Initially, Wall Street supported Johnson's ideas. In a vote of confidence, investors drove Penney's stock up 24 percent to $43 after Johnson announced his vision in late January 2012. But as the plans unraveled, Penney's stock lost more than 60 percent of its value. Credit rating agencies downgraded the company deeper into junk status. On Monday, the stock closed down about 50 percent from when Johnson took the helm.
In one of the biggest signs of the board's disapproval of Johnson's performance, Johnson saw his 2012 compensation package plummet nearly 97 percent to about $1.9 million, according to an SEC filing last week. He didn't get any stock or option awards, or a bonus. In 2011, he had received a stock award worth $52.7 million on the day it was granted. The award was given to Johnson after he was named CEO and made a $50 million personal investment in the company.
In yet another blow to Johnson's turnaround strategy, Vornado Realty Trust, one of Penney's biggest shareholders, sold more than 40 percent of its stake in the company last month. The company's chairman and CEO, Steve Roth sits on Penney's board.
A court battle with department store Macy's Inc. over a partnership with Martha Stewart also has raised questions about Johnson's judgment. Macy's, which has had long-term exclusive rights to the Martha Stewart brand for products such as bedding and bath items, is trying to block Penney from opening Martha Stewart mini-shops, planned for this spring.
Macy's contends that Penney's deal with Stewart infringes on its own deal with the home maven. If Penney loses, it will have to take a big loss on the products that it ordered from Martha Stewart Living.
While acknowledging that Penney made some mistakes during the fourth-quarter conference call with investors, Johnson said Penney would start offering sales in stores every week — about 100 of the 600 or so the chain offered each year prior to his turnaround plan. And it would bring back coupons.