J.C. Penney board cuts CEO's pay
J.C. Penney chief executive Ron Johnson, who is struggling to overhaul the department-store company, had his total compensation cut to $1.89 million last year.
Johnson, 54, received $1.5 million in salary and $344,000 for personal use of the corporate aircraft, according to a company filing Tuesday. The former Apple Inc. retail chief was awarded $53.3 million in salary, bonus, stock awards and other compensation in 2011, the year he took over as chief executive of the Texas-based retailer.
Johnson came under fire after J.C. Penney's annual sales slid 25 percent to $13 billion, the lowest since at least 1987, during his first year at the company. A shift to everyday low prices, marketing missteps and an attempt to move away from sales and coupons have alienated longtime shoppers. Johnson has been working to improve results by adding boutiques and new items from brands such as Joe Fresh. An effort to add items from the Martha Stewart line put the company at odds with Macy's which sued it and Martha Stewart Omnimedia in New York State Supreme Court. Early last month, the judge ordered the three companies into mediation to resolve the dispute.
Johnson said last month that 19,000 J.C. Penney employees have lost their jobs in the past year as his turnaround struggles to gain traction.
"He took the appropriate salary cut," Jeffrey Sonnenfeld, president of the Chief Executive Leadership Institute and a senior associate dean at Yale University in New Haven, Connecticut, said Tuesday in an interview. "To pay for performance that was terrible would destroy the credibility of the incentive system."
Johnson was recruited to J.C. Penney by billionaire investor Bill Ackman, whose Pershing Square Capital Management is the company's biggest shareholder, with an 18 percent stake. Ackman waived his compensation for his work as a J.C. Penney board member last year.
Johnson commutes on corporate aircraft to the retailer's headquarters in Plano from California, where he and his wife have school-age children. J.C. Penney has three jets registered to it, two Gulfstream G450 jets and one Gulfstream G-IV, according to the Federal Aviation Administration's website.
Chief financial officer Kenneth Hannah received $5.26 million in total compensation, which included $624,621 in salary, a $2 million bonus and about $2.5 million in stock awards, according to the filing.
Last month, Hannah said J.C. Penney was aiming to reverse its "huge miss" with core customers last year by expanding private-label lines such as St. John's Bay and reviving promotions.
Caribou Coffee Co. announced in March it will no longer pursue plans to open shops inside J.C. Penney stores, about six months after Johnson cited the company as a potential partner.