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Kohl’s Bucks Investor Pressure, Keeps Current Board in Place as Sale Talks Continue

Kohl's shareholders reelect the retailer's existing board despite the efforts of activist investor Macellum.

Kohl’s shareholders voted to re-elect all 13 of its current Board Directors on May 11 despite prolonged efforts by activist investor Macellum Advisors, which has been pushing for a shakeup of the Kohl’s Board.

In February, Macellum nominated 10 directors, including its CEO Jonathan Duskin, arguing that the company has underperformed in recent years compared with other retailers and needed a total leadership overhaul.

A year earlier, in April 2021, Kohl’s acceded to pressure from a group of investors that included Macellum and named three new directors to its Board. This trio included two of the investor group’s nominees alongside a director selected by Kohl’s. However, the company pushed back when Macellum renewed its efforts for a total overhaul of the Board earlier this year, saying in a letter to shareholders that the efforts were “unjustified and unwarranted and highly concerning given Macellum’s intentions to engineer short-term financial actions that could damage the long-term future of the company.”

While Kohl’s is putting the reelection of its current Board in the “win” column, Macellum doesn’t seem to see it that way: “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 run the risk of disrupting the process,” Duskin told CNBC.

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Kohl’s CEO Michelle Gass confirmed in March that the company has engaged with “roughly 20” parties interested in buying its business. After rejecting a takeover offer from Sycamore Partners and Acacia Research earlier in 2022 on the grounds that the bid undervalued the company, Kohl’s engaged Goldman Sachs to field additional bids.

Among the companies reportedly making overtures to buy Kohl’s are: Simon Property Group and Brookfield Asset Management (joint owners of JCPenney); Hudson’s Bay Company (HBC); and a new offer from Sycamore (which has stakes in a number of retailers including StaplesExpress and Belk).

“While we have had differences with Macellum, this Board is committed to serving the interests of all our shareholders,” said Peter Boneparth, Chairman of the Kohl’s Board in a statement following the shareholder vote. “The Board remains focused on running a robust and intentional review of strategic alternatives while executing our strategy to drive shareholder value.”

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