Ron Johnson and I have so much in common. My daily roundtrip commute to work costs approximately $13 per day ($5 gas; $2 tolls; $6 parking). Ronnie commutes from his home in San Jose to Plano, Texas. I’m sure the shareholders of JC Penney are more than satisfied with paying the $41,817 to fly Ronnie back and forth. He’s done such a bang up job turning JC Penney around. They probably left out the cost of the limo to drive him from the airport to the office. We both have worked in retail. The only differences between us are that he makes a salary of $1.5 million per year with a bonus of $2 million per year and he was given $50 million of JC Penney stock for just signing on, that he commutes to work in a lear jet paid for by the stockholders, and he has managed to lose $1 billion in just one year as CEO. I can’t possibly match this record. Maybe I should storm into my bosses office and demand that he pay for my $13 daily commuting expense. Only in America.
J.C. Penney and the $41,817 executive commute
- Gulfstream GIV-SP
Shareholders at J.C. Penney /quotes/zigman/237947 /quotes/nls/jcp JCP -0.68%, who have seen the value of that stock drop nearly 18% so far this year, may not be too happy with news that some top executives at the struggling retailer are flying the friendly skies to get to work.
In an article entitled ‘J.C. Penney High-Flying Executives Seen Hampering Revamp,’ Bloomberg reported Thursday that the company is paying for at least nine executives to commute from far-flung cities to its Plano, Texas headquarters. Among these:
- CEO Ron Johnson (The New York Post said back in February that he was at his desk maybe four out of five days)
- Executive VPs Ben Fay and Laurie Miller commute from California
- Chief Creative Officer Michael Fisher and senior design and trends executive Nick Wooster fly in from New York
- Construction executive Bob Laughrea commutes from Boston.
Here’s how J.C. Penney responded to Bloomberg:
“Regardless of where our executives are based, their work requires extensive travel visiting stores and distribution centers; meeting with current and potential business partners across the U.S., Europe and Asia; as well as exploring new developments for possible expansion,” Kristin Hays, a spokeswoman, said in an e-mail.
Hays also said several of those who commute are about to set up permanent residence in Texas and are moving to Dallas.
Bloomberg also laid out the cost of that commute. Starbase Jet, which claims to be the biggest private-jet company in Texas, said a typical round-trip flight on a Gulfstream GIV-SP between Dallas and San Jose, California costs around $41,817. (J.C. Penney has one of these and two Gulfstream G450s registered to it, says Bloomberg, citing the FAA’s website.)
In an annual report filed on Wednesday, the company said that turnaround effort could take longer than expected, and at a higher price tag.
But it’s not like J.C. Penney isn’t getting any breaks these days. The company was set to go to trial in April over a dispute with bondholders, who threatened to claim the company was in default, but those bondholders have apparently backed off. Hey, Seeking Alpha recently said J.C. Penney bonds are a bargain.
(A previous version of this blog incorrectly said BTIG upgraded shares. The upgrade was March 14.)
– Barbara Kollmeyer