Kohl’s Corp. announced Wednesday that it has secured a deal with the group of activist investors who have been campaigning since February to replace five of Kohl’s 12 current board members.
The Menomonee Falls-based retailer has agreed to add two directors nominated by the investor group: Margaret Jenkins, former chief marketing officer at Denny’s Inc. and Thomas Kingsbury, former chief executive officer at Burlington Stores. In addition, Christine Day, who is former CEO at Lululemon Athletica, will join the board. Day was selected by Kohl’s and accepted by the investors, according to a news release.
The new directors will assume their seats on the board at the end of Kohl’s 2021 annual meeting, set to take place virtually on May 12.
With these new additions, Kohl’s board will also lose two tenured members. Steve Burd will retire at the end of August and chairman Frank Sica will retire next year, in connection with the 2022 annual meeting.
“We are pleased to further strengthen our board with the addition of Christine, Margaret and Tom as part of our continued refreshment process,” said Sica. “Today’s agreement reflects our board’s ongoing dialogue with our shareholders and our commitment to maximizing long-term value for all stakeholders. We welcome the new directors and look forward to their perspectives as we continue to execute Kohl’s growth strategy.”
The settlement comes after a months-long proxy fight between Kohl’s and the activist investors, who together own 9.3% of the retailer’s outstanding stock.
The group, which includes Macellum Advisors GP LLC, Ancora Holdings Inc., Legion Partners Asset Management LLC and 4010 Capital LLC, fired criticism after criticism at the retailer, blaming current board leadership for underperforming stock, stagnant sales and lost market share — operating issues that arose well before the COVID-19 pandemic, which brought sales down 20% last year, and 10% for the fourth quarter.
Meanwhile, Kohl’s continued to defend its board members and their ability to lead the company through retail industry disruption, doubling down on its new long-term growth strategy. Plans include growing sales and operating margin by capitalizing on retail trends and improving its women’s business. There’s also a new consumer-facing vision to be the leader in the active and casual lifestyle categories.
Kohl’s claims it’s making progress, but the investor group’s campaign sought to poke holes in the retailer’s messaging and convince shareholders that substantial growth wouldn’t be possible without major changes to the board.
Read further about how Kohl’s is navigating retail industry upheaval and mounting competitive pressure in BizTimes Milwaukee’s latest cover story.
A statement by the investor group was included in the Wednesday news release: “These new directors are all proven leaders in retail who will add valuable expertise to the board. We are pleased to have been able to reach this constructive resolution with the company, and we are confident these changes will help further our shared goal of creating long-term value for shareholders. We are excited for the future at Kohl’s.”
As part of the agreement, the board’s existing ad hoc finance committee will become an official “Finance Committee of the Board,” which will help oversee capital allocation decisions. Thomas Kingsbury will join the committee. Additionally, the board expanded its existing share repurchase authorization to $2 billion.
