'Despicable': Soros, Schultz Weigh In On J.C. Penney's CEO Fight

×
Getty ImagesStarbucks Chairman Howard Schultz (left) and William "Bill" Ackman, founder and chief executive officer of Pershing Square Capital Management.
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.

Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Add a Comment

*0 / 3000 Character Maximum

8 Comments

Filter by:
Garry Burkhart

Personally I like J.C. Penny's line of underware, Staford. It's really decent quality for a good price. The t-shirts hold their shape and wear well wash after wash. The one I shop also has Levis at a very good price so I still shop their store. After all the damage Ackerman has done, especially the Johnson hire which was a personal favor to someone who knew nothing about department retail, he should keep his fat pie hole shut and let Ullman, who at least has a somewhat sucessful track record at the helm, do his job. He has a long road to hoe which has been made harder by Ackerman's antics. Ackerman is just doing more damage. One has to wonder if this wanker is shorting the stock on the side because of the stuff he pulls? He knows he's doing damage and his BS is unprecedented in this type of situation. Pension funds involved in this POS's company should take a long hard look and wonder just who's best interest he really has. Pull a few hundred million from his fund and maybe he'll shut the hell up.

September 05 2013 at 7:53 PM Report abuse rate up rate down Reply
Hi Ron

Who are the JCP customers of today? Except for their drapery department which is excellent and unequalled by any of its competition (but I can't believe a big money-maker), Kohl's has its higher end inventory flanked and Walmart has everything else. A tough row to hoe I don't care who the CEO is.

August 13 2013 at 11:26 AM Report abuse rate up rate down Reply
stock market

When George Soros gets involved, you can bet the company will go to he11 - he destroys anything American.

August 13 2013 at 10:51 AM Report abuse +2 rate up rate down Reply
rostra

Perfect, a far left, and a far right, Board member squaring off, which can only lead to the demise of JCP. The exact situation facing our country over the past few decades, and look whats happened since the early 1980's when we began our debt run up. It's been a pissing contest between the parties, the public be damned.

August 13 2013 at 10:34 AM Report abuse +2 rate up rate down Reply
howard

heck I miss their catalogs
the things they send in the mails now are close to useless
what do they think people need when something comes in the mail?
a GO TO THE STORE colorful directive?
used to be you could order a zillion and one things
from those catalogs and even speak with persons who
spoke English about them and get something that used
to be called customer service assistance.
sure you can go online but the online site they have
isn't much better... those highly paid MBA's have managed to
screw with what once was a highly diverse and productive
shopping experience. i'm down on all the BOD's and the CEO
and anyone foolish to invest in Penny and still keep the
ball rolling the way it has been the last 3 +_ years.
this reminds me of what that stupid NY investor did to
Sears... screw with a success and your firm goes to hell.

August 13 2013 at 8:34 AM Report abuse rate up rate down Reply
janmanuel2

Bill Ackman sounds totally self-absorbed and self-destructive. All I know is that J.C.P.'s was really niceunder Myron Ullman and it stunk under Ron Johnson. He needs to keep his nose out of it, as he obviously doesn't know anything about the retail business. My JCP became like a horrible bargain basement under Johnson's tenure.

August 13 2013 at 8:30 AM Report abuse rate up rate down Reply
The Canoli King

I personally like JCP,but we the people could do without the politics.... Just please get back to what JCP once was .Thank You.. and stop the B.S.

August 12 2013 at 9:29 PM Report abuse rate up rate down Reply
tj

I don't know or care who becomes CEO but I have not shopped at JCP in about 2 years and I will not until they really care about more than mass profits. They are not alone in this world wide lack of management but I can hold my ground and not give $$ to anyone else but JCP I do miss a few things that I loved at that store but I have had enough. A manager should care about their employees and their customers should be treated like gold because they literally are!!

August 12 2013 at 8:17 PM Report abuse rate up rate down Reply
1 reply to tj's comment
xredsgguitarx

They have been losing money this is well documented.....What is a company suppossed to do? So what mass profits are you talking about? Stop listening to this class warfare crap it is wrong.

August 12 2013 at 8:40 PM Report abuse -1 rate up rate down Reply