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Kohl’s Shakes Up Board in Settling Activist Battle

Kohl’s has reached an agreement with activist investors that were attempting to foment change at the retail chain.

The settlement means the investor group will essentially back down for 30 days before nominations are due for Kohl’s annual shareholder meeting next year. And as part of the truce, former Lululemon CEO Christine Day is slated to become a board member.

Day joins Margaret Jenkins and Thomas Kingsbury as new independent directors at the close of the retailer’s 2021 annual shareholders’ meeting. Jenkins has extensive management experience in the food and hospitality industries, including stints with PepsiCo, Denny’s and Taco Bell, in addition to serving on the boards of apparel retailer Citi Trends Inc. and apparel manufacturer PVH Corp. Kingsbury is a retail veteran who was the former president and CEO of Burlington Stores Inc. and served as its chair, and has also held leadership positions at Kohl’s and The May Department Stores Co.

The activist group led by Macellum Advisors GP, LLC, and including Ancora Holdings Inc., Legion Partners Asset Management LLC and 4010 Capital LLC, had nominated Jenkins and Kingsbury.

Day was identified by Kohl’s as a director candidate as part of the board shakeup and was approved by the activists, Kohl’s said on Wednesday.

“I look forward to working with our newly expanded board to further advance our transformative strategy and deliver results for shareholders. Amidst ongoing industry disruption and evolving consumer trends, we are uniquely positioned to build on our momentum and accelerate growth and profitability,” said Kohl’s CEO Michelle Gass.

As part of the settlement, the activists will not be submitting their White proxy cards, and instead will encourage eligible stockholders to submit the Blue proxy card in support of Kohl’s nominees. Any White proxy cards already submitted will be disregarded.

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Many activist battles typically end in some form of a settlement, and it’s really the best solution that helps both sides. It gives the challenging investors a seat at the table where they can offer input on the direction of the company, which is what they wanted in the first place. And the targeted company gets to put a major, and often times costly, headache behind it so it can get back to the business of running the corporation without any distractions. And a board shakeup can usually yield new and beneficial viewpoints.

Former Lululemon CEO Christine Day joins Kohl's board of directors after activist investors called for change.
Former Lululemon CEO Christine Day WWD

“These new directors are all proven leaders in retail who will add valuable expertise to the Board. We are pleased to have been able to reach this constructive resolution with the Company, and we are confident these changes will help further our shared goal of creating long-term value for shareholders. We are excited for the future at Kohl’s,” the investor group said in a statement.

The agreement also included another change—the board’s existing ad hoc finance committee will instead become a standing finance committee, which Kingsbury will join. The committee will assist the board with managing capital allocations for Kohl’s.

Board director Steve Burd will retire at the end of August, and current chairman Frank Sica will retire following the close of the 2022 annual meeting.

“We are pleased to further strengthen our board with the addition of Christine, Margaret and Tom as part of our continued refreshment process,” Sica said. “Today’s agreement reflects our board’s ongoing dialogue with our shareholders and our commitment to maximizing long-term value for all stakeholders. We welcome the new directors and look forward to their perspectives as we continue to execute Kohl’s growth strategy.”

Kohl’s also agreed to expand its existing share repurchase program to $2 billion.