Saks Incorporated: Peter Schoenfeld Calls for Changes

In a letter on Monday to the shareholders of Saks Incorporated (SKS), hedge fund manager Peter Schoenfeld called for corporate governance improvements at the troubled department store.

Mr. Schoenfeld is the CEO of P. Schoenfeld Asset Management (PSAM), which owns 2,137,265 shares of SKS, representing approximately 1.5% of the company’s shares outstanding.

As part of the hedge fund’s proposals, PSAM is urging Saks shareholders to:

Withhold their support for the re-election of C. Warren Neel to the Saks Board. Mr. Neel currently is a member of Saks' Governance and Nominating Committee, which in the view of PSAM has failed Saks and its shareholders.

Vote to end Saks' staggered Board. PSAM believes that Saks' staggered Board, which provides that directors are elected for three-year terms, reduces Board member accountability and breeds complacency. PSAM believes that shareholders should have the opportunity to vote for all Board members each year.

Support the proposal submitted by the New England Carpenters' Pension Fund to implement majority voting for Board member elections. PSAM believes that majority voting in the election of directors is necessary to hold Saks' directors accountable for their actions.

PSAM stated that SKS’s poor performance cannot just be attributed to the economic downturn. It believes that the company’s leadership as well as its insistence on operating stores in many poor locations is responsible for the company’s consistently low operating margins. PSAM is convinced that the board’s leadership is lacking and it is time for an overhaul.

Separately, PSAM is a top shareholder of Amylin Pharmaceuticals (AMLN), which is also in the midst of a proxy battle that is being led by activist hedge fund manager Carl Icahn.

According to PSAM’s 3/31/09, it purchased 296,650 shares of AMLN over the first quarter, bringing its ownership stake in AMLN to 2,114,327 shares, which is over 1.5% of shares out. PSAM also holds significant stakes in Savient Pharmaceuticals Inc (SVNT) with 2.6%, ThinkOrSwim Group Inc (SWIM) with 1.5% and Genomic Health Inc (GHDX) with 1.35%.

P. Schoenfeld Asset Management LLC (PSAM) was founded by Peter Schoenfeld in 1997. For more information about PSAM and its investment strategy, please see here.

Disclosure: No positions