Investor support for Directed chairman Brian Cornell set a record low

The target has promised investors he’s pursuing aggressive changes with a new CEO in charge, but longtime CEO Brian Cornell still leads the retailer’s board of directors — and some big investors are showing they’re hungry for change.

Shareholder support for former Target CEO and current Chairman Cornell fell to an all-time low during the company’s annual meeting this month.

While Cornell, 67, was comfortably re-elected to his position on Target’s board of directors, he saw a sharp drop in support since he joined the retailer’s board more than a decade ago, when he was hired as its CEO.

Overall, 87.2% of shareholders voted to re-appoint him to the board – a 4% drop from the year-ago period and a material drop from his historic 95% support rating. And it’s well below the average level of support directors have received across the board S&P 500 this year, Harvard Law puts it at 96.6%.

“Getting below 95% is normal. Getting below 95% is poor, and being below 90 is very poor. It means people are going out of their way to say they don’t want to be there anymore,” said Kevin Kaiser, an associate professor of finance at The Wharton School of the University of Pennsylvania who teaches a course on equity ownership.

Given how many investors automatically approve what major proxy companies or boards suggest they vote for, “anything below 90 is considered a very poor result” and is rarely seen, Kaiser said.

Cornell’s drop in support comes after he stepped down as CEO and transitioned to executive chairman of Target in February as the company grappled with shrinking profits, declining stock prices and three straight years of annual sales declines.

Neil Saunders, retail analyst and managing director of GlobalData, said some analysts and investors viewed Cornell’s appointment as executive chairman as “reward for failure” and called for a clean break from the management team responsible for many of Target’s issues.

“If you’re not doing well as a CEO, you should be removed from the board and I think that’s the way a lot of people look at it,” Saunders said. “I don’t think that’s unreasonable. To get a reward for bringing down the stock price and causing problems for the company, it doesn’t go down well with a lot of people.”

A spokeswoman for Target declined to comment and instead referred CNBC to its 2026 proxy statement and the press release it issued announcing the voting results of its annual general meeting. In its proxy statement, the company said keeping the roles of chairman of the board and CEO separate “makes sense given the company’s strategic and operational priorities” as the positions “have distinct roles and responsibilities.”

“The split structure allows it [CEO Michael Fiddelke] to focus on the business, including the implementation of important programs, during the first phase of his tenure as CEO, while the work of Mr. Cornell as Executive Chairman allows the Board to continue to utilize his deep knowledge of our business and industry during this phase of transition,” the statement read.

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

But over the past few years, he has faced increasing criticism as the company has underperformed and lost share to competitors. Costco, Walmart again Amazon. Target has been criticized for mismanaging inventory, underinvesting in stores and lagging behind the trendy, eye-catching merchandising the retailer has built its name on.

Target has also been the subject of backlash for its actions on many social justice issues, and the brunt of that has fallen on Cornell. The retailer dropped LGBTQ-themed pride merchandise in stores a few summers ago and scaled back its diversity, equity and inclusion programs, which led to a nationwide slump and in recent weeks to a drop in foot traffic.

Combined, these issues have contributed to a steep decline in Target’s share price, which is up about 33% year to date but is down about 50% from its peak in 2021.

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

When it said two insiders would continue to lead the company — Cornell as executive chairman and company veteran Fiddelke as CEO — on the same day it predicted another decline in annual sales, investors were disappointed, sending shares down. However, since then, it seems that analysts and investors are warming to Fiddelke, who received 99% of the votes during the company meeting.

“They seem to be doing a lot of things better in terms of sales,” 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 first fiscal quarter, which ended May 2, Target saw same-store sales grow 5.6% — its first positive same-store sales number in five quarters, with strength in all six of its core categories. Although Target said its turnaround efforts are showing early signs of improvement, chief financial officer James Lee acknowledged that higher tax refunds have helped spending, a benefit he expects to fade throughout the year.

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

The Florida State Board of Trustees, which oversees 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 him for the past nine years, proxy records show.

The fund manager did not return CNBC’s request for comment, but proxy records show it voted against Cornell because of the company’s “long-term poor performance.”

The New York regulator, which oversees the $295 billion New York State Common Retirement Fund, supported Cornell from 2017 to 2024 but voted against him in the last two meetings, state records show.

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

“Investors don’t support Target’s leadership because it mistreats the company’s employees, hurts the brand, and hurts shareholder value,” DiNapoli said. “That’s why the New York state pension fund and other shareholders voted against the board of directors and Target’s high-wage plan.”

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

A number of left-leaning activists — including SOC Investment Group, Trillium Asset Management and Mercy Investment Services — have called on investors to vote for Cornell. Activists also urged investors to vote against Lead Independent Director Christine Leahy, who received 88.5% of the vote during the latest meeting, an 8% drop in support from last year.

“Let’s say someone is criticized and it damages our reputation with our clients and our employees, and as a solution to that, we promote this person to the position of executive chairman at the board level,” said Wharton’s Kaiser. “It doesn’t smell good, and the person who would be most instrumental in stopping that would be a leading independent board member.”

In its proxy statement, Target called Leahy a strong director “supported by a governance structure designed to advance independence” as it urged shareholders to vote him out.

It’s unclear whether investor pressure will affect Target’s board, but Kaiser said a change at that level often happens when directors see such a drop in support during annual meetings.

“It means that there is a lot of pressure now on the board and the people on the board and it is clear that they are losing the support of the shareholders,” said Kaiser. “If they don’t do something, what’s next [annual general meeting] it will not go well for them.”