Great ResignationInflationSupply ChainsLeadership

How next J.C. Penney CEO’s pay package stacks up to Johnson, Ullman

October 14, 2014, 11:02 PM UTC
Photograph by Matthew Staver/Bloomberg/Getty

J.C. Penney’s (JCP) incoming president and soon-to-be CEO Marvin Ellison stands to get a less lavish, but steadier annual compensation package than his two predecessors got.

Ellison, who last year had a total compensation package worth $4.37 million as the head of Home Depot’s (HD) U.S. stores, will get a lower base salary than either of his two precedessors, getting $1.3 million a year. Mike Ullman, who was CEO from 2004 to 2011 before returning in April 2013 to save the company after Apple superstar Ron Johnson’s disastrous tenure, is being paid $1.5 million a year, as was Johnson. Ellison will start as president on Nov. 1, apprenticing under Ullman for 9 months before becoming CEO in August 2015.

But in other ways he’s getting goodies that make up for that. To compensate him for the stock awards he is losing by leaving Home Depot, Ellison is getting a $4.1 million cash signing bonus. (Johnson got no such signing reward.) On top of that, he stands to get performance bonus of $3.9 million in 2015 (0r 300% of his base salary, vs the 200% Ullman is eligible for.) What’s more, he is also getting a Penney stock award worth $15 million today and distributed over three years. That comes to a total of about $11.6 million a year, at today’s stock prices, and possibly much more if he manages to kickstart Penney’s heart. (Ullman could make as much as $10 million in compensation this year.)

When Penney hired Johnson to much fanfare, with his promise to revitalize a tired old department store by turning its stores into collections of dozens of hip brands, it spared no expense so eager was it to get its “transformation” under way: it gave Johnson a total package in 2011 of $53.3 million, the bulk of it stock options to compensate him for restricted Apple (AAPL) stock he was leaving on the table. Penney also gave Ullman total compensation of $34.51 million that year, apparently to get him to go away.

(Johnson invested $50 million of his own money in J.C. Penney stock warrants for 7.26 million shares that are worthless now, with the stock at $7 and nowhere near the $29.92 it needs to be to be in the money. His stock awards, which were the bulk of his compensation, especially since Penney’s 25% sales decline on his watch meant no bonuses were also worthless.)

So while Ellison mighty have been passed over for the top job at Home Depot last month, and is getting compensated more sanely than Ullman or Johnson were in peak years, he’s getting a lot more cash up front and a lot of upside if Penney’s stock blooms. No bad for someone in his first CEO job.