4/3/2013 2:15 PM ET|
JC Penney marks down its CEO's pay
The beleaguered retailer punishes Ron Johnson, whose missteps have cost the company and its shareholders plenty.
Johnson's compensation took a massive hit, with the company reducing his overall pay package by more than $50 million, according to a regulatory filing posted on Tuesday.
The former Apple executive took home a 2012 salary of $1.5 million and $344,000 for personal use of the company's corporate jet, certainly not peanuts by any means. But that's a far cry from his 2011 total of $53.3 million in salary, bonus, stock awards and other compensation.
Johnson has made a slew of memorable business decisions since joining in 2011. They include introducing a no-sale policy that customers hate, getting Penney embroiled in a messy legal tangle with Macy's (M) over Martha Stewart Living Omnimedia (MSO) and cutting thousands of jobs at the retailer's stores and corporate offices.
Meanwhile, shareholders have suffered as its stock slumped 59% during the past 12 months.
"To pay for performance that was terrible would destroy the credibility of the incentive system," Jeffrey Sonnenfeld, president of the Chief Executive Leadership Institute and a senior associate dean at Yale, told Bloomberg about Johnson's pay cut, which he described as "appropriate."
One revealing aspect of the regulatory filing was the whopping price tag for Johnson's cross-country commute. Rather than moving to Penney's headquarters in Plano, Texas, Johnson commutes from California, where he and his wife have school-age children, Bloomberg notes.
But that travel doesn't come cheap, as the $344,213 for Johnson's personal use of Penney's corporate aircraft attests.
He's not the only exec who's taking advantage of Penney's three Gulfstream jets, however. At least nine of the company's top key officials commute via plane to Plano, as MSN moneyNOW reported last month.
Altogether, the company spent nearly $400,000 on paying for three executives' personal use of the jets, according to Tuesday's regulatory filing.
To put that in some perspective, that amount would have covered the average pay for 23 Penney sales associates, based on the average annual pay listed by Glassdoor.com.
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