May 11 (Bloomberg) -- Hedge-fund manager William Ackman asked Target Corp. shareholders to publicly voice their support for his bid to replace board members with directors he says will add real estate, grocery and credit-card expertise.

Ackman, the head of Pershing Square Capital Management LP, asked investors to vote, call the company and talk with the proxy advisory firm as he presented his five candidates, including himself, at a meeting in New York today. Target, in a separate filing, urged shareholders to re-elect its nominees.

Ackman nominated himself and four others to the Target board in March, saying the current directors lack expertise in some areas. Ackman’s slate also would increase the size of the board by one, to 13. The current board has made mistakes that have led to the company underperforming other discount retailers amid the longest recession in the postwar era, Ackman said.

“The company blames the underperformance on the economy, but Target is not Gucci,” Ackman said today. “They should be doing well even in these tough economic times.”

The parties have been feuding publicly since Ackman suggested his slate for the board, including a letter last week in which Pershing Square asked that Target ensure that the site of the annual meeting, a store in Wisconsin undergoing renovations, have reliable phone and Internet service. The meeting is set for May 28.

Board Nominees

“The four incumbent directors up for election are better qualified to serve the interests of shareholders than Pershing Square’s nominees,” Target said today in an e-mailed statement.

Ackman has put forward Richard Vague, a former bank executive; Jim Donald, who served as chief executive officer at Starbucks Corp.; Michael Ashner, chairman and CEO of Winthrop Realty Trust Inc.; and Ronald Gilson, a law professor at Stanford University and Columbia University.

Ackman’s slate would bring “very little downside, if any,” said Mark Axelowitz, a New York money manager who personally owns Target shares, and would bring “fresh new insights.”

Like other retailers, Target has seen consumers concentrate their spending on necessities as they cope with rising job losses and plunging home values. The shares fell 31 percent last year.

In February, Ackman told investors they could exit in full from his Target-only fund, which had plunged 90 percent since its inception in 2007. The decrease in the $2 billion fund outpaced Target’s share performance because Ackman invested using options rather than the underlying stock.

Real Estate

Ackman has pressed Target’s management to sell its credit- card portfolio, buy back shares and place the land under its stores into a real estate investment trust that would lease the property back to the retailer.

Ackman’s real estate proposal would cost $1.4 billion in annual lease expenses for 75 years, with payments rising at the rate of inflation, Target said today in a regulatory filing.

Target should consider other real estate strategies, Ackman said today. The retailer has waited too long to sell its credit- card loans and failed to consider other strategies to maximize the value of its real estate, he said. Target sold almost half of its credit-card portfolio to JPMorgan Chase & Co. for $3.6 billion last year.

“We think these errors have led to massive underperformance” compared with larger Wal-Mart Stores Inc., Ackman said. Target also hasn’t done enough with its food business to lure shoppers to stores, said Ackman and board nominee Donald, who helped oversee Wal-Mart’s grocery expansion.

“We are very encouraged from the feedback from shareholders,” Ackman said in an interview tonight. Pershing Square has spoken to more than 50 shareholders since proposing the alternate slate, he said. About 1,300 people listened to the meeting via Webcast and in person, Ackman said.

Target fell $1.06, or 2.4 percent, to $42.73 at 4:01 p.m. in New York Stock Exchange composite trading. The shares gained 27 percent this year through May 8.

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net; Courtney Dentch in New York at cdentch1@bloomberg.net.

Last Updated: May 11, 2009 18:49 EDT