Investor support for Target chairman Brian Cornell hits record low
Brian Cornell is Chief Executive Officer of Target Corporation.
Anjali Sundaram | CNBC
Aim has promised investors it will pursue an aggressive transformation with a new CEO at the helm, but its former top executive Brian Cornell still leads the retailer’s board and some major investors have signaled they are hungry for change.
Shareholder support for Target’s former CEO and current Chief Executive Cornell fell to its lowest level ever at the company’s annual general meeting this month.
While Cornell, 67, was comfortably re-elected to his position on Target’s board, the retailer, where he was hired as CEO more than a decade ago, has seen the biggest drop in support since he joined the board.
In total, 87.2% of shareholders voted for his re-election to the board; This represents a 4% decline from the previous year and a significant drop from its historical average support of 95%. This is also well below the average level of support managers receive globally. S&P 500 Which year is it? Harvard Law It goes up to 96.6%.
“Going above 95% is OK. Getting below 95% is bad, getting below 90 is very bad. That means people are doing their best to say they don’t want you there anymore,” said Kevin Kaiser, an assistant finance professor at the University of Pennsylvania’s Wharton School who teaches shareholder activism.
Given how many investors automatically approve of what major proxy firms or boards recommend they vote on, “anything below 90 is considered a very bad outcome” and is rare, Kaiser said.
The decline in Cornell’s support comes after he stepped down as CEO and became executive chairman of Target in February, as the company struggled with declining profits, falling stock prices and three consecutive years of annual sales declines.
Retail analyst and GlobalData chief executive Neil Saunders said some analysts and investors viewed Cornell’s appointment as chairman of the board as a “reward for failure” and wanted a clean break from the management team that has overseen many of Target’s problems.
“If you’re not doing a good job as CEO, you should probably be removed from the boardroom, and I think that’s how most people see it,” Saunders said. “I don’t think it’s unreasonable. A lot of people don’t like being rewarded for causing problems for the company by causing a drop in share prices.”
A spokesperson for Target declined to comment, instead referring to CNBC’s 2026 proxy statement and a press release announcing the voting results of its annual general meeting. The company said in its proxy statement that keeping the chairman and CEO roles separate was “appropriate given the company’s immediate strategic and operational priorities” because the positions have “distinct roles and responsibilities.”
“Separated structure allows [CEO Michael Fiddelke] “His focus on the business, including the implementation of key initiatives during the first phase of his CEO tenure, while Mr. Cornell’s service as Chief Executive Officer allows the Board to continue to benefit from his in-depth knowledge of our business and industry during this transition phase,” the statement reads.
Criticizing Cornell
Since joining Target as the retailer’s CEO in 2014, Cornell has increased sales by more than 44% and helped grow it into a $100 billion-plus sales behemoth by overseeing the expansion of its digital presence, growing stores and guiding the company through the Covid-19 pandemic.
However, over the past few years, the company has faced increasing criticism for underperforming expectations and losing share to rivals. costco, Walmart And Amazon. Target has been criticized for mismanaging inventory, underinvesting in stores and falling short of the trendy, eye-catching products on which the retailer has built its name.
Target has also faced backlash for its actions on a number of social justice issues, with Cornell bearing the brunt of that. The retailer reduced some LGBTQ-themed pride products in stores and rolled back its diversity, equity and inclusion programs a few summers ago; This led to nationwide boycotts and a decline in foot traffic for weeks.
Combined, these problems contributed to a rapid decline in Target’s stock price; This price is up about 33% year to date but is still down about 50% since its 2021 all-time high.
When the company announced that Cornell would step down as CEO at the beginning of this year, Wall Street preferred an outside candidate to replace him, according to a survey of 51 investors conducted by equity research firm Mizuho Securities in June.
On the same day the company predicted another decline in annual sales, investors were disappointed when two insiders (Cornell’s executive chairman and company veteran Fiddelke’s CEO) said they would continue to lead the company, causing shares to tumble. But since then, analysts and investors seem to have warmed to Fiddelke, who received 99% of the votes at the company’s meeting.
“It feels like they’re doing a lot of things better from a sales standpoint,” Michael Baker, senior research analyst at investment bank DA Davidson, said in an interview. “To me, this would be a sign of continued progress under Michael Fiddelke.”
In the first quarter of the company’s fiscal year ending May 2, Target saw comparable sales increase 5.6%; This was the first positive same-store sales figure in five quarters and was strong across all six core retail categories. While Target said its turnaround efforts were showing early signs of progress, finance chief James Lee acknowledged that higher rebates helped boost spending and he expects that advantage to fade over the rest of the year.
Lose shareholder support
There’s a sign at the entrance of a Target in Venice, Florida.
Erik McGregor | Light Rocket | Getty Images
Investors who voted against Cornell and their reasons are unclear because full voting records have not yet been released, but two of the nation’s largest public pension fund managers opposed Cornell.
The Florida State Board of Governors, which governs the Florida Retirement System Pension Plan, the sixth-largest retirement plan in the nation with nearly $277 billion in assets under management, voted against Cornell after supporting him for the past nine years.
The fund manager did not respond to CNBC’s request for comment, but voting records show it voted against Cornell due to “poor long-term company performance.”
The New York comptroller, who oversees the $295 billion New York State Common Retirement Fund, supported Cornell from 2017 to 2024 but voted against him in the last two meetings, state records show.
“Cornell and others should not be rewarded for poor performance,” state Comptroller Thomas DiNapoli told CNBC.
“Investors do not support Target’s leadership because it has mismanaged the company’s workforce, damaged the brand, and harmed shareholder value,” DiNapoli said. he said. “That’s why New York state’s pension fund and other shareholders voted against board directors and Target’s executive compensation plan.”
Although influential, pension funds are not among Target’s 50 largest shareholders. It’s unclear how Target’s largest investors voted at the meeting.
A number of left-wing activists, including SOC Investment Group, Trillium Asset Management and Mercy Investment Services, have urged investors to vote against Cornell. Activists also urged investors to vote against lead independent director Christine Leahy, who received 88.5% of the vote at the last meeting, a drop of 8% from last year.
“Let’s say someone was criticized and it damaged our reputation with our customers and employees, and as a solution we appointed that person to a board-level executive position,” Wharton’s Kaiser said. “It doesn’t smell right, and the person who would have a primary role in preventing that from happening would be the lead independent director.”
In its proxy statement, Target described Leahy as a strong executive “supported by a management structure designed to further enhance independence” and recommended that shareholders vote in Leahy’s favor.
It’s unclear whether investor pressure will have an impact on Target’s board, but Kaiser said that level of change typically occurs when executives see such dramatic declines in support during annual meetings.
“That means there’s a lot of pressure on the board and the individuals on the board right now, and they’ve clearly lost the support of shareholders,” Kaiser said. “If they don’t do anything, the next [annual general meeting] It’s not going to go well for them.”
