EXHIBIT 10.62
J. C. Penney Company,
Inc.
Deferred Compensation Plan for
Directors
As amended and restated effective
February 27, 2008
and As Further Amended Through December 10,
2008
1. Purpose of Plan
The purpose of the J. C. Penney
Company, Inc. Deferred Compensation Plan for Directors
(“Plan”) is to provide a procedure whereby a member of
the Board of Directors of J. C. Penney Company, Inc.
(“Company”) who is not an associate of the Company or
any of its subsidiaries (“Director”) may defer the
payment of all or a specified portion of the compensation payable
to the Director for services as a Director, including the annual
retainer, meeting fees, and fees payable to a Director for services
above and beyond those services in connection with his or her Board
and committee responsibilities (“Fees”). Deferred Fees
will be subject to Social Security Self-Employment tax in the year
the Fees are paid irrespective of when such Fees are earned. A
Director who elects to defer the payment of Fees will be eligible
to make a deductible Keogh Plan contribution with respect to such
Fees in the year such Fees are actually paid to the
Director.
2. Administration
The Plan shall be administered by a
committee (“Committee”) consisting of one or more
persons appointed from time to time by the Board of Directors out
of those members of the Board of Directors who have never been
participants under the Plan. The Committee shall have plenary
authority in its discretion, but subject to the express provisions
of the Plan, to interpret the Plan, to prescribe, amend, and
rescind rules and regulations relating to it, and to make all other
determinations deemed necessary or advisable for the administration
of the Plan. The determinations of the Committee on the foregoing
matters shall be conclusive and binding on all interested
parties.
3. Election to
Defer
3.1 A Director may elect annually to
defer payment of all or a specified portion of any unearned Fees.
This election to defer must be made by December 31 of the
calendar year prior to the calendar year that the election becomes
effective for the Fees earned in such calendar year, and the
election shall become irrevocable on December 31 of the year
in which the election is made. Such election shall be effective
January 1 of the calendar year following the calendar year of
election. For purposes of Section 3.1 and 3.2, Fees will be
treated as earned in the period during which the services giving
rise to such Fees are performed.
3.2 A newly eligible Director may
make an election to defer payment of all or a specified portion of
any unearned Fees for the current year of appointment if the
election is made within 30 days of the effective date of election
to the Board. A Director will not be treated as newly eligible if
the Director is otherwise eligible to participate in an agreement,
method, program, or other arrangement that would be aggregated with
this Plan under section 409A of the Internal Revenue Code of 1986,
as amended (“Code”) or Treasury Regulation section
1.409A-1(c)(2), or its successor. A Director who has terminated
board service and is subsequently re-elected to the Board will be
deemed to be newly eligible to the extent permitted under Code
section 409A or Treasury Regulation section 1.409A-2(a)(7), or its
successor. If the election to defer is not made within 30 days, or
the Director is not otherwise newly eligible, the Director will be
allowed to make an election for the deferral of unearned Fees for
the following year in accordance with Section 3.1
above.
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JCPenney Board of Directors Compensation and
Benefit Programs
3.3 A Director’s election to defer will
remain in effect from year to year until he or she files a new
election in accordance with Section 3.1 or gives notice to
terminate such election. In order for a termination of an election
to become effective for a calendar year, the notice to terminate
the election must be received prior to the election becoming
irrevocable on the preceding December 31. An election to defer
cannot be terminated once the election becomes effective for the
calendar year, except due to an unforeseeable emergency as defined
in Section 6.2.
4. Directors’
Accounts
4.1 There shall be established for
each Director participating in the Plan an account on the books of
the Company, to be designated as such Director’s deferred
compensation account (“Account”). Unless and until a
Change of Control (as defined hereinafter) shall be deemed to have
occurred, all amounts deferred pursuant to the Plan, together with
any further amounts accrued thereon, as hereinafter provided, shall
be held in the general funds of the Company and shall be credited
to the Director’s Account. The Company shall furnish
quarterly or upon request to each participating Director a
statement of such Director’s Account.
4.2 Change in Control.
(a) In the event a Change in Control
(as defined in Section 4.2(c) below) shall be deemed to have
occurred, the Company’s liability for benefits under the Plan
shall be funded under an irrevocable trust, to the extent permitted
under Code section 409A, and as described in Section 4.2(b)
below, which shall be subject to the claims of the Company’s
general creditors so that Eligible Directors will not be currently
taxed upon the funding of such benefits.
(b) Grantor Trust . To the
extent permitted by Code section 409A and the regulations
thereunder, the Board of Directors will have the authority to
transfer assets of the Company, or its affiliates or subsidiaries
in an amount sufficient to pay benefits that have accrued under the
Plan up to the date of a Change in Control, as described in
Section 4.2(c), to a grantor trust to be established by the
Company for the purpose of paying benefits hereunder; and the
Director’s Account shall thereafter be paid to the Director
from such trust in accordance with the terms of the Plan. On each
anniversary date of the date of the Change of Control, to the
extent permitted by Code section 409A and the regulations
thereunder, the Company shall transfer to the grantor trust an
amount necessary to pay all benefits accrued under the Plan during
the preceding twelve months.
(c) Change in Control Event .
For the purpose of determining whether a Change in Control has
occurred with respect to the Plan, a Change in Control means a
Change in Control within the meaning of Code section 409A and
Treasury Regulation section 1.409A-3(i)(5), or its successor,
including a change in the ownership of the corporation, a change in
the effective control of the corporation, or a change in the
ownership of a substantial portion of the assets of the corporation
as such terms are defined in Treasury Regulation sections
1.409A-3(i)(5)(v), (vi) and (vii). For this purpose,
“corporation” has the meaning given in Treasury
Regulation section 1.409A-3(i)(5)(ii), or its successor.
4.3 If a Director should make the
one-time election under the J. C. Penney Company, Inc. Retirement
Plan for Non-Associate Directors to cease participation in that
plan and to transfer his or her accrued benefit under that plan to
this Plan, the amount so transferred, together with any further
amounts accrued thereon (“Retirement Transfer”), shall
be a part of the Director’s Account. Notwithstanding the
foregoing, no Retirement Transfers to this Plan shall be made after
1997.
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JCPenney Board of Directors Compensation and
Benefit Programs
4.4 A Director may elect that all but not a part
of the balance in his or her Account be determined by reference to
one of the following factors (“Factors”):
(a) the addition of interest, to be
accrued during each such quarter and to be credited to such Account
on the first business day following the end of such quarter on the
basis of the average balance in such Account during such quarter,
at a rate equal, also at such Director’s election, to
either;
(1) the average annual rate payable
for one-year United States Treasury Notes issued during such
quarter, or
(2) the annual rate in effect for
such quarter under the Interest income Account of the J. C. Penney
Corporation, Inc. Savings, Profit-Sharing, and Stock Ownership
Plan, or
(3) the year to date average of the
Moody’s Single A Corporate Bond Yield compounded quarterly;
or
(b) a number of units
(“Units”), to be determined and valued in accordance
with the fair market value of shares of the Company’s Common
Stock of 50¢ par value (“Common Stock”), the
method of such determination and valuation being set forth in
Attachment A to the Plan.
4.5 The Director’s election as
to the Factor to be referenced to determine the balance in his or
her Account and any change in such election, shall be effective on
the first day of the calendar quarter following receipt by the
Secretary of the Company, or his or her designee, of written notice
thereof; provided, however, that in the absence of any such
election, the Factor for a Director’s Account shall be deemed
to be the Savings Plan Interest Income Account described in
Section 4.4(a)(2).
5. Payment from Directors’
Accounts
5.1 For amounts
commencing distribution on or after January 1, 2008, a
Director may receive payment from his or her Direc
