Activist investor nominates 10 candidates for election to Kohl’s board

Retailer continues to defend its bid evaluation process, strategic plan

Kohl’s headquarters
Kohl’s headquarters in Menomonee Falls.

Last updated on February 14th, 2022 at 11:46 am

In an effort to overhaul Kohl’s 14-person board, activist investor Macellum Capital Management Thursday morning announced a slate of 10 director nominees for election at the retailer’s 2022 annual meeting this spring. 

Macellum, which owns a 5% stake in Menomonee Falls-based Kohl’s Corp., has put pressure on the company since last year to improve its board representation in order boost shareholder value, or to seriously consider a full sale of the company. 

The hedge fund is now taking action, as promised, following Kohl’s rejection last week of two purchase offers, one for $64 per share and the other for $65 per share, and adoption of a shareholder rights plan or “poison pill” to prevent a hostile takeover. However, that does not prevent the board from considering qualified purchase offers.

Kohl’s stock price has risen 7% over the past five days, opening Thursday at $62.56. 

The way Macellum sees it, Kohl’s recent decisions indicate that its current board is “no longer operating with impartiality and objectivity” and “no longer prioritizing shareholders’ interests,” managing partner Jonathan Duskin wrote in a letter to shareholders Thursday.

Arguing that Kohl’s current board is in need of additional retail expertise and shareholder representation, Macellum has nominated the following 10 candidates. 

  • George Brokaw – Board director at DISH Network Corp., CTO Realty Growth, Inc., and Alico, Inc.; and former managing director at financial services company Lazard Frères & Co. LLC.
  • Jonathan Duskin – Managing partner and chief executive officer at Macellum Capital Management; and board director at retailer Citi Trends, Inc.
  • Francis Ken Duane – Former executive vice chairman at PVH Corp., which includes fashion brands such as Tommy Hilfiger, Warner’s, Olga and True & Co., and Calvin Klein; and board director at apparel manufacturer Ariat International, Inc.
  • Pamela Edwards – Chief financial officer and executive vice president at Citi Trends, Inc.; and board director at luxury department store chain Neiman Marcus Group, LLC. 
  • Stacy Hawkins – Vice dean and professor at Rutgers Law School.
  • Jeffrey Kantor – Former senior executive at Macy’s, Inc.; former chairman of Macy’; and president of retail and wholesale consulting firm JAK Consulting. 
  • Perry Mandarino – Co-head of investment banking, head of restructuring and senior managing director at investment banking firm B. Riley Securities, Inc.; and board director at retailer Bebe Stores Inc. 
  • Cynthia Murray – Former president at women’s clothing chain Chico’s Brand, FAS, Inc.; former president at plus-size apparel company Full Beauty Brands; former executive at women’s apparel retailer Talbots, Inc.; and founder and chief executive officer of senior leadership consultancy Stanmore Partners.
  • Kenneth Seipel – Former chief executive officer at department store chain Gabriel Brothers, Inc.; former president and chief operating officer at fast fashion brand Wet Seal, Inc.; former executive vice president of stores, operations and store design at Old Navy.; principal of Retail Business Optimization LLC; and board director at Citi Trends, Inc.
  • Craig Young – Founder and managing principal of real estate private equity firm Tidewater Capital, LLC; and president of venture investing platform Chain of Lakes Capital, Inc.

This is not the first time Macellum has attempted to take control of Kohl’s board. The firm was part of the activist investor group that launched a proxy war against the retailer last year. That effort amounted to a settlement consisting of three new board directors. Two were appointed by the group: Margaret Jenkins, former chief marketing officer at Denny’s Inc. and Thomas Kingsbury, former chief executive officer at Burlington Stores. And one by Kohl’s, Christine Day, former CEO of Lululemon Athletica. The board also agreed to expand its share repurchase authorization from $300 million to $2 billion.

Macellum said its nominees, if elected this time around, will explore all avenues of maximizing shareholder value, including sale opportunities. 

Responding in a statement Thursday morning, Kohl’s fought back. It called Macellum’s overhaul effort “unjustified and counterproductive” and pointed to the 2021 settlement agreement. Kohl’s also highlighted the recent appointment of its independent finance committee to lead a review of any purchase offers, as well as its engagement with financial advisors Goldman Sachs and PJT Partners. 

“The board reaffirms its commitment to maximizing the long-term value of the company. It will continue to pursue all reasonable opportunities to drive value, consistent with its fiduciary obligations,” the retailer said. 

It also pointed to recent financial performance, which saw net sales for the first three quarters of 2021 catch up to pre-pandemic levels, prompting Kohl’s to twice raise its guidance for the full year. Plus, the company’s Q3 operating margin was 8.4%, marking the highest Q3 operating margin in nine years. Kohl’s has also seen single-digit in-store sales growth since launching its Sephora shop-in-shop partnership last fall, so far in 200 stores.

This progress, Macellum argues, can only be attributed to the economy’s reopening from the pandemic, considering Kohl’s stock and top-line growth has lagged behind industry peers including Dillard’s and Macy’s over the past year.

Kohl’s plans to give a full update on its turnaround plans at its March 7 investor day and is to release its fourth quarter 2021 earnings on March 1. 

In the meantime, the board will present its recommendation to re-elect the current board through proxy statements filed with the U.S. Securities and Exchange Commission.

Shareholders will vote at the 2022 Annual Meeting on a date yet-to-be-announced. 

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Maredithe has covered retail, restaurants, entertainment and tourism since 2018. Her duties as associate editor include copy editing, page proofing and managing work flow. Meyer earned a degree in journalism from Marquette University and still enjoys attending men’s basketball games to cheer on the Golden Eagles. Also in her free time, Meyer coaches high school field hockey and loves trying out new restaurants in Milwaukee.

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