IBEW Proposals To Increase Corporate Responsibility Pass at Kohl's Annual Shareholder Meeting

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Kohl's shareholders back changes to board terms, severance pacts

by Erik Brooks, The Business Journal of Milwaukee - 2:55 PM CDT Wednesday

Shareholders of Kohl's Corp. backed separate proposals made at the company's annual meeting Wednesday calling for annual elections of corporate board members and shareholder approval of certain executive severance agreements.

The votes were advisory only. Larry Montgomery, chairman and chief executive officer of the Menomonee Falls-based retailer, said after the meeting that the board would consider both proposals.

"We're not going to stiff the shareholders," he said.

The first shareholder request, put forth by the International Brotherhood of Electrical Workers Pension Benefit Fund, called for Kohl's to declassify its current board in order to establish annual elections for directors. It passed with 64 percent of the vote.

The proposal would make the board more accountable to shareholders, according to a summary of the request in the Kohl's proxy statement released in March.

The second proposal, by the AFL-CIO Reserve Fund, called for the Kohl's board to seek shareholder approval for severance agreements with senior executives that are more than 2.99 times the amount of that executive's average compensation over the previous five years. It drew 53 percent support.

The severance proposal would limit the size of "golden parachute" severance payouts for executives who may not deserve them, the AFL-CIO argued in its proxy request.

Montgomery declined to say if the board was likely to support either proposal. The company urged shareholders to reject both in its proxy statement.

In an interview, Montgomery said the recommendation of one-year board terms would be especially problematic because it would limit the ability of Kohl's to hand out long-term contracts for key executives that he said are "commonplace in the industry."

Currently, the 13 members of the Kohl's board serve three-year terms. Those include four members elected by shareholders Tuesday, with terms expiring in 2008. They are:

* James Ericson, the 69-year-old former chairman and CEO of the Northwestern Mutual Life Insurance Co., Milwaukee;
* William Kellogg, the 61-year-old former chairman and CEO of Kohl's;
* Arlene Meier, the 52-year-old chief operating officer of Kohl's; and
* R. Elton White, the 62-year-old former president of NCR Corp., Dayton, Ohio.

Eighty-eight percent of shareholders backed their election. Shareholders also approved the ratification of Ernst & Young as Kohl's 2005 auditors with 98 percent support.


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