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For Kohl’s, 2 Out of 3 Ain’t Bad

Kohl’s might be sailing into next week’s shareholders meeting with the wind at its back after the last big proxy advisory sided with the retailer’s 13 board nominees instead of activist investor Macellum Advisors‘ picks.

Glass Lewis’ opinion Tuesday comes after advisory rival Institutional Shareholder Services (ISS) said Kohl’s should install Macellum-nominated Jeffrey Kantor and Pamela Edwards on its board but stopped short of calling for a complete overhaul. Macellum and Glass Lewis didn’t respond to a request for comment.

In a statement, Kohl’s noted that Glass Lewis agreed not only that last year’s board refresh kept the retailer’s leadership current but also that the company is making the right moves to grow sales and profits. Kohl’s has said its strong balance sheet and steady margins don’t jive with Macellum’s demand for a big shakeup.

T. Rowe Price, a big-time institutional investor, also plans to back Kohl’s board nominees when the vote comes up on May 11.

Kohl’s went on to say that its board members have the right experience to steer the company forward.

Kohl’s is looking to sell itself and has talked to several interested bidders including Hudson’s Bay Co., a Leonard Green-led consortium that includes Authentic Brands Group, Sycamore Partners, Franchise Group and a possible joint bid from Simon Property Group and Brookfield Asset Management.

The retailer’s pointed to Glass Lewis’ warning that adding “dissident” nominees to its board could interfere with its ability to complete a sale. Citing to the Glass Lewis report, Kohl’s also highlighted the potential pitfalls of private equity meddling with its real estate.

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“Simply because a private equity buyer may be considering a sale-leaseback to partially finance a leveraged buyout does not necessarily mean that a sale-leaseback would be a prudent move for the Company on a standalone basis,” Glass Lewis said. “We also question how potential buyers of the Company would react to the Company pursuing a significant sale-leaseback, as such a move could result in the loss of a potential deal financing source in the context of a takeover proposal…To the best of our knowledge, [Macellum] has not highlighted any successful precedents where a retailer has undertaken sale-leasebacks on the scale [it] has proposed here.”

Last week, incoming chairman Peter Boneparth said Kohl’s has given some bidders access to 55,000-plus documents and is weighing its current plan against alternatives with an eye toward the “path that maximizes shareholder value.”

Meanwhile, Boneparth, who is standing for re-election to Kohl’s board, will be honored this year at the NACD Directorship 100 Gala on June 22 in Manhattan recognizing peer-nominated directors and governance professionals.

“The NACD Directorship 100 continues to honor those who have demonstrated exemplary board leadership and innovation in corporate governance,” Peter R. Gleason, NACD president and CEO, said. “We honor these individuals’ forward-thinking minds and their ability to lead their board and organizations to current and future success.”