The big sacrifice at Penney’s…

December 19, 2008

Many people these days feel lucky if they still have a job and the check actually clears. You’d think that would be particularly true at retailers, which are really in the dumps. But that’s not the case at JC Penney (JCP) which earlier this week filed this 8K that has some of the most self-serving language we’ve come across recently. Penney’s board has decided to give Chairman and CEO Myron Ullman III a supplemental performance grant “to provide an incentive for performance during the current economic environment and to recognize Mr. Ullman’s willingness to continue his service to the Company” (we’ve added the emphasis here).

A quick skim of the agreement doesn’t seem all that offensive, though at $25 million, it’s quite an incentive for something that really should be considered doing your job. The shares — up to 500,000 — are subject to a sliding scale based on stock performance over the next three years. If the stock doesn’t increase by at least 11.3%, Ullman gets zippo. If the stock increases by at at least 29.1%, Ullman gets the 500,000 shares. The agreement also has some interesting new language about what happens under a change in control and it’s not immediately clear from the filing whether this just applies to this particular grant or is a bit more broadly defined.

Still, given this story in today’s WSJ, which says that Penney is planning “about 300 “doorbuster” discounts on various items, up 80% from last year, and will keep stores open to midnight, one hour later than on Black Friday” you have to wonder what that sales clerk stuck in the Penney’s at 11:15 pm at night thinks about Ullman’s incentive. Between this and the “mistake” at Kohl’s that we footnoted two weeks ago, this very bad shopping season isn’t looking too shabby for at least two retail CEOs.

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