in Target principally through stock options, which in bad times can intensify losses. But Ackman is not giving up, having put some more skin in the game, having personally invested an additional $25 million in the fund. With all of this skin in the game, Ackman wants his butt (and others he has chosen) planted firmly on boardroom seats. On Tuesday, he announced plans to nominate himself and four others to Target's 13-seat board. Target recommended against his nominees and announced plans to nominate four current directors whose terms expire this year. When asked about the status of his discussions with Target regarding a REIT spinoff, Ackman told The Deal that he "will take it up with the new board," adding, "the only way to have a real discussion on this is to have it from inside of the company, rather than through public discourse." Ackman is bringing along some real estate ammo to the table to help fuel his REIT spinoff argument. Among his nominees is Michael Ashner, chairman and CEO of REIT Winthrop Realty Trust. Other nominees include Jim Donald, former Starbucks Corp. CEO and one time chief executive of supermarket chain Pathmark Stores Inc.; Richard Vague, former CEO of First USA Bank NA, Juniper Financial and Barclays Bank Delaware; and Ronald J. Gilson, a Stanford Law School and Columbia Law School professor and corporate governance expert. Donald's supermarket experience should come in handy as Target tries to play up consumables amid these recessionary times. "He has big-box food retailing experience -- something that Target is focused on," Ackman said, adding a food focus has helped Wal-Mart Stores Inc. (NYSE:WMT) to stay competitive in these tough times. Vague's credit card expertise should also help with Ackman's campaign to drive Target to sell its credit card business. Target in May 2008 bowed to pressure from Ackman to unload its credit card business, having sold 47% of its credit card receivables to J.P. Morgan Chase & Co. (NYSE:JPM) for $3.6 billion. Ackman said his goals for this business have not changed -- he still seeks a sale of all of the receivables. Target's credit card business has been a burden of late as the consumer debt crisis has led to rising bad debt expenses and mounting write-offs. - Michael Rudnick
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