Target's final tally shows dissent against board
New York • Target Corp.'s final shareholder vote tally showed a rise in dissent against key board members, highlighting how a massive data breach is eroding faith among its investors.
All 10 nominees were elected to the board Wednesday at the discounter's annual shareholders' meeting. But the rise in votes against several key directors shows that Target, based in Minneapolis, has a lot of work to do to shore up confidence among the investor community.
The investor dissatisfaction comes at one of the most tumultuous times in Target's history as the discounter faces challenges on all fronts ranging from the data breach to a botched-up expansion in Canada. The company fired its CEO Gregg Steinhafel in early May and is looking for a new leader.
The shareholder dissent follows a recommendation by Institutional Shareholder Services last month to shareholders to get rid of seven out of 10 directors who serve on the company's audit or corporate committees because they failed to spot the pre-Christmas security threat. The breach compromised credit card and personal information of millions of customers and exposed big security flaw. That move seemed to influence the shareholders' votes.
All seven members who were targeted by ISS saw at least 19 percent of the shares cast were against each of them, according to the results released by Target.
Among the hardest hit were James A. Johnson, who was once the CEO at Fannie Mae, and Anne Mulcahy, former chair and CEO at Xerox. Of the 557 million shares voted representing 88 percent of shares outstanding on the record Target says that 37.1 percent of the votes cast were against Johnson, while 36.4 percent were against Mulcahy. Twenty-two percent of the votes were cast against board member Roxanne S. Austin, who is serving as interim nonexecutive chair of the board.
One shareholder proposal that called for creating an independent chairman was backed by a strong 45.8 percent of the votes, while nearly 54 percent were against the proposal. The company's Chief Financial Officer John Mulligan is serving as interim CEO.
The other two shareholder proposals one that was against Target's discrimination policy and the other that was against executive perks both received the support of less than 4 percent of the votes.
As for the management's proposal to approve the company's executive compensation plan, 77.9 percent of the votes supported it, while 22.1 percent were against it.
"During this proxy season, we have had a productive dialogue with many of our investors, and we look forward to continued engagement in the weeks and months to come," said Austin in a statement.
In an address to shareholders Wednesday, Mulligan reiterated to investors three priorities: revitalizing Target's U.S. business by constantly testing new products; becoming a digital leader and catering to shoppers jumping back and forth between online and physical stores; and improving operations in Canada.
Last month, Target cut its annual profit outlook and said its first-quarter earnings fell 16 percent. Target is overhauling its security and technology departments and its systems.
Target's shares slipped 1 cent to close at $57.23 Friday.
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