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J.C. Penney’s Board Fiddles With Ackman While the Company Burns

J.C. Penney’s Board Fiddles With Ackman While the Company Burns

The Wall Sreet Journal reported that J.C. Penney's (JCP) board held a conference call late Sunday afternoon to discus the possibility of taking unspecified actions against Bill Ackman, the company's largest shareholder and fellow board member. The discussions come in response to Ackman releasing two open letters to the board last week accusing them of making key hiring decisions without Ackman's input, and demanding that the company remove current Chairman Thomas Engibous.

Related: J.C. Penney: Why Ackman’s Tantrum Will Kill the Company

Among the myriad of offenses, Ackman disclosed a vendor's concerns that J.C. Penney's sales weren't strong enough to support the company's product order, and he said financial projections had deteriorated in May, June and July. These disclosures were tantamount to an unofficial warning for the quarter just ended, and suggest that current company guidance would be reduced.

Related: J.C. Penney: The Death Spiral Scenario

Breakout co-host Matt Nesto points out that Ackman, while clearly damaging the company is making some fair points. "The fact of the matter is Tom Engibous is the Chairman of the company, it's his job to manage the board and right now the board has gone out of control."

There's probably nothing the rest of the J.C. Penney board can do about Ackman's whining and threats. True to Carl Icahn's infamous description, Ackman is acting like a whiny child on the playground. Then again he's down half a billion on his investment in J.C. Penney. A little whining might be in order.

J.C. Penney is set to report earnings a week from tomorrow. Analysts expect the company to lose $1.02 on a $2.78 billion in sales. Based on Ackman's memo those dismal estimates are too optimistic. Vendor financing is at risk. Cash is being burned and sales are rumored to be comping down more than 10% year-over-year.

If Engibous is leading conference calls discussing anything other than how to stop J.C. Penney from going up in smoke, he's not just heading one of the worst boards in U.S. history, he might be the worst leader since Nero.

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