Kohl shareholders vote to keep current slate of directors despite pressure from activists

The Kohl’s logo is displayed outside a Kohl’s store on January 24, 2022 in San Rafael, California.

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Kohl shareholders voted to re-elect the company’s current slate of 13 board directors as the retailer faced growing pressure from activists for an overhaul, the company announced on Wednesday.

Kohl’s annual shareholder meeting came as activist firm Macellum Advisors lobbied for Kohl to revamp its slate of directors, arguing the company has underperformed in recent years compared to other retailers.

Macellum argued that efforts by Kohl’s chief executive, Michelle Gass, such as teaming up with beauty retailer Sephora or forming a return program with Amazon, weren’t enough.

In February, Macellum appointed 10 directors, including its chief executive Jonathan Duskin. The activist also lobbied for Kohl’s to sell and sell some of its real estate and lease it out to tap into additional capital.

Kohl’s resisted such sale-leaseback deals, but the retailer brought in bankers from Goldman Sachs to evaluate the offers. Kohl’s confirmed in March that it had received several preliminary takeover offers after rejecting an offer from Starboard-backed Acacia Research at $64 a share that it deemed too low.

Shares of Kohl’s closed Tuesday at $49.39, down from a 52-week high of $64.80. The stock was down more than 1% in early trading Wednesday.

Ahead of Wednesday’s vote, major proxy advisory firms were split in their recommendations. Institutional Shareholder Services, or ISS, backed Macellum, while Glass Lewis said shareholders would be best served by backing Kohl’s current board.

It’s also not the first time Macellum has put pressure on Kohl. The two reached an agreement in April 2021 to add two directors from a list that an activist group, including Macellum, was lobbying for. Kohl’s has also appointed an independent director, with the support of activists.

Kohl’s board “remains focused on conducting a robust and intentional review of strategic alternatives,” Chairman Peter Boneparth said.

“Although we have had differences with Macellum, this board is committed to serving the interests of all of our shareholders,” he said.

And although Macellum did not win the vote, the activist firm says it will not remain silent.

“I think the vote was a referendum on a sale, and the people who voted for the company believed the narrative that any changes to the board in the middle of this process risked disrupting the process,” Duskin said. at CNBC.

“The vote for business was a vote to sell a business,” he said. “We’re not leaving.”

—CNBC’s Courtney Reagan contributed to this report.

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