* Already faces one call for resignation
* Expert suggests investors might toss out board
* Shares tumble 10 percent
By Ben Berkowitz
April 9 (Reuters) - The board of J.C. Penney Co Inc is facing scathing criticism from investors and corporate governance experts after ousting Chief Executive Ron Johnson and replacing him with his own embattled predecessor, Myron Ullman.
Hours after the switch was announced on Monday, there was at least one call for the entire board to resign, while others suggested shareholders might vote out current directors at the company's next annual meeting.
"It was the wrong thing for the board to do to get rid of Johnson here. With the board firing Johnson now, at this stage in the game, they should tender their own resignation as well," said Brian McGough, managing director and head of the retail group at research firm Hedgeye Risk Management.
Though the board may not face serious legal challenges to the decision, shareholders may question whether the move to replace Johnson with Ullman, who Johnson himself replaced in late 2011, is good for them.
More than 16 hours after the change, Penney's website still listed Johnson as CEO.
J.C. Penney shares lost half their value during Johnson's tenure after having shed 15 percent during Ullman's time as CEO from 2004 to 2011. The stock slid further Monday night after the retailer said Ullman was returning, as analysts blamed him for creating the problems that Johnson was supposed to fix.
Shares tumbled 10.3 percent at $14.23 in early Tuesday trading.
Whether Ullman is the right man for the job or not, some said ultimate responsibility for the retailer's future now lies with the remaining 10 members of the board of directors, four of whom joined in the last five years.
That board reflects the company's Texas roots more than its retail operations. Four directors are or were executives of Texas-based institutions. Aside from Ullman, only one board member has direct retail experience - Leonard Roberts, the former CEO of electronics chain RadioShack Corp. The rest come from consumer products, airlines, media and manufacturing sectors, among others.
The board said in a statement it picked Ullman because he was well-positioned to move quickly and improve sales, but Ullman himself conceded in an interview that the change was so new he did not yet have a plan. He said the board only approached him last weekend.
Governance experts said it was unlikely the board would face legal repercussions for the change.
"That's a classic board decision," said Charles Elson, a professor of finance at the University of Delaware. "It's called business judgment. It's up to them."
J.C. Penney Chairman Tom Engibous said in a statement the company felt fortunate to have Ullman's help. Through a company spokeswoman, the board declined further comment.
Board member Bill Ackman, the hedge fund manager whose Pershing Square is J.C. Penney's largest shareholder, might also take heat for his role in the CEO debacle.
Ackman handpicked Johnson to replace Ullman, and in May 2012 said the company had been "chronically mismanaged" during Ullman's tenure. Ackman could not be reached for comment, but said last Friday that criticism of Johnson "is deserved."
David Tawil, whose hedge fund Maglan Capital had bet that J.C. Penney's stock would fall further, likened the change in management to an abrupt about-face.
"This is like Elon Musk announcing that Tesla (the maker of electric cars) is changing gears and will now focus on gas-powered vehicles," Tawil said.
Whether the board gets to make the same mistakes again will be entirely up to shareholders, said Paul Hodgson, an independent corporate governance analyst in Camden, Maine.
"When you get a board that keeps making errors like that, then you start to lose faith not just in the CEO, but in the board as well," said Hodgson. "I think at the next annual meeting, the shareholders will be registering their dissatisfaction with the board."
One question Ullman has to address quickly is the company's cash position. Penney ended the last fiscal year with less than $1 billion in cash, and there is a sense that the retailer needs to do something to bolster cash.
"We expect first-quarter performance to be very weak, and that Penney's financial risk profile will remain 'highly leveraged,'" Standard & Poor's Ratings Services said on Tuesday. While S&P said the CEO change would not affect the company's credit rating, it did note an expectation that Penney would seek more capital.
While many on Wall Street were clamoring for Johnson's ouster, analysts warned Ullman's return was not a cure-all as he tries to win back shoppers, mollify worried vendors and decide whether to forge ahead with some aspects of Johnson's strategy.
"Ullman makes sense in the interim given the urgent cash situation. Ullman is also a known partner to the vendors," UBS analyst Michael Binetti wrote in a note on Tuesday. (Additional reporting by Karen Freifeld and Phil Wahba in New York, Svea Herbst-Bayliss in Boston, Jessica Wohl in Chicago and Lisa Baertlein in Los Angeles; Writing by Ben Berkowitz; Editing by Edward Tobin, Mary Milliken, Matt Driskill and Jeffrey Benkoe)