Contrarian Corpus
activist full deck proxy fight
2009-05-11 · 80 pages

Target Corporation TGT

N 4 Narrative
V 3 Visual
C 3 Craft
Original source ↗

The three reasons

  1. 1

    Target board lacks senior operating experience in retail, credit cards, and real estate

  2. 2

    Board mishandled credit card transaction and refused to explore real estate alternatives

  3. 3

    Governance is insular: interlocking directorships, 9-year tenure, no shareholder representation

Primary demands

  • Elect Pershing Square's five 'Nominees for Shareholder Choice' to Target's board
  • Authorize a full review of real estate ownership alternatives (including TIP REIT spin-off)
  • Transfer credit risk out of the credit card business
  • Adopt a universal proxy card and improve board nominating process
  • Add directors with senior operating experience in retail, credit cards, and real estate

KPIs cited

Credit Card EBIT decline
Fell 65% from $930M (2007) to $322M (2008)
Credit Card EBIT % of receivables
Dropped from 12.8% (2007) to 3.7% (2008)
Target stock return vs Wal-Mart (Q4'07 to announcement)
Target -51% vs Wal-Mart +11%, ~62pp underperformance
Retail EBIT margin 2008
Target 6.3% vs Wal-Mart US 7.3%
Real estate replacement cost
~$40 billion on 200 million sq ft
Board common stock ownership
Full board owns 0.27%; independents own only 0.09% (0.02% issued)
Insider stock activity (last 5 years)
Executive management and board sold $429M of stock vs $3.8M purchased
Average independent director tenure
~9 years (nearly a decade)
Interlocking directorships
12 incumbent directors serve on 18 other boards, including Citi, Wells Fargo, Goldman
Sanger/Wells Fargo fees
Nominating Chair Sanger received >$1.25M from Kovacevich's Wells Fargo since 2003

Pattern membership

Where this document fits across the library's 12 rhetorical / structural patterns.

Notable slides (8)

Notes

Proxy-fight deck for 2009 Target annual meeting; follows Pershing's October 2008 'A TIP for Target Shareholders' initial thesis. The argument is almost entirely about board composition/governance rather than valuation — three-pillar structure (Composition / Strategic Mistakes / Governance) organizes the whole deck. Notable rhetorical patterns: (1) 'Target's misleading stance vs The ACTUAL FACTS' two-column rebuttal slides, (2) category-by-category 'NO experience' callouts for Target board vs Wal-Mart board, (3) Wal-Mart as peer-gap foil on stock, SSS, EPS, and margins, (4) villain-naming of Sanger over Wells Fargo conflict. Campaign was ultimately lost — shareholders narrowly elected incumbent slate in May 2009.