PhillyDeals: Recruiting a rebel slate to challenge Target

The upheaval in corporate America has attracted new candidates for seats on the boards of big, cash-strapped corporations. Some have been recruited. Others are trying to fight their way in.

Center City-based investor Richard W. Vague, who ran the former First USA Bank when it was the largest U.S. credit-card lender in the late 1990s, has joined hedge-fund manager William Ackman's attempt to replace five management-backed Target Corp. directors at the annual meeting May 28. Vague has "a great resume," Ackman told me. They met last month as Ackman recruited his slate of "experts."

Ackman's Pershing Square Capital Management L.P. is one of Target's largest investors, with about 4 percent of the stock. Besides Vague and Ackman, the rebel slate includes former Starbucks chief executive Jim

McDonald; Wall Street landlord Michael Ashner; and Ron Gilson, accounting professor at Columbia and Stanford.

In a statement, Target called the rebel effort "costly and disruptive" and urged investors to back incumbents.

In an interview with Bloomberg TV, Ackman called Target "a great company . . . under a lot of challenge.. . . We thought Target would be where Wal-Mart has been during these difficult economic times," gaining value as hard-times shoppers seek bargains, instead of losing more than half its share price since mid-2007.

Ackman says Target needs to cut real-estate costs, and to reduce losses from its credit-card portfolio - a place he says Vague comes in useful. The insurgents' victory would force out Wells Fargo & Co. chairman Dick Kovacevich, among other incumbents.

Separately, Main Line resident Anthony Santomero, former president of the Federal Reserve Bank of Philadelphia and, before that, a Wharton School finance professor, has been tapped by troubled Citigroup to fill a board vacancy at its April 21 annual meeting.

Five of Citi's 15 directors are slated to leave as the company struggles to repay federal investments and restore profits after its once-highly profitable businesses of making, trading, and selling risky U.S. home loans at high rates of interest collapsed.

Finance scholars recall Santomero as a student of "universal banks" like Citi, who wrote about the limits of government supervision in the 1990s. As Philadelphia Fed chief, he was a rotating member of Alan Greenspan's Federal Open Market Committee. He left in 2006 to try the private sector as a McKinsey & Co. senior adviser.

Besides Santomero, proposed Citi directors include retired U.S. Bancorp CEO Jerry Grundhofer; retired Bank of Hawaii CEO Michael E. O'Neill; and William S. Thompson Jr., retired chief executive of PIMCO, the giant California-based bond-investment house who earlier worked at Citi predecessor Salomon Bros.

Mexico's Grupo Bimbo, a multinational baking giant that owns Stroehmann, Arnold, Freihofer's and Brownberry bread, Boboli pizza, Thomas' English Muffins, and Entenmann's cakes, among other brands, has chosen Horsham over Fort Worth as its U.S. headquarters, following a merger.

Bimbo Bakeries USA, the U.S. arm of Grupo Bimbo, "quietly shifted its headquarters last month to Horsham, Pa., from Fort Worth, which will see a staff reduction," the Fort Worth Star-Telegram reported yesterday

Horsham was the U.S. base for Canadian-owned George Weston Bakeries Inc., before Bimbo bought a string of Weston brands for $2.4 billion in January. The move leaves Weston's former U.S. chief, Gary Prince, in charge of 35 U.S. plants employing more than 15,000.

AnySource Media L.L.C., Malvern, says it's raised $3.2 million from Terry Williams and his partners at NextStage Capital of Audubon, James Jaffee's Murex Investments of Philadelphia, "and individual investors from the cable television and video-on-demand industries."

The firm says its Internet Video Navigator software "is being built into HDTV sets to enable them to navigate and play videos coming directly from the Internet," starting "in the second half of 2009."

Separately, James Yoh's Galaxy Technology, of Egg Harbor Township, and Warren "Pete" Musser's Musser Group, Wayne, have invested $1 million in Nicor Global, a "cyber security solutions provider" based in Washington, D.C., say Nicor president Rick Yost and Musser managing director Michael Carter.