Following an unusually rancorous public dispute between them, hedge-fund manager William Ackman tendered his resignation from JC Penney’s board of directors. However, their feud continues unabated, just as testy as ever.
Tuesday evening, Ackman called into Charlie Rose’s show on PBS and lambasted Starbucks CEO Howard Shultz for publicly criticizing him. After Ackman’s two letters to JC Penney’s board urging them to expedite the replacement of interim CEO Mike Ullman went public, Shultz unleashed an angry complaint:
“Mike is working tirelessly to save this company, and it is despicable of Ackman to leak a letter asking for his removal. The irony is that Ackman himself has every step of the way severely damaged this company.” Ullman sits on the board of Starbucks.
Speaking to Charlie Rose, Ackman intimated that Shultz was responsible for leaking the memos and issued a tersely worded response. “I think he doesn’t really understand the facts. He’s a good friend of Mike Ullman, who sits on the board. You know the reality is Howard Schultz, when he brought in the new CEO– the board brought in Jim Donald to be the CEO of Starbucks a number of years ago and things were going poorly. Howard Schultz wrote a memo to the board that was leaked to the press and it’s not clear who leaked that memo to the press.”
Ackman has also previously insisted his aggressive interventions aimed only at improving JC Penney’s lagging revenues. “As the largest shareholder of JC Penney, I have only one goal: help save one of the great iconic American companies,” said Ackman.
Before Ackman’s resignation, JC Penney Chairman of the Board Thomas Engibous expressed his own consternation: “The Board of Directors strongly disagrees with Mr. Ackman and is extremely disappointed that his letter was released to the media at the same time that it was sent to the Board. Mr. Ackman has been integrally involved in the Board`s activities since he joined two years ago. This includes leading a campaign to appoint the Company`s previous CEO, under whose leadership performance deteriorated precipitously. His latest actions are disruptive and counterproductive at an important stage in the Company`s recovery.”
Industry experts say it’s unclear what role Ackman will play in JC Penney’s future in the wake of his resignation. He remains the company’s largest single shareholder with 18 percent of its stock. Also, his departure from the board might actually make it easier for him to exert influence over the company’s strategies by lobbying other shareholders and adjusting his holdings. Ackman’s final words walking out the door hardly struck a conciliatory note:
“If you’re a member of a board and you believe a company is heading in the wrong direction and the issues are serious, and you’re unsuccessful in convincing the board to go your way, you have an obligation as a director to share your concerns with the other owners of the business: the shareholders. I did that by writing an open letter to the board outlining my concerns that shines a spotlight on those issues and motivates all parties involved – the board, the management and the shareholders – to get to the right answers. The downside to that is it potentially makes the boardroom dynamics more difficult going forward. The infusion of fresh blood to the board at this time is a good solution to that problem.”