Dive Brief:
- A coalition of activist investors is urging Target shareholders to vote against the reelection of its current leadership, namely Executive Chair Brian Cornell and Lead Independent Director Christine Leahy, at the company’s annual shareholder meeting in June.
- Trillium Asset Management, SOC Investment Group and Mercy Investment Services sent a letter to Target shareholders last week, attributing the retailer’s lagging financial performance to a “series of operational and strategic missteps” that they said have “materially impaired the company’s brand.”
- The investors cited Target’s decision to end some diversity, equity and inclusion initiatives, scale back Pride-themed merchandise, and its limited response to Immigration and Customs Enforcement raids at its Minnesota locations as some of the “missteps” that have recently spurred consumer backlash and reputational harm.
Dive Insight:
The trio of investors alleged these developments on social policies not only resulted in protests and boycotts, but also contributed to alienating key customer demographics, like the LGBTQ+, Black and Latino communities.
Shortly after President Donald Trump was inaugurated in January 2025 and signed a slate of executive orders targeting DEI, Target announced it was axing some of its diversity efforts, and said it would no longer participate in third-party diversity surveys, including the Human Rights Campaign’s Corporate Equality Index. At the time, the company cited “the importance of staying in step with the evolving external landscape,” while reiterating its commitment to “inclusion” and “belonging” in an internal memo.
The walk back from DEI prompted customer retaliation and boycotts, ultimately impacting the retailer’s 2025 Q1 financial results, a shift that was acknowledged by Cornell, who previously served as Target’s CEO.
Earlier this year, Target came under fire for its restrained response to two of its employees being detained by ICE agents at one of its locations in Minneapolis, where the retailer is headquartered. Consequently, Target faced increased pressure from some consumers and activists to make a public statement on recent federal immigration activities taking place on its home turf. Some groups staged protests outside of Target’s Minneapolis headquarters, asking the company to publicly denounce ICE, while the American Federation of Teachers — a major labor union — asked its nearly 1.8 million members to boycott Target when shopping for school supplies and purchase from local stores.
“Target’s reversal on DEI initiatives — including its Pride collection — along with muted response to ICE activity on its properties, signaled a willingness to compromise stated values, eroding credibility and alienating the very demographics that once viewed the brand as an ally,” SOC Investment Group Deputy Director Emma Bayes told ESG Dive Wednesday.
“Target’s waffling on social issues has contributed to the identity crisis it now faces,” Bayes added. “This inconsistency in positioning makes Target seem insincere, alienating consumers at a time when they are increasingly looking for retailers that align with their personal values.”
‘Continuity without correction’
The May 13 letter also raised issues with Target’s governance decisions, particularly its current corporate leadership structure. The letter said Target had significantly underperformed during Cornell and Leahy’s tenure, impacting long-term shareholder value.
The investors also criticized the board’s decision to promote company veteran Michael Fiddelke to CEO while retaining his former boss, Cornell, as executive chair and special adviser. The letter said the move represents “continuity without correction,” adding that Cornell’s retention comes with a considerable price tag. After receiving a $1.4 million salary in his final year as CEO and chair — as part of a nearly $12.9 million compensation package — Cornell will make a $1.12 million salary as executive chair and will remain eligible for some incentives.
“The recent Chief Executive Officer (CEO) succession does not signal that the Board is focused on the genuine reset we believe is critical to turn the company around,” the investors wrote in the letter.
The investors added that they were surprised at the decision to promote Fiddelke, the former COO, “given the persistent performance weaknesses at Target.” They pointed to “potential pitfalls” of Fiddelke trying to steer the company as his former boss maintained a presence on the board.
Despite the investors’ criticism of Target’s turnaround strategy and governance decisions, the company’s 2026 Q1 performance beat expectations and demonstrated early returns on changes implemented under Fiddelke. Target’s first quarter sales jumped 6.7% year over year to $25.4 billion, while merchandise sales grew 6.4% and comparable traffic grew 4.4%, according to a Wednesday press release.
Target declined to comment on the letter submitted by the trio of activist investors, but pointed ESG Dive to its 2026 proxy statement, which outlines the company’s recommended board leadership structure and their respective qualifications.
Target’s annual general meeting is set to take place on June 10.
