Kohl’s former board member and ex-Lululemon CEO Christine Day has pushed back against the company’s official explanation of her recent departure, alleging governance failures and a lack of transparency at the highest levels of the business.
In emails disclosed in Kohl’s latest SEC filing, Day disputed the company’s claim that she stepped down without disagreement, stating: “In the 8K filing, for my departure, it would not be accurate to say I have no disagreements with the board. Unfortunately I have been continually disappointed with the level of governance process. The 8K needs to reflect this.”
Day, who joined Kohl’s board in spring 2021, served on the board’s compensation, audit, and finance committees. Her departure comes amid ongoing turmoil for the retailer, which recently ousted its CEO, closed stores, and saw its credit rating outlook downgraded.
Kohl’s responded firmly to Day’s comments, stating: “The Company strongly disagrees with the assertions in Ms. Day’s emails.”
At the centre of Day’s concerns is how the board handled a report from proxy advisory firm Institutional Shareholder Services (ISS), which recommended voting against executive compensation plans, citing issues with the size, structure, and disclosure of sign-on awards granted to former CEO Tom Kingsbury’s predecessor, Ashley Buchanan.
Although Buchanan was dismissed in early May after conflicts of interest were discovered in vendor dealings, and Kohl’s has since clawed back equity awards and demanded repayment of a significant portion of his $2.5 million signing bonus, ISS maintained that the initial decision to grant such substantial awards, without performance criteria, remained problematic.
In her emails, Day criticised Kohl’s response to ISS, alleging the company failed to engage with the advisory firm and shared “material information with only select shareholders.” She further accused interim CEO Michael Bender of withholding key details from the full board.
“As directors, we all get sued together — so transparency with risks is a requirement for trust and accountability,” she wrote. “To place other directors in [the] position of making a decision without full disclosure of risks is unacceptable. And it has been going on far too long.”
Kohl’s declined to answer questions from Retail Dive about Day’s transparency claims.
The department store chain has faced growing instability in 2024. In January, Kohl’s announced plans to close nearly 30 underperforming stores and an e-commerce fulfilment centre in California.
It also laid off 10% of its corporate staff. In Q4, net sales dropped 9.4% year over year to $5.2 billion, with comparable sales down 6.7%. Net income fell by more than 74% to $48 million.
Fitch Ratings recently downgraded the company’s outlook to “negative,” citing “ongoing operational challenges.”
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