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Kohl’s Shareholders Vote for Independent Chairman

Proposal allows the company to wait to make the change with the next ceo.

MILWAUKEE — Kohl’s Corp. shareholders narrowly approved a proposal requiring that the retailer’s chairman be an independent director.

This story first appeared in the May 17, 2013 issue of WWD.  Subscribe Today.

The company’s chief executive officers historically have held both titles. Chairman and ceo Kevin Mansell told shareholders at the meeting that the board’s governance committee would take up the issue as a result of the 51 percent “yes” vote. Kohl’s had advised shareholders to vote against the proposal, which was forwarded by activist investor John Chevedden.

The vote would not necessarily strip Mansell of the chairmanship because the proposal allows the company to wait to make the change with the next ceo.

“Speaking from a standpoint of financial results, 2012 was a somewhat disappointing year for Kohl’s,” Mansell told shareholders at the sparsely attended annual meeting here Thursday.

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Kohl’s net income fell by 15.5 percent to $986 million in 2012.

But the firm said Thursday that first-quarter earnings fell less than analysts expected. Net income declined 4.5 percent to $147 million, or 66 cents a share, from $154 million, or 63 cents, a year earlier. Earnings per share came in 8 cents ahead of the 58 cents anticipated and traders pushed the stock up 4.7 percent to $52.03. Sales for the three months ended May 4 slipped 1 percent to $4.2 billion from $4.24 billion.

At the meeting, Mansell said Kohl’s put a new leadership team in place across many areas of the company in 2012, which was the 50th anniversary of Kohl’s founding.

“It is as much change as we ever had in my time at Kohl’s,” Mansell said.

“We entered 2013 as a smarter, more focused organization,” he said. “We will own savings. We will focus on moms. We will increase her confidence in Kohl’s.”

In a conference call with analysts earlier Thursday, Mansell said the company was “very pleased” with results of a loyalty program it’s been testing in 100 stores. Kohl’s expanded the program to Texas this year.

Mansell attributed the 1.9 percent drop in same-store sales in the first quarter to cold weather, which slowed sales of seasonal merchandise. The ceo said he saw evidence of pent-up demand for warm weather items in April.

Mansell also noted the company was investing in information technology to offer customers a full multichannel shopping experience. Kohl’s is working to increase the number of stores that are capable of shipping online orders directly to customers. Shipping from stores reduces costs and delivery time, the ceo said.

A shareholder proposal seeking a policy on animal cruelty related to the sale of animal fur was soundly defeated. The proposal, from the Humane Society of the United States, received only 3 percent of votes.

P.J. Smith, corporate outreach manager for the Humane Society, said that hundreds of brands, retailers and designers have committed to the anticruelty fur policy.

“Only Kohl’s has zero interest in discussing what the industry is doing,” Smith said. “Attending a shareholders’ meeting like this is always a last resort for us.”

A shareholder at the meeting asked how many malls it shares with J.C. Penney Co. Inc., a competitor with widely reported troubles over the past year.

“We’re only in about 80 malls, and Penney’s is in most of them,” Mansell answered.

“Are Penney’s customers coming over to Kohl’s?” the shareholder asked.

“Yes,” replied Mansell.