Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-16-07029/USCOURTS-caDC-16-07029-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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The Motley Fool's Worst CEO of the Year Is... -- The Motley Fool

https://www.fool.com/investing/general/2013/12/12/the-motley-fools-worst-ceo-of-the-year-is-2.aspx[05/10/2017 5:33:29 PM]

The Motley Fool's Wors CEO of the Year Is...

After sifting through thousands of companies, this now-former CEO, who oversaw perhaps the uglies

retail quarter in hisory and allowed his company to lose nearly $1 billion las year, sands atop the heap as

the wors of the wors.

Sean Williams (TMFUltraLong)

Dec 12, 2013 at 10:05AM

It's that time of the year again, folks! It's time to dus of the cyber awards and crown fve CEOs with the

dubious honor of being the wors of the wors in 2013.

Unlike las year, when we held several rounds of public voting after I picked eight of the bes and wors

CEOs, I wanted to do something diferent this year. So insead of picking who I thought should be in each

category for 2013, I reached out to as many of my Motley Fool colleagues as possible and aggregated

their answers into one lis. The result is a considerably more balanced lis representing a wider swath of

views and likely a more accurate portrayal of the wors CEOs of the year than I could have come up with

by myself.

Over the previous four weeks we've looked at some of the wors of the wors when it comes to corporate

leaders in 2013. These include:

Thorsen Heins, the now-former CEO of BlackBerry (NASDAQ: BBRY), as the No. 5 wors CEO of the

year.

Aubrey McClendon, the also now-former CEO of Chesapeake Energy (NYSE: CHK), as the No. 4 wors

CEO of the year.

Tim Cook, CEO of Apple (NASDAQ: AAPL) , as the No. 3 wors CEO of the year.

Michael Dell, CEO of Dell which was taken private in October, as the No. 2 wors CEO of the year.

Today, though, it's time to crown the absolute wors CEO of the year -- and let's jus say that the

consensus among my fellow Fools was practically overwhelming as to who should sit atop this year's lis of

wors CEOs. So without further ado, now-former J.C. Penney (NYSE:JCP) CEO Ron Johnson, come on

down!



Cited in Coburn v. Evercore Trust Company, 16-7029. Archived on 5/10/17.

USCA Case #16-7029 Document #1674738 Filed: 12/30/2016 Page 1 of 5
The Motley Fool's Worst CEO of the Year Is... -- The Motley Fool

https://www.fool.com/investing/general/2013/12/12/the-motley-fools-worst-ceo-of-the-year-is-2.aspx[05/10/2017 5:33:29 PM]

SOURCE: FORTUNE LIVE MEDIA, FLICKR.

Why Ron Johnson?

Ron Johnson's slightly more than yearlong tenure as CEO of

department sore J.C. Penney's was tragic in every sense of the

term. But what's truly remarkable is jus how asronomically bad

Johnson failed given how successful he was at his two previous

ventures.

At Target (NYSE:TGT) in the 1990s, Johnson was able to hit a bull's-eye and dramatically boos sales by

introducing reasonably priced brand-name and designer merchandise. Johnson followed that up by

heading Apple's sore division and growing the company into the 300-plus sore juggernaut that it is today.

It simply wouldn't be fair if I didn't note that invesor expectations surrounding Johnson's acceptance of the

CEO position at Penney's were already asronomically high, making his ability to live up to these lofty

expectations tough. But some of his key decisions simply left many of Penney's faithful cusomers out in

the cold.

Perhaps nothing proved more damaging than Johnson's attempt to back Penney's away from being a

discount retailer and insead project an "everyday price" to consumers. The move works for certain

retailers, but the core cusomer for Penney's has always been a cos-conscious discount and coupon

seeker. Remove the coupons and Penney's essentially alienated its core cusomer.

Penney's results following this move cascaded lower faser than I've ever seen a retailer lose sales (short

of a licensing dispute) and culminated in what I consider to be the uglies year-over-year retail quarter in

hisory! That particular quarter in quesion (its fourth quarter, reported in February 2013) featured a 28.4%

revenue decline, a 31.7% plummet in same-sore sales, and a net loss that ballooned more than 600% to

$552 million. Simply put, we may never see a retail quarter this bad again as long as we shall live.

But that wasn't the end of it for Johnson. In similar fashion to what he

did at Target two decades prior, he attempted to mold Penney's

product lineup by introducing new designers and creating soreswithin-a-sore. In essence, Johnson really, really wanted to become

Cited in Coburn v. Evercore Trust Company, 16-7029. Archived on 5/10/17.

USCA Case #16-7029 Document #1674738 Filed: 12/30/2016 Page 2 of 5
The Motley Fool's Worst CEO of the Year Is... -- The Motley Fool

https://www.fool.com/investing/general/2013/12/12/the-motley-fools-worst-ceo-of-the-year-is-2.aspx[05/10/2017 5:33:29 PM]

Macy's (NYSE:M). In fact, his vision for Penney's was so similar to

Macy's that the two companies feuded for months over the rights to

sell Martha Stewart Living OmniMedia (NYSE:MSO) products in its

sores. Penney's did eventually drop its bid for the line, but it simply

demonsrates how similar a path these two companies were on.

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The problem with trying to emulate Macy's (without fat out telling everyone you want to try to emulate

Macy's) is that the core Penney's cusomer doesn't want to shop at Macy's. That's why they came to J.C.

Penney, for a good bargain at a sub-Macy's price point! Johnson, though, appeared to think he could

dictate the purchasing habits of consumers by introducing brands as he saw ft and removing the coupons

and discounts that drove consumers into the sore in the frs place.

The end result was a big boos in business for department sores like Macy's and Dillard's (NYSE:DDS),

which also drive their cusomer trafc by discounting and deal with a somewhat similar price point. In

Macy's mos recent quarter, it reported a 3.5% increase in same-sore sales -- a genuine indicator of retail

health that excludes sores opened and closed within the pas year -- while Dillard's reported a more

modes 1% increase in comparable sales. By contras, Penney's only recently ended a 23-month sreak of

year-over-year same-sore sales declines.

As perhaps the fnal jab to Johnson's abysmal tenure as CEO, the Penney's board chose, in April, to fre

him and replace him with (drumroll, please...) Mike Ullman, whom Johnson replaced. In other words,

Johnson made things so bad for Penney's business and invesors that its board of directors chose to rehire

Ullman and hope for a time when things were jus bad insead of really bad!

Don't feel sorry for Johnson or his management team, either, because according to research conducted by

Bloomberg into Penney's SEC flings, the company spent $170 million (including salaries, sock warrants,

Cited in Coburn v. Evercore Trust Company, 16-7029. Archived on 5/10/17.

USCA Case #16-7029 Document #1674738 Filed: 12/30/2016 Page 3 of 5
The Motley Fool's Worst CEO of the Year Is... -- The Motley Fool

https://www.fool.com/investing/general/2013/12/12/the-motley-fools-worst-ceo-of-the-year-is-2.aspx[05/10/2017 5:33:29 PM]

and severance packages) in assembling this now-laughing sock of Wall Street group of leaders.

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All told, there's no quesion in my mind why my Foolish cohorts and I selected Ron Johnson as the clear

wors CEO of the year.

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newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom jus revealed what they believe are the ten bes socks for invesors to buy right now...

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Fool contributor Sean Williams has no material interes in any companies mentioned in this article. You can follow him on

CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and

check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends Apple. It also owns shares of Dillard's. Try any of our Foolish

newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a

diverse range of insights makes us better invesors. The Motley Fool has a disclosure policy.

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Cited in Coburn v. Evercore Trust Company, 16-7029. Archived on 5/10/17.

USCA Case #16-7029 Document #1674738 Filed: 12/30/2016 Page 4 of 5
The Motley Fool's Worst CEO of the Year Is... -- The Motley Fool

https://www.fool.com/investing/general/2013/12/12/the-motley-fools-worst-ceo-of-the-year-is-2.aspx[05/10/2017 5:33:29 PM]

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