Bill Ackman stepped down from JCPenney’s boardtoday following a public feud with the retailer’s board of directors.
CNBC’s Andrew Ross Sorkin caught up with Ackman this morning following his resignation.
“I elevated a bunch of issues that are critically important by making them public. We came to an agreement on Ron Tysoe,” Ackman told Sorkin, adding, “The board will now function more effectively without the noise.”
Last week, he fired off letters to the board demanding that they find a new CEO to replace interim CEO Mike Ullman and that chairman Tom Engibous resign.
It appears that part of his reasoning for sending the letters is that he was taking what he believed to be a Warren Buffett-style investing approach. (He has compared his investment strategy to Buffett before.)
His basis in the company is $US25 per share. So it is not clear that he has any ambition to sell these shares at a low price. One other thing, he quoted Warren Buffett. Warren Buffett had a letter that he wrote in 1993. I just want to read you a bit of it. He is wrapping himself in sort of the Buffett flag a little bit in terms of his decision to go public which has been something that people, including myself, have been highly critical of. This is what Warren Buffett said. He said, “A director who sees something he doesn’t like should attempt to persuade other directors of his views. If he is successful, the board will have the muscle to make the appropriate change. Suppose though, that the unhappy director can’t get other directors to agree with him. He should then feel free to make his views known to the absentee owners. Otherwise known as the public shareholders. Directors seldom do that of course. The temperament of many directors would in fact be incompatible with critical behaviour of that sort. But I see nothing proper in such actions assuming the issues are serious. Naturally, the complaining director can expect a vigorous rebuttal from the unpersuaded directors. A prospect that should discourage the dissenter from pursuing trivial or non-fractional causes.”
Ackman, who runs $US12 billion Pershing Square Capital Management, is still JCPenney’s top shareholder. He owns a nearly 18% stake in the retailer’s stock.
He had reportedly threatened to sell his stake if the board didn’t replace Ullman. That doesn’t seem to be the case, though.
“If I wanted to sell, I could have sold all along during the quarterly window,” Ackman told Sorkin.