Oh, you thought everything would get back to normal at J.C. Penney (JCP) once Ron Johnson was gone?
Just four months after Johnson was ousted as CEO, the struggling retailer once again finds itself embroiled in a leadership controversy. Activist investor Bill Ackman, who was responsible for bringing on Johnson in the first place, is now making noise about replacing current CEO Myron Ullman. Ullman had preceded Johnson as CEO, and was brought back by the board in April to stabilize things after Johnson's disastrous reign.
Ackman's Pershing Square Capital Management represents one of the company's biggest investors, and despite the failure of his last hand-picked chief executive, Ackman hasn't hesitated to throw his weight around. Last week, he sent a letter to the board urging it to speed up it search for a new CEO; the board fired back, calling his efforts "disruptive and counterproductive" and calling Ullman "the right person to rebuild J.C. Penney." Ackman is also pushing for Allen Questrom, another former CEO, to replace Tom Engibous as chairman of the board.
Ackman's efforts to undermine the current leadership have drawn sharp rebukes from outside the company. Most notably, Starbucks (SBUX) CEO Howard Schultz jumped into the fray late last week, blasting Ackman for trying to oust Ullman.
"It is despicable of Ackman to leak a letter asking for [Ullman's] removal," he told the Wall Street Journal. "The irony is that Ackman himself has every step of the way severely damaged this company."
Schultz also told CNBC that he thought the board should move to remove Ackman.
Schultz isn't the only one weighing in on the controversy. Bloomberg reports that George Soros -- who owns a sizable stake in the company -- likewise told J.C. Penney that he supports Ullman and Engibous. But Ackman isn't without allies: Richard Perry's hedge fund, Perry Capital, another big shareholder, said that it agrees with Ackman that Ullman and Engibous need to go. The week of infighting has had the stock on a roller coaster ride for the last week.
Indeed, it's rare to see such an ugly boardroom fight play out in the public eye. If and when it comes time to replace Myron Ullman as CEO, we have to imagine the board will have a hard time convincing a talented CEO to join this circus.
Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.
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