J. C. Penney Corporation, Inc. Management Incentive Compensation Program


    Exhibit
      10.6

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    J.
      C. PENNEY CORPORATION, INC.

    MANAGEMENT

    INCENTIVE
      COMPENSATION PROGRAM

    


    


    EFFECTIVE
      DECEMBER 31, 2007

    


    


    


    


    


    


    


    


    


    


    


    


    



    
      
        
          


          


        

        
        

      

      
        
        

        
        

      

      
        
        

        
        

      

    



    J.
      C. PENNEY CORPORATION, INC.

    Management

    Incentive
      Compensation Program

    


    


    1.  Purpose
      of Program.
      The
      purpose of this Management Incentive Compensation Program ("Program") is to
      continue in effect a fundamental policy which has been an important factor
      in
      the growth and success of J. C. Penney Corporation, Inc., and its divisions
      and
      subsidiaries (collectively, the "Company"). That policy is to base a substantial
      part of the compensation of management employees ("associates") of the Company
      holding positions of responsibility upon the operating results of the Company
      which such associates help to create. Those associates will be paid reasonable
      fixed salaries, but because their aggregate yearly remuneration may be affected
      substantially by variations in the operating results of the Company, they will
      have a direct incentive to put forth their best efforts for the development
      and
      growth of the Company. “Parent Company” means J.C. Penney Company, Inc., a
      Delaware corporation, and any successor corporation.

    


    2.  Structure
      of Program. The
      Program shall consist of separate incentive compensation plans ("plan" or
      "plans") for the following groups of management associates: JCPenney Stores,
      Merchandising, JCPenney Direct, Logistics, and Home Office support areas. The
      Board of Directors of the Company ("Board of Directors" or “Board") or its
      delegate may from time to time authorize additional plans to be included in
      the
      Program or the consolidation of plans that are in the Program.


    
      
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    The
      Program and all plans shall be administered by, or under the direction of,
      a
      committee ("Committee") of the Board of Directors of the Parent Company
      consisting of not less than three Board members who are not, and who have not
      within the year prior to such service on the Committee been, eligible to
      participate in any plan or the Program. The Committee shall have plenary
      authority to interpret the Program and the plans and to make all determinations
      specified in or permitted by the Program and the plans or deemed necessary
      or
      desirable for their administration or for the conduct of the Committee's
      business; all interpretations and determinations of the Committee may be made
      on
      an individual or group basis, and shall be final, conclusive, and binding on
      all
      interested parties; and the Committee may delegate its responsibilities under
      the Program and the plans to persons other than its members, subject to such
      terms and conditions as it shall determine.

    


    3.
       Participants
      in Plans.
      Participants in a plan for any fiscal year shall be designated by the Committee.
      Such designation may be made and, may from time to time be changed, on an
      individual basis or by groups, according to job eligibility, salary, or any
      other method of classification deemed appropriate by the Committee, but only
      management associates (including those who are also directors, but excluding
      those who serve as directors only of the Parent Company) may be so designated
      by
      the Committee.

    4. 
      Determination of Bases of Participation of Participants. The
      basis on which each participant shall participate in a plan shall be determined
      by the Committee, and any bases so determined may be changed from time to time
      by such Committee.

     

    
      
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    The
      Committee may determine the basis on which each participant shall participate
      in
      a plan, on an individual basis or by groups, according to job eligibility,
      salary, or any other method of classification deemed appropriate by the
      Committee. The Committee may specify that such determination will continue
      in
      effect until changed by it, in which event the Committee shall not be required
      to make a new determination for each fiscal year.

    


    The
      Board of Directors of the Parent Company shall determine the basis on which
      participants who are directors of the Parent Company shall participate in a
      plan, and from time to time may change such determination. The Board may specify
      that such determination shall continue in effect until changed by it, in which
      event the Board shall not be required to make a new determination for each
      fiscal year. Such initial determination and any such change shall be made only
      after recommendations of the Committee are considered.

    


    5.
       Limit
      on Incentive Compensation.
      There
      are no limits on the total amount of incentive compensation payable with respect
      to the Program for any fiscal year.

     

    6.
 Determination
      and Payments of Incentive Compensation. The
      method for determining incentive compensation payable with respect to any plan
      and the Program for any fiscal year shall be prescribed by the Committee, and
      may be changed from time to time.

    
      
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    The
      amount of
      incentive compensation payable under the plans shall be computed in accordance
      with the determinations of the Committee, and shall be paid on the basis of
      such
      computation. The Committee shall adopt such rules and procedures as it shall
      deem necessary or desirable in order that the amounts paid under the Program
      be
      verified, and such verification be submitted to the Board of Directors of the
      Parent Company for its approval. Such verified amounts, when approved by the
      Board shall be final, conclusive, and binding on all interested parties,
      including the Company and the plan participants.

    


    The
      amount of incentive compensation payable
      under the Program for a fiscal year will be paid through payroll in a lump
      sum
      within two and one-half months after that fiscal year ends.

    


    7.  Termination
      and Amendment of Plans and Program. Except as provided below, the Board
      of Directors of the Parent Company shall have the power to construe, interpret,
      administer, amend, modify, suspend and terminate the Program or any plan
      established under the Program.

     

    The
      Program or any
      plan established under the Program may be amended at any time, provided however,
      any modification, suspension, amendment or termination within one year before
      or
      two years after a Change in Control may not be made if it would have an adverse
      effect on the Participant’s eligibility, benefits and/or rights under the
      Program 

    
 

    
      
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    or
      any
      plan established under the Program, except as may be otherwise required to
      comply with changes in applicable laws or regulations. 

    


    For
      the
      purposes of this section the following definitions apply. 

    


    Board
      means
      the Board of Directors of J.C. Penney Company, Inc.

     

    Change
      in Control
      means
      the occurrence of any of the following events:

     

    
      	(i)  	
              any
                individual, entity or group (within the meaning of Section 13(d)(3)
                or 14(d)(2) of the Exchange Act) (a “Person”) becomes the beneficial owner
                (within the meaning of Rule 13d-3 promulgated under the Exchange
                Act) of
                20% or more of the combined voting power of the then-outstanding
                Voting
                Stock of the Company or Corporation; provided, however,
                that:

            


    

     

    (1)  for
      purposes of this Section (i)(1), the following acquisitions shall not
      constitute a Change in Control: (A) any acquisition of Voting Stock of the
      Company or Corporation directly from the Company or Corporation that is approved
      by a majority of the Incumbent Directors, (B) any acquisition of Voting
      Stock of the Company or Corporation by the Company or any Subsidiary,
      (C) any acquisition of Voting
      Stock of the
      Company or Corporation by the trustee or other fiduciary holding securities
      under any employee benefit plan (or related trust) sponsored or maintained
      by
      the Company or any Subsidiary, and (D) any acquisition of Voting Stock of the
      Company or Corporation by any Person pursuant to a Business Transaction that
      complies with clauses (A), (B) and (C) of Section (iii) below;

     

    
      
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      (2)  if
        any Person becomes the beneficial owner of 20% or more of combined voting
        power
        of the then-outstanding Voting Stock of the Company or Corporation as a result
        of a transaction described in clause (A) of Section (i)(1) above and such
        Person thereafter becomes the beneficial owner of any additional shares of
        Voting Stock of the Company or Corporation representing 1% or more of the
        then-outstanding Voting Stock of the Company or Corporation, other than in
        an
        acquisition directly from the Company or Corporation that is approved by
        a
        majority of the Incumbent Directors or other than as a result of a stock
        dividend, stock split or similar transaction effected by the Company or
        Corporation in which all holders of Voting Stock are treated equally, such
        subsequent acquisition shall be treated as a Change in
        Control;

    

     

    (3)  a
      Change in Control will not be deemed to have occurred if a Person becomes the
      beneficial owner of 20% or more of the Voting Stock of the Company or
      Corporation as a result of a reduction in the number of shares of Voting Stock
      of the Company or Corporation outstanding pursuant to a transaction or series
      of
      transactions that is approved by a majority of the Incumbent Directors unless
      and until such Person thereafter becomes the beneficial owner of any additional
      shares of Voting Stock of the Company or Corporation representing 1% or more
      of
      the then-outstanding Voting Stock of the Company or Corporation, other than
      as a result of a stock dividend, stock split or similar transaction effected
      by
      the Company or Corporation in which all holders of Voting Stock are treated
      equally; and 

     

    (4)  if
      at least a majority of the Incumbent Directors determine in good faith that
      a
      Person has acquired beneficial ownership of 20% or more of the Voting Stock
      of


     

    
      
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      the
        Company or
        Corporation inadvertently, and such Person divests as promptly as practicable
        but no later than the date, if any, set by the Incumbent Directors a sufficient
        number of shares so that such Person beneficially owns less than 20% of the
        Voting Stock of the Company or Corporation, then no Change in Control shall
        have
        occurred as a result of such Person’s acquisition; or

    

     

    
      	(ii)  	
              a
                majority of
                the board of the Company or of the Corporation ceases to be comprised
                of
                Incumbent Directors; or

            


    

     

    
      	(iii)  	
              the
                consummation of a reorganization, merger or consolidation, or sale
                or
                other disposition of all or substantially all of the assets of the
                Company
                or the Corporation, or the acquisition of the stock or assets of
                another
                corporation, or other transaction (each, a “Business Transaction”),
                unless, in each case, immediately following such Business Transaction
                (A) the Voting Stock of the Company outstanding immediately prior to
                such Business Transaction continues to represent (either by remaining
                outstanding or by being converted into Voting Stock of the surviving
                entity or any parent thereof), more than 50% of the combined voting
                power
                of the then outstanding shares of Voting Stock of the entity resulting
                from such Business Transaction (including, without limitation, an
                entity
                which as a result of such transaction owns the Company, Corporation
                or all
                or substantially all of the Company’s or Corporation’s assets either
                directly or through one or more subsidiaries), (B) no Person (other
                than the Company, such entity resulting from such Business Transaction,
                or
                any employee benefit plan (or related trust) sponsored or maintained
                by
                the Company or any Subsidiary or such entity resulting from such
                Business
                Transaction) beneficially owns, directly or indirectly, 20%
                or

            


    

     

     

    
      
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    more
      of the combined voting power
      of the then outstanding shares of Voting Stock of the entity resulting from
      such
      Business Transaction, and (C) at least a majority of the members of the
      Board of Directors of the entity resulting from such Business Transaction were
      Incumbent Directors at the time of the execution of the initial agreement or
      of
      the action of the Board providing for such Business Transaction; or

     

    
      	(iv)  	
              approval
                by
                the stockholders of the Company of a complete liquidation or dissolution
                of the Company, except pursuant to a Business Transaction that complies
                with clauses (A), (B) and (C) of
                Section (iii).

            


    

     

    Company
      shall
      mean J. C. Penney Company, Inc., a Delaware corporation, or any successor
      company.

    


    Corporation
      shall
      mean J. C. Penney Corporation, Inc., a Delaware corporation, or any successor
      company.

    


    Exchange
      Act
      means
      the Securities Exchange Act of 1934, as amended, and the regulations promulgated
      thereunder. Reference to any section or subsection of the Exchange Act includes
      reference to any comparable or succeeding provisions of any legislation that
      amends, supplements or replaces such section or subsection.

    


    Incumbent
      Directors
      means
      the individuals who, as of the Effective Date hereof, are Directors of the
      Company or the Corporation, as the context requires, and any individual becoming
      a Director subsequent to the date hereof whose election, nomination for election
      by the Company’s or Corporation’s stockholders, or appointment, was approved


     

     

     

    
      
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    by
      a
      vote of at least two-thirds of the then Incumbent Directors (either by a
      specific vote or by approval of the proxy statement of the Company in which
      such
      person is named as a nominee for director, without objection to such
      nomination); provided,
      however,
      that
      an individual shall not be an Incumbent Director if such individual’s election
      or appointment to the Board occurs as a result of an actual or threatened
      election contest (as described in Rule 14a-12(c) of the Exchange Act) with
      respect to the election or removal of Directors or other actual or threatened
      solicitation of proxies or consents by or on behalf of a Person other than
      the
      Board.

     

    Subsidiary
      shall
      mean any entity in which the Company, directly or indirectly, beneficially
      owns
      50% or more of the Voting Stock.

    


    Voting
      Stock
      means
      securities entitled to vote generally in the election of directors.

     

    8. Effective
      Date.
      The
      amended and restated Program shall be effective at 11:59 P.M. on December 31,
      2007.

     

     

     

     

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