JC Penney marks down its CEO's pay
The beleaguered retailer punishes Ron Johnson, whose missteps have cost the company and its shareholders plenty.
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.
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
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?
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.
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