The Association of U S West Retirees



Ackman, Target practice art of proxy war
By Jackie Crosby
Mpls Star Tribune
Saturday, May 23, 2009

The blows are hitting faster and lower as the proxy fight between Target Corp. and activist investor William Ackman enters its final week.

Ackman, whose Pershing Square Capital Management fund is Target's third-largest shareholder, is gunning to put himself and four others on an expanded Target board of directors.  The Minneapolis-based retailer is defending four incumbent directors.

In a flurry of dueling news releases Friday -- a crucial voting day because of the holiday weekend -- barbs were traded, words from an ancient Chinese warrior were brought to bear and the volume on the rhetoric dial got kicked way up in the countdown to Thursday's shareholder meeting.

Ackman started the back-and-forth by calling for two of Target's board members -- one whose term isn't over -- to "step down promptly," in accordance to corporate bylaws, because their employment had changed.  In the early-morning missive, Ackman's candidate and governance guru, Ronald Gilson, accused Target of "poor corporate governance."

At issue:  Target board member Solomon Trujillo, who is up for reelection, recently resigned as CEO of Australian telecommunications company Telstra Corp.  Another director, Anne Mulcahy, whose term expires in 2010, will retire as CEO of Xerox Corp. on July 1, but will remain as chairwoman.

Ackman, who is campaigning for "fresh perspectives and more relevant experience," zeroed in on Trujillo.  He relied on an Australian trade publication to disparage Trujillo's record at Telstra.  He then accused Target's board of extending its director's term limits to 20 years specifically for Trujillo, who has served for 15 years.  (Trujillo formerly was head of the US West phone company before it was acquired by Qwest.)

Within 45 minutes of Pershing Square's first dispatch, Target shot back, scolding Ackman's "personal attack" on Trujillo as "shameful and wrong."  As for the resignation requirements of Trujillo and Mulcahy, Target faulted Ackman and Gilson for proffering an "inaccurate and misleading reading."

"We are surprised that Mr. Ackman and Professor Gilson apparently did not read Target's entire corporate governance guidelines," said the retailer.  It cited another policy that it said applies in this case, in which directors who "retire from principal employment" may serve up to three more years.

Saying Ackman's campaign has become "desperate," Target used an embellished quote from Sun Tzu, the sixth-century B.C. Chinese general, which was published in the Financial Times:  "Tactics without strategy, however clever, are merely the noise before defeat."  (The actual quote from Sun's "The Art of War" is:  "Tactics without strategy is the noise before defeat.")

But big investors and the media aren't the only ones getting plied with competing messages in the increasingly bitter contest.  Just ask Marty Swain.

Her retirement account includes shares in Target.  When the retailer's ballot arrived, she went online right away and voted.  Then she got a second ballot.  A few days later, she pulled three more from her mailbox -- two from Pershing Square and another from Target.

"I keep getting these ballots!" said Swain, of Shorewood, who's semiretired from the University of Minnesota's Infectious Disease Department.  "I usually get one ballot.  Now I've got five total.

"After I got the second one, I went online to see if it would take the vote.  I thought surely it would give me an error message.  When it went through, I thought, 'What the heck is this?'  I wish they'd explain it."

The crush of mailings must have obscured the point, despite the message both sides make in boldfaced, capital letters in their campaign literature:  Only the latest arriving proxy card counts.  (In proxy campaigns you can indeed vote early and vote often.)

"It feels like a political campaign," Swain said.  "You get material from Pershing, he seems to know a bunch that we don't.  Then you get the thing from Target.

"You'd hope a company like Target knows what it's doing."

Jackie Crosby 612-673-7335