 Reuters/ Eduardo Munoz |
It's a move that's not unexpected after huge losses, strategic missteps, and a 97 percent pay cut. But the final blow that pushed Johnson over the edge was losing hedge fund manager Bill Ackman's support.
Ackman called the execution of Johnson's strategy "something very close to a disaster."
This is a big deal because the billionaire investment was the guy who lured Johnson from Apple and for a long time his biggest supporter. Ackman also holds a seat on JCPenney's board and his hedge fund owns 18 percent of the company's shares.
In August, in a letter to shareholders, Ackman said he was still confident in Johnson, but was already worried about execution:
I have complete confidence in Ron Johnson and the new management team he has assembled to execute a total transformation of this iconic U.S. retailer. Ron has been at the job for eight months and has made remarkable progress in many of the requirements for the turnaround. The execution has not, however, been flawless. In particular, the company has had a somewhat confusing pricing message and has struggled to communicate the new business model and every-day value available in the store.
Ackman was a firm believer in Johnson's strategy, a position he explained at length in a presentation at the Ira Sohn investment conference. But in the end, the execution was so poor and the losses so huge that Johnson lost his support.