I waited a decent interval before writing this, so I could
do it without biting through my lower lip.
Maybe you've heard that J. C. Penney, iconic American
retailer, isn't doing so well. Under Ron Johnson, a new CEO, the company's sales
last year dropped 25%, and sales were
down double-digits in the first quarter of this year. The stock price dropped
50% since Johnson took over in late 2011. Johnson's new sales and marketing
strategies bombed, spectacularly.
Johnson resigned a few weeks ago, after less than 18 months
on the job. The three top execs that he recruited also went out the door.
The directors of J. C. Penney spent at least $170 million
just to get Johnson and his marketing troika in the door. That doesn't count
their salaries or good-bye parachutes. A recent story on Bloomberg.net tells it
all, read it here.
Among other goodies, Johnson received $52.7 million in
"restricted" J. C. Penney stock when he was hired in November 2011.
All of those shares vested last year, so I guess it wasn't too restricted….
I won't even get into details about Johnson's salary and going-away
doggy bag of money, or the tens of millions paid to the other gents.
Apologists for sky-high executive pay packages love to claim
that they have to "pay the going rate for top talent." That might make
some sense if they were actually getting top talent.
"This is a story of how just tossing money at
management doesn't guarantee success," commented Steven Hall, an executive
compensation consultant.
Amen, brother.
Would Ron Johnson have taken only $25 million in restricted
stock? We'll never know.
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