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
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.
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
"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
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
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
and another from Target.
"I keep getting these ballots!" said Swain, of Shorewood, who's
semiretired from the
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