Activist investor William “Bill” Ackman, who is an independent director for J.C. Penney, is being called the “angry guy” who is responsible for tanking the company’s stock, according to some experts. Many describe a Friday meeting in the company’s boardroom as a time when “all hell broke loose.”
Ackman’s Pershing Square Capital Management is one of J.C. Penney’s largest investors. In a letter to the board on Thursday, Ackman voiced frustration and concerns with the board regarding the current process being undertaken to fill the CEO job permanently. He feels as though the issue has not been handled quickly enough.
Then on Friday, in a second letter, Ackman demanded that the company’s board meet as soon as possible and that the current chairman, Tom Engibous, be replaced. The company has had no comment about replacing the board chair.
In April, Mike Ullman was returned to the role of chief executive to help recover from a sales plunge blamed on Ron Johnson, who Ackman pulled from Apple’s retail side in 2011 to turn J.C. Penney into a trendier, more popular department store. Johnson started a pricing program that required no sales, and it didn’t work. Instead, it hurt the 111-year-old retailer even more.
Reports indicate that Jeffrey Sonnenfeld, a senior associate dean at the Yale School of Management, has indicated J.C. Penney made a mistake when they brought in Johnson, thus, Ackman would be the person who would be responsible for causing stock to drop.
J.C. Penney shares dropped 4.4 percent to $13.05 early on Friday, which was getting close to lows that the company last saw more than 10 years ago. According to reports, the entire dispute with Ackman could keep the company from finding a new leader if it is actually looking for one.
In the Thursday letter, Ackman encouraged another move in the retailer’s management with a claim that former CEO Allen Questrom conditionally agreed to return as chairman, which CNBC said Questrom has told them was not a done deal. Questrom has said he will not return under hostile circumstances.
Engibous told the media on Thursday evening that the board “strongly disagrees” with Ackman and is “extremely disappointed” that his letter has been made public. He called Ackman’s moves “disruptive and counterproductive.”
Experts have pointed out that the directors are there to represent the full interests of the company, not separate interest blocks.
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