JC Penney's $41,817 executive commute

At least 9 of the retailer's top bosses live remotely and get a company plane to shuttle them to Texas HQ.

By Aimee Picchi Mar 21, 2013 1:54PM

JC Penney CEO Ron JohnsonBeleaguered retailer J.C. Penney (JCP) has laid off thousands, seeking to cut costs as an ill-fated makeover plan has faltered. But the company is also spending sky-high amounts on ferrying top executives between their homes and its headquarters, according to Bloomberg.


At least nine of the company's top key executives live a plane ride away from Penney's Plano, Texas, headquarters, including Chief Executive Officer Ron Johnson (pictured) and Chief Creative Officer Michael Fisher. 


The retailer pays for the commutes of all the executives, including a construction executive who lives in Boston and a design-and-trends employee who lives in New York, Bloomberg said. The company's head of human resources is also among those commuting from California.


Many of these executives formerly worked at Apple, from which Johnson was recruited.


The company has three jets registered to it, two Gulfstream G450s and one Gulfstream G-IV, according to the Federal Aviation Administration.


Operating a Gulfstream jet isn't cheap: A round-trip flight between Dallas and San Jose, Calif., adds up to a whopping $41,817, according to a quote from private-jet company Starbase Jet, as cited by Bloomberg. 


Aside from the cost of paying for the executives' cross-country commutes, many of them also don't spend the entire week in Texas. The Penney execs who live in California, for example, fly out of Texas on Thursdays and work from their home state on Friday. 


"To have them not be there on a regular basis I think sends a very, very bad message," Howard Gross, managing director of retail and fashion practice at executive search firm Boyden, told Bloomberg. Such telecommuting arrangements have come under debate recently, with Yahoo Chief Executive Marissa Mayer banning staff from working from home.


CEO Johnson's work arrangements have been detailed before, as written by my colleague Jonathan Berr. Johnson works four days a week at its Plano headquarters, then returns to California in his corporate jet. While in Texas, he stays at the luxurious Ritz-Carlton hotel.


Meanwhile, shareholders of J.C. Penney continue to suffer. The stock has plunged 56% during the past 12 months through yesterday.


Because of the long-distance commuting, decision-making has slowed down and created friction between the new executives and long-term employees, Bloomberg notes. Some of the long-term employees have been called DOPEs, short for "dumb, old Penney employees," the story adds. A company spokeswoman told Bloomberg she had never heard the term. 


As for the commuting executives, the company said several are "in the process of setting up permanent residence here and are moving to the Dallas area."


The spokeswoman added: "With all the travel retail leaders do, it doesn’t always make sense to uproot and relocate their families, move them away from friends and family to a new city -- only to be gone traveling to visit vendors, stores or overseas."


More on moneyNOW

Tags: JCPRetail
26Comments
Mar 21, 2013 2:37PM
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 "With all the travel retail leaders do, it doesn’t always make sense to uproot and relocate their families, move them away from friends and family to a new city -- only to be gone traveling to visit vendors, stores or overseas."

 

This statement is just complete nonsense. I have worked for several major corporations and consulted with many more, and this is exactly what is wrong with much of American business--the excessive sense of entitlement senior executives feel they are owed. I guarantee that the middle managers, who are the people who truly make the company run, aren't allowed to commute cross-country. Plus, if you are going to commute, why a private jet and nights in the Ritz-Carleton? That sets a bad tone for the company by saying that these people are royalty and don't have to suffer like the peasants who work for them.

Mar 21, 2013 3:00PM
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So basically 1 round trip in that fancy jet = a year's salary for one employee.
Mar 21, 2013 2:27PM
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Wow. I am not an employee or shareholder of JC Penney, thankfully, but if I were this story would add to my sense of outrage. Mr. Johnson fails to realize that the trappings of success at Apple came AFTER the success, not in the middle of failure. He also seemingly has failed to have learned from Steve Jobs that the company comes first. Jobs lived in a relatively modest house not far from the office and put growth and strength of Apple in front of all else. Johnson seems to put his own benefit and comfort in front of all else.
Mar 21, 2013 3:13PM
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JCPennys has trouble figuring out what their problems are and these are the folks that they brought in to help?
HAHAHAHAHAHAHAHAHAHAHAHAHA, dang.
Mar 21, 2013 3:04PM
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When is enough, enough? It's time for the J.C. Penney board of directors to put the company first and fire these entitlement executive babies. Enough already - what is the B.O.D waiting for?

Mar 21, 2013 3:04PM
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This is the worst example of leadership with a company in need of leadership. There are other companies in the same shape that have booted the CEO and Board of Directors out the door. So he may get a golden paracute deal where the sun don't shine to leave.
Mar 21, 2013 3:53PM
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JCP should start by getting rid of the planes... even first class aboard commercial airlines would be a huge savings and show that the company really does want to change. Investors need to punish this company starting at the company board level.
Mar 21, 2013 3:10PM
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The key sentence in this whole article is - "Many of these executives formerly worked at Apple, from which Johnson was recruited."

 

Simply amazing, simply amazing!

Mar 21, 2013 3:09PM
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Consequences, consequences; perceived reactions to our intended actions, image, image....

To me, Penney's image was always modest, perhaps even low-cost discounted and frugal.

I never would have twined necessary staff caliber with jet-set dynamics.  Shows how very

biased some buying public is. Though flying coach may not appeal to all, when your product 

is considered non-durable working-man consumer discretionary that's floundering, it's

best to fly like most and not as though you're a Neiman officer headed for a Dubai showroom.  

 

In times of economic stress bordering upon economic depression, any sign of waste should

be targeted as unnecessary and eliminated. It's ok to get "the best'" if the costs are similar but

when they're not, prudence mandates one tailor manpower perks to product function. WILD

impractical perks for any organization should be cut.  Since Penney's hasn't viewed itself in the mirror lately and streamlined its budget, I'd say the whole organization should be audited for waste and altered; nobless oblige has limits ....

Mar 21, 2013 4:29PM
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I wonder how many "made in china" JC Penney shirts /pants need to be sold to pay for one jet ride? 
Mar 21, 2013 4:58PM
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WTF?!?! Exactly what's wrong with first-class? Geez. Does he fear for his safety or something? Heck, I don't think anyone know who he is! He's not a recognizable celebrity (they would pay for their own private jets anyways) and he's not the President of the United States (who has to travel in private for obvious security reasons).

 

Common sense really is not common anymore and humility doesn't exist.  

 

James Penney founded his company under the rule to "treat others the way you'd like to be treated - Fair and Square". I can't imagine any of Mr. Johnson's store workers feeling like they're being treated "fair and square" when twice or more of their ANNUAL salary is being spent to shuttle him to work every week. In the meanwhile, most employees AND Americans in general can barely put gas in their cars to commute to work.

 

But then again...maybe Mr. Johnson HASN'T adopted James Penney founding rule.

 

God help us.

Mar 21, 2013 4:00PM
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CEO`S get lots of perks like this and more.What surprises me is how cheap people

are when there`s talk of raising the minimum wage.The hardest jobs I ever had paid

minimum wage or less when I was a teen.I read once that 65% of minimum wage

people are over 21 years old.

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I will never set foot in a Pennys ever again after reading this.  The garbage does float to the top.
Mar 21, 2013 5:04PM
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Just get rid of the sorry a--CEO with no severance package along with his high end staff and take a shot at stabilizing the company.  The CEO is the problem.  Cut the head off of a snake and it dies.
Mar 21, 2013 5:08PM
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"Operating a Gulfstream jet isn't cheap: A round-trip flight between Dallas and San Jose, Calif., adds up to a whopping $41,817, according to a quote from private-jet company Starbase Jet, as cited by Bloomberg."

Maybe that expense should be taxable to those executives as income.
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Ok, someone or multiple someones has/have taken a hard hit to the head.  There is nothing logical about this at all.  There is too much technology available.  I keep looking for smarts/common sense/logic; I keep being disappointed.  The consolation is that I feel better about myself every time I read such things.

Mar 21, 2013 5:34PM
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Ron Johnson is operating on a short load. I have said this before, Apple did not even flinch when he left them. They were probably just glad he left.
Mar 21, 2013 5:50PM
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So big paychecks and travel perks while the rank and file get slaved and decimated. It guess that looks equitable from one side of the desk.

Mar 22, 2013 11:23AM
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Maybe if their salaries were linked to the stock value the top executives would stop being so wasteful and more productive.  They take all the credit for a company's success; they receive obscenely large bonuses and excellent perks like unlimited expense accounts; but, when things go wrong they start laying off hard-working minimum wage employees, cut the hours of the remaining staff, reduce or eliminate their benefits, and waste corporate funds on airfare because they don't want to be away from home to long. 
Mar 21, 2013 6:32PM
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They blew it big time when they tried to makeover Penneys. I was a big fan of St Johns Bay only one of the casualties from this group. Many people like me feel the same and we don't shop there anymore! I haven't been there since black Friday and then I bought nothing.

I spend loads of money at Penneys. Now I do my shopping on line at LL Bean, Duluth Trading and Lands End. Better quality than the crap Penney's now has.

 

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