JC Penney Top Investor Resigns From Board

By Sam Lewis

Days after his controversial letter went public, Bill Ackman steps down

JC Penney just hit another bump on the long and winding road it has been staggering down. The top investor in the 111-year-old retailer announced his resignation from the board, effective August 12. “At this time,” Bill Ackman says, “I believe that the addition of two new directors and my stepping down from the board is the most constructive way forward for J. C. Penney and all other parties involved.”

Ronald  Tysoe, a former vice chairman of Federated Department Stores — now Macy’s — will replace Ackman. “I look forward to working collaboratively with the rest of the Board and management to advance the turnaround currently underway,” Tysoe says. JCP also plans to name another new director in the near future.

This announcement comes less than a week after Ackman penned a letter publicly pushing for the company to find a new CEO within the next 30 to 45 days. JCP fired back by offering its overwhelming support for CEO Mike Ullman, and Chairman Thomas Engibous — both of whom were the target of Ackman’s letter.

Ackman’s troubles with JCP began in 2011 when he handpicked former CEO Ron Johnson, whose reign with the retailer ended quite poorly. His ideals changed the philosophy of the discount retail chain, causing customers to flee and stock prices to plummet. Johnson’s departure put his predecessor, Mike Ullman, back in the role of JCP’s CEO on an interim basis. Ullman’s focus took JCP back to its roots — discounted traditional merchandise — which Johnson alienated. Ullman also made financial moves to correct the errors of Johnson. He added a $2.25 billion dollar loan from Goldman Sachs Inc. to ease financial concerns. The actions of Ullman never seemed to be enough for Ackman. Even though Ullman’s role as CEO with JCP was temporary, Ackman pushed for a new CEO to be named within 30 to 45 days and added that former JCP CEO Allen Questrom would join as chairman on the JCP board if the right CEO was chosen. It now seems unlikely that Questrom will be returning to JCP in any capacity.

The resignation of Ackman from the JCP board will likely end public hostility between the two parties. However, Ackman still has plenty of influence upon JCP. Ackman’s Pershing Square Capital Management is — and  it seems will remain — JCP’s largest shareholder, holding more than 39 million shares, almost 18 percent of all stakes.