Until recently, Bill Ackman welcomed the media limelight as he forged a proxy fight against the board of retail giant Target. However, after his efforts failed this summer, Ackman told Pershing investors in a letter that he plans to take cover, “until such a time as an investment opportunity requires us to work more closely with the press…hopefully many moons from now.”
Ackman launched a proxy battle against Target last spring after it rejected Pershing’s proposal to convert Target owned land into a publicly traded real estate trust. “He wanted to monetize Target’s assets,” says Leon Nicholas, director of retail insight at consultancy MVI. “He wanted to treat them like pieces on a chess board.”
Other shareholder groups did not join in the fight despite a recommendation from RiskMetrics that shareholders vote onto the board two of the dissident slate of five: Ackman and Jim Donald. No candidate received more than 25 percent of the vote.
“This proxy fight was flawed from the beginning,” says Charles Elson, professor at University of Delaware’s Lerner College of Business and Economics. “He happened to pick the wrong company at the wrong time.” Like many companies, Target has struggled because of the unsteady economy. However, the governance and profit issues usually associated with lengthy proxy battles are not apparent in this case. “Why take a gamble on a company like Target?” asks Elson. “Ackman needed a stronger track record to gain the support needed to overthrow an incumbent board…Target didn’t fit the bill.”