SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
EXCHANGE ACT OF 1934 (Amendment No. )
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Pershing Square II, L.P.
Pershing Square IV Trade-Co, L.P.
Pershing Square IV-I Trade-Co, L.P.
Pershing Square International, Ltd.
Pershing Square International IV Trade-Co, Ltd.
Pershing Square International IV-I, Ltd.
Pershing Square Capital Management, L.P.
PS Management GP, LLC
Pershing Square GP, LLC
Pershing Square Holdings GP, LLC
William A. Ackman
Michael L. Ashner
James L. Donald
Ronald J. Gilson
Richard W. Vague
Roy J. Katzovicz
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FOR IMMEDIATE RELEASE
The Nominees For Shareholder Choice Issue a Public Letter to
Target Corporation Shareholders
NEW YORK, May 18 The Nominees for Shareholder Choice sent a letter to shareholders of Target
Corporation (NYSE: TGT) in connection with Targets upcoming Annual Meeting of Shareholders. The
full text of the letter follows:
The Nominees for Shareholder Choice
c/o Pershing Square Capital Management, L.P.
888 Seventh Avenue, 42nd Floor
New York, NY 10019
May 15, 2009
Re: Now Is The Time For Change
Dear Fellow Target Shareholder:
It was a great pleasure to introduce the Nominees for Shareholder Choice to you at our Town
Hall Meeting on Monday, May 11, 2009, and for each of us to answer your questions regarding our
background, experience, and perspectives. If you were unable to attend the Town Hall Meeting, I
encourage you to view a replay of the video webcast at www.TGTtownhall.com.
To make the comparison between the Nominees for Shareholder Choice and Targets incumbent
nominees easier, we have enclosed with this letter a booklet that includes our biographies and
comparisons with the incumbent nominees who are up for election.
The vote for Targets directors at the companys May 28, 2009 Annual Meeting of Shareholders
is rapidly approaching. We urge you to act now and vote the GOLD proxy card AGAINST the proposal
by Targets board to determine that its size is 12 (or in our view reduce its size from 13
directors to 12 directors) and FOR the election of the Nominees for Shareholder Choice Jim
Donald, Richard Vague, Michael Ashner, Ron Gilson, and me, Bill Ackman to Targets board of
directors. Our goal in proposing five independent directors at the Annual Meeting is to bring
fresh perspectives and relevant experience to the board of directors to help make Target a
stronger, more profitable, and more valuable company.
We recommend that you vote FOR the Nominees for Shareholder choice because we believe that the
insularity of Targets board, its strategic missteps, and its lack of sufficiently relevant senior
operating experience argue strongly for choice and for change. More importantly, we believe that
the Nominees for Shareholder Choice are the best candidates with the most relevant experience to
act as effective stewards of Target, particularly during a challenging economic environment which
may last for several years.
Support Management but Hold the Board Accountable
Commentators have noted that this is a unique proxy contest. This is not an election for
control of Targets board. Even if all of the Nominees for Shareholder Choice are elected, eight
of the 12 incumbents will continue to represent a majority of the board providing continuity. This
is not a campaign for the ouster of executives, nor are we pressing for a hasty,
predetermined plan of action. In fact, from the inception of our investment more than two years
ago, we have been consistently supportive of Targets management. Our concerns principally relate
to the composition and governance practices of the incumbent board.
We believe that the company has substantially underperformed its potential because of the
boards strategic missteps. Last year, the companys credit card business witnessed dramatic
profit declines which we believe was predominantly due to the boards failure to execute a
credit-risk transfer transaction, despite our emphatic efforts, beginning in August 2007, to
convince the company to do so. Such a transaction would have transferred a substantial majority of
the credit card business credit and funding risk to a partnering bank.
Targets board has also been unwilling to explore any alternatives to unlock real
estate value, an error that we believe demonstrates the boards lack of initiative to explore
value-creating opportunities for shareholders. Finally, with respect to Targets retail business,
we believe that customers and shareholders have suffered partially due to Targets more limited
food offering as compared to its principal competitor Wal-Mart. On this point, we strongly believe
that the board does not have sufficient food retailing expertise to advise, guide, or challenge
management on the companys grocery expansion strategies. In our view, these are all strategic
missteps for which we hold the incumbent board of directors accountable.
You need not take our word for it. PROXY Governance, Inc., a leading independent proxy voting
advisory firm, recommended that Target shareholders elect two of the Nominees for Shareholder
Choice real estate executive Michael Ashner and food retailing executive Jim Donald. Proxy
Governance noted that Targets thin director experience in areas of increasing strategic
importance has led to suboptimal outcomes for the company. Praising the Nominees for Shareholder
Choice, PROXY Governance noted that the real strength of our campaign lies in the nominees whose
professional experience is directly relevant to certain strategic challenges the company faces
(particularly outside its core operations) yet which seem to be under-represented in the board as
The Need for Change and Fresh Perspectives
In 1984, Kenneth Dayton, a member of the founding family and a former chairman of Targets
board of directors, laid out a simple and sensible vision for how a board of directors should work.
He published his thoughts in the Harvard Business Review, a preeminent business journal, in an
essay entitled Corporate Governance: the Other Side of the Coin.
Mr. Dayton was of the view that directors should function as representatives of the
shareholders, to be the primary force pressing the corporation to the realization of its
opportunities and the fulfillment of its obligations to its shareholders, customers, employees, and
communities in which it operates. We could not agree more.
Mr. Dayton felt that ensuring fresh perspectives on a board was essential to a successful
company. His thoughts are instructive:
To keep our board young, vital, and independent and ensure a steady flow of
fresh blood and new thinking we have rigid policies of rotation and
retirement. We expect directors to submit their resignations at age 65, or
after 12 years of service, or whenever a significant change in their position
Since the time Mr. Dayton penned those words, Targets board has materially loosened Mr.
Daytons rigid policies. Incumbent term limits have been extended from 12 years to 15 years, and
recently to 20 years, and other board governance practices established by Mr. Dayton have been
weakened or eliminated. We do not understand why Targets historic governance principles have been
compromised. In our opinion, in the current hypercompetitive retail environment, the need for
fresh and independent perspectives on the board is even more vital to the companys enduring
Of the sitting 12 incumbent directors, five have held their seats for 12 years or more.
Included among this group are incumbent nominees Richard Kovacevich, Chairman of Wells Fargo & Co.
who has served for 13 years, and Solomon Trujillo, CEO of an Australian telecommunications company
who has served for 15 years. Messrs. Kovacevich and Trujillo now seek additional three year terms.
While we presume that these gentlemen are high-quality business executives, we believe that Target
would benefit greatly from new and more relevant perspectives.
Targets Faulty Board Nomination Process
We suspect that the boards faulty nomination process is part of the problem. The nominating
committee is composed of five individuals including Mr. Kovacevich and George Tamke, a leveraged
buyout investor who has served for 10 years. We note that both Messrs. Kovacevich and Tamke are
Rather than undertaking a comprehensive search process to identify individuals able to bring
specific expertise and experience to the board, according to Targets proxy statement, [t]he
Nominating Committee did not meet during the past fiscal year, but took action by written consent
on two occasions. In our view, this is not a process open to fresh perspectives.
As troubling, the chairman of the boards nominating committee, Stephen Sanger, also serves on
the board of Wells Fargo Mr. Kovacevichs company. Since 2003, Mr. Sanger has received over
$1.25 million in fees and equity compensation from Wells Fargo. He has also served on Wells
Fargos compensation committee since 2003, where he helped to determine Mr. Kovacevichs
compensation when Mr. Kovacevich was that companys CEO.
We ask: Did Messrs. Kovacevich and Tamke recuse themselves when voting to re-elect themselves
to the board? Did Mr. Sanger recuse himself from the consideration of Mr. Kovacevichs nomination?
In any event, we believe that these kinds of relationships foster insularity on Targets board.
Prior to the launch of this proxy contest, I asked the board to consider offering one board
seat to Pershing Square as the companys third largest beneficial owner, and adding one additional
independent director. I proposed Michael Ashner, a major real estate owner operator, and Richard
Vague, a leading credit card industry executive as potential new independent directors. Rather
than carefully consider their nominations, Targets nominating committee simply chose not to
interview them. When I asked why the nominating committee would not consider appointing myself or
either of these two potential independent directors, Mr. Sanger explained that the board did not
authorize him to provide us with an explanation.
Questions of Independence
In his Harvard Business Review essay, Mr. Dayton stressed independence as a critical criterion
that applies to all directors. We are concerned about the level and degree of independence of the
incumbent directors. We note that seven of the 12 incumbent directors are or have been affiliated
with companies that do business with Target including three of the incumbent nominees Mary
Dillon, Richard Kovacevich and George Tamke.
Egan-Jones Proxy Services, another independent proxy voting advisory firm, has specifically
taken issue with the incumbent nominees on the question of independence. Egan-Jones has
recommended that shareholders withhold their support for Messrs. Kovacevich and Tamke, both of whom
serve on Targets audit and nominating committees. In Egan-Joness words, these key board
committees should be comprised solely of independent outside directors for sound corporate
practices. We suspect that Mr. Dayton would agree.
Taken together, we believe that these facts establish a level of insularity among the
incumbent board members. By electing the Nominees for Shareholder Choice you can help fix this
Circling the Wagons
When Pershing Square proposed the Nominees for Shareholder Choice, Target insisted that the
board consisted of 12 directors and that only four seats were up for election this year. After
failing to provide a satisfactory explanation for its view on board size, Target is now asking
shareholders to determine that the size of the board is 12. We are at a loss to understand why
Target would fight so hard to preclude the addition of even one new director.
Great retailers of our countrys past began to lose their way when they became insular and
failed to constantly reinvent themselves. When old formulas, executed by rote, became the
mainstays of their business that state of affairs marked the beginning of their demise. We are
confident that a more independent board with specifically relevant expertise will assist Target in
once again regaining its rightful position as the leading general merchandizing retailer with a
value proposition unmatched by its peers.
To ensure that will be the case, we ask our fellow shareholders to be open to fresh
perspectives at a time when the incumbent board is closing ranks. By electing one or more Nominees
for Shareholder Choice, you can ensure that individuals with new perspectives and specifically
relevant expertise in food retailing, credit card operations, real estate, and corporate governance
will join Targets board. We urge all shareholders to reject the companys proposal to
determine that the board is comprised of only 12 members. Doing so will ensure that at least
one of the Nominees for Shareholder Choice will be seated as a new director.
Vote Your GOLD Proxy Card Today
We believe that Targets board is in need of changes changes in shareholder representation,
in corporate governance, and in director expertise. It is time to take matters into your hands and
help to effect these positive changes on the board. We encourage you to vote the GOLD proxy card
today to elect the Nominees for Shareholder Choice and to protect your investment in Target.
Please vote AGAINST the companys proposal to reduce the size of the Board to 12 and FOR the
Nominees for Shareholder Choice using the GOLD proxy card. You can also vote by telephone or
Internet by following the instructions on the GOLD proxy card. If you have any questions or need
any assistance voting your shares, please contact our proxy solicitor, D.F. King & Co., Inc.,
toll-free at (800) 290-6427.
Thank you for your careful consideration. If you have questions about any of the above,
please contact me at (212) 813-3700.
PERSHING SQUARE CAPITAL MANAGEMENT, L.P.
William A. Ackman
In connection with Targets 2009 Annual Meeting of Shareholders, Pershing Square Capital
Management, L.P. and certain of its affiliates (collectively, Pershing Square) have filed a
definitive proxy statement on Schedule 14A with the Securities and Exchange Commission (the SEC)
containing information about the solicitation of proxies for use at the 2009 Annual Meeting of
Shareholders of Target Corporation. The definitive proxy statement and the GOLD proxy card were
first disseminated to shareholders of Target Corporation on or about May 2, 2009.
SHAREHOLDERS OF TARGET ARE URGED TO READ THE PROXY STATEMENT CAREFULLY BECAUSE IT CONTAINS
IMPORTANT INFORMATION. The definitive proxy statement and other relevant documents relating to the
solicitation of proxies by Pershing Square are available at no charge on the SECs website at
http://www.sec.gov. Shareholders can also obtain free copies of the definitive proxy
statement and other relevant documents at
www.TGTtownhall.com or by calling Pershing Squares proxy solicitor, D. F. King & Co.,
Inc., at 1 (800) 290-6427.
Pershing Square and certain of its members and employees and Michael L. Ashner, James L. Donald,
Ronald J. Gilson and Richard W. Vague (collectively, the Participants) are deemed to be
participants in the solicitation of proxies with respect to Pershing Squares nominees. Detailed
information regarding the names, affiliations and interests of the Participants, including by
security ownership or otherwise, is available in Pershing Squares definitive proxy statement.
Cautionary Statement Regarding Forward-Looking Statements
This letter contains forward-looking statements. All statements contained in this letter that are
not clearly historical in nature or that necessarily depend on future events are forward-looking,
and the words anticipate, believe, expect, estimate, plan, and similar expressions are
generally intended to identify forward-looking statements. These statements are based on current
expectations of Pershing Square and currently available information. They are not guarantees of
future performance, involve certain risks and uncertainties that are difficult to predict and are
based upon assumptions as to future events that may not prove to be accurate. Pershing Square does
not assume any obligation to update any forward-looking statements contained in this letter.
# # #
Vote Now Vote Today
The date of Targets Annual Meeting is fast approaching. We urge Target shareholders to sign, date
and return the GOLD proxy card as soon as possible and vote FOR the Nominees for Shareholder
Choice. For more information on how to vote, as well as other proxy materials, please visit
About Pershing Square Capital Management, L.P.
Pershing Square Capital Management, L.P., based in New York City, is an SEC registered investment
advisor to private investment funds. Pershing Square manages funds that are in the business of
trading buying and selling securities and other financial instruments. Funds managed by
Pershing Square have long positions in stock, options and other financial instruments tied to the
performance of Target Corporations stock. Pershing Square has and in the future may increase,
decrease, dispose of, or change the form of its investment in Target Corporation for any or no
Pershing Square Capital Management, L.P.
William A. Ackman, 212-813-3700