After a boardroom brawl which lasted several days, it appears as if J.C. Penney Company, Inc. (NYSE:JCP)’s board of directors has beaten activist investor Bill Ackman. The retail chain announced that Ackman has resigned from its board, putting an end to the very public disagreement between Ackman and the rest of the board.
It was revealed on Monday that he was ending his push, but it wasn’t known what that entailed. Now we know.
J.C. Penney supports Chairman Engibous
The reason Ackman was publicly attacking the company’s board was because he wanted a replacement for interim Chief Executive Officer Myron Ullman to be put in place sooner rather than later. He also wanted to see Chairman Thomas Engibous fired, but J.C. Penney Company, Inc. (NYSE:JCP)’s board announced its support for both Engibous and Ullman.
So far Bill Ackman has lost more than $600 million on his long position in the aging retailer. His Pershing Square Management fund holds almost 18 percent of the company’s outstanding shares, making it the biggest shareholder.
Bill Ackman’s other options for dealing for J.C. Penney
Emily Glazer, Joann S. Lublin and Suzanne Kapner of The Wall Street Journal report that Ackman’s resignation from the retail chain’s board does provide him with other options. He would be freer to lobby the company’s board more actively or even make adjustments to his stake in the company as an outsider.
Ackman issued a statement saying that his resignation is the most constructive way for J.C. Penney Company, Inc. (NYSE:JCP) to move forward. The company has been struggling to recover from missteps by former CEO Ron Johnson which only put it further behind in its efforts to return to a prominent position in the retail space. Under Johnson’s tenure, sales fell 25 percent and losses amounted to $1 billion as he did away with the couponing and discounting strategy previously used by the retailer, thus alienating those who already shopped there while also failing to attract new shoppers.
According to The WSJ, Bill Ackman threatened to sell his shares of J.C. Penney and leave the company’s board at the July board meeting unless the board moved more quickly to find a permanent replacement for Ullman. On Monday, reports indicated that the board had been considering ways to get rid of Ackman.