Back in 2004, Target's sold the Mervyn's department-store chain to a group of PE investors led by Cerberus. (Faille's first law of finance: Cerberus has one of its many canine heads in everything!)
Mervyn's declared bankruptcy in 2008. (Didn't everybody?) But in Mervyn's case, ticked-off unpaid creditors decided it was all Target's fault. Target had structured the sale so as to strip to valuable real-estate holdings from the transaction, so that Mervyn's thereafter was required to make lease payments on land it had previously owned. Inflated lease payments, say the ticked-off creditors.
The estate trustee has apparently brought an adversary action against Target through the bankruptcy court. I say "apparently" because I haven't done a serious search via PACER for the actual papers yet, so I'm relying on news accounts. Said accounts tell me that Judge Kevin Gross of the U.S. Bankruptcy Court in Wilmington, Del., said the complex series of transactions should be viewed as a single deal, one that had "devastating" consequences on Mervyn's creditors, and he denied the motion to dismiss.
Last year, William Ackman tried to use a proxy fight to persuade Target to turn the land under its stores into a real-estate investment trust. His slate of nominees for the board was defeated, though. I wonder if Ackman has a cheering interest in this lawsuit one way or the other?
Showing posts with label William Ackman. Show all posts
Showing posts with label William Ackman. Show all posts
Tuesday, March 30, 2010
Wednesday, September 16, 2009
Target Declassifies Board
Target Corp said last week that at next year's annual meeting it will ask its shareholders to approve a measure declassifying the board of directors, i.e. henceforth requiring that every member of the board seek re-election each year.
The rules change will require approval of those who hold 75% of the shares. Nonetheless, approval of such a request will likely be granted. After all, this is a classic bone of contention between activists and incumbent, with the incumbents stereotypically seeking a staggered board, for the sake of self-preservation but in the name of continuity.
If the board itself is giving up the continuity flim-flam, no 26% of shareholders will insist upon it on their behalf.
Earlier this year, Pershing Square Capital made an issue of the staggered board in its proxy contest against Target.
I see a Reuters story on the subject quotes William Ackman, founder of Pershing Square, thus: "We applaud Target's decision to declassify the board and we believe it will contribute to stronger corporate governance in the future."
Target's incumbents won re-election in late May, as my readers may remember.
The rules change will require approval of those who hold 75% of the shares. Nonetheless, approval of such a request will likely be granted. After all, this is a classic bone of contention between activists and incumbent, with the incumbents stereotypically seeking a staggered board, for the sake of self-preservation but in the name of continuity.
If the board itself is giving up the continuity flim-flam, no 26% of shareholders will insist upon it on their behalf.
Earlier this year, Pershing Square Capital made an issue of the staggered board in its proxy contest against Target.
I see a Reuters story on the subject quotes William Ackman, founder of Pershing Square, thus: "We applaud Target's decision to declassify the board and we believe it will contribute to stronger corporate governance in the future."
Target's incumbents won re-election in late May, as my readers may remember.
Wednesday, May 27, 2009
Three meetings
Monday, May 11, 2009
Ackman and Target
William Ackman, the principal of Pershing Square, is hosting what he calls a "town meeting" today, to introduce his nominees for the board of big-box retailer Target.
Isn't that a wonderful name for such an anouncement? Reminds me of a Norman Rockwell painting. In fact, I think I'll post a photo of the relevant painting here. I gather that is supposed to be some ordinary townfolk telling his neighbors what he thinks about putting a stoplight in at State & Main.
Anyway, Ackman's nominees are as follows: himself, Michael Ashner, James Donald, Ronald Gilson, and Richard Vague. If they are successful, they will replace the following incumbents: Mary Dillon, Richard N. Kovacecich, George W. Tamke, and Solomon D. Trujillo.
Why is a slate with five names contesting a slate with four names? Apparently there is a dispute over the size of the board. Ackman believes the board ought to have 13 seats rather than 12, and that 5 of those 13 ought to be up for decision at the forthcoming annial meeting. The company holds ithas a 12 member classified board, with just the four seats at issue this year.
Target Corporation's retail segment includes general merchandise and food discount stores and Target.com, a fully integrated on-line business. In addition, the company operates a credit card segment that offers both store-brand credit cards and VISAs. The company, which operates 1,699 stores in 49 states (which state is excluded? -- I can't tell you) has sufered a severe stock price decline of late, which has ticked off Mr. Ackman, who seems to have bought in at the peak.
The Financial Times quotes Ackman thus: "This is not a poorly managed company. this is really just about improving the board."
It seems sensible to presume that dysfunctions at the board will also show up in the management. If they don't, how dysfunctional can they be? This one confuses me a bit.
I appreciate the excuse to steal the Rockwell image, though.
Wednesday, April 22, 2009
Pershing Square and Target
On April 6, Pershing Square Capital Management filed a preliminary proxy statement with the SEC regarding the upcoming annual meeting of Target Corp. (NYSE: TGT).
Its contentions are as follows:
"Despite the fact that Target’s two principal business lines are retail and credit cards, Target currently has no independent directors with senior, executive-level experience in these two businesses. Similarly, despite the fact that Target is one of the largest owners of retail real estate in the country, there are no independent directors on the company’s board with substantial real estate expertise. The board also has no significant shareholder representation, with the current directors owning less than 0.3% of the company’s outstanding common stock. As such, we believe that the current board is suboptimal from a shareholder and corporate governance perspective."
Pershing Square (i.e. William Ackman's) own nominees are: Jim Donald; Richard Vague; Michael Ashner; Ronald Gilson, and Ackman himself.
Target's board has 13 seats. One of them is now vacant. The incumbent board proposes to reduce the size of the board to 12 -- thus eliminating, rather than filling, the vacant seat.
If Target gets its wish in that respect, only four seats rather than five will be up for grabs at the next annual meeting. Ackman, writing to shareholders, has said: "We cannot conceive of a good reason to reduce the size of the board, for it will curtail the ability of shareholders to add strong board candidates of their choosing to the current board. As such, we urge you to vote against Target’s board reduction proposal."
One of the Pershing nominees, Ronald Gilson, has impressive academic credentials. He is a professor in the law schools of both Stanford and Columbia. [Which leads me to suspect he spends an awful lot of time flying over Kansas.] He's also the author of major casebooks covering corporate finance and corporate acquisitions.
One survey of citations in law journals puts Gilson at number 31st on the list of mostr frequently cited authors. (He's been cited 3,062 times.)
In case you're curious -- and why shouldn't you be? -- the single most frequently cited author in law jourals is Richard Posner. That fails to surprise me.
Its contentions are as follows:
"Despite the fact that Target’s two principal business lines are retail and credit cards, Target currently has no independent directors with senior, executive-level experience in these two businesses. Similarly, despite the fact that Target is one of the largest owners of retail real estate in the country, there are no independent directors on the company’s board with substantial real estate expertise. The board also has no significant shareholder representation, with the current directors owning less than 0.3% of the company’s outstanding common stock. As such, we believe that the current board is suboptimal from a shareholder and corporate governance perspective."
Pershing Square (i.e. William Ackman's) own nominees are: Jim Donald; Richard Vague; Michael Ashner; Ronald Gilson, and Ackman himself.
Target's board has 13 seats. One of them is now vacant. The incumbent board proposes to reduce the size of the board to 12 -- thus eliminating, rather than filling, the vacant seat.
If Target gets its wish in that respect, only four seats rather than five will be up for grabs at the next annual meeting. Ackman, writing to shareholders, has said: "We cannot conceive of a good reason to reduce the size of the board, for it will curtail the ability of shareholders to add strong board candidates of their choosing to the current board. As such, we urge you to vote against Target’s board reduction proposal."
One of the Pershing nominees, Ronald Gilson, has impressive academic credentials. He is a professor in the law schools of both Stanford and Columbia. [Which leads me to suspect he spends an awful lot of time flying over Kansas.] He's also the author of major casebooks covering corporate finance and corporate acquisitions.
One survey of citations in law journals puts Gilson at number 31st on the list of mostr frequently cited authors. (He's been cited 3,062 times.)
In case you're curious -- and why shouldn't you be? -- the single most frequently cited author in law jourals is Richard Posner. That fails to surprise me.
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