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Target taps outsider to lead shake-up [Pioneer Press, St. Paul, Minn. :: ](Saint Paul Pioneer Press (MN) Via Acquire Media NewsEdge) Aug. 01--Target Corp. broke with a half-century of tradition Thursday to choose a CEO from outside the company, hoping to restore its former luster. PepsiCo executive Brian Cornell, 55, will become chief executive and board chairman of the the Minneapolis-based discounter, effective Aug. 12, Target said. He replaces Gregg Steinhafel, who was fired in May. Cornell sports a long list of executive credentials, including brief stints as CEO of PepsiCo Foods, Sam's Club and Michael's Stores, as well as chief marketing officer of Safeway. But choosing an outsider comes at a price for Target. Along with up to $15 million in salary and stock incentives, the company will pay as much as $20 million in make-whole payments for stock and bonus money Cornell will lose by leaving PepsiCo. Steinhafel was paid $23 million last year. Cornell's selection drew a mixed reaction. Target shares lost almost 3 percent Thursday, along with the broader stock market, which fell sharply. Target closed at $59.59. Retail consultant Carol Spieckerman said Target continues to add executives from outside the company: Its new chief information security officer came from General Motors; its new chief information officer worked at First Data and Home Depot. "They are determined to bust out of their insular past and stop insisting on growing their own talent," Spieckerman said. "They're willing to shake things up and bring in new blood and perspective," she said. "You could say they're actually doing a hard correction from the Steinhafel years." Most analysts expected an outsider would replace Steinhafel -- a Target lifer -- after a grim year that included a massive consumer data breach, huge losses in its Canadian rollout and an uneven financial performance. But the culture shift still raised eyebrows. "I think he's got really broad retail experience, so that's a plus," David Brennan, a University of St. Thomas retailing specialist in Minneapolis, said of Cornell. "But by the number of companies he's been with, that seems uncharacteristic for Target." Cornell joined Safeway in 2004, Michael's in 2007, Sam's Club in 2009, PepsiCo in 2012 and now Target in 2014. "He's 55, and the question I would have is: How many more places does he plan to go before retirement?" Brennan asked. "Or is Target his last jump?" Daniel Binder, a financial analyst at Jeffries, wrote in a research note, "Some investors may have been hoping for an executive with more experience in Canada and e-commerce and a deeper home/apparel merchandising background, but our impression of Mr. Cornell during his time at Sam's Club was that he was a strong leader that produced results from his team." In an interview posted on Target's corporate blog, Cornell underscored his admiration for the Target brand and its people, calling it "iconic." In retail circles, he said, "Target has been viewed as an academy company with some of the best and brightest in retail." Despite some struggles, Target remains Minnesota's highest-profile corporation. It has $73 billion a year in sales, is a huge employer in the Twin Cities and an influential corporate citizen known for its philanthropy, design sensibility and community support -- including Target Field and Target Center. The company's roots go back to the Dayton's retailing family, which in 1962 veered from its department store heritage to experiment with a discount chain. After decades of impressive growth, the entire company renamed itself Target Corp. and sold off its department stores. Yet these days, there is a sense that something isn't working at Target, including a corporate culture that even its executives concede has become ingrown, stifling to innovation, slow and bureaucratic. In June, interim CEO John Mulligan put it bluntly in a memo to his troops: "All across Target, we need more 'leadership' and less 'committee'." Target is hardly alone in searching for a way forward in a tough, fast-changing retail world. Retailing is filled with companies trying to regain their footing. Minnesota's other retailing superpowers, electronics chain Best Buy and grocer Supervalu, have faced turmoil in recent years. Both fired their CEOs and endured their share of agonies before recently emerging stronger under new leadership from outside. Cornell couched any criticisms of Target gently. On the corporate blog post, he said Target must move more quickly to knit together its digital capabilities online, its in-store experience and its mobile capabilities -- a cluster known in retailing as "omnichannel." "Advancing Target's omnichannel presence is critically important and it's at the top of my list of priorities," Cornell said. "I have been close to the changes business and consumers have experienced over the last few years, and I have an acute understanding of how important it is to connect stores, online and mobile. "For us to create the Target of tomorrow, all three of those elements have to work in tandem." But the Target of yesterday also requires attention. It is still coping with dozens of lawsuits and fallout from the data breach of the 2013 holiday season, when cyberthieves stole the credit and debit card data of 40 million shoppers. An additional 70 million customers had other personal information swiped. Meanwhile, Target is still wrestling with its Canadian operations after a botched national rollout there. Losses from Canada have totaled $1.5 billion since the first stores opened. "He certainly has to fix Canada," said Brennan, the St. Thomas professor. "That's probably the biggest thing they've got going right now." Cornell earned a bachelor's degree from UCLA and attended the Anderson Graduate School of Management, where he served on its board. He also serves on the board of Polaris Industries, the Medina-based snowmobile maker. "It's given me a new appreciation for the winter season," Cornell said. Although it's still July, he joked, "I am already shopping for a new warm coat for next winter." Tom Webb can be reached at 651-228-5428. Follow him at twitter.com/TomWebbMN. ___ (c)2014 the Pioneer Press (St. Paul, Minn.) Visit the Pioneer Press (St. Paul, Minn.) at www.twincities.com Distributed by MCT Information Services |