Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Classified Sites

The Canadian Press - ONLINE EDITION

Target taps outsider as CEO for first time in push to redefine itself with shoppers

President and CEO of Sam's Club Brian Cornell speaks during the Wal-Mart Stores Inc. shareholders' meeting in Fayetteville, Ark., on June 4, 2010. THE CANADIAN PRESS/AP, April L. Brown

Enlarge Image

President and CEO of Sam's Club Brian Cornell speaks during the Wal-Mart Stores Inc. shareholders' meeting in Fayetteville, Ark., on June 4, 2010. THE CANADIAN PRESS/AP, April L. Brown

NEW YORK, N.Y. - Target is bringing in an outsider as its CEO for the first time as the retailer fights to redefine itself to American shoppers.

The Minneapolis-based company (NYSE:TGT) said Thursday that it named PepsiCo executive Brian Cornell to the top spot, replacing chief financial officer John Mulligan, who had been keeping the seat warm since May.

The announcement comes roughly three months after Target CEO Gregg Steinhafel resigned following a large data breach in the run-up to the holiday shopping season last year.

Steinhafel had been dealing with problems on a number of other fronts too, including persistent perceptions that Target charges higher prices than its rivals and a poor showing in Canada, the company's first venture outside of the United States.

For its latest fiscal year, Target reported its first annual profit decline in five years.

As such, Cornell faces a daunting task, especially when considering how the slow economic recovery has pressured the broader retail industry.

With lower-income customers still struggling, Wal-Mart Stores Inc. (NYSE:WMT) has pushed low prices even more aggressively to go after penny-pinching customers.

Still, the infusion of new blood is a signal to Wall Street that Target is serious about addressing its internal issues.

"Outside perspective is what Target needs, in our view, given the need to rebuild trust," said Greg Melich, head of consumer research at ISI Group.

PepsiCo Inc., which is based in Purchase, New York, said in a statement it expects to announce Cornell's successor soon.

On Thursday, Target said Cornell's top priorities will be to ramp up its performance and help it evolve into a retailer that seamlessly incorporates online and brick-and-mortar experiences for its shoppers.

Target is looking to start anew after announcing in December a data breach in which hackers stole millions of customers' credit- and debit-card records. The breach occurred in the United States but affected some Canadians who crossed the border to shop during the affected period.

The theft badly damaged the chain's reputation and profits and spawned dozens of legal actions that could prove costly. Target's response since the theft has included free credit monitoring for affected customers and an overhaul of security systems.

The company's expansion into Canada has also been a disappointment. Analysts have said that Target botched its Canadian expansion by moving too aggressively. The company opened about 120 stores in the latest year and lost nearly $1 billion in the Canadian business.

In May, it fired the president of its Canadian operations, Tony Fisher, and replaced him with Mark Schindele, a company veteran.

Target must also work to restore faith among its investors. In June, at its annual shareholders meeting, the final shareholder vote tally showed a rise in dissent against key board members. All 10 nominees were elected to the board but the rise in votes against several directors shows how uneasy investors remain following the data breach.

Cornell, who is set to become Target's CEO on Aug. 12, will receive a base salary of US$1.3 million, according to a filing with the Securities and Exchange Commission. He will be eligible for a bonus of up to $2 million and stock-based awards with a target value of $3.8 million, according to the filing. For fiscal 2015, the board also agreed to grant him stock-based awards with a target value of $9 million.

To make up compensation from PepsiCo that Cornell will be forfeiting, Target said it would pay him up to $19.3 million in equity grants, according to the filing. Any amount he is able to retain from PepsiCo will be subtracted from that amount.

The appointment was first reported by The Wall Street Journal.

Target shares finished at $61.38 per share on Wednesday. They have fallen 3 per cent since the start of the 2014.

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
The First World War at 100

Social Media