Ackman's Dream Team Already Pounding Target

Not long ago, this blog detailed how William Ackman, who heads investment firm Pershing Square, had assembled a kind of dream team of potential directors for Target in the sense that their experience was perfectly suited to execute his plans to excise the retailer’s credit card business, convert a lot of its property into a real estate investment trust and energize the expansion of its food business.

Recently, Ackman, whose investors have lost money in his Target crusade, began putting that dream team into play, even as he wages a proxy fight with the retailer, which has rejected his plans. A major shareholder, he remains far from owning enough stock to hold sway over the company in his own right.

In an April 21 letter to Target filed with the Securities and Exchange Commission, Ron Gilson, an Ackman board candidate, law and business professor at Stanford and Columbia universities, and an expert on corporate governance, argued for a change in how Target handles proxies, one that would align its procedures with some new thinking on corporate governance and, unsurprisingly, give the Pershing Square slate a better shot at election. He wrote:

Both Target and Pershing Square have a unique opportunity to make this election historic from a corporate governance perspective. As you may know, the press has reported that SEC chair Mary Schapiro has directed the commission’s staff to draft proposals for rules governing shareholder proxy access by mid-May 2009. I expect those proposed rules will provide the opportunity for the use of a universal proxy card whereby shareholders can choose — on one proxy card — from among the candidates nominated both by the company and by shareholders. The benefit to shareholders, who may want to choose members from both slates, would be substantial.

Target and Pershing Square now have the opportunity to proactively provide good corporate governance to the Target shareholders by making it convenient for them to make a choice in what, in the end, is their election. This is not a control contest. The qualifications of the candidates will be fully vetted by the time of the May 28th election, and Target shareholders are entirely capable of assessing the candidates and making a choice. There is simply no excuse to deny shareholders the benefit of the use of a universal proxy card.

Gilson’s argument steps over the fact that new governance rules have not yet been proposed, never mind adopted. Still, he’s pushing the company to adopt what he assumes the the proposal will include in time to help his slate take its place on Target’s board. It might be fair to surmise that the credit card, REIT and food experts Pershing Square has among its board candidates would prove equally anxious to move Ackman’s agenda along.

In an April 24 SEC filing over his own signature, Ackman argued:

On March 17, 2009, Pershing Square announced the nomination of five independent directors for the open seats on Target’s board at the upcoming 2009 Annual Meeting of Shareholders. We did so principally because we believe that the Target board lacks sufficient relevant experience and shareholder representation. The nominees we have proposed bring extensive expertise in food retailing, credit cards, real estate, shareholder value, and corporate governance.

He went on to reiterate his candidate’s credentials then finished with a boldface declaration:

We Believe That Target’s Board Lacks Sufficient Relevant
Experience in Retail, Credit Cards, and Real Estate

What he failed to add was: To Execute My Personal Plans for the Company.