Why Apple’s retail genius Ron Johnson is paying for the privilege of running J.C. Penney

“He could have had any job he wanted. Or he could have stayed at Apple, where he was sitting on $50 million of restricted stock — and, should the company continue its record of innovation, untold millions more in the future,” Jennifer Reingold reports for Fortune.

“But instead, Ron Johnson, senior vice president and creator of Apple’s retail stores strategy, is taking the CEO job at J.C. Penney (JCP), a middle-class, middling-performance department store chain — and paying for the privilege of doing so,” Reingold reports. “Why? In part, it’s because Johnson, who started his career at Mervyn’s (later bought by Target (TGT)) and moved up the ranks there before leaving for Apple in 2000, has always dreamed of running a retail company.”

Reingold reports, “But there’s another reason, too… If the stock doubles from today to $60, he’ll earn over $385 million — in addition to the huge sums he would gain on his restricted stock and other pay. What’s more, because the warrants are an investment rather than compensation, Johnson will be eligible for capital gains tax treatment instead of the ordinary income tax rate. And Johnson is already ahead — J.C. Penney shares shot up 17.5% on Tuesday to $35.37.”

Read more in the full article here.

24 Comments

  1. Ron Johnsons deserves all kinds of honours and praise, but he is not “creator of Apple’s retail strategy”. The creator was Steven Jobs who wanted that Apple would have its own integrated, all-inclusive, minimalistic design, lot of glass retail stores — and he hired Johnson to implement exactly that.

    But yes, Johnson did excellent job so he deserves best future that could be available for him.

    1. I assume you’re making assumptions, derss. Because you’re off track. Ron was hired not to implement, but to fill a gap. As much as we all admire Steve, he isn’t actually ‘all-knowing’. But, he does hire great people with the right skill set to meet a need.

      Jobs hired Johnson because he had *retail* vision. Sure, Jobs was/is involved in store design, but Ron architected the retail strategy including components like the Genius Bar, Workshops, product mix, etc. Simply put, without Johnson, Apple Retail likely would have not be the success it is.

      1. “Simply put, without Johnson, Apple Retail likely would have not be the success it is.”

        I was with you up to there. I agree that Johnson likely had important contributions to make, but that doesn’t mean that someone else couldn’t have done just as good (or even better) a job. For all we know, he may not even have been Apple’s first choice.

        1. Why do you (or anyone so out of the loop) augment or diminish individual contributions based on speculation?

          Unless you worked closely with either of these men (or the many other people who contributed), you’re all talking out your bums.

      2. True… however, Johnson has (possibly) already made a mistake. One that Steve Jobs didn’t.

        What did Jobs do when he returned to Apple? He didn’t buy Apple stock… he sold off what he had.

        At first, I thought this was a sign that Jobs had bad things planned for Apple. Eventually, I realized it was the right thing because not owning Apple stock allowed him to make the kind of hard decisions he needed without having to concern himself with how those decisions would affect his stock. He divorced himself from undue influence.

        Johnson has done just the opposite. However objective he may be in making decisions about JCP, he is still going to be influenced by how those decisions may or may not impact the value of his stock.

      3. What you described is exactly *implementing* vision. Jobs knew what he wanted, what retail stores should be, but to execute it, of course, he needed experienced professional — and Johnson was that person.

        But, again, the vision, concept, idea — is certainly Jobs. Integrated, all-inclusive experience, minimalistic design, lot of glass — this is Jobs all around. But not only concept, he personally participated even in the execution (the cube thing in NYC, product placements, countless things). This is why Jobs was asked to advice on retail store concept by Disney.

        1. It is similar to Apple’s new spaceship headquarters building, conceptual design of which was in Jobs’ head like thirty years ago already: ring form, lot of glass, minimalism. But, of course, Jobs is not architect, so he hired some big name to **implement** his vision.

    1. I have 2 young teenage boys that haven’t noticed or don’t care about brand names yet. JCP has some of the best prices on jeans. At the rate my guys grow or wear out the jeans, JCP is where we go to buy.
      Great prices on shirts too.
      Older teenage daughter loves the dress selections and mom loves the prices.

  2. Your headline and excerpt don’t match — you left out how Johnson is investing $50 million of his own money in JCP. Gotta admire that. And you have to admire a guy leaving the coolest company on earth to live his dream of running a major retailer. Go figure.

  3. Smart, talented people enjoy tough challenges. The Apple stores have already matured into the most well-oiled and most innovative operations in the retail space, and tweaking something that is already close to perfection can get (comparatively) boring. So I perfectly understand his move.

  4. Simple! Change the name to JCP; get a cool logo in a snappy color, orange, maybe. Clean up store design. Buy 15 second ads on Hulu featuring trendy chicks and dudes. That’s it! Give me my $385 mil!

  5. It’s one thing to come on as CEO and have people throw stock at you for the privilege of having you. It takes balls to personally invest in the value you’ll add to a company.

    Wonder what would happen if they tied Ballmer’s compensation to the performance of Microsoft’s stock? Looking back, he’d have to have taken a second job at Walmart to eat.

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