J.C. Penney Spent $170 Million to Install Johnson Team [View all]

[phantom power]

The question is, of course, why did DreamWorks hire this ultra-expensive failure? Because there is a club, and we are not in it. There is no amount of failure that will cause these people to ever be unemployed.

Ron Johnson’s tenure at J.C. Penney Co. (JCP) will long be associated with a 25 percent sales plunge. Lost amid the criticism since his departure last month is the $170 million it cost to install Johnson and his top three executives.

The sum covers cash payments and restricted stock offerings to the four executives and outgoing Chief Executive Officer Myron Ullman -- and doesn’t include salary or incentive pay, according to public filings. Now after less than a year and a half, former Chief Executive Officer Johnson and his trio are gone, and some are being paid on the way out too. Upon his April 17 exit, Chief Operating Officer Michael Kramer pocketed $2.1 million.

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Investors suffered under Johnson’s leadership, too, as J.C. Penney sank 50 percent. The shares rose 2.7 percent to $17.26 at the close in New York and have risen 8.8 percent since Ullman became CEO on April 8.

The recruitment of marketing chief Michael Francis is emblematic of what J.C. Penney was willing to spend to attract talent. Francis helped cultivate the “cheap chic” brand of discounter Target, where he worked with Johnson in the 1990s. To lure him from Target, J.C. Penney gave Francis $12 million in cash and $32 million in restricted stock in November 2011.

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Thanks to a termination agreement, Francis received $4.3 million on his way out. So in about eight months, J.C. Penney spent $16 million in cash on hiring and firing Francis, who in December was named chief global brand officer for DreamWorks Animation SKG Inc. Because he left before the restricted stock vested, he kept about 100,000 of the 1 million shares he was granted, the filings show. Meanwhile, the company cut its workforce by more than 40,000 people during Johnson’s tenure.

http://mobile.bloomberg.com/news/2013-05-03/j-c-penney-spent-170-million-to-install-johnson-team.html