A Dark Cloud Hangs Over JCPenney With Latest Exec Departure

JCPenney store. (Photo by Paul Hennessy/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images

JCPenney just lost their Chief Financial Officer Bill Wafford. He was their CFO for two years and he has taken the same responsibility at Thrasio, a startup that sells popular brands on Amazon.com.

Wafford left his important position at a critical time. Since December 31, Stanley Shashoua has been the interim CEO after Jill Soltau, the former CEO, left the company. No CEO replacement has been anointed to keep the company moving forward and develop a strategy for growth.

Now the CFO has also left. It is my opinion that Wafford found this new job only because he was seeking interviews and actively looking for a new position. What made Wafford make such a move? As CFO, did he see problems that are unsurmountable? Did he conclude that JCPenney is going to fail? It certainly was not his salary that made him move, since he earned over $1 million a year with a base salary of $500,000.

Wafford joined JCPenney 2 years ago, after having a 2-year tenure at Vitamin Shoppe
VSI
. Prior to that he had a 2-year tenure at KPMG as a partner following 5 years working at Walgreens
WBA
. He moved around a lot.

Wafford was part of the team when JCPenney filed for chapter 11 bankruptcy on May 15, 2020 during the pandemic. During his tenure the company closed 154 stores and finally Simon Property Group
SPG
and Brookfield Management acquired the company. That was certainly a relief, since many of the specialty store leases required the anchor stores to be open. Major tenants like JCPenney generate customer traffic in the malls through their promotional activities.

While JCPenney bumbles along with the two major C-suite positions open, I believe as an observer that it is unlikely that applicants will flock to the company since there are uncertain times ahead.

At the same time Reuters reports that JCPenney transferred its pension obligations to annuities provider Athene, ensuring that the employees of JCPenney will continue to get their benefits. Apollo Global Management
APO
a private equity firm that controls Athene, is seeking to profit by earning a higher return on investing the pension assets than its payout to the retirees will be.

The Pension Benefit Guarantee Corporation in November 2020 had taken responsibility for JCPenney pension plan, but also allowed the retailer to explore alternatives that would avoid cuts in retiree benefits. I am happy that retirees are protected, no matter what happens to the company.