Exhibit 10.1
JCPenney
Notice of 2008
Supplemental Annual CEO Performance Unit Grant
J. C. Penney Company,
Inc.
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 independent members
of the JCPenney Board of Directors. 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 (“Committee”) of
the Board. 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
Disability
– Disability
means totally and permanently disabled within the meaning of the
Social Security Act, provided you either (a) qualified for
disability insurance benefits under such Act, or (b) in the opinion
of the organization that administers the Company’s disability
plans, you have a disability which entitles you to such disability
insurance benefits except for the fact that you do not have
sufficient quarters of coverage or have not satisfied any age
requirements under such law.
Payout Matrix
– The Payout
Matrix is established by the independent members of the Board at
the beginning of the Performance Cycle and describes the percentage
of units you shall earn based on the Company’s annual Total
Stockholder Return for the Performance Cycle.
Performance Units
– The
Performance Units granted under this award are restricted stock
units with performance-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 166⅔% of
the units granted based on the Company’s actual results for
the Performance Cycle.
Performance Cycle
– The
Performance Cycle is a three-year period beginning on December 15,
2008 and ending on December 14, 2011.
Performance
Measurement –The Performance
Measurement is the Company’s annual Total Stockholder Return
over the Performance Cycle.
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.
Total Stockholder Return
(“TSR”) – The Company’s
annual stockholder returns, assuming reinvestment of all dividends
on the date paid (assumed to be the ex-dividend
date). The Company’s annual stockholder returns
will be calculated based on the closing price of Common Stock on
the last trading day immediately preceding the date of grant and
the 60-day trailing average stock price of Common Stock prior to
the last day of the Performance Cycle.
How Your Actual Performance
Units are Determined
The Company’s annual TSR
for the Performance Cycle shall determine the actual number of
Performance Units, if any, that will vest on December 15, 2011 (the
“Vesting Date”). The Payout Matrix shown
below indicates the percentage of Performance Units that will vest
for the respective TSR percentages . Within 2½ months following the
Vesting Date, the independent members of the Board shall approve
the percentage of Performance Units, if any, earned based on the
Payout Matrix. T he actual number of Performance
Units that vest shall be paid in shares of Common Stock as soon as
practicable, but in no event later than 2½ months, after the
Vesting Date.
You shall not be allowed to
defer the payment of your shares of Common Stock to a later
date.
