Dive Brief:
- Kohl’s board member Christine Day’s recent resignation was due to disagreements with the company, according to a Friday 8K filing with the U.S. Securities and Exchange Commission.
- This contradicts a Wednesday 8K filing with the SEC that stated Day’s decision to resign was not due to any disagreements with the company.
- “There is simply no way the Board could have interpreted my resignation as having no conflict issues. This was a deliberately selective edit,” Day wrote in an email regarding the matter.
Dive Insight:
Kohl’s most recent SEC filing contains emails wherein Day pushes back on the company’s narrative that she exited her board position without friction.
Day, the former CEO of Lululemon, has been on Kohl’s board since the spring of 2021 and was a member of the board’s compensation committee, audit committee and finance committee.
“In the 8K filing, for my departure, it would not be accurate to say I have no disagreements with the board,” Day wrote in an email to Chief Legal Officer and Corporate Secretary Jennie Kent, among others. “Unfortunately I have been continually disappointed with the level of governance process. The 8K needs to reflect this.”
Day asserts that she voiced her concerns prior to the company filing its original paperwork.
“The Company strongly disagrees with the assertions in Ms. Day’s emails,” Kohl’s stated.
Specifically, Day was concerned about how the company handled a report by proxy advisory firm Institutional Shareholder Services regarding executive pay. In that report, ISS was against a vote to ratify named executive officers’ compensation primarily due to concerns around the size, disclosure and structure of former CEO Ashley Buchanan’s sign-on awards.
Buchanan was ousted from Kohl’s at the start of May after only a few months because it was found that he was involved in vendor transactions that were a conflict of interest. As a result, the company yanked back all equity awards and it was determined that Buchanan would have to reimburse Kohl’s for much of his $2.5 million signing bonus.
But, as ISS reported, even though Buchanan had to pay back some of those rewards, “there remains concern with the company’s prior decision to originally grant these large awards, which entirely lack performance criteria.”
Day in emails states that the company did not respond to ISS and shared “material information with only select shareholders.” She accuses interim CEO Michael Bender of not disclosing information to all board members.
“As directors, we all get sued together — so transparency with risks is a requirement for trust and accountability. To place other directors in position of making a decision without full disclosure of risks is unacceptable. And it has been going on far too long,” Day wrote.
Kohl’s did not answer Retail Dive’s specific questions regarding Day’s allegations of lack of transparency.
The department store has been going through a spate of difficulties since the start of the year. In January, the company announced it was closing nearly 30 underperforming locations and an e-commerce fulfillment center in California, followed by it cutting 10% of its corporate workforce. In its Q4 earnings, net sales fell 9.4% year over year to $5.2 billion, comps fell 6.7% and net income was down over 74% to $48 million. Fitch Ratings analysts recently downgraded the company and listed its outlook as negative, citing “ongoing operational challenges.”
