Pershing Square Calls Target Board ‘Suboptimal,’ Seeks Single Ballot

Apr 23 2009 | 8:19am ET

The once-congenial relationship between activist hedge fund Pershing Square Capital Management and retailer Target Corp. has turned downright acrimonious. On opposite sides of an increasingly bitter proxy battle, traded barbs this week, as two of Pershing Square’s board nominees offered a new criticism of Target’s election procedures.

In a regulatory filing, Pershing Square chief William Ackman wrote that “Target’s current board composition is suboptimal.” Ackman, who is one of his firm’s candidates for election to the Minneapolis company’s board, likened Target’s use of separate ballots in proxy contests to that of a banana republic.

“In the political realm, we see analogous elections only in the Third World and in dictatorships,” he wrote.

Earlier this week, Ronald Gilson, a Standford University law professor, corporate governance expert and Pershing Square nominee, called on Target to abandon the common practice of sending two proxy cards, allowing investors to vote for just one slate or the other, in favor of a single ballot, known as a universal proxy.

“Target and Pershing Square now have the opportunity to proactively provide good corporate governance to the Target shareholders by making it convenient for them to make a choice in what, in the end, is their election,” Gilson wrote to Target.

The retailer shot back that to do so would only delay the voting.

“With Target’s annual meeting only five weeks away, we believe our shareholders clearly understand the choice between our independent directors and the Pershing Square slate,” Target said. The company has previously characterized the hedge fund’s nominees as “risky.”

Earlier in the battle, the two sides sparred over exactly how many board seats are up for election next month.

Pershing Square’s decision to opt for a proxy contest comes after several years during which Target has ignored several of Ackman’s proposals, including spinning off its real-estate holdings into a separate company. The New York-based firm manages a hedge fund that invests solely in Target securities that has lost some 90% of its value since it debuted two years ago.


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