Activist investor Bill Ackman could face action from J.C. Penney Company, Inc. (NYSE:JCP)’s board of directors, according to Joann S. Lublin, Suzanne Kapner and Emily Glazer of The Wall Street Journal. Sources told the publication that board members were considering action because Ackman publicly released what should have been confidential boardroom negotiations two times last week.

J.C. Penney

J.C. Penney board holds phone conference

Sources told The WSJ that board members held a phone meeting Sunday to consider what steps it should take after Ackman’s release of the information. They reportedly considered his strong suggestion that they should speed up the process to find a replacement for Interim Chief Executive Officer Myron Ullman. The board didn’t immediately take any action, although it could decide at any time what to do about the suggestion from Ackman.

Ackman at odds with J.C. Penney’s board

Ackman’s release of the boardroom disagreements last week has put him at odds with the retail chain’s board. He released a letter he wrote to J.C. Penney Company, Inc. (NYSE:JCP)’s board initially telling it to act more quickly in finding a replacement for Ullman. The board said it was wrong of Ackman to release the letter publicly at the same time as delivering it to members.

Board members have apparently said since then that Ackman “crossed the line” and is now a “rogue” director. However, their options for dealing with Ackman’s actions may be limited. His fund Pershing Square Management holds an almost 18 percent stake in J.C. Penney Company, Inc. (NYSE:JCP). He’s also a board member, and it’s very difficult to remove one even when there’s such hostility among members of the board.

What legal experts say about J.C. Penney

The Wall Street Journal interviewed legal experts about what the chain’s board could do about Ackman. Weinberg Center for Corporate Governance head Charles Elson said there’s little the board could do from a legal standpoint to get rid of Ackman. They could create a special committee which serves as a de facto board and which does not contain Ackman.

That’s what HealthSouth Corp (NYSE:HLS)—a company which Elson serves as a board member—did when it fired founder and CEO Richard Scrushy in 2003. He refused to resign from the board, and the company then created a special committee. The legal battle in that case stretched out for years.

However J.C. Penney Company, Inc. (NYSE:JCP) does form such a committee, Ackman could sue the retail chain, arguing that the committee prevents him from carrying out his fiduciary duties. Ackman doesn’t stand for re-election to the board until next year, so the board may be stuck with him until at least then. At that time, they could decide that he shouldn’t be re-nominated for his seat.