Ron Johnson of Apple will become Penney’s chief executive on Nov. 1, when Myron E. Ullman III, the current chief executive, steps down to become executive chairman, the company said Tuesday.
Given that most products can be bought online, retailers have been trying to give shoppers reasons to go to stores — known as “retail theater” or “retailtainment” in the industry. Arguably, no business has done that better than Apple under Mr. Johnson, who turned the boring computer sales floor into a sleek playroom filled with gadgets.
Retail analysts said the expectation was that Mr. Johnson could similarly transform Penney, which like many traditional big mall retailers has been struggling since the recession and the huge growth of online shopping.
“If he can take a little bit of that magic and sprinkle it on to J. C. Penney, you could really create the next generation of retailing,” said Deborah Weinswig, a retail analyst with Citigroup. “We’re at a very interesting kind of intersection right now where retail needs to be fun, it needs to be exciting.”
Since Mr. Johnson did not seem to be in line for the chief executive job at Apple, the move to J. C. Penney, based in Plano, Tex., gives him a chance to run a company. Still, it was seen as a surprising step at a time when Apple’s retail stores continue to thrive.
“My lifetime dream has been to lead one of the large great retailers, to reimagine what it could be,” said Mr. Johnson, who was vice president for merchandising at Target Stores before joining Apple in 2000.
“In the U.S., the department store has a chance to regain its status as the leader in style, the leader in excitement,” he said in an interview. “It will be a period of true innovation for this company.”
Investors cheered the hire, with Penney shares rising 17 percent, to close at $35.37.
Yet the job ahead will be very different from Mr. Johnson’s role at Apple, which already had a cult following when he joined it. And Apple’s imprint got bigger and bigger with a its rat-a-tat hits, from the iPod to the iPhone to the iPad.
“Apple sells best-in-class product and faces basically little to no competition,” said Michelle Clark, an analyst with Morgan Stanley. “J. C. Penney, on the other hand, operates in an intensely competitive industry and sells merchandise that is undifferentiated versus peers and in fact has been lagging peers.”
J. C. Penney’s sales in 2010 were $17.76 billion, up 1.2 percent from the prior year, but still more than 10 percent below 2007 sales.
J. C. Penney had first contacted Mr. Johnson three or four years ago, Mr. Ullman said.
This time, the wooing of Mr. Johnson started with two activist investors. In November, Pershing Square Capital Management and Vornado Realty Trust bought 26.4 percent of J. C. Penney stock. In January, William A. Ackman from Pershing and Steven Roth from Vornado joined the Penney board, and as part of that arrangement, got to appoint an additional director. While Mr. Johnson was intrigued by the possibility, he did not want to become just a board member, and asked for the chief executive position, according to people briefed on the matter who were not authorized to speak publicly.
“Ron Johnson is the Steve Jobs of the retail industry,” Mr. Ackman said in an interview.
Still, Penney seems to have limited Mr. Johnson’s role. He will have the marketing, product and merchandising functions reporting to him. But all other major departments, including finance, stores, JCPenney.com, corporate communications and legal will continue to report to Mr. Ullman.
“His role is more like that of a chief merchant than it is of a C.E.O.,” said Ms. Clark of Morgan Stanley.
To make up for Mr. Johnson’s stock options at Apple, he will receive restricted Penney stock worth $50 million as of Monday’s close. With the jump in stock price, it was worth more than $58 million by the close on Tuesday.
He is also investing $50 million of his own money in J. C. Penney by buying warrants on the company’s stock. In 2017, the warrants will give him the right to buy more than seven million shares at $29.92 a share, meaning that if he can raise the stock price he stands to make a hefty profit.
Mr. Johnson’s annual salary will be $1.5 million, and he will be eligible for a bonus of 125 percent of that amount if he meets certain targets. Still, “this guy has become enormously wealthy on Apple stock options,” said Charles Wolf, an analyst with Needham and Company. “He certainly doesn’t need the money.”
During his tenure at Apple, Mr. Johnson received total compensation valued at $141 million, according to Equilar, an executive compensation research firm. The analysis excludes the years 2008 and 2009, during which Mr. Johnson realized additional stock gains valued at more than $100 million, Equilar said.
Mr. Johnson did not specify what his plans were for Penney.
“I don’t have a priority list,” he said. “I have so many ideas in my head that I can’t quite sort them out, to tell you the truth.”
As for his experience, he said: “Apple has taught me, really, what breakthrough innovation is and how to energize teams to accomplish that. I’ve seen that happen on the product side at Apple; we’ve done that in our stores. I think that’s what I bring.”
While Mr. Ullman, who has been chief executive for seven years, has been praised for bringing in brands like Liz Claiborne, MNG by Mango and Sephora into Penney’s stores, his tenure has been marked by the recession, when the company’s middle-class shoppers cut way back on spending.
Michael J. de la Merced contributed reporting.
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