Kohl’s Urges Shareholders to Reelect Current Board Directors Amid Activist Investors’ Push

Kohl’s Corp. is urging shareholders to vote for the reelection of current members of its board amid an activist investor group’s push to replace five out of its 12 directors.

In a letter today, the Menomonee Falls, Wis.-based retailer asked shareholders to vote the “blue” proxy card — instead of the “white” put forth by investors Macellum Advisors GP LLC, Ancora Holdings Inc., Legion Partners Asset Management LLC and 4010 Capital LLC — at the company’s annual meeting scheduled to be held on May 12.

“Kohl’s has a diverse, highly experienced board that is actively engaged in overseeing the execution of our new strategy,” it wrote in the letter. “Your board is committed to ensuring company and leadership accountability for delivering growth and improved profitability. Do not allow a group of activist hedge funds to disrupt our momentum.”

According to the chain, all or nearly all of its board members have senior leadership experience; served in retail or other consumer-facing industries; and possess technology, e-commerce or digital expertise. It has previously indicated that replacing some of its directors could “disrupt the Kohl’s business strategy” as detailed in its strategic plan announced in October.

“Your company’s board of directors has overseen a transformation of Kohl’s including the development of our new strategy, which is producing positive results,” it added in the letter. “Your board has the right skills and experience to drive continued momentum.”

Early this week, the activist investors, which hold a stake of just over 9% in the department store, called out Kohl’s “egregious” executive compensation — the latest attempt in their bid to shake up the board. As detailed in the group’s letter, the retailer paid its top five executives more than $278 million in total compensation from 2011 to 2019. During that same timeframe, its sales remained relatively flat from $18.8 billion a decade ago to $18.9 billion in 2019, while its operating income dropped 44% from $2.2 billion to $1.2 billion. (Offering a contrast, the group brought up the Census Bureau’s annual retail trade survey, which indicated that the clothing and accessories industry grew 17% in net sales over the 10-year period.)

The investors had originally sought to nominate nine directors but revised its proxy statement in mid-March to nominate just five individuals. Kohl’s also rejected that move in a statement, suggesting that the group’s nominees lack “critical relevant experience” and “meaningful digital experience.”

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