In the 8-K that Penney’s filed on February 28, the board declared that age is just a state of mind, not a factor that should terminate their status as directors. After reporting the named executive officers’ 2011 salaries and freshly granted equity awards, the filing reported that the directors recently amended J. C. Penney’s Bylaws to state:
“…Notwithstanding the expiration of a director’s term…, no person shall be qualified or may continue to serve as a director after attaining age 74; provided, however, that the Board of Directors may waive such mandatory retirement age with respect to a director if it deems such waiver to be in the best interests of the Company and its stockholders.”
Before that amendment, a director’s 74th birthday marked the end of his or her service at Penney’s… not to mention the end of the annual $60,000 cash retainer (plus extra money for committee leadership), the annual award of $120,000 worth of Restricted Stock Units, and the company’s match for charitable donations up to $10,000 per year.
Changes aren’t made in a vacuum, so who was at risk of losing a seat at the boardroom table? According to the March, 2010 proxy, that would be director Burl Osborne, who has served on the board since 2003. His age was listed as 72 in last year’s proxy, so by now he is (or soon will be) 73 years old. Osborne’s biography states that he has been an executive at Freedom Communications, Inc., The Associated Press, Texas media company Belo Corp., and other publications. The filing explains his contributions as a director:
“Mr. Osborne has extensive executive and board experience in major publicly-traded media companies. Along with human resources and operations management experience, he brings to the JCPenney Board skills and perspectives to help the Company reach and communicate with its customers through various media….”
But now that the change has been made, several other directors may hope that an exception to the mandatory retirement age will be made for them, too: Of the company’s 12 directors, 75 percent of them are older than age 60.
Of course, companies want strong, intelligent leaders; if they come with that and a lot of valuable experience, who cares about an artificial number like age? We don’t, but it’s not really up to us. Ultimately, it’s up to Penney’s shareholders to decide whether they’re getting the leadership they want from the board.
See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at email@example.com.