As Twitter (TWTR) is finding out currently, the makeup of a company's board of directors has a direct correlation to investor confidence in that company.
Over the weekend Elon Musk pulled out of a previous agreement with the social media company that would have resulted in him joining Twitter's board.
After he questioned the company's viability, naturally via Twitter, Twitter CEO Parag Agrawal announced Sunday night that Musk wouldn't be joining the board, as had been announced last week after it was revealed that Musk purchased enough shares to become the company's top individual shareholder.
Twitter stock immediately jumped at last week's announcement and in a microcosm of Musk's polarizing persona, some users threatened to leave the platform while others heralded the dawn of a new era of internet free speech.
While the whole saga has been bizarre, there is definitely a method to Musk's madness as he had originally agreed not to increase his 9.2% ownership to more than 14.9% in exchange for the board seat.
Now that the offer is off the table, Musk, who over the weekend tweeted out a poll asking users if he should turn Twitter HQ into a homeless shelter, is free to increase his stake in the company, and buy it outright, if he so chooses.
Struggling retailer Kohl's (KSS) may have been paying attention to Twitter's soap opera this weekend, because the company came out on the offensive Monday in a direct appeal to investors.
Kohl's Comes Out Swinging Against Activists
Kohl's is currently locked into a battle over its future with activist investment firm Macellum Advisors which wants the company to sell itself to any of a number of bidders.
The nearly $8 billion retailer on April 11 mailed a letter to shareholders detailing their "highly qualified" board of directors, juxtaposing them against the slate of Macellum board nominees, whom the firm described a novices.
Kohl's noted that it has added six new independent directors over the past three years and that 10 of its 13 directors have experience in mergers and acquisitions.
Conversely, Macellum's slate only features on nominee with M&A experience. In fact, six of Macellum's 10 nominees have never served on any public company's board, according to a Kohl's statement.
"Macellum CEO Jonathan Duskin’s short-term approach threatens to destroy significant value, making him unfit to serve on the Kohl’s Board," the company's letter stated.
"Duskin’s attacks on Kohl’s reveals a short-term approach that threatens to destroy the value of your investment. Mr. Duskin’s promotion of baseless speculation and repeated falsehoods regarding the Board’s process – a process in which Mr. Duskin is not involved – is particularly concerning."
Kohl's executives said Macellum's criticism of the company's rejection of a bid to acquire Kohl's for $64 per share shows that the firm "appears to be advocating for a quick sale at any price."
Kohl's shares were trading up 0.8% to $58.28 per share at last check April 11.
"For a slate that is supposed to deliver first-rate oversight of strategic alternatives, it is especially surprising that most of Macellum’s nominees lack M&A experience," Kohl's letter said.
Kohl's Is a Popular Takeover Target
In mid-March, activists prodded the board to consider a sale of the department store retailer and reports suggested Canada's Hudson's Bay company could be considering a takeover bid.
Engine Capital LP, which asked management to consider the sale or the separation of the e-commerce division, said Kohl's recent sales and profit guidance, as well as its "underwhelming" growth, outlined during a recent investor presentation on March 1.
"We believe it is imperative for the Board to reassess its view of the Company’s intrinsic value," the group said. "It is our understanding that Kohl’s is finally running a competitive sale process months after we urged the Board to do so."
"We urge the Board to let shareholders make the ultimate assessment about a sale of Kohl’s," the group said.
Kohl's seems to agree and is taking its case directly to its shareholders.
