J.C. Penney spent $170M for failed execs

Ron Johnson's tenure at J.C. Penney Co. will long be associated with a 25 percent sales plunge. Lost amid the criticism since his departure last month is the $170 million it cost to install Johnson and his top three executives.

The sum covers cash payments and restricted stock offerings to the four executives and outgoing Chief Executive Officer Myron Ullman - and doesn't include salary or incentive pay, according to public filings. Now after less than a year and a half, Johnson and his trio are gone, and some are being paid on the way out, too. Upon his April 17 exit, Chief Operating Officer Michael Kramer pocketed $2.1 million.

"This is a story of how just tossing money at management doesn't guarantee success," Steven Hall, managing director and founder of his eponymous executive-compensation consulting firm, said in an interview.

Joey Thomas, a spokesman for J.C. Penney, declined to comment.

Johnson recruited executives from across retail, including Target, Apple and Abercrombie & Fitch, to revamp the department-store chain. It spent a total of $236 million, including the recruitment of the top four executives, on what it calls management transition costs.

When Johnson's remake foundered, mounting losses and restructuring costs, which include the recruitment spending,- helped sink the balance sheet. Now Ullman, who returned as chief executive officer 17 months after Johnson replaced him, has been raising cash.

Investors also suffered under Johnson's leadership too as J.C. Penney sank 50 percent. The shares through Thursday had risen 5.9 percent since Ullman became CEO on April 8.

The recruitment of marketing chief Michael Francis is emblematic of what J.C. Penney was willing to spent to attract talent. Francis helped cultivate the "cheap chic" brand of discounter Target, where he worked with Johnson in the 1990s. To lure him from Target, J.C. Penney gave Francis $12 million in cash and $32 million in restricted stock in November 2011.

Francis was named president and given the responsibility to lead the overhaul of the company's marketing. The chain unveiled a new logo, television spokeswoman Ellen DeGeneres and themed monthly catalogs. Even as J.C. Penney poured money into brand advertising, sales fell. Francis was fired in June, and Johnson took over his responsibilities.

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