JC Penney C-Suite Feels Hit After Dismal Year
Last year was a tough one for J.C. Penney as a multi-year transformation plan begun at the year's start failed to traction and the retailer's shares shed 46 percent as investors grew impatient with the turnaround.
Now, Chief Executive Officer Ron Johnson and other C-suiters are feeling the hit. Johnson's 2011 compensation totaled $53.3 million, but for 2012, his total compensation was just $1.9 million, according to the company's filing with the U.S. Securities and Exchange Commission.
Unlike in 2011, Johnson received no stock awards in 2012. And the rate of his annual salary remained the same. He earned $375,000 in 2011, but that was pro-rated based on a salary of $1.5 million and his Nov. 1, 2011, start date. Last year, he earned $1.5 million.
In 2011, Johnson received a grant of 1.66 million restricted shares, which were valued at about $52.7 million based on J.C. Penney's closing stock price on June 13, 2011, of $32.10, according to regulatory filings. That was approximately the amount that Johnson was set to vest in Apple stock in 2012 if he had not resigned as the company's senior vice president of retail to take the helm at J.C. Penney.
But beyond the more than $50 million in restricted shares J.C. Penney granted Johnson, he put his money where his mouth was and invested another $50 million of his own money in the company's stock. Johnson purchased 7.26 million warrants, with a cost of $7 each and strike price of $30 per share, directly from the company.The $50 million in warrants can't be exercised until 2017.
If the stock price is below $30 per share when the warrants can be exercised, Johnson loses his entire $50 million investment.
On the flipside, if the shares are at $50 at that point, Johnson's stake would be worth more than $360 million.
Johnson isn't the only one at J.C. Penney taking the hit. The proxy filed with the SEC said, "None of our named executive officers received an annual cash incentive award for fiscal 2012 due to the company's financial results versus its goals. Our CEO received 44 percent of his target cash compensation (base salary only) and our other current named executive officers received, collectively, 55 percent of their aggregate target cash compensation (base salary only)."
Another point of frustration for some investors is that Johnson's permanent residence remains in California although J.C. Penney is headquartered in Plano, Texas. Beyond the base salary in 2012, Johnson tallied $344,213 in corporate jet expenses for his personal travel. J.C. Penney had no comment beyond what's in the proxy.
However, previous SEC filings reveal Johnson's $344,213 in corporate jet usage for personal travel is not only usual for J.C. Penney's chiefs. In fact, it's actually below the amount that former CEO Myron "Mike" Ullman used during five of the seven years of his tenure as J.C. Penney's CEO (see table below). Ullman's permanent residence was in Colorado.
JCP’s CEO Value of Personal Aircraft Usage
|Chief Executive||FY End||Value of Personal Aircraft Usage|
|Ronald B. Johnson||01/13||$344,213|
|Ronald B. Johnson||01/12||$13,185|
|Myron E. Ullman, III||01/12||$362,682|
|Myron E. Ullman, III||01/11||$199,681|
|Myron E. Ullman, III||01/10||$319,179|
|Myron E. Ullman, III||01/09||$458,078|
|Myron E. Ullman, III||01/08||$416,750|
|Myron E. Ullman, III||01/07||$567,067|
|Myron E. Ullman, III||01/06||$490,624|
Of course, while J.C. Penney wasn't a thriving department store under Ullman, its sales weren't nearly as troublesome as they've been under Johnson.
-By CNBC's Courtney Reagan; Follow her on Twitter @CourtReagan
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