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Ackman feuds with board while J.C. Penney burns

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So you are a billionaire investor whose reputation, not to mention business model and lucrative fees, rests on your ability to at least leave companies in a better state than you found them. Now imagine that the latest project has not gone so well.

Bill Ackman is facing just such a scenario. He installed his own man at department store chain J.C. Penney Co. Inc. in 2011. Penney turned, but down, instead of around. Under former Apple executive Ron Johnson , sales dropped 25 per cent and it posted a loss of nearly $1-billion (U.S.) during the last fiscal year. Mr. Johnson is gone and the chief executive Mr. Ackman ousted is now back , and appears to be getting comfortable. The company is struggling and the board – which backed Mr. Ackman's decision but is happy for him to take the blame – has no sense of urgency. What to do next? Pick a fight .

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Mr. Ackman has taken his concerns about interim chief executive Mike Ullman public, after threatening to resign from the board and sell his hedge fund's stake – 18 per cent in stock and 7 per cent via derivatives. The stand may be a good pretext. Mr. Ackman can either cut his losses – "I tried, but the directors were against me" – or recruit a new chief executive for a shot at redemption.

J.C. Penney's board, meanwhile, has come out fighting. Howard Schultz of Starbucks even jumped into the fray with a spirited defence of Mr. Ullman, who is also on Starbucks' board. But none of this is helping Mr. Ackman to make up his losses. As the debate raged last week, the shares fell 8 per cent to close at $13 on Friday.

The next few months are crucial, with the holiday season approaching. Mr. Ullman may not be the visionary that people even beyond Mr. Ackman believe J.C. Penney needs to revitalise the brand, but Mr. Ackman's own judgment is now in question. An old fashioned tussle is good theatre, but Mr. Ackman et al are company directors, not actors. Their public spat is doing J.C. Penney no favours at all.

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