UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): March 9, 2007
J
.
C. PENNEY COMPANY, INC.
(Exact
name
of
registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction
of
incorporation )
|
1-15274
(Commission
File No.)
|
26-0037077
(I.R.S.
Employer Identification No.)
|
|
6501
Legacy Drive
Plano,
Texas
(Address
of principal executive offices)
|
75024-3698
(Zip
code)
|
Registrant's
telephone number, including area code:
(972)
431-1000
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(b) under the Exchange
Act (17 CFR 240.13e-4(b))
Item
5.02
Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain
Officers; Compensatory Arrangements of Certain Officers
(e)
(1)
2006 Incentive Compensation Awards, 2007 Base Salaries, 2007 Target Incentive
Opportunity Percentages, and 2007 Equity Awards.
Pursuant
to the J. C. Penney Corporation, Inc. Management Incentive Compensation
Program
(“Incentive Program”), annual cash incentive compensation is awarded to eligible
associates based upon the achievement of pre-set performance goals. For
the
Company’s “named executive officers” identified in the Summary Compensation
Table of the Company’s Proxy Statement, incentive compensation payouts are based
(i) 50% on total Company sales and operating profit from continuing operations,
and (ii) 50% on the named executive officer’s individual performance. On March
9, 2007, the Human Resources and Compensation Committee of the Company’s Board
of Directors (“Committee”) determined the Incentive Program payment amounts for
fiscal 2006 for each of the Company’s named executive officers other than the
Chairman and Chief Executive Officer (“CEO”), as set forth in the table below.
The Committee also determined the 2007 base salaries, the 2007 target incentive
opportunity percentages under the Incentive Program, and the 2007 equity
awards
for the Company’s named executive officers other than the CEO, which are also
set forth in the table below.
Each
of these determinations will be discussed in the Compensation Discussion
and
Analysis section of the Company’s 2007 proxy statement, which will be filed with
the Securities and Exchange Commission and posted on the Company’s website.
As
previously reported in the Company’s Current Report on Form 8-K dated February
28, 2007, the 2006 Incentive Program payment amount and 2007 compensation
arrangements for the CEO were determined by the independent members of
the Board
of Directors on February 28, 2007.
|
Named
Executive Officer
|
2006
Incentive
Compensation
|
2007
Base
Salary
|
2007
Target
Incentive
Award Opportunity
(%
of base salary)
|
2007
Equity
Awards
|
|
Stock
Options
(#)
|
Performance
Units
(#)
|
|
Robert
B. Cavanaugh
Executive
Vice President,
Chief
Financial Officer
|
|
|
|
|
|
Ken
C. Hicks
President
and
Chief
Merchandising Officer
|
|
|
|
|
|
|
Michael
T. Theilmann
Executive
Vice President,
Chief
Human Resources and
Administration
Officer
|
$550,924
|
$550,000
|
60%
|
27,708
|
7,006
|
|
Joanne
L. Bober
Executive
Vice President,
General
Counsel
and
Secretary
|
|
|
|
|
|
In
addition to the determinations above, the Committee also granted special
restricted stock unit awards to Ken C. Hicks and Michael T. Theilmann in
the
amounts of 19,108 units and 9,554 units, respectively. These awards vest
50% on
the third anniversary of the grant date, 25% on the fourth anniversary
of the
grant date, and 25% on the fifth anniversary of the grant date.
(2)
Forms of Grant Notice.
The
Company has updated its forms of Notice of Grant to be used in connection
with
grants of stock options, restricted stock units, and performance-based
restricted stock units under the Company’s 2005 Equity Compensation Plan. Copies
of the respective revised Forms of Notice of Grant are filed herewith as
Exhibits 10.1, 10.2 and 10.3, and are incorporated herein by
reference.
Item
9.01(d)
Financial
Statements and Exhibits
|
Exhibit
10.1
|
Form
of Notice of Grant of Stock Options under the J. C. Penney Company,
Inc.
2005 Equity Compensation Plan
|
|
Exhibit
10.2
|
Form
of Notice of Special Restricted Stock Unit Award under the J.
C. Penney
Company, Inc. 2005 Equity Compensation
Plan
|
|
Exhibit
10.3
|
Form
of Notice of 2007 Performance Unit Grant under the J. C. Penney
Company,
Inc. 2005 Equity Compensation Plan
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
J.
C. PENNEY COMPANY, INC.
By:
/s/ Joanne L. Bober
Joanne
L. Bober
Executive
Vice President,
General
Counsel and Secretary
Date:
March 15, 2007
EXHIBIT
INDEX
|
Exhibit
Number
|
|
Description
|
|
Exhibit
10.1
|
Form
of Notice of Grant of Stock Options under the J. C. Penney
Company, Inc.
2005 Equity Compensation Plan
|
|
Exhibit
10.2
|
Form
of Notice of Special Restricted Stock Unit Award under the
J. C. Penney
Company, Inc. 2005 Equity Compensation
Plan
|
|
Exhibit
10.3
|
Form
of Notice of 2007 Performance Unit Grant under the J. C. Penney
Company,
Inc. 2005 Equity Compensation
Plan
|
Exhibit
10.1
JCPenney
J.
C. Penney Company,
Inc.
Notice
of Grant of
Stock Option(s)
|
Name
[Associate
Name]
|
Employee
ID
[EEID]
|
|
Date
of Grant
[Grant
Date]
|
Option
Grant Price Per Share
[Grant
Price]
|
Number
of NSO Shares Granted
[Grant
Amount]
|
2005
Equity
Compensation
Plan
This
Notice of Non-Qualified (also known as "Non-Statutory") Stock Option ("NSO")
gives you the right to purchase the total number of shares of Common Stock
of
50
¢
par
value ("Common Stock") of J. C. Penney Company, Inc. ("Company") at the option
grant price per share as shown above. This option is subject to all the terms,
rules, and conditions of the J. C. Penney Company, Inc. 2005 Equity Compensation
Plan (“Plan”) and the implementing resolutions (“Resolutions”) approved by the
Human Resources and Compensation Committee of the Board of Directors.
Capitalized terms not otherwise defined herein shall have the respective
meanings assigned to them in the Plan and the Resolutions. In the event of
a
change in the capitalization of the Company or other similar event, the option
grant price and number of shares shall be adjusted as provided in the
Plan.
Terms
of Exercise
Effective
Exercise Date
When
an
option exercise instruction is given in conjunction with a sell order for the
underlying stock that is an Exercise-and-Sell to Cover , an Exercise-and-Sell
Order, a Limit Order or a Good ‘til Cancelled Order, the effective exercise date
shall be the date on which such sale order is executed. For a Cash Payment
(Exercise and Hold) transaction, the effective exercise date shall be the date
the requisite funds are received by the Company at its home office in Plano,
Texas, or such other location as the Company may designate, or by a third party
duly designated by the Company at the offices of such third party. For a Stock
Payment transaction, the effective exercise date shall be the date the properly
completed option exercise form/instructions and any necessary accompanying
documents and payment are received by the Company at its home office in Plano,
Texas, or such other location as the Company may designate, or by a third party
duly designated by the Company at the offices of such third party. Exercise
instructions received after the close of the New York Stock Exchange for the
day
shall be deemed received as of the opening of the next Business Day (a “Business
Day” being any day on which the New York Stock Exchange is open and operating).
An effective exercise date shall never mean a non-Business Day. If any
"effective exercise date," as defined above, falls on a day Common Stock is
not
traded, all transactions shall be postponed until the next trading day, and
the
effective exercise date shall be deemed to be the next trading date, unless
such
day is after the
Normal
Expiration Date
(as
defined below),
in
which case the option shall expire.
Transferability
This
option may be assigned or transferred by will or the laws of descent and
distribution. No Stock Option shall be exercisable except by you or (a) upon
your incapacity, by your guardian or legal representative, or (b) upon your
death, by the beneficiary you have designated on the JCPenney Company Equity
Compensation beneficiary designation form or in the absence of such beneficiary,
your legal representative (collectively, "Legal Transferees").
Date
Option Becomes Exercisable
This
option shall become exercisable (“vest”) over a
period
in accordance with the following schedule:
|
Normal
Vesting Dates
|
Percent
of this Option Grant Vesting
|
|
|
|
|
|
|
|
|
|
This
option shall be 100% vested on
.
However,
100% of this option becomes immediately exercisable, without regard to these
dates, upon a "Change of Control" (as defined in Attachment A) of the Company
or
an Involuntary Termination under, and as defined in the Executive Termination
Pay Agreement, and a portion of this option becomes immediately exercisable,
without regard to these dates, in the event of your employment termination
due
to retirement, death, disability, or reduction in force/unit closing as
described below.
Additional
Exercise Terms Of This Option Are
:
While
you are Employed
While
you are employed by the Company, subsidiary, or other entity affiliated with
the
Company, you may exercise vested options any time on or
after
the
Normal
Vesting Dates
until
the
Expiration
Date
which
is
(
"Normal
Expiration Date"
).
This
option can be exercised by:
|
|
·
|
Cash
Payment Method (Exercise-and-Hold)
|
|
|
·
|
Exercise-and-Sell
Method
|
|
|
·
|
Exercise-and-Sell
To Cover Method
|
After
your Employment Termination
In
all cases, the option exercise period following termination of employment cannot
extend beyond the applicable date described below or the Normal Expiration
Date,
whichever comes first.
|
1)
|
Retirement,
Death, or Disability:
If your employment terminates due to
your:
|
·
Retirement
at age 60 or more,
·
Retirement
between ages 55 and 59 with at least 15 years of service,
·
Death,
or
·
Disability,
before
the final
Normal
Vesting Date
,
you
shall be entitled to a prorated number of stock options. The proration shall
be
based on the ratio of (a) the number of calendar days from the date of grant
to
the effective date of termination to (b) the total number of calendar days
in
the vesting period. The number of options that have already vested shall be
subtracted from the prorated amount and the remaining prorated options shall
become immediately exercisable. Any options which have not already vested or
for
which exercisability is not accelerated shall expire on such employment
termination.
If
your
employment terminates due to any of the three circumstances listed above, all
vested stock options may be exercised for a period of five years after
employment termination or until the option’s
Normal
Expiration Date
,
whichever comes first.
2)
Reduction in Force or Unit Closing:
If
your
employment terminates due to a reduction in force or unit closing before the
final
Normal
Vesting Date
,
you
shall be entitled to a prorated number of stock options. The proration shall
be
based on the ratio of (a) the number of calendar days from the date of grant
to
the effective date of termination to (b) the total number of calendar days
in
the vesting period. The number of options that have already vested shall be
subtracted from the prorated amount and the remaining prorated options shall
become immediately exercisable. Any options which have not already vested or
for
which exercisability is not accelerated shall expire on such employment
termination.
If
your
employment terminates due to a reduction in force or unit closing, all vested
options may be exercised for a period of two years after employment termination
or until the option’s
Normal
Expiration Date
,
whichever comes first.
3)
Resignation,
Summary Dismissal or Resignation in Lieu of Summary Dismissal, Discretionary
Dismissal or Resignation in Lieu of Discretionary Dismissal (excluding Reduction
In Force or Unit Closing):
If
your
employment terminates due to your resignation, summary dismissal or resignation
in lieu of summary dismissal, discretionary dismissal or resignation in lieu
of
a discretionary dismissal, then this option shall expire as of the date of
your
employment termination.
4)
Involuntary
Termination
under the Executive Termination Pay Agreement:
If
your employment terminates due to an Involuntary Termination under, and as
defined in the Executive Termination Pay Agreement, any outstanding options
will
vest and become immediately exercisable subject to (a) the execution and
delivery prior to the Involuntary Termination of a release in such form as
may
be required by the Company and (b) the expiration of the applicable revocation
period for such release.
If
your
employment terminates due to an Involuntary Termination under, and as defined
in
the Executive Termination Pay Agreement, all vested stock options may be
exercised for a period of 120 days after the effective date of employment
termination or until the option’s
Normal
Expiration Date
,
whichever comes first.
This
stock option grant does not constitute an employment contract. It does not
guarantee employment for the length of the vesting period or for any portion
thereof.
Attachment
A
A
Change of Control Event shall have occurred if there is a change of ownership,
a
change of effective control, or a change in ownership of a substantial portion
of the assets of the Company (as “Company” is defined in the J. C. Penney
Company, Inc. 2005 Equity Compensation Plan).
|
1.
|
Change
of ownership occurs on the date that a person or persons acting as
a group
acquires ownership of stock of the Company that together with stock
held
by such person or group constitutes more than 50 percent of the total
fair
market value or total voting power of the stock of the
Company.
|
|
2.
|
Notwithstanding
whether the Company has undergone a change of ownership, a change
of
effective control occurs (a) when a person or persons acting as a
group
acquires within a 12-month period 35 percent of the total voting
power of
the stock of the Company or (b) a majority of the Board of Directors
is
replaced within 12 months if not previously approved by a majority
of the
members.
A
change in effective control also may occur in any transaction in
which
either of the two corporations involved in the transaction has a
Change in
Control Event, i.e. multiple change in control
events.
|
|
3.
|
Change
in ownership of a substantial portion of the Company’s assets occurs when
a person or persons acting as a group acquires assets that have a
total
gross fair market value equal to or more than 40 percent of the total
gross fair market value of all assets of the Company immediately
prior to
the acquisition.
A
transfer of assets by the Company is not treated as a change in the
ownership of such assets if the assets are transferred to -
|
(i)
A
shareholder of the Company (immediately before the asset transfer) in exchange
for or with respect to its stock;
(ii)
An
entity, 50 percent or more of the total value or voting power of which is owned,
directly or indirectly, by the Company;
(iii)
A
person, or more than one person acting as a group, that owns, directly or
indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the Company; or
(iv)
An
entity, at least 50 percent of the total value or voting power of which is
owned, directly or indirectly, by a person described in paragraph (iii).
Persons
will not be considered to be acting as a group solely because they purchase
assets of the Company at the same time, or as a result of the same public
offering. However persons will be considered to be acting as a group if they
are
owners of a corporation that enters into a merger, consolidation, purchase
or
acquisition of assets, or similar business transaction with the Company.
Exhibit
10.2
NOTICE
OF SPECIAL RESTRICTED STOCK UNIT AWARD
Name:[Associate
Name]
ID:
[EEID]
Restricted
Stock Unit Grant
A
restricted stock unit award for [Grant Amount] units was granted to you on
[Grant Date] (“Grant Date”). Each restricted stock unit shall at all times be
deemed to have a value equal to the then-current fair market value of one share
of J. C. Penney Company, Inc. Common Stock of 50¢ par value (“Common Stock”).
This grant is subject to all the terms, rules, and conditions of the J. C.
Penney Company, Inc. 2005 Equity Compensation Plan (“Plan”) and the implementing
resolutions (“Resolutions”) approved by the Human Resources and Compensation
Committee of the JCPenney Board of Directors. In the event of a change in the
capitalization of the Company or other similar event, the number of restricted
stock units granted to you shall be adjusted as provided in the Plan.
The
restricted stock unit award shall vest [Vesting Schedule] provided you are
still
actively employed on the vesting date with no interruption of employment with
the Company. The shares to be received upon vesting of your restricted stock
units, including in connection with termination of your employment as described
below, shall be delivered to you as soon as practicable but in no event later
than two and one-half months following the close of the year in which vesting
occurs.
You
shall be credited with a quarterly distribution of an amount equivalent to
the
dividend declared on Common Stock on the restricted stock units until such
time
as the units are converted to shares of Common Stock. Any such dividends shall
be converted into a number of additional restricted stock units equal to the
aggregate dividend which would have been paid with respect to the number of
restricted stock units then credited to you under this grant divided by the
closing price of the Common Stock on the New York Stock Exchange on the day
on
which such dividends are paid. Any such additional restricted stock units shall
vest at the same time as the restricted stock units granted hereunder.
Employment
Termination
If
your
employment terminates due to retirement, Disability, death or reduction in
force/unit closing prior to the vesting date, you shall be entitled to a
prorated number of restricted stock units. The proration shall be based on
the
ratio of (a) the number of calendar days from the date of grant to the effective
date of termination to (b) the total number of calendar days in the vesting
period. Any remaining restricted stock units shall expire on such employment
termination. The beneficiary listed on your JCPenney Company Equity Compensation
beneficiary designation form shall receive the vested shares covered by the
restricted stock unit award in the case of termination of employment due to
death.
If
your
employment terminates due to
an
Involuntary Termination under, and as defined in the Executive Termination
Pay
Agreement, any outstanding restricted stock units shall immediately vest and
be
payable in shares of JCPenney Common Stock, subject to (a) the execution and
delivery prior to the Involuntary Termination of a release in such form as
may
be required by the Company and (b) the expiration of the applicable revocation
period for such release.
If
your
employment terminates for any reason other than those specified above, any
unvested restricted stock units shall be cancelled on the effective date of
termination.
Taxes
and Withholding
At
the
time the restricted stock units vest, the fair market value of the shares on
the
vesting date (the closing price of the Common Stock on the NYSE, or if the
Common Stock does not trade on such date, the closing price reported in the
composite transaction table on the last trading date immediately preceding
such
date) multiplied by the number of vested shares shall be included as income
on
your W-2 form and the Company shall be required to withhold applicable taxes
on
such shares. The Company shall collect any withholding taxes due by retaining
and canceling the number of vested shares equal to the value of the required
minimum tax withholding.
Transferability
The
restricted stock unit granted hereunder is non-transferable.
Effect
on Other Benefits
The
value of the shares covered by the restricted stock unit award shall not be
included as compensation or earnings for purposes of any other compensation,
retirement, or benefit plan offered to Company associates.
Change
of Control
The
restricted stock unit award vests immediately without regard to the vesting
dates listed above upon a Change of Control of the Company (as defined in
Attachment A).
Administration
The
Human Resources and Compensation Committee of the Company’s Board of Directors
has full authority and discretion to decide all matters relating to the
administration and interpretation of the Plan and this award and all such
Committee determinations shall be final, conclusive, and
binding.
Attachment
A
A
Change of Control Event shall have occurred if there is a change of ownership,
a
change of effective control, or a change in ownership of a substantial portion
of the assets of the Company (as “Company” is defined in the J. C. Penney
Company, Inc. 2005 Equity Compensation Plan).
|
1.
|
Change
of ownership occurs on the date that a person or persons acting as
a group
acquires ownership of stock of the Company that together with stock
held
by such person or group constitutes more than 50 percent of the total
fair
market value or total voting power of the stock of the
Company.
|
|
2.
|
Notwithstanding
whether the Company has undergone a change of ownership, a change
of
effective control occurs (a) when a person or persons acting as a
group
acquires within a 12-month period 35 percent of the total voting
power of
the stock of the Company or (b) a majority of the Board of Directors
is
replaced within 12 months if not previously approved by a majority
of the
members.
A
change in effective control also may occur in any transaction in
which
either of the two corporations involved in the transaction has a
Change in
Control Event, i.e. multiple change in control
events.
|
|
3.
|
Change
in ownership of a substantial portion of the Company’s assets occurs when
a person or persons acting as a group acquires assets that have a
total
gross fair market value equal to or more than 40 percent of the total
gross fair market value of all assets of the Company immediately
prior to
the acquisition.
A
transfer of assets by the Company is not treated as a change in the
ownership of such assets if the assets are transferred to -
|
(i)
A
shareholder of the Company (immediately before the asset transfer) in exchange
for or with respect to its stock;
(ii)
An
entity, 50 percent or more of the total value or voting power of which is owned,
directly or indirectly, by the Company;
(iii)
A
person, or more than one person acting as a group, that owns, directly or
indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the Company; or
(iv)
An
entity, at least 50 percent of the total value or voting power of which is
owned, directly or indirectly, by a person described in paragraph (iii).
Persons
will not be considered to be acting as a group solely because they purchase
assets of the Company at the same time, or as a result of the same public
offering. However persons will be considered to be acting as a group if they
are
owners of a corporation that enters into a merger, consolidation, purchase
or
acquisition of assets, or similar business transaction with the Company.
Exhibit
10.3
JCPenney
J.
C. Penney Company,
Inc.
Notice
of 2007
Performance Unit Grant
|
Name
[Associate
Name]
|
Employee
ID
[EEID]
|
|
Date
of Grant
3/14/2007
|
Number
of Performance Units Granted
[Grant
Amount]
|
Performance
Cycle
Begins:
2/4/2007
Ends:
2/2/2008
|
2005
Equity
Compensation
Plan
You
have been
granted the number of Performance Units listed above in recognition of your
expected future contributions to the success of JCPenney. This Performance
Unit
grant is a “target” award, which may increase or decrease based on the Company’s
actual results for the Performance Cycle as set forth in the Payout Matrix
established by the Human Resources and Compensation Committee of the JCPenney
Board of Directors (“Committee”). This grant is subject to all the terms, rules,
and conditions of the J. C. Penney Company, Inc. 2005 Equity Compensation Plan
(“Plan”) and the implementing resolutions (“Resolutions”) approved by the
Committee. Capitalized terms not otherwise defined herein shall have the
respective meanings assigned to them in the Plan and the Resolutions. In the
event of a change in capitalization of the Company or other similar event,
the
number of units shall be adjusted as provided in the Plan.
Definitions
Payout
Matrix
- The payout matrix is established by the Committee at the beginning
of the Performance Cycle and describes the percentage of units you shall
earn
based on the Company’s actual EPS for the Performance Cycle.
Performance
Units
- The performance units granted under this program are restricted
stock units with both performance-based and time-based vesting features.
Each
performance unit shall at all times be deemed to have a value equal to the
then-current fair market value of one share of J. C. Penney Company, Inc.
Common
Stock of 50¢ par value (“Common Stock”). You can earn from 0% to 200% of the
units granted based on the Company’s actual results for the Performance
Cycle.
Performance
Cycle
- The performance cycle is a one-year period beginning on the first
day of the Company’s fiscal year and ending on the last day of the fiscal
year.
Performance
Measurement
- The performance measurement is the Company’s Diluted Earnings
Per Share from continuing operations (“EPS”) over the Performance Cycle
excluding any extraordinary or unusual noncomparable items as identified
by the
Committee at the time the Payout Matrix for the Performance Cycle is
established.
Retirement
—Retirement
means your separation from service either (1) at or after age 60 or (2) at
or
after age 55 with at least 15 years of service with JCPenney or any of its
subsidiaries.
How
Your
Actual Performance Units are Determined
The
Company’s EPS
for fiscal 2007 shall determine the actual number of Performance Units, if
any,
that are credited to your account. The Payout Matrix shown below indicates
the
percentage of Performance Units that shall be credited for the respective
EPS
amounts.
The
actual number
of Performance Units that you earn shall be credited to your account as soon
as
practicable but in no event later than 75 days after the end of the Performance
Cycle.
Vesting
of Your Credited Performance Units
The
actual
Performance Units credited to your account shall vest, and the restrictions
on
your Performance Units shall lapse, according to the following Vesting
Schedule
,
PROVIDED YOU REMAIN CONTINUOUSLY EMPLOYED BY THE
COMPANY THROUGH EACH OF THE RESPECTIVE VESTING DATES (unless your employment
terminates due to your Retirement, death, Disability, reduction in force/unit
closing or an Involuntary Termination under, and as defined in the Executive
Termination Pay Agreement).
Your vested Performance Units
shall be paid out in shares of Common Stock as soon as practicable but in
no
event later than 75 days following each Vesting Date. You shall not be allowed
to defer the payment of your shares of Common Stock to a later
date.
|
Vesting
Dates
|
Percent
Vesting
|
|
March
14, 2008
|
33-1/3%
|
|
March
14, 2009
|
33-1/3%
|
|
March
14, 2010
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33-1/3%
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If
your
employment terminates during the Performance Cycle because of Retirement,
Disability, death or reduction in force/unit closing, then you shall be entitled
to a prorated number of the Performance Units earned in accordance with the
Payout Matrix, determined as of the end of the Performance Cycle. The proration
shall be based on the ratio of (a) the number of calendar days from the date
of
grant to the effective date of termination to (b) the total number of calendar
days in the vesting period. Any Performance Units earned under this termination
provision, shall be immediately vested and delivered in shares of JCPenney
Common Stock within 75 days of the end of the Performance Cycle.
If
your
employment terminates following the end of the Performance Cycle because of
Retirement, Disability, death or reduction in force/unit closing, you shall
be
entitled to a prorated number of the Performance Units earned under the Payout
Matrix. The proration shall be based on the ratio of (a) the number of calendar
days from the date of grant to the effective date of termination to (b) the
total number of calendar days in the vesting period. Any Performance Units
that
have already vested shall be subtracted from the prorated amount and the
remaining prorated Performance Units shall vest immediately and be delivered
as
shares of JCPenney Common Stock as soon as practicable but in no event later
than 75 days following your termination date. Any Performance Units which have
not already vested or for which vesting is not accelerated shall expire on
such
employment termination.
If
your
employment terminates due to an Involuntary Termination under, and as defined
in
the Executive Termination Pay Agreement, any outstanding Performance Units
shall
immediately vest and be payable in shares of JCPenney Common Stock, in an amount
equal to (1) if termination occurs prior to the end of the Performance Cycle,
the target number of Performance Units for such Performance Cycle, and (2)
if
the termination occurs after the end of the Performance Cycle, the number of
Performance Units earned for such Performance Cycle, subject to (a) the
execution and delivery prior to the Involuntary Termination of a release in
such
form as may be required by the Company and (b) the expiration of the applicable
revocation period for such release.
If
your
employment terminates for any reason other than Retirement, Disability, death,
reduction in force/unit closing, or Involuntary Termination under, and as
defined in the Executive Termination Pay Agreement you shall forfeit any
unearned and/or unvested Performance Units at the time of such employment
termination.
Change
of Control
If
a Change of
Control (as defined in Attachment A to this Notice of Grant) occurs during
the
Performance Cycle, any outstanding Performance Units shall immediately vest
and
be payable in shares of JCPenney Common Stock, in an amount equal to (1) if
a
Change of Control occurs prior to the end of the Performance Cycle, the target
number of Performance Units for such Performance Cycle, and (2) if the Change
of
Control occurs after the end of the Performance Cycle, the number of Performance
Units earned for such Performance Cycle as of the effective date of the Change
of Control.
Dividend
Equivalents
You
shall not have
any rights as a stockholder until your Performance Units vest and you are issued
shares of Common Stock in cancellation of the vested Performance Units. However,
following the conclusion of the Performance Cycle you shall begin to accrue
dividend equivalents on the Performance Units credited to your account in the
amount of any quarterly dividend declared on the Common Stock. Dividend
equivalents shall continue to accrue until your Performance Units vest and
you
receive actual shares of Common Stock in cancellation of the vested Performance
Units. The dividend equivalents shall be credited as additional Performance
Units in your account to be paid out in shares of Common Stock on each
applicable Vesting Date along with the Performance Units to which they relate.
The number of additional Performance Units to be credited to your account shall
be determined by dividing the aggregate dividend payable with respect to the
number of Performance Units in your account by the closing price of the Common
Stock on the New York Stock Exchange on the dividend payment date. The
additional Performance Units credited to your account are subject to all of
the
terms and conditions of this Performance Unit award and the Plan and you shall
forfeit your additional Performance Units in the event that you forfeit the
Performance Units to which they relate.
Taxes
and Withholding
At
the time your
Performance Units vest and you are issued shares of Common Stock or cash in
lieu
of fractional shares, the fair market value of the shares of Common Stock issued
to you shall be included in your W-2 form and the Company shall be required
to
withhold applicable taxes on such amount. Your withholding rate with respect
to
this award may not be higher than the minimum statutory rate. The Company shall
retain and cancel the number of issued shares equal to the value of the required
minimum tax withholding in payment of the required minimum tax withholding
due.
For purposes of this grant notice, “fair market value” means the closing price
of the Common Stock on the New York Stock Exchange, or if the Exchange is closed
on the applicable date, or if the Common Stock does not trade on such date,
the
closing price of the Common Stock on the New York Stock Exchange on the last
trading day immediately preceding such date.
Transferability
of Your Performance Units
The
Performance
Units awarded hereunder are non-transferable.
Effect
on Other Benefits
The
value of the shares covered by the Performance Unit award shall not be included
as compensation or earnings for purposes of any other compensation, retirement,
or benefit plan offered to Company associates.
Administration
The
Committee has full authority and discretion, subject only to the terms of the
Plan, to decide all matters relating to the administration and interpretation
of
the Plan and this Performance Unit award. The Committee’s determinations shall
be final, conclusive, and binding on you and your heirs, legatees and
designees.
This
performance unit grant does not constitute an employment contract. It does
not
guarantee employment for the length of the vesting period or for any portion
thereof.
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2007
Performance Unit Award Payout
Matrix
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|
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2007
EPS
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Plan
Payout %
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Maximum
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$5.87
|
200%
|
|
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$5.78
|
180%
|
|
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$5.70
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160%
|
|
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$5.61
|
140%
|
|
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$5.53
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120%
|
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Target
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$5.44
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100%
|
|
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$5.33
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80%
|
|
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$5.22
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60%
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$5.10
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40%
|
|
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$4.99
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20%
|
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Threshold
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$4.88
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0%
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For
EPS
results that fall in between the intervals shown above, the payout percent
increases approximately 2.33% for each $0.01 above target and decreases
approximately 1.79% for each $0.01 of EPS below target.
Attachment
A
A
Change of Control Event shall have occurred if there is a change of ownership,
a
change of effective control, or a change in ownership of a substantial portion
of the assets of the Company (as “Company” is defined in the J. C. Penney
Company, Inc. 2005 Equity Compensation Plan).
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1.
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Change
of ownership occurs on the date that a person or persons acting as
a group
acquires ownership of stock of the Company that together with stock
held
by such person or group constitutes more than 50 percent of the total
fair
market value or total voting power of the stock of the
Company.
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2.
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Notwithstanding
whether the Company has undergone a change of ownership, a change
of
effective control occurs (a) when a person or persons acting as a
group
acquires within a 12-month period 35 percent of the total voting
power of
the stock of the Company or (b) a majority of the Board of Directors
is
replaced within 12 months if not previously approved by a majority
of the
members.
A
change in effective control also may occur in any transaction in
which
either of the two corporations involved in the transaction has a
Change in
Control Event, i.e. multiple change in control
events.
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3.
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Change
in ownership of a substantial portion of the Company’s assets occurs when
a person or persons acting as a group acquires assets that have a
total
gross fair market value equal to or more than 40 percent of the total
gross fair market value of all assets of the Company immediately
prior to
the acquisition.
A
transfer of assets by the Company is not treated as a change in the
ownership of such assets if the assets are transferred to -
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(i)
A
shareholder of the Company (immediately before the asset transfer) in exchange
for or with respect to its stock;
(ii)
An
entity, 50 percent or more of the total value or voting power of which is owned,
directly or indirectly, by the Company;
(iii)
A
person, or more than one person acting as a group, that owns, directly or
indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the Company; or
(iv)
An
entity, at least 50 percent of the total value or voting power of which is
owned, directly or indirectly, by a person described in paragraph (iii).
Persons
will not be considered to be acting as a group solely because they purchase
assets of the Company at the same time, or as a result of the same public
offering. However persons will be considered to be acting as a group if they
are
owners of a corporation that enters into a merger, consolidation, purchase
or
acquisition of assets, or similar business transaction with the Company.