JCPenney spent $170 million hiring failed CEO Ron Johnson and his top three executives.
About 18 months later, all those executives are gone, reports Matt Townsend at Bloomberg News.
Johnson left JCPenney last month after shares sunk 50% in his tenure. The charismatic former Apple executive unsuccessfully tried to make JCPenney more modern by eliminating its popular promotions program, which only drove away customers.
The $170 million used to recruit the high-level executives includes cash payments (such as a sign-on bonus) and stock options and doesn’t even include salary, according to Townsend.
“This is a story of how just tossing money at management doesn’t guarantee success,” consultant Steven Hall told Bloomberg.
Former CEO Mike Ullman took Johnson’s place as head of JCPenney.
The money JCPenney spent recruiting four short-lived executives is small potatoes compared with the billions of dollars its burning through to finish out a costly part of Ron Johnson’s strategy.
Johnson started remodeling 700 stores to include shop-in-shops, sections that highlight certain designers.
Many of the stores were still under construction at the time of Johnson’s ouster, forcing JCPenney to finish what he started.
Today, the company is in grave financial danger: if it continues burning through cash at the current speed, it would be out of money by mid-summer.
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