Activist Investors Keep Up Pressure, But Cut Kohl’s Board Nominees From 9 to 5
The group of activist investors looking to seize control of Kohl’s board has reduced the number of directors that it plans to nominate from nine to five. In a letter sent to the retailer’s shareholders Thursday, the group — which has a combined 9.5 percent stake in Kohl’s — said it originally nominated nine candidates “in hopes of working constructively with the board to choose from a large pool of candidates to construct a well-balanced board.” Kohl’s was quick to reject the initial proposal late last month, arguing it would disrupt the momentum that the department store chain has seen in its business.
The group of investors — Macellum Advisors, Ancora Holdings, Legion Partners Asset Management, and 4010 Capital — said Thursday that, “in the absence of meaningful progress towards a resolution,” it has revised its proxy campaign to nominate just five individuals to Kohl’s board, which would replace five incumbents, including the board’s current chair, Frank Sica.
Total Retail's Take: The Kohl's vs. activist investor group saga isn't over yet. I've previously reported on Kohl's rejection of the investor group's initial letter, in which the group revealed plans to instate new board directors with deep retail experience, cut executive compensation, slash inventory levels, and consider selling some of its noncore real estate. Cutting its demands from nine new directors to five, the activist investors named nominees include Macellum CEO Jonathan Duskin, former Denny’s Chief Marketing Officer Margaret Jenkins, former Macy’s Chief Merchandising Officer Jeffrey Kantor, former Burlington CEO Thomas Kingsbury, and former Chico’s President Cynthia Murray. The group has also created a public website listing its critiques of Kohl's current board, as well as its demands for future growth.
The group also identified the five incumbent directors "who we believe are the least qualified to continue serving on the Board" as Steven A. Burd, Jonas Prising, John E. Schlifske, Frank V. Sica, and Stephanie A. Streeter. "These five individuals should be held accountable for overseeing a decade of stagnant growth and poor shareholder returns," the letter states, as well as mentions investor concern with the results of background checks into some of these individuals. The statement also emphasized that the campaign is not about "seizing control" of Kohl's or its board, but aims to "construct the strongest possible board with directors who possess relevant retail, capital allocation, strategy and corporate governance expertise."
It appears that the group of activist investors refuse to back down, and have come prepared with a lengthy list of reasons why their nominees would improve Kohl's performance. Swift action, stronger than investor updates on its current strategy, is needed from Kohl's to come to a compromise with its unhappy stakeholders.
Kristina Stidham is the digital content director at Women in Retail Leadership Circle and sister brand Total Retail. She is passionate about digital media and handles video, podcast and virtual event production for both brands. You can often find her at WIRLC, TR, or industry events with her camera and podcasting equipment recording interviews with retailers.
Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia. Go Owls! When she's not in the office, she loves to go on long walks, sing around the house, hangout with her two pet guinea pigs, and travel to new places.