Target to shareholders: Take the blue pill

Target is hosting its annual shareholder meeting today and faces a pretty contentious fight from a major shareholder. William Ackman wants to shake things up and has nominated five independent candidates to the board of directors, including himself.

Ackman isn't exactly an everyman. He runs Pershing Square Capital Management, a hedge fund that controls nearly 8% of Target's stock. Ackman is pushing for change in the retailer's merchandising strategy to include more low priced items and food, but if successful today, he could change the size, composition and oversight of the board of directors.

I love activist shareholders. If there had been more of them or they were louder, we might have avoided some of the problems plaguing the economy today. Unfortunately the odds are stacked pretty high against Ackman and his ilk.

First off, Target management has not engaged in the conversation at all, beyond telling shareholders to "vote the white card." Meaning, they should just cast their votes for whomever the current board recommends. That's akin to saying, "don't worry your pretty little heads about anything. Just do as we tell you."

Target hasn't historically been very open to criticism, by anyone. In fact, at the shareholder meeting in 2003, management refused to take any questions from those in attendance. None. That meeting lasted something like 12 minutes.

To be fair, most of the questions are along the lines of "You used to sell olive green sweatpants. Why were they discontinued and can you bring them back?" But so what? I'm with Warren Buffet on this. If someone is good enough or brave enough to invest their money in a company, they've earned the right to stand at a microphone and ask about the growth plan. And management has an obligation to listen and answer.

This meeting is likely to take longer that 12 minutes, but how many with voting rights are making the trek to Waukesha, Wis.? Because when making important decisions about the future of a publicly traded, multi-billion dollar corporation the construction site of a future discount store is the logical place to hold a meeting. Instead of say, the corporate headquarters or a nearby facility.

Moving a meeting site to a different state is just one more thing companies do to insulate themselves from the very people who own the stock and might want to participate in its governance.

There are going to be a lot of these shareholder tussles this year, it's just difficult to imagine real change given the resistance from those in power.
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