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Target Corp.’s directors have voted to declassify its board structure, which, subject to approval by 75 percent of shareholders at its 2010 annual meeting, would reduce directors’ terms to one year from three. If the amendments are approved, nominees for the class of directors whose terms expire at the 2010 meeting will be elected for one-year terms, and beginning with the 2011 shareholders’ meeting, all director nominees will be elected for one-year terms.
Companies have increasingly abandoned staggered terms for board members, which corporate governance experts say insulate directors from dissatisfied shareholders.
“The changes we’re announcing today are being made in response to shareholder feedback as well as trends in prevailing market practices,” according to a spokesman for the Minneapolis-based retailer.
The move comes in the wake of a costly high-profile proxy battle the company waged earlier this year with a dissident investor, William Ackman, who heads up New York-based Pershing Square Capital Management, LP. Ackman and a group of allies ran for election to the board, contending that many of the company’s existing directors lacked experience relevant to the retailer’s operations and had served too long.
Ackman was quoted in press reports as saying that he welcomed the news, which he termed “a very positive development for Target shareholders as the company takes a step to meaningfully improve its corporate governance."
Target’s board also voted to require 90 days’ advance notice of any shareholder nominations for the board, up from 60 days’ notice, and to require additional information regarding the proponent’s economic holdings in Target, including interests in derivative securities. In addition, Target’s board approved changes to the company bylaws that permit the annual meeting of shareholders to be held in June. The change in the timing of this meeting, which take effect at the beginning of 2010, accommodates board member attendance at the annual shareholders’ meeting.
Target operates 1,719 Target stores in 49 states.