JC Penney marks down its CEO's pay

The beleaguered retailer punishes Ron Johnson, whose missteps have cost the company and its shareholders plenty.

By Aimee Picchi Apr 3, 2013 10:15AM

JCPenney CEO Ron Johnson.J.C. Penney (JCP) sent a strong message to Chief Executive Ron Johnson: You're not going to get rewarded for your missteps. 

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.

More on moneyNOW

Apr 3, 2013 11:02AM

The fact that this man is paid enough to be able to cut $50 million from his pay is more than an indication of the problems that exist in wall st with bloated CEO pay and employees/shareholders getting the shaft. I don't care if Penny's stock was up 500% there is nothing that this man does that is worth that kind of money. Fire the low level workers and those that actually interact with the customers and make or break the business but give the guys at the top who are sinking the ship, money hand over fist. Now don't get me wrong glad to see they cut this and seem to buck the trend of pay them regardless of performance but this isn't the story everywhere and it has to stop. CEO's don't deserve pay like this and certainly not when stock prices fall. I think its time to get CEO pay back down to reality. If they don't want pay cuts then find someone else, I guarantee there of plenty of others who know the business and can do the work for less and do a better job without 8 figure pay.

I think its time

Apr 3, 2013 11:04AM
In all hopes of JCP shareholders and anyone else that can make a difference reading this... As soon as you allowed this guy to make the changes he did you lost me and my family as a loyal customer. I used to always go to JC Penney first and foremost if I wanted something. Now I walk right through your store without a glance. Oh and you'll love this: The only reason I am walking through your store to get to another store or the mall area is because the parking lots in front of JCP stores are ALWAYS the least crowded. Doesn't that just make you feel special?!  Get rid of this guy, go back to the way things were and maybe, just maybe, your old customers might forgive you. By the way, you are just as much to blame as this guy is for your troubles. Who put him in this position?!
Apr 3, 2013 11:15AM
Ron Johnson has to go.  He ruined a good store
Apr 3, 2013 11:34AM
give him the same thing all those lower level  workers recieved - A PINK SLIP
Apr 3, 2013 11:10AM
Its about time. Wake up and smell the coffee corporate America!
Apr 3, 2013 11:30AM
Apr 3, 2013 11:26AM
Poor man. How will he ever be able to live on $1.5 million a year. Is there a website or address where donations can be sent?
Apr 3, 2013 11:04AM
And? Isn't he STILL making zillions more than anyone else? So far, his "talent" is losing money and a lack of retail execution. Apparently, THAT is worth the other millions he will make. Meanwhile, JCP has yet to hire ACTUAL TALENTED people and restore course. My guess is-- we will see those idiots with the big Liquidation Bankruptcy signs on the main intersections by June. FIRE THE BOARD AND THE CEO. Save the name for skill sets that aren't lame.
Apr 3, 2013 11:27AM
 I'm sorry but the stock price is down 59%, Penny's is basically a 'laughing stock' and the company still pays $400,000 so 3 'top level' employees can commute via the corporate jets? Really? If Mr. Johnson, and his two 'buddies' were a 'normal' employee his employment evaluation would be such that he would be terminated immediately!
Apr 3, 2013 11:15AM
They need to get rid of him before he takes everyone down with him. What he did with Apple almost anyone could have done. Apple is one line and just about sells itself.
Apr 3, 2013 11:18AM
I agree with jus4jas.  It's too late.  I got the "JCP" (what is with that name?) $10 off a $50 purchase coupon in yesterday's mail.  It didn't even make it into my house.  I threw it in the garbage can.  So sad.  I LOVED the old JcPenny.  If they can totally undo this mess, then let me know.  Otherwise, sorry.  My business is going elsewhere.
Apr 3, 2013 11:07AM
This is a good move for all corporations to follow. Should a regular employee show poor performance results such as these they would be fired. This can serve as a warning that better things are expected from him in the coming year. I hope he takes the message seriously and returns the chain to it's former glory. JCP was the only place my parents, and grand parents shopped. We shopped there also until Ron made his changes and got rid of what the people wanted such as brand names and inventory. He also cut the floor staff and removed registers from the sales floor. Looks like an easy fix to me, get to work and save it Ron.
Apr 3, 2013 11:35AM
I think it is too late for Penney's...once you lose your base customers its very hard to get them back. Old man J.C.Penney would roll over in has grave if he knew the direction his store has gone. There is not much choice now.
Apr 3, 2013 11:41AM

There is still time to save JCP but this bozo has to go. He is not worth 2 cents. How far down does the brand has to go before changes are made?

Apr 3, 2013 11:05AM

Major mistake -- should have bankrupted Penny's.  Then you could have gotten a 20 million parachute deal.   And on to the next BOD or CEO gig.  There is no true 'failure' at this layer. 


Meanwhile, how many of the "thousands of jobs [cut] at the retailer's stores and corporate offices" represent people who are now bankrupt, in foreclosure or worse?


Prattle on lovelies -- you can't justify it no matter how you slice it.

Apr 3, 2013 11:19AM
No! this is Wrong, absolutely wrong! Ron Johnson should be in Jail, and all his property and compensation must be forfeited, he is so calus and so greedy  bustered only would be the right example of Greedy corporate america's CEO or the greedy management. This guy ruins JCPenny company and eventually 1600 people of lo-paid american worker lost their job because of his wrong experipent. HE IS A FOOL AND GREEDY. As Well  the board memebr also fool and greedy too.
Apr 3, 2013 11:30AM
Bravo!!!   The normal joe working stiff, would be fired for a lot less. This guy blew it, and got a raise. At least he they came to theirs senses and cut that raise,  Should actually be out to the curb.
Apr 3, 2013 11:01AM
too bad "there a day late & a dollar short" I will NEVER give JCPENNY a 2nd look ! done
Apr 3, 2013 11:29AM
Oh J C Penney is horrible. I ordered clothes for my daughter on their website. Some Life Insurance Company they are affiliated with, Stonebridge Life started taking money from my bank account each month for $10 to $25. It is called SB Fun Family rewards. I never signed up for anything either. I'm so angry that I can't see straight. When I did research last night I discovered that this scam has been going on since 2006. How do they get way with this crap? Beware of ordering anything from J C Penney online! Check your statements closely. They will be hearing from my attorney very soon! I hope they go out of business!
Apr 3, 2013 11:32AM
Shareholders need to take the same measures with  the Wall Street barrons, who are rewarded  for prudent decisions, but rarely punished for unsound ones.
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