Target has nowhere to hide

According to the annual proxy statement of Target, company CEO Brian Cornell “intends to stay in his role beyond the traditional retirement age of 65.” That role includes not just serving as CEO but also as the chairman of the board, to whom the CEO answers, making him in some sense his own boss. The board supports this arrangement by citing “strategic clarity and strong financial performance during his tenure.” Since combining the CEO and chairman role is done by less than half of corporations (and trending downwards) and is not generally seen as good governance, Cornell is asking for exceptional confidence. The board supported him in this. That was a mistake.

Brian Cornell has not earned the privilege of continued service as both CEO and chairman of the board/ According to the proxy statement, the CEO’s roles include “risk management, reputation management, and ESG.” It seems pretty hard to argue that recent events and controversies reveal “strategic clarity” around Target’s “brand” and “reputational management.” Target’s reputation has taken a major beating lately, and deservedly so.

Cornell’s tenure has seen Target turn a mainstream brand with positive value into what Morning Consult in 2018 identified as a polarizing brand. And that was back in 2018, before the “tuck friendly” bathing suits and “Bible girl: 666” tee-shirt by a designer who praises Satan and calls for the beheading of “homophobes.” These latest offenses have been followed by a backlash that has led to roughly $10 billion in lost market capitalization. By any reasonable standard, the leaders of this company have engaged in a wanton act of reputational destruction.

The public response we’re seeing now is not a boycott. For decades conservative activists have tried to herd their followers into one or another boycott, but with diminishing results. Boycotts are top-down and duty-driven. What we’re seeing with companies like Target is brand-revulsion.

There is an interesting background to Target’s embrace of liberal causes. Back in 2010, the former CEO approved a contribution to a pro-business mainstream candidate who was opposed to same-sex marriage. The LGBT faction (back in 2010 when it only had four letters) went hard after Target and the company has been “atoning” for its alleged homophobia ever since. Signing the various Human Rights Campaign letters, opening women’s bathrooms to men, banning books skeptical about sexual transitions for minors, and now, embracing Satanism and onesies for boys who don’t want to be boys—and then $10 billion gone.

Target has made a series of strategically disastrous moves, pandering to a narrow group of extremists and simultaneously offending the retailer’s customer base. Some brands are edgy. If you make athletic footwear, you can get away with arranging endorsement deals with players who take a knee during the anthem. Ben and Jerry’s can even go anti-Semite adjacent and still sell their ice cream. But Target is a middle-class retailer. It can’t keep kowtowing to each new letter added to the alphabet club and still maintain its customers. It can’t ... and it didn’t.

On June 14 the company had its annual meeting and chose liberal Austin, Texas, for its location. Notably, the company decided against an on-line meeting. In-person meetings tend to attract either loyalist or activist shareholders. Online meetings have allowed conservatives, who are often busy with life’s responsibilities, to log on and participate, which they have been doing much more than in years past. Target’s meeting looks like a classic “foxhole meeting.” In other words, it appears Target is avoiding questions from its owners.

Regrettably, the Target board, including its poorly performing CEO/chairman, was reelected. There was a proposal to separate the CEO and chair roles and while that resolution failed, it did perform surprisingly well at 32 percent support. That should send a message. Furthermore, the two board members with the highest percent of votes against were the CEO/chair and the highly ideological lead independent director. Retention votes are always high, and these weren’t exactly no-confidence votes, but neither were they high confidence.

It’s easy to be angry at Target’s leaders. The anger has been earned. But Christians would do well to look back at 2010 and wonder how things might be different if more of those with our values had leaned into the controversy swirling about Target back then. How might things have gone differently if, instead of just hearing from the LGBT activists back then, the company had heard from more Christians as well?