UNIONS WANT TO SEE KMART UP FOR SALE
Byline: Carol Emert
WASHINGTON — UNITE and the Teamsters union are asking Kmart shareholders to press the retailer to consider putting itself on the block.
“Kmart should explore the sale or merger of the company, or another extraordinary initiative, because it continues to lose market share and its long-term competitive prospects seem poor,” said a proxy statement filed with the Securities and Exchange Commission by the newly formed Kmart Independent Shareholders Committee.
The committee is the creation of UNITE (Union of Needletrades, Industrial and Textile Employees), whose pension fund owns 20,000 Kmart shares, and the International Brotherhood of Teamsters, whose pension fund owns 500,000 Kmart shares. Kmart stock has lost 67 percent of its value since 1992, diving from $28.12 per share to $9.25 on March 25, 1996, the proxy said.
On Wednesday, Kmart stock closed at 9, up 1/8 on the New York Stock Exchange. Kmart has about 465 million shares outstanding.
Bill Burton, Kmart’s director of investor relations, said that “there are a number of factual errors in the proxy and we’re putting together a response to those,” which will be released today or Friday.
The proxy asks Kmart’s board to study all options for increasing shareholder value and to release a report on the matter to shareholders within six months after the company’s annual shareholders meeting May 21.
The proxy, which will be voted on at the meeting, also nominates Stephen Hester, a Washington lawyer, to replace Gloria Shatto, president of Berry College, Rome, Ga., to Kmart’s board of directors.
Hester, 59, is a turnaround specialist who has represented both labor and corporations while a partner at the law firm Arnold & Porter and in his current job as general counsel and principal of American Capital Strategies Ltd., Bethesda, Md.
In a telephone interview Wednesday, Hester said he would push for improved service at Kmart stores. “I’ve visited several stores lately and the service at Kmart is good, but unfortunately the service at Wal-Mart is really outstanding,” he said.
Improving customer service is a step that can be taken at little cost to the company, unlike renovating stores or overhauling inventory, said Hester, who purchased 1,000 Kmart shares last month.