WSJ: J.C. Penney Board Mulls Action Against William Ackman

(RTTNews) - J.C. Penney Co. Inc.'s (JCP) board of directors is considering taking action against William Ackman after the activist hedge-fund manager released confidential boardroom deliberations in two separate letters last week, the Wall Street Journal reported Sunday, citing people close to the struggling department chain.

Ackman is a director and the largest shareholder of J.C. Penney. His investment firm Pershing Square Capital Management L.P. owns nearly 18 percent of the Plano, Texas-based retailer.

According to the WSJ report, the J.C. Penney board met late Sunday afternoon by telephone to consider its next steps after Ackman pressed directors to quickly replace Chief Executive Officer Myron "Mike" Ullman.

Ackman had made public a letter calling on the J.C. Penney board to move more quickly to replace Ullman. The move opened a rift at the struggling department-store chain. The WSJ reported, citing one of the people, that Ackman's actions "crossed the line" and made him a "rogue director".

Last Tuesday, J.C. Penney said it started a process to find a permanent successor to Ullman, who returned as CEO of the company four months ago to correct the errors of the previous management.

At that time, the struggling retailer expressed displeasure over a letter by Ackman to the board, which was reported in the media, complaining that the CEO search process was slow. Ackman also said in his letter that the company's performance was suffering and that Ullman had 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 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.

In mid-May, J.C. Penney reported a loss for the first quarter that widened from last year, hurt by a 16 percent decline in sales as well as on lower margins. The company is slated to report its second-quarter results on August 12.

JCP closed Friday's trading at $12.87, down $0.79 or 5.78 percent on a volume of 64.53 million shares.