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Starbucks chief wades into J.C. Penney fight

Howard Schultz, chief executive of Starbucks Corp., has accused hedge fund manager Bill Ackman of being a “destroyer of companies.”

Ted S. Warren/AP

Howard Schultz, chief executive of Starbucks Corp., has accused hedge fund manager Bill Ackman of being a "destroyer of companies" as he stepped into a fight between the investor and the struggling retailer J.C. Penney Co. Inc.

Mr. Schultz, one of America's best-known businessmen, spoke out after Mr. Ackman, a member of the J.C. Penney board, tried to increase the pressure on fellow directors to find a new chief executive by making a letter to them public.

"I thought it was disgusting," Mr. Schultz told the Financial Times, accusing Mr. Ackman of bypassing established governance procedures. "When I saw what happened [on Thursday] ... I'm distraught."

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The J.C. Penney dispute has escalated into one of America's most public and ill-tempered corporate spats and marks a return to the days of activists as reviled insurgents.

Mike Ullman, the J.C. Penney chief executive who Mr. Ackman is trying to force out, is a member of the Starbucks board.

Mr. Ackman, who owns nearly 18 per cent of J.C. Penney, has a seat on the board and already forced Mr. Ullman out of the job once, in 2011, when the activist investor installed ex-Apple Inc. executive Ron Johnson in his place.

But Mr. Johnson oversaw a disastrous fall in sales and in April the board ousted him and rehired Mr. Ullman.

"Bill Ackman has blood on his hands for being the one who brought Ron Johnson in," said Mr. Schultz.

"As someone who runs a public company, I'm speaking out on behalf of people whose livelihoods can be destroyed by people like this."

Over the past decade the perception of activists has changed as many have sought to work with boards rather than against them, transforming themselves from agitators to be tackled through lawsuits into mainstream advocates of shareholder rights. But Mr. Ackman has often been ready to deploy the confrontational tactics of old.

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Mr. Ackman did not respond to a request for comment on Mr. Schultz's criticism.

But on Friday the investor released another letter responding to J.C. Penney's chairman, Thomas Engibous, who had criticized Mr. Ackman for actions that he said were "disruptive and counterproductive."

Mr. Ackman admitted that his Thursday release of a public letter to the board was "an extraordinary step." But, he said: "You should understand that I did so as a last resort after attempting to negotiate a resolution of my concerns about the recruitment process with our chairman and the company's advisers over the last week."

J.C. Penney has initiated a search for a new chief executive, but Mr. Ackman wants it to hurry up and find one in 30 to 45 days.

Mr. Ackman went on: "I am concerned that a small subset of the board is negotiating and speaking on behalf of the full board, that the rest of the board has not been properly informed and has not been given an opportunity to express its views, nor is even included in deliberations about what to do."

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