By Uday Sampath Kumar
(Reuters) -Target Corp on Wednesday scrapped its policy of chief executives having to retire at 65, allowing Brian Cornell to lead the retailer for another three years as it battles through a period of high inflation and overstocked stores.
Cornell, 63, has served as Target (NYSE:TGT)'s CEO since 2014 helping beef up the company's online shopping and delivery operations to keep pace with larger rivals Amazon.com Inc (NASDAQ:AMZN) and Walmart (NYSE:WMT) Inc.
The former PepsiCo (NASDAQ:PEP) and Walmart Inc executive also led the company though the exit of its Canadian operations and the sale of its pharmacy business to CVS Heath Corp in 2015.
Target's shares rose 1.3% as investors cheered the prospect of stability in the big-box retailer's leadership as it faces the burden of clearing shelves of excess apparel, electronics and other discretionary goods due to slowing consumer demand.
"As a longtime shareholder, it's awesome," said Bill Smead, chief investment officer of Smead Capital Management, which owns Target shares worth about $190 million.
"Brian Cornell has done a fantastic job and who would want to change skippers when you get a little bit of rough water? There are very talented people on the bench at Target, but you don't want to start somebody in the fire," Smead said.
That fire refers to the task Cornell now has in shoring up Target's profit margins while balancing the need to discount more to stay competitive.
The company reported a bigger-than-expected 90% fall in quarterly earnings last month.
Cornell's total 2021 compensation was $19.76 million, roughly the same as the prior year.
Boeing (NYSE:BA) Co last year extended its required retirement age to 70 from 65 to allow CEO Dave Calhoun to stay in the top job.
Target also said on Wednesday Gretchen McCarthy, head of the company's global inventory management, would take over as chief supply chain and logistics officer, replacing Arthur Valdez.