JCPenney's $170 Million Pricetag For Johnson's Team Looks Bad, But Only In Hindsight

Two things can be said for Monday morning quarterbacks. First, they're always right. Secondly, they are always fond of criticizing how much money was spent for a team that is associated with weak results. Somehow, no one criticizes the sky-high expenses and compensation package of a winning team. So it only stands to reason that Wall Street is going to be taking a long and hard look at every expenditure related to Ron Johnson's running of JCPenney (NYSE:JCP).

On Friday, Bloomberg fed those JCPenney critics barrels of red meat by detailing an impressive $170 million pricetag from the Johnson team—which did not include salaries and bonuses. 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. Upon his April 17 exit, Chief Operating Officer Michael Kramer pocketed $2.1 million.

Johnson recruited executives from across the retail industry, including Target Corp., Apple Inc. and Abercrombie & Fitch Co., 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. Investors suffered under Johnson's leadership, too, as J.C. Penney sank 50 percent. The shares rose 2.7 percent to $17.26 at the close in New York and have risen 8.8 percent since Ullman became CEO on April 8.

The story spoke of the recruitment of marketing chief Michael Francis, who came from Target (NYSE:TGT), where he had worked with Johnson in the 1990s. To lure him from Target, JCPenney gave Francis $12 million in cash and $32 million in restricted stock in November 2011.

In November 2011, Chief Talent Officer Daniel Walker received a signing bonus of $8 million and restricted stock valued at $12 million to join the company from a human resources firm he founded after time at Apple and Gap Inc.

For more:

- See the Bloomberg story

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