Apr 6, 2021
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Kohl’s urges shareholders to vote against investor group’s board nominations

Apr 6, 2021

Menomonee Falls, Wisconsin-based department store retailer Kohl’s Corporation has sent a letter to its shareholders ahead of its annual meeting in May, highlighting the progress made by its current board of directors and advising recipients to vote against the five board nominations put forward by a group of activist investors.

Instagram: @kohls

The letter points out that the retailer’s current 12-strong board has overseen a successful transformation at the company, “which has resulted in stock price appreciation of more than 200%.”
Going on to emphasize the fact that, having been temporarily suspended due to the Covid-19 pandemic, the company’s quarterly dividend and share repurchase program have now been reinstated, the letter argues that, “Kohl’s board, working closely with management, has acted decisively to put the Company on a new trajectory to enhance value for shareholders.”

“Do not allow a group of activist hedge funds to disrupt our momentum. Please support the board that has overseen your company’s recent outperformance,” continues the letter, concluding its plea to shareholders, before presenting tables comparing the respective experience and expertise of the incumbent board members and their nominated replacements.
Initially, the group of investors, which includes Macellum Advisors GP, LLC; Legion Partners Holdings, LLC; Ancora Advisors, LLC; and 4010 Capital, LLC, put forward a slate of nine directors in February.
The group, which collectively owns a 9.5% stake in Kohl’s, presented its nominations alongside strategic proposals for the company, including cutting inventory levels and executive compensation, and selling non-core real estate.
At the time, Kohl’s dismissed the nomination of the nine-person slate as an “attempt to seize control of our board and disrupt our momentum” and claimed that many of the strategic suggestions made by the investor group were already included in the current board’s existing plans.
In early March, the investor group cut its slate of nominees from nine to five, stating that the move was a reaction to “the absence of meaningful progress towards a resolution.” The directors that the group is hoping to replace include the chairs of its compensation and audit committees. Its nominees include Macellum CEO Jonathan Duskin.
Kohl’s, which currently operates more than 1,100 stores across 49 states, saw its existing problems with falling sales compounded by the Covid-19 pandemic last year. The company’s revenues fell 20.1% to $15.96 billion in 2020, compared to $19.97 billion in 2019.
Annual net loss at the retailer was $163 million, or $1.06 per diluted share, compared to net earnings of $691 million, or $4.37 per diluted share, in the previous year.
The Kohl’s annual meeting of shareholders is scheduled for May 12, 2021.

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