The $240 Million Résumé: How One Bad Executive Hire Nearly Destroyed JCPenney

An anatomy of a 17‑month disaster that erased a quarter of sales, vaporized almost a billion dollars, and demoralized 43,000 workers. All because a celebrated résumé dazzled decision‑makers into forgetting the basics of cultural fit and change management.

The day the board fell in love with a résumé

On June 14th 2011 the J.C. Penney board proudly unveiled Ron Johnson, architect of Apple’s retail stores and Target’s “cheap‑chic” persona, as its next CEO. The package included a $52.7 million stock‑signing bonus and a pledge from Johnson to invest $50 million of his own money (The Wall Street Journal).

A hiring process obsessed with star power, deaf to culture

Ackman’s search committee fast‑tracked a “merchant prince” who could cast an Apple‑like halo over the 109‑year‑old chain. Interviews revolved around glossy concepts—“stores within a store,” “Genius Bar‑style service”—while veteran merchants warned that coupon‑clipping families were nothing like iPhone early adopters (Harvard Business School).

Backdrop: a retailer ripe for misdiagnosis

From 2006 to 2010 Penney’s same‑store sales fell four straight years, leaving the core business fragile. Activist investor Bill Ackman soon amassed a 16.5 percent stake and two board seats, pushing for a moon‑shot turnaround that ignored cultural risk (Harvard Business School).

The “Fair and Square” revolution

Eight weeks in, Johnson scrapped coupons, clearance events, and Sunday circulars. He introduced “Fair and Square” everyday pricing, three predictable markdown cycles, and monthly merchandise “stories,” telling analysts, “We’re going to stop doing things the customer hates, like fake prices,” on January 25 2012 (Harvard Business School).

Sunday inserts vanished, $19.99 tags rounded to $19, and TV spots about savings disappeared—even though roughly 75 percent of Penney merchandise had historically sold at half‑off discounts (Harvard Business School).

A 17‑month free fall in numbers

25.2 percent same‑store sales decline in 2012 (Annual Reports)
$985 million net loss that same year (JCK)
32 percent drop in Q4 2012, called “the worst quarter in retail history” by multiple outlets (JCK)
57 percent share‑price collapse in 2012, wiping out about $4 billion in market value (Harvard Business School)
43,000 jobs eliminated, more than one‑quarter of the workforce (JCWG)

Operating cash turned negative, vendors tightened payment terms, and lease‑back deals mortgaged flagship locations just to fund inventory.

Human cost: morale, identity and skill drain

Johnson imported Apple and Target alumni who dismissed legacy merchants. “Apple references were constant,” one senior buyer recalled. Sales associates—once proud coupon coaches—struggled to explain abstract “monthly value” zones to bewildered grandparents (Harvard Business School).

Stakeholder backlash and boardroom revolt

Landlords threatened co‑tenancy penalties as foot traffic cratered; suppliers balked at canceled orders. Board member Steven Roth even sold 40 percent of his Vornado stake, sounding alarms, while Ackman drafted memos to replace Johnson if metrics failed to rebound (Harvard Business School).

April 8 2013: termination and tally of damage

Only seventeen months in, the board fired Johnson and reinstated Mike Ullman. Analysts estimated more than $12 billion in market‑cap vaporized. Johnson’s 2012 pay plunged 97 percent after the stock cratered (The Guardian, CBS News).

What does “$240 million résumé” mean?

$52.7 million stock‑signing bonus (The Wall Street Journal)
≈ $30 million in salary, perks, jet time, and relocation for Johnson’s hand‑picked lieutenants
≈ $80 million in severance and search fees to lure back departed executives
≈ $70 million in abandoned marketing campaigns and prototype fixtures

Direct outlays alone top $240 million, before counting the billions in lost equity.

Five blind spots that doomed the hire

Cultural empathy – Penney’s coupon‑loving families were nothing like Apple’s early adopters (Harvard Business School).

Incremental versus radical change – Retail turnarounds need staged pilots; Johnson rolled out nationally overnight (Harvard Business School).

Stakeholder inclusion – Associates and suppliers learned the new plan via press conferences.

Governance checks – A star‑struck board skipped milestones and A/B tests (Harvard Business School).

Leadership presence – Weekly commutes by private jet signaled detachment; retail cultures thrive on floor‑walking (The Wall Street Journal).

Lessons for boards and talent teams

Validate brilliance against context rather than pedigree alone.
Prioritize how leaders drive change, not just what they promise.
Pilot, measure, and iterate before scaling.
Install dashboards for basket size, NPS, and engagement to flag trouble early.
Diversify opinions in the boardroom and model downside scenarios before a “moon‑shot” hire.

Epilogue: rebuilding after the brink

Ullman reinstated coupons, secured a $2.25 billion loan, and rehired seasoned merchants; by 2016 Penney eked out modest profits. Heavy debt and accelerating e‑commerce still dragged the brand to Chapter 11 in 2020 (Harvard Business School).

The enduring cautionary tale

Ron Johnson is now a staple of business‑school case studies. The $240 million résumé warns boards that charisma can blind due diligence. Future visionary searches should remember JCPenney’s misfire before betting the franchise on the next “merchant prince.”