New J.C. Penney Co. Inc. (NYSE: JCP) CEO Jill Soltau will get a $6 million bonus to head the extremely troubled retailer, less applicable withholding tax. She joins a company with a share price of only $1.56, down 56% in the past year.
Soltau ran Joann Stores before joining J.C. Penney. It claims to be the largest fabric and craft retailer in the United States. It has 865 stores and an “industry-leading e-commerce business,” which is unlikely, based on the size of some online retail operations. Joann Stores is privately held and, by some estimates, has revenue of $2.5 billion.
Soltau gets her bonus, plus a base salary of $1.6 billion and a potential bonus as high as 300% of that base, which is $4.2 billion. While that may seem high, she is taking a risk that she can accomplish a long shot. J.C. Penney is one of the most damaged large retailers in the United States.
As J.C. Penney announced the appointment, Soltau said: “JCPenney is a quintessential American brand with a strong and loyal customer base, and I couldn’t be prouder to lead such an iconic retailer.”
If that base indeed exists, it has grown so small as to be negligible. J.C. Penney’s comparable store sales were up 0.3% in the quarter that ended August 4. Revenue dropped 7.5% to $2.67 billion, partly because J.C. Penney continued to shutter stores. The company lost $101 million during the quarter.
J.C. Penney continues to be overwhelmed by larger competitors, particularly Target and Walmart, both of which have greater revenue, larger store bases, much larger online presences and strong balance sheets. J.C. Penney, however, has been mentioned as a Chapter 11 candidate by credit and retail experts.
Soltau is fortunate to get her $6 million upfront. J.C. Penney may be unable to pay out the entire balance of her contract.
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