A big state investment fund is asking Kirkland's shareholders to change how some directors are elected, but the retailer's board is resisting the initiative.
The California State Teachers' Retirement System, which owned about 25,000 shares of Kirkland's at the end of March, wants Kirkland's to change its election methods so that unopposed board candidates need to win a majority of the votes cast. Doing so, officials there say, will "establish a challenging vote standard for board nominees to improve the performance of individual directors and entire boards." The fund says about 85 percent of companies in the Standard & Poor's 500 have adopted majority voting for uncontested elections.
"We believe the plurality vote standard currently in place at the Company completely disenfranchises shareholders and makes the shareholder's role in director elections meaningless," CalSTRS officials wrote. "Majority voting in director elections will empower shareholders with the ability to remove poorly performing directors and increase the directors' accountability to the owners of the Company, its shareholders. In addition, those directors who receive the majority support from shareholders will know they have the backing of the very shareholders they represent."
In their recently filed proxy statement, Kirkland's officials are urging shareholders to vote against the CalSTRS proposal, saying the retailer's largest shareholders have not voiced any dissatisfaction with the system and that directors have historically received strong support. They also say that plurality voting is the default standard for director elections under the Tennessee Business Corporation Act and that it helps ensure there are no failed elections in which no candidate is placed on the board or where retiring directors need to stay on to ensure a full roster.
Kirkland's shareholders will vote on the matter June 11. Shares of the company (Ticker: KIRK) were up almost 2 percent to $16.74 Monday morning but are down almost 30 percent year to date.