Investor support for Target Chairman Brian Cornell hits record low

target has promised investors that it is pursuing an aggressive turnaround under the direction of a new CEO, but longtime former chief executive Brian Cornell still leads the retailer’s board, suggesting some big investors want a change.

Shareholder support for Mr. Cornell, Target’s former CEO and current executive chairman, fell to an all-time low at the company’s annual shareholder meeting this month.

Mr. Cornell, 67, was successfully re-elected to Target’s board, but his approval ratings have fallen the most since he joined the retailer’s board and became CEO more than a decade ago.

Overall, 87.2% of shareholders voted to re-elect him to the board. This is down 4% from the same period a year ago and significantly down from his historical average approval rating of 95%. This is also well below the average level of support received by directors worldwide. S&P500 This year, it’s 96.6%, according to Harvard Law.

“More than 95% is normal. Anything less than 95% is bad, anything less than 90% is very bad. It means people go out of their way to say they don’t want you there anymore,” said Kevin Kaiser, an adjunct professor of finance at the Wharton School at the University of Pennsylvania who teaches a course on shareholder activism.

Given the number of large voting firms and investors who automatically approve anything a board proposes to vote, “any result below 90 is considered a very bad result” and is rarely seen, Kaiser said.

Mr. Cornell’s decline in approval ratings came after he stepped down as CEO and transitioned to Target’s executive chairman in February as the company faced declining profits, a declining stock price and a third consecutive year of declining annual sales.

Neil Saunders, retail analyst and global data managing director, said some analysts and investors see Mr. Cornell’s appointment as executive chairman as a “reward for failure” and want a complete departure from the management team that has overseen many of Target’s problems.

“If you don’t do a good job as CEO, you should probably be kicked off the board, and I think most people think that,” Sanders said. “I don’t think it’s unreasonable. Many people don’t like the idea of ​​causing stock prices to fall and getting paid to cause problems for the company.”

A spokesperson for Target declined to comment, instead referring CNBC to a press release announcing CNBC’s 2026 proxy statement and annual meeting voting results. In its proxy statement, the company said the roles of chairman of the board and CEO are “appropriate given the company’s immediate strategic and operational priorities” as they have “defined roles and responsibilities.”

“The separate structure allows[CEO Michael Fidelke]to focus on the business, including implementing key initiatives, during the early stages 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 period,” the statement said.

Since joining Target as the retailer’s CEO in 2014, Cornell has helped transform the company into a more than $100 billion behemoth, increasing sales by more than 44% while overseeing the expansion of its digital presence, expanding stores and steering the company through the COVID-19 pandemic.

But in recent years, he has faced growing criticism as the company’s performance has fallen short of expectations and it has lost market share to competitors, including: costco, walmart and Amazon. Target has been criticized for mismanaging its inventory, underinvesting in its stores and for being slow to introduce the trendy, eye-catching products that made the retailer a name.

Target has also been the subject of backlash for its actions on a number of social justice issues, with the brunt of that falling on Cornell University. Several summers ago, the company reduced certain LGBTQ-themed Pride products in its stores and rolled back its diversity, equity and inclusion programs, leading to a national boycott and weeks of declining customer traffic.

Adding these issues together, Target’s stock price has plummeted, and while it’s up about 33% since the beginning of the year, it’s still down about 50% from its all-time high in 2021.

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

On the same day that the company announced that it expected annual sales to decline further, it announced that two insiders would continue to lead the company: Mr. Cornell as chairman of the board and Mr. Fidelke, a company veteran, as chief executive officer, disappointing investors and sending the stock price lower. But since then, analysts and investors appear to have warmed to Fidelke, who won 99% of the votes at the general meeting.

“It feels like we’re improving a lot of things on the merchandising side,” 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 Fidelke.”

During the company’s fiscal first quarter, which ended May 2, Target’s same-store sales increased 5.6%, the first time in five quarters that same-store sales were positive, with all six core product categories performing well. Target said its turnaround efforts are showing early signs of progress, but Treasurer James Lee acknowledged that higher tax refunds helped boost spending, and he expects the effect to wear off by the end of the year.

The exact investors who voted against Mr. Cornell and why are not clear because the complete voting record has not yet been made public, but the managers of two of the nation’s largest public pension funds voted against Mr. Cornell.

The Florida Board of Supervisors, which manages the Florida Retirement System Pension Plan, the nation’s sixth-largest pension system with about $277 billion in assets under management, voted against Cornell despite supporting him for the past nine years, proxy records show.

The fund manager did not respond to CNBC’s request for comment, but voting records show the fund voted against Cornell University, citing “deteriorating long-term corporate performance.”

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

“Cornell University should not be rewarded for poor performance,” State Auditor Thomas DiNapoli said in a statement to CNBC.

“Investors are not backing Target’s management because they have mismanaged their employees, damaged their brand, and hurt shareholder value,” DiNapoli said. “That’s why New York state pension funds and other shareholders voted against the board and Target’s executive compensation plan.”

Pension funds, while influential, are not among Target’s top 50 shareholders. It is not clear how Target’s large investors voted at the meeting.

A number of left-wing activists, including SOC Investment Group, Trillium Asset Management and Marcy Investment Services, called on investors to vote against Cornell University. Activists are also calling on investors to vote against lead independent director Christine Leahy, who received 88.5% of the vote at the most recent meeting, down 8% from last year.

“Let’s say someone has been criticized and it’s hurting their reputation with customers and employees. The solution is to promote that person to an executive chair role at the board level,” Wharton’s Kaiser said. “That doesn’t smell right at all. The lead independent director should have had the main role in preventing that from happening.”

In its shareholder proxy statement, Target described Ms. Leahy as a strong director “supported by a governance structure designed to further promote independence” and encouraged shareholders to vote in her favor.

It’s unclear whether investor pressure will affect the target’s board, but Kaiser said that level of change typically occurs when a board sees such a dramatic drop in support during an annual meeting.

“This means there’s a lot of pressure on boards and board members right now, and they’re clearly losing shareholder support,” Kaiser said. “If we don’t do something, the next (annual meeting) will not go well.”