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Sunday, November 22, 
12:47 am

Ackman gains support in Target proxy fight

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target125x100.jpgOn Thursday, proxy advisory firm Proxy Governance recommended that shareholders side with Bill Ackman's Pershing Square Capital Management LP on several key points in its battle with Target Corp. (NYSE:TGT). Another proxy advisory, Egan-Jones Proxy Services, also questioned the independence of two of the proposed nominees and backed two Ackman choices instead.

Proxy Governance recommended that Target shareholders vote to reject the retailer's proposal to fix the board size at 12 (down from 13) and to elect two of Ackman's nominees to the board at the company shareholder meeting May 28.

The news came the same day Target's CEO Gregg Steinhafel had published an open letter to shareholders, defending the board's proposed nominees from claims they did not possess the relevant experience or independence to guide Target through the retail recession.

Proxy Governance apparently agreed with the dissenters, at least in the case of two nominees:

  • Real Estate: "Because the company's sizeable holdings will continue to make real estate a significant strategic issue - even as the company has presented compelling reasons to question the TIP REIT proposal - we believe Michael Ashner, who has extensive professional experience in commercial real estate, would add meaningfully to the current board's composition."
  • Food Retailing: "[W]e believe the board's ability to respond to the core strategic challenges of retailing, especially groceries, would be materially improved by the addition of the long-term grocery executive, Jim Donald, who established Wal-Mart's grocery business and superstore presence."
  • Relevant Expertise: "We believe that Jim Donald, with retail grocery experience, and Michael Ashner, with commercial real estate experience, would add meaningfully to the board's ability to assess and meet emerging strategic challenges in these two aspects of the company's operations."
In a separate statement, Target said:

"We are disappointed that Egan-Jones has recommended withholding votes from two Target nominees on the basis of minimal, ordinary course business transactions conducted between Target and their companies. These two directors fully meet the independence standards of the SEC and NYSE.


"We are also disappointed that PROXY Governance has recommended two of Pershing Square's nominees. We continue to believe that our nominees - Mary N. Dillon, Richard M. Kovacevich, George W. Tamke and Solomon Trujillo - have the diversity, experience and qualifications to provide effective and independent oversight and direction to Target."

As the FT noted earlier this week, Ackman's proxy fight has cost at least $15 million thus far, one of the most expensive proxy battles in history. For most of this battle, that has looked like money poorly spent. But as the shareholder vote comes closer, suddenly Ackman has some momentum. The question is: Will it be enough to save Ackman's investment (his fund solely invested in Target has lost almost 90% of its value since 2007)? Or is $15 million enough to at least save face? - Tom Groppe

@dealscape: Follow me on Twitter


See press release from Pershing Square

More on Steinhafel's open letter to shareholders

See Bill George's column on the proxy battle from TheDeal.com


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