NEW YORK (AP) — Target is dropping the mandatory retirement age for its CEO, allowing Chief Executive Brian Cornell to stay on for three more years.
Cornell, 63, would have passed the age of 65 in that span.
Cornell took the helm at Target in 2014 when the discounter was grappling with a major data breach that hurt its business. Sales have been climbing steadily through the pandemic but now Target — like many retailers — is grappling with inflationary pressures and big shifts in consumer spending that have taken a toll on profits, which plunged nearly 90% in the fiscal second quarter.
Despite the new challenges, the company is sticking with Cornell.
“In discussions about the company’s longer-term plans, it was important to us as a board to assure our stakeholders that Brian intends to stay in his role beyond the traditional retirement age of 65,” said Monica Lozano, the lead independent director of Target’s board in a release on Wednesday.
The move is part of a growing trend among corporations to drop the age requirement of CEOs amid stronger corporate governance standards and a shift in perception about the age appropriateness of a top executive, according to experts.
“People are working later in their life,” said Andy Challenger, senior vice president of Challenger Gray & Christmas, a global outplacement firm. “The common perception of when someone should retire has changed,” although he noted that many law firms and accounting firms still have mandatory requirements for their partners.
Amber Clayton, senior director of Knowledge Center Operations at the Society for Human Resource Management noted that surveys have shown most companies do not impose a mandatory requirement for their CEOs. In fact, some companies that still have them may be reconsidering their policy since CEOs are staying in their jobs longer and boards are less likely to want to replace a CEO if the business is doing well. Experts also believe that boards also are looking for stability at a time of volatility.
Under Cornell’s leadership, the Minneapolis-based chain had been accelerating its online services such as curbside pickup and same-day services while sprucing up its stores well before the pandemic. During the height of the health crisis, Target became a lifeline to millions of people trying to limit their exposure during the pandemic.
The company has also been out front with its investment with workers. It raised its minimum wage to $15 per hour in 2020, a commitment it pledged in 2017 and well ahead of many grocery rivals. Earlier this year, Target adopted minimum wages that range from $15 to $24 an hour, with the highest pay going to hires in the most competitive markets.
Before joining Target, Cornell spent more than 30 years in leadership positions at retail and consumer-product companies, including as chief marketing officer at Safeway Inc. and CEO at Michaels, Walmart’s Sam’s Club and PepsiCo Americas Foods.
The company also announced Wednesday that Arthur Valdez, executive vice president and chief supply chain and logistics officer, will retire. Valdez will be succeeded by Gretchen McCarthy, senior vice president, global inventory management.
Shares of Target rose nearly 5%, or $7.83 to $171.41 in afternoon trading on Wednesday.