After a very public bloodletting, it seems that JCPenney's boardroom drama may finally have come to a close. The company's board announced Tuesday (August 13) that Bill Ackman would resign from his position on the board, ending the long power struggle.
Ackman will be replaced by two other board members, one of whom has already been named. Ronald Tysoe, a former Macy's executive, will step in to fill Ackman's shoes, while JCPenney will name another director in the near future.
"During my time on the J. C. Penney Board of Directors, I have always advocated for what I believe to be in the best interests of the Company—its stockholders, employees and others," Ackman said in a statement. "At this time, 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."
Ackman had been embroiled in an effort to speed up the search process to replace interim CEO Mike Ullman, and he recently went public with statements that board chairman Thomas Engibous should be replaced. Ackman's been running out of friends, though, with investor George Soros, along with Glenview Capital Management, siding against his efforts.
His role in recruiting former CEO Ron Johnson hasn't helped his case either. Johnson's strategy to reinvent JCPenney proved a bust and has put the company on the precarious financial footing it now finds itself on.
The announcement triggered a 4 percent jump in JCPenney's stock, but it began to decline later in the day as investors began to worry about Ackman potentially selling his 39 million shares, a 17.7 percent stake in the company. The stock was down more than 3 percent at market close.
But Ackman won't be dumping his stock any time soon, since he is restricted from selling those shares since he has material non-public information as a former director. In addition, if the share price rises, that will reduce the loss for Ackman's Pershing Square investors, who currently face a loss of about $700 million on the investment.
On the bright side, now that the boardroom has been saved, maybe they can get back to saving the company.
Ackman Threatens To Sell JCPenney Stake
JCPenney Needs A New CEO Quick, Says Ron Johnson Backer Bill Ackman
JCPenney Hires Kraft Marketer Debra Berman With The Clock Ticking For The Holidays