On May 16, 2014, JCPenney (headquartered in Texas) will hold it’s annual meeting of shareholders. Now I know there are 25,404 of you out there who may not all be coming to the annual shareholder meeting, but if you are, I’d ask that everyone show up in something purchased from the store. This will signal a strong vote of support for the brand and our belief that J.C. Penney is truly an outstanding company.
On to business…
The annual meeting of stockholders will be held at the JCPenney home office located at 6501 Legacy Drive in Plano Texas on May 16, 2014 beginning at 10 A.M.
Shareholders will vote on the following provisions (proxy votes count, so be sure to get them in.)
- To ratify the appointment of KPMG LLP as independent auditor for the fiscal year ending January 31, 2015.
- To approve the 2014 long term incentive plan
- To approve amendments to the company’s restated certificate of incorporation, as amended, to restrict certain transfers of the Company’s common stock in order to protect the tax benefits of the Company’s net operating loss carry forwards.
- Conduct an advisory vote on executive compensation.
There’s a ton of detail in JCP’s proxy statement here.
All shareholder actions look ok to me. Their compensation plans appear to be sound and there doesn’t appear to be excess executive compensation. Pay appears to be expertly tied to performance which is really good compared to other companies who appear to over indulge in executive salaries. The board is proposing a “poison pill” which would limit a change in ownership. This action protects net operating loss carry forwards by diluting shares. Could be bad for shareholders, but very good for corporate performance as they move forward. In essence, JCP could carry forward their historic losses to offset taxable income in the future. The position bodes well for the company when they shore up the books and start becoming profitable. I personally believe earnings could be in the $1B range in FY 14 based on lower unemployment, enhanced consumer confidence, and a return of JCP “core” products. A conservative intrinsic value if this scenario plays out, could result in a market cap in the $8B range. That’s approximate 4 times current market price, or $26-28 per share. To do this though, they’ll have to steal back some market share and begin buying down their debt/shares to enhance owners equity.
In today’s market, I see JCP as a fairly certain value play. Their prices are incredible, their selection appeals to multi-generationals, and their web site has gotten much, much better, but I’d like to see them more readily available on their phone lines when/if people have problems with their site. I’ve heard grumblings of not being able to get through… You’ve got to be ready and able to take orders around the clock! Never take your eye off the ball, because companies are lurking in the shadows to kick your ass.
I really like the company, I’m “long” the stock and I’m a believer in a turnaround success story.
More to follow as we write more about the turnaround story of the century.