In the wake of its massive data breach and amid other ongoing challenges, Target Corporation fired its chief executive and has made other substantial changes to its leadership team.
But what about the company’s board of directors, which remains intact?
That’s the question posed by Twin Cities Business’ Editor In Chief Dale Kurschner in his latest editor’s note. And it’s also a topic that generated headlines on Wednesday, after a proxy advisor recommended that shareholders oust seven of Target’s 10 board members during their annual meeting next month.
Kurschner pointed out that, in years past, Target’s board included business greats such as Bill George, former chair and CEO of Medtronic, and Warren Staley, former chair and CEO of Cargill, but they had been replaced by the time recently ousted CEO Gregg Steinhafel took over. Steinhafel, in his capacity as chairman, had the power to suggest changes to the board’s composition, which could’ve benefited shareholders, customers, and other stakeholders. But he made few changes to the board he inherited, and Target defeated a proxy battle aimed in part at overhauling the company’s board.
Kurschner detailed the board makeups of other major retailers, including Best Buy and Lululemon Athletica, noting a major concentration of directors with experience leading and/or starting businesses in the restaurant or retail space. (Read the full editor’s note column here.)
Now, it appears Target is under increased pressure to overhaul its board. Proxy advisor Institutional Shareholder Services (ISS) stated that many of Target’s directors failed to protect the company against the massive data breach, according to reports by the Star Tribune, Wall Street Journal, and others.
ISS said that members of Target’s audit and corporate responsibility committees should be ousted because risk assessment and oversight of reputational risk were among their responsibilities, the Star Tribune reported.
“ISS believes that in light of the company’s significant exposure to customer credit card information and online retailing, these committees should have been aware of, and more closely monitoring, the possibility of theft of sensitive information, especially since it involves shoppers and the communities in which the company operates, as well as the overall impact on brand reputation and brand value,” ISS reportedly said.
Minneapolis-based Target said in a statement published by the Star Tribune that its board sees risk oversight as a “full board responsibility” and said it had been among the “best-in-class” within the retail industry, having made “significant” data security investments. Target also said its board is “re-examining the entire risk oversight structure, including senior management roles and reporting structures, as well as board oversight.”
ISS reportedly described Target's recent changes to its executive team as “largely reactionary in nature.” It recommended that shareholders vote against Target’s interim board chairwoman Roxanne Austin, who leads the company’s audit committee, as well as Calvin Darden, Henrique De Castro, James Johnson, Mary Minnick, Anne Mulcahy, and Derica Rice.
Conversely, ISS recommended the election of Douglas Baker, Jr., Kenneth Salazar, and John Stumpf. It also recommended a yes vote on a shareholder proposal to have an independent chairman. Learn more about Target's current board members on the company's website.
And read more in the Star Tribune about the ISS report, as well as additional comments from Target, here.