RiskMetrics said yesterday it is backing hedge-fund investor William Ackman and former Starbucks Chief Executive James Donald to join Target’s board, bringing Ackman one step closer to at least a partial victory in his proxy battle with the retailer. This is the first advisory firm to endorse Ackman to Target’s board.
The advisory firm said Ackman’s other three nominees, who have expertise in corporate governance, credit cards and real estate, respectively, shouldn’t be elected because Ackman himself has some knowledge in all three of those areas (we disagree because knowledge does not equate expertise).
Target hasn’t approved what’s called a “universal proxy card,” so RiskMetrics said it couldn’t support any specific Target incumbents. If it were able to, the firm said it would recommend re-electing incumbent Mary N. Dillon, a McDonald’s marketing executive, and voting against incumbents George W. Tamke, partner at private-equity firm Clayton, Dubilier, and Solomon D. Trujillo, chief executive of Australian telecom company Telstra Corp.
Because the two slates are on separate proxy cards, shareholders have to attend Target’s May 28 shareholder meeting in order to pick and choose among the company’s and Ackman’s nominees. If they don’t attend, they can only select from Target’s white proxy card, or Ackman’s gold card.
Previously, Proxy Governance said it was supporting two of Ackman’s nominees, Donald and real-estate industry veteran Michael Ashner. Egan-Jones backs none of Ackman’s nominees but says holders should withhold votes for two of Target’s incumbents.
Previously, we wrote an article questioning the objectivity of these advisory firms, as their recommendations may be in conflict with what their revenue-generating clients (mostly institutional investors) would like to see recommended. Therefore, we do not put much weigh on these recommendations.
Lastly, we found a short article titled “You Shouldn’t Need Proxy Advisers”, written by CNBC’s David Faber where he makes the case against proxy advisory firms. At Valuehuntr, we agree with Mr.Faber’s general sentiment: “While I dutifully report their conclusions, my own conclusion … is that these firms should not exist in the first place.”