The board of JC Penney is facing scathing criticism from investors and corporate governance experts after ousting chief executive Ron Johnson and replacing him with his own embattled predecessor, Myron Ullman.
Hours after the switch was announced on Monday, there was at least one call for the entire board to resign, while others suggested shareholders might vote out current directors at the company's next annual meeting.
"It was the wrong thing for the board to do to get rid of Johnson here. With the board firing Johnson now, at this stage in the game, they should tender their own resignation as well," said Brian McGough, managing director and head of the retail group at research firm Hedgeye Risk Management.
Although the board may not face serious legal challenges to the decision, shareholders may question whether the move to replace Mr Johnson with Mr Ullman, whom Mr Johnson himself replaced in late 2011, is good for them.
More than 16 hours after the change, Penney’s website still listed Mr Johnson as chief executive.
JC Penney shares lost half their value during Mr Johnson’s tenure after having shed 15 per cent during Mr Ullman’s time as chief executive from 2004 to 2011. The stock slid further on Monday night after the retailer said Mr Ullman was returning, as analysts blamed him for creating the problems that Mr Johnson was supposed to fix.
Shares tumbled 10.3 per cent at $14.23 in early trading yesterday.
Whether Mr Ullman is the right man for the job or not, some said ultimate responsibility for the retailer’s future now lay with the remaining 10 members of the board of directors, four of whom joined in the last five years. – (Bloomberg)
