DALLAS — Target Corp. shareholders are sticking by their board.
Despite a call last month from advisory firm Institutional Shareholder Services to oust seven of the company’s 10 directors, the full board was reelected at the company’s annual meeting in Dallas Wednesday. Shareholders also voted down a proposal requesting the board have an independent chairman and approved a proposal to revise compensation packages.
While Target officials were no doubt heartened by the shareholder support, they acknowledged that the company fell well short of financial expectations last year, endured losses from the opening of 124 stores in Canada, and suffered a massive data breach that rattled consumer confidence during the critical holiday season.
Roxanne Austin, interim non-executive chairman, and John Mulligan, interim president and chief executive officer and chief financial officer, promised to do better.
Target is charging ahead with a long to-do list while it searches for a permanent ceo following Gregg Steinhafel’s departure last month.
The company’s three-point strategy calls first for ramping up traffic and sales in the U.S. by introducing more innovative merchandise and “irresistible” offers and promotions, Mulligan said. The company is developing smaller, more flexible brick-and-mortar formats and equipping stores with “category experts” to advise shoppers, especially in beauty, electronics and baby departments.
Improving the Canadian operations is also key, he said, adding that executives are “thinking broadly” about all aspects of that business. Target has tweaked its Canadian management team and laid out plans for a new non-executive chairman who will take on an advisory role in the business.
“Our third priority is to accelerate our digital transformation and become a leading omnichannel retailer,” Mulligan said. “We are testing and iterating more concepts and continuing to shift our investments away from square-footage growth into technology and supply-chain capabilities to make our digital and physical aspects work harder together.”
By way of example, Mulligan pointed to Target’s new mobile app, “Cartwheel,” and the appointment of a digital advisory council of technology leaders.
Target has also hired an independent security expert to conduct an “end-to-end review” of its network security, accelerated its transition to chip and PIN technology and is reexamining its entire risk oversight structure, Austin pointed out. The company has made a number of personnel changes in the information technology area and on Tuesday named Brad Maiorino senior vice president and chief information security officer.
“We are going to set the bar high,” Austin said. “We strive to be not just the best in retail, but to be among the best, period.”
The company expects that all of its stores will be equipped with chip-card readers by September.
“We have the team, the capital and the plan we need to continue transforming Target to succeed for many years to come,” Mulligan said. “We have a world-class brand and reputation, a strong network of newly built and remodeled stores across the U.S. and Canada, a rapidly growing online and mobile business supported by an efficient supply-chain network, and strong partnerships with leading national brands combined with a set of powerful owned and exclusive brands that benefit from our design and sourcing capabilities.” Target declared a quarterly dividend of 52 cents. That’s up from 43 cents in each of the last four quarters and marks the company’s 43rd consecutive annual dividend increase.
Mulligan adopted an open, friendly approach before the meeting, strolling among the gathering shareholders and media and thanking them for coming. The audience of about 100 people included a small army wearing Target red shirts and jackets.
Shareholders generally went easy on company executives at the meeting.
The exception was one investor who criticized executive compensation as far too generous — including Steinhafel’s $12 million-plus compensation package last year. But Austin had already explained that Target had realigned pay and performance in response to shareholder feedback.
During the question-and-answer session, one investor heaped praise on Target’s management for “coming out right away” about the data breach. The second and final commentator asserted that dumping the board would have been a “knee-jerk reaction” and offered to send everyone present a copy of “American Icon” by Alan Mulally as a primer on corporate improvement.
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