Kohl’s board remains in control following shareholder vote

Activist investor loses campaign to overhaul board

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

Last updated on May 12th, 2022 at 03:01 pm

Menomonee Falls-based Kohl’s Corp. announced Wednesday that shareholders have re-elected all 13 incumbent board directors over the 10 candidates nominated by activist investor Macellum Capital Management.

Tallied following the retailer’s 2022 annual meeting, the preliminary vote count marks the end of a months-long proxy war with Macellum, which owns about 5% of Kohl’s stock and had been campaigning to overhaul the board in order to improve performance or pursue a full sale of the company.

“We would like to thank our shareholders for their support throughout this proxy contest,” Peter Boneparth, chairman of the board said in a news release. “While we have had differences with Macellum, this board is committed to serving the interests of all our shareholders. The board remains focused on running a robust and intentional review of strategic alternatives while executing our strategy to drive shareholder value. We appreciate the feedback we have received from our shareholders over the past several months and look forward to engaging with them further.”

Kohl’s 13 board directors include Michael Bender, Peter Boneparth, Yael Cosset, Christine Day, Chuck Floyd, Kohl’s CEO Michelle Gass, Margaret Jenkins, Thomas Kingsbury, Robbin Mitchell, ManpowerGroup CEO Jonas O. Prising, Northwestern Mutual CEO John Schlifske, Adrianne T. Shapira and Stephanie Streeter.

In addition to the re-election of directors, Kohl’s shareholders also ratified the appointment of Ernst & Young as the company’s independent registered public accounting firm for fiscal year 2022 and approved an advisory resolution on the compensation of the company’s named executive officers reported in the company’s 2022 proxy statement.

Kohl’s noted in its release that Wednesday morning’s results are “considered preliminary until final results are tabulated and certified by the independent Inspector of Elections.” The final certification of results will be filed with the U.S. Securities and Exchange Commission and will be posted on Kohl’s investor website.

The market has so far reacted somewhat negatively to the news of Kohl’s board re-election. Kohl’s shares were trading at $49.03 at the open and dropped to $47.65 following the announcement. As of 10 a.m., Kohl’s stock price had rebounded to $48.03. That’s compared to $58.05 on May 5.

In the midst of its proxy fight, Kohl’s has been vetting potential suitors for a possible sale, having retained Goldman Sachs to engage with bidders. CEO Michelle Gass recently said the company has engaged with more than 25 parties since January. Now that the proxy fight is settled, Kohl’s management faces “the greater question of whether to accept one of the bids to buy the company,” wrote Morningstar analyst David Swartz in a brief Wednesday responding to the vote.

“Our view is Kohl’s must seriously consider any legitimate bids above our $59 fair value estimate. We lack confidence that (the company’s current turnaround plan) will improve its pricing power, store traffic, or operating efficiency,” said Swartz.

In February, Kohl’s rejected offers from Acacia Research Corp., for $64 per share, and the from Sycamore Partners, for $65 per share, in pursuit of better opportunities. This added fuel to the fire with Macellum who, as a result, accused Kohl’s board of neglecting its duty to act in the best interest of shareholders. Swartz said he agrees with Macellum that turning down fair offers close to $70 is a risky move.

“If Kohl’s does scare off potential suitors, there could be another proxy fight in 2023,” he said.

Responding to the vote tally Wednesday afternoon, Macellum’s managing director Jonathan Duskin issued a statement thanking the firm’s supporters and saying it was “unfortunate” that the majority of shareholders “seem to have bought into the narrative that change in the boardroom would be too disruptive during a sale process and possibly delay or jeopardize a near-term transaction.”

“Although we respect the outcome of this year’s contest, we firmly believe the close vote validates the concerns we have articulated about the current Board and its questionable handling of its ongoing sale process. We believe the Board should not misconstrue today’s result as a ringing endorsement of its preferred operating plan, which has been met with considerable market skepticism,” Duskin said.

“In short, we contend this vote was a shareholder referendum for a sale, and we look forward to learning of an announced transaction on the quickest possible horizon. However, if Kohl’s is not sold, all directors need to be held accountable for any value that is not realized. We certainly will be there to bring that accountability if very meaningful value is not created in the coming months,” he added.

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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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