Investor support for Target Chairman Brian Cornell hits record high

Target promised investors it would pursue an aggressive turnaround with a new CEO at the helm, but its former longtime top executive, Brian Cornell, still leads the retailer’s board — and some major investors are signaling they’re hungry for change.

Shareholder support for Target’s former CEO and current executive chairman Cornell fell to its lowest level ever at the company’s annual general meeting this month.

Although Cornell, 67, was comfortably re-elected to his position on Target’s board, he experienced the biggest drop in support since joining the retailer’s board more than a decade ago, when he was hired as CEO.

A total of 87.2% of shareholders voted for his re-election to the board, down 4% from last year and a significant drop from his historical average of 95% support. It’s also well below the average level of support administrators have received worldwide. S&P500 this year, which Harvard Law rates at 96.6%.

“Going above 95% is normal. Going below 95% is bad, and going below 90 is very bad. That means people are going out of their way to say they don’t want you there anymore,” said Kevin Kaiser, an assistant professor of finance at the Wharton School of the University of Pennsylvania, who teaches a course on shareholder activism.

Given how many investors automatically approve of what major voting companies or boards suggest voting for, “anything below 90 is considered a very bad result” and is rare to see, Kaiser said.

Cornell’s drop in support comes after he stepped down as CEO and became executive chairman of Target in February, as the company struggled with declining profits, a falling stock price and three straight years of declining annual sales.

Neil Saunders, a retail analyst and managing director at GlobalData, said some analysts and investors viewed Cornell’s appointment as executive chairman as a “reward for failure” and wanted a clean break from the management team that has overseen so many of Target’s problems.

“If you’re not doing a good job as a CEO, then you should probably be kicked out of the board room and I think that’s the way most people see it,” Saunders said. “I don’t think it’s unreasonable. To be rewarded for causing a drop in the stock price and causing problems for the company, that just doesn’t sit well with a lot of people.”

A Target spokesperson declined to comment and instead referred CNBC to its 2026 proxy statement and a press release it issued announcing the results of its annual general meeting vote. In its proxy statement, the company said keeping the roles of chairman and CEO separate “is appropriate given the Company’s immediate strategic and operational priorities” because the positions have “distinct roles and responsibilities.”

“The separate structure allows [CEO Michael Fiddelke] “to focus on the business, including the implementation of key initiatives, during the initial phase of his tenure as CEO, while Mr. Cornell’s service as Executive Chairman allows the Board to continue to leverage his deep knowledge of our business and industry during this transition phase,” the release said.

Since joining Target as the retailer’s CEO in 2014, Cornell has grown its sales by more than 44% and helped transform it into a more than $100 billion juggernaut by overseeing the expansion of its digital presence, growing its stores and leading the company through the Covid-19 pandemic.

But in recent years, it has faced growing criticism as the company has underperformed expectations and lost share to rivals like Costco, Walmart And Amazon. Target has been criticized for poor inventory management, underinvestment in stores and falling behind on the trendy, eye-catching products the retailer has built its reputation on.

Target has also faced backlash for its actions on a number of social justice issues, and the brunt of that backlash has fallen on Cornell. The retailer reduced some LGBTQ-themed pride products in stores several summers ago and rolled back its diversity, equity and inclusion programs, leading to nationwide boycotts and preceding weeks of declining foot traffic.

Together, these issues have contributed to a precipitous drop in Target’s stock price, which is up about 33% year to date but still down about 50% from its 2021 all-time high.

When the company announced that Cornell would step down as CEO earlier this year, Wall Street favored an outside candidate to replace him, according to a June survey of 51 investors by Mizuho Securities, an equity research firm.

When he said two insiders would continue to run the company — Cornell as executive chairman and Fiddelke, a company veteran as CEO — on the same day he predicted another decline in annual sales, investors were disappointed, sending shares tumbling. But since then, it seems that analysts and investors are getting used to Fiddelke, who received 99% of the votes at the company’s general meeting.

“It feels like they’re doing a lot better in terms of merchandising,” Michael Baker, senior research analyst at investment bank DA Davidson, said in an interview. “To me, that would be a sign of continued progress under Michael Fiddelke.”

During the company’s fiscal first quarter, which ended May 2, Target saw comparable sales increase 5.6% – its first positive same-store sales number in five quarters, with strength across its six major merchandising categories. While Target said its turnaround efforts were showing early signs of progress, Chief Financial Officer James Lee acknowledged that higher tax refunds helped fuel spending, a benefit that is expected to fade over the rest of the year.

The exact investors who voted against Cornell, and their reasons, are unclear since full voting records have not yet been released, but two of the nation’s largest public pension fund managers turned against him.

The Florida State Board of Trustees, which manages the Florida Retirement System Pension Plan, the nation’s sixth-largest pension plan with about $277 billion in assets under management, voted against Cornell after supporting it for the past nine years, according to proxy documents.

The fund manager did not respond to CNBC’s request for comment, but voting records show he voted against Cornell due to the company’s “poor long-term performance.”

The New York State comptroller, who manages the $295 billion New York State Common Retirement Fund, supported Cornell from 2017 to 2024 but voted against him in the last two meetings, according to state records.

In a statement to CNBC, State Comptroller Thomas DiNapoli said “Cornell and others should not be rewarded for poor performance.”

“Investors do not support Target’s leadership because it has mismanaged the company’s staff, harmed the brand and damaged shareholder value,” DiNapoli said. “This is why the New York State Pension Fund and other shareholders voted against Target’s directors and executive compensation plan.”

Although influential, pension funds are not among Target’s top 50 shareholders. It’s unclear how Target’s largest investors voted at the meeting.

A number of left-wing activists – including SOC Investment Group, Trillium Asset Management and Mercy Investment Services – have called on investors to vote against Cornell. Campaigners also urged investors to vote against independent director Christine Leahy, who received 88.5% of the vote at the last meeting, down 8% from last year.

“Suppose someone is criticized and it damages our reputation with our customers and employees. To resolve that, we promote that person to executive chairman of the board,” Wharton’s Kaiser said. “It just doesn’t smell right, and the person who would have had the lead role in preventing this from happening would have been the lead independent board member.”

In its proxy statement, Target called Leahy a strong director “supported by a governance structure designed to further promote independence” and recommended shareholders vote in favor of her.

It’s unclear whether or not investor pressure will have an impact on Target’s board, but Kaiser said change at this level typically occurs when directors see such dramatic drops in support at annual meetings.

“This means that there is now a lot of pressure on the board and on the board members and they are clearly losing shareholder support,” Kaiser said. “If they don’t do anything, the next one [annual general meeting] It won’t go well for them. »