SCHEDULE 14A
(Rule 14a-101)
Proxy
Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a party other than the
Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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☒
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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J. C. Penney Company, Inc.
(Name of Registrant as Specified
in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
April 1, 2019
Dear Stockholders:
On behalf of your Board of Directors, I want to take this opportunity to invite you to attend our 2019 Annual Meeting of Stockholders. The meeting will
be held on Friday, May 24, 2019, at 10:00 A.M., local time, at the JCPenney Home Office, located at 6501 Legacy Drive, Plano, Texas 75024. We will be asking you to vote on and to support several proposals for our Company and it is important
that your shares be represented. We urge you to vote your shares via the toll-free telephone number, over the Internet, or by mail, as provided in the enclosed materials.
You will find information regarding the matters to be voted on at the meeting in the formal Notice of Meeting and Proxy Statement, which are included in
the following pages.
We appreciate your support of JCPenney.
Ronald W. Tysoe
Chairman of the Board
J. C. PENNEY COMPANY, INC.
6501 Legacy Drive
Plano, Texas 75024-3698
J. C. PENNEY COMPANY, INC.
Notice
of 2019 Annual Meeting of Stockholders
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Date and Time:
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Friday, May 24, 2019
10:00 A.M., local time
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Place:
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JCPenney Home Office
6501 Legacy Drive
Plano, Texas 75024-3698
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Business:
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1. To elect ten directors nominated by the Board of Directors for a
one-year
term as described in the accompanying proxy materials;
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2. To ratify the appointment of KPMG LLP as independent auditor for the fiscal year ending
February 1, 2020;
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3. To approve the adoption of the J. C. Penney Company, Inc. 2019 Long-Term Incentive
Plan;
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4. To hold an advisory vote on executive compensation; and
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5. To consider any other business properly brought before the meeting.
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Record Date:
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In order to vote, you must have been a stockholder at the close of business on March 25, 2019.
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Voting By Proxy:
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It is important that your shares be represented and voted at the meeting. If you received the proxy materials by mail, you can vote your shares by telephone, over the Internet, or by completing, signing, dating and returning your
completed proxy card. If you received the proxy materials over the Internet, a proxy card was not sent to you, and you may vote your shares only by telephone or over the Internet. To vote by telephone or Internet, follow the instructions included in
the Proxy Statement or on the Internet. You can revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the Proxy Statement.
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Important Notice Regarding the Availability of Proxy Materials for the 2019 Annual Meeting of Stockholders to be held on May 24,
2019.
The Notice of Annual Meeting, Proxy Statement and Annual Report on Form
10-K
for the fiscal year ended February 2, 2019 are available at www.proxyvote.com.
Salil R. Virkar, Secretary
Plano, Texas
April
1, 2019
YOUR VOTE IS IMPORTANT
PLEASE
SIGN, DATE, & RETURN YOUR PROXY CARD OR
VOTE BY TELEPHONE OR INTERNET
PROXY STATEMENT
TABLE OF CONTENTS
Corporate Governance
2019 PROXY STATEMENT
This Proxy Statement and the accompanying materials are being sent to JCPenney stockholders beginning on or about April 8, 2019. In this Proxy
Statement, you will find information on the matters to be presented at the 2019 Annual Meeting of Stockholders (the Annual Meeting) and information to assist you in voting your shares.
CORPORATE GOVERNANCE
More than 115 years ago, James Cash Penney founded JCPenney on the principle of the Golden Rule: treat others the way you would like to be treated.
While JCPenney has gone through many changes throughout its history, the foundation built on honesty, trust and integrity has never wavered. Our corporate governance principles continue to reflect the highest ethical standards rooted in our rich
heritage as we seek to achieve excellence in our work, products and services for our customers and our stockholders.
Our key corporate governance
policies and practices include:
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Stockholder Rights
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✓
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Annual election of all directors
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Majority vote standard in uncontested elections
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Director resignation policy
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No unequal voting rights
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No supermajority vote requirements
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3%/3 year proxy access bylaw
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Board Structure and Practices
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All directors are independent other than the CEO
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Diverse and experienced Board
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Independent Chairman of the Board with clearly defined responsibilities
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Independent directors regularly meet in executive sessions
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Annual Board and Committee self-assessments
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Annual evaluation of CEO
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Corporate governance guidelines
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Mandatory retirement age policy
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No significant related party transactions
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Governing Documents
The key documents that make up our corporate governance framework are our:
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Corporate Governance Guidelines, including our:
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Standards for the Determination of Director Independence,
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Lead Independent Director Policy and
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Policy on Review and Consideration of Related Person Transactions;
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Restated Certificate of Incorporation, as amended;
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Audit Committee Charter;
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Finance and Planning Committee Charter;
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Corporate Governance Committee Charter;
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2019 Proxy Statement
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1
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Corporate Governance
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Human Resources and Compensation Committee Charter;
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Statement of Business Ethics; and
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Standards and Procedures for Director Nominations.
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You can access each of these documents on our website at www.jcpenney.com by clicking on Investors, then Governance. You can
also obtain a free copy of any of these documents by sending a written request to JCPenneys Corporate Secretary at P.O. Box 10001, Dallas, Texas 75301.
Corporate Governance Guidelines
Our Corporate Governance Guidelines (the Guidelines) set forth JCPenneys primary principles and policies regarding corporate governance, which are
the foundation of our commitment to best practices. The Guidelines are reviewed annually by the Corporate Governance Committee and the Board of Directors (the Board). The matters covered by the Guidelines include:
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director responsibilities;
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director independence and minimum qualifications;
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factors to be considered in selecting candidates to serve on the Board;
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the Companys voting standard for the election of directors;
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director resignations upon change of principal employment or personal circumstances;
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mandatory retirement age for directors;
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directors outside directorships and outside audit committee service;
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Board organization, including committees of the Board and the role and responsibilities of the lead independent director;
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policies relating to Board meetings;
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executive sessions for directors;
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ethical principles to be followed by directors;
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policies and procedures for reviewing related person transactions and conflicts of interest;
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claw-back policy on recovery of compensation in the event of a financial restatement;
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the Boards access to management and independent advisors;
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stockholders and other interested parties communications to
non-employee
directors;
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director orientation and continuing education;
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prohibition on loans to directors and executive officers;
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stock ownership goals for directors and members of the Companys senior management team;
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prohibition on hedging and pledging of Company stock;
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management succession and CEO evaluation; and
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annual self-assessments of the Board and each Board committee.
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Board Leadership Structure
Effective May 22, 2018, the Board of Directors elected Ronald W. Tysoe, a
non-employee,
independent
director, to serve as the Companys
Non-Executive
Chairman of the Board. Mr. Tysoe previously served as Lead Director pursuant to the Companys Lead Independent Director Policy. The duties of
the
Non-Executive
Chairman of the Board include:
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presiding over all meetings of the Board and regular executive sessions of the
non-employee,
independent members of the Board;
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2019 Proxy Statement
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Corporate Governance
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approving the scheduling of Board meetings as well as the agenda and materials for each Board meeting and executive session
of the Boards
non-employee,
independent directors;
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calling and presiding over meetings of the
non-employee,
independent directors as
he/she deems necessary;
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meeting regularly with the CEO and serving as a liaison and channel of communication between the
non-employee,
independent directors and the CEO;
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presiding over all meetings of stockholders and communicating with stockholders as appropriate; and
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approving and coordinating the retention of advisors and consultants who report directly to the
non-employee,
independent members of the Board, except as otherwise required by applicable law or New York Stock Exchange (NYSE) listing standards.
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The Companys leadership structure previously consisted of a combined Chairman/CEO leadership role coupled with a Lead Director. The Board of
Directors
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in connection with the departure of Marvin Ellison as Chairman of the Board and CEO and as part of its continuing review of corporate governance matters, decided to separate the Chairman and CEO roles and elect a
Non-Executive
Chairman of the Board after careful consideration and upon recommendation by the Corporate Governance Committee. The Board believes that JCPenneys current leadership structure enhances the
Boards ability to ensure that the appropriate level of independent oversight is applied to all management decisions.
Board and Committee Self-Assessments
Each year, the Board and the Boards Audit, Corporate Governance, Finance and Planning,
and Human Resources and Compensation Committees conduct self-assessments to evaluate their effectiveness and to identify opportunities for improvement. This self-assessment may be conducted in the form of written or oral questionnaires administered
by Board members, management or third parties. Directors respond to questions designed to elicit information to be used in improving Board and committee effectiveness. Self-assessment topics generally include, among other matters, Board composition
and structure, meeting topics and process, information flow, Board oversight of risk management and strategic planning, succession planning and access to management.
Director feedback solicited from the self-assessment process is discussed during Board executive sessions and, where appropriate, addressed with
management. The Corporate Governance Committee oversees the development and administration of the self-assessment process, including determining the format. More recently, the Corporate Governance Committee has determined that written questionnaires
are a highly effective method of conducting the self-assessments.
Board of Directors Role in Risk
Oversight
The Board oversees an enterprise-wide approach to risk management, designed to support the achievement of organizational
objectives, including strategic objectives, to improve long-term organizational performance and to enhance stockholder value. A fundamental part of risk management is not only understanding the risks a company faces and what steps management is
taking to manage those risks but also understanding what level of risk is appropriate for the company. The involvement of the full Board in reviewing the Companys business strategy is an integral aspect of its assessment of managements
tolerance for risk and also its determination of what constitutes an appropriate level of risk for the Company. In addition to managements discussion of risk with the full Board throughout the year, the independent directors also discuss risk
management during their executive sessions without management present over which the
Non-Executive
Chairman of the Board presides. The
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2019 Proxy Statement
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3
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Corporate Governance
Boards committees also consider risk appropriate to their respective jurisdictions
throughout the year. In that regard, the Audit Committee has oversight responsibility with respect to risks associated with financial accounting, data privacy and cybersecurity matters. The Human Resources and Compensation Committee reviews risks
related to executive compensation and the design of compensation plans and arrangements.
Policies and
Procedures with Respect to Related Person Transactions
The Board recognizes that related person transactions can present a heightened
risk of conflicts of interest. Accordingly, as a general matter, our directors and executive officers are to avoid any activity, interest or relationship that would create, or might appear to others to create, a conflict with the interests of
JCPenney. There were no related person transactions for the Companys fiscal year ended February 2, 2019.
Our written Policy on Review
and Consideration of Related Person Transactions (the RPT Policy) is included as Appendix C to the Guidelines. For purposes of Securities and Exchange Commission (SEC) rules as well as the RPT Policy, a related person transaction is any
transaction in which the Company was, is or will be a participant and the amount involved exceeds $120,000 and in which any related person had, has or will have a direct or indirect material interest. The term related person means:
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any person who is, or at any time since the beginning of the Companys last fiscal year was, a director or executive
officer of the Company or a nominee to become a director of the Company,
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any person who is known to be the beneficial owner of more than 5% of any class of the Companys voting securities and
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any immediate family member of any of the foregoing persons.
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We review all relationships and transactions in which the Company and a related person are participants to determine whether such persons have a direct
or indirect material interest. To identify potential related person transactions, we request certain information from our directors and executive officers. We then review the information provided for any related person transactions. The Corporate
Governance Committee reviews and determines whether to approve or ratify any related person transaction that is required to be disclosed. Any member of the Corporate Governance Committee who is a related person with respect to a transaction under
review may not participate in the deliberations or vote respecting approval or ratification of the transaction.
Board Independence
The Board reviews the independence of each
non-employee
director annually to confirm that the director continues
to meet our standards as well as the requirements of the NYSE. No member of the Board will be considered independent unless the Board determines that he or she has no material relationship with the Company that would affect his or her independence
and that he or she otherwise satisfies JCPenneys director independence standards as well as all applicable laws, rules and regulations. Our Standards for the Determination of Director Independence are included as Appendix A to
the Guidelines.
The factors the Board considers in determining whether a director is independent include:
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Whether within the preceding three years,
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the director is or was an employee of JCPenney;
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2019 Proxy Statement
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Corporate Governance
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a member of the directors immediate family is or was an executive officer of JCPenney;
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the director or an immediate family member of the director received more than $120,000 per year in direct compensation from
JCPenney (other than compensation for service as a director or pension or other forms of deferred compensation for prior service);
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the director or an immediate family member of the director was a partner or employee of JCPenneys external auditor
and personally worked on JCPenneys audit within that time;
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the director or an immediate family member of the director is or was employed as an executive officer of another company
where any of JCPenneys present executive officers serve on the compensation committee of that companys board of directors;
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the director or an immediate family member of the director is or was an employee or executive officer of another company
that makes payments to, or receives payments from, JCPenney in excess of the greater of $1 million or 2% of that companys consolidated gross revenues;
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Whether the director or an immediate family member of the director is a current partner of JCPenneys external
auditor;
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Whether the director is a current employee of JCPenneys external auditor;
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Whether an immediate family member of the director is a current employee of JCPenneys external auditor and personally
works on JCPenneys audit; and
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Whether the director serves as an officer, director or trustee of a charitable organization or as a member of that
organizations fund-raising entity or committee that received contributions from JCPenney in excess of the greater of $1 million or 2% of the charitys gross revenues.
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The Board has reviewed each directors independence for fiscal 2019. Applying the standards listed above as well as the requirements of the NYSE,
the Board has determined that each of the directors, except for Ms. Soltau, is independent.
Meeting
Attendance
During fiscal 2018, the Board held eleven meetings and committees of the Board held a total of 33 meetings. Each director
serving during fiscal 2018 attended at least 75% of the total number of meetings of the Board and committees on which he or she served.
All
directors are strongly encouraged to attend the Annual Meeting, but we do not have a formal attendance requirement. In 2018, ten of the eleven then-serving members of the Board attended the Annual Meeting.
Executive Sessions
The
non-employee,
independent directors meet in executive session with no Company associates present as a part of
each regularly scheduled Board meeting. The Companys
Non-Executive
Chairman of the Board, Ronald W. Tysoe, presides over these sessions.
Communications with the Board of Directors
Any Company stockholder or other interested party who wishes to communicate with the Board or with an individual director may direct such communications
by telephone to
1-800-527-0063,
by facsimile to
972-431-1133,
by email to
jcpdirectors-sm@jcpenney.com,
or by writing to:
Corporate Secretary
J. C. Penney
Company, Inc.
P.O. Box 10001
Dallas, TX 75301
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2019 Proxy Statement
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Corporate Governance
The communication must be clearly addressed to the Board of Directors or to a
specific director(s). If a response is desired, the individual should also provide contact information such as name, address and telephone number.
All such communications will be reviewed initially by the Companys Corporate Secretary and entered into a log for tracking purposes. The Board has
asked the Corporate Secretary to forward to the appropriate director(s) all correspondence, except for items unrelated to the Boards functions, business solicitations, advertisements and materials that are profane. The Corporate Secretary
prepares a periodic summary report of all such communications for the Board.
Communications with the Audit
Committee
Complaints and concerns relating to the Companys accounting, internal accounting controls or auditing matters should
be communicated to the Audit Committee of the Board. Any such communication may be made on an anonymous basis and may be reported to the Audit Committee through the Companys Vice President, Audit by calling
1-800-527-0063,
by website at www.jcpline.com or by writing to:
Vice President, Audit
J. C. Penney
Company, Inc.
P.O. Box 250335
Plano, TX 75025-0335
All such concerns will
be reviewed under the direction of the Audit Committee and oversight by the Vice President, Audit, the General Counsel, or such other persons as the Audit Committee determines to be appropriate. Confidentiality is maintained to the fullest extent
possible, consistent with the need to conduct an adequate review. Prompt and appropriate corrective action will be taken when and as deemed appropriate in the judgment of the Audit Committee. The Vice President, Audit will prepare a periodic summary
report of all such communications for the Audit Committee.
Board Diversity, Refreshment, Director
Qualifications and Process for Nominations
JCPenney is committed to creating an inclusive work environment where everyone is
respected and valued. A workforce that understands JCPenneys diverse customer base helps ensure that the Companys products, services and message are relevant in every community where the Company does business.
The Boards philosophy on diversity mirrors the Companys philosophy. In connection with the selection of nominees for director, the Corporate
Governance Committee strives to identify and recruit high-caliber individuals whose diverse talents, perspectives, experiences and backgrounds would preserve and enhance the inclusive environment in which the Board currently functions. Additional
information on the experiences and backgrounds of the director nominees can be found under
Proposal 1 - Election of Directors
beginning on page 14. The director nominees identified in this Proxy Statement
reflect the importance of diversity to the Board.
The Board also aims to maintain an appropriate balance of tenure across our directors. In the
last four years, the Board has appointed nine new directors to the Board while six directors have retired from or left the Board during the same period. Further, our Corporate Governance Guidelines provide that it is the Boards policy that no
individual who would be age 73 or older at the time of his or her election or
re-election
will be eligible to stand for election or
re-election
to the Board. The Board
may waive the age limitation if it deems a waiver to be in the best interests of the Company and its stockholders.
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2019 Proxy Statement
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Corporate Governance
The charts below reflect the gender composition and board tenure of the director
nominees.
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Average tenure: 5.3 years
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As provided in the Guidelines, nominees for director, including those directors who are eligible to stand for
re-election,
are selected based on, among other things, consideration of the following factors:
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character and integrity;
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business and management experience;
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demonstrated competence in dealing with complex problems;
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familiarity with the Companys business;
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diverse talents, backgrounds and perspectives;
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freedom from conflicts of interest;
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regulatory and stock exchange membership requirements for the Board;
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sufficient time to devote to the affairs of the Company; and
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reputation in the business community.
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In considering whether to nominate directors who are eligible to stand for
re-election,
the Corporate Governance
Committee also considers the quality of past director service, attendance at Board and committee meetings, compliance with the Guidelines (including satisfying the expectations for individual directors), as well as input from other Board members
concerning the directors performance and independence.
Although the Board retains ultimate responsibility for approving candidates for
election, the Corporate Governance Committee conducts the initial screening and evaluation process. In doing so, the Corporate Governance Committee considers candidates recommended by directors and the Companys management, as well as any
recommendations from Company stockholders. Additionally, the Corporate Governance Committee takes into account the Boards current composition and the capabilities and attributes of serving Board members, as well as additional capabilities and
attributes considered necessary or desirable in light of existing Company needs and the goal of preserving and enhancing Board diversity. The Corporate Governance Committee may engage one or more search firms to assist in the identification and
recruitment of director candidates.
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2019 Proxy Statement
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Corporate Governance
To recommend a candidate for election to the Board, a stockholder must submit the
following information to the Corporate Secretary of the Company at least 90 days in advance of the Annual Meeting:
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The stockholders name and address;
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A representation that the stockholder is a holder of record of JCPenney stock entitled to vote at the Annual Meeting and
intends to appear in person or by proxy at the Annual Meeting;
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The name and address of the stockholders nominee for director;
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A description of any arrangements or understandings between the stockholder and the director nominee or any other person
(naming such person(s)) relating to the election of the nominee to the Board;
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The biographical and other information about the nominee that would be required to be included in a proxy statement filed
pursuant to the proxy rules of the SEC; and
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The nominees consent to serve on the Board.
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In general, candidates recommended by stockholders will be evaluated under the same process as candidates recommended by existing directors, Company
management or third-party search firms. However, the Corporate Governance Committee will additionally seek and consider information concerning the relationship between a stockholders recommended nominee and the stockholder to determine whether
the nominee can effectively represent the interests of all stockholders. Also, except in unusual circumstances, the Corporate Governance Committee will not evaluate a stockholder-recommended candidate unless and until the stockholder advises that
the potential candidate has indicated a willingness to serve as a director, to comply with the expectations and requirements for Board service and to provide all the information required to conduct an evaluation.
In addition, pursuant to the Companys proxy access Bylaw, a stockholder, or a group of up to 20 stockholders, owning at least 3% of the
Companys outstanding common stock continuously for at least three years may nominate and include in the Companys proxy materials for an annual meeting of stockholders a number of directors up to the greater of two directors and 20% of
the Board, provided that the stockholder(s) and nominee(s) satisfy the Bylaw requirements.
A notice from an eligible stockholder under the
Companys proxy access Bylaw must be received by the Corporate Secretary of the Company no later than 120 days and no earlier than 150 days prior to the first anniversary of the date the Companys definitive proxy statement was first sent
to stockholders in connection with the previous years annual meeting of stockholders. If the date of the annual meeting of stockholders is more than 30 days before or after the anniversary of the preceding years annual meeting, the
notice must be received no earlier than 150 days prior to such annual meeting and no later than the later of 120 days prior to such annual meeting or 10 days following the day on which public disclosure of the date of the annual meeting was first
made. The notice must include certain information, representations and agreements required by Article III, Section 17 of the Companys Bylaws, including information about the stockholder or group of stockholders and any proposed
director nominee.
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2019 Proxy Statement
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Board Committees
BOARD COMMITTEES
The Board has four principal standing committees. Committee members consist entirely of
non-employee
directors and the Board has determined that each of the members of these committees is independent, as defined under our standards of independence and under NYSE listing standards. The
following table reflects committee membership as of April 1, 2019:
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Audit
Committee
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Corporate
Governance
Committee
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Finance and
Planning
Committee
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Human Resources
and Compensation
Committee
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Paul J. Brown
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X
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X
|
Amanda Ginsberg
|
|
|
|
X
|
|
|
|
Chair
|
Wonya Y. Lucas
|
|
|
|
X
|
|
|
|
X
|
B. Craig Owens
|
|
Chair
|
|
|
|
X
|
|
|
Lisa A. Payne
|
|
X
|
|
|
|
X
|
|
|
Debora A. Plunkett
|
|
X
|
|
X
|
|
|
|
|
Leonard H. Roberts
|
|
X
|
|
|
|
X
|
|
|
Javier G. Teruel
|
|
X
|
|
|
|
Chair
|
|
|
R. Gerald Turner
|
|
|
|
X
|
|
|
|
X
|
Ronald W. Tysoe*
|
|
|
|
Chair
|
|
|
|
|
*
|
Non-Executive
Chairman of the Board
|
A copy of each committees Charter is available at the Companys website at www.jcpenney.com. Also available on the Companys website are
procedures for the confidential and anonymous reporting of matters relating to questionable accounting, internal accounting controls or auditing matters. For a discussion of the processes and procedures for determining executive and director
compensation and the roles of management and compensation consultants in determining or recommending the amount or form of compensation, see
Compensation Discussion and Analysis
beginning on page 22 and
Director
Compensation for Fiscal 2018
beginning on page 61. The mailing address for all of these committees is c/o Corporate Secretary, J. C. Penney Company, Inc., P.O. Box 10001, Dallas, Texas 75301.
|
|
|
Audit Committee
|
|
Meetings in Fiscal 2018: 8
|
Members*:
B. Craig Owens** (Chair), Lisa A. Payne**, Debora A. Plunkett, Leonard H. Roberts**, Javier G. Teruel**
(All Independent)
|
Primary
Responsibilities
|
Selection and retention of the independent auditor for the annual audit of
the Companys consolidated financial statements
|
Approval of audit fees and
non-audit
services and fees paid to the independent auditor
|
Review the independent auditors strategy and plan, scope, audit
results, performance and independence
|
Review internal audit reports on the adequacy of internal
controls
|
Review the Companys ethics program
|
Review the status of significant legal matters
|
Review the Companys major financial risks, as well as risks associated
with data privacy and cybersecurity matters
|
Review the scope of the internal auditors plans and budget and results
of its audits
|
Review the effectiveness of the Companys program for correcting audit
findings
|
Participate in the certification process relating to the filing of certain
periodic reports pursuant to the Securities Exchange Act of 1934, as amended (Exchange Act)
|
|
*
|
The Board has determined that each member of this Committee is financially literate as defined by the NYSE.
|
|
**
|
The Board has determined that each of these Committee members qualifies as an audit committee financial expert
as defined by the SEC.
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
9
|
Board Committees
|
|
|
Corporate Governance Committee
|
|
Meetings in Fiscal 2018: 3
|
Members:
Ronald W. Tysoe (Chair), Amanda Ginsberg, Wonya Y. Lucas, Debora A. Plunkett, R. Gerald Turner
(All Independent)
|
Primary Responsibilities
|
Perform the functions of a nominating committee
|
Consider matters of corporate governance
|
Review developments in the governance area as they affect relations between
the Company and its stockholders
|
Develop and recommend to the Board corporate governance principles and
practices for the Company
|
Make recommendations to the Board with respect to the size, composition,
organization and responsibilities of the Board and its directors
|
Make recommendations to the Board with respect to the qualifications of
directors, candidates for election as directors, the compensation of directors, and annual independence determinations
|
Oversee the annual performance self-assessment process by the Board and each
of the Audit, Corporate Governance, Finance and Planning, and Human Resources and Compensation Committees
|
|
|
|
Finance and Planning Committee
|
|
Meetings in Fiscal 2018: 2
|
Members:
Javier G. Teruel (Chair), Paul J. Brown, B. Craig Owens, Lisa A. Payne, Leonard H. Roberts
(All Independent)
|
Primary Responsibilities
|
Review the Companys financial policies
|
Review the Companys financial strategies
|
Review the Companys capital structure
|
|
|
|
Human Resources and Compensation Committee
|
|
Meetings in Fiscal 2018: 9
|
Members:
Amanda Ginsberg (Chair), Paul J. Brown, Wonya Y. Lucas, R. Gerald Turner
(All Independent)
|
Primary Responsibilities
|
Review and administer the Companys annual and long-term incentive
compensation plans
|
Review the administration and operation of certain of the Companys
retirement and welfare plans
|
Set performance goals and objectives for the CEO
|
Evaluate the performance of the CEO in light of set performance goals and
objectives
|
Take action or make recommendations with respect to the compensation of
executive officers, including making a
non-binding
recommendation to the independent directors of the Board regarding the compensation level of the CEO
|
Review succession plans for key Company executives, including the
CEO
|
Review the annual financial and investment performance results of the
Companys retirement and welfare plans, including the annual actuarial valuation reports applicable to such plans
|
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Human Resources and Compensation Committee determines compensation for officers of the Company at the level of Senior Vice President
and above, other than the CEO. The compensation of the CEO is determined by all of the independent directors of the Board, taking into account the Human Resources and Compensation Committees recommendations.
|
|
|
|
|
10
|
|
|
|
2019 Proxy Statement
|
Board Committees
The Human Resources and Compensation Committee is composed entirely of persons who
are neither Company associates nor former or current officers of the Company. None of the independent directors of the Board are Company associates or former or current officers of the Company. There is not, nor was there during fiscal 2018, any
compensation committee interlock or insider participation on the Human Resources and Compensation Committee or among the independent directors of the Board.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires JCPenneys directors and officers and persons who beneficially own more than ten percent of a
registered class of the Companys equity securities to file initial reports of ownership and reports of changes in ownership with the SEC. The Company assists its directors and officers by monitoring transactions and completing and filing
Section 16 reports on their behalf. We believe that all filing requirements were met during fiscal 2018.
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
11
|
Beneficial Ownership of Common Stock
BENEFICIAL OWNERSHIP OF COMMON
STOCK
The following table shows, as of March 25, 2019, the beneficial ownership of shares of JCPenney common stock by (a) each
stockholder known to the Company to beneficially own more than 5% of JCPenney common stock, (b) each present director, all of whom, other than R. Gerald Turner, are nominees for
re-election
at the Annual
Meeting, (c) the five most highly compensated executive officers serving during the last fiscal year, one other officer serving during the last fiscal year who is also deemed to be a named executive officer, and four former executive officers
who are also deemed to be named executive officers, and (d) all present directors and executive officers of the Company as a group. Beneficial ownership means that the individual has or shares voting power or investment power with respect to
the shares of common stock or the individual has the right to acquire the shares of common stock within 60 days of March 25, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of shares
beneficially
owned
|
|
Number of shares included in
previous column which
the
individual or group has/have the
right to acquire within 60 days of
March 25, 2019
|
|
Percent of
outstanding
common stock
(1)
|
BlackRock, Inc.
|
|
|
|
43,382,574
|
(2)
|
|
|
|
|
|
|
|
|
13.71
|
%
|
State Street Corporation
|
|
|
|
27,706,626
|
(3)
|
|
|
|
|
|
|
|
|
8.42
|
%
|
The Vanguard Group
|
|
|
|
23,071,541
|
(4)
|
|
|
|
|
|
|
|
|
7.29
|
%
|
Directors
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul J. Brown
|
|
|
|
130,106
|
|
|
|
|
105,106
|
|
|
|
|
|
*
|
Amanda Ginsberg
|
|
|
|
128,549
|
|
|
|
|
96,291
|
|
|
|
|
|
*
|
Wonya Y. Lucas
|
|
|
|
95,252
|
|
|
|
|
95,252
|
|
|
|
|
|
*
|
B. Craig Owens
|
|
|
|
143,328
|
|
|
|
|
111,070
|
|
|
|
|
|
*
|
Lisa A. Payne
|
|
|
|
117,435
|
|
|
|
|
85,177
|
|
|
|
|
|
*
|
Debora A. Plunkett
|
|
|
|
100,586
|
|
|
|
|
100,586
|
|
|
|
|
|
*
|
Leonard H. Roberts
|
|
|
|
212,565
|
|
|
|
|
194,527
|
|
|
|
|
|
*
|
Jill A. Soltau
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Javier G. Teruel
|
|
|
|
633,137
|
|
|
|
|
180,265
|
|
|
|
|
|
*
|
R. Gerald Turner
(7)
|
|
|
|
207,827
|
|
|
|
|
167,330
|
|
|
|
|
|
*
|
Ronald W. Tysoe
|
|
|
|
181,673
|
|
|
|
|
124,415
|
|
|
|
|
|
*
|
Named Executive Officers
(5)(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Fung
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Therace M. Risch
|
|
|
|
143,816
|
|
|
|
|
80,506
|
|
|
|
|
|
*
|
Michael Robbins
|
|
|
|
125,531
|
|
|
|
|
80,506
|
|
|
|
|
|
*
|
Brynn Evanson
|
|
|
|
475,104
|
|
|
|
|
302,787
|
|
|
|
|
|
*
|
Brandy Treadway
|
|
|
|
43,632
|
|
|
|
|
32,072
|
|
|
|
|
|
*
|
Marvin Ellison
(9)
|
|
|
|
2,814,785
|
|
|
|
|
911,826
|
|
|
|
|
|
*
|
Jeffrey Davis
(10)
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
*
|
Marci Grebstein
(11)
|
|
|
|
20,425
|
|
|
|
|
20,425
|
|
|
|
|
|
*
|
Joseph McFarland
(12)
|
|
|
|
96,215
|
|
|
|
|
90,215
|
|
|
|
|
|
*
|
Jerry Murray
(13)
|
|
|
|
21,549
|
|
|
|
|
15,443
|
|
|
|
|
|
*
|
Michael Amend
(14)
|
|
|
|
157,918
|
|
|
|
|
48,930
|
|
|
|
|
|
*
|
All present directors and executive officers as a
group
(15)
|
|
|
|
2,738,541
|
|
|
|
|
1,755,890
|
|
|
|
|
1.41
|
%
|
(1)
|
Calculated based on Rule
13d-3(d)(1)(i)
using the number of outstanding shares of
common stock as of March 25, 2019.
|
(2)
|
Based on information set forth in an Amendment No. 7 to Schedule 13G filed with the SEC on January 31, 2019 by
BlackRock, Inc. reporting sole power to vote or direct the vote of 38,667,665 shares of JCPenney common stock and sole power to dispose or direct the disposition of 43,382,574 shares of JCPenney common stock. The address of BlackRock, Inc. is 55
East 52nd Street, New York, New York 10055.
|
|
|
|
|
|
12
|
|
|
|
2019 Proxy Statement
|
Beneficial Ownership of Common Stock
(3)
|
Based on information set forth in a Schedule 13G filed with the SEC on February 13, 2019 by State Street Corporation
reporting shared power to vote or direct the vote of 26,634,506 shares of JCPenney common stock and shared power to dispose or direct the disposition of 13,489,602 shares of JCPenney common stock. The address of State Street Corporation is State
Street Financial Center, One Lincoln Street, Boston, Massachusetts 02111.
|
(4)
|
Based on information set forth in an Amendment No. 5 to Schedule 13G filed with the SEC on February 11, 2019 by
The Vanguard Group reporting sole power to vote or direct the vote of 318,601 shares of JCPenney common stock, shared power to vote or direct the vote of 38,600 shares of JCPenney common stock, sole power to dispose or direct the disposition of
22,756,696 shares of JCPenney common stock and shared power to dispose or direct the disposition of 314,845 shares of JCPenney common stock. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
|
(5)
|
Except as set forth in the footnotes below, each person has sole investment and voting power with respect to the common
stock beneficially owned by such person. Includes only those stock options that are exercisable or become exercisable within 60 days of March 25, 2019. Does not include restricted stock units that will not vest within 60 days of March 25,
2019.
|
(6)
|
Ms. Soltau joined the Company in October 2018. None of the equity awards granted to Ms. Soltau upon commencement
of her employment have vested as of March 25, 2019 and none will vest within 60 days of such date.
|
(7)
|
Includes 1,742 shares of JCPenney common stock that Dr. Turner holds under the Companys Dividend Reinvestment
Plan with respect to which he shares voting and investment power.
|
(8)
|
In addition to Ms. Soltau, who also serves as a director.
|
(9)
|
Stock ownership for Mr. Ellison reflects direct holdings as of June 1, 2018, the last day on which he served as
an executive officer of the Company, along with stock options exercisable and restricted stock units that would vest within 60 days of such date.
|
(10)
|
Stock ownership for Mr. Davis reflects direct holdings as of October 1, 2018, the last day on which he served as
an executive officer of the Company, along with stock options exercisable and restricted stock units that would vest within 60 days of such date.
|
(11)
|
Stock ownership for Ms. Grebstein reflects direct holdings as of February 3, 2019, the last day on which she
served as an executive officer of the Company, along with stock options exercisable and restricted stock units that would vest within 60 days of such date.
|
(12)
|
Stock ownership for Mr. McFarland reflects direct holdings as of August 1, 2018, the last day on which he served
as an executive officer of the Company, along with stock options exercisable and restricted stock units that would vest within 60 days of such date.
|
(13)
|
Stock ownership for Mr. Murray reflects direct holdings as of October 30, 2018, the last day on which he served
as an executive officer of the Company, along with stock options exercisable and restricted stock units that would vest within 60 days of such date.
|
(14)
|
Stock ownership for Mr. Amend reflects direct holdings as of March 16, 2018, the last day on which he served as
an executive officer of the Company, along with stock options exercisable and restricted stock units that would vest within 60 days of such date.
|
(15)
|
Excludes shares of Messr. Ellison, Davis, McFarland, Murray and Amend and Ms. Grebstein, who no longer serve as
executive officers of the Company.
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
13
|
Proposal 1 - Election of Directors
PROPOSAL 1 ELECTION OF
DIRECTORS
The terms of each of the Companys current directors will expire at the 2019 Annual Meeting. Each of the current
directors, other than R. Gerald Turner, who will be retiring from the Board effective May 24, 2019, has been nominated by the Board to serve as a continuing director for a new
one-year
term expiring at
the 2020 Annual Meeting of Stockholders. Each nominee elected as a director will continue in office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or retirement. We are not aware of any
reason why any of these nominees would not accept the nomination. However, if any of the nominees does not accept the nomination, or is otherwise unavailable for election, the persons designated as proxies will vote for any substitute nominee
recommended by the Board. Proxies cannot be voted for a greater number of persons than the number of nominees named.
In determining whether to
nominate each of the current directors, other than Mr. Turner, for another term, the Board considered the factors discussed above in
Board Diversity, Refreshment, Director Qualifications and Process for
Nominations
and concluded that each of the current directors standing for
re-election
possesses unique talents, backgrounds, perspectives, attributes and skills that will enable each of them to
continue to provide valuable insights to Company management and play an important role in helping the Company achieve its long-term goals and objectives. As described below in the experience and qualifications of each of our director nominees, each
nominee has achieved an extremely high level of success in his or her career. The chart below depicts the full range of skills, qualifications and expertise represented by the director nominees.
Range of Skills, Qualifications and Expertise Represented by Our Nominees
|
|
|
Retail Industry Experience
|
|
Audit/Financial Reporting
|
Customer Relations
|
|
Financial Management/Capital Markets
|
Human Resources and Compensation
|
|
Accounting/Tax
|
Global Operations Management
|
|
E-Commerce
Experience
|
Executive Experience
|
|
Brand Management
|
Board Experience
|
|
Enterprise Risk Management
|
Corporate Governance
|
|
Strategic Planning
|
Public Company Board Service
|
|
Store Operations
|
Sales Experience
|
|
Merchandising
|
Logistics Management
|
|
Marketing
|
Consumer Industry Experience
|
|
Sourcing
|
Cybersecurity
|
|
Media Industry Experience
|
Crisis Management
|
|
Mergers & Acquisitions
|
Public Affairs
|
|
Real Estate Industry Experience
|
Academic Experience
|
|
Government/Political Experience
|
It is the Boards policy that no individual who would be age 73 or older at the time of his or her election or
re-election
will be eligible to stand for election or
re-election
to the Board. The Board may waive the age limitation if it deems a waiver to be in the best interests of the
Company and its stockholders. There is no family relationship between any director or executive officer of the Company.
The Board recommends
a vote FOR each of the nominees for director.
|
|
|
|
|
14
|
|
|
|
2019 Proxy Statement
|
Proposal 1 - Election of Directors
Nominees for Director
|
|
|
|
|
Paul J. Brown, 52 - Director of the Company since 2016.
Chief Executive Officer and
Co-Founder,
Inspire Brands, Inc.
Committees
:
Finance and Planning, Human Resources and Compensation
Business Experience
: Chief Executive
Officer and
Co-Founder
of Inspire Brands, Inc. (food industry) (formerly Arbys Restaurant Group, Inc.) since 2013; President, Brands and Commercial Services of Hilton Worldwide (hospitality) from 2008 to
2013; President of Expedia North America and Expedia Inc. Partner Services Group (Internet-based travel reservations) from 2005 to 2008; Partner of McKinsey & Co. (consulting) from 2001 to 2005; Director of Lindblad Expedition Holdings,
Inc. from 2015 to 2017; Director of H&R Block, Inc.
Qualifications
: Mr. Brown has extensive executive experience in consumer industries, including food,
hospitality and travel, having served as CEO or as an executive of several major U.S. companies. He brings to the JCPenney Board significant operations, financial management,
e-commerce,
brand management and
enterprise risk management experience. He also currently serves on the board of another publicly-traded company.
|
|
|
|
|
|
Amanda Ginsberg, 49 - Director of the Company since 2015.
Chief Executive Officer and Director, Match Group, Inc.
Committees
:
Corporate Governance, Human Resources and Compensation
(Chair)
Business Experience
: Chief
Executive Officer since 2018 and Director since 2017, Match Group, Inc. (Internet-based dating service); Chief Executive Officer of Match Group Americas from 2015 to 2017; Chief Executive Officer of The Princeton Review (test preparation and college
admission services) from 2014 to 2015; Chief Executive Officer of Tutor.com (Internet-based
on-demand
instructional solutions) from 2013 to 2015; Chief Executive Officer from 2012 to 2013 and Senior Vice
President and General Manager from 2008 to 2012 of Match.com (Internet-based dating service); Vice President and General Manager of Chemistry.com (Internet-based dating service) from 2006 to 2008; Director of Care.com, Inc. from 2012 to 2014.
Qualifications
: Ms. Ginsberg has
extensive operational and senior management experience with consumer Internet companies, including service as Chief Executive Officer of a leading provider of Internet-based dating products, a leading test preparation company and a leading
on-demand
learning solutions company. She brings extensive knowledge of online consumer engagement to the JCPenney Board as well as considerable executive experience managing operations and strategic
planning.
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
15
|
Proposal 1 - Election of Directors
|
|
|
|
|
Wonya Y. Lucas, 57 - Director of the Company since 2017.
President and Chief Executive Officer, Public Broadcasting Atlanta
Committees
: Corporate Governance, Human Resources and Compensation
Business Experience
: President and Chief Executive Officer, Public Broadcasting Atlanta (media company) since 2015;
President of Lucas Strategic Consultants LLC (media strategy consulting) from 2013 to 2015; President and Chief Executive Officer of TV One (television network) from 2011 to 2013; Executive Vice President and Chief Operating Officer, Discovery
Channel and Science Channel, of Discovery Communications, Inc. (media company) from 2010 to 2011; Executive Vice President and Global Chief Marketing Officer of Discovery Communications, Inc. from 2008 to 2010; Executive Vice President, General
Manager of The Weather Channel Companies (television network) from 2004 to 2008; Executive Vice President, Strategic Marketing, of The Weather Channel Companies from 2002 to 2004; Turner Broadcasting System, a division of Time Warner, Inc. (mass
media company) from 1994 to 2002, with which she served in a variety of marketing and strategy roles.
Qualifications
: Ms. Lucas has more than 20 years of media and marketing experience, having served as Chief
Marketing Officer of several well-known television networks and in multiple media and marketing roles with a large broadcasting network. She also has over 15 years of leadership and executive experience, having served as Chief Executive Officer of
two media companies and in an executive role for two well-known television networks. With her background, Ms. Lucas brings extensive insights and perspectives on marketing, interfacing with media companies, and operations to the JCPenney
Board.
|
|
|
|
|
|
B. Craig Owens, 64 - Director of the Company since 2014.
Retired Chief Financial Officer and Chief Administrative Officer, Campbell Soup Company
Committees
:
Audit (Chair), Finance and Planning
Business Experience
: Retired Senior Vice
President, Chief Financial Officer and Chief Administrative Officer (2008 to 2014) of Campbell Soup Company; Executive Vice President and Chief Financial Officer of Delhaize Group (grocery retailer) from 2001 to 2008; served in various positions of
increasing importance with The Coca-Cola Company (beverages) and its bottlers from 1981 to 2001; Director of Pall Corporation from 2011 to 2015; Director of Dean Foods Company; Director of AptarGroup, Inc.; Trustee of Washington and Lee
University.
Qualifications
: Mr. Owens has extensive experience in the consumer food and beverage industries, including
service as Chief Financial Officer of a leading publicly-traded consumer food company. He also has considerable knowledge of the retail industry, having served as Chief Financial Officer of a leading international grocery retailer. He brings
significant financial expertise to the JCPenney Board including all aspects of financial reporting, accounting, corporate finance and capital markets, as well as considerable experience managing supply chain and information technology organizations.
As a result of his executive experience, he also has a deep understanding of operations and strategic planning. He also currently serves on the boards of two other publicly-traded companies.
|
|
|
|
|
|
16
|
|
|
|
2019 Proxy Statement
|
Proposal 1 - Election of Directors
|
|
|
|
|
Lisa A. Payne, 60 - Director of the Company since 2016.
Retired Vice Chairman and Chief Financial Officer, Taubman Centers, Inc.
Committees
:
Audit, Finance and Planning
Business Experience
:
Chairman
of the Board of Soave Enterprises, LLC (diversified management and investment company) and President of Soave Real Estate Group from 2016 to 2017; Retired Vice Chairman and Chief Financial Officer (2005 to 2016) of Taubman Centers, Inc. (real estate
investment trust), where she held various positions since 1997, including Director from 1997 to 2016 and Executive Vice President and Chief Financial and Administrative Officer from 1997 to 2005; Vice President of Goldman, Sachs & Co.
(finance) from 1996 to 1997, where she held various positions between 1986 and 1996; Director of Masco Corporation and Rockwell Automation, Inc.; Trustee of Munder Series Trust and Munder Series Trust, II from 2005 to 2014.
Qualifications
: Ms. Payne has
extensive accounting and financial experience in the regional mall and real estate industries, including service as the Chief Financial Officer of a leading retail management and real estate development company. She also brings extensive corporate
finance experience from her past experience as an investment banker with a leading investment banking firm. As a result of her executive experience, she also has a deep understanding of operations and strategic planning. Ms. Paynes Board
and Board committee experience also provides her with significant insight as to governance and compliance-related matters of public companies.
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Debora A. Plunkett, 59 - Director of the Company since 2017.
Principal, Plunkett Associates LLC
Committees
:
Audit, Corporate Governance
Business
Experience
:
Principal, Plunkett Associates LLC (cybersecurity consulting) since 2016; Senior Fellow, Harvard University since 2017; Adjunct Professor, University of Maryland College Graduate School since 2014;
Senior Advisor to the Director of the United States National Security Agency (NSA) from 2014 to 2016, with which she served in positions of increasing importance since 1984, including Director, Information Assurance Directorate, from 2010 to 2014,
Deputy Director of Information Assurance from 2008 to 2010, and in various senior executive, supervisory and analytic roles from 1984 to 2008; Director, Office of Transnational Threats, United States National Security Council at the United States
White House from 2000 to 2001.
Qualifications
: Ms. Plunkett has more than 30 years of cybersecurity experience, having served as a Director
on the United States National Security Council of the White House and in multiple cybersecurity roles with the United States National Security Agency. In addition, her past experience provides her with perspective into the challenges of managing
large, complex, multi-faceted organizations. Ms. Plunkett also brings to the Board a valuable and different perspective due to her extensive background in public policy.
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2019 Proxy Statement
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17
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Proposal 1 - Election of Directors
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Leonard H. Roberts, 70 - Director of the Company since 2002.
Retired Chairman and Chief Executive Officer, RadioShack Corporation
Committees
: Audit, Finance and Planning
Business Experience
: Retired Chairman and Chief Executive Officer of RadioShack Corporation (consumer electronics),
with which he served as Executive Chairman of the Board from 2005 to 2006, Chairman of the Board and Chief Executive Officer from 1999 to 2005, President from 1993 to 2000, and a Director from 1997 to 2006; Chairman and Chief Executive Officer of
Shoneys, Inc. (restaurants) from 1990 to 1993; President and Chief Executive Officer of Arbys, Inc. (restaurants) from 1985 to 1990; Director of
Rent-A-Center,
Inc. from 2006 to 2017; Director of Tarrant County Safe City Commission; Director and Former Chairman of the Board of Directors of Texas Health
Resources.
Qualifications
: Mr. Roberts has extensive executive and board experience in the retail industry, including
service as the Chairman and as the CEO of a publicly-traded consumer electronics retailer and CEO positions with two restaurant operators. With this background, he has insights and perspectives on delivering merchandise and services to consumers,
which he brings to the JCPenney Board. As a result of his extensive executive experience, he also brings financial expertise to the Board.
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Jill Soltau, 52, Director of the Company since October 2018.
Chief Executive Officer of JCPenney
Business Experience
: Chief Executive Officer since October 2018 of JCPenney. President and Chief Executive Officer
of JoAnn Stores, Inc. from 2015 to October 2018. From 2013 to 2015, she served as President of Shopko Stores, with which she served in positions of increasing responsibility, including Executive Vice President, Chief Merchandising Officer from 2009
to 2013 and Senior Vice President, General Merchandise Manager, Apparel and Accessories from 2007 to 2009. Prior to that, she held positions of increasing responsibility with national and regional retailers including Sears Holdings, Kohls
Corporation and Carson Pirie Scott. Director of Autozone, Inc.
Qualifications
: Ms. Soltau has extensive experience in the retail industry, including executive experience
with a major U.S. retailer. She brings considerable knowledge of merchandising, operations and strategic planning. She also currently serves on the board of another publicly-traded company.
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18
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2019 Proxy Statement
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Proposal 1 - Election of Directors
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Javier G. Teruel, 68 - Director of the Company since 2008.
Partner, Spectron Desarrollo, SC and Chairman, Alta Growth Capital
Committees
:
Audit, Finance and Planning (Chair)
Business Experience
: Partner of Spectron
Desarrollo, SC (investment management and consulting) since 2007; Chairman of Alta Growth Capital (private equity) since 2012; Retired Vice Chairman (2004 to 2007) of Colgate-Palmolive Company (consumer products), with which he served in positions
of increasing importance since 1971, including as Executive Vice President responsible for Asia, Central Europe, Africa and Hills Pet Nutrition, Vice President of Body Care in Global Business Development in New York, President and General
Manager of Colgate-Mexico, President of Colgate-Europe, and Chief Growth Officer responsible for the companys growth functions; Director of Starbucks Corporation; Director of Nielsen Holdings.
Qualifications
: Mr. Teruel has
extensive executive experience in the consumer products industry. He brings to the JCPenney Board considerable product development, merchandising and marketing skills and perspectives. His broad international experience also provides unique insights
relevant to the Companys product sourcing initiatives. Mr. Teruel brings the benefits of service on the boards of other publicly-traded companies to the JCPenney Board, including financial expertise resulting from his service as the
former chair of the audit committee of one of the boards.
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Ronald W. Tysoe, 65 -
Non-Executive
Chairman of the Board since May 2018, Director of the Company since
2013.
Former Vice Chairman of Finance and Real Estate, Federated Department Stores, Inc.
Committees
:
Corporate Governance (Chair)
Business Experience
: Vice Chairman of
Finance and Real Estate of Federated Department Stores, Inc. (now Macys, Inc.) from 1990 to 2006 and Chief Financial Officer from 1990 to 1997; Senior Advisor of Perella Weinberg Partners LP (global, independent advisory and asset management
firm) from 2006 to 2007; Director of Scripps Networks Interactive, Inc. from 2008 to 2018; Director of Canadian Imperial Bank of Commerce; Director of Cintas Corporation; Director of Taubman Centers, Inc.
Qualifications
: Mr. Tysoe has
extensive experience in the retail industry, including executive and board experience with a major U.S. retailer. He provides valuable insights and perspectives to the Board as a result of his considerable financial and real estate experience. He
also brings the benefits of service on the boards of other publicly-traded companies, including expertise in corporate strategy, compensation and corporate governance.
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2019 Proxy Statement
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19
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Letter from Human Resources and Compensation Committee Chair
Dear Fellow Stockholders,
On behalf of the Human Resources and Compensation Committee of your Board, let me first thank you for your continued support. Our Committee is comprised
solely of independent directors, and we take seriously our responsibilities to our stockholders. Our goal is to design pay programs that reward executives when JCPenney successfully executes on its strategic priorities and financial goals.
Retail Environment and Leadership Transitions
As you are aware, the retail industry continues to undergo significant transformation. As we review JCPenneys executive compensation program and
make decisions regarding executive pay, we continue to be mindful of the dramatic changes occurring within the industry, both online and in
brick-and-mortar
stores.
Given this dynamic and fast-changing landscape, it is critical that we attract and retain talent that brings deep retail experience, innovative thinking, consumer-centric focus and the ability to drive world class execution.
In 2018, the Companys leadership team experienced several significant changes. Effective June 2018, Marvin Ellison resigned as Chairman of the
Board and Chief Executive Officer of the Company. In connection with Mr. Ellisons departure, in order to both retain critical executives as well as maintain stability during the Chief Executive Officer change, the Board of Directors
established the Office of the Chief Executive Officer (OCEO). The OCEO consisted of four JCPenney senior leaders who managed the Companys day to day operations while the search for a new Chief Executive Officer was conducted. Additionally,
Ronald Tysoe, who had been serving as the Lead Independent Director, was elected as the Companys
Non-Executive
Chairman of the Board. In October 2018, Jill Soltau joined the Company as its new Chief
Executive Officer, bringing decades of retail and merchandising experience from a host of retail companies. Her apparel background and expertise are a significant asset to JCPenney as it seeks to rebuild market share in a competitive retail
environment and reinforce its rightful place as one of Americas leading department stores.
In addition to the Chief Executive Officer
transition, we also experienced numerous other executive transitions including the following:
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On March 16, 2018, Michael Amend, our Executive Vice President, Omnichannel, left the Company.
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On August 1, 2018, Joseph McFarland, our Executive Vice President, Chief Customer Officer and member of the OCEO,
resigned from the Company.
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On October 1, 2018, Jeffrey Davis, our Executive Vice President, Chief Financial Officer and member of the OCEO,
resigned from the Company. Jerry Murray, our Senior Vice President, Finance, served as the Companys Interim Chief Financial Officer from October 1, 2018 until October 30, 2018. On October 30, 2018, we hired Michael Fung to serve
as Interim Executive Vice President, Chief Financial Officer of the Company while we conduct an external search for a permanent Chief Financial Officer.
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The level of changes in the industry and within JCPenney reinforced the need for our Committee to examine our compensation programs in 2018 and make
adjustments where necessary, and to provide special awards to retain our critical leadership talent.
Programs Designed to Compete for
Talent
In order to attract and retain our leadership team, we pay our executives commensurate with the market for executive talent.
The following pages detail the Companys executive compensation
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20
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2019 Proxy Statement
|
Letter from Human Resources and Compensation Committee Chair
program, which we believe allows the Company to compete for talent while remaining strongly
aligned with the long-term interests of investors as well as near-term business performance.
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Annual bonus payouts based only on financial goals
. Awards under the annual cash bonus plan for
senior executives are based solely on financial performance. Bonus payments for 2018 could only be earned if sales and operating profit results exceeded explicit, seasonally-based goals. We believe we have set challenging targets for the
program and that the payouts under the program vary as intended based on the business results achieved.
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Long-term incentive awards tied to long-term financial performance
. The vast majority of the
Companys long-term incentive program rewards only for longer-term performance. The 2018 performance-based restricted stock unit awards are tied to the Companys EBITDA performance over the next three years. Again, we set challenging
targets that reflect company goals and financial performance. Additionally, in 2018 we introduced performance cash awards to our long-term incentive plan, which are based on the Companys cumulative free cash flow performance for fiscal 2018
through 2020. The objective of this addition was to continue to provide competitive pay opportunities to executives that align with our strategy, while mitigating share dilution.
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Peer group and benchmarking
. We benchmark pay for executives against a carefully-constructed peer
group limited to retailers. In selecting the peer group used for 2018 compensation decisions, the Committee placed a higher priority on industry and the similarity of business models and products sold, rather than strict size constraints that did
not fully consider the magnitude and scope of JCPenneys operations. For 2019, the Committee
re-evaluated
the composition of the peer group and determined that certain changes should be made in order to
enhance the overall sample size and to reorient the group to be more reflective of the Companys current size and scope. To ensure objectivity as compensation levels are set, the Committees independent compensation consultant takes the
lead in conducting any analyses used to establish competitive market pay levels for members of the senior leadership team.
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Retention awards
. In June 2018, in connection with the creation of the OCEO, the Company granted
equity and cash retention awards to key members of the management team. These retention awards were granted to reflect the critical nature of the leaders roles and to focus efforts on continuing to drive the Companys strategies during
the Chief Executive Officer search and transition. In order to drive retention, the equity awards granted vest over a three-year period and each executive would have to be employed at the Company through June 2019 to retain the cash component.
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Each year, we conduct a rigorous review of market practices to ensure that the Companys programs remain current and
relevant. It is important that we strike the balance between being competitive in the market to attract and retain great talent while ensuring compensation and incentive structures are tied to driving results. We also critique our incentive designs
each year with the goal of identifying any changes that would better support our business and compensation objectives, both immediate and longer-term.
We are committed to the Companys journey of reinvention while ensuring we have the compensation programs in place to drive long-term stockholder
value.
Amanda Ginsberg
Chair, Human Resources and
Compensation Committee
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2019 Proxy Statement
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21
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Compensation Discussion and Analysis
COMPENSATION DISCUSSION AND
ANALYSIS
Table of Contents
Executive Summary
Our compensation philosophy is integrated with JCPenneys core values and business objectives. Our core values were first stated in The Penney Idea,
which was adopted in 1913 and which includes the principle that we will reward men and women in our organization through participation in what the business produces. This principle endures today in our executive compensation policies
that link pay for performance and align the pay of our named executive officers with the interests of our stockholders.
Leadership
Changes
. The Companys leadership team experienced several changes in fiscal 2018. In connection with Marvin Ellisons resignation from his position as Chairman of the Board and Chief Executive Officer of the Company, effective
June 1, 2018, the Board of Directors established the Office of the Chief Executive Officer (OCEO) and appointed Jeffrey Davis, Joseph McFarland, Therace Risch, and Michael Robbins as its members. In addition, Ronald Tysoe, who had been serving
as the Lead Independent Director, was elected as the Companys
Non-Executive
Chairman of the Board. The OCEO was then dissolved on October 15, 2018, the date that Jill Soltau joined the Company as
Chief Executive Officer.
In addition to the Chief Executive Officer transition, additional leadership changes in fiscal 2018 included:
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The resignations of Mr. McFarland as Executive Vice President, Chief Customer Officer of the Company, effective
August 1, 2018, and Mr. Davis as Executive Vice President and Chief Financial Officer of the Company, effective October 1, 2018;
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The appointment of Jerry Murray as the Companys Interim Chief Financial Officer from October 1, 2018 until
October 30, 2018;
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The hiring of Michael Fung as Interim Executive Vice President, Chief Financial Officer of the Company, effective
October 30, 2018; and
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As noted in the Companys 2018 proxy statement, the departure of Michael Amend, former Executive Vice President,
Omnichannel, on March 16, 2018.
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22
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2019 Proxy Statement
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Compensation Discussion and Analysis
Our named executive officers serving as of the last day of the fiscal year ended
February 2, 2019 are listed below.
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Name
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Title
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Jill Soltau
(1)
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Chief Executive Officer
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Michael Fung
(2)
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Interim Executive Vice President, Chief Financial Officer
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Therace Risch
(3)
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Executive Vice President, Chief Information Officer and Chief Digital Officer and Former Member of the OCEO
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Michael Robbins
(3)
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Executive Vice President, Chief Stores and Supply Chain Officer and Former Member of the OCEO
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Brynn Evanson
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Executive Vice President, Human Resources
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Marci Grebstein
(4)
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Executive Vice President, Chief Marketing Officer
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Brandy Treadway
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Senior Vice President, General Counsel
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(1)
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Ms. Soltau began serving as the Companys Chief Executive Officer on October 15, 2018.
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(2)
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Mr. Fung began serving as the Companys Interim Executive Vice President, Chief Financial Officer on
October 30, 2018.
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(3)
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Ms. Risch and Mr. Robbins each served as a Member of the OCEO from June 1, 2018 to October 15, 2018.
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(4)
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Ms. Grebstein left the Company, effective February 3, 2019.
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New Executive Officer Compensation
.
Chief
Executive Officer
. Jill Soltau began serving as the Companys Chief Executive Officer on October 15, 2018. In connection with the commencement of Ms. Soltaus employment, she was provided with the following compensation:
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Base salary.
2018 annualized base salary of $1,400,000; actual salary received for fiscal 2018: $413,636.
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Annual bonus
. Participation in the annual bonus program beginning with the 2019 fiscal year with a target annual
bonus equal to 150% of base salary. Ms. Soltau did not participate in the annual bonus program for fiscal 2018.
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Cash signing bonus
. A
one-time
cash signing bonus of $6,000,000 as an
inducement to join the Company and in relinquishment of certain benefits and compensation provided by her previous employer.
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Equity signing bonus
. An equity award of restricted stock units having a grant date fair value of $10,000,000,
granted on October 18, 2018 as an inducement to join the Company and in relinquishment of certain benefits and compensation provided by her previous employer. The award vests annually over a three-year period provided she remains continuously
employed with the Company during that time.
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Equity awards
. Participation in the annual long-term equity incentive award program in a manner consistent with
other senior executive officers and commensurate with Ms. Soltaus position, beginning with the 2019 fiscal year with a target grant date fair value of $7,500,000.
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Relocation benefits
. Reimbursement of relocation expenses in accordance with the Companys executive relocation
policy and an additional lump sum payment of $240,000 for any costs not covered by the policy.
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2019 Proxy Statement
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23
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Compensation Discussion and Analysis
Interim Chief Financial Officer
. Michael Fung began serving as the
Companys Interim Executive Vice President, Chief Financial Officer on October 30, 2018. Per his employment agreement, he will remain in this role until the earlier of 30 days following the start date of a permanent Chief Financial Officer
or 180 days from the effective date of the agreement. In connection with Mr. Fungs employment, he was provided with the following compensation:
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Base salary.
Salary of $65,000 per month during the term of employment, prorated for any partial month; actual
salary received for fiscal 2018: $200,417.
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Monthly bonus
. Bonus of $10,000 per month, prorated for any partial month and payable as a lump sum within 30 days
following termination of employment, which bonus amount will be forfeited if Mr. Fung is terminated for cause or voluntarily terminates employment prior to the expiration of the term set forth in his employment agreement.
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Stipend
. Stipend of $5,417 per month in recognition of certain board-related compensation that Mr. Fung is
foregoing as a result of his employment with the Company, prorated for any partial month, and payable as a lump sum within 30 days following termination of employment.
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Relocation benefits
. Reimbursement for
out-of-pocket
expenses reasonably incurred during employment, including up to $5,000 per month for temporary housing and up to $4,000 per month for commuting expenses.
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No incentive program participation
. Mr. Fung is not eligible to participate in the bonus program or long-term
equity incentive programs offered by the Company.
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Supplemental Retention Awards
.
The Human Resources and Compensation Committee of the Board of Directors (the Committee) believes that the retention of key executives is critical to
the Companys future success. In June 2018, in connection with the resignation of Marvin Ellison as Chairman of the Board and Chief Executive Officer and the creation of the OCEO, the Committee granted supplemental retention awards to the
members of the OCEO to reflect the critical nature of their roles, as outlined in the table below. In the Committees view, each of these executives possessed unique skills and experience that were necessary to maintain stability within the
organization during the search for a new Chief Executive Officer.
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Name
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Equity
(1)
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Cash
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Total
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Rationale for Award
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Therace Risch
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$
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250,000
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$
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250,000
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$
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500,000
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Service on OCEO and Retention
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Michael Robbins
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$
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250,000
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$
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250,000
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$
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500,000
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Service on OCEO and Retention
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Jeffrey Davis*
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$
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250,000
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$
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250,000
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$
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500,000
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Service on OCEO and Retention
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Joseph McFarland*
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$
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250,000
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$
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250,000
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$
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500,000
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Service on OCEO and Retention
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*
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Awards to Messrs. Davis and McFarland were forfeited in connection with their resignations from the Company in 2018.
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(1)
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Grant date fair market value.
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The awards were comprised of 50% time-based restricted stock units and 50% cash. The overall size of the award represented 50% of each executives
2018 long-term equity incentive award target. The time-based restricted stock units will vest in three equal installments on each anniversary of the grant date, provided that the executive remains continuously employed with the Company until that
time. The Committee chose to use time-based restricted stock units for these awards since the units have value in all market conditions and provide a strong retention mechanism. Since the ultimate value of the award depends on the market value of
our common stock on the vesting date, the interests of participants are aligned with stockholders.
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24
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2019 Proxy Statement
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Compensation Discussion and Analysis
The cash awards were structured to vest when the OCEO was dissolved, which
occurred on October 15, 2018; however, in order to maximize the retention goal for the supplemental retention awards, the cash awards must be paid back to the Company in full if the executive voluntarily terminates his or her employment prior
to June 1, 2019. As noted above, the equity and cash awards to Messrs. Davis and McFarland were forfeited in connection with their resignations from the Company in 2018, prior to the dissolution of the OCEO.
In addition to the awards to the members of the OCEO, the following named executive officers received the supplemental retention awards outlined in the
table below to further motivate and retain them during the Chief Executive Officer search and transition.
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Name
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Equity
(1)
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Cash
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Total
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Rationale for Award
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Brynn Evanson
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$
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175,000
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$
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175,000
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$
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350,000
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Retention
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Marci Grebstein
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$
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175,000
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$
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175,000
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$
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350,000
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Retention
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Brandy Treadway
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$
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125,000
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$
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125,000
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$
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250,000
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Retention
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Jerry Murray
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$
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150,000
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$
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150,000
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Retention
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(1)
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Grant date fair market value.
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Similar to the awards for the members of the OCEO, the awards for these individuals (with the exception of Mr. Murray) were comprised of 50%
time-based restricted stock units and 50% cash. As with the OCEO awards, these awards were sized to represent 50% of each executives 2018 annual long-term incentive program target. The other terms of the awards are consistent with those
described above for members of the OCEO.
Mr. Murrays award consisted of 100% cash, structured to vest 50% when the OCEO was dissolved
and 50% on June 1, 2020. The amount paid upon the dissolution of the OCEO has the same pay back clause as the cash awards for the other named executive officers.
Business Performance
. In fiscal 2018, we focused on stabilizing our business, both financially and operationally. Our decisions included
eliminating
non-core
and low gross margin product categories, significantly reducing unproductive inventory and continuing the revitalization of our womens apparel business. While we are pleased with
these actions, we know we need to move faster to reestablish the fundamentals of retail, build capabilities focused on satisfying our customers wants and needs and ensure that our digital and store operations operate seamlessly to provide an
experience that wins with customers. For fiscal 2018, full year results did not meet our compensation program targets and payouts reflected that performance. The Company had total net sales of $11.66 billion, a net loss of $255 million, or
($0.81) per share, and an adjusted net loss of $296 million, or ($0.94) per share, all of which were below fiscal 2017 levels.
Please see
pages
34-37
of the Companys Annual Report on Form
10-K
for a discussion of
non-GAAP
financial measures.
Summary of Key Compensation Decisions and Outcomes for Fiscal 2018.
As highlighted above, 2018 was a year of extraordinary change for JCPenney. In addition to the special compensation actions described above, the
following key compensation decisions and outcomes occurred during fiscal 2018 with respect to our named executive officers serving as of the last day of the fiscal year:
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The Committee approved salary increases for the named executive officers ranging from 2.5% to 12.7%.
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2019 Proxy Statement
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25
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Compensation Discussion and Analysis
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Cash bonus targets for the named executive officers were set at the beginning of fiscal 2018 to reflect the
individuals position and responsibilities. Adjustments to the targets were made during the year, as necessary, to reflect changes to those responsibilities.
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Each of the current named executive officers (other than Ms. Soltau and Mr. Fung who did not participate in the
2018 cash bonus program) earned cash bonuses equal to 61.3% of their respective Spring performance period target opportunities and 0% of their respective Fall performance period target opportunities. Overall payouts earned by the named executive
officers (other than Ms. Soltau and Mr. Fung) in fiscal 2018 were 24.5% of the annual cash bonus opportunity.
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Long-term equity incentive award targets for the named executive officers were set at the beginning of fiscal 2018 to
reflect the individuals position and responsibilities. Adjustments to the targets were made during the year, as necessary, to reflect changes to those responsibilities.
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Based on 2018 EBITDA results, each of the named executive officers earned 0% of their respective target performance-based
restricted stock unit awards for the fiscal 2018 performance cycle.
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The Company sold its corporate aircraft and eliminated its Key Associate Protection Program, pursuant to which the
Companys Chief Executive Officer was required to use Company aircraft for all business and personal travel.
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In addition,
the following key compensation decisions and outcomes occurred during fiscal 2018 with respect to the individuals who were no longer serving as named executive officers as of the last day of the fiscal year:
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In light of the Companys performance in fiscal 2017, Mr. Ellison received no increase in salary for fiscal 2018.
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In light of the fact that Mr. Davis did not join the Company as Executive Vice President, Chief Financial Officer
until the latter part of 2017, he did not receive an increase in salary for fiscal 2018.
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Mr. McFarland was promoted to Executive Vice President, Chief Customer Officer, in fiscal 2018 and received a 7.0%
salary increase in connection with his promotion.
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Mr. Murray received a 3.5% merit-based salary increase, effective March 1, 2018, as well as a subsequent salary
increase of 13.1% in connection with his service as Interim Chief Financial Officer, effective October 1, 2018. Mr. Murray also received a stipend of $15,000 per month during the time that he served as Interim Chief Financial Officer
(October 1, 2018 to October 30, 2018).
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None of the named executive officers who left the Company voluntarily before the end of fiscal 2018 received any payout
under the annual cash bonus program for fiscal 2018. These individuals also forfeited their annual long-term equity incentive awards upon departure.
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26
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2019 Proxy Statement
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Compensation Discussion and Analysis
Components of 2018 Compensation and Alignment with Performance
. The
following table outlines the key components of our named executive officers 2018 compensation, and highlights the impact of our performance during this fiscal year on each element.
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Element
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Key Characteristics
|
|
Link to Performance
|
Base Salary
|
|
Fixed component payable in cash
Set based on responsibilities of the
position with consideration of peer group and market survey data
Reflects individual experience and performance
|
|
Merit increases for select
named executive officers based on individual performance
|
Annual Bonus
|
|
Performance-based
cash program
Split into Spring and
Fall performance periods weighted 40% and 60%, respectively, to reflect seasonal business cycle
For both periods, awards are tied to the following financial metrics:
Sales: 75%
Operating Profit: 25%
|
|
Overall payouts earned by named executive officers were 24.5% of target annual awards
|
Long-term Incentives
Performance-based
Restricted
Stock
Units (PBRSUs)
|
|
Performance-based
equity grants that focus on long-term value creation and growth strategy
Cover
3-year
performance periods, and can be earned for achieving
pre-set
financial goals
2018 grants
tied to adjusted EBITDA goals for each of fiscal 2018, 2019 and 2020
2016 grants
tied to adjusted
EBITDA goal for fiscal 2018
Shares
earned are distributed at end of
3-year
performance period
|
|
Based on 2018 EBITDA results, the 2018 portion of the 2018 grant was earned at 0% of target, reflecting the
pay for performance aspect of the grant
Based on 2018 EBITDA results, the 2016 grant was earned at 0% of target, reflecting the pay for performance
aspect of the grant
|
|
|
|
Performance Cash
|
|
Cash awards that can be earned for achieving
pre-set
financial goals
2018 grant tied to cumulative free cash flow goals for 2018 through 2020
Earned cash awards distributed at end
of
3-year
performance period
|
|
Awards earned based on
achievement of
pre-set
performance goals for the three-year period, with payout determined at the end of fiscal 2020
|
|
|
|
Time-based
Restricted Stock
Units (TBRSUs)
|
|
Equity awards that
deliver value based on stock price
3-year
cliff vesting promotes retention
Aligns economic interests of executives with stockholders
|
|
Year-end
value was 64% lower than grant date value, commensurate with stock price decline during the year
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
27
|
Compensation Discussion and Analysis
Key Features of Our Executive Compensation Program
.
The
Companys executive compensation program includes key features that align the interests of the named executive officers with stockholders.
What We Do
✓
|
|
Majority of pay is based on Company financial performance and is not guaranteed
|
✓
|
|
Balance the focus of our short-term and long-term incentive programs by using different performance metrics for each plan
|
✓
|
|
Multiple long-term incentive vehicles link pay to internal performance goals and/or to external market performance
|
✓
|
|
Impose robust stock ownership guidelines, with holding requirement for Chief Executive Officer until guideline is met
|
✓
|
|
Have clawback policy for both cash and equity awards
|
✓
|
|
Impose stringent restrictive covenants on those who receive awards under our long-term incentive program
|
✓
|
|
Conduct annual risk assessment of executive pay programs
|
✓
|
|
Review tally sheets for executive officers
|
✓
|
|
Independent compensation consultant who reports only to the Human Resources and Compensation Committee
|
What We Dont Do
û
|
|
No excise tax gross ups
|
û
|
|
No single trigger change in control plans
|
û
|
|
No hedging or pledging of Company stock
|
û
|
|
No stock options granted below fair market value
|
û
|
|
No option repricing without stockholder approval
|
2018
Say-on-Pay
Vote and Stockholder
Outreach
Approximately 90% of votes cast by the Companys stockholders at the 2018 annual meeting were cast in favor of the
Companys executive compensation program. The Committee continues to evaluate the Companys compensation programs in light of the Companys evolving business circumstances but made no specific changes given the high level of
stockholder support for our existing programs. The Committees goal is to ensure the Company has the appropriate compensation programs in place to most effectively link
pay-for-performance,
to create stockholder value over the long-term, to be consistent with good governance practices, to attract and retain critical talent and to align
with the Companys business strategies. We believe a continuing, constructive dialogue with our long-term stockholders on matters such as executive compensation and corporate governance matters will ensure that our programs
remain
aligned with their interests. We welcome stockholder feedback as a way to provide us with further insight and understanding of their views on our programs.
|
|
|
|
|
28
|
|
|
|
2019 Proxy Statement
|
Compensation Discussion and Analysis
Establishing Our Executive Compensation
Program
Role of the Human Resources and Compensation Committee
.
The Committee is responsible for
establishing and implementing our executive compensation program. Each member of the Committee is independent under the listing standards of the New York Stock Exchange (NYSE).
The Committee determines compensation for officers of the Company at the level of Senior Vice President and above, other than the Chief Executive
Officer (CEO). The compensation of the CEO is determined by all of the independent directors of the Board of Directors (the Board), taking into account the Committees recommendations.
As part of the Committees deliberations, the CEO makes compensation recommendations for the executive officers other than herself. The Committee
considers these recommendations in making its determinations.
Role of Independent Compensation Consultant
. The Committee
engages an independent consultant to assist in its deliberations and decision-making regarding executive compensation. The Committees consultant provides current market research and analyses against which executive compensation programs and
proposals can be evaluated, including a review of competitive market trends and design practices, a review of the Companys peer group, and market benchmarking for officers at the level of Senior Vice President and above. The independent
consultant does not assist the Board on director compensation matters. The Committee has sole authority to retain and terminate its consultant and sole authority to approve the fees and other terms of the engagement of its consultant. The
independent consultant reports directly to the Committee and does not work for the Companys management in any capacity.
For fiscal 2018, the
Committee retained Meridian Compensation Partners LLC (Meridian) as its independent consultant. In retaining Meridian as its consultant, the Committee considered all factors relevant to Meridians independence from management in accordance with
the listing standards of the NYSE.
Role of Management
. Management makes recommendations to the Committee regarding the
design and implementation of our executive compensation programs. Management works with its outside executive compensation consultant, Frederic W. Cook & Co., Inc. (FW Cook), in making recommendations that are consistent with the
Companys philosophy and objectives. The Committee may review data and analyses provided by management and its consultant. FW Cook does not work for the Committee or the Board in any capacity.
Role of Peer Companies and Benchmarking.
Understanding the competitive market for executive talent in our industry is critical
to ensuring that we can attract and retain a strong leadership team. Accordingly, we benchmark the competitiveness of pay for our named executive officers, and for our various compensation programs in general, against the practices of a
carefully-constructed and select group of retailers we view as our peers.
For 2018, the Committee selected the following companies as our
benchmarking peers:
|
|
|
|
|
Ascena Retail Group, Inc.
|
|
L Brands, Inc.
|
|
Sears Holdings Corporation
|
Bed Bath & Beyond Inc.
|
|
Macys, Inc.
|
|
Staples, Inc.
|
Best Buy Co., Inc.
|
|
Nordstrom, Inc.
|
|
Target Corp.
|
Gap, Inc.
|
|
Office Depot Inc.
|
|
TJX Companies, Inc.
|
Kohls Corp.
|
|
Ross Stores, Inc.
|
|
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
29
|
Compensation Discussion and Analysis
In selecting this peer group, the Committee focused on retailers with business
characteristics similar to ours and that align with the Companys strategic direction. In general, the peer group includes mall anchors, department stores and other retailers who offer the same or similar products in most cases, whose customers
are influenced by similar broad economic trends in spending and whose operations are primarily domestic.
The Committee considered various size
parameters in choosing the peer group. Although the focus was on peers with revenues, market cap and enterprise values that typically range between 0.33x to 3.0x ours at the time of selection, the 2018 peer group deliberately included a few
companies outside this range because we viewed them as key competitors for executive talent. Further, although market cap is often cited in peer group selection, at present the Committee views enterprise value as more relevant in light of our
current capital structure, with the result that a significant majority of the peers fell within the prescribed range of enterprise values.
The
Committee reviews and approves the peer group each year, and in so doing considers information provided by the Committees independent consultant and management. For 2019, the Committee
re-evaluated
the
composition of the peer group and determined that certain changes should be made in order to enhance the overall sample size and to reorient the group to be more reflective of the Companys current size and scope. Based on this conclusion,
Staples, Inc. and Target Corp. were removed from our peer group for 2019 and Burlington Stores, Inc., Dicks Sporting Goods, Inc., Ulta Beauty, Inc. and Williams-Sonoma Inc. were added.
We also review retail industry surveys to benchmark pay for executive officer positions for which proxy peer group data are not available. The Committee
uses market data as one point of reference when making compensation decisions but also considers individual and Company performance as well as individual growth and experience relevant to the associates position.
For fiscal 2018, a key element of our compensation benchmarking philosophy was to target total direct compensation for our executive officers at or
around the median percentile of the national market represented by our peer group and/or survey data for relevant positions. Where necessary, we may target total direct compensation above or below the median percentile to reflect role complexity,
individuals experience in the role, internal equity, individual performance, and other factors deemed relevant by the Committee.
Internal Pay Relationships
.
Our compensation philosophy reflects the importance of offering a competitive target
compensation package. In general, the differences in pay between the named executive officers relative to each other and to the CEO, as well as to
non-managerial
associates, are based on market differences for
the particular job, job responsibilities and scope, and adjustments for individual experience and performance, rather than a
pre-determined
ratio or multiple.
Relationship of Executive Compensation to Risk
. In connection with fulfilling its responsibilities, the Committee considers
whether the design of the Companys executive compensation program encourages executives to engage in excessive risk-taking. The Committee reviews the overall program design, as well as the balance between short-term and long-term compensation,
the metrics used to measure performance and the total award opportunity under the Companys incentive compensation program, and other features designed to mitigate risk such as incentive caps, vesting requirements, stock ownership guidelines,
the Companys insider trading policy, the Companys claw-back policy and the Companys prohibition on hedging and pledging of Company securities by directors and senior management. Based on its review, the Committee believes that the
Companys executive compensation program is aligned with the interests of stockholders, appropriately rewards pay for performance and does not promote unnecessary or excessive risk.
|
|
|
|
|
30
|
|
|
|
2019 Proxy Statement
|
Compensation Discussion and Analysis
Compensation of Our Named Executive Officers
In 2018, our executive compensation program had three principal components:
|
|
|
Annual cash bonus awards; and
|
|
|
|
Long-term equity incentive awards.
|
Consistent with our
pay-for-performance
philosophy, the majority of the
compensation opportunity in fiscal 2018 for our named executive officers was linked to Company performance. We believe that our combination of annual cash bonus awards and long-term incentive awards strikes the appropriate balance between our
near-term focus on Company performance and our long-term focus on stockholder value creation.
Base
Salary
. We review base salaries annually, and focus on ensuring that they are competitive based on market data for comparable positions at companies in our peer group. Merit increases are intended to reward individual performance
and ensure that the individuals base salary remains competitive for the position and level of responsibility. Periodically, we also make adjustments to ensure that the salary for a key role remains competitive with the market.
Several of our named executive officers received merit increases in fiscal 2018 to reward individual performance, as outlined below. The
Summary
Compensation Table
presents the named executive officers actual salaries for fiscal 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name*
|
|
Prior Year
Base Salary
|
|
Salary After
Adjustment
|
|
Percentage
Change
|
|
Basis for Adjustment
|
Therace Risch
(1)
|
|
|
$
|
627,000
|
|
|
|
$
|
690,000
|
|
|
|
|
10.0
|
%
|
|
Merit increase and promotion
|
Michael Robbins
(2)
|
|
|
$
|
612,000
|
|
|
|
$
|
690,000
|
|
|
|
|
12.7
|
%
|
|
Merit increase and promotion
|
Brynn Evanson
|
|
|
$
|
615,000
|
|
|
|
$
|
630,375
|
|
|
|
|
2.5
|
%
|
|
Merit increase
|
Marci Grebstein
(3)
|
|
|
$
|
500,000
|
|
|
|
$
|
550,000
|
|
|
|
|
10.0
|
%
|
|
Merit increase
|
Brandy Treadway
|
|
|
$
|
400,000
|
|
|
|
$
|
420,000
|
|
|
|
|
5.0
|
%
|
|
Merit increase
|
*
|
Jill Soltau and Michael Fung did not join the Company until October 2018.
|
(1)
|
Ms. Risch was promoted to Executive Vice President, Chief Information Officer and Chief Digital Officer, effective
March 1, 2018. Ms. Risch also served as a member of the OCEO from June 1, 2018 to October 15, 2018.
|
(2)
|
Mr. Robbins was promoted to Executive Vice President, Chief Stores and Supply Officer, effective January 21,
2019. Mr. Robbins also served as a member of the OCEO from June 1, 2018 to October 15, 2018.
|
(3)
|
Ms. Grebstein left the Company, effective February 3, 2019.
|
Annual Cash Bonus Awards
. Annual cash bonuses are determined and paid pursuant to the Management
Incentive Compensation Program (MICP), which provides named executive officers as well as other management associates the opportunity to earn cash awards based on the achievement of specified Company goals. For fiscal 2018, the annual cash bonus was
again split into a Spring performance period and a Fall performance period to better align with key near-term objectives and to reflect the volatility of the retail sector. The plans are structured as follows:
|
|
|
The Spring period measured performance for the first and second fiscal quarters, and the Fall period measured performance
for the third and fourth fiscal quarters.
|
|
|
|
To align with the Companys business cycle, the Spring and Fall performance periods accounted for 40% and 60%,
respectively, of each named executive officers annual target bonus opportunity.
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
31
|
Compensation Discussion and Analysis
|
|
|
To increase retention, payouts for the named executive officers for both performance periods are only made after the end of
the fiscal year.
|
The program structure provides each participant with an annual target bonus opportunity that is a
percentage of the individuals base pay. The range of potential payouts for each of the named executive officers is presented in the
Grants of Plan-Based Awards Table
.
The fiscal 2018 annual target bonus opportunity for each of our current named executive officers who participated in the 2018 annual cash bonus program
is shown below. Ms. Soltau and Mr. Fung did not participate in the annual cash bonus program in fiscal 2018. Bonus targets for the named executive officers were set at the beginning of fiscal 2018 to reflect the individuals position
and responsibilities. Adjustments to the targets were made during the year, as necessary, to reflect promotions or other changes to those responsibilities. The target opportunity percentages set forth below reflect the named executive officers
target bonus opportunity percentages at fiscal year end. In the event that a named executive officers target percentage was increased during the course of the year in connection with a promotion or an increase in responsibilities, the target
bonus opportunity percentage for that individual was prorated accordingly. The named executive officers who left the Company voluntarily before the end of fiscal 2018 did not receive any payout under the annual cash bonus program for fiscal 2018.
|
|
|
|
|
|
Name
|
|
Annual Target
Bonus Opportunity
(% of Salary)
|
Therace Risch
|
|
|
|
85
|
%
|
Michael Robbins
|
|
|
|
85
|
%
|
Brynn Evanson
|
|
|
|
75
|
%
|
Marci Grebstein
|
|
|
|
75
|
%
|
Brandy Treadway
|
|
|
|
60
|
%
|
For the named executive officers, both the Spring and Fall performance periods provided that awards could be earned
based on performance against
pre-established
goals for the Companys sales and operating profit. The metrics were weighted as follows:
|
|
|
|
|
|
Metric
|
|
Weighting
|
Sales
|
|
|
|
75
|
%
|
Operating Profit
|
|
|
|
25
|
%
|
The increase in weighting on sales from 50% to 75% in 2018 was intended to drive revenue growth, increases in market
share and the development of new initiatives, while also maintaining a focus on profitability. Results for each metric in the annual cash bonus program are measured separately.
For purposes of the bonus program, operating profit was defined as operating income/(loss) excluding qualified and supplemental pension expense, bonus
and equity expense, real estate and other, and restructuring and management transition charges. The Committee chose to exclude those items because they are not directly related to the Companys ongoing core business operations, which consist of
selling merchandise and services to consumers through the Companys department stores and website. In addition, qualified and supplemental pension plan expense are determined using numerous complex assumptions about changes in pension assets
and liabilities that are subject to factors beyond the Companys control, such as market volatility.
Performance goals for each of the Spring
and Fall plans were established at the beginning of the respective performance periods, taking into account both historical results and the Companys plans at
|
|
|
|
|
32
|
|
|
|
2019 Proxy Statement
|
Compensation Discussion and Analysis
the beginning of each period as well as expectations in light of the then-current business climate
and the Companys strategic initiatives. The target Operating Profit goals for the 2018 Spring and Fall performance were set at or above the actual results achieved for the comparable periods in 2017. The Sales goals for the 2018 Spring and
Fall performance periods were set above the comparable store sales results for the same periods in 2017. At the end of each performance period, a payout factor ranging from 25% to 200% of the target bonus opportunity was calculated for each metric
based on performance results achieved. For each component, no payout would occur for results below the threshold goal.
Spring Performance
Period
. The performance goals, potential payout levels and actual awards earned for the Spring performance period are indicated below. Based on the Companys performance and the relative weightings of each of the performance
metrics, each of the current named executive officers (other than Ms. Soltau and Mr. Fung) earned cash bonuses equal to 61.3% of their respective Spring performance period target opportunities. As previously stated, neither Ms. Soltau
nor Mr. Fung were eligible to receive an award for the Spring performance period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Metric
|
|
Weighting
|
|
Threshold
(25%)
|
|
Target
(100%)
|
|
Maximum
(200%)
|
|
Actual
|
|
Payout %
|
Sales ($ in millions)
|
|
|
|
75
|
%
|
|
|
$
|
5,141
|
|
|
|
$
|
5,278
|
|
|
|
$
|
5,584
|
|
|
|
$
|
5,213
|
|
|
|
|
70.5
|
%
|
Operating Profit ($ in millions)
|
|
|
|
25
|
%
|
|
|
$
|
12
|
|
|
|
$
|
104
|
|
|
|
$
|
237
|
|
|
|
$
|
20
|
|
|
|
|
33.6
|
%
|
Cash Bonus earned as percent of Spring Bonus opportunity (40% weighting)
|
|
|
|
|
61.3
|
%
|
Fall Performance Period
. The performance goals, potential payout levels and actual awards earned for the Fall
performance period are indicated below. Based on the Companys performance and the relative weightings of each of the performance metrics, each of the current named executive officers (other than Ms. Soltau and Mr. Fung) earned cash
bonuses equal to 0% of their respective Fall performance period target opportunities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Metric
|
|
Weighting
|
|
Threshold
(25%)
|
|
Target
(100%)
|
|
Maximum
(200%)
|
|
Actual
|
|
Payout %
|
Sales ($ in millions)
|
|
|
|
75
|
%
|
|
|
$
|
6,441
|
|
|
|
$
|
6,598
|
|
|
|
$
|
6,866
|
|
|
|
$
|
6,157
|
|
|
|
|
0
|
%
|
Operating Profit ($ in millions)
|
|
|
|
25
|
%
|
|
|
$
|
167
|
|
|
|
$
|
305
|
|
|
|
$
|
450
|
|
|
|
$
|
77
|
|
|
|
|
0
|
%
|
Cash Bonus earned as percent of Fall Bonus opportunity (60% weighting)
|
|
|
|
|
0
|
%
|
Note: For both the Spring and Fall plans, the payout percentage is interpolated on a straight-line basis for points in
between those shown in the table above.
As a result of the Companys full year performance and the relative weightings of each of the
performance metrics, each of the current named executive officers (other than Ms. Soltau and Mr. Fung) earned cash bonuses equal to 24.5% of their respective annual cash bonus opportunities. The total annual cash bonus payouts for 2018 for
each of the named executive officers are reflected in the
Summary Compensation Table
under the column
Non-Equity
Incentive Plan Compensation.
Free Cash Flow Performance Kicker.
In addition to the Spring and Fall performance periods, the annual cash bonus program for
fiscal 2018 included a
one-time
performance kicker to incentivize cash generation.
The performance kicker paid out only if the Company achieved at least $240 million in free cash flow for fiscal
2018. Free cash flow was calculated as cash flow provided by or used in operating activities less capital expenditures plus proceeds from the sale of operating assets not to exceed $60 million. The potential kicker amount was equal to 25% of
the participants target bonus amount. No payout would occur if the Company did not achieve the targeted free cash flow amount and no additional payout would occur if the Company exceeded the target amount.
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
33
|
Compensation Discussion and Analysis
For fiscal 2018, the Company generated $27 million of free cash flow for
purposes of the performance kicker. Accordingly, none of the named executive officers earned the free cash flow performance kicker.
Long-Term Incentive Awards
.
For fiscal 2018, the annual long-term incentive awards to our named executive officers were made under the 2016 Long-Term Incentive Plan (the 2016 Plan). The 2016 Plan provided equity-based
awards to eligible associates, including the named executive officers, other Company officers and senior management associates. Generally, whether an associate is granted an award and the size of the award granted are functions of the
associates position, performance and potential.
The potential number of shares used for annual long-term incentive awards for each
participant was based on a predefined intended equity dollar value for the participant. The intended equity dollar value is determined by position and expected future contributions, taking into consideration competitive market data for
comparable positions at companies in our peer group and the Companys overall equity plan budget for the year. The actual equity dollar value of the award granted to each eligible associate can be higher or lower than the associates
intended equity dollar value based on the associates performance and potential.
For fiscal 2018, the Committee modified the mix of long-term
incentive awards granted to the named executive officers to further strengthen the link between those awards and the Companys long-term performance as well as provide an additional retention incentive to key leaders. As a result, the long-term
incentive awards granted to the named executive officers in fiscal 2018 included performance-based restricted stock units, time-based restricted stock units and performance-based cash awards in the following mix:
Performance-based cash awards replaced
non-qualified
stock options in 2018.
This new vehicle is a cash-based award requiring the achievement of
pre-established
free cash flow goals over a cumulative three-year period through the end of fiscal 2020.
The Committee believed this mix, 75% of which was tied to financial metrics, best balanced our dual goals of ensuring that executives maintain a
long-term focus on stockholder value creation and retaining key leaders.
|
|
|
|
|
34
|
|
|
|
2019 Proxy Statement
|
Compensation Discussion and Analysis
The table below sets forth the dollar values of the annual long-term incentive
awards granted to the current named executive officers in fiscal 2018 (other than Ms. Soltau who joined the Company in October 2018 and did not participate in the long-term incentive award program for fiscal year 2018, and Mr. Fung, who
does not participate in the long-term incentive award program). Ms. Risch received an annual award with equity dollar values that were higher than her equity dollar values in 2017 in connection with her promotion to Executive Vice President,
Chief Information Officer and Chief Digital Officer in fiscal 2018. The named executive officers who left the Company voluntarily prior to the end of the fiscal year forfeited their annual long-term equity incentive awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Dollar Value of
Performance-
Based Restricted
Stock Units
|
|
Dollar Value of
Time-Based
Restricted
Stock Units
|
|
Dollar Value of
Performance
Cash Awards
(1)
|
|
Total Dollar
Value of LTI
Awards
|
Therace Risch
(2)
|
|
|
$
|
500,000
|
|
|
|
$
|
250,000
|
|
|
|
$
|
250,000
|
|
|
|
$
|
1,000,000
|
|
Michael Robbins
(3)
|
|
|
$
|
350,000
|
|
|
|
$
|
175,000
|
|
|
|
$
|
175,000
|
|
|
|
$
|
700,000
|
|
Brynn Evanson
|
|
|
$
|
350,000
|
|
|
|
$
|
175,000
|
|
|
|
$
|
175,000
|
|
|
|
$
|
700,000
|
|
Marci Grebstein
|
|
|
$
|
350,000
|
|
|
|
$
|
175,000
|
|
|
|
$
|
175,000
|
|
|
|
$
|
700,000
|
|
Brandy Treadway
|
|
|
$
|
250,000
|
|
|
|
$
|
125,000
|
|
|
|
$
|
125,000
|
|
|
|
$
|
500,000
|
|
(1)
|
Performance cash awards are required to be disclosed in the Summary Compensation Table in the year such awards are paid
out rather than the year in which they were granted. Therefore our 2018 Summary Compensation Table does not include the grant of these awards, and the amount earned, if any, will be disclosed for fiscal year 2020.
|
(2)
|
Ms. Risch was promoted to Executive Vice President, Chief Information Officer and Chief Digital Officer in fiscal
2018. Ms. Risch also served as member of the OCEO from June 1, 2018 to October 15, 2018.
|
(3)
|
Mr. Robbins was promoted to Executive Vice President, Chief Stores and Supply Officer in fiscal 2018.
Mr. Robbins also served as a member of the OCEO from June 1, 2018 to October
15, 2018.
|
Please see the
Summary Compensation Table
and the
Grants of Plan-Based
Awards Table
for more information about these awards.
The following paragraphs describe each type of award in greater detail.
Performance-Based Restricted Stock Units
. To determine the number of performance-based restricted stock units granted to each named executive
officer, we divided 50% of their respective total annual target equity dollar value by the closing share price of our common stock on the date of grant. The actual awards earned can vary above or below the target award based on the extent to which
the Company achieves the performance measure goal established for the program.
The Committee chose adjusted EBITDA as the performance measure for the performance-based restricted stock unit awards to align with the Companys long-term
EBITDA goals and to drive profitable growth.
Adjusted EBITDA is defined for this purpose as earnings before interest, taxes, depreciation and
amortization, excluding qualified and supplemental pension plan expense, bonus and equity expense, real estate and other, and restructuring and management transition charges. The Committee chose to exclude those items because they are not directly
related to the Companys ongoing core business operations, which consist of selling merchandise and services to consumers through the Companys department stores and website. In addition, qualified and supplemental pension plan expense are
determined using numerous complex assumptions about changes in pension assets and liabilities that are subject to factors beyond the Companys control, such as market volatility.
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
35
|
Compensation Discussion and Analysis
The Company designed the performance-based restricted stock unit awards to achieve
growth and reward performance over a three-year period of time. The performance period for the performance-based restricted stock units consists of three
one-year
performance cycles beginning with fiscal 2018.
The goal for the performance measure for the first performance cycle was set at the beginning of fiscal 2018. The goals for the second and third performance cycles will be set at the beginning of each performance cycle pursuant to a
pre-determined
formula based on growth above the actual results for the preceding performance cycle. Set forth below are the 2018 performance goals and payout factors for the performance-based restricted stock unit
awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Metric
|
|
Threshold
(25%)
|
|
Target
(100%)
|
|
Maximum
(200%)
|
|
Actual
|
|
Payout %
|
2018 Adjusted EBITDA ($ in millions)
|
|
|
$
|
915
|
|
|
|
$
|
963
|
|
|
|
$
|
1,059
|
|
|
|
$
|
653
|
|
|
|
|
0
|
%
|
Note: The payout percentage is interpolated on a straight-line basis for points in between the threshold and maximum
goals.
At the end of each performance cycle, the percentage of the target award earned is determined pursuant to the payout matrix established by
the Committee. The payout matrix sets forth a range of payout percentages relative to the Companys actual results for the performance period. The payout percentages under the payout matrix range from 25% to 200% of the target award with a 100%
payout for achieving the target performance goal. The range of potential payouts is presented in the
Grants of Plan-Based Awards Table
.
For fiscal 2018, the Companys actual adjusted EBITDA was $653 million. This performance resulted in a payout of 0% for the 2018 performance
cycle. Accordingly, each of the named executive officers earned 0% of their target performance-based restricted stock unit award for the fiscal 2018 performance cycle.
Performance Cash
. In fiscal 2018, we introduced performance cash as part of our long-term incentive award program. The actual awards
earned can vary above or below the target award based on the extent to which the Company achieves the performance goal for the program.
Performance
with respect to these awards will be measured against the Companys cumulative free cash flow for fiscal 2018 through 2020. The Committee chose free cash flow as the performance measure for the performance cash awards to align with the
Companys long-term goal of generating cash to pay down debt.
Free cash flow is defined for this purpose as cash flow provided by and or used
in operating activities less capital expenditures plus proceeds from the sale of operating assets not to exceed $60 million in any given year during the performance cycle.
The cumulative free cash flow goal for fiscal 2018 through 2020 was set at the beginning of fiscal 2018, is viewed as challenging to achieve, and
requires significant growth over the performance period. At the end of fiscal 2020, the percentage of the target award earned will be determined pursuant to the payout matrix established for the program. The payout matrix sets forth a range of
payout percentages relative to the Companys actual results for the performance period. The payout percentages under the payout matrix range from 25% to 200% of the target award with a 100% payout for achieving the target performance goal.
No payout will occur for results below the threshold goal. The range of potential payouts is presented in the
Grants of Plan-Based
Awards Table
.
Earned performance cash awards will vest on the third anniversary of the date of grant provided that the participant remains
continuously employed with the Company through that date.
|
|
|
|
|
36
|
|
|
|
2019 Proxy Statement
|
Compensation Discussion and Analysis
Time-Based Restricted Stock Units
. Each time-based restricted
stock unit represents the right to receive one share of our common stock on the vesting date. The units vest in full on the third anniversary of the grant date provided the participant remains continuously employed with the Company until that time.
These units have value in all market conditions; thus, they provide a strong retention mechanism. Since the ultimate value of the award depends on the market value of our common stock on the vesting date, the interests of participants are also
aligned with stockholders.
To determine the number of time-based restricted stock units granted to each of the named executive officers, we divided
the dollar value allocated to these awards by the closing share price of our common stock on the date of grant.
Restrictive
Covenants
. By accepting any long-term incentive awards, each named executive officer agrees to comply with the following restrictive covenants:
|
|
|
Obligation not to disclose confidential or proprietary information of the Company;
|
|
|
|
Obligation to refrain from activities designed to influence or persuade any person not to do business or to reduce its
business with the Company;
|
|
|
|
Obligation to refrain from attempting to influence or persuade any of the Companys employees to leave their
employment with the Company and to refrain from directly or indirectly soliciting or hiring employees of the Company; and
|
|
|
|
Obligation not to undertake work for a competing business.
|
Each of the above restrictive covenants continues for 18 months, or 12 months in the case of Mr. Murray and Ms. Treadway, following
termination of employment, except for the obligation not to disclose confidential or proprietary information, which continues indefinitely.
2016
Performance-Based Restricted Stock Unit Awards Earned
. In 2016, the Company granted performance-based restricted stock units to our executive officers at the time. Of our current named executive officers, only Ms. Evanson,
Ms. Risch and Mr. Robbins received the 2016 award. The performance-based restricted stock units could be earned only to the extent we achieved
pre-set
performance goals for adjusted EBITDA for fiscal
2018.
Adjusted EBITDA is defined for this purpose as earnings before interest, taxes, depreciation and amortization, excluding qualified pension
expense, bonus expense, real estate and other, net gains on the sale of
non-operating
assets, asset impairments, the effect of reclassifications of certain expenses, and restructuring and management transition
charges. The Committee chose to exclude those items because they are not directly related to the Companys ongoing core business operations, which consist of selling merchandise and services to consumers through the Companys department
stores and website. In addition, qualified pension expense is determined using numerous complex assumptions about changes in pension assets and liabilities that are subject to factors beyond the Companys control, such as market volatility.
The performance goals for the 2018 performance cycle were set at the beginning of fiscal 2016. Below are the range of 2018 performance goals,
related payout factors and 2018 actual performance for the 2016 performance-based restricted stock unit awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Metric
|
|
Threshold
(25%)
|
|
Target
(100%)
|
|
Maximum
(200%)
|
|
Actual
|
|
Payout %
|
2018 Adjusted EBITDA ($ in millions)
|
|
|
$
|
1,365
|
|
|
|
$
|
1,740
|
|
|
|
$
|
2,065
|
|
|
|
$
|
653
|
|
|
|
|
0
|
%
|
Note: The payout percentage is interpolated on a straight-line basis for points in between the threshold and maximum
goals.
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
37
|
Compensation Discussion and Analysis
At the end of the performance cycle, the percentage of the target award earned was
determined pursuant to the payout matrix established for the awards. Based on the Companys performance in fiscal 2018, each of
Ms. Evanson, Ms. Risch and Mr. Robbins earned 0% of their respective 2016 target
performance-based restricted stock unit awards.
For equity awards outstanding for each of the named executive officers as of the end of fiscal
2018, see the
Outstanding Equity Awards at Fiscal
Year-End
Table
. Actual awards vesting or exercised during the fiscal year are presented in the
Option Exercises
and Stock Vested Table
.
Other Compensation Program Elements
In addition to the three principal components of our compensation program, we also offer the following to our named executive officers, to help us
attract and retain the most talented individuals:
|
|
|
Health and welfare benefits, including medical and dental benefits, paid time off, and group term life insurance benefits;
|
|
|
|
Termination arrangements; and
|
Retirement Benefits
. As with the principal components of our compensation program, our retirement benefits are intended to
provide an industry competitive level of benefits.
The principal retirement benefits that we currently offer to our associates, including our named
executive officers, are through our defined contribution 401(k) plan (Savings Plan) and our
non-qualified
defined contribution plan (Mirror Savings Plan). Both the Savings Plan and Mirror Savings Plan offer
eligible associates the opportunity to defer a portion of their base salary and annual cash bonus compensation as a means of saving for retirement.
The Savings Plan also includes a Company matching contribution feature of 100% per dollar deferred up to a maximum of 5% of deferrals. The Mirror
Savings Plan has a similar feature with respect to compensation in excess of the Internal Revenue Code (the Code) compensation limit for qualified plans.
The Mirror Savings Plan is discussed in more detail in the narrative following the
Nonqualified Deferred Compensation Table
.
Health and Welfare Benefits
. Our named executive officers are entitled to participate in active associates health
and welfare benefit plans, including paid time off, medical, dental, group term life insurance and disability insurance, on the same terms and conditions as those made available to associates generally. We provide these benefits as part of a
competitive package of health and welfare benefits.
Termination Arrangements
. In order to attract top retail talent, we
recognize the need to provide protection to our executives in the event of involuntary termination of employment without cause or voluntary termination for good reason or following a change in control of the Company. Accordingly, we have put in
place separate arrangements consisting of individual Executive Termination Pay
|
|
|
|
|
38
|
|
|
|
2019 Proxy Statement
|
Compensation Discussion and Analysis
Agreements for our CEO and Executive Vice Presidents, individual Termination Pay Agreements for
our Senior Vice Presidents, and a Change in Control Plan to address termination situations not precipitated by the conduct of the named executive officer.
The termination pay agreements provide severance benefits to the executive in exchange for the executives agreement to comply with certain
restrictive covenants. The benefits payable under the termination pay agreements are not available if the executive receives the benefits under the Change in Control Plan.
Change in Control Plan
. The Company has in place a Change in Control Plan (the CIC Plan) that provides benefits if the
executives employment is involuntarily terminated within two years following a change in control of the Company. The CIC Plan further provides that cash severance benefits will not exceed 2.99 times the sum of base salary and target bonus.
The CIC Plan defines a change of control as:
|
|
|
the acquisition by any person, entity or group of 30% or more of the Companys outstanding common stock;
|
|
|
|
the replacement of a majority of the Board;
|
|
|
|
a reorganization, merger or consolidation, or the sale of all or substantially all of the Companys assets, subject to
certain exceptions; or
|
|
|
|
a complete liquidation or dissolution of the Company.
|
Of the current named executive officers, Ms. Soltau, Ms. Evanson, Ms. Risch and Mr. Robbins participate in the CIC Plan.
The CIC Plan does not provide for the payment of excise tax
gross-ups
to named executive officers. The CIC Plan
and the termination pay agreements are described in more detail in
Potential Payments and Benefits on Termination of Employment
beginning on page 54.
Perquisites
.
We provide certain additional benefits to enable our executives to devote their energy and attention to the
Company.
Company Aircraft
. For the first four months of fiscal 2018, the Company maintained a Key Associate Protection Program
(the KAPP), pursuant to which the Companys CEO was required to use Company aircraft for all business and personal travel. In view of the KAPP requirement to use Company aircraft, Mr. Ellison, who was CEO at that time, was also party to an
aircraft time sharing agreement with the Company, which required him to reimburse the Company for any personal use of the corporate aircraft in excess of $150,000 during each fiscal year. Income was imputed to associates, including the CEO, for
personal use of Company aircraft in accordance with IRS regulations. The Company does not provide a tax
gross-up
with respect to such imputed income. During fiscal 2018, the Company sold all its aircraft and
eliminated the KAPP.
For total compensation purposes, we calculate the aggregate incremental cost to the Company of personal use of Company
aircraft by determining the incremental nautical miles flown, including any deadhead legs, and multiplying that number by the cost to the Company per nautical mile. These amounts, exclusive of any amounts reimbursed by Mr. Ellison
are reflected as All Other Compensation in the
Summary Compensation Table
below. The amount reflected for total compensation purposes is often higher than the amount imputed to associates under IRS regulations.
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
39
|
Compensation Discussion and Analysis
A nautical mile is a unit of length used for maritime and aviation purposes. The
cost per nautical mile excludes fixed costs which do not change based on usage, such as pilots or other associates salaries, purchase costs of the aircraft, or
non-trip-related
hangar expenses. It
is derived from the aircrafts variable operating costs, which include:
|
|
|
Aircraft fuel expenses;
|
|
|
|
Landing and parking expenses; and
|
|
|
|
Aircraft maintenance and external labor.
|
Annual Health Exam
. In fiscal 2018, the named executive officers were eligible to receive an allowance of up to $5,000 (or $3,000 in
the case of Mr. Fung) each calendar year for an annual health exam. The Company does not provide a tax
gross-up
on this benefit. We value the benefit based on the actual charges incurred by the Company
for the services provided, which is reflected as All Other Compensation in the
Summary Compensation Table
below.
Relocation
. The Company provides tiered relocation benefits to all associates based on the associates position within the
organization. At the commencement of their respective employments with the Company, Ms. Soltau and Mr. Fung did not maintain a residence near the Companys Home Office in Texas. The Company provided relocation benefits to them for
their commuting and temporary housing expenses consistent with Company policy for executives. We value the benefits based on the actual charges incurred by the Company for the benefits provided reduced by the amount of charges permitted under the
Companys policy for the lowest level of benefits provided under the base policy. These amounts are reflected as All Other Compensation in the
Summary Compensation Table
below.
Equity Award Grant Policy
The Committee has adopted a Policy Statement which sets forth its practices regarding the timing of, and approval process for, equity awards. In certain
cases, the Committee may waive such policy. The following table sets forth the current Policy Statement.
|
|
|
Grant
|
|
Grant Date
|
Annual Grant
|
|
Third full trading date following the later of (i) public disclosure of the Companys financial results for the fiscal year prior to the Committees approval or (ii) the Committees approval.
|
Off-cycle
grants other than to new hires
|
|
Tenth full trading date of the calendar month if the promotion or award is effective or approved by the seventh trading day of the month; otherwise, tenth full trading date of the following calendar month.
|
Off-cycle
grants for new hires
|
|
For Senior Vice Presidents and above, third full trading date following the date of hire.
For all other associates, tenth full trading date of the calendar month if the date of hire is on
or before the seventh trading day of the month; otherwise, tenth full trading date of the following calendar month.
|
|
|
|
|
|
40
|
|
|
|
2019 Proxy Statement
|
Compensation Discussion and Analysis
The Committee also adheres to the following approval policies in making equity
awards to associates:
|
|
|
Equity awards to the CEO must be approved by the independent directors of the Board.
|
|
|
|
Equity awards to executive officers other than the CEO, including new hires, must be approved by the Committee.
|
|
|
|
The aggregate annual grant of equity awards to associates must be approved by the Committee.
|
|
|
|
Authority has been delegated by the Committee to the CEO and/or the Executive Vice President, Human Resources to approve
(i) equity awards to new hires who are not executive officers and
(ii) off-cycle
equity awards to associates who are not executive officers.
|
Tally Sheets
In 2018, the Committee reviewed tally sheets for our named executive officers and for select other executives. These tally sheets provide a comprehensive
view of target, actual and contingent executive compensation payouts under a variety of termination and performance scenarios. The tally sheets allow the Committee to understand the cumulative effect of prior pay decisions and stock performance, as
well as the retentive ability of existing long-term incentives, severance and change in control arrangements. The tally sheets are intended to facilitate the Committees understanding of the nature and amounts of total compensation under our
executive compensation program and to assist the Committee in its overall evaluation of our program.
Stock
Ownership Goals
The Company strives to align pay with the long-term interests of stockholders. The Board has adopted formal stock
ownership goals for senior executives of the Company. The stock ownership goals specify that, within a five-year period, executives should hold an amount of Company stock having a value of:
|
|
|
|
|
Role
|
|
Stock Ownership Goal
|
|
Chief Executive Officer
|
|
|
6x base salary
|
|
Executive Vice President
|
|
|
3x base salary
|
|
Senior Vice President
|
|
|
1x base salary
|
|
In addition to directly owned stock, shares held in Company qualified and
non-qualified
savings plans and unvested time-based restricted stock units are included in calculating ownership levels. Unexercised stock options do not count toward the ownership goals. The stock ownership
goals also specify that the CEO should retain at least 50% of net shares received pursuant to an equity award payout or exercise if the CEO is below the above-described ownership goal at the time of receipt. Due to the decline in the price of the
Companys stock in fiscal 2018, all of the named executive officers were below their respective stock ownership goals as of the end of fiscal 2018.
Tax Implications of Our Compensation Policies
Section 162(m) of the Code places
a limit of $1,000,000 on the amount of compensation that we may deduct in any given year with respect to the CEO and certain of our other most highly paid executive officers. To maintain flexibility in compensating executive officers in view of the
overall objectives of our compensation program, the Committee has reserved the right to grant compensation that is not tax deductible should it determine that doing so will better meet the Companys objectives.
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
41
|
Compensation Discussion and Analysis
Claw-Back Policy
One of the objectives of our compensation program is to make a substantial portion of compensation dependent on the Companys overall financial
performance. In the event of a financial restatement arising out of the willful actions, including without limitation, fraud or intentional misconduct, or the gross negligence of any participant in the Companys compensation plans or programs,
it is the Boards policy that the Committee shall have the authority to determine the appropriate action to take. The compensation plans or programs covered under this policy include, without limitation, cash bonus and stock incentive plans,
welfare plans or deferred compensation plans. The Committees actions under the policy may include requiring relinquishment (claw-back) of previously awarded equity-based incentive compensation and/or repayment of previously paid cash
compensation to a participant under such plans and programs.
Prohibition on Hedging and Pledging of Company
Stock
The Board considers it inappropriate for directors or executive officers to enter into speculative transactions in Company
securities. The Companys Corporate Governance Guidelines prohibit directors and senior management from engaging in short sales, options trading or other similar derivative transactions in Company securities, or hedging or monetization
transactions, such as
zero-cost
collars and forward sale contracts, in which the individual continues to own the underlying security without the full risks and rewards of ownership. In addition, the
Companys directors and senior management may not purchase Company securities on margin, hold Company shares in a margin account or pledge Company shares as collateral for a loan because a margin sale or foreclosure sale may occur at a time
when such director or officer is prohibited from trading under the Companys insider trading policy.
REPORT OF THE
HUMAN RESOURCES AND COMPENSATION COMMITTEE
The Human Resources and Compensation Committee of the Board assists the Board in discharging
the Boards responsibilities relating to compensation of the Companys executives, reviews plans and proposals on management succession and major organizational or structural changes, and oversees the administration, financial and
investment performance and operation of the Companys retirement and welfare plans. Each member of the Committee is considered independent for purposes of applicable NYSE listing standards as well as the Standards for Determination of Director
Independence. You can learn more about the Committees purpose, responsibilities, composition and other details by reading the Human Resources and Compensation Committees charter, which is available online at www.jcpenney.com.
The Human Resources and Compensation Committee has reviewed the Compensation Discussion and Analysis and discussed the same with management. Based on
our review and discussions with management, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Companys Annual Report on
Form 10-K
for the 2018
fiscal year and the Companys 2019 Proxy Statement. This report is submitted by the following independent directors, who comprise the Human Resources and Compensation Committee:
|
|
|
Amanda Ginsberg, Chair
|
|
Wonya Y. Lucas
|
Paul J. Brown
|
|
R. Gerald Turner
|
|
|
|
|
|
42
|
|
|
|
2019 Proxy Statement
|
Summary Compensation Table
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
(1)
|
|
|
Option
Awards
($)
(1)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
(2)
|
|
|
All Other
Compensation
($)
(3)
|
|
|
Total
($)
|
|
Jill Soltau*
|
|
|
2018
|
|
|
|
413,636
|
|
|
|
6,000,000
|
|
|
|
9,999,999
|
|
|
|
0
|
|
|
|
0
|
|
|
|
335,743
|
(4)
|
|
|
16,749,378
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Fung**
|
|
|
2018
|
|
|
|
200,417
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
31,320
|
(5)
|
|
|
231,737
|
|
Interim Executive Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Therace Risch*
|
|
|
2018
|
|
|
|
684,750
|
|
|
|
250,000
|
|
|
|
1,000,002
|
|
|
|
0
|
|
|
|
141,428
|
|
|
|
17,154
|
(6)
|
|
|
2,093,335
|
|
Executive Vice President,
|
|
|
2017
|
|
|
|
622,500
|
|
|
|
0
|
|
|
|
1,399,998
|
|
|
|
199,999
|
|
|
|
391,225
|
|
|
|
30,265
|
|
|
|
2,643,987
|
|
Chief Information Officer
|
|
|
2016
|
|
|
|
600,000
|
|
|
|
0
|
|
|
|
525,003
|
|
|
|
175,000
|
|
|
|
108,918
|
|
|
|
13,156
|
|
|
|
1,422,077
|
|
and Chief Digital Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Former Member
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Robbins*
|
|
|
2018
|
|
|
|
667,833
|
|
|
|
250,000
|
|
|
|
775,003
|
|
|
|
0
|
|
|
|
132,879
|
|
|
|
30,263
|
(7)
|
|
|
1,855,978
|
|
Executive Vice President,
|
|
|
2017
|
|
|
|
610,000
|
|
|
|
0
|
|
|
|
1,399,998
|
|
|
|
199,999
|
|
|
|
381,865
|
|
|
|
41,048
|
|
|
|
2,632,910
|
|
Chief Stores and Supply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chain Officer and Former
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brynn Evanson
|
|
|
2018
|
|
|
|
627,813
|
|
|
|
175,000
|
|
|
|
700,002
|
|
|
|
0
|
|
|
|
115,879
|
|
|
|
47,484
|
(8)
|
|
|
1,666,178
|
|
Executive Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Human Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marci Grebstein***
|
|
|
2018
|
|
|
|
541,667
|
|
|
|
175,000
|
|
|
|
700,002
|
|
|
|
0
|
|
|
|
101,104
|
|
|
|
6,071
|
(9)
|
|
|
1,523,843
|
|
Executive Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brandy Treadway
|
|
|
2018
|
|
|
|
416,667
|
|
|
|
125,000
|
|
|
|
500,000
|
|
|
|
0
|
|
|
|
58,598
|
|
|
|
18,833
|
(10)
|
|
|
1,119,098
|
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marvin Ellison****
|
|
|
2018
|
|
|
|
488,826
|
|
|
|
0
|
|
|
|
5,249,998
|
|
|
|
0
|
|
|
|
0
|
|
|
|
74,551
|
(11)
|
|
|
5,813,375
|
|
Former Chairman of the
|
|
|
2017
|
|
|
|
1,450,000
|
|
|
|
0
|
|
|
|
5,249,997
|
|
|
|
1,750,001
|
|
|
|
2,111,073
|
|
|
|
257,264
|
|
|
|
10,818,335
|
|
Board and Chief Executive
|
|
|
2016
|
|
|
|
1,446,667
|
|
|
|
0
|
|
|
|
5,249,996
|
|
|
|
1,750,000
|
|
|
|
614,177
|
|
|
|
309,986
|
|
|
|
9,370,826
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Davis*****
|
|
|
2018
|
|
|
|
485,227
|
|
|
|
0
|
|
|
|
1,000,002
|
|
|
|
0
|
|
|
|
0
|
|
|
|
80,381
|
(12)
|
|
|
1,565,611
|
|
Former Executive Vice
|
|
|
2017
|
|
|
|
365,909
|
|
|
|
50,000
|
|
|
|
375,001
|
|
|
|
124,999
|
|
|
|
305,156
|
|
|
|
53,317
|
|
|
|
1,274,382
|
|
President, Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph McFarland******
|
|
|
2018
|
|
|
|
363,807
|
|
|
|
0
|
|
|
|
1,000,002
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,363,809
|
|
Former Executive Vice
|
|
|
2017
|
|
|
|
677,083
|
|
|
|
0
|
|
|
|
1,249,999
|
|
|
|
249,999
|
|
|
|
425,854
|
|
|
|
0
|
|
|
|
2,602,936
|
|
President, Chief Customer
|
|
|
2016
|
|
|
|
650,000
|
|
|
|
0
|
|
|
|
749,998
|
|
|
|
250,000
|
|
|
|
117,995
|
|
|
|
56,692
|
|
|
|
1,824,685
|
|
Officer and Member of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry Murray**
|
|
|
2018
|
|
|
|
382,113
|
|
|
|
75,000
|
|
|
|
187,499
|
|
|
|
0
|
|
|
|
43,341
|
|
|
|
35,251
|
(13)
|
|
|
723,204
|
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance and Former
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim Chief Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Amend*******
|
|
|
2018
|
|
|
|
78,750
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,029,398
|
(14)
|
|
|
2,108,148
|
|
Former Executive Vice
|
|
|
2017
|
|
|
|
625,000
|
|
|
|
0
|
|
|
|
1,474,999
|
|
|
|
225,001
|
|
|
|
393,096
|
|
|
|
47,378
|
|
|
|
2,765,474
|
|
President, Omnichannel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Ms. Soltau began serving as the Companys CEO on October 15, 2018. In order to maintain stability and
leadership during the search for a new CEO, the Board established the OCEO, effective June 1, 2018, which initially consisted of Ms. Risch and Messrs. Davis, McFarland and Robbins. The OCEO was dissolved on October 15, 2018.
|
**
|
Mr. Fung joined the Company as Interim Executive Vice President, Chief Financial Officer on October 30, 2018.
Mr. Murray served as Interim Chief Financial Officer from October 1, 2018 to October 30, 2018.
|
***
|
Ms. Grebstein left the Company, effective February 3, 2019.
|
****
|
Mr. Ellison resigned as Chairman of the Board and CEO, effective June 1, 2018.
|
*****
|
Mr. Davis resigned from his position as Executive Vice President, Chief Financial Officer, effective October 1,
2018.
|
******
|
Mr. McFarland resigned as Executive Vice President, Chief Customer Officer, effective August 1, 2018.
|
*******
|
Mr. Amend left the Company on March 16, 2018.
|
(1)
|
See Note 2 to the Consolidated Financial Statements of J. C. Penney Company, Inc. and subsidiaries, as included in the
Companys Annual Report on Form
10-K
for the fiscal year ended February 2, 2019, for a discussion of the assumptions underlying the valuation of stock options. The value of stock awards is calculated
in accordance with FASB ASC Topic 718 and applicable FASB guidance. The values of the performance-based restricted stock unit awards are based upon the probable outcome of the performance goals as of the grant date consistent with the estimate of
aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. That value is the same as the value calculated assuming the target level of
performance under the award. The values of the performance-based restricted stock unit awards as of the grant date,
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
43
|
Summary Compensation Table
|
assuming that the maximum level of the performance goals will be achieved, are as follows: Ms. Risch - $1,000,000; Mr. Robbins - $700,000; Ms. Evanson - $700,000; Ms. Grebstein - $700,000;
Ms. Treadway - $500,000; and Mr. Murray - $250,000.
|
(2)
|
The amounts shown in this column reflect payments made under the MICP.
|
(4)
|
The amount shown in this column for Ms. Soltau includes Company matching charitable contributions in the amount of
$10,000 on behalf of Ms. Soltau under the Directors Matching Fund in fiscal 2018 and $68,880 in payment of legal expenses incurred by Ms. Soltau in connection with the negotiation of her offer letter from the Company. The amount
further includes the value of relocation benefits, $252,169, received by Ms. Soltau during fiscal 2018, and amounts paid in respect of taxes imputed to Ms. Soltau with respect to relocation expenses, $3,362, as well as the following
perquisite: security services, $1,332.
|
(5)
|
The amount shown in this column for Mr. Fung includes a stipend of $16,987 in recognition of certain compensation
that Mr. Fung is foregoing as a result of his temporary employment with the Company. The amount further indicates the value of the following perquisite received by Mr. Fung during fiscal 2018: temporary relocation, $14,333.
|
(6)
|
The amount shown in this column for Ms. Risch includes Company contributions or allocations to Ms. Rischs
account in the Savings Plan for fiscal 2018 of $14,013. The amount further includes the value of the following perquisite received by Ms. Risch during fiscal 2018: annual health exam, $3,142.
|
(7)
|
The amount shown in this column for Mr. Robbins includes Company contributions or allocations to
Mr. Robbins accounts in the Savings Plan and Mirror Savings Plan for fiscal 2018 of $14,075 and $11,718, respectively. The amount further includes the value of the following perquisite received by Mr. Robbins during fiscal 2018:
annual health exam, $4,470.
|
(8)
|
The amount shown in this column for Ms. Evanson includes Company contributions or allocations to
Ms. Evansons accounts in the Savings Plan and Mirror Savings Plan for fiscal 2018 of $13,814 and $33,670, respectively.
|
(9)
|
The amount shown in this column for Ms. Grebstein includes Company contributions or allocations to
Ms. Grebsteins account in the Savings Plan for fiscal 2018 of $2,292. The amount further includes the value of the following perquisite received by Ms. Grebstein during fiscal 2018: annual health exam, $3,779.
|
(10)
|
The amount shown in this column for Ms. Treadway includes Company contributions or allocations to
Ms. Treadways account in the Savings Plan for fiscal 2018 of $13,833. The amount further includes the value of the following perquisite received by Ms. Treadway during fiscal 2018: annual health exam, $5,000.
|
(11)
|
The amount shown in this column for Mr. Ellison includes Company contributions or allocations to
Mr. Ellisons account in the Savings Plan for fiscal 2018 of $6,167. The amount further includes an installment payment from the Mirror Savings Plan of $20,461, and the value of the following perquisite received by Mr. Ellison during
fiscal 2018: personal use of corporate aircraft, $47,923. For security purposes, Mr. Ellison participated in a Key Associate Protection Program, which required that he use Company aircraft for all business and personal travel. Income is imputed
for personal use of Company aircraft. The Company does not provide a tax
gross-up
with respect to such imputed income.
|
(12)
|
The amount shown in this column for Mr. Davis includes Company contributions or allocations to Mr. Davis
account in the Mirror Savings Plan for fiscal 2018 of $6,761. The amount further includes the value of relocation benefits, $45,942, received by Mr. Davis during fiscal 2018, and amounts paid in respect of taxes imputed to Mr. Davis with
respect to relocation expenses, $27,678
|
(13)
|
The amount shown in this column for Mr. Murray includes Company contributions or allocations to
Mr. Murrays accounts in the Savings Plan and Mirror Savings Plan for fiscal 2018 of $13,993 and $16,258, respectively. The amount further includes the value of the following perquisite received by Mr. Murray during fiscal 2018:
annual health exam, $5,000.
|
(14)
|
The amount shown in this column for Mr. Amend includes the value of the lump sum cash severance payment under the
Executive Termination Pay Agreement that Mr. Amend entered into in connection with the commencement of his employment. The amount further includes an installment payment from the Mirror Savings Plan of $10,838, and Company contributions or
allocations to Mr. Amends account in the Savings Plan for fiscal 2018 of $11,125.
|
|
|
|
|
|
44
|
|
|
|
2019 Proxy Statement
|
Grants of Plan-Based Awards
GRANTS OF PLAN-BASED AWARDS FOR
FISCAL 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
(1)
|
|
Date of
Committee
Approval
|
|
Estimated Future Payouts
Under Non-Equity
Incentive Plan
Awards
|
|
Estimated Future Payouts
Under
Equity
Incentive Plan Awards
(2)
|
|
All
Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(3)
(#)
(3)
|
|
Grant
Date Fair
Value of
Stock
and
Options
Awards
($)
(4)
|
|
Thres-
hold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Thres-
hold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
Jill Soltau
|
|
|
|
10/18/2018
|
(5)
|
|
|
|
9/29/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,711,409
|
|
|
|
|
9,999,999
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Fung Interim
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Therace Risch
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,819
|
|
|
|
|
139,276
|
|
|
|
|
278,552
|
|
|
|
|
|
|
|
|
|
500,001
|
|
Executive Vice
President, Chief
Information and Chief
Digital Officer and
Former Member of
the OCEO
|
|
|
|
3/7/2018
|
|
|
|
|
2.26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,638
|
|
|
|
|
250,000
|
|
|
|
|
6/14/2018
|
|
|
|
|
5/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,593
|
|
|
|
|
250,001
|
|
|
|
|
N/A
|
(6)
|
|
|
|
|
|
|
|
|
57,702
|
|
|
|
|
230,809
|
|
|
|
|
461,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(7)
|
|
|
|
|
|
|
|
|
87,975
|
|
|
|
|
351,900
|
|
|
|
|
703,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/7/2018
|
(9)
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
|
250,000
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Robbins
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,373
|
|
|
|
|
97,493
|
|
|
|
|
194,986
|
|
|
|
|
|
|
|
|
|
350,000
|
|
Executive Vice
President, Chief Stores
and Supply
Chain
Officer and Former
Member of the
OCEO
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,747
|
|
|
|
|
175,002
|
|
|
|
|
6/14/2018
|
|
|
|
|
5/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,593
|
|
|
|
|
250,001
|
|
|
|
|
N/A
|
(6)
|
|
|
|
|
|
|
|
|
54,214
|
|
|
|
|
216,857
|
|
|
|
|
433,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(7)
|
|
|
|
|
|
|
|
|
87,975
|
|
|
|
|
351,900
|
|
|
|
|
703,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/7/2018
|
(9)
|
|
|
|
|
|
|
|
|
43,750
|
|
|
|
|
175,000
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brynn Evanson
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,373
|
|
|
|
|
97,493
|
|
|
|
|
194,986
|
|
|
|
|
|
|
|
|
|
350,000
|
|
Executive Vice
President, Human
Resources
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,747
|
|
|
|
|
175,002
|
|
|
|
|
6/14/2018
|
|
|
|
|
5/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,815
|
|
|
|
|
175,001
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
47,278
|
|
|
|
|
189,113
|
|
|
|
|
378,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
70,917
|
|
|
|
|
283,669
|
|
|
|
|
567,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/7/2018
|
|
|
|
|
|
|
|
|
|
43,750
|
|
|
|
|
175,000
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marci Grebstein
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,373
|
|
|
|
|
97,493
|
|
|
|
|
194,986
|
|
|
|
|
|
|
|
|
|
350,000
|
|
Executive Vice
President, Chief
Marketing Officer
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,747
|
|
|
|
|
175,002
|
|
|
|
|
6/14/2018
|
|
|
|
|
5/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,815
|
|
|
|
|
175,001
|
|
|
|
|
N/A
|
(6)
|
|
|
|
|
|
|
|
|
41,250
|
|
|
|
|
165,000
|
|
|
|
|
330,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(7)
|
|
|
|
|
|
|
|
|
61,875
|
|
|
|
|
247,500
|
|
|
|
|
495,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/7/2018
|
(9)
|
|
|
|
|
|
|
|
|
43,750
|
|
|
|
|
175,000
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brandy Treadway
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,410
|
|
|
|
|
69,638
|
|
|
|
|
139,276
|
|
|
|
|
|
|
|
|
|
250,000
|
|
Senior Vice
President, General
Counsel
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,819
|
|
|
|
|
125,000
|
|
|
|
|
6/14/2018
|
|
|
|
|
5/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,296
|
|
|
|
|
124,999
|
|
|
|
|
N/A
|
(6)
|
|
|
|
|
|
|
|
|
23,908
|
|
|
|
|
95,631
|
|
|
|
|
191,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(7)
|
|
|
|
|
|
|
|
|
37,800
|
|
|
|
|
151,200
|
|
|
|
|
302,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/7/2018
|
(9)
|
|
|
|
|
|
|
|
|
31,250
|
|
|
|
|
125,000
|
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marvin Ellison
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
243,733
|
|
|
|
|
974,930
|
|
|
|
|
1,949,860
|
|
|
|
|
|
|
|
|
|
3,499,999
|
|
Former Chairman
of the Board and Chief
Executive
Officer
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
487,465
|
|
|
|
|
1,749,999
|
|
|
|
|
N/A
|
(10)
|
|
|
|
|
|
|
|
|
634,375
|
|
|
|
|
2,537,500
|
|
|
|
|
5,075,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
634,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/7/2018
|
(9)
|
|
|
|
|
|
|
|
|
437,500
|
|
|
|
|
1,750,000
|
|
|
|
|
3,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Davis
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,819
|
|
|
|
|
139,276
|
|
|
|
|
278,552
|
|
|
|
|
|
|
|
|
|
500,001
|
|
Former Executive
Vice President,
Chief Financial
Officer and
Member of the OCEO
|
|
|
|
3/7/2018
|
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,638
|
|
|
|
|
250,000
|
|
|
|
|
6/14/2018
|
|
|
|
|
5/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,593
|
|
|
|
|
250,001
|
|
|
|
|
N/A
|
(6)
|
|
|
|
|
|
|
|
|
57,346
|
|
|
|
|
229,385
|
|
|
|
|
458,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(7)
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/7/2018
|
(9)
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
|
250,000
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
45
|
Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
(1)
|
|
|
Date of
Committee
Approval
|
|
|
Estimated Future Payouts
Under Non-Equity
Incentive Plan
Awards
|
|
|
Estimated Future Payouts
Under
Equity
Incentive Plan Awards
(2)
|
|
|
All
Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(3)
(#)
(3)
|
|
|
Grant
Date Fair
Value of
Stock
and
Options
Awards
($)
(4)
|
|
|
Thres-
hold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Thres-
hold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
Joseph McFarland
|
|
|
3/7/2018
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,819
|
|
|
|
139,276
|
|
|
|
278,552
|
|
|
|
|
|
|
|
500,001
|
|
Former Executive
Vice President,
Chief Customer
Officer and Member of
the OCEO
|
|
|
3/7/2018
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,638
|
|
|
|
250,000
|
|
|
|
6/14/2018
|
|
|
|
5/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,593
|
|
|
|
250,001
|
|
|
|
N/A
|
(6)
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(7)
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(8)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/7/2018
|
(9)
|
|
|
|
|
|
|
62,500
|
|
|
|
250,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry Murray
|
|
|
3/7/2018
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,705
|
|
|
|
34,819
|
|
|
|
69,638
|
|
|
|
|
|
|
|
125,000
|
|
Senior Vice
President, Finance and
Former Interim
Chief
Financial Officer
|
|
|
3/7/2018
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,409
|
|
|
|
62,498
|
|
|
|
N/A
|
(6)
|
|
|
|
|
|
|
17,683
|
|
|
|
70,732
|
|
|
|
141,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(7)
|
|
|
|
|
|
|
31,875
|
|
|
|
127,500
|
|
|
|
255,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
(8)
|
|
|
|
|
|
|
|
|
|
|
49,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/7/2018
|
(9)
|
|
|
|
|
|
|
15,625
|
|
|
|
62,500
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Amend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executive
Vice President,
Omni-channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Committee has adopted a policy regarding the grant date for annual grants of equity awards to associates. For fiscal
2018, the policy stated that the grant date for annual grants of equity awards to associates was the third full trading date following approval of the grant by the Committee. See
Equity Award Grant Policy
on
page 40 for information on the Committees policy regarding the grant date for
off-cycle
equity awards.
|
(2)
|
Grants of performance-based restricted stock units under the Companys 2016 Long-Term Incentive Plan.
|
(3)
|
Grants of time-based restricted stock units under the Companys 2016 Long-Term Incentive Plan and 2018 Long-Term
Incentive Plan.
|
(4)
|
The grant date value is calculated in accordance with applicable FASB guidance.
|
(5)
|
Grant of time-based restricted stock units in connection with the commencement of Ms. Soltaus employment.
Ms. Soltaus award was comprised of 3,611,409 restricted stock units granted under the Companys existing 2018 Long-Term Incentive Plan and 3,100,000 restricted stock units were granted as a standalone equity inducement award.
|
(6)
|
Grant of award for the Spring performance period under the MICP.
|
(7)
|
Grant of award for the Fall performance period under the MICP.
|
(8)
|
Grant of performance-based kicker award under the MICP.
|
(9)
|
Grant of performance cash awards under the MICP.
|
(10)
|
Grant of award for the 2018 performance period under the MICP.
|
|
|
|
|
|
46
|
|
|
|
2019 Proxy Statement
|
Outstanding Equity Awards at Fiscal
Year-End
OUTSTANDING
EQUITY AWARDS AT FISCAL
YEAR-END
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number
of
Shares or
Units of
Stock
That
Have
Not
Vested (#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
(1)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
(2)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or
Other
Rights
That
Have Not
Vested ($)
(1)
|
Jill Soltau
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
6,711,409
|
(3)
|
|
|
|
8,859,060
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Michael Fung
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim Executive Vice President, Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Therace Risch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President, Chief Information Officer and Chief Digital Officer and Former Member of the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
23,396
|
(4)
|
|
|
|
30,883
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2016
|
|
|
|
23,333
|
|
|
|
|
11,667
|
(5)
|
|
|
|
10.84
|
|
|
|
|
3/2/2026
|
|
|
|
|
16,144
|
(6)
|
|
|
|
21,310
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2017
|
|
|
|
22,753
|
|
|
|
|
45,506
|
(7)
|
|
|
|
5.96
|
|
|
|
|
3/5/2027
|
|
|
|
|
167,785
|
(8)
|
|
|
|
221,476
|
|
|
|
|
16,779
|
(9)
|
|
|
|
22,147
|
|
2018
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162,231
|
(10)
|
|
|
|
214,145
|
|
|
|
|
23,212
|
(11)
|
|
|
|
30,640
|
|
Michael Robbins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President, Chief Store and Supply Chain Officer and Former Member of the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
23,333
|
|
|
|
|
11,667
|
(12)
|
|
|
|
10.84
|
|
|
|
|
3/2/2026
|
|
|
|
|
16,144
|
(13)
|
|
|
|
21,310
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2017
|
|
|
|
22,753
|
|
|
|
|
45,506
|
(14)
|
|
|
|
5.96
|
|
|
|
|
3/5/2027
|
|
|
|
|
167,785
|
(15)
|
|
|
|
221,476
|
|
|
|
|
16,779
|
(16)
|
|
|
|
22,147
|
|
2018
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
141,340
|
(17)
|
|
|
|
186,569
|
|
|
|
|
16,249
|
(18)
|
|
|
|
21,449
|
|
Brynn Evanson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President, Human Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
2,765
|
|
|
|
|
0
|
|
|
|
|
30.72
|
|
|
|
|
3/15/2020
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2011
|
|
|
|
5,702
|
|
|
|
|
0
|
|
|
|
|
36.58
|
|
|
|
|
3/14/2021
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2012
|
|
|
|
10,702
|
|
|
|
|
0
|
|
|
|
|
37.63
|
|
|
|
|
3/12/2022
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2013
|
|
|
|
42,262
|
|
|
|
|
0
|
|
|
|
|
14.43
|
|
|
|
|
4/2/2023
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2015
|
|
|
|
166,538
|
|
|
|
|
0
|
|
|
|
|
7.77
|
|
|
|
|
3/18/2025
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2016
|
|
|
|
23,333
|
|
|
|
|
11,667
|
(19)
|
|
|
|
10.84
|
|
|
|
|
3/2/2026
|
|
|
|
|
16,144
|
(20)
|
|
|
|
21,310
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2017
|
|
|
|
19,909
|
|
|
|
|
39,818
|
(21)
|
|
|
|
5.96
|
|
|
|
|
3/5/2027
|
|
|
|
|
29,362
|
(22)
|
|
|
|
38,758
|
|
|
|
|
14,681
|
(23)
|
|
|
|
19,379
|
|
2018
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
113,562
|
(24)
|
|
|
|
149,902
|
|
|
|
|
16,249
|
(25)
|
|
|
|
21,449
|
|
Marci Grebstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President, Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
20,425
|
|
|
|
|
40,850
|
(26)
|
|
|
|
4.59
|
|
|
|
|
6/19/2027
|
|
|
|
|
27,233
|
(27)
|
|
|
|
35,948
|
|
|
|
|
13,616
|
(28)
|
|
|
|
17,973
|
|
2018
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
113,562
|
(29)
|
|
|
|
149,902
|
|
|
|
|
16,249
|
(30)
|
|
|
|
21,449
|
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
47
|
Outstanding Equity Awards at Fiscal
Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number
of
Shares or
Units of
Stock
That
Have
Not
Vested (#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
(1)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
(2)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or
Other
Rights
That
Have Not
Vested ($)
(1)
|
Brandy Treadway
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President, General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
1,884
|
|
|
|
|
0
|
|
|
|
|
37.63
|
|
|
|
|
3/12/2022
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2013
|
|
|
|
3,890
|
|
|
|
|
0
|
|
|
|
|
14.43
|
|
|
|
|
4/2/2023
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2015
|
|
|
|
9,233
|
|
|
|
|
0
|
|
|
|
|
7.77
|
|
|
|
|
3/18/2025
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2017
|
|
|
|
8,532
|
|
|
|
|
17,065
|
(31)
|
|
|
|
5.96
|
|
|
|
|
3/5/2027
|
|
|
|
|
12,584
|
(32)
|
|
|
|
16,611
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2018
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
81,115
|
(33)
|
|
|
|
107,072
|
|
|
|
|
11,606
|
(34)
|
|
|
|
15,320
|
|
Jerry Murray
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President, Finance and Former Interim Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
8,333
|
|
|
|
|
4,167
|
(35)
|
|
|
|
10.84
|
|
|
|
|
3/2/2026
|
|
|
|
|
5,766
|
(36)
|
|
|
|
7,611
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2017
|
|
|
|
7,110
|
|
|
|
|
14,221
|
(37)
|
|
|
|
5.96
|
|
|
|
|
3/5/2027
|
|
|
|
|
10,487
|
(38)
|
|
|
|
13,843
|
|
|
|
|
5,243
|
(39)
|
|
|
|
6,921
|
|
2018
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
17,409
|
(40)
|
|
|
|
22,980
|
|
|
|
|
5,803
|
(41)
|
|
|
|
7,660
|
|
Michael Amend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executive Vice President, Omni-channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
24,306
|
|
|
|
|
0
|
|
|
|
|
10.84
|
|
|
|
|
3/15/2020
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
2017
|
|
|
|
27,730
|
|
|
|
|
0
|
|
|
|
|
5.96
|
|
|
|
|
3/15/2020
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
6,816
|
(42)
|
|
|
|
8,997
|
|
(1)
|
Based on the closing market price of Company common stock on February 1, 2019, which was $1.32.
|
(2)
|
The reported number of units assumes achievement of the threshold level of performance, in accordance with SEC
requirements. The number of units earned can increase or decrease based on the Companys achievement of the performance measure.
|
(3)
|
Restricted stock units that vest
one-third
on October 18, 2019,
October 18, 2020 and October 18, 2021.
|
(4)
|
Restricted stock units that vest on December 10, 2019.
|
(5)
|
Stock options that vest on March 3, 2019.
|
(6)
|
Restricted stock units that vest on March 3, 2019.
|
(7)
|
Stock options that vest
one-half
on March 6, 2019 and March 6, 2020.
|
(8)
|
Restricted stock units that vest on March 6, 2020.
|
(9)
|
Performance-based restricted stock units that vest on March 6, 2020 if the performance measure is achieved.
|
(10)
|
69,638 restricted stock units vest on March 7, 2021 and 92,593 restricted stock units will vest
one-third
on June 14, 2019, June 14, 2020 and June 14, 2021.
|
(11)
|
Performance-based restricted stock units that vest on March 7, 2021 if the performance measure is achieved.
|
(12)
|
Stock options that vest on March 3, 2019.
|
(13)
|
Restricted stock units that vest on March 3, 2019.
|
(14)
|
Stock options that vest
one-half
on March 6, 2019 and March 6, 2020.
|
(15)
|
Restricted stock units that vest on March 6, 2020.
|
(16)
|
Performance-based restricted stock units that vest on March 6, 2020 if the performance measure is achieved.
|
(17)
|
48,747 restricted stock units vest on March 7, 2021 and 92,593 restricted stock units will vest
one-third
on June 14, 2019, June 14, 2020 and June 14, 2021.
|
(18)
|
Performance-based restricted stock units that vest on March 7, 2021 if the performance measure is achieved.
|
(19)
|
Stock options that vest on March 3, 2019.
|
(20)
|
Restricted stock units that vest on March 3, 2019.
|
(21)
|
Stock options that vest
one-half
on March 6, 2019 and March 6, 2020.
|
(22)
|
Restricted stock units that vest on March 6, 2020.
|
(23)
|
Performance-based restricted stock units that vest on March 6, 2020 if the performance measure is achieved.
|
(24)
|
48,747 restricted stock units vest on March 7, 2021 and 64,815 restricted stock units will vest
one-third
on June 14, 2019, June 14, 2020 and June 14, 2021.
|
(25)
|
Performance-based restricted stock units that vest on March 7, 2021 if the performance measure is achieved.
|
(26)
|
Stock options that vest
one-half
on June 20, 2019 and June 20, 2020.
|
(27)
|
Restricted stock units that vest on June 20, 2020.
|
|
|
|
|
|
48
|
|
|
|
2019 Proxy Statement
|
Outstanding Equity Awards at Fiscal
Year-End
(28)
|
Performance-based restricted stock units that vest on June 20, 2020 if the performance measure is achieved.
|
(29)
|
48,747 restricted stock units vest on March 7, 2021 and 64,815 restricted stock units will vest
one-third
on June 14, 2019, June 14, 2020 and June 14, 2021.
|
(30)
|
Performance-based restricted stock units that vest on March 7, 2021 if the performance measure is achieved.
|
(31)
|
Stock options that vest
one-half
on March 6, 2019 and March 6, 2020.
|
(32)
|
Restricted stock units that vest on March 6, 2020.
|
(33)
|
34,819 restricted stock units vest on March 7, 2021 and 46,296 restricted stock units will vest
one-third
on June 14, 2019, June 14, 2020 and June 14, 2021.
|
(34)
|
Performance-based restricted stock units that vest on March 7, 2021 if the performance measure is achieved.
|
(35)
|
Stock options that vest on March 3, 2019.
|
(36)
|
Restricted stock units that vest on March 3, 2019.
|
(37)
|
Stock options that vest
one-half
on March 6, 2019 and March 6, 2020.
|
(38)
|
Restricted stock units that vest on March 6, 2020.
|
(39)
|
Performance-based restricted stock units that vest on March 6, 2020 if the performance measure is achieved.
|
(40)
|
Restricted stock units that vest on March 7, 2021.
|
(41)
|
Performance-based restricted stock units that vest on March 7, 2021 if the performance measure is achieved.
|
(42)
|
Performance-based restricted stock units that vest on March 6, 2020 if the performance measure is achieved.
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
49
|
Option Exercises and Stock Vested
OPTION EXERCISES AND STOCK
VESTED FOR FISCAL 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise (#)
|
|
|
Value Realized
on
Exercise ($)
|
|
|
Number of
Shares
Acquired on
Vesting (#)
|
|
|
Value Realized
on
Vesting ($)
|
|
Jill Soltau
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Fung
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Interim Executive Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Chief Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Therace Ricsh
|
|
|
0
|
|
|
|
0
|
|
|
|
23,396
|
(1)
|
|
|
31,819
|
(2)
|
Executive Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Information Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Digital Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Former Member
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Robbins
|
|
|
0
|
|
|
|
0
|
|
|
|
33,647
|
(3)
|
|
|
43,405
|
(4)
|
Executive Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Stores and Supply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chain Officer and Former
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brynn Evanson
|
|
|
0
|
|
|
|
0
|
|
|
|
57,627
|
(5)
|
|
|
178,067
|
(6)
|
Executive Vice President, Chief
|
|
|
|
|
|
|
|
|
|
|
36,680
|
(7)
|
|
|
113,341
|
(8)
|
Human Resources
|
|
|
|
|
|
|
|
|
|
|
53,495
|
(9)
|
|
|
70,613
|
(10)
|
Marci Grebstein
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Executive Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brandy Treadway
|
|
|
0
|
|
|
|
0
|
|
|
|
4,183
|
(11)
|
|
|
12,925
|
(12)
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
8,748
|
(13)
|
|
|
11,285
|
(14)
|
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marvin Ellison
|
|
|
0
|
|
|
|
0
|
|
|
|
555,694
|
(15)
|
|
|
1,717,094
|
(16)
|
Former Chairman of
|
|
|
|
|
|
|
|
|
|
|
217,181
|
(17)
|
|
|
671,089
|
(18)
|
the Board and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Davis
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Former Executive Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Chief Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer and Member of the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph McFarland
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Former Executive Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Chief Customer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer and Member of the OCEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Amend
|
|
|
0
|
|
|
|
0
|
|
|
|
151,699
|
(19)
|
|
|
459,648
|
(20)
|
Former Executive Vice
|
|
|
|
|
|
|
|
|
|
|
11,211
|
(21)
|
|
|
33,970
|
(22)
|
President, Omnichannel
|
|
|
|
|
|
|
|
|
|
|
62,103
|
(23)
|
|
|
188,175
|
(24)
|
Jerry Murray
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance and Former
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents portion of 2015 time-based restricted stock unit equity inducement award that vested on December 10, 2018.
The equity inducement award was granted in relinquishment of certain benefits and compensation provided by Ms. Rischs previous employer and as an inducement to join the Company.
|
|
(2)
|
Based on the closing market price of JCPenney common stock on December 10, 2018, which was $1.36.
|
|
(3)
|
Represents 2015 time-based restricted stock unit equity inducement award that vested on November 17, 2018. The equity
inducement award was granted in relinquishment of certain benefits and compensation provided by Mr. Robbinss previous employer and as an inducement to join the Company.
|
|
(4)
|
Based on the closing market price of JCPenney common stock on November 16, 2018, which was $1.29.
|
|
(5)
|
Represents 2015 Performance-based restricted stock award that vested on March 19, 2018.
|
|
(6)
|
Based on the closing market price of JCPenney common stock on March 19, 2018, which was $3.09.
|
|
(7)
|
Represents 2015 time-based restricted stock unit award that vested on March 19, 2018.
|
|
(8)
|
Based on the closing market price of JCPenney common stock on March 19, 2018, which was $3.09.
|
|
(9)
|
Represents portion of 2016 time-based restricted stock unit award that vested on January 15, 2019.
|
|
(10)
|
Based on the closing market price of JCPenney common stock on January 15, 2019, which was $1.32.
|
|
(11)
|
Represents 2015 time-based restricted stock unit award that vested on March 19, 2018.
|
|
(12)
|
Based on the closing market price of JCPenney common stock on March 19, 2018, which was $3.09.
|
|
(13)
|
Represents 2015 time-based restricted stock unit award that vested on November 17, 2018.
|
|
(14)
|
Based on the closing market price of JCPenney common stock on November 16, 2018, which was $1.29.
|
|
(15)
|
Represents 2015 Performance-based restricted stock award that vested on March 19, 2018.
|
|
(16)
|
Based on the closing market price of JCPenney common stock on March 19, 2018, which was $3.09.
|
|
|
|
|
|
50
|
|
|
|
2019 Proxy Statement
|
Option Exercises and Stock Vested
|
(17)
|
Represents 2015 time-based restricted stock unit award that vested on March 19, 2018.
|
|
(18)
|
Based on the closing market price of JCPenney common stock on March 19, 2018, which was $3.09.
|
|
(19)
|
Represents portion of 2015 time-based restricted stock unit equity inducement award that vested on March 15, 2018.
The equity inducement award was granted in relinquishment of certain benefits and compensation provided by Mr. Amends previous employer and as an inducement to join the Company.
|
|
(20)
|
Based on the closing market price of JCPenney common stock on March 15, 2018, which was $3.03.
|
|
(21)
|
Represents portion of 2016 time-based restricted stock unit award that vested on March 15, 2018.
|
|
(22)
|
Based on the closing market price of JCPenney common stock on March 15, 2018, which was $3.03.
|
|
(23)
|
Represents portion of 2017 time-based restricted stock unit award that vested on March 15, 2018.
|
|
(24)
|
Based on the closing market price of JCPenney common stock on March 15, 2018, which was $3.03.
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
51
|
Nonqualified Deferred Compensation
NONQUALIFIED DEFERRED
COMPENSATION FOR FISCAL 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in last FY
($)
(1)
|
|
Registrant
Contributions
in last FY
($)
(2)
|
|
Aggregate
Earnings
in last FY
($)
(3)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance
at last FYE
($)
(4)
|
Jill Soltau
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Michael Fung
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Therace Risch
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Michael Robbins
|
|
|
|
11,718
|
|
|
|
|
11,718
|
|
|
|
|
(691
|
)
|
|
|
|
0
|
|
|
|
|
110,830
|
|
Brynn Evanson
|
|
|
|
33,670
|
|
|
|
|
33,670
|
|
|
|
|
(9,219
|
)
|
|
|
|
0
|
|
|
|
|
461,411
|
|
Marci Grebstein
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Brandy Treadway
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
(125
|
)
|
|
|
|
0
|
|
|
|
|
7,856
|
|
Marvin R. Ellison
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
(2,459
|
)
|
|
|
|
20,461
|
|
|
|
|
108,368
|
|
Jeffrey Davis
|
|
|
|
39,773
|
|
|
|
|
6,761
|
|
|
|
|
(1,857
|
)
|
|
|
|
0
|
|
|
|
|
53,764
|
|
Joseph McFarland
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Michael Amend
|
|
|
|
504
|
|
|
|
|
0
|
|
|
|
|
(504
|
)
|
|
|
|
10,838
|
|
|
|
|
40,401
|
|
Jerry Murray
|
|
|
|
16,258
|
|
|
|
|
16,258
|
|
|
|
|
126
|
|
|
|
|
0
|
|
|
|
|
58,807
|
|
(1)
|
The amounts shown are included in the salary and incentive compensation numbers shown in the Summary Compensation Table.
|
(2)
|
The amounts shown are included in the All Other Compensation numbers shown in the Summary Compensation Table.
|
(3)
|
These amounts are not included in the Summary Compensation Table since they do not constitute above market interest or
preferential earnings.
|
(4)
|
The balance reported includes named executive officer contributions to the Mirror Savings Plan; these amounts were
included in the Summary Compensation Table as salary and incentive compensation in the fiscal year earned. Company contributions to the Mirror Savings Plan were included in the All Other Compensation column of the Summary Compensation Table in the
fiscal year paid.
|
Mirror Savings Plan
.
The Mirror Savings Plan is a
non-qualified
defined contribution plan which provides eligible associates the opportunity to defer a portion of their base salary and incentive compensation exceeding the Code compensation limit as a means of
saving for retirement.
Accordingly, eligible associates earning more than the Code compensation limit ($275,000 for 2018) may defer up to 75% of
their compensation above the limit through the Mirror Savings Plan.
The Mirror Savings Plan includes a Company match feature of 100% per dollar
deferred up to a maximum of 5% of deferrals on compensation over the Code compensation limit. This matching contribution is credited each pay period. The Company may make additional discretionary matching contributions. Participants vest in the
Mirror Savings Plan Company matching contribution and related investment earnings as follows:
|
|
|
For contributions made for plan years 2016 and earlier, participants become 100% vested in the match after three years of
service; and
|
|
|
|
For contributions made for plan years 2017 and after, participants are 100% vested in the match immediately.
|
For plan years 2016 and earlier, the Mirror Savings Plan included
a non-contributory retirement
account in which eligible participants received a Company contribution in an amount equal to 2% of the participants compensation in excess of the Code compensation
limit after one year of service. Participating associates are fully vested in this Company contribution after three years. Beginning with plan year 2017, the retirement account provision of the Mirror Savings Plan was discontinued.
Generally, all unvested Company matching contributions are forfeited when the participant terminates employment. The Mirror Savings Plan provides that
all matching contributions are immediately vested and
non-forfeitable
if a participant terminates employment due to:
|
|
|
Qualifying for permanent and total disability while working for the Company,
|
|
|
|
|
|
52
|
|
|
|
2019 Proxy Statement
|
Nonqualified Deferred Compensation
|
|
|
The work unit or type of work the associate was doing being discontinued (as determined by the Company), or
|
Deferrals and Company matching contributions are credited to the participants Mirror Savings Plan account and invested according to the
participants investment elections. Earnings on the balance in the participants Mirror Savings Plan accounts are based on hypothetical investments in the same funds offered under the Savings Plan. Participants can change their investment
elections daily.
Generally, a Mirror Savings Plan participant can only receive a distribution following an unforeseen emergency event (as defined
under the Code), a change in control, or termination of employment. The only form of payment under the Mirror Savings Plan is a five-year annual installment option. No withdrawals or distributions were taken during the year by any of the named
executive officers.
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
53
|
Potential Payments and Benefits on Termination of Employment
POTENTIAL PAYMENTS AND BENEFITS
ON TERMINATION OF EMPLOYMENT
Under our compensation program, described above in
Compensation Discussion and Analysis
, payments and the provision of benefits can be triggered by the termination of an associates employment. These payments and benefits may vary depending on the reason for termination as described below.
Except as described below, in the event of an associates voluntary termination or the termination of an associates employment for cause, the
associate is only entitled to receive payments for accrued base salary and vacation through the date of termination and any amounts payable under the terms of the Mirror Savings Plan regardless of whether or not the termination follows a change in
control of the Company.
In the event that an associates termination is the result of retirement, death or permanent disability, the associate
is entitled to additional payments and benefits, regardless of whether or not the termination follows a change in control of the Company.
In the
event that an associate is involuntarily terminated without cause, the associate is entitled to additional payments and benefits, which may vary depending on whether or not the termination follows a change in control of the Company. If an associate
terminates employment with good reason following a change in control of the Company or, in the case of Ms. Soltau, if she voluntarily terminates employment with good reason at any time, the associate is also entitled to additional payments and
benefits.
Termination without a Change in Control
In an effort to attract the best people, the Company offers its CEO and each of its Executive Vice Presidents the right to enter into an Executive
Termination Pay Agreement with the Company and each of its Senior Vice Presidents the right to enter into a Termination Pay Agreement with the Company. We refer to the Executive Termination Pay Agreements and the Termination Pay Agreements
collectively as the TPAs. The forms of the agreements were reviewed by the Committees independent consultant and approved by the Committee. The TPAs are intended to provide the executive with severance benefits in exchange for the
executives agreement to comply with certain restrictive covenants. The benefits payable under these agreements are not available if the executive receives the benefits under the CIC Plan, which is described later in this section.
The primary purpose of the TPAs is to provide for severance benefits in the event of involuntary termination of the executives employment without
cause. For purposes of the TPAs entered into by the CEO and Executive Vice Presidents, cause includes:
|
|
|
An intentional act of fraud, embezzlement, theft or other material violation of law;
|
|
|
|
Intentional damage to the Companys assets;
|
|
|
|
Intentional disclosure of confidential information in violation of the Companys policies;
|
|
|
|
Material breach of the executives obligations under the TPA;
|
|
|
|
Breach of the executives duty of loyalty to the Company;
|
|
|
|
Failure of the executive to substantially perform the duties of his or her job (other than as a result of physical or
mental incapacity); or
|
|
|
|
Intentional breach of Company policies or willful misconduct by the executive that is in either case materially injurious
to the Company.
|
|
|
|
|
|
54
|
|
|
|
2019 Proxy Statement
|
Potential Payments and Benefits on Termination of Employment
For purposes of the TPAs entered into by Senior Vice Presidents, cause includes:
|
|
|
Failure of the executive to substantially perform the duties of his or her job;
|
|
|
|
Failure or refusal of the executive to perform specific directives of the Board or the Company that are consistent with the
scope and nature of his or her duties;
|
|
|
|
Conviction of a felony;
|
|
|
|
Breach of the executives fiduciary duties to the Company;
|
|
|
|
Violation of the Companys Statement of Business Ethics;
|
|
|
|
Any act or omission that results in assessment of a criminal penalty against the Company;
|
|
|
|
Violation of an applicable law or regulation;
|
|
|
|
Any act or omission that adversely affects or could reasonably be expected to adversely affect the Companys
reputation; or
|
|
|
|
Willful misconduct, gross negligence or any act of dishonesty or disloyalty.
|
Under the TPAs, if an executive is involuntarily terminated without cause or, in the case of Ms. Soltau, voluntarily terminates employment for good
reason, he or she will receive the benefits set forth in the table immediately below. The standard forms of TPAs were revised in December 2015. The table below sets forth the benefits to be received by an executive based on the form of TPA to which
he or she is a party.
|
|
|
|
|
Benefits
|
|
Form of TPA prior to December 2015
|
|
Form of TPA after December 2015
|
Lump sum payment for unpaid salary and vacation
|
|
Accrued base salary and earned but unused paid time off through termination date
|
|
Same
|
|
|
|
Payment for base salary and annual cash incentive*
|
|
Lump sum equal to annualized base salary plus target annual cash incentive compensation (at 100% of the target incentive opportunity in effect at the time of termination) with respect to a period of (a) 24 months
for the CEO (b) 18 months following termination if the executive is an Executive Vice President or higher, or (c) 12 months following termination if the executive is a Senior Vice President
|
|
Equal monthly installments during the severance period
|
|
|
|
Lump sum payment for current year annual cash incentive*
|
|
Average of actual incentive compensation payments for the 3 prior fiscal years or, if the associate has been employed for less than 3 fiscal years at the time of termination, the average of the actual payments for
the fiscal years, or portion thereof, that the associate has been employed
|
|
Executives actual annual cash incentive compensation payable for the fiscal year of termination prorated for the period of service during the fiscal year
|
|
|
|
Payment of insurance premiums*
|
|
Lump sum payment for Company-paid portion of premiums toward medical, dental and life insurance coverages for 24 months for the CEO 18 months for Executive Vice Presidents and 12 months for Senior Vice Presidents,
grossed-up
for federal income taxes
|
|
Continuation of payments by Company for its portion of premiums for medical and dental insurance coverage if executive elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (COBRA)
|
|
|
|
Lump sum payment for outplacement and financial counseling services*
|
|
$25,000 for CEO and Executive Vice Presidents; $15,000 for Senior Vice Presidents
|
|
Same
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
55
|
Potential Payments and Benefits on Termination of Employment
|
|
|
|
|
Benefits
|
|
Form of TPA prior to December 2015
|
|
Form of TPA after December 2015
|
|
|
|
Vesting of equity awards granted in connection with commencement of employment*
|
|
Immediate vesting
|
|
Same
|
|
|
|
Vesting of other equity awards*
|
|
Immediate vesting
|
|
Immediate vesting of
pro-rated
portion reflecting length of employment
|
*
|
Conditioned on execution of a release and expiration of the revocation period under the release, but payable no later than
two and
one-half
months after the year of termination.
|
As noted above,
Ms. Soltaus Executive Termination Pay Agreement also provides the above-described benefits if she voluntarily terminates employment with the Company for good reason. For purposes of Ms. Soltaus Executive Termination Pay
Agreement, good reason consists of:
|
|
|
A reduction in base salary or target annual cash incentive opportunity;
|
|
|
|
Involuntary relocation of more than 50 miles;
|
|
|
|
A materially adverse change in the executives duties or responsibilities;
|
|
|
|
The Companys failure to nominate Ms. Soltau for election to the Board; or
|
|
|
|
Failure to make any material payments when due.
|
For Ms. Soltau to receive benefits under her Executive Termination Pay Agreement in connection with a termination for good reason, she must
terminate employment within 180 days of the date the good reason event occurred. Notice of a good reason event must be provided to the Company within 30 days of the event and the Company must be given a
30-day
opportunity to correct the situation.
In addition to providing severance payments in the event of an involuntary termination without cause, the
TPAs also include certain limited benefits in the event of death or termination due to permanent disability. In such case, the executive will receive a lump sum cash payment as soon as practicable after termination equal to prorated annual incentive
compensation for service during the year at 100% of the executives target incentive compensation opportunity.
By entering into a TPA, the
executive agrees to the following restrictive covenants:
|
|
|
Obligation not to disclose confidential or proprietary information of the Company, which continues indefinitely following
termination of employment;
|
|
|
|
Obligation to refrain from activities designed to influence or persuade any person not to do business or to reduce its
business with the Company, which continues for the applicable severance period following termination of employment;
|
|
|
|
Obligation to refrain from attempting to influence or persuade any of the Companys employees to leave their
employment with the Company and to refrain from directly or indirectly soliciting or hiring employees of the Company, which continues for the applicable severance period following termination of employment; and
|
|
|
|
Obligation not to undertake work for a competing business, which continues for the applicable severance period following
termination of employment.
|
The standard forms of TPAs used by the Company prior to December 2015 provided that the noncompetition
covenant may be waived by the executive; however, he or she must then forego any severance benefits available under the TPA. Beginning with the forms of TPAs as revised in December 2015, the restrictive covenants also extend to a voluntary
termination of employment in addition to involuntary separation without cause. In the event the executive breaches any of the covenants listed above, the Company will not be obligated to make any further payments under the agreement and may seek to
recover damages from the executive.
|
|
|
|
|
56
|
|
|
|
2019 Proxy Statement
|
Potential Payments and Benefits on Termination of Employment
Ms. Evanson has an Executive Termination Pay Agreement in the form used by
the Company prior to December 2015. Ms. Soltau, Ms. Risch and Mr. Robbins have Executive Termination Pay Agreements as revised in December 2015. Ms. Treadway currently has a TPA in the form utilized for Senior Vice Presidents of the
Company.
Change in Control; Termination Following a Change in Control
Each of Ms. Soltau, Ms. Evanson, Ms. Risch, and Mr. Robbins currently participate in the Companys CIC Plan. Ms. Grebstein
also participated in the CIC Plan. None of our named executive officers are entitled to a tax
gross-up
payment in respect of any excise taxes imposed on the benefits payable under the CIC Plan.
The CIC Plan provides benefits to the Companys executives if their employment is terminated as a result of an involuntary separation from service
by the Company other than for cause within two years of the occurrence of a change in control of the Company. The CIC Plan also provides benefits to an executive if the executive terminates employment with the Company for Good Reason following a
change of control. Good Reason consists of:
|
|
|
A material reduction in the executives base salary or target annual cash incentive opportunity;
|
|
|
|
Involuntary relocation of more than 50 miles;
|
|
|
|
A materially adverse change in the executives duties or responsibilities;
|
|
|
|
A material diminution in the budget over which the executive has responsibility;
|
|
|
|
A material adverse change in the executives supervisors duties or responsibilities, including a change in the
supervisor to whom the executive is required to report; or
|
|
|
|
Failure of the Company to continue a material benefit or a material reduction in the benefits in which the executive
participated prior to the occurrence of the change in control, unless replaced by a substantially equivalent benefit.
|
For an
executive to receive benefits under the CIC Plan, a Good Reason event with respect to such executive must occur within two years of the occurrence of a change in control of the Company, and if the Good Reason event is not cured by the Company
following timely notice of the event by the executive, the executive must terminate employment within the later of (i) two years of the change in control or (ii) 180 days of the date the Good Reason event occurred.
Notice of a Good Reason event must be provided to the Company within 90 days of the event and the Company must be given a
30-day
opportunity to correct the situation without having to pay benefits under the CIC Plan.
Change in
control is defined as:
|
|
|
the acquisition by any person, entity or group of 30% or more of the Companys outstanding common stock;
|
|
|
|
the replacement of a majority of the Board;
|
|
|
|
a reorganization, merger or consolidation, or the sale of all or substantially all of the Companys assets, subject to
certain exceptions; or
|
|
|
|
a complete liquidation or dissolution of the Company.
|
For purposes of the CIC Plan, cause includes the failure of the executive to substantially perform the duties of his or her job, failure of the
executive to follow Company policy, engagement by the executive in illegal conduct, or gross misconduct injurious to the Company.
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
57
|
Potential Payments and Benefits on Termination of Employment
For the named executive officers, the CIC Plan entitles them to receive cash
severance of 2.99 times annualized base salary plus target annual cash incentive opportunity (at 100%) at the time of termination.
In addition to
the cash severance payments, all participants in the CIC Plan are entitled to receive the following at the time of termination:
|
|
|
Accrued base salary and pay in respect of earned but unused paid time off through the date of termination;
|
|
|
|
With respect to annual incentive compensation:
|
|
|
|
the average of the participants actual annual incentive compensation payments under the MICP for the three fiscal
years prior to the fiscal year of termination; or
|
|
|
|
if termination occurs on the last day of the fiscal year, the actual annual cash incentive compensation, if greater;
|
|
|
|
A lump sum payment in respect of additional paid time off, if any, under the Companys paid time off policies;
|
|
|
|
A lump sum payment representing the incremental value of additional years of Company matching contributions credited to the
executive (equal to the executives cash severance multiple) with respect to the Mirror Savings Plan, to the extent the executive participates in that plan;
|
|
|
|
A lump sum payment representing the Company-financed portion of the premium toward medical, dental and life insurance
coverages for the number of years equal to the applicable cash severance multiple for the executive,
grossed-up
for federal income taxes; and
|
|
|
|
A lump sum payment of $25,000 toward outplacement and financial counseling services, and, to the extent applicable and
allowable by law, reimbursement of legal fees and expenses incurred in defense of the executives rights under the plan.
|
Additionally, participants in the CIC Plan are eligible for up to one year of additional age and service credit for purposes of determining retiree
eligibility under the Companys medical, dental, life insurance, and lifetime discount programs.
In addition to the benefits provided by the
CIC Plan, some of the Companys other plans and programs, such as the Companys equity compensation plans, also include specific benefits payable to associates in the event of a change in control of the Company. The Companys 2012
Long-Term Incentive Plan, 2014 Long-Term Incentive Plan, 2016 Long-Term Incentive Plan and the 2018 Long-Term Incentive Plan provide that vesting of outstanding equity awards is accelerated if the participants employment is terminated as a
result of an involuntary separation from service by the Company other than for Cause within two years of the occurrence of a change in control of the Company.
For purposes of these plans, a change of control is defined as:
|
|
|
the acquisition by a person or group of more than 50% of the total voting power of the Companys common stock;
|
|
|
|
the acquisition by a person or a group within a twelve-month period of 30% of the total voting power of the Companys
common stock or the replacement of a majority of the Board within a twelve-month period unless approved by a majority of the Board; or
|
|
|
|
the acquisition by a person or group of 40% or more of the assets of the Company.
|
The plans also provide for vesting acceleration of outstanding awards if the participant terminates employment with the Company for Good Reason within
two years of the occurrence of a change in control of the Company. The definition of Good Reason under these plans is the same as the definition under the CIC Plan.
|
|
|
|
|
58
|
|
|
|
2019 Proxy Statement
|
Potential Payments and Benefits on Termination of Employment
In order to describe the payments and benefits that are triggered for each
termination event for each of the Companys named executive officers, we have created the table below estimating the payments and benefits that would be paid to each of our named executive officers under each applicable element of our
compensation program. The table assumes that the named executive officers employment terminated on February 1, 2019, which was the last business day of the Companys last completed fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
($)
|
|
|
Annual
Cash
Incentive
($)
|
|
|
Restricted
Stock
($)
|
|
|
Non-Equity
Long-Term
Incentives
($)
|
|
|
Mirror
Savings
Plan
($)
|
|
|
Other
($)
(1)
|
|
|
Excise
Tax
Cutback
($)
|
|
|
Total
($)
|
|
Jill Soltau
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination without Change in Control
|
|
|
2,800,000
|
|
|
|
4,200,000
|
|
|
|
8,859,060
|
|
|
|
0
|
|
|
|
0
|
|
|
|
86,020
|
|
|
|
0
|
|
|
|
15,945,080
|
|
Involuntary Termination with Change in Control
|
|
|
4,186,000
|
|
|
|
6,279,000
|
|
|
|
8,859,060
|
|
|
|
0
|
|
|
|
0
|
|
|
|
128,058
|
|
|
|
0
|
|
|
|
19,452,118
|
|
Death
|
|
|
0
|
|
|
|
2,100,000
|
|
|
|
8,859,060
|
|
|
|
0
|
|
|
|
0
|
|
|
|
26,923
|
|
|
|
0
|
|
|
|
10,985,983
|
|
Permanent Disability
|
|
|
0
|
|
|
|
2,100,000
|
|
|
|
8,859,060
|
|
|
|
0
|
|
|
|
0
|
|
|
|
26,923
|
|
|
|
0
|
|
|
|
10,985,983
|
|
Good Reason without Change in Control
|
|
|
2,800,000
|
|
|
|
4,200,000
|
|
|
|
8,859,060
|
|
|
|
0
|
|
|
|
0
|
|
|
|
86,020
|
|
|
|
0
|
|
|
|
15,945,080
|
|
Good Reason After Change in Control
|
|
|
4,186,000
|
|
|
|
6,279,000
|
|
|
|
8,859,060
|
|
|
|
0
|
|
|
|
0
|
|
|
|
128,058
|
|
|
|
0
|
|
|
|
19,452,118
|
|
Michael Fung
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination without Change in Control
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Involuntary Termination with Change in Control
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Death
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Permanent Disability
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Good Reason After Change in Control
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Therace Risch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination without Change in Control
|
|
|
1,035,000
|
|
|
|
1,021,178
|
|
|
|
335,386
|
|
|
|
76,389
|
|
|
|
0
|
|
|
|
51,659
|
|
|
|
0
|
|
|
|
2,519,613
|
|
Involuntary Termination with Change in Control
|
|
|
2,063,100
|
|
|
|
1,967,492
|
|
|
|
632,579
|
|
|
|
250,000
|
|
|
|
0
|
|
|
|
75,435
|
|
|
|
0
|
|
|
|
4,988,606
|
|
Death
|
|
|
0
|
|
|
|
586,500
|
|
|
|
335,386
|
|
|
|
76,389
|
|
|
|
0
|
|
|
|
18,577
|
|
|
|
0
|
|
|
|
1,016,852
|
|
Permanent Disability
|
|
|
0
|
|
|
|
586,500
|
|
|
|
335,386
|
|
|
|
76,389
|
|
|
|
0
|
|
|
|
18,577
|
|
|
|
0
|
|
|
|
1,016,852
|
|
Good Reason After Change in Control
|
|
|
2,063,100
|
|
|
|
1,967,492
|
|
|
|
632,579
|
|
|
|
250,000
|
|
|
|
0
|
|
|
|
75,435
|
|
|
|
0
|
|
|
|
4,988,606
|
|
Michael Robbins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination without Change in Control
|
|
|
1,035,000
|
|
|
|
1,012,629
|
|
|
|
304,960
|
|
|
|
53,472
|
|
|
|
110,830
|
|
|
|
69,693
|
|
|
|
0
|
|
|
|
2,586,585
|
|
Involuntary Termination with Change in Control
|
|
|
2,063,100
|
|
|
|
1,960,538
|
|
|
|
557,268
|
|
|
|
175,000
|
|
|
|
110,830
|
|
|
|
120,950
|
|
|
|
0
|
|
|
|
4,987,686
|
|
Death
|
|
|
0
|
|
|
|
586,500
|
|
|
|
304,960
|
|
|
|
53,472
|
|
|
|
110,830
|
|
|
|
23,885
|
|
|
|
0
|
|
|
|
1,079,647
|
|
Permanent Disability
|
|
|
0
|
|
|
|
586,500
|
|
|
|
304,960
|
|
|
|
53,472
|
|
|
|
110,830
|
|
|
|
23,885
|
|
|
|
0
|
|
|
|
1,079,647
|
|
Good Reason After Change in Control
|
|
|
2,063,100
|
|
|
|
1,960,538
|
|
|
|
557,268
|
|
|
|
175,000
|
|
|
|
110,830
|
|
|
|
120,950
|
|
|
|
0
|
|
|
|
4,987,686
|
|
Brynn Evanson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination without Change in Control
|
|
|
945,563
|
|
|
|
825,051
|
|
|
|
416,178
|
|
|
|
175,000
|
|
|
|
461,411
|
|
|
|
62,780
|
|
|
|
0
|
|
|
|
2,885,982
|
|
Involuntary Termination with Change in Control
|
|
|
1,884,821
|
|
|
|
1,616,460
|
|
|
|
326,809
|
|
|
|
175,000
|
|
|
|
461,411
|
|
|
|
115,141
|
|
|
|
0
|
|
|
|
4,579,643
|
|
Death
|
|
|
0
|
|
|
|
472,781
|
|
|
|
173,001
|
|
|
|
53,472
|
|
|
|
461,411
|
|
|
|
16,972
|
|
|
|
0
|
|
|
|
1,177,637
|
|
Permanent Disability
|
|
|
0
|
|
|
|
472,781
|
|
|
|
173,001
|
|
|
|
53,472
|
|
|
|
461,411
|
|
|
|
16,972
|
|
|
|
0
|
|
|
|
1,117,637
|
|
Good Reason After Change in Control
|
|
|
1,884,821
|
|
|
|
1,616,460
|
|
|
|
326,809
|
|
|
|
175,000
|
|
|
|
461,411
|
|
|
|
115,141
|
|
|
|
0
|
|
|
|
4,579,643
|
|
Marci Grebstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination without Change in Control
|
|
|
825,000
|
|
|
|
719,854
|
|
|
|
137,909
|
|
|
|
53,472
|
|
|
|
0
|
|
|
|
35,577
|
|
|
|
0
|
|
|
|
1,771,812
|
|
Involuntary Termination with Change in Control
|
|
|
1,644,500
|
|
|
|
1,404,534
|
|
|
|
297,0677
|
|
|
|
175,000
|
|
|
|
0
|
|
|
|
40,179
|
|
|
|
0
|
|
|
|
3,561,279
|
|
Death
|
|
|
0
|
|
|
|
412,500
|
|
|
|
137,909
|
|
|
|
53,472
|
|
|
|
0
|
|
|
|
10,577
|
|
|
|
0
|
|
|
|
614,458
|
|
Permanent Disability
|
|
|
0
|
|
|
|
412,500
|
|
|
|
137,909
|
|
|
|
53,472
|
|
|
|
0
|
|
|
|
10,577
|
|
|
|
0
|
|
|
|
614,458
|
|
Good Reason After Change in Control
|
|
|
1,644,500
|
|
|
|
1,404,534
|
|
|
|
297,067
|
|
|
|
175,000
|
|
|
|
0
|
|
|
|
40,179
|
|
|
|
0
|
|
|
|
3,561,279
|
|
Brandy Treadway
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination
|
|
|
420,000
|
|
|
|
310,598
|
|
|
|
66,324
|
|
|
|
45,889
|
|
|
|
7,856
|
|
|
|
20,532
|
|
|
|
0
|
|
|
|
871,199
|
|
Death
|
|
|
0
|
|
|
|
252,000
|
|
|
|
66,324
|
|
|
|
45,889
|
|
|
|
7,856
|
|
|
|
0
|
|
|
|
0
|
|
|
|
372,069
|
|
Permanent Disability
|
|
|
0
|
|
|
|
252,000
|
|
|
|
66,324
|
|
|
|
45,889
|
|
|
|
7,856
|
|
|
|
0
|
|
|
|
0
|
|
|
|
372,069
|
|
(1)
|
The amounts shown in this column include amounts payable with respect to health and life insurance, outplacement, and
vacation, as applicable.
|
|
|
|
|
|
|
|
2019 Proxy Statement
|
|
59
|
CEO Pay Ratio
CEO PAY RATIO
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act), we are providing the following information
about the relationship of the median annual total compensation of our associates and the annual total compensation of Jill Soltau, our Chief Executive Officer.
As one of the largest department store and
e-commerce
retailers in the United States, including operating 864
department stores in 49 states and Puerto Rico as of February 2, 2019, our associate population consists of a significant number of part-time associates, many of which are also compensated on an hourly basis. Approximately 92% of our associates
are compensated on an hourly basis and part-time associates represent approximately 66% of our total workforce. Accordingly, our median associate in fiscal 2018 was determined to be a part-time hourly associate.
For fiscal 2018, our last completed fiscal year:
|
|
|
the median of the annual total compensation of all associates of the Company (other than our CEO) was $12,939; and
|
|
|
|
the annual total compensation of our CEO, as reported in the Summary Compensation Table included earlier in this Proxy
Statement, was $16,749,378.
|
Based on this information, for fiscal 2018, the ratio of the annual total compensation of
Ms. Soltau, our Chief Executive Officer, to the median of the annual total compensation of all associates was 1294 to 1. In addition, we have calculated a supplemental pay ratio, which you will find below under Supplemental Pay Ratio
Disclosure. The supplemental pay ratio compares the median employee compensation to the target total compensation of our CEO.
To calculate
this ratio, we determined that, as of February 2, 2019, our associate population consisted of approximately 96,200 individuals working at the Company through our consolidated subsidiaries, with approximately 99% of these individuals located in
the United States and approximately 1% of these individuals located outside the United States. This population consisted of our full-time, part-time, and temporary associates as of such date.
Our associate population, after taking into consideration the adjustments permitted by SEC rules (as described below), consisted of approximately 95,100
individuals. As permitted by SEC rules, we have chosen to exclude all of the associates who are employed outside of the United States from the determination of the median associate. The jurisdictions from which we have excluded associates and the
approximate number of associates excluded from each jurisdiction are: Bangladesh (20), China (71), Guatemala (11), Hong Kong (127), India (723), Pakistan (16), South Korea (40), Taiwan (44) and Vietnam (12).
To identify the median associate from our associate population, we analyzed the amount of salary, wages and tips of our associates as reflected in our
payroll records as reported to the Internal Revenue Service on Form
W-2
for the 2018 calendar year. We also annualized the compensation for permanent associates who joined the Company, or were on an unpaid
leave of absence for any period of time, after January 1, 2018. We did not perform any full-time equivalency adjustments for part-time associates.
Using this compensation measure, which was consistently applied to all of the associates included in the relevant population, we determined that the
median associate was a part-time hourly associate.
|
|
|
|
|
60
|
|
|
|
2019 Proxy Statement
|
CEO Pay Ratio
Once we identified our median associate, we combined all of the elements of such associates
compensation for fiscal 2018 in accordance with the SECs rules, resulting in annual total compensation of $12,939. With respect to the annual total compensation of our CEO, we used the amount reported in the Total column of our
2018 Summary Compensation Table included in this Proxy Statement.
Supplemental Pay Ratio Disclosure
We understand that the CEO pay ratio is intended to provide greater transparency to annual CEO pay and how it compares to the pay of the median employee.
As such, we are providing a supplemental ratio that compares the CEOs total target pay of $11,000,000, which includes Ms. Soltaus annualized base salary, annual target bonus and annual equity grant target, but excludes the special
one-time
cash signing bonus and equity signing bonus, which were inducements to join the Company, to the pay of the median associate. We believe this supplemental ratio reflects a more representative comparison. The
resulting supplemental CEO pay ratio is 850 to 1.
Because the SEC rules for identifying the median of the annual total compensation of our
associates and calculating the pay ratio based on that median allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation
practices, the pay ratio reported by other companies may not be comparable to the pay ratio for our Company, as other companies are headquartered in different locations, have different employee populations and compensation practices and may utilize
different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
DIRECTOR COMPENSATION FOR FISCAL 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or Paid
in Cash ($)
|
|
Stock Awards
($)
(1)
|
|
Option
Awards
($)
|
|
All Other
Compensation
($)
(2)
|
|
Total
($)
|
Paul J. Brown
(3)
|
|
|
|
80,000
|
|
|
|
|
149,999
|
|
|
|
|
0
|
|
|
|
|
10,000
|
|
|
|
|
239,999
|
|
Amanda Ginsberg
(4)
|
|
|
|
105,000
|
|
|
|
|
149,999
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
254,999
|
|
Wonya Y. Lucas
(5)
|
|
|
|
80,000
|
|
|
|
|
149,999
|
|
|
|
|
0
|
|
|
|
|
10,000
|
|
|
|
|
239,999
|
|
B. Craig Owens
(6)
|
|
|
|
102,500
|
|
|
|
|
149,999
|
|
|
|
|
0
|
|
|
|
|
10,000
|
|
|
|
|
262,499
|
|
Lisa A. Payne
(7)
|
|
|
|
85,000
|
|
|
|
|
149,999
|
|
|
|
|
0
|
|
|
|
|
10,000
|
|
|
|
|
244,999
|
|
Debora A. Plunkett
(8)
|
|
|
|
80,000
|
|
|
|
|
149,999
|
|
|
|
|
0
|
|
|
|
|
10,000
|
|
|
|
|
239,999
|
|
Leonard H. Roberts
(9)
|
|
|
|
85,000
|
|
|
|
|
149,999
|
|
|
|
|
0
|
|
|
|
|
10,000
|
|
|
|
|
244,999
|
|
Javier G. Teruel
(10)
|
|
|
|
2
|
|
|
|
|
244,997
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
244,999
|
|
R. Gerald Turner
(11)
|
|
|
|
85,000
|
|
|
|
|
149,999
|
|
|
|
|
0
|
|
|
|
|
10,000
|
|
|
|
|
244,999
|
|
Ronald W. Tysoe
(12)
|
|
|
|
302,500
|
|
|
|
|
149,999
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
452,499
|
|
(1)
|
Each
non-employee
director receives an annual stock grant consisting of a number
of restricted stock units having a market value nearest to $150,000. For fiscal 2018, the number of units was determined by dividing $150,000 by the closing price of Company common stock on the date of grant (rounded to the nearest whole unit). The
amounts shown in this column include the fair value of the annual stock award for fiscal 2018, which was based on the closing price of JCPenney common stock on the date of grant, which was $2.42. The date of grant of the annual stock grant to
non-employee
directors is the third trading date following the Companys Annual Meeting of Stockholders.
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(2)
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Includes the value of Company matching contributions under the Directors Matching Fund. Under this program,
directors may request the Company to match
dollar-for-dollar
their personal charitable contributions up to $10,000 per fiscal year.
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(3)
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Mr. Brown had 105,106 restricted stock unit awards outstanding as of February 2, 2019.
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(4)
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Ms. Ginsberg had 96,291 restricted stock unit awards outstanding as of February 2, 2019.
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(5)
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Ms. Lucas had 95,252 restricted stock unit awards outstanding as of February 2, 2019.
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(6)
|
Mr. Owens had 111,070 restricted stock unit awards outstanding as of February 2, 2019.
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(7)
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Ms. Payne had 85,177 restricted stock unit awards outstanding as of February 2, 2019.
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(8)
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Ms. Plunkett had 100,586 restricted stock unit awards outstanding as of February 2, 2019.
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(9)
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Mr. Roberts had 194,528 stock awards, consisting of 184,769 restricted stock unit awards and 9,759 restricted stock
awards, outstanding as of February 2, 2019.
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(10)
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Mr. Teruel has elected to receive 100 percent of his cash retainers in shares of Company common stock. The
amount shown in the Stock Awards column includes the fair value of stock received in lieu of cash. Fractional shares are paid out in cash. Mr. Teruel had 180,265 restricted stock unit awards outstanding as of February 2, 2019.
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(11)
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Dr. Turner had 167,331 stock awards, consisting of 152,511 restricted stock unit awards, 13,220 restricted stock
awards and 1,600 option awards outstanding as of February 2, 2019.
|
(12)
|
Mr. Tysoe had 124,415 restricted stock unit awards outstanding as of February 2, 2019.
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2019 Proxy Statement
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61
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Director Compensation
Cash Retainers and Stock Award
Directors who are Company associates do not receive directors fees. The Corporate Governance Committee has the responsibility for recommending to
the Board the appropriate compensation for
non-employee
directors. In recommending the appropriate compensation for
non-employee
directors, the Corporate Governance
Committee benchmarks the compensation for our
non-employee
directors against the practices of the Companys retail-focused peer group. Recommendations to modify
non-employee
director compensation take into account the results of such benchmarking.
For 2018, the annual
compensation arrangements for
non-employee
directors included the following, to the extent applicable:
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An annual cash retainer of $80,000;
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An annual award of restricted stock units with a market value at the time of grant of $150,000;
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An annual cash retainer of $25,000 for the chair of the Audit Committee;
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An annual cash retainer of $20,000 for the chair of the Human Resources and Compensation Committee;
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An annual cash retainer of $15,000 for the chairs of the Corporate Governance Committee and the Finance and Planning
Committee;
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An annual cash retainer of $30,000 for the Lead Independent Director, as applicable;
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For the period from June 1, 2018 to October 31, 2018, a cash retainer of $100,000 per quarter for the
Non-Executive
Chairman of the Board, prorated for any partial quarter, in light of the Chairmans additional responsibilities in connection with the search for a new CEO and oversight of the OCEO; and
thereafter, a cash retainer of $100,000 per year; and
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An annual cash retainer of $5,000 for directors who are Representatives under an Indemnification Trust Agreement among
the Company, its wholly owned subsidiary, J. C. Penney Corporation, Inc., and SunTrust Bank, as trustee (currently Directors Ginsberg and Turner).
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Director compensation covers the period from June 1 to May 31 following the election of directors at the annual meeting in May. The cash
retainers are payable quarterly.
Non-employee
directors are reimbursed for expenses incurred for attending any meeting which they attend in their official capacities as directors.
Director equity awards granted prior to 2017 do not vest until the directors service ends. Beginning with the 2017 annual restricted stock unit
grant for
non-employee
directors, each
non-employee
director may elect (i) to have their equity award vest on the first anniversary of the date of grant,
(ii) to have their equity award vest when the directors service ends or (iii) to have a portion of the award vest on the first anniversary of the date of grant with the remaining portion vesting when the directors service ends.
Non-employee
directors may not transfer, sell, assign or otherwise dispose of any shares of common stock received in connection with an annual equity award while serving as a director, except for a sale in
limited circumstances where necessary for the
non-employee
director to pay any income taxes arising in connection with the annual equity award.
The Board has adopted formal stock ownership goals for
non-employee
directors of the Company. The stock
ownership goals specify that, within a four-year period from the date of election to the Board,
non-employee
directors should hold an amount of Company stock having a value of at least three times the annual
retainer. All of the current
non-employee
directors have met or are on track to meet that goal.
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62
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2019 Proxy Statement
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Director Compensation
Election to Receive Common Stock; Deferral
Directors may elect to receive all or a portion of their cash retainers in Company common stock. One director has currently elected to receive all or
part of his cash retainers in Company common stock. A director may also elect to defer payment of all or part of their cash retainers under the terms of a deferred compensation plan for directors. No current director has elected such deferral.
Directors Matching Fund
Members of the Board may be involved with charitable organizations to which they provide support in the form of personal charitable contributions. The
Company has established the Directors Matching Fund to benefit and recognize the mutual interest of directors and the Company in supporting worthy charitable and educational institutions. Under the Directors Matching Fund, directors may
request the Company to match
dollar-for-dollar
their personal charitable contributions up to $10,000 per fiscal year. All or part of the matching contributions may
be allocated to one or several organizations that have been determined to be charitable organizations under Section 501(c)(3) of the Code or that are a political subdivision of the state. Matches may only be made on personal gifts that have
been paid within that fiscal year, not pledged.
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2019 Proxy Statement
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63
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Audit Function
AUDIT FUNCTION
Report of the Audit Committee
Composition and Qualifications
The Audit Committee of the Board is composed of five independent directors and operates under a written charter, in accordance with applicable rules of
the SEC and the NYSE. The Corporate Governance Committee and the full Board considers membership for the Audit Committee annually. The current members of the Audit Committee are Lisa A. Payne, Debora A. Plunkett, Leonard H. Roberts, Javier G. Teruel
and B. Craig Owens, who serves as its Chair. The Board of Directors has determined that each member is financially literate and that each of Ms. Payne and Messrs. Owens, Roberts and Teruel qualifies as an audit committee
financial expert, as those terms are defined by the NYSE and the SEC.
Purpose
The purpose of the Audit Committee is to assist the Board in monitoring: (i) the Companys accounting and financial reporting processes,
including internal control over financial reporting; (ii) the Companys compliance with legal and regulatory requirements; (iii) the independence and qualifications of the Companys independent auditor; and (iv) the
performance of the Companys internal auditors and independent auditor.
Responsibilities
Management is responsible for maintaining adequate internal control over financial reporting. KPMG LLP is responsible for expressing opinions on the
conformity of the Companys audited consolidated financial statements with U.S. generally accepted accounting principles and on the effectiveness of the Companys internal control over financial reporting. The Audit Committees
responsibility is to monitor and oversee these processes. The Audit Committee is also solely responsible for the selection and termination of the Companys independent auditor, including the approval of audit fees and
non-audit
services provided by and fees paid to the independent auditor.
In evaluating and selecting the
Companys independent auditor, the Audit Committee considers, among other things, historical and recent performance of the current independent auditor, an analysis of known significant legal or regulatory proceedings related to the independent
auditor, external data on audit quality and performance, including Public Company Accounting Oversight Board (PCAOB) reports, industry experience, audit fee revenues, independent auditor capabilities and audit approach, and the independence and
tenure of the independent auditor.
Review of Financial Information
In this context, the Audit Committee has met and held discussions with management of the Company, who represented to the Audit Committee that the
Companys audited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee has reviewed and discussed the audited consolidated financial statements,
managements assessment of the effectiveness of the Companys internal control over financial reporting, and KPMG LLPs evaluation of the Companys internal control over financial reporting with both management and the
independent auditor.
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2019 Proxy Statement
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Audit Function
The Audit Committee also discussed with the independent auditor the matters
required to be discussed by Auditing Standard No. 1301 (Communications with Audit Committees). The Audit Committee has received the written disclosures and the letter from the independent auditor required by applicable requirements of the PCAOB
regarding the independent auditors communications with the Audit Committee concerning independence, and the Audit Committee discussed with the independent auditor its independence, including the extent to which the independent auditor provides
non-audit
services to the Company. The Audit Committee also participated in the certification process relating to the filing of certain reports pursuant to the Exchange Act.
Inclusion of Consolidated Financial Statements in
Form 10-K
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be
included in the Companys Annual Report on
Form 10-K
for the year ended February 2, 2019 for filing with the SEC.
Independent Auditor
The Audit
Committee also recommends that the Companys stockholders ratify KPMG LLP as the Companys independent auditor for the 2019 fiscal year.
Audit Committee
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B. Craig Owens, Chair
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Leonard H. Roberts
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Lisa A. Payne
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Javier G. Teruel
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Debora A. Plunkett
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Audit and Other Fees
The following table presents fees for professional services rendered by KPMG LLP:
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Fiscal 2017
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Fiscal 2018
|
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Audit Fees
(1)
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|
$
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3,423,600
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$
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3,157,400
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Audit-Related Fees
(2)
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90,000
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|
|
115,000
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|
Total Audit and Audit-Related Fees
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|
$
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3,513,600
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$
|
3,272,400
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Tax Fees
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Tax Compliance Fees
(3)
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$
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16,240
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$
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All Other Fees
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Total Fees
(4)
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$
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3,529,840
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$
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3,272,400
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(1)
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Audit fees include fees for the audits of the Companys annual consolidated financial statements, for professional
services rendered for the audits of internal control over financial reporting, for quarterly reviews, for review of SEC filings, for statutory audits and other related matters.
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(2)
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Audit-related fees in fiscal 2017 and 2018 were for the audit of financial statements of a related entity and for
consultation regarding adoption of new financial accounting standards.
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(3)
|
Tax compliance fees in fiscal 2017 consist of fees for services related to international tax matters and transfer
pricing. There were fees for tax services in fiscal 2018.
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(4)
|
All fees were
pre-approved
by the Audit Committee.
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2019 Proxy Statement
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65
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Audit Function
Audit Committees
Pre-Approval
Policies and Procedures
The Audit Committee must approve any fee for services to
be performed by the Companys independent auditor in advance of the service being performed. For proposed projects using the services of the Companys independent auditor that are expected to cost over $200,000, or 5% of the auditors
fee for the preceding year, whichever is lower, the Audit Committee will be provided information to review and must approve each project prior to commencement of any work. For proposed projects using the services of the Companys independent
auditor that are expected to cost less than $200,000, or 5% of the auditors fee for the preceding year, whichever is lower, the Audit Committee will be asked to review and approve a maximum amount for certain services, which may include
services in any one or more of the following categories: (a) audit fees; (b) audit-related fees; (c) tax fees; and (d) all other fees for any services allowed to be performed by the independent auditor. If additional amounts are
needed, the Audit Committee must approve the increased amounts prior to the previously approved maximum being reached and before the work may continue. Approval by the Audit Committee may be made at its regularly scheduled meetings or otherwise,
including by telephonic or other electronic communications. The Company will report the status of the various types of approved services and fees, and cumulative amounts paid and owed, to the Audit Committee on a periodic basis as appropriate.
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2019 Proxy Statement
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Proposal 2 - Ratification of Appointment of Independent Auditor
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
KPMG LLP, independent certified public accountants, member of the SEC Practice
Section of the AICPA Division for CPA firms, and registrant with the PCAOB, has been the auditor of the Companys consolidated financial statements since 1916. Its appointment as the Companys independent auditor for the fiscal year ending
February 1, 2020 has been approved by the Audit Committee of the Board. The Audit Committee believes this appointment is in the best interests of the Company and its stockholders. Stockholder ratification of such appointment is requested.
It is anticipated that a representative of KPMG LLP will attend the meeting, will be available to respond to appropriate questions, and will have an
opportunity to make a statement should he or she so desire.
The Board recommends a vote FOR the ratification of the appointment of KPMG
LLP.
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2019 Proxy Statement
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67
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Proposal 3 - Approval of 2019 Long-Term Incentive Plan
PROPOSAL 3
APPROVAL OF 2019 LONG-TERM INCENTIVE PLAN
Introduction
The Board has adopted, subject to stockholder approval, the J. C. Penney Company, Inc. 2019 Long-Term Incentive Plan, to be effective May 24, 2019
(the 2019 Plan). The principal features of the 2019 Plan are summarized below, but such description is qualified in its entirety by reference to the full text of the 2019 Plan which is included as Annex A to this Proxy Statement. All capitalized
terms not defined in this Proposal 3 will have the meanings set forth in Annex A to this Proxy Statement.
The 2019 Plan is intended to provide
long-term incentives to associates and
non-associate
directors of the Company in order to align the interests of such associates and
non-associate
directors with those
of the Companys stockholders, to motivate associates to achieve business objectives promoting the long-term growth, profitability and success of the Company, and to assist the Company in retaining and attracting the best associates and
non-associate
directors.
The 2019 Plan will be administered by, or under the direction of, a committee of the
Board constituted in such a manner as to comply at all times with Rule
16b-3
or any successor rule promulgated by the SEC under the Exchange Act, as in effect from time to time. The Board has designated the
Human Resources and Compensation Committee of the Board as the plan committee (the Plan Committee).
The 2019 Plan allows for grants of stock
options, stock appreciation rights (SARs) and stock awards (collectively, Equity Awards) and cash incentive awards (together with Equity Awards, collectively, Awards) to associate participants and Equity Awards to
non-associate
director participants. Under the 2019 Plan, Awards to associate participants may be subject to conditions such as continued employment, qualifying termination, passage of time and/or satisfaction
of performance criteria as specified in the 2019 Plan or set by the Plan Committee.
The Board recommends a vote FOR the proposal to approve
the 2019 Plan.
Principal Features of the 2019 Plan
General
. The principal features of the 2019 Plan are:
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Fungible share design in which each stock option and SAR will count as one share issued and each stock award, including
restricted stock and restricted stock units, will count as 1.49 shares issued;
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Reserves a total of 19,228,188 shares of common stock, or 28,650,000 options, for use under the 2019 Plan;
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Minimum
one-year
vesting for Equity Awards, except in certain limited situations;
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Annual limit on Equity Awards granted to each
non-associate
director of $500,000
based on grant date fair value;
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Performance Awards are to be tied to Performance Goals to be set by the Plan Committee;
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Independent administration of the 2019 Plan by the Plan Committee;
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Limits Incentive Stock Options (ISOs) to no more than 28,650,000 options;
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Limits performance-based cash incentive awards to any participant in any calendar year to the product of $2,000,000 and the
number of years in the performance cycle of the award;
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Limits stock option and SAR awards to any one participant to no more than 4,000,000 options during any fiscal year;
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2019 Proxy Statement
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Proposal 3 - Approval of 2019 Long-Term Incentive Plan
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Limits performance-based Equity Awards to any one participant to no more than 3,000,000 shares during any fiscal year;
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Provides that shares subject to Awards under the 2019 Plan or under prior plans that are cancelled or forfeited, or
terminate, lapse or expire for any reason, or settle without delivery of the shares of common stock underlying such Award, may again be available for issuance;
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Prohibits repricing, exchange and buyout of stock options and SARs without prior stockholder approval;
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Stock option and SAR terms may not exceed 10 years from the date of grant, except in certain limited circumstances; and
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Prohibits payouts of dividend or dividend equivalents on unvested Equity Awards.
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Associate Participants
General
. Associate participants in the 2019 Plan are generally to be selected management employees of the Company and its subsidiaries
as determined by the Plan Committee. Currently, it is anticipated that approximately 500 associates will be eligible to participate.
Stock
Options
. Option grants will generally be made in amounts based on an associate participants position, responsibilities or salary and such other factors as the Plan Committee may deem relevant. An associate participant may receive
one or more option grants and may receive
Non-Qualified
Stock Options (NSOs) and ISOs, as determined by the Plan Committee. The Plan Committee may determine any other terms, conditions or restrictions relating
to option grants as it may deem appropriate, subject to certain restrictions set forth in the 2019 Plan.
Price
. The option price
under each option may not be less than 100% of the fair market value of JCPenney common stock on the date of grant, which is the closing price of JCPenney common stock on the NYSE on the applicable date. The closing price of JCPenney common stock on
March 25, 2019, as reported on the NYSE, was $1.52 per share. The exercise price of the shares as to which a Stock Option is exercised may be paid in cash, with shares of JCPenney common stock already owned by the associate or through
withholding of shares that would otherwise be received as a result of the Stock Option exercise, except as otherwise set forth in the Award Notice or Award Agreement pertaining to the Stock Option.
Stock Awards
. The Plan Committee may award shares of common stock or stock units to such associate participants and on such bases as it
may determine. The Plan Committee may determine the types of awards made, the number of shares, and any other terms, conditions or restrictions relating to the awards, as it may deem appropriate.
Stock Appreciation Rights
. SARs may be granted to such associate participants and on such terms and conditions as the Plan Committee
may determine and may be granted independently or in tandem with related awards or options, either concurrently with or after the related award or option date. A SAR will generally entitle an associate participant to receive the number of shares of
JCPenney common stock equal in value to the excess of the fair market value of each share of JCPenney common stock covered by the SAR on the date of exercise over the exercise price of the SAR, but may, at the discretion of the Plan Committee, be
settled in cash.
Cash Incentive Awards
. The Plan Committee may also grant cash incentive awards to such associate participants
on such terms and conditions as it may determine. Cash incentive awards are annual or long-term performance-based awards expressed in U.S. dollars.
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2019 Proxy Statement
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69
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Proposal 3 - Approval of 2019 Long-Term Incentive Plan
Performance-Based Awards
. Any Award granted pursuant to the
2019 Plan may be made in the form of a performance-based Award. Performance-based Awards are made based on the measurement of performance against certain Performance Goals over a Performance Period. The Plan Committee may use one or more of several
business criteria for the purpose of establishing a Performance Goal, including:
Earnings Per Share;
Total Stockholder Return;
Operating Income;
Net Income;
Cash Flow;
Gross Profit;
Gross Profit Return on Investment (or
Inventory);
Return on Equity;
Return on
Capital;
Sales;
Revenues;
Gross Margin;
Gross Margin Return on Investment (or
Inventory);
Earnings Before Interest, Taxes, Depreciation and Amortization;
Earnings Before Interest and Taxes; and
Operating
Profit.
The Plan Committee may establish any special adjustments in calculating whether Performance Goals have been met including taking into
consideration the effect of any event not directly related to the operations of the Company or not within the reasonable control of management. A performance-based cash incentive award may not have a Performance Period of less than one year.
Terms of Options and SARs
. An option or SAR granted under the 2019 Plan will become exercisable on such terms and at such times as
the Plan Committee may determine. In the event of employment termination due to death, disability, retirement or other circumstances, as deemed appropriate by the Plan Committee, the 2019 Plan authorizes post-termination exercise periods, but not
beyond the options or SARs original expiration date. In no event may an ISO be exercised more than 10 years after its grant date. Generally, an NSO and a SAR may not be exercised more than 10 years after its grant date, or such shorter
time period as determined by the Plan Committee.
Transferability
. No unearned Stock Award or vested or unvested Stock Option, or
any portion thereof, may be assigned or transferred except by will or the laws of descent or distribution, or by such other means as the Plan Committee, in its discretion, may approve. No Stock Option or SAR shall be exercisable during the associate
participants lifetime except by the associate participant or the associate participants guardian or legal representative, or other third party, as the Plan Committee may determine.
Deferral
. Unless specifically provided for in the Award Notice or Award Agreement or unless the Plan Committee otherwise determines,
no Equity Award shall provide any feature for the deferral of compensation as defined by Treasury Regulation section
1.409A-1(b).
Any deferral will be for such period and in accordance with the terms and
conditions as the Plan Committee may determine and must be in compliance with Section 409A of the Internal Revenue Code, as in effect from time to time (the Code). The terms and conditions applicable to such deferral and the terms and
conditions evidencing compliance with Code Section 409A shall be set forth in the Award Notice or Award
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2019 Proxy Statement
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Proposal 3 - Approval of 2019 Long-Term Incentive Plan
Agreement or the Plan Committees determinations. The method of payment for, and type and
character of, any Award may not be altered by any deferral unless specifically permitted under Code Section 409A and the Treasury Regulations thereunder.
Term of Plan
. The 2019 Plan will terminate on May 31, 2024. After this date, no Awards may be made under the 2019 Plan.
Change in Control
. Upon an involuntary termination of an associate participants employment within two years following a Change
in Control, the associate participant shall have the right to exercise any and all Stock Options and SARs held by such associate participant, and all Stock Awards held by such associate participant shall immediately vest, be deemed to have been
earned, and any Performance Goal for the then applicable Performance Period met, on such terms and conditions specified in the grant.
Federal Income Tax Consequences
The following discussion summarizes the United States federal income tax consequences under current federal tax law generally arising with respect to
awards granted under the 2019 Plan. This summary is not intended to be exhaustive and the exact tax consequences to any participant will depend on various factors and the participants particular circumstances. This summary is based on present
laws, regulations and interpretations and is not a complete description of federal tax consequences. This summary of federal tax consequences may change in the event of a change in the Code or regulations thereunder or interpretations thereof. We
urge participants in the 2019 Plan to consult their tax advisors with respect to any state, local and foreign tax considerations or particular federal tax implications of awards made under the 2019 Plan prior to taking action with respect to an
award. The 2019 Plan is not intended to be a qualified plan under Section 401(a) of the Code.
Non-Qualified
Stock Options
. An associate participant will not be subject to tax at the time
an NSO is granted, and no tax deduction is then available to the Company. On the exercise of an NSO, the associate participant will realize ordinary income in an amount equal to the difference between the exercise price and the fair market value of
the shares acquired on the date of exercise. The Company will generally be entitled to deduct an amount equal to the ordinary income realized by the associate participant in the Companys tax year in which the associate participant realizes the
ordinary income. On disposition of shares acquired on exercise, appreciation or depreciation after the date of exercise will generally be treated by the associate participant as a capital gain or loss, as applicable.
Incentive Stock Options
. An associate participant will not be subject to regular income tax at the time an ISO is granted or
exercised, and no tax deduction is then available to the Company; however, the associate participant may be subject to the alternative minimum tax (AMT) on the excess of the fair market value of the shares received on exercise of the ISO (the ISO
Shares) over the exercise price. On disposition of ISO Shares, the associate participant will generally recognize capital gain or loss in an amount equal to the difference between the exercise price and the sale price, as long as the participant has
not disposed of the shares within two years after the date of grant or within one year after the date of exercise (a disqualifying disposition) and has been employed by the Company or a subsidiary at all times from the grant date until the date
three months before the date of exercise (one year in the case of disability).
If the associate participant disposes of ISO Shares in a
disqualifying disposition, the participant will recognize ordinary income equal to the excess of the fair market value of the ISO Shares on the date the ISO is exercised over the exercise price with any remaining gain or loss being treated as
capital
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Proposal 3 - Approval of 2019 Long-Term Incentive Plan
gain or loss, respectively. The Company is not entitled to a tax deduction on either the exercise
of an ISO or on the disposition of ISO Shares, except to the extent that the participant recognizes ordinary income on disposition of the shares. If in the event an option intended to be an ISO fails to qualify as an ISO, for example if the
associate participant does not satisfy both the employment requirements in connection with the exercise of the ISO and the holding period requirement, the ISO will be taxed as an NSO as described above.
Payment of the Exercise Price with Stock
. If an associate participant surrenders common stock that the associate participant already
owns as payment for the exercise price of a stock option, the associate participant will not recognize gain or loss as a result of the surrender, except under certain circumstances related to the surrender of ISO Shares for which the holding period
requirement has not been satisfied. A number of shares received on exercise of the option equal to the number of shares surrendered will have a tax basis equal to the tax basis of the surrendered shares. The holding period for those shares will
include the holding period for the shares surrendered. The remaining shares received will have a basis equal to the amount includible in the associate participants taxable income on receipt of such shares. The associate participants
holding period for the remaining shares will commence on the date of exercise.
Stock Awards
. An associate participant will be
taxed on the fair market value of the shares of common stock in the taxable year in which the grant occurs, unless the underlying shares are substantially nonvested (i.e. both nontransferable and subject to a substantial risk of forfeiture). An
associate participant who wishes to recognize income with respect to substantially
non-vested
shares in the taxable year in which the grant occurs may, however, do so by making a special election, a
so-called
Section 83(b) Election, to pay tax in the year the grant is made.
An associate participant who is
subject to Section 16(b) of the Exchange Act who receives stock will recognize ordinary income equal to the fair market value of the shares of stock received at the later of (i) the applicable date, or (ii) the earlier of:
(a) the date on which the shares are transferable, or (b) the date on which the restrictions lapse, unless the associate participant makes a Section 83(b) Election to report the fair market value of such shares received as ordinary
income in the taxable year of receipt. The Company may deduct an amount equal to the income recognized by the associate participant, provided that the associate participant is a covered employee under Section 162(m) of the Code and the
associate participants compensation is within the statutory limitations of Section 162(m) of the Code.
On the sale or disposition of
shares of stock, an associate participant will recognize taxable income equal to the difference between the amount realized by the associate participant on the disposition of the stock and the associate participants basis in the stock. The
basis of the restricted shares will be equal to the fair market value of the shares of stock on the date the associate participant recognizes ordinary income as described above. The gain or loss will be taxable to the associate participant as a
capital gain or deductible by the associate participant as a capital loss (either short-term or long-term, depending on the holding period of the stock), provided that the associate participant held the stock as a capital asset.
Restricted Stock Unit Awards
. An associate participant will not be subject to tax at the time a restricted stock unit is granted, and
no tax deduction is then available to the Company. On vesting of the restricted stock unit, an associate participant will generally realize ordinary income equal to the value of the shares of common stock or cash received. The basis of any shares
delivered in payment for restricted stock units will be equal to the fair market value of the shares on the date the associate participant recognizes ordinary income as described above. The Company will deduct an amount equal
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Proposal 3 - Approval of 2019 Long-Term Incentive Plan
to the income recognized by the associate participant, provided that the associate participant is
a covered employee under Section 162(m) of the Code and the associate participants compensation is within the statutory limitations of Section 162(m) of the Code.
Stock Appreciation Rights and Other Stock-Based Awards
. An associate participant will not be subject to tax at the time a SAR is
granted, and no tax deduction is then available to the Company. On exercise of a SAR, the associate participant will generally realize ordinary income equal to the value of the shares of common stock or cash received. The Company will deduct an
amount equal to the income recognized by the associate participant, provided that the associate participant is a covered employee under Section 162(m) of the Code and the associate participants compensation is within the statutory
limitations of Section 162(m) of the Code.
Section 162(m) of the Code
Section 162(m) of the Code generally disallows a public companys tax deduction for compensation paid to its covered employees as defined in
Section 162(m) of the Code to the extent such compensation exceeds $1,000,000 in any tax year. While the Company understands that Awards will generally be subject to the deduction limitations of Section 162(m), the Company reserves the
right to make grants that are not tax deductible, and the Companys tax deductions for those grants may be limited or eliminated as a result of the application of Section 162(m).
Section 409A of the Code
For associate participants who are key employees, as defined in Section 409A of the Code and regulations promulgated under that Section,
distributions of certain deferral amounts may occur no earlier than six months following the key employees separation from service from the Company. It is the intent of the Company that no Awards under the 2019 Plan be subject to
Section 409A of the Code unless and to the extent that the Plan Committee specifically determines otherwise.
The terms and conditions of any
Award that the Plan Committee determines will be subject to Section 409A will be set forth in the applicable Award Notice or Award Agreement and will be designed to comply in all respects with Section 409A. If the Award fails to comply
with the applicable requirements of Section 409A, the deferred compensation for the year in which the failure to comply with Section 409A occurs and for all preceding taxable years under the Award and any other plan or arrangement required
to be aggregated with the Award may be includible in the participants gross income for the taxable year in which the failure occurs, to the extent such amounts are not subject to a substantial risk of forfeiture and have not previously been
included in the participants gross income. The amounts so included are also subject to an additional income tax equal to twenty percent of the amount required to be included in gross income and to interest equal to the underpayment rate
specified by the IRS plus one percentage point, on the underpayments of income tax that are deemed to have occurred because the compensation was not included in income for the taxable year when it was first deferred, or if later, when the
compensation was no longer subject to a substantial risk of forfeiture.
Non-Associate
Director
Participants
General
. Each director who is presently not an employee of the Company
(Non-Associate
Director) will generally be awarded an annual Equity Award in an amount which the Board determines and pursuant to such terms, conditions and restrictions as determined by the Board. Annual
Equity Awards granted to each
Non-Associate
Director may not exceed $500,000 based on grant date fair value.
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Proposal 3 - Approval of 2019 Long-Term Incentive Plan
Currently, there are ten
Non-Associate
Directors eligible
to participate in the 2019 Plan. An initial grant will also automatically be granted to each new
Non-Associate
Director participant on his or her first being elected as a director in a pro rata amount of the
annual Equity Award for that year, based on the date of election.
Non-Transferability
. A
Non-Associate
Director participant may not transfer, sell, assign, pledge or otherwise encumber or dispose of any shares of common stock received in connection with an annual Equity Award while serving as a
director, except for a sale only in limited circumstances where necessary for the
Non-Associate
Director to pay any federal, state or local income taxes arising in connection with the Award.
Federal Income Tax Consequences
. The federal income tax implications for
Non-Associate
Director participants are substantially similar to those for associate participants, except that
Non-Associate
Director participants may not receive ISOs or cash incentive awards. Any election to defer
compensation and any election to defer distributions will be made in compliance with Section 409A of the Code, if applicable.
Miscellaneous
The Board
may amend the 2019 Plan from time to time as it deems advisable and may terminate the 2019 Plan at any time. Amendments to increase the total number of shares of the common stock reserved under the 2019 Plan or that otherwise constitute material
changes to the 2019 Plan under applicable tax or securities laws or the listing standards of the NYSE require stockholder approval. Except as otherwise provided in or permitted by the 2019 Plan or by the terms, if any, of an Award under the 2019
Plan, no termination or amendment of the 2019 Plan or change in the terms of an outstanding Award may adversely affect the rights of the holder of any Award without the consent of the holder. If the 2019 Plan is approved by stockholders, no further
awards will be granted under any prior plan after the effective date of the 2019 Plan.
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Equity Compensation Plan(s) Information
EQUITY COMPENSATION PLAN(S)
INFORMATION
The following table shows the number of options and other awards outstanding as of February 2, 2019 under the 2018 Plan
and other outstanding equity compensation plans, as well as the number of shares remaining available for grant under the 2018 Plan.
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Plan Category
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Number of
securities to
be issued
upon exercise
of outstanding
options,
warrants and
rights
(a)
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Weighted-
average
exercise price
of outstanding
options,
warrants and
rights
(b)
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Number of
securities
remaining
available for
future
issuance
under
equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c)
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Equity compensation plans approved by security holders
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17,889,781
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(1)
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$
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14.39
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(2)
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26,496,733
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(3)
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Equity compensation plans not approved by security holders
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3,178,358
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(4)
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$
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8.35
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(5)
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Total
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21,068,139
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$
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14.33
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(6)
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26,496,733
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(1)
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Includes 9,297,202 restricted stock units.
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(2)
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Represents the weighted average exercise price of outstanding stock options only. The weighted average remaining term is
4.0 years.
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(3)
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At the May 25, 2018 Annual Meeting of Stockholders, our stockholders approved the 2018 Plan, which has a fungible
share design in which each stock option will count as one share issued and each stock award will count as 1.63 shares issued. The 2018 Plan reserved 17,239,263 shares or 28,100,000 options for issuance to associates and
non-employee
directors. In addition, shares underlying any outstanding stock award or stock option grant from prior plans that are canceled prior to vesting or exercise become available for use under the 2018 plan.
No shares remain available for future issuance from prior plans.
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(4)
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On June 11, 2015, the Company made an inducement equity award of 78,358 stock options to our Chief Accounting
Officer, Andrew S. Drexler, which vested
one-third
on June 11, 2016, June 11, 2017 and June 11, 2018 and on October 18, 2018 made an inducement equity award of 3,100,000 restricted stock
units to our Chief Executive Officer, Jill A. Soltau, which will vest
one-third
on October 18, 2019, October 18, 2020, and October 18, 2021.
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(5)
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Represents the weighted average exercise price of outstanding stock options only. The weighted average remaining term is
6.4 years.
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(6)
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Represents the weighted average exercise price of outstanding stock options only. The weighted average remaining term is
5.0 years.
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On March 5, 2019, the Company made an annual grant of restricted stock unit awards covering 3,654,763 shares of
common stock under the 2018 Plan.
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Proposal 4 - Advisory Vote on Compensation of our Named Executive Officers
PROPOSAL 4 ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
The Human Resources and Compensation Committee of the Board is responsible for establishing and implementing our executive compensation
program. The Human Resources and Compensation Committee determines compensation for each named executive officer other than the CEO. The compensation of the CEO is determined by all of the independent directors of the Board, taking into account the
Human Resources and Compensation Committees recommendations. Our executive compensation program is designed to link pay to Company performance and align the pay of our named executive officers with the interests of our stockholders.
Stockholders are encouraged to read the
Compensation Discussion and Analysis
section for a more detailed discussion of how the Companys compensation program reflects our overall philosophy and
objectives.
As required by Section 14A of the Exchange Act and pursuant to the Dodd-Frank Act, we are asking stockholders to vote on the
following resolution:
RESOLVED, that the Companys stockholders approve, on an advisory basis, the compensation of the named executive
officers described in this Proxy Statement in the Compensation Discussion and Analysis section and the tabular disclosure regarding named executive officer compensation together with the accompanying narrative disclosure, as disclosed pursuant to
the compensation disclosure rules of the Securities and Exchange Commission.
As an advisory vote, this proposal is
non-binding.
Although the vote is
non-binding,
the Board values the opinions of the Companys stockholders and will take into account the outcome of the vote when
considering future compensation decisions. At the 2017 Annual Meeting of Stockholders, the Board recommended, and the stockholders approved, holding an annual vote on the compensation of our named executive officers.
The Board recommends a vote FOR the approval of the compensation of the named executive officers.
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About the Annual Meeting
ABOUT THE ANNUAL MEETING
Who is soliciting my vote?
JCPenneys Board is soliciting your vote at the 2019 Annual Meeting of Stockholders.
What will I be voting on?
You will be voting on:
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Election of ten directors nominated by the Board;
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Ratification of the appointment of KPMG LLP as JCPenneys independent auditor for the fiscal year ending
February 1, 2020;
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Approval of the J. C. Penney Company, Inc. 2019 Long-Term Incentive Plan;
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Advisory vote on executive compensation; and
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Any other business that may properly come before the meeting.
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What are the Board of Directors voting recommendations?
The Board recommends that you vote your shares For each of the Boards nominees for director, For the ratification of the
appointment of KPMG LLP as independent auditor for the fiscal year ending February 1, 2020, For the approval of the J. C. Penney Company, Inc. 2019 Long-Term Incentive Plan and For the approval of our executive
compensation in connection with the advisory vote on executive compensation.
Who is entitled to vote?
All stockholders who owned JCPenney common stock at the close of business on the record date, March 25, 2019, are entitled to attend and vote at the
Annual Meeting.
How many votes do I have?
You will have one vote for every share of JCPenney common stock you owned on the record date.
How many votes can be cast by all stockholders?
Each share of JCPenney common stock is entitled to one vote. There is no cumulative voting. On March 25, 2019, JCPenney had 316,368,365 shares of
common stock outstanding and entitled to vote.
How many shares must be present to hold the Annual Meeting?
A majority of the outstanding shares of JCPenney common stock as of the record date, or 158,184,183 shares, must be present at the Annual Meeting in
order to hold the meeting and conduct business. This is called a quorum.
Shares are counted as present at the Annual Meeting if stockholders are
present and vote in person or a proxy card has been properly submitted by or on behalf of a stockholder. Abstentions and broker
non-votes
are counted for purposes of determining the presence of a quorum.
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About the Annual Meeting
How many votes are required to elect directors and adopt the other
proposals?
You may vote For or Against with respect to the election of directors. Our Bylaws provide that in
a
non-contested
election, each director must be elected by the affirmative vote of the majority of the votes cast with respect to that directors election. Accordingly, abstentions and broker
non-votes
will have no effect on the election of a director. Any director nominee who is an incumbent director and is not
re-elected
must promptly tender his or her
resignation, and the Board, excluding the director who tenders his or her resignation, must promptly decide whether to accept or reject the resignation.
Ratification of the appointment of KPMG LLP as JCPenneys independent auditor requires the affirmative vote of a majority of the shares of JCPenney
common stock present in person or by proxy that are entitled to vote on such matter. If you abstain from voting on this matter, your shares will be counted as present for purposes of establishing a quorum, and the abstention will have the same
effect as a vote
against
the proposal. Broker
non-votes
will also have the same effect as a vote
against
the proposal.
Approval of the J. C. Penney Company, Inc. 2019 Long-Term Incentive Plan and approval of our executive compensation in connection with the advisory vote
on executive compensation requires the affirmative vote of a majority of the shares of JCPenney common stock present in person or by proxy that are entitled to vote on each such matter. If you abstain from voting on either of these matters, your
shares will be counted as present for purposes of establishing a quorum, and the abstention will have the same effect as a vote
against
the particular proposal. Broker
non-votes
are not entitled to be
cast for these matters and accordingly will have no effect on the approval of these matters.
Why did I receive a
one-page
notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
In accordance with rules adopted by the SEC, rather than mailing a printed copy of our proxy materials to each stockholder of record, we may send some or
all of our stockholders a Notice of Internet Availability of Proxy Materials (the Notice), which indicates how our stockholders may:
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access their proxy materials and vote their proxies over the Internet;
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make a
one-time
request to receive a printed set of proxy materials by mail; or
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make a permanent election to receive all of their proxy materials in printed form by mail or electronically by email.
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How can I get electronic access to the proxy materials?
The Notice provides you with instructions regarding how to:
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view our proxy materials for the Annual Meeting over the Internet; and
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instruct us to send our future proxy materials to you electronically by email instead of sending you printed copies by
mail.
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Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and
will reduce the impact of our annual meetings of stockholders on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the
proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it. Our Annual Report on Form
10-K
accompanies these proxy materials but is not considered part of
the proxy soliciting materials.
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2019 Proxy Statement
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About the Annual Meeting
How do I vote?
You can vote either in person at the Annual Meeting or by proxy whether or not you attend the Annual Meeting. To obtain directions to attend the Annual
Meeting and vote in person, please call
972-431-1000.
You can vote by proxy in three ways:
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by mail If you received your proxy materials by mail, you can vote by mail by using the enclosed proxy card;
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by telephone In the United States and Canada, you can vote by telephone by following the instructions on the
Internet or on your proxy card if you received your materials by mail; or
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by Internet You can vote by Internet by following the instructions on the Notice or on your proxy card if you
received your materials by mail.
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If you vote by proxy, your shares will be voted at the Annual Meeting in the manner you
indicate. If you sign your proxy card, but do not specify how you want your shares to be voted, they will be voted as the Board recommends.
How do I attend the Annual Meeting?
Admission to the Annual Meeting is limited to JCPenney stockholders or their proxy holders. Each stockholder will be asked to present proof of stock
ownership and a valid, government-issued photo identification, such as a drivers license, before being admitted to the Annual Meeting. Proof of stock ownership may consist of the top portion of the proxy card or if shares are held in the name
of a broker, bank or other nominee, an account statement or letter from the nominee indicating that the individual beneficially owned shares of JCPenney common stock on March 25, 2019, the record date for the Annual Meeting.
Can I change my vote after I execute my proxy?
You can revoke a proxy at any time prior to its exercise at the Annual Meeting. You can send in a new proxy card with a later date if you received your
proxy materials by mail, or cast a new vote by telephone or Internet, or send a written notice of revocation to JCPenneys Corporate Secretary at the address on the first page of this Proxy Statement. If you attend the Annual Meeting and want
to vote in person, you can request that any previously submitted proxy not be used.
How do I vote my shares of JCPenney common stock in
the 401(k) Savings Plans?
If you are a participant in the J. C. Penney Corporation, Inc. Savings, Profit-Sharing and Stock Ownership
Plan (the Traditional Plan) or the J. C. Penney Corporation, Inc. Safe Harbor 401(k) Savings Plan (the Safe Harbor Plan), you will receive a separate voting instruction card for the shares allocated to your account in the Traditional Plan or the
Safe Harbor Plan. This voting instruction card will allow you to instruct State Street Bank and Trust Company, as trustee for the Traditional Plan and the Safe Harbor Plan, how to vote your shares. If you do not vote your shares in the Traditional
Plan or the Safe Harbor Plan, State Street Bank and Trust Company will vote them in the same proportion as those shares for which it has received voting instructions.
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2019 Proxy Statement
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About the Annual Meeting
Will my vote be kept confidential?
Yes. JCPenneys policy is that all proxy or voting instruction cards, ballots and vote tabulations which identify the vote of an individual
stockholder are to be kept secret. Your vote will only be disclosed:
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to allow the independent election inspectors to certify the results of the vote;
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if JCPenney is legally required to disclose your vote or is defending or asserting claims in a lawsuit;
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if there is a proxy contest involving JCPenney; or
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if you make a written comment on your proxy or voting instruction card or ballot.
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Who pays for this proxy solicitation?
JCPenney does. In addition to soliciting proxies by mail, JCPenney may solicit proxies by telephone, personal contact and electronic means. No director,
officer or employee of JCPenney will be specially compensated for these activities. JCPenney has hired Morrow Sodali LLC, a proxy solicitation firm, to assist in soliciting proxies for an estimated fee of $10,000 plus reimbursement for reasonable
expenses.
JCPenney will also reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of
JCPenney common stock.
Could other matters be decided at the Annual Meeting?
We do not know of any other matters that will be considered at the Annual Meeting. If any matter other than those described in this Proxy Statement
arises at the Annual Meeting, the proxies will be voted at the discretion of the proxy holder.
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2019 Proxy Statement
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Other Business Matters
OTHER BUSINESS MATTERS
Stockholder Proxy Proposal Inclusion Deadline
Under the rules of the SEC, the date by which proposals of stockholders intended to be presented at the 2020 Annual Meeting of Stockholders (other than
proxy access director nominations) must be received by the Company for inclusion in its proxy statement and form of proxy relating to that meeting is December 3, 2019.
Deadline for Proxy Access Director Nominations
Under the Companys Bylaws, notice of a proxy access director nomination for the 2020 Annual Meeting of Stockholders must be received by the Company
for inclusion in its proxy statement and form of proxy relating to that meeting no earlier than November 10, 2019 and no later than December 10, 2019.
Stockholder Business Annual Meeting
Stockholders who wish to introduce an
item of business at an annual meeting of stockholders may do so in accordance with JCPenneys Bylaw procedures. These procedures provide, generally, that stockholders desiring to bring a proper subject of business before the meeting, must do so
by a written notice timely received (not later than 90 days in advance of such meeting) by the Corporate Secretary of the Company. Any notice of intent to introduce an item of business at an annual meeting of stockholders must contain the name
and address of the stockholder, a representation that the stockholder is a holder of record of JCPenney stock entitled to vote at the meeting and that the stockholder intends to appear in person or by proxy at the meeting. Notice of an item of
business shall include a brief description of the proposed business and the reasons for conducting such business at the meeting as well as any material interest of the stockholder in such business.
The chair of the annual meeting may refuse to allow the transaction of any business not presented in compliance with the foregoing procedures.
Timing
It is currently
expected that the 2020 Annual Meeting of Stockholders will be held on or about May 22, 2020, in which event any advance notice of nominations for directors and items of business (other than proposals intended to be included in the proxy
statement and form of proxy, including proxy access director nominations) must be given by stockholders and received by the Secretary of the Company by February 21, 2020. The Company does, however, retain the right to change the date of
the 2020 Annual Meeting of Stockholders as it, in its sole discretion, may determine. Notice of any change will be furnished to stockholders prior to the expiration of the
90-day
advance notice period referred
to above. Copies of the Companys Bylaws are available on our website at www.jcpenney.com or you may request a copy from the Corporate Secretary of the Company.
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Salil R. Virkar, Secretary
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2019 Proxy Statement
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81
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Annex A - 2019 Long-Term Incentive Plan
ANNEX A
2019 J. C. PENNEY COMPANY, INC.
LONG-TERM
INCENTIVE PLAN
ARTICLE I
PURPOSE
OF PLAN
The purpose of this 2019 Long-Term Incentive Plan is to provide long-term incentives to associates and
non-associate
directors of J. C. Penney Company, Inc., its subsidiaries and affiliates, or any unit thereof, in order to align the interests of such associates and
non-associate
directors with those of the Companys stockholders, to motivate associates to achieve business objectives promoting the long-term growth, profitability and success of the Company, and to
assist the Company in retaining and attracting the best associates and
non-associate
directors in retail.
ARTICLE II
DEFINITIONS
Associate means any person who is employed, within the meaning of section 3401 of the Code, by the Company or a Subsidiary.
Award means an Equity Award or a Cash Incentive Award.
Award Notice means the notice of an Award to a Participant in such form and delivered by such means as the Committee or its designee may
establish from time to time that sets out the terms of the grant of the Award, including any amendment thereto. Each Award Notice will be subject to the terms of the Plan.
Beneficiary means the beneficiary designated by a Participant, in a manner authorized by the Committee or its designee, to exercise the
rights of the Participant in the event of the Participants death. In the absence of an effective designation by a Participant, the Beneficiary will be the Participants estate.
Board means the Board of Directors of the Company.
Cash Incentive Awards shall mean annual or long-term Performance Awards issued pursuant to the requirements of Article VIII that are
expressed in U. S. currency.
Cause means (i) cause, or summary dismissal as the case may be, as that term may
be defined in any written agreement between a Participant and the Company or a Subsidiary that may at any time be in effect, (ii) in the absence of a definition in a then-effective agreement between a Participant and the Company or a Subsidiary
(as determined by the Committee), cause as that term may be defined in any Award Notice under the Plan, or (iii) in the absence of a definition in a then-effective agreement between a Participant and the Company or a Subsidiary (as
determined by the Committee), or any Award Notice under the Plan, termination of a Participants employment with the Company or a Subsidiary on the occurrence of one or more of the following events:
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(a)
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The Participants failure to substantially perform such Participants duties with the Company or any Subsidiary
as determined by the Board or the Company;
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2019 Proxy Statement
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A-1
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Annex A - 2019 Long-Term Incentive Plan
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(b)
|
The Participants willful failure or refusal to perform specific directives of the Board, the Company, or any
Subsidiary, which directives are consistent with the scope and nature of the Participants duties and responsibilities;
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(c)
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The Participants conviction of a felony; or
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(d)
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A breach of the Participants fiduciary duty to the Company or any Subsidiary or any act or omission of the
Participant that (A) constitutes a violation of the Companys Statement of Business ethics, (B) results in the assessment of a criminal penalty against the Company, (C) is otherwise in violation of any federal, state, local or
foreign law or regulation (other than traffic violations and other similar misdemeanors), (D) adversely affects or could reasonably be expected to adversely affect the business reputation of the Company, or (E) otherwise constitutes willful
misconduct, gross negligence, or any act of dishonesty or disloyalty.
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Code means the Internal Revenue Code of 1986,
as amended, and rules and regulations thereunder, as now in force or as hereafter amended.
Committee means a committee appointed by the
Board in accordance with the
by-laws
of the Company and the Charter for the Human Resources and Compensation Committee of the Board, or any committee of the Board that replaces the Human Resources and
Compensation Committee. The Committee will consist of at least three Directors who (i) satisfy any applicable standards of independence under the federal securities and tax laws and the listing standards of the New York Stock Exchange
(NYSE) or any other national securities exchange on which the Common Stock is listed as in effect from time, and (ii) qualify as
non-employee
directors within the meaning of
Rule 16b-3.
If at any time no Committee will be in office, then the functions of the Committee specified in the Plan will be exercised by the members of the Board that otherwise satisfy the requirements to be a
member of the Committee.
Common Stock means common stock, $0.50 par value per share, of the Company, or any security issued in
substitution, exchange or in lieu therefore.
Company means J. C. Penney Company, Inc., a Delaware corporation, and any successor
thereof.
Corporation means J. C. Penney Corporation, Inc., a Delaware corporation, and any successor thereof.
Date of Grant means the date of grant specified in the Award Notice with respect to an Equity Award, which will be a date not
prior to the date on which the Committee takes all actions necessary to grant the Equity Award.
Director means a member of the Board.
Disability means for any Award subject to section 409A of the Code, Disability as defined in section 409A(a)(2)(C) of the
Code. For any Award not subject to section 409A of the Code, Disability means disability as defined in any then effective long-term disability plan maintained by the Company that covers such person, or if such a plan does not exist at
any relevant time, Disability means the permanent and total disability of a person within the meaning of section 22(e)(3) of the Code. For purposes of determining the time during which an Incentive Stock Option may be exercised under the
terms of an Award Notice, Disability means the permanent and total disability of a person within the meaning of section 22(e)(3) of the Code. Section 22(e)(3) of the Code provides that an individual is totally and permanently
disabled if he is unable to engage in any substantial gainful activity by reason
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of any medically determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
Employment means
that the provision of services to the Company or a Subsidiary in any capacity as an Associate is not interrupted or terminated. Except as otherwise provided in a particular Award Notice, service will not be considered interrupted or terminated for
this purpose in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Subsidiary, or any successor, in any capacity as Associate, or (iii) any change in status as long as the individual remains in the
service of the Company or any Subsidiary in any capacity as Associate. An approved leave of absence will include sick leave, military leave, or any other authorized personal leave. For purposes of each Incentive Stock Option, if any leave exceeds
ninety (90) days, and
re-employment
upon expiration of such leave is not guaranteed by statute or contract, then the Incentive Stock Option will be treated as a
Non-Qualified
Stock Option on the day that is three (3) months and one (1) day following the expiration of such ninety (90) day period.
Equity Award means a Stock Option, Stock Appreciation Right, or Stock Award.
Exchange Act means the Securities Exchange Act of 1934, as amended and in effect from time to time, and the regulations promulgated
thereunder. Reference in the Plan to any section of the Exchange Act will be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section.
Fair Market Value means, as of any date, the closing price on such date as reported in the composite transaction table covering transactions
of NYSE listed securities, or if such Exchange is closed, 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, or such other
amount as the Committee may ascertain reasonably to represent such fair market value; provided, however, that such determination will be in accordance with the requirements of Treasury Regulation section
1.409A-1(b)(5)(iv),
or its successor.
Incentive Stock Option means a Stock Option that
satisfies the requirements of section 422 of the Code.
Non-Associate
Director means a member of
the Board who is not an Associate.
Non-Qualified
Stock Option means a Stock Option that is not
intended to qualify as an Incentive Stock Option (including, without limitation, any Stock Option to purchase Common Stock originally designated as or intended to qualify as an Incentive Stock Option but which does not (for whatever reason) qualify
as an Incentive Stock Option).
Participant means an Associate or a Director who has been granted and holds an Award.
Performance Award means an Award granted under this Plan of Common Stock, rights based upon, payable in or otherwise related to shares of
Common Stock (including Restricted Stock), Restricted Stock Units or cash, as the Committee may determine, at the end of a specified Performance Period based on the attainment of one or more Performance Goals.
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Performance Measure means any of the following business criteria that
may be used by the Company in establishing a Performance Goal:
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(b)
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Total Stockholder Return;
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(g)
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Gross Profit Return on Investment;
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(m)
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Gross Margin Return on Investment (or Inventory);
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(n)
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Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA);
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(o)
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Earnings Before Interest and Taxes (EBIT); or
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Performance Goal means any goal established by the Committee or its designee that must be satisfied before a Performance Award will be
payable, in whole or in part, to a recipient of the Award.
Performance Period means with respect to a Performance Award the period
established by the Committee or its designee at the time the Award is granted, or at any time thereafter, during which the performance of the Company, a Subsidiary, or any Associate Participant is measured for the purpose of determining whether and
to what extent the Performance Awards Performance Goal has been achieved.
Plan means this 2019 Long-Term Incentive Plan as it may
be amended from time to time.
Prior Plan means any equity compensation or long-term incentive compensation plan or program previously
established and maintained by the Company.
Restricted Stock means any shares of Common Stock granted as an Equity Award that is subject
to restrictions or a substantial risk of forfeiture.
Restricted Stock Unit means an Equity Award that represents an unsecured promise
by the Company to issue a share of Common Stock, or, at the discretion of the Committee or is designee, cash equal to the value of a share of Common Stock, subject to restrictions or a substantial risk of forfeiture.
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Retirement means, unless otherwise provided in a particular Award
Notice or specified in Determinations adopted by the Committee, an Associates termination of Employment with the Company or any of its Subsidiaries other than for Cause on or after the date the employee attains age 55 with at least 15 years of
service, or on or after the employee attains age 60 with at least 10 years of service.
Rule
16b-3
means Rule
16b-3
of the Exchange Act or any successor rule promulgated by the SEC under the Exchange Act.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended and in effect from time to time, and the regulations promulgated thereunder.
Reference in the Plan to any section of the Securities Act will be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section.
Separation Pay Plan means the J. C. Penney Corporation, Inc. Separation Pay Plan, as such plan may be amended from time to time, and any
successor plan or program that replaces the plan.
Stock Appreciation Right means a right to receive, on exercise of that right, an
amount, in shares of Common Stock, or, at the discretion of the Committee or is designee, cash equal to the value of such shares of Common Stock, equal to the difference between the Fair Market Value of a share of Common Stock as of the date of
exercise of the Stock Appreciation Right and the Fair Market Value of a share of Common Stock as determined under Section 6.3(a).
Stock
Award means an award of shares of Common Stock, Restricted Stock, or a Restricted Stock Unit.
Stock Option means a right to
purchase from the Company at any time not more than ten years following the Date of Grant, one share of Common Stock for an exercise price not less than the Fair Market Value of a share of Common Stock on the Date of Grant, subject to such terms and
conditions established under Section 6.1 hereof. Stock Options may either be Incentive Stock Options or
Non-Qualified
Stock Options.
Subsidiary means any corporation or other entity (other than the Company) in an unbroken chain of corporations or entities beginning with
the Company, in which each of the corporations or entities other than the last corporation or other entity in the unbroken chain owns stock or other voting securities constituting fifty percent or more of the total combined voting power in one of
the other corporations or entities in such chain as determined at the point in time when reference is made to such Subsidiary in this Plan.
Trading Date means a day on which the Companys Common Stock trades on the NYSE.
ARTICLE III
SHARES SUBJECT TO THE PLAN
3.1
Shares Available for Awards
. Subject to the provisions of this Article 3.1, and adjustment as provided in Section 12.7,
the maximum number of shares of Common Stock upon which options to purchase shares of Common Stock (Stock Option), stock appreciation rights (SARs) or awards of
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Common Stock or share units (Stock Awards), herein collectively called Equity
Awards) may be issued under the Plan is: 28,650,000 Stock Options, and 19,228,188 Stock Awards. These amounts shall be reduced less one (1) share of Common Stock for every one (1) share that was subject to a Stock Option or SAR
granted after February 2, 2019 and prior to the effective date of the Plan under any Prior Plan, and 1.63 shares of Common Stock for every one (1) share that was subject to an award other than a Stock Option or SAR granted after
February 2, 2019 and prior to the effective date of the Plan under any Prior Plan. The aggregate number of shares of Common Stock available for Awards under the Plan will be reduced by one (1) share of Common Stock for each share subject
to a Stock Option or a Stock Appreciation Right and 1.49 shares of Common Stock for each share subject to a Stock Award. The shares of Common Stock available for delivery under this Plan may consist of Common Stock held in treasury, authorized but
unissued shares of Common Stock, or shares of Common Stock purchased or held by the Company or a Subsidiary for purposes of the Plan, or shares available from the Prior Plan, or any combination thereof. After the effective date of the Plan, no other
awards may be granted under any Prior Plan.
3.2
Shares Again Available
. If (i) any shares of Common Stock subject to an Award
are forfeited or cancelled, or any such Award terminates, lapses, or expires, is settled without full delivery of the shares of Common Stock underlying the Award, or (ii) after February 2, 2019, any shares of Common Stock subject to an
award under any Prior Plan are forfeited or cancelled, or any such award terminates, lapses, or expires, is settled without full delivery of the shares of Common Stock underlying the award, then in each such case the shares of Common Stock subject
to such Award or award under any Prior Plan will, to the extent of any such forfeiture, termination, lapse, cancellation, or expiration be added to the shares available for issuance under the Plan. In the event that withholding tax liabilities
arising from an Award other than an Option or Stock Appreciation Right or, after February 2, 2019,
an
award other than an option or stock appreciation right under any Prior Plan are satisfied by the tendering of shares (either
actually or by attestation) or by the withholding of shares by the Company, the shares so tendered or withheld shall be added to the shares available for Awards under the Plan. Each share of Common Stock that again becomes available for an Award as
provided in this Section 3.2 will increase the total number of shares of Common Stock available for Awards under Section 3.1 by (i) 1 share of Common Stock if that share of Common Stock was subject to a Stock Option or Stock Appreciation
Right under the Plan or a stock option or stock appreciation right under a Prior Plan, and (ii) 1.49 shares of Common Stock if that share of Common Stock was subject to a Stock Award or a stock award under a Prior Plan. Notwithstanding the
foregoing, shares of Common Stock (a) tendered by a Participant or withheld by the Company in payment of the exercise price of an Option, or after February 2, 2019, an option under any Prior Plan, (b) not issued on the net settlement
or net exercise of Stock Appreciation Rights, or after February 2, 2019, stock appreciation rights under any Prior Plan, (c) delivered by a Participant or withheld by the Company to pay withholding taxes related to Options or Stock
Appreciation Rights or, after February 2, 2019, options or stock appreciation rights under a Prior Plan, or (d) reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Options or, after
February 2, 2019,
options under any Prior Plan, will not again become available for issuance and will not be added to the shares authorized for grant under the Plan. For the avoidance of doubt, Option reloading is not permitted under the
Plan.
Shares of Common stock issued in connection with Awards that are assumed, converted or substituted pursuant to an event described in
Section 12.8 or assumed or issued in substitution of awards to employees of companies acquired by the Company will not reduce the maximum limitation specified in Section 3.1 (nor shall shares subject to a substitute award be added to the
shares available for Awards under the Plan as provided above). Further, where the number of shares of Common stock subject to an Award is variable on the Date of Grant, the number of shares to be
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counted against the shares authorized under the Plan prior to earning the Award will be the
maximum number of shares that could be received under the Award.
3.3
Individual Award Limitations on Equity Awards
. Subject to the
provisions of Sections 12.7 and 12.8, the following individual Award limits will apply:
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(a)
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During the term of the Plan, the maximum number of shares of Common Stock available for grant as Incentive Stock Options
under the Plan will not exceed the maximum number of shares of Common Stock available for Awards under the Plan as provided in Section 3.1.
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(b)
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During any fiscal year no Participant will be granted Stock Option and Stock Appreciation Right Awards for collectively
more than 4,000,000 shares of Common Stock, and Performance Awards with a payout, at maximum, of more than 3,000,000 shares of Common Stock.
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ARTICLE IV
ADMINISTRATION
The Plan will be administered by, or under the direction of the Committee. The Committee will administer the Plan so as to comply at all times with the
Exchange Act and the Code, as applicable, and will otherwise have plenary authority to interpret the Plan and to make all determinations specified in or permitted by the Plan or deemed necessary or desirable for its administration or for the conduct
of the Committees business (Determinations). All interpretations and Determinations of the Committee may be made on an individual or group basis, and will be final, conclusive, and binding on all interested parties. The Committee
may delegate, to the fullest extent permitted by law, its responsibilities under the Plan to persons other than its members, subject to such terms and conditions as it may determine, other than the making of grants and awards under the Plan to
individuals subject to Section 16 of the Exchange Act. With respect to Participants subject to Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable conditions of Rule
16b-3.
To the extent any provision of the Plan or any action by the Committee or its delegate fails to so comply, such provision or action will, without further action by any person, be deemed to be automatically
amended to the extent necessary to effect compliance with Rule
16b-3,
provided; however, that if such provision or action cannot be amended to effect such compliance, such provision or action will be deemed
null and void, to the extent permitted by law and deemed advisable by the relevant authority. Each Award to a Participant subject to Section 16 of the Exchange Act under this Plan will be deemed issued subject to the foregoing qualification.
Further, except as otherwise specifically provided in an Award Notice or Determinations, Awards under this Plan are generally intended to be exempt from Section 409A of the Code and the Plan will be interpreted accordingly.
ARTICLE V
ELIGIBILITY
Under the Plan: (i) Awards may be made to such Associates, including officers and Associate Directors of the Company, as the Committee may
determine; and (ii) Equity Awards will be made pursuant to Article X below to individuals who serve as
Non-Associate
Directors of the Company (including any former Associate Participant). In determining
the Associate Participants who are to receive Awards and the number of shares covered by any Equity Award, the Committee may take into account the nature of the services rendered by the Associate Participants, their contributions to the
Companys success, their position levels and salaries, and such other factors as the Committee, in its discretion, may consider relevant in light of the purposes of the Plan.
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ARTICLE VI
STOCK OPTIONS AND
STOCK APPRECIATION RIGHTS
6.1
Terms and Conditions of Stock Options
. The Committee may grant Stock Options alone or in addition to other Awards granted
under this Plan to any Associate Participant. The Committee will determine (i) whether each Stock Option will be granted as an Incentive Stock Option or a
Non-Qualified
Stock Option, and (ii) the
provisions, terms and conditions of each Stock Option including, but not limited to, the vesting schedule, the number of shares of Common Stock subject to the Stock Option, the exercise price of the Stock Option, the period during which the Stock
Option may be exercised, repurchase provisions, forfeiture provisions, methods for payment of the exercise price of the Stock Option, acceleration of vesting, if any, in connection with certain termination events, and all other terms and conditions
of the Stock Option, subject to the following:
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(a)
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Form of Stock Option Grant
. Each Stock Option granted under the Plan will be evidenced by an Award Notice (which
need not be the same for each recipient of a Stock Option Award) that is not inconsistent with the Plan, including any provisions that may be necessary to assure that any Stock Option that is intended to be an Incentive Stock Option will comply with
section 422 of the Code. The Award Notice evidencing the Stock Option grant will be delivered to the recipient with a copy of the Plan, and other relevant Stock Option documents, within a reasonable time after the Date of Grant.
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(b)
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Exercise Period
. Unless a shorter period is otherwise provided in an Award Notice, each Stock Option will expire
and all rights to purchase shares of Common Stock thereunder will cease ten years after the Date of Grant.
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(c)
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Exercise Price and Terms
. The exercise price of a Stock Option will be not less than 100% of the Fair Market Value
of a share of the Common Stock on the Date of Grant of the Stock Option and during its term the Stock Option will be exercisable only on the event or events determined by the Committee and set forth in the Award Notice.
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(d)
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Limitations on Incentive Stock Options
. The aggregate Fair Market Value (determined as of the Date of Grant of a
Stock Option) of Common Stock that any Associate is first eligible to purchase during any calendar year by exercise of Incentive Stock Options granted under the Plan and by exercise of incentive stock options (within the meaning of section 422 of
the Code) granted under any other incentive stock option plan of the Company or a Subsidiary will not exceed $100,000. If the Fair Market Value of stock with respect to which all incentive stock options described in the preceding sentence held by
any one Participant are exercisable for the first time by such Participant during any calendar year exceeds $100,000, the Stock Options that are intended to be Incentive Stock Options on the Date of Grant thereof for the first $100,000 worth of
shares of Common Stock to become exercisable in such year will be considered to constitute incentive stock options within the meaning of section 422 of the Code and the Stock Options that are intended to be Incentive Stock Options on the Date
of Grant thereof for the shares of Common Stock in the amount in excess of $100,000 that become exercisable in that calendar year will be treated as
Non-Qualified
Stock Options. If an Incentive Stock Option is
granted to an Associate that owns more than 10% of the total combined voting power of all classes of stock of the Company (i) the exercise price of the Incentive Stock Option will not be less than 110% of the Fair Market Value of a share of the
Common Stock on the Date of Grant of the Incentive Stock Option, and (ii) the Incentive Stock Option will expire and all rights to purchase shares of Common Stock thereunder will cease at the time period specified in the grant or award
agreement after the Date of Grant. If the Code or the Treasury regulations promulgated thereunder are amended after the effective date of
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the Plan to provide for a different rules and/or limits governing Incentive Stock Options than those described in this Section 6.1(d), such different rules and/or limit will be incorporated herein and will apply to
any Incentive Stock Options granted after the effective date of such amendment.
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(e)
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Dividend and Dividend Equivalents.
No grant of a Stock Option may provide for dividends, dividend equivalents, or
other similar distributions to be paid in connection with the exercise of the Stock Option.
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(f)
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Extension of the Term of a Stock Option
. Notwithstanding any other provision of this Plan to the contrary, if, by
its terms, a Stock Option, other than an Incentive Stock Option, would expire when trading in shares of Common Stock is otherwise prohibited by law or by the Companys insider trading policy, as such may be amended from time to time, the term
of the Stock Option will be automatically extended until the close of trading on the 30
th
Trading Date following the expiration of any such prohibition.
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Vesting Period
. The Committee will determine the types of Stock Options made and any terms and conditions relating
to the Stock Options as it considers appropriate, including any vesting conditions necessary to comply with the laws of the State of Delaware. Notwithstanding the foregoing, no portion of a Stock Option may be scheduled to vest in less than one year
from the date of grant, provided; however, that up to five percent (5%) of the shares available for award may be granted as Stock Options that vest in whole in less than one year in connection with limited situations such as new hires, Retirements,
and similar situations.
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6.2
Exercise of Stock Options
.
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(a)
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Notice
. Stock Options may be exercised only by delivery to the Company, or its designee, of notice, in such form
as is permitted by the Committee or its designee, stating the number of shares of Common Stock being purchased, the method of payment, and such other matters as may be considered appropriate by the Company in connection with the issuance of shares
of Common Stock upon exercise of the Stock Option, together with payment in full of the exercise price for the number of shares of Common Stock being purchased. The effective date of exercise of a Stock Option (which in no
event, may be beyond the expiration date of the Stock Option) will be, unless otherwise provided in Determinations adopted by the Committee:
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(i)
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in connection with a sell order for the underlying stock that is a
Sell-to-Cover
Order, a
Same-Day-Sale
Exercise Order, a Limit Order, a Good-till Cancelled
Order or the like, the date on which such sell order is actually executed.
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(ii)
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in connection with an Exercise and Hold (cash exercise) transaction, 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, in the manner determined by the Chief Executive
Officer or the Chief Talent Officer, or their respective successors by title or office.
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Provided, however, that if the date of exercise, as otherwise determined pursuant to this Section 6.2(a), including
any Determinations adopted by the Committee, is not a Trading Date, the date of exercise will be deemed to be the next Trading Date. Further, if an exercise instruction is received after the close of the NYSE on a particular day, it will be deemed
received as of the opening of the next Trading Date. If a Stock Option is granted
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in tandem with any other Equity Award, there will be surrendered and cancelled from the related Equity Award at the time of exercise of the Stock Option, in lieu of exercise pursuant to the related Equity Award, that
number of shares of Common Stock as equals the number of shares of Common Stock as to which the tandem Stock Option will have been exercised.
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(b)
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Early Exercise
. An Award Notice may, but need not, include a provision that permits the Participant to elect at
any time while an Associate, to exercise all or any part of the Stock Option before full vesting of the Stock Option, subject to the provisions of Section 6.1(g). Any unvested shares of Common Stock received pursuant to such exercise may be
subject to a repurchase right in favor of the Company or a Subsidiary or to any other restriction the Committee determines to be appropriate.
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Payment
. Payment equal to the aggregate exercise price for the shares subject to a Stock Option and for which
notice of exercise has been provided by an Associate Participant, including an Associate Participant that has terminated Employment, to the Company, along with any applicable withholding taxes as described in Section 12.11, will be tendered in
full, with the notice of exercise, in cash (by check) or, unless otherwise prohibited in a specific Award Notice or by law or applicable regulation, by:
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(i)
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the actual or constructive transfer to the Company of nonforfeitable,
non-restricted
shares of Common Stock that have been owned by the Participant for more than six months, or such shorter time as may be permitted by applicable law, prior to the date of exercise;
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using the net proceeds (after paying all selling fees) from the sale of some (the
Sell-to-Cover
Exercise Method) or all (the
Same-Day-Sale
Exercise Method), of the shares of Common Stock
received on the exercise of the Stock Option, or from any arrangement pursuant to which an Associate Participant, including those Associate Participants who have terminated Employment, irrevocably instructs a broker-dealer to sell a sufficient
portion of such shares to pay the exercise price and any withholding obligation, as described in Section 12.11, and related fees thereon and deliver the sale proceeds directly to the Company. The value of the shares of Common Stock used in
payment of the exercise price under the
Sell-to-Cover
Exercise Method or the
Same-Day-Sale
Exercise Method will be the price at which the Common Stock was sold by the broker-dealer functioning under the
Sell-to-Cover
Exercise Method or the
Same-Day-Sale
Exercise Method on the effective date of exercise as described in
Section 6.2(a). The amount of the proceeds to be delivered to the Company by the broker-dealer functioning under the
Sell-to-Cover
Exercise Method or the
Same-Day-Sale
Exercise Method will be credited to the Common Stock account of the Company as consideration for the shares of Common Stock to be issued in accordance with the
Sell-to-Cover
Exercise or the
Same-Day-Sale
Exercise Method;
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by surrender for cancellation of shares of Common Stock at the Fair Market Value per share at the time of exercise under
a net exercise arrangement; provided, however, that use of a net exercise arrangement cannot result in the Stock Option being settled either in whole or in part for cash payable to the Associate Participant;
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(iv)
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in accordance with such other procedures or in such other forms as the Committee will from time to time determine; or
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(v)
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any combination of the above.
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On payment of all amounts due from the Participant, the Company will cause certificates for the Common Stock then being purchased to be delivered as
directed by the Associate
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Participant (or the person exercising the Associate Participants Stock
Option in the event of his death) at its principal business office promptly after the Exercise Date. If the Associate Participant has exercised an Incentive Stock Option, the Company may at its option retain physical possession of the certificate
evidencing the shares acquired upon exercise until the expiration of the holding periods described in section 422(a)(1) of the Code. The obligation of the Company to deliver shares of Common Stock will, however, be subject to the condition that
if at any time the Committee will determine in its discretion that the listing, registration or qualification of the Stock Option or the Common Stock upon any securities exchange or inter-dealer quotation system or under any state or federal law, or
the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the Stock Option or the issuance or purchase of shares of Common Stock thereunder, the Stock Option may not be exercised
in whole or in part unless such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Committee.
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Acquisitions and Other Transactions
. The Committee may, from time to time, assume outstanding options or stock
appreciation rights granted by another entity, whether in connection with an acquisition of such other entity or otherwise, by either (i) granting a Stock Option or Stock Appreciation Right, as applicable, under the Plan in replacement of or in
substitution for the option or stock appreciation right assumed by the Company, or (ii) treating the assumed option or stock appreciation right as if it had been granted under the Plan if the terms of such assumed option could be applied to a
Stock Option or Stock Appreciation Right, as applicable, granted under the Plan. Such assumption will be permissible if the holder of the assumed option would have been eligible to be granted a Stock Option or Stock Appreciation right, as
applicable, hereunder if the other entity had applied the rules of this Plan to such grant. The Committee also may grant Stock Options or Stock Appreciation Rights under the Plan in settlement of or substitution for outstanding options or stock
appreciation rights, or obligations to grant future options in connection with the Companys or a Subsidiarys acquiring another entity, an interest in another entity or an additional interest in a Subsidiary whether by merger, stock
purchase, asset purchase or other form of transaction. Notwithstanding the foregoing provisions of Sections 6.1 or 6.4(c), in the case of a Stock Option or Stock Appreciation Right issued or assumed pursuant to this Section 6.1(e), the exercise
price for the Stock Option or Stock Appreciation Right will be determined in accordance with the principles of Sections 424(a) and 409A of the Code, and the Treasury regulations promulgated thereunder.
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Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares
available under a
pre-existing
plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such
pre-existing
plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to
the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares authorized for grant under the Plan (and shares subject to such Awards shall not be added to
the shares available for Awards under the Plan); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the
pre-existing
plan, absent the acquisition or combination, and shall only be made to individuals who were not Associates or Directors prior to such acquisition or combination.
6.4
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Terms and Conditions of Stock Appreciation Rights
. The Committee may grant Stock Appreciation Rights alone or in
tandem with other Awards granted under this Plan to any
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Associate. The Committee will determine the provisions, terms and conditions of each Stock Appreciation Right including, but not limited to, the vesting schedule, the number of shares of Common Stock subject to the
Stock Appreciation Right, the exercise price of the Stock Appreciation Right, the period during which the Stock Appreciation Right may be exercised, repurchase provisions, forfeiture provisions, acceleration of vesting, if any, in connection with
certain termination events, and all other terms and conditions of the Stock Appreciation Right, subject to the following:
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(a)
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Form of Stock Appreciation Right
. Each Stock Appreciation Right granted under the Plan will be evidenced by an
Award Notice (which need not be the same for each recipient of a Stock Appreciation Right) that is not inconsistent with the Plan. The award Notice evidencing the Stock Appreciation Right grant will be delivered to the recipient with a copy of the
Plan, and other relevant Stock Appreciation Right documents, within a reasonable time after the Date of Grant.
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(b)
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Exercise Period
. Unless a shorter period is otherwise provided in an Award Notice, each Stock Appreciation Right
will expire and all rights thereunder will cease ten years after the Date of Grant.
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(c)
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Exercise Price and Terms
. The exercise price of a Stock Appreciation Right will be not less than 100% of the Fair
Market Value of a share of the Common Stock on the Date of Grant of the Stock Appreciation Right and during its term the Stock Appreciation Right will be exercisable only on the events determined by the Committee and set forth in the Award Notice.
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(d)
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Dividend and Dividend Equivalents.
No grant of a Stock Appreciation Right may provide for dividends, dividend
equivalents, or other similar distributions to be paid in connection with the exercise of the Stock Appreciation Right.
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(e)
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Exercise.
The grant of the Stock Appreciation Right will provide that the holder will be paid for the value of the
Stock Appreciation Right in shares of Common Stock or, at the discretion of the Committee or is designee, cash. In the event of the exercise of a Stock Appreciation Right, the holder of the Stock Appreciation Right will receive that number of shares
of Common Stock, or, at the discretion of the Committee or is designee, cash equal to the value of such shares of Common Stock having an aggregate Fair Market Value on the date of exercise equal to the value obtained by multiplying (i) either
(A) in the case of a Stock Appreciation Right issued in tandem with a Stock Option, the difference between the Fair Market Value of a share of Common Stock on the date of exercise over the exercise price per share of the related Stock Option, or
(B) in the case of a stand-alone Stock Appreciation Right, the difference between the Fair Market Value of a share of Common Stock on the date of exercise over the Fair Market Value of a share of Common Stock on the Date of Grant of the Stock
Appreciation Right by (ii) the number of shares of Common Stock with respect to which the Stock Appreciation Right is exercised. Notwithstanding the foregoing, the Committee, in its sole discretion, may place a ceiling on the amount payable
upon exercise of a Stock Appreciation Right, but any such limitation will be specified at the time that the Stock Appreciation Right is granted and stated in the Award Notice.
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(f)
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Tandem Stock Appreciation Rights.
A Stock Appreciation Right granted in tandem with an Incentive Stock Option
(i) may be exercised at, and only at, the times and to the extent the related Incentive Stock Option is exercisable, (ii) will expire upon the termination or expiration of the related Incentive Stock Option, (iii) may not result in a
Participant realizing more than 100% of the difference between the exercise price of the related Incentive Stock Option and the Fair Market Value of the shares of Common Stock subject to the related Incentive Stock Option at the time the Stock
Appreciation Right is exercised, and (iv) may be exercised at,
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and only at, such times as the Fair Market Value of the shares of Common Stock subject to the related Incentive Stock Option exceeds the exercise price of the related Incentive Stock Option. A Stock Appreciation Right
granted in tandem with a
Non-Qualified
Stock Option will be exercisable as provided by the Committee and will have such other terms and conditions as the Committee may determine. A Stock Appreciation Right may
be transferred at, and only at, the times and to the extent the related Stock Option is transferable. If a Stock Appreciation Right is granted in tandem with any other Equity Award, there will be surrendered and cancelled from the related Equity
Award at the time of exercise of the Stock Appreciation Right, in lieu of exercise pursuant to the related Equity Award, that number of shares of Common Stock as will equal the number of shares of Common Stock as to which the tandem Stock
Appreciation Right will have been exercised.
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(g)
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Certain Limitations on
Non-Tandem
Stock Appreciation Rights
. A stand-alone
Stock Appreciation Right will be exercisable as provided by the Committee and will have such other terms and conditions as the Committee may determine at the time of grant and include in the Award Notice. A stand-alone Stock Appreciation Right is
subject to such acceleration of vesting rights as the Committee may determine and is subject to provisions of Section 6.5 of this Plan with respect to any exercise rights an Associate Participant may have following a termination of Employment.
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(h)
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Limited Stock Appreciation Rights
. The Committee may grant Stock Appreciation Rights which will become exercisable
only upon the occurrence of such events as the Committee may designate at the time of grant and include in the Award Notice. Such a Stock Appreciation Right may be issued either as a stand-alone Stock Appreciation Right or in tandem with a Stock
Option.
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(i)
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Method of Exercise
. Subject to the conditions of this Section 6.3 and such administrative regulations as the
Committee may from time to time adopt, a Stock Appreciation Right may be exercised only by delivery to the Company, or its designee, of notice, in such form as is permitted by the Committee or its designee, stating the number of shares of Common
Stock with respect to which the Stock Appreciation Right is to be exercised. Unless otherwise provided in Determinations adopted by the Committee, the effective date of exercise of a Stock Appreciation Right will be the date of receipt of the
written notice 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, in the manner determined by the Company or its designee. If the date of receipt
of written notice of exercise is not a Trading Date, the date of exercise will be deemed to be the next Trading Date. Further, if notice of exercise is received after the close of the NYSE on a particular day it will be deemed received as of the
opening of the next Trading Date.
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(j)
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Extension of the Term of a Stock Appreciation Right.
Notwithstanding any other provision of this Plan to the
contrary, if, by its terms, a Stock Appreciation Right would expire when trading in shares of Common Stock is otherwise prohibited by law or by the Companys insider trading policy, as such may be amended from time to time, the term of the
Stock Appreciation Right will be automatically extended until the close of trading on the 30
th
Trading Date following the expiration of any such prohibition.
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(k)
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Award Vesting Limitations
. The Committee will determine the types of Stock Appreciation Rights made and any terms
and conditions relating to the Stock Appreciation Rights as it considers appropriate, including any vesting conditions necessary to comply with the laws of the State of Delaware. Notwithstanding the foregoing, no portion of a Stock Appreciation
Right may be scheduled to vest in less than one year from the date of grant, provided; however,
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that up to five percent (5%) of the shares available for award may be granted as Stock Appreciation Rights that vest in whole in less than one year in connection with limited situations such as new hires, Retirements,
and similar situations.
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6.5
Exercise of a Stock Option or a Stock Appreciation Right Following Termination of
Employment
. Unless (i) otherwise modified pursuant to Determinations adopted by the Committee, or (ii) a more generous post-termination exercise period is otherwise provided with respect to a particular termination event listed in this
Section 6.5 (A) in any written agreement between an Associate Participant and the Company or a Subsidiary that may at any time be in effect, or (B) in the absence of an agreement between an Associate Participant and the Company or a
Subsidiary (as determined by the Committee, or its designee) that may at any time be in effect, in an Award Notice, a participant will have the right to exercise a Stock Option or a Stock Appreciation Right following a termination of Employment as
follows:
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(a)
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Termination of Employment with Cause
. If the Associate Participants Employment with the Company is
terminated for Cause, then, notwithstanding any other provision of this Section 6.4(a), all Stock Options or Stock Appreciation Rights granted to the Associate Participant, whether vested, exercisable or otherwise, will immediately expire,
terminate, or be forfeited and cancelled as of the effective date of the Associate Participants termination of Employment.
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(b)
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Voluntary Termination of Employment and Termination of Employment Without Cause
. If an Associate Participant
voluntarily terminates employment with the Company, or the Associate Participants Employment with the Company is terminated involuntarily without Cause, and the termination of the Associate Participants Employment would not otherwise
qualify as a Retirement, any vested but unexercised Stock Options or Stock Appreciation Rights will continue to be exercisable as set forth in the applicable Award Notice. Any Stock Options or Stock Appreciation Rights that are not vested or
exercisable on the effective date of the Associate Participants termination of Employment other than for Cause, will immediately expire, terminate, or be forfeited and cancelled as of the effective date of the Associate Participants
termination of Employment.
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Notwithstanding the foregoing, if an Associate Participants employment terminates due to an
involuntary termination of employment without cause and (i) the Associate Participant is a party to any form of executive termination pay agreement between the Associate and the Corporation that does not provide for any period following a
termination of employment in which the Associate Participant may exercise any vested but unexercised Stock Option, and (ii) the termination of the Associate Participants Employment would not otherwise qualify as a Retirement, or a
termination as a result of a unit closing, job restructuring, position elimination, reduction in force, or mutual consent as determined by the Committee, or its designee, and as defined in the Companys then existing and effective Separation
Pay Plan, any vested but unexercised Stock Options or Stock Appreciation Rights will continue to be exercisable as set forth in the applicable Award Notice.
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(c)
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Termination of Employment as a Result of Disability or Retirement
. If the Associate Participants Employment
with the Company is terminated as a result of the Associate Participants Disability or Retirement, any vested, but unexercised Stock Options or Stock Appreciation Rights will continue to be exercisable through the earlier of (i) five (5)
years following the effective date of such termination of the Associate Participants Employment, and (ii) the Awards original expiration or termination date. Any Stock Options or Stock Appreciation Rights that are not vested or
exercisable on the effective date of the Associate Participants termination of Employment as result of the Associate Participants Disability or
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Retirement will immediately expire, terminate, or be forfeited and cancelled as of the effective date of the Associate Participants termination of Employment.
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(d)
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Termination of Employment as a Result of Death
. If the Associate Participants Employment with the Company is
terminated as a result of the Associate Participants death, any vested, but unexercised Stock Options or Stock Appreciation Rights will continue to be exercisable by the Associate Participants Beneficiary through the earlier of
(i) five (5) years following the effective date of such termination of the Associate Participants Employment, and (ii) the Awards original expiration or termination date. Any Stock Options or Stock Appreciation Rights that are
not vested or exercisable on the effective date of the Associate Participants termination of Employment as result of the Associate Participants death will immediately expire, terminate, or be forfeited and cancelled as of the effective
date of the Associate Participants termination of Employment.
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(e)
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Termination of Employment as a Result of a Unit Closing, Job Restructuring, Job Elimination, Reduction in Force, or
Mutual Consent
. If the Associate Participants Employment with the Company is terminated (i) as a result of unit closing, job restructuring, position elimination, reduction in force, or mutual consent as determined by the Committee, or
its designee, and as defined in the Companys then existing and effective Separation Pay Plan, and (ii) the termination of the Associate Participants Employment would not otherwise qualify as a Retirement, any vested but unexercised
Stock Options or Stock Appreciation Rights will continue to be exercisable through the earlier of (x) twelve (12) months following the effective date of the termination of the Associate Participants Employment, and (y) the
Awards original expiration or termination date. Any Stock Options or Stock Appreciation Rights that are not vested or exercisable on the effective date of the Associate Participants termination of Employment as result of a unit closing,
job restructuring or reduction in force will immediately expire, terminate, or be forfeited and cancelled as of the effective date of the Associate Participants termination of Employment.
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6.6
Committee Discretion
. Notwithstanding anything to the contrary contained in this Article VI, the Committee or its designee may, at or
after the date of grant, accelerate or waive any conditions to the exercisability of any Stock Option or Stock Appreciation Right granted under the Plan, and may permit all or any portion of any Stock Option or Stock Appreciation Right to be
exercised following a Participants termination of employment for any reason on such terms and subject to such conditions as the Committee or its designee may determine for a period up to and including, but not beyond, the Awards original
expiration or termination date.
ARTICLE VII
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
7.1
In General
. The Committee may grant a Stock Award (including any associated dividend equivalent right or share unit equal in value to
such Stock Award) to Associate Participants on such terms and conditions as the Committee may determine.
7.2
Terms and Conditions.
The Committee will determine the types of Stock Awards made, the number of shares, share units, or dividend equivalent rights covered by such awards, and any other terms and conditions relating to the Stock Awards as it considers appropriate,
including any vesting conditions necessary to comply with the laws of the State of Delaware. Notwithstanding the foregoing, no portion of a Stock Award may be scheduled to vest in less than one year from the date of grant, provided; however, that up
to five percent (5%) of the shares available for award under Section 3.1
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may be granted as Stock Awards that vest in whole in less than one year in connection with limited
situations such as new hires, Retirement, and similar situations.
7.3
Restricted Stock Terms and Conditions
. Restricted Stock will,
at the Companys discretion, be represented (i) by a stock certificate registered in the name of the Associate Participant granted such Restricted Stock, or (ii) in any acceptable uncertificated form via book entry. Such Associate
Participant will have the right to enjoy all shareholder rights during the any applicable restriction period except that:
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(a)
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The Participant will not be entitled to delivery of the stock certificate until the Restriction Period will have expired.
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(b)
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The Company may either issue shares subject to such restrictive legends and/or stop-transfer instructions as it considers
appropriate or provide for retention of custody of the Common Stock during the Restriction Period.
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(c)
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Subject to Section 12.10, the Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose
of the Common Stock during the Restriction Period.
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(d)
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A breach of the terms and conditions established by the Committee with respect to the Restricted Stock will cause a
forfeiture of the Restricted Stock.
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(e)
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Subject to Section 8.8, dividends payable in cash or in shares of stock or otherwise shall be withheld by the
Company for the Participants account. At the discretion of the Committee, interest may be paid on the amount of cash dividends withheld, including cash dividends on stock dividends, at a rate and subject to such terms as determined by the
Committee. However, any such interest, dividends, or dividend equivalent payment shall only be made on vested awards.
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Provided,
however, in lieu of the foregoing, the Committee may provide that no shares of Common Stock be issued until the Restriction Period is over and further provide that the shares of Common Stock issued after the Restriction Period has been completed, be
issued in escrow and/or be legended and that the Common Stock be subject to restrictions including the forfeiture of all or a part of the shares.
7.4
Payment for Restricted Stock
. A Participant will not be required to make any payment for Restricted Stock unless the Committee so
requires.
7.5
Forfeiture Provisions
. Subject to Section 6.5, in the event a Participant terminates Employment during a
Restriction Period for the Participants Restricted Stock or Restricted Stock Units, such Awards to the extent not otherwise vested will be forfeited; provided, however, that the Committee may provide for proration or full payout in the event
of (a) death, (b) Disability, or (c) Retirement. Any Restricted Stock Unit that is not, in all cases, due and payable not later than the 15th day of the third month following the calendar year, or if later, the Companys fiscal year,
in which the Restricted Stock Unit ceases to be subject to a substantial risk of forfeiture within the meaning Section 409A of the Code, will be designed to comply with the requirements of section 409A of the Code.
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ARTICLE VIII
PERFORMANCE AWARDS
8.1
|
In General.
An Award granted under the Plan may be in the form of a Performance Award.
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8.2
|
Establishment of Performance Goals.
Performance Goals applicable to a Performance Award will be established by the
Committee on or before the Date of Grant and not more than a reasonable period of time after the beginning of the relevant Performance Period. Such Performance Goals may include or be based upon any one or more Performance Measures. Performance
Goals may be based on the Companys consolidated results or the results of any segment or other subset of the Companys business, and may be calculated in accordance with generally accepted accounting principles or any other management
accounting principle. The Committee, or its designee, may establish any special adjustments that will be applied in calculating whether the Performance Measure has been met including, but not limited to, taking into consideration the effect of any
restructurings, discontinued operations, extraordinary items, unusual, infrequently occurring, or
non-recurring
events, accounting changes, divestitures, or acquisitions, changes in tax or accounting
principles, foreign exchange gains and losses, a change in the fiscal year of the Company, or any event either not directly related to the operations of the Company or any Subsidiary, division, business segment or business unit or not within the
reasonable control of management. At any time prior to distribution of a Performance Award, the Committee may modify the Performance Goals applicable to such Performance Award if it determines that unforeseen events have occurred which have had a
substantial effect on the Performance Goals and such unforeseen events would otherwise make application of the original Performance Goals unfair.
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8.3
|
Levels of Performance Required to Earn Performance Awards.
At or about the same time that Performance Goals are
established for a Performance Period applicable to a Performance Award, the Committee will in its absolute discretion establish the percentage of the Performance Award granted for such Performance Period which will be earned by the Associate
Participant for various levels of performance measured in relation to achievement of Performance Goal for such Performance Period.
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8.4
|
Other Restrictions.
The Committee will determine any other terms and conditions applicable to any Performance
Award, including any vesting conditions or restrictions on the delivery of Common Stock payable in connection with the Performance Award and restrictions that could result in the future forfeiture of all or part of any Common Stock earned. The
Committee may provide that shares of Common Stock issued in connection with a Performance Award be held in escrow and/or legended. Unless otherwise provided in Determinations adopted by the Committee (i) a Performance Award, other than a
restricted Equity Award, may not vest, or be deemed to be earned, in whole in less than three years from the date of grant (though portions of an individual award may vest or be deemed to be earned in equal annual installments over a period of not
less than three years), and (ii) a Performance Award to be paid out as a restricted Equity Award may not have a vesting period of less than one year.
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8.5
|
Notification to Associate Participants.
Promptly after the Committee has established or modified the Performance
Goal with respect to a Performance Award, the Associate Participant will be provided with a written Award Notice that will include the terms of the Performance Award including the Performance Goal so established or modified.
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8.6
|
Measurement of Performance Against Performance Goals.
The Committee will, as soon as practicable after the close
of a Performance Period, determine:
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(a)
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the extent to which the Performance Goals for such Performance Period have been achieved; and
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(b)
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the percentage of the Performance Awards earned as a result.
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Notwithstanding the foregoing, if and to the extent the applicable Award Notice permits, the
Committee may, in its sole discretion, reduce the percentage of any Performance Award otherwise determined for a Performance Period, and such reduced percentage will be the amount earned by the Associate Participant. All determinations of the
Committee will be absolute and final as to the facts and conclusions therein made and are binding on all parties. As promptly as practicable after the Committee has made the foregoing determination, each Associate Participant who has earned
Performance Award will be notified thereof. For all purposes of this Plan, notice will be deemed to have been given the date action is taken by the Committee making the determination. Subject to Section 12.10, an Associate Participant may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of all or any portion of a Performance Awards during the Performance Period.
8.7
Treatment of Performance Awards Earned.
Upon the Committees determination that a percentage of any Performance Award has been
earned for a Performance Period, Associate Participants to whom such earned Performance Award has been granted and who have been (or were) in the employ of the Company or a Subsidiary thereof continuously from the Date of Grant, will be entitled,
subject to the other conditions of this Plan, to payment in accordance with the terms and conditions of their Performance Awards as set forth the Award Notice. Such terms and conditions may permit or require the payment of any applicable withholding
taxes pursuant to Section 12.11. Subject to Section 8.9, Performance Awards will under no circumstances become earned or have any value whatsoever for any Associate Participant who is not in the employ of the Company or its Subsidiaries
continuously during the entire Performance Period for which such Performance Award was granted.
8.8
Distribution.
Distributions
payable pursuant to Section 8.7 will be made, subject to Section 12.15, as soon as practicable after the Committee determines the Performance Goal has been achieved, but in no event more than 2
1
⁄
2
months after the end of the fiscal year in which the Performance Period applicable to the Performance Award ends. Any dividend equivalents credited in connection with a Performance Award will be subject to the
same restrictions and risk of forfeiture as the Performance Award to which the dividend equivalents relate.
8.9
Non-Disqualifying
Termination of Employment.
The only exceptions to the requirement of continuous Employment during a Performance Period for distribution of an amount earned under a Performance Award are
termination of an Associate Participants Employment by reason of death (in which event the Performance Award may be transferable by will or the laws of descent and distribution only to such Participants Beneficiary designated to receive
the Performance Award or to the Participants applicable legal representatives, heirs or legatees), Disability, Retirement, involuntary termination of Employment other than for Cause (including an involuntary termination of Employment as a
result of a unit closing, job restructuring, position elimination or reduction in force as determined by the Committee or its designee and as defined in the Companys then existing and effective Separation Pay Plan), a Change in Control and
such other events as may be specified in Determinations adopted by the Committee. In such instance, a distribution of the Performance Award will be made pursuant to the terms of the Performance Award and included in the Award Notice.
8.10
Cash Incentive Awards.
Performance Awards granted by the Committee under this Article VIII may take the form of Cash Incentive
Awards. Cash Incentive Awards may be granted by the Committee to Associate Participants on such terms and conditions as the Committee may determine, but in all instances in compliance with the requirements of this Article VIII and section 409A of
the Code or any exemptions therefrom. A Participant may not be granted a Cash Incentive Award in any one calendar year the value of which exceeds the product of $2,000,000 and the number of years in the applicable Performance Period.
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ARTICLE IX
CHANGE IN CONTROL
9.1
Definitions
. For purposes of this Article VIII the following definitions will apply:
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(a)
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Change in Control
. Change in Control will, unless modified pursuant to Determinations adopted by the
Committee, generally have the meaning specified in Section 409A of the Code, and any regulations and guidance promulgated thereunder and will, subject to any additional requirements of Treasury Regulation section 1.409A-(3)(i)(5)(v), mean:
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(i)
|
Change of Ownership
. A 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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(ii)
|
Change in Effective Control
. Notwithstanding whether the Company has undergone a change of ownership as described
in Section 9.1(a)(i), a change of effective control occurs:
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(A)
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when a person or persons acting as a group acquires within a
12-month
period
30 percent or more of the total voting power of the stock of the Company, or
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(B)
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a majority of the Board is replaced within a
12-month
period by directors whose
appointment or election is not approved by a majority of the members of the Board before such appointment or election.
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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). For purposes of this Section 9.1(a)(ii), any
acquisition by the Company of its own stock within a
12-month
period, either through a transaction or series of transactions, that, immediately following such acquisition, results in the total voting power of
a person or persons acting as a group to equal or exceed 30 percent of the total voting power of the stock of the Company will not constitute a change in effective control of the Company for purposes of this Section 9.1(a)(ii).
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(iii)
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Change in Ownership of a Substantial Portion of the Companys Assets
. Change in ownership of a substantial
portion of the Companys 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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(A)
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A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;
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(B)
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An entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the
Company;
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(C)
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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
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(D)
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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).
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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. 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.
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(b)
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Employment Termination
. Employment Termination will be deemed to have occurred when an Associate
Participant has a separation from service:
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(i)
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within two years following the effective date of a Change in Control because of an Involuntary Separation from Service
other than for Cause; or
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(ii)
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where the basis for the Participant Associates Employment Termination is the occurrence of a Good Reason event
described in Section 9.1(c), within two years of the initial existence of any condition that would constitute Good Reason and within two years following the effective date of a Change in Control.
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An Employment Termination will not include a termination by reason of the Associate Participants death, Disability, Retirement termination of
Employment other than a separation from service for Good Reason.
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(c)
|
Good Reason
. Good Reason means a condition resulting from any of the actions listed below taken by the
Company or a Subsidiary, without the consent of the Associate Participant, directed at an Associate Participant:
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(i)
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a material decrease in the Participants salary or incentive compensation opportunity (the amount paid at target as
a percentage of salary under the Management Incentive Compensation Program) as in effect immediately prior to the Change in Control, or
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(ii)
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failure to pay the Participant a material portion of the Participants current base salary, or incentive
compensation within seven days of its due date, or
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(iii)
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a material adverse change in the Participants reporting responsibilities, duties, or authority as compared with
pre-Change
in Control responsibilities, duties, or authority, or
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(iv)
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a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant is required
to report, including a requirement that a Participant report to a corporate officer or employee instead of reporting directly to the Board or the Board of the Corporation, as the case may be, or
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(v)
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a material diminution in the budget over which the Participant retains authority as compared to the
pre-Change
in Control budget, or
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(vi)
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the Service Recipients requiring the Participant to change the principal location at which the Participant must
perform services to a location that is more than 50 miles from the location where the Participant performed such services immediately prior to the Change in Control, or
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(vii)
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discontinuance of any material paid time off policy, fringe benefit, welfare benefit, incentive compensation, equity
compensation, or retirement plan (without substantially equivalent compensating remuneration or a plan or policy providing substantially similar benefits) in which the Participant participates or any action that materially reduces such
Participants benefits or payments under such plans, as in effect immediately before the Change in Control, provided, that in either case such discontinuance or other action results in a material decrease in the Participants overall
compensation.
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provided, however, that the Associate Participant must provide notice to the
Corporation of the existence of any condition described above within 90 days of the initial existence of the condition, upon the notice of which the Corporation will have 30 days during which it or a Service Recipient may remedy the condition. Any
separation from service as a result of a Good Reason condition must occur within two years of the initial existence of the condition and of the Change in Control in order for benefits to be due hereunder. A separation from service for Good Reason
will be treated as an Involuntary Separation from Service for purposes of the Plan.
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Involuntary Separation from Service
. Involuntary Separation from Service means separation from service
due to the independent exercise of the unilateral authority of the Company or a Subsidiary, as applicable, to terminate the Associate Participants services, other than due to the Associate Participants implicit or explicit request, where
the Associate Participant was willing and able to continue performing services, within the meaning of Code Section 409A and Treasury Regulation section
1.409A-1(n)(1)
or any successor thereto.
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9.2
Effect on Awards
. On an Employment Termination, an Associate Participant will have the right to exercise any
and all Stock Options and Stock Appreciation Rights held by the Associate Participant, and all Stock Awards held by the Associate Participant that are not subject to Performance Goals will immediately vest and be deemed to have been earned and the
achievement of any Performance Goal for which the applicable Performance Period has yet to be completed will determined on such terms and conditions as may be established by the Committee at the time of the grant or award and included in the Award
Notice; provided, that, the duration of any exercise period following Employment Termination for a Stock Option or Stock Appreciation Right may not exceed the original exercise period; provided, further, that any vested Stock Awards that are
Restricted Stock Units or vested Cash Incentive Awards, will be distributed no later than the deadline for distribution specified in Sections 7.5 and 8.8 above.
ARTICLE X
NON-ASSOCIATE
DIRECTOR PARTICIPANT AWARDS
10.1
General Provisions
. Subject to the terms and conditions of this Article X, each Director who is designated by the Board as a
Non-Associate
Director Participant on the date of grant will automatically be awarded an annual Equity Award in an amount and in such form as the Board determines and pursuant to such terms, conditions, and
restrictions as the Board determines (the Annual Equity Award); provided, however, that the maximum aggregate grant date fair value, determined based on the Fair Market Value of the Common Stock, of an Annual Equity Award granted to a
Non-Associate
Director Participant as compensation for services as a
Non-Associate
Director during any fiscal year of the Company may not exceed $500,000. Such Annual Equity
Awards will begin in May 2019 and continue through May 31, 2024, unless earlier terminated by the Board. The date of grant each Annual Equity Award will be the third full Trading Date following the later of: (i) the date on which the
Annual Meeting of the Companys stockholders, or any adjournment thereof, is held (Annual Meeting); and (ii) the date on which the Companys earnings for the fiscal quarter immediately preceding such Annual Meeting date
are released to the public. Also, Equity Awards in a pro rata amount of the Annual Equity Award for that year, based on the date of the
Non-Associate
Directors election to the Board, will automatically
be granted to each individual (other than a former Associate Participant) who is first elected a
Non-Associate
Director after May 24, 2019, on the third full Trading Date following the effective date of
such election.
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10.2
Non-Transferability
.
Subject to Section 12.10, a
Non-Associate
Director Participant may not transfer, sell, assign, pledge, or otherwise encumber or dispose of any shares of Common Stock received in connection with an Annual
Equity Award prior to the time his or her service as a director expires or is terminated, other than by will or the laws of descent and distribution and any attempt to do so will be void. Notwithstanding the foregoing, a
Non-Associate
Director Participant may sell shares of Common Stock to cover applicable federal, state or local income taxes resulting from the vesting of such Common Stock.
10.3
Right to Tender, Exchange
. Notwithstanding Section 10.2 above, a
Non-Associate
Director
Participant (including for purposes of this paragraph a
Non-Associate
Director Participants guardian or legal representative) will have, with respect to any shares covered by an Annual Equity Award and
any shares already received pursuant to an Annual Equity Award under this Plan, the right to: (i) tender or exchange any such shares in the event of the consummation of (A) any tender offer or exchange within the meaning of
Section 14(d) of the Exchange Act, or (B) any plan of merger approved by the Board, in each case that constitutes a Change in Control; and (ii) sell or exercise any option, right, warrant, or similar property derived from or
attributable to such shares after such option, right, warrant, or similar property becomes transferable or exercisable. If any shares covered by an Annual Equity Award are tendered or exchanged or any option, right, warrant, or similar property
attributable thereto is sold, exercised, or redeemed for value, the cash and/or property received will be delivered to the Company (or its successor) and held subject to the restrictions of the Plan as if it were the stock itself.
10.4
Non-Associate
Director Participants Termination
. If a
Non-Associate
Director Participants service as a director of the Company terminates on account of any act of: (i) fraud or intentional misrepresentation; or (ii) embezzlement, misappropriation,
or conversion of assets or opportunities of the Company or any subsidiary of the Company, such termination will be considered a
Non-Qualifying
Termination. All other terminations, including
termination by reason of death, will be considered Qualifying Terminations. In the event of a
Non-Qualifying
Termination, all outstanding restricted Equity Awards made pursuant to this Section will
be forfeited or canceled, as the case may be.
10.5
Stock In Lieu of Cash
. A
Non-Associate
Director Participant may also elect to receive Common Stock in lieu of the cash compensation payable for services rendered as a director, so long as such election is made in accordance with Section 16 of the Exchange Act and on such other terms
and conditions as may be determined from time to time by the Board. Any such Common Stock issued to a
Non-Associate
Director Participant in lieu of cash compensation will automatically vest (become
non-forfeitable
and freely transferable) in the
Non-Associate
Director Participant on the date of issuance.
ARTICLE XI
AMENDMENT AND TERMINATION
No Award may be made under the Plan after May 31, 2024. The Board may terminate the Plan or make such amendments as it deems advisable,
including, but not limited to, any amendments to conform to or reflect any change in any law, regulation, or ruling applicable to an Award or the Plan, provided, however, that the Board may not, without approval by affirmative vote of the holders of
a majority of the outstanding stock of the Company having general voting power: (i) take any action which will increase the aggregate number of shares of Common Stock which may be issued under the Plan (except for adjustments pursuant to
Section 3.2 and Section 11.7 of the Plan); (ii) decrease the grant or exercise price of any Award to less than fair market value of its underlying Common Stock on the date of grant; (iii) change the individual award limits found in
Section 3.3 or any other maximum
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limit included in the Plan to comply with set forth in the Code; or (iv) change the separate
limit for Incentive Stock Options set forth in Section 3.3; (v) change the class of Associate Participants eligible for Awards under Article V. Except as otherwise provided in or permitted by the Plan or by the terms, if any, of an Award under
the Plan, no termination or amendment of the Plan or change in the terms of an outstanding Award may adversely affect the rights of the holder of any Award without the consent of the holder.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1
Interpretive Matters
. Whenever required by the context, pronouns and any variation thereof will be deemed to refer to the
masculine the feminine or neuter, and the singular will include the plural, and vice versa. The term include or including does not denote or imply any limitation. The headings and captions herein are provided for reference
and convenience only, will not be considered a part of this Plan, and will not be employed in the interpretation of this Plan.
12.2
Unfunded Plan
. The Plan will be unfunded and the Company will not be required to segregate any assets that may at any time be represented by Awards under the Plan. Neither the Company, its Subsidiaries, the Committee, nor the Board will be
deemed to be a trustee of any amounts to be paid under the Plan nor will anything contained in the Plan or any action taken pursuant to its provisions create or be construed to create a fiduciary relationship between the Company and/or its
Subsidiaries, and a Participant. To the extent any person has or acquires a right to receive a payment in connection with an Award under the Plan, this right will be no greater than the right of an unsecured general creditor of the Company.
12.3
No Right to Continued Employment
. Neither the Plan nor any Award under the Plan will confer on a Participant any right with respect
to continuation of the Participants employment with the Company or any Subsidiary nor will the Plan or an Award interfere in any way with the right of the Company or a Subsidiary to terminate the employment of any of its employees at any time.
12.4
No Effect on Retirement and Other Benefit Plans
. Except as may otherwise be specifically stated under any employee benefit plan,
policy, or program, no amount payable in respect of any Award will be treated as compensation for purposes of calculating a Participants right under any such plan, policy, or program. The Plan is not a welfare plan or pension
plan under the Employee Retirement Income Security Act of 1974, as amended.
12.5
Stockholder Rights
. A Participant (including
for purposes of this Section, a Participants legatee, distributee, guardian, legal representative, or other third party, as the Committee may determine) will have no stockholder rights with respect to any shares of Common Stock subject to an
Equity Award until such shares of Common Stock are issued to the Participant. Shares of Common Stock will be deemed issued on the date on which they are issued in the Participants (as this term is defined in the preceding sentence) name.
12.6
Indemnification.
Each person who is or will have been a member of the Board or of the Committee and any designee of the Board or
Committee will be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed on or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to
which he may be made party or in which he may be involved by reason of any determination, interpretation, action taken or failure to act under the Plan and against and from any and all amounts paid by him in
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settlement thereof, with the Companys approval, or paid by him in satisfaction of any
judgment in any such action, suit or proceeding against him, provided he will give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification will not be exclusive and will be independent of any other rights of indemnification to which such persons may be entitled under the Companys Articles of Incorporation,
By-laws,
by
contract, as a matter of law, or otherwise.
12.7
Adjustments in Capitalization
. In the event of any change in the value or number of
shares of Common Stock outstanding, or the assumption and conversion of outstanding Awards, by reason of any stock dividend, stock split, dividend or distribution, whether in cash, shares or other property (other than a normal cash dividend),
recapitalization, reorganization, merger, consolidation,
split-up,
spin-off,
combination or exchange of shares, the Committee or its designee will make changes to the
Plan and Awards in an equitable and appropriate, manner including, but not limited to: (1) the exercise price under each unexercised Stock Option; (2) the exercise price under each unexercised Stock Appreciation Right; and (3) the
number, type, character, and class of shares which may be issued on exercise of Stock Options and Stock Appreciation Rights granted and for Stock Awards, including restricted stock units, and any remaining shares reserved under the Plan. Any such
adjustment with respect to each Stock Option or Stock Appreciation Right will be consistent with the requirements applicable to exempt stock rights under Treasury Regulations section
1.409A-1(b)(5)
or its
successor. Any adjustment with respect to Incentive Stock Options will also conform to the requirements of Section 422 of the Code. Any adjustment will also include the limits under the Plan established for purposes of section 162(m) of the
Code and with respect to Awards of Incentive Stock Options,
12.8
Prohibition on Repricing
. Except in connection with a corporate
transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, Common Shares, other securities or other property), stock split, extraordinary cash dividend, recapitalization, change
in control, reorganization, merger, consolidation,
split-up,
spin-off,
combination, repurchase or exchange of Common Shares or other securities, or similar
transaction(s)), the Company may not (a) amend the terms of outstanding Stock Options or Stock Appreciation Rights to reduce the exercise price of such outstanding Stock Options or Stock Appreciation Rights; (b) cancel outstanding Stock
Options or Stock Appreciation Rights in exchange for Stock Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Stock Options or Stock Appreciation Rights; (c) cancel outstanding Stock
Options or Stock Appreciation Rights with an exercise price above the current stock price in exchange for cash or other Awards or securities; or (d) take any other action with respect to a Stock Option or Stock Appreciation Right that would be
treated as a repricing under the rules and regulations of the principal national securities exchange on which the shares of Common Stock are listed without the prior approval of the Companys stockholders.
12.9
Compliance with Applicable Legal Requirements
. Notwithstanding anything contained herein to the contrary, the Company will not be
required to sell or issue shares of Common Stock in connection with any Award if the issuance thereof would constitute a violation by the Participant or the Company of any provisions of any law or regulation of any governmental authority or any
national securities exchange or inter-dealer quotation system or other forum in which shares of Common Stock are quoted or traded (including without limitation Section 16 of the 1934 Act); and, as a condition of any sale or issuance of shares
of Common Stock under an Award, the Committee may require such agreements or undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such law or regulation. The Plan, the grant and exercise of Awards
hereunder, and the obligation of the Company to sell and deliver shares of Common Stock, will be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required.
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12.10
Transferability
. No unearned Stock Awards or vested or
unvested Stock Options or Stock Appreciation Rights, and no shares of Common Stock that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, pledged, or transferred
other than by will or the laws of descent and distribution and any attempt to do so will be void. No Stock Option or Stock Appreciation Right will be exercisable during an Associate Participants lifetime except by the Associate Participant or
the Associate Participants guardian or legal representative. To the extent and under such terms and conditions as determined by the Committee, a Participant may assign or transfer an Award without consideration (i) to the
Participants spouse, children or grandchildren (including any adopted and step children or grandchildren), parents, grandparents or siblings, (ii) to a trust for the benefit of one or more of the Participant or the persons referred to in
clause (i), (iii) to a partnership, limited liability company or corporation in which the Participant or the persons referred to in clause (i) are the only partners, members or shareholders or (iv) for charitable donations; provided that
any such assignee shall be bound by and subject to all of the terms and conditions of the Plan and the Award Agreement relating to the transferred Award and shall, to the extent necessary, execute an agreement satisfactory to the Company evidencing
such obligations; and provided further that such Participant shall remain bound by the terms and conditions of the Plan. The Company shall cooperate with any assignee and the Companys transfer agent in effectuating any transfer permitted under
this Section.
12.11
Withholding Taxes
. All distributions under the Plan will be subject to any required withholding taxes and other
withholdings and, all tax withholdings will be governed by the Code and any applicable state laws and any rules and regulations adopted thereunder and, in the case of Participants who are subject to Section 16 of the Exchange Act, any
restrictions set forth in Section 16 of the Exchange Act. In case of distributions in Common Stock, the Participant or other recipient may, as a condition precedent to the delivery of Common Stock, be required to pay to his/her participating
employer the excess, if any, of the total withholding obligation with respect to any federal, state, and local tax obligations, including FICA and Medicare over the actual amount withheld, which will be limited to the minimum statutory withholding
or such other rate that will not cause adverse accounting consequences and is permitted under applicable Internal Revenue Service withholding rules, if any, from any distributions under the Plan. All or a portion of such payment may, in the
discretion of the Committee or its designee and upon the election of the Participant, be made (a) in cash, (b) by withholding from shares of Common Stock that would otherwise be delivered to the Participant a number of shares of Common
Stock sufficient to satisfy all or a portion of the minimum statutory tax withholding obligation, (c) by tendering (either actually or by attestation) owned and unencumbered shares of Common Stock acceptable to the Committee and having a Fair
Market Value on the date of tender equal to or less than the remaining required tax withholding. Notwithstanding the foregoing, in the event the Company adopts International Financial Reporting Standards, the minimum statutory withholding
obligation, or such other rate that will not cause adverse accounting consequences and is permitted under applicable Internal Revenue Service withholding rules, will not be satisfied by withholding shares of Common Stock if permitting the
satisfaction of the minimum statutory withholding obligation via the withholding of shares of Common Stock would result in unfavorable accounting treatment for the Company.
12.12
No Limitations on Compensation
. Neither the adoption of the Plan by the Board nor the submission of the Plan to shareholders of the
Company for approval will be construed as creating any limitations on the power or authority of the Board to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable
or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees, which the Company or any Subsidiary now has lawfully
put into effect, including, without limitation, any retirement, pension, savings, profit sharing or stock purchase plan, insurance, death and disability benefits, and executive short term incentive plans.
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12.13
Code Section
83(b) Elections
. Neither the
Company nor any of its Subsidiaries have any responsibility for a Participants election, attempt to elect or failure to elect to include the value of an Award subject to section 83 of the Code in the Participants gross income for
the year of grant pursuant to section 83(b) of the Code. Any Participant who makes an election pursuant to section 83(b) of the Code will promptly provide the Committee or its designee with a copy of the election form.
12.14
Section 409A of the Code
. The Plan is intended to be administered in a manner consistent with the requirements of section 409A of
the Code, where applicable. Where reasonably possible and practicable, the Plan will be administered in a manner to avoid the imposition on participants of immediate tax recognition and additional taxes under section 409A of the Code. Unless
specifically provided for in an Award Notice, no Equity Award will provide any feature for the deferral of compensation as defined by Treasury Regulation section
1.409A-1(b).
Any deferral will be for such
period and in accordance with the terms and conditions as the Committee may determine and must be in compliance with section 409A of the Code. The terms and conditions applicable to such deferral and the terms and conditions evidencing compliance
with section 409A of the Code will be set forth in the Award Notice. The method of payment for, and type and character of, any Award may not be altered by any deferral permitted under this Section unless specifically permitted under section 409A of
the Code and the Treasury regulations thereunder. Notwithstanding the foregoing, neither the Company nor the Committee will have any liability to any person in the event section 409A of the Code is determined to apply to an Award in a manner that
results in adverse tax consequences for the participant or any of his beneficiaries or transferees.
12.15
Effective Date
. The Plan
will become effective on May 24, 2019, subject to approval by the affirmative vote of a majority of the outstanding shares of Common Stock present by person or by proxy at the Companys 2019 Annual Meeting that are entitled to vote on a
proposal to approve the adoption of the Plan.
12.16
Governing Law
. To the extent that federal laws do not otherwise control, this
Plan and all determinations made and actions taken under this Plan will be governed by the internal laws of the State of Delaware, without regard to Delawares
conflict-of-laws
principles and will be construed accordingly.
12.17
Severability
. The Company intends all provisions of the Plan to be enforced to the fullest extent permitted by law. If any provision
of this Plan will be held to be illegal, invalid, or unenforceable for any reason, under present or future law, the illegal, invalid, or unenforceable provision will be fully severable and severed, and will not affect the remaining parts of the
Plan, and the Plan will be construed and enforced as if the illegal, invalid, or unenforceable provision had not been included in the Plan, and the remaining provisions of the Plan will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance.
12.18
Compensation Recoupment Policy
. Awards may be made subject to
any compensation recoupment policy adopted by the Board or the Committee at any time prior to or after the effective date of the Plan, and as such policy may be amended from time to time after its adoption. The compensation recoupment policy will be
applied to any Award that constitutes the deferral of compensation subject to section 409A of the Code in a manner that complies with the requirements of section 409A of the Code.
12.19
No Issuance of Certificates.
Notwithstanding any provisions of the Plan to the contrary, to the extent the Plan provides for
issuance of stock certificates to reflect the issuance of shares of Common Stock in connection with an Award, the issuance may be effected on a
non-certificate
basis, to the extent not prohibited by applicable
law or the applicable rules of any stock exchange on which the Common Stock is traded.
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2019 Proxy Statement
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J. C. PENNEY COMPANY,
INC.
6501 LEGACY DRIVE
PLANO, TX 75024
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VOTE BY INTERNET -
www.proxyvote.com
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Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day
prior to the meeting date. Have your proxy/voting instruction card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
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If you would like to reduce the costs incurred by J. C. Penney Company, Inc. in mailing proxy materials, you can consent to receive all future
notice communications, proxy statements, proxy/voting instruction cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
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VOTE BY PHONE -
1-800-690-6903
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Use any touch-tone Telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day prior to the meeting date. Have
your proxy/voting instruction card in hand when you call and follow the instructions.
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VOTE BY MAIL
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Mark, sign and date your proxy/voting instruction card and return it in the enclosed postage-paid envelope provided or return it to J. C.
Penney Company, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
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You can view the Annual Report on Form 10-K and the
Proxy Statement on the Internet at www.proxyvote.com.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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E64196-P19600
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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J. C. PENNEY COMPANY, INC.
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Directors recommend a vote FOR Proposal 1.
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1.
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Election of Directors: Boards nominees for Directors
for the term set forth in the Proxy Statement are:
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Nominees:
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For
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Against
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Abstain
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1a.
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Paul J. Brown
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☐
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For
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1b.
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Amanda Ginsberg
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1i.
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Javier G. Teruel
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1c.
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Wonya Y. Lucas
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1j.
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Ronald W. Tysoe
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1d.
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B. Craig Owens
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Directors recommend a vote FOR Proposals 2, 3 and
4.
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1e.
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Lisa A. Payne
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2.
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To ratify the appointment of KPMG LLP as independent auditor for the fiscal year ending February 1, 2020.
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1f.
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Debora A. Plunkett
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3.
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To approve the adoption of the J. C. Penney Company, Inc. 2019 Long-Term Incentive Plan.
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1g.
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Leonard H. Roberts
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4.
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Advisory vote on executive compensation.
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1h.
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Jill Soltau
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For address changes and/or comments, please check this box
and write them on the back where indicated.
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☐
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Please indicate if you plan to attend this meeting.
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☐
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Yes
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No
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Please Sign and Date
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Please sign your name exactly as stenciled hereon. For a joint account, each joint owner should sign. Persons signing in a representative capacity should indicate their capacity.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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You can access J.
C. Penney Company, Inc. stockholder accounts online.
Computershare, Transfer Agent for J. C. Penney Company, Inc., makes it easy
and convenient to get current information on stockholder accounts.
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● View account status
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● View certificate history
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● View book-entry information
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● Make address changes
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● Obtain a duplicate 1099 tax form
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Visit us on the web at www.computershare.com/investor
q
FOLD AND DETACH HERE
q
E64197-P19600
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J. C. Penney Company, Inc.
PROXY/VOTING INSTRUCTION CARD
This Proxy is solicited by the Board of Directors
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By properly executing this card on the reverse, or by voting via Internet or telephone, you are authorizing Amanda Ginsberg, B.
Craig Owens and Ronald W. Tysoe, or any of them, with power of substitution in each, to represent and vote the stock owned of record which you are entitled to vote at the Annual Meeting of Company Stockholders, to be held at the JCPenney Home Office
located at 6501 Legacy Drive, Plano, Texas 75024-3698 on Friday, May 24, 2019, at 10:00 A.M., local time, and at any adjournment or postponement thereof (Meeting), upon such business as may come before the Meeting, including the items
set forth on the reverse (Business).
Board's nominees for Directors for
the term set forth in the Proxy Statement are (1a) Paul J. Brown, (1b) Amanda Ginsberg, (1c) Wonya Y. Lucas, (1d) B. Craig Owens, (1e) Lisa A. Payne, (1f) Debora A. Plunkett, (1g) Leonard H. Roberts, (1h) Jill Soltau, (1i) Javier G.
Teruel, and (1j) Ronald W. Tysoe.
Your vote is important and cannot be recorded by
the proxies unless this card is properly executed by you and returned, or unless you vote by Internet or telephone. Therefore, please sign, date, and return this card promptly in the envelope provided, or vote by Internet or telephone. No postage is
required if this envelope is mailed in the United States.
This proxy, when
properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be voted FOR election of all directors, and FOR Proposals 2, 3 and 4.
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Address Changes/Comments:
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(If you noted any Address Changes/Comments above, please mark the corresponding box on the reverse side.)
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(Continued on the reverse side)
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J. C. PENNEY COMPANY,
INC.
6501 LEGACY DRIVE
PLANO, TX 75024
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VOTE BY INTERNET -
www.proxyvote.com
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Use the Internet to transmit your voting instructions and for electronic delivery of information up until two days prior to the meeting date.
Have your proxy/voting instruction card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
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If you would like to reduce the costs incurred by J. C. Penney Company, Inc. in mailing proxy materials, you can consent to receive all future
notice communications, proxy statements, proxy/voting instruction cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
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VOTE BY PHONE -
1-800-690-6903
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Use any touch-tone telephone to transmit your voting instructions up until two days prior to the meeting date. Have your proxy/voting
instruction card in hand when you call and follow the instructions.
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VOTE BY MAIL
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Mark, sign and date your proxy/voting instruction card and return it in the enclosed postage-paid envelope provided or return it to J. C.
Penney Company, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
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You can view the Annual Report on Form 10-K and the
Proxy Statement on the Internet at www.proxyvote.com.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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E64217-P19600
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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J. C. PENNEY COMPANY, INC.
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Directors recommend a vote FOR Proposal 1.
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1.
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Election of Directors: Boards nominees for Directors
for the term set forth in the Proxy Statement are:
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Nominees:
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For
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Against
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Abstain
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1a.
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Paul J. Brown
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☐
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☐
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☐
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For
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Against
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Abstain
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1b.
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Amanda Ginsberg
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☐
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☐
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☐
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1i.
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Javier G. Teruel
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☐
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☐
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☐
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1c.
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Wonya Y. Lucas
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☐
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☐
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☐
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1j.
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Ronald W. Tysoe
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☐
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☐
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☐
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1d.
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B. Craig Owens
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☐
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☐
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Directors recommend a vote FOR Proposals 2, 3 and
4.
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1e.
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Lisa A. Payne
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☐
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☐
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☐
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2.
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To ratify the appointment of KPMG LLP as independent auditor for the fiscal year ending February 1, 2020.
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☐
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☐
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☐
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1f.
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Debora A. Plunkett
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☐
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☐
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☐
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3.
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To approve the adoption of the J. C. Penney Company, Inc. 2019 Long-Term Incentive Plan.
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☐
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☐
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☐
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1g.
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Leonard H. Roberts
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☐
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☐
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☐
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4.
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Advisory vote on executive compensation.
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☐
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☐
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☐
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1h.
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Jill Soltau
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☐
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☐
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☐
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For address changes and/or comments, please check this box
and write them on the back where indicated.
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☐
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I elect to direct the voting of undirected shares in the Plans.
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☐
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☐
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Yes
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No
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Please Sign and Date
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Please sign your name exactly as stenciled hereon. For a joint account, each joint owner should sign. Persons signing in a representative capacity should indicate their capacity.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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q
FOLD AND DETACH HERE
q
E64218-P19600
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J. C. Penney Company, Inc.
PROXY/VOTING INSTRUCTION CARD
Allocated and Undirected Stock
This Proxy is solicited by the Board of Directors
TO PARTICIPANTS IN THE COMPANY'S SAVINGS, PROFIT-SHARING AND STOCK OWNERSHIP PLAN ("TRADITIONAL PLAN") AND PARTICIPANTS IN THE COMPANY'S SAFE HARBOR 401(K)
SAVINGS PLAN ("SAFE HARBOR PLAN"):
By properly executing this card on the
reverse, or by voting by Internet or telephone, you are instructing State Street Bank and Trust Company ("Trustee") to vote on your behalf, in accordance with your instructions, in person or by proxy, shares of Common Stock allocated under the
Traditional Plan or the Safe Harbor Plan ("Allocated Stock"), represented by the number of equivalent shares shown on the reverse side of this card, and a proportionate number of shares of Common Stock held in the Traditional Plan and the Safe
Harbor Plan for which no directions are received by the Trustee ("Undirected Stock"), at the Annual Meeting of Company Stockholders, to be held at the JCPenney Home Office located at 6501 Legacy Drive, Plano, Texas 75024-3698 on Friday, May 24,
2019, at 10:00 A.M., local time, and at any adjournment or postponement thereof, upon such business as may come before the meeting, including the items set forth on the reverse. If this proxy/voting instruction card is not received by the Trustee,
or if you have not voted by Internet or telephone, by May 22, 2019, the Allocated Stock will be voted in the same proportion as instructions received by the Trustee by that date from the Traditional Plan participants and Safe Harbor Plan
participants who have returned their proxy/voting instruction cards or voted by Internet or telephone in a timely manner. You acknowledge that in voting the Undirected Stock, you are acting as a named fiduciary under the Employee Retirement Income
Security Act of 1974. You may elect not to direct the voting of Undirected Stock by checking the appropriate box on the reverse side of this card.
For your information, a copy of the Board of Directors' Proxy Statement for the meeting is enclosed herewith.
Board's nominees for Directors for the term set forth in the Proxy Statement are (1a)
Paul J. Brown, (1b) Amanda Ginsberg, (1c) Wonya Y. Lucas, (1d) B. Craig Owens, (1e) Lisa A. Payne, (1f) Debora A. Plunkett, (1g) Leonard H. Roberts, (1h) Jill Soltau, (1i) Javier G. Teruel, and (1j) Ronald W. Tysoe.
Your voting instructions are important and cannot be followed by the Trustee unless this
card is properly executed by you and received by the Trustee, or unless you vote by Internet or telephone, by May 22, 2019. Therefore, please sign, date and return this card promptly in the envelope provided, or vote via Internet or telephone. No
postage is required if this envelope is mailed in the United States.
This
proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be voted FOR election of all directors, and FOR Proposals 2, 3 and 4.
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Address Changes/Comments:
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(If you noted any Address Changes/Comments
above, please mark the corresponding box on the reverse side.)
(Continued on the reverse side)
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J C Penney (NYSE:JCP)
Historical Stock Chart
Von Mär 2024 bis Apr 2024
J C Penney (NYSE:JCP)
Historical Stock Chart
Von Apr 2023 bis Apr 2024