Activist Investor William Ackman Resigns From J. C. Penney Board

(RTTNews) - Beleaguered department store chain J. C. Penney Co., Inc. (JCP) announced Tuesday that activist investor William Ackman has resigned from its board of directors. The company has elected former Macy's exec Ronald Tysoe to replace Ackman on the board. Both the changes were effective Monday.

The company added that the board intends to name another highly qualified new director in the near future. Tysoe has spent 16 years as vice chairman at Federated Department Stores, Inc., which is now Macy's, Inc. (M). He has more than 20 years of experience in the retail, finance and real estate investment industry.

"The Company is extremely fortunate to have the benefit of Ron Tysoe's judgment and experience at this important time. His deep knowledge of the retail industry and his financial expertise will be invaluable to us as we continue the work underway to return J. C. Penney to profitability and growth. I would like to thank Bill Ackman for his service on the Board over the past two years," Chairman Thomas Engibous said in a statement.

Ackman was pulled up on Monday by the J. C. Penney board for releasing confidential boardroom deliberations in two separate letters last week. The board was reportedly considering taking action against the activist hedge-fund manager for releasing the letters to the media at the same time that it was sent to the Board.

The WSJ reported on Monday, citing one of the people, that Ackman's actions "crossed the line" and made him a "rogue director".

Ackman is also the largest shareholder of J.C. Penney, with his investment firm Pershing Square Capital Management L.P. owning nearly 18 percent of the Plano, Texas-based retailer.

Ackman has recently been pressing directors to quickly replace CEO Myron "Mike" Ullman, III, who returned as CEO four months ago, under unusually difficult circumstances. Last Tuesday, J.C. Penney said it started a process to find a permanent successor to Ullman.

The Board of J. C. Penney has today also reaffirmed its overwhelming support for Mike and Engibous.

Ackman has complained in the two letters that the CEO search process was slow, and also that the company's performance was suffering, with Ullman having already revised the company's forecasts twice, each time pointing to worse-than-expected results.

Thomas Engibous, chairman of J.C. Penney, has said that the board strongly disagreed with Ackman's views and was extremely disappointed that his letter was released to the media at the same time that it was sent to the board. He added that Ackman's latest actions were disruptive and counterproductive at an important stage in the company's recovery.

Meanwhile, the board is persistent and explains that Mike has led significant actions since his appointment to correct the errors of previous management and to return the company to sustainable, profitable growth.

"During my time on the J. C. Penney Board of Directors, I have always advocated for what I believe to be in the best interests of the Company - its stockholders, employees and others. At this time, I believe that the addition of two new directors and my stepping down from the Board is the most constructive way forward for J. C. Penney and all other parties involved," Ackman stated.

JCP closed Monday's regular trading session at $13.17, up $0.55 on a volume of 30.93 million shares. In the past 52-week period, the stock has been trading in a range of $12.34 to $32.55.