The billion-dollar chief executive

Share

Dave Kansas at MarketBeat makes an interesting calculation on what Ron Johnson is worth as incoming chief executive at J.C. Penney Co. Inc. : more than $1-billion (U.S.) Or, at least that's what the market thinks he's worth.

Mr. Johnson was the head of retail operations for Apple Inc. before announcing on Tuesday that he is leaving to take the top job at J.C. Penney, the U.S. department store operator, later this year. J.C. Penney shares were up 17.7 per cent in afternoon trading, adding more than $1.1-billion to the company's market capitalization.

Is Mr. Johnson worth it? His years with Apple certainly coincided with some impressive developments. In his 11 years there, he helped build the company's retail presence from scratch to over 300 stores today in the United States and elsewhere.

Of course, these 11 years also overlapped with a tremendous growth period for Apple, as it unveiled the iPod (2001), the iPhone (2007) and the iPad (2010) - tremendously innovative products that drove Apple's share price up 1,225 per cent since that first iPod hit store shelves. Those products can't be divorced from Apple's retail success.

While the jump to J.C. Penney might not look like a logical move, it is in many ways. Prior to joining Apple, Mr. Johnson spent 15 years at Target Corp.

"I've always dreamed of leading a major retail company as CEO, and I am thrilled to have the opportunity to help J. C. Penney re-imagine what I believe to be the single greatest opportunity in American retailing today, the Department Store," Mr. Johnson said in a statement.

According to filings, Mr. Johnson will receive a base salary of $1.5-million in his new job, plus a bonus of $1.9-million, plus 1.66 million shares of restricted stock worth $50-million at the close of trading on Monday. That's a lot of money, but not even close to $1-billion. He should ask for a raise; the market demands it.