Kohl’s Activists Scale Back Slate, No Longer Seeking Control

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The activist group pushing for changes at Kohl’s Corp. scaled back its slate of director nominees so that it is no longer seeking control of the retailer’s board and identified the incumbent directors it would like replaced.

The investor group, which includes Macellum Advisors GP, Ancora Holdings Inc. and Legion Partners Asset Management, said in a statement Thursday it will now seek five seats on the 12-member board rather than nine. The group said the rationale for putting forth the larger slate, revealed last month, had been to work constructively with the company to draw its new directors from a large pool of potential candidates.

“Rather than engaging in meaningful discussions, however, Kohl’s has tried to distract shareholders into believing our campaign is about ‘seizing control’ of the company or the board,” the investor group said in its latest statement. “Our campaign is to construct the strongest possible board with directors who possess relevant retail, capital allocation, strategy and corporate governance expertise.”

Kohl’s said the smaller slate doesn’t change its stance, noting that the activist push threatens to disrupt its business momentum. In a statement Thursday afternoon, Kohl’s said its existing directors “outmatch” the proposed slate of nominees on relevant experience, especially when it comes to the increasingly important area of digital sales.

‘Short-termism’

“Regardless of whether the activists are nominating five or nine directors, their capabilities and track records simply do not measure up,” the company said. “Shareholders should reject the efforts of this slate to impose short-termism and financial engineering to disrupt the Kohl’s business strategy and our ongoing momentum.”

Kohl’s shares were little changed in New York, rising 0.2% as of 2:01 p.m. The stock soared 41% this year through Wednesday.

The activist group also identified five incumbent directors, including Chairman Frank Sica, that it said were the least qualified and should be replaced with its nominees. The other directors called out by the investors were Steven Burd, Jonas Prising, John Schlifske and Stephanie Streeter.

“Collectively, we believe these five individuals should be held accountable for overseeing a decade of stagnant growth and poor shareholder returns,” the group said.

New Slate

The group’s own slate now consists of Macellum’s Jonathan Duskin, former Denny’s Corp. Chief Marketing Officer Margaret Jenkins, former Macy’s Inc. executive Jeffrey Kantor, former Burlington Stores Chief Executive Officer Thomas Kingsbury and Cynthia Murray, the former president of Chico’s FAS Inc.

Kohl’s said in its statement it’s still meeting with the activists, including a meeting scheduled for next week.

The investor group last month disclosed a 9.5% stake in Kohl’s and has said change is needed due to the chain’s poor retail execution and strategy that has led to stagnant sales and declining margins. It has also criticized the board for lacking retail experience.

The company has countered that Kohl’s has outperformed during the pandemic and is now positioned to accelerate growth and profitability.

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