Kohl’s shareholders vote to keep directors despite activist pressure

Kohl’s shareholders voted to reelect the company’s current slate of 13 board directors, as the retailer faced mounting pressure from activists for an overhaul, the company announced Wednesday.

The annual meeting of Kohl’s shareholders took place as activist firm Macellum Advisors has been pushing for Kohl’s to revamp its slate of directors, arguing that the company has underperformed in recent years compared with other retailers.

Macellum has argued that Kohl’s Chief Executive Officer Michelle Gass’s efforts, such as teaming up with beauty retailer Sephora or patterning with Amazon on a returns program, haven’t been enough.

In February, Macellum nominated 10 directors, including its Chief Executive Officer Jonathan Duskin. The activist has also been pushing for Kohl’s to sell itself and to sell some of its real estate and lease it back to tap into additional capital.

Kohl’s has been resistant to such sale-leaseback transactions, but the retailer did tap bankers at Goldman Sachs to evaluate bids. Kohl’s confirmed in March that it had received multiple preliminary buyout offers after rejecting a bid from Starboard-backed Acacia Research, at $64 per share, that was deemed to be too low. 

Kohl’s shares closed Tuesday at $49.39, compared with a 52-week high of $64.80. The stock was down more than 1% in early trade Wednesday.

Ahead of Wednesday’s vote, the major proxy advisory firms were split in their recommendations. Institutional Shareholder Services, or ISS, backed Macellum, while Glass Lewis said that shareholders would be best served by supporting Kohl’s current board.

This isn’t the first time Macellum has laid the pressure on Kohl’s, either. The two struck a deal in April of 2021 to add two directors from a slate that a group of activists, which included Macellum, was pushing for. Kohl’s also appointed one independent director, with the activists’ backing.

Kohl’s board “remains focused on running a robust and intentional review of strategic alternatives,” said Chairman Peter Boneparth.

“While we have had differences with Macellum, this board is committed to serving the interests of all our shareholders,” he said.

And while Macellum didn’t win the vote, the activist firm says it won’t be staying silent.

“I think the vote was a referendum on a sale, and people who voted for the company bought the narrative that any changes of the board in the middle of this process had ran the risk of disrupting the process,” Duskin told CNBC.

“The vote for the company was a vote for a sale of a business,” he said. “We aren’t going away.”

—CNBC’s Courtney Reagan contributed to this reporting.