In a stinging critique,
It advised Target shareholders to vote against most of its board, including interim chairwoman
ISS advises mutual funds and other big shareholders on corporate governance issues. It rarely urges a majority of a board be replaced.
"The data breach revealed that the company was in- adequately prepared for the significant risks of doing business in today's electronic commerce environment," ISS wrote. "The responsibility for oversight of these risks lies squarely with the Audit Committee and the Corporate Responsibility Committee. ...
"It appears that failures of the committees to ensure appropriate management of these risks set the stage for the data breach, which has resulted in significant losses to the company and its shareholders," ISS wrote.
Target responded Wednesday that it views risk oversight as the responsibility of the full board.
"As one would expect, following the criminal attack that resulted in the data breach, the board is re-examining the entire risk oversight structure, including senior management roles and reporting structures, as well as board oversight," it said.
Discount giant Target has had a difficult year. During the holiday season, thieves stole some 40 million credit and debit card numbers from its shoppers. The company also missed its financial goals, and its troubled rollout in
The turmoil has led to a flurry of executive turnover, including CEO and chairman
"For shareholders who have seen the value of their investment decline by over 10 percent, this might appear to be a case of 'too little too late,' " its advisory said.
The ISS analysis also:
-- Urged that Target permanently separate the CEO and board chairman positions. Both positions had been held by Steinhafel. Last year, 38 percent of Target shareholders voted to separate the two positions despite Target's opposition to the idea.
-- Credited Target directors for altering its executive pay policies. In 2012, ISS scolded Target for not more fully linking its generous executive pay with Target's performance -- and Target barely won a "Say on Pay" advisory vote. This year, ISS credits Target for scaling back the pay package and better linking it to performance. Now, ISS is urging a yes vote on the "Say On Pay" advisory question.
-- Noted that Target promised to add new security executives, including a chief information security officer. Wrote ISS, "The addition of these 'new' positions raises serious concern about how Target could have been running a business of its size and complexity without these permanent roles."
-- Raised questions about "the appropriateness of the background" of Target's previous Chief Information Officer,
-- Recommended that shareholders vote against a proposal to eliminate all executive perks. ISS called it "overly prescriptive, and could place the company at a competitive disadvantage."
Target shares lost
(c)2014 Pioneer Press (St. Paul, Minn.)
Visit the Pioneer Press (St. Paul, Minn.) at www.twincities.com
Distributed by MCT Information Services