Exhibit 10.3

                                                        Exhibit
    10.3

    JCPenney          Notice
      of
      2008 Performance Unit Grant

    


    J.
      C. Penney Company, Inc.

    
      
        	
                Name

                 [Associate
                  Name]

              	
                 Employee
                  ID

                 [EEID]

              
	
                Date
                  of
                  Grant

                3/12/2008

              	
                Number
                  of Performance Units Granted

                [Grant
                  Amount]

              	
                Performance
                  Cycle

                Begins:
                  2/3/2008 

                Ends:
                  1/31/2009

              


      

    

    2005
      Equity

    Compensation
      Plan

    
      
        

      

    

    You
      have been
      granted the number of Performance Units listed above in recognition of your
      expected future contributions to the success of JCPenney. This Performance
      Unit
      grant is a “target” award, which may increase or decrease based on the Company’s
      actual results for the Performance Cycle as set forth in the Payout Matrix
      established by the independent members of the JCPenney Board of Directors.
      This
      grant is subject to all the terms, rules, and conditions of the J. C. Penney
      Company, Inc. 2005 Equity Compensation Plan (“Plan”) and the implementing
      resolutions (“Resolutions”) approved by the Human Resources and Compensation
      Committee (“Committee”) of the Board. Capitalized terms not otherwise defined
      herein shall have the respective meanings assigned to them in the Plan and
      the
      Resolutions. In the event of a change in capitalization of the Company or other
      similar event, the number of units shall be adjusted as provided in the
      Plan.

    


    Definitions

    Disability
      - Disability means totally and permanently disabled within the meaning of the
      Social Security Act, provided you either (a) qualified for disability insurance
      benefits under such Act, or (b) in the opinion of the organization that
      administers the Company’s disability plans, you have a disability which entitles
      you to such disability insurance benefits except for the fact that you do not
      have sufficient quarters of coverage or have not satisfied any age requirements
      under such law.

    


    Payout
      Matrix - The payout matrix is established by the independent members of the
      Board at the beginning of the Performance Cycle and describes the percentage
      of
      units you shall earn based on the Company’s actual EPS for the Performance
      Cycle.

    


    Performance
      Units - The performance units granted under this program are restricted
      stock units with both performance-based and time-based vesting features. Each
      performance unit shall at all times be deemed to have a value equal to the
      then-current fair market value of one share of J. C. Penney Company, Inc. Common
      Stock of 50¢ par value (“Common Stock”). You can earn from 0% to 200% of the
      units granted based on the Company’s actual results for the Performance
      Cycle.

    


    Performance
      Cycle - The performance cycle is a one-year period beginning on the first
      day of the Company’s fiscal year and ending on the last day of the fiscal
      year.

    


    Performance
      Measurement -The Performance Measurement is the Company’s Diluted Earnings
      Per Share from continuing operations (“EPS”) over the Performance Cycle. 
The Committee, based on objective criteria selected by the Committee may, in
      its
      sole discretion and in compliance with Internal Revenue Service regulations,
      adjust EPS.  Such adjustments may include, but are not limited to,
      extraordinary items as defined under APB No. 30 (as amended), or other items
      that are not reflective of normal ongoing operations, such as: asset impairments
      and write-downs; the effects of losses, or gains as a result of  natural,
      or man made disasters; litigation and claims judgments; legal or tax
      settlements;  the effects of tax law changes; changes in accounting or the
      application of new accounting standards; the effects of restructuring or
      reorganization programs, including refinancing, debt or common stock
      repurchases, or other capital restructurings;  gains or losses,
      realized or unrealized on real estate investments, or assets held for
      sale.

    


    Retirement—Retirement
      means your separation from service either (1) at or after age 60 or (2) at
      or
      after age 55 with at least 15 years of service with JCPenney or any of its
      subsidiaries.

    


    How
      Your
      Actual Performance Units are Determined

    The
      Company’s EPS
      for fiscal 2008 shall determine the actual number of Performance Units, if
      any,
      that are credited to your account. The Payout Matrix shown below indicates
      the
      percentage of Performance Units that shall be credited for the respective EPS
      amounts.

     

    The
      actual number
      of Performance Units that you earn shall be credited to your account as soon
      as
      practicable but in no event later than 2 1⁄2 months after the end of the
      Performance Cycle.

    


    Vesting
      of Your Credited Performance Units

    The
      actual
      Performance Units credited to your account shall vest, and the restrictions
      on
      your Performance Units shall lapse, according to the following Vesting
      Schedule, PROVIDED YOU REMAIN CONTINUOUSLY EMPLOYED BY THE
      COMPANY THROUGH EACH OF THE RESPECTIVE VESTING DATES (unless your employment
      terminates due to your Retirement, Disability, death, job
      restructuring/reduction in force/unit closing or an Involuntary Separation
      from
      Service without Cause under, and as defined in, the Executive Termination Pay
      Agreement). Your vested Performance Units shall be paid
      out in shares of Common Stock as soon as practicable but in no event later
      than
      2 1⁄2 months following each Vesting Date. You shall not be allowed to defer the
      payment of your shares of Common Stock to a later date.

    


    
      	
              Vesting
                Dates

            	
              Percent
                Vesting

            
	
              March
                12,
                2009

            	
              33-1/3%

            
	
              March
                12,
                2010

            	
              33-1/3%

            
	
              March
                12,
                2011

            	
              33-1/3%

            


    

     

    Dividend
      Equivalents 

    You
      shall not have
      any rights as a stockholder until your Performance Units vest and you are issued
      shares of Common Stock in cancellation of the vested Performance Units. However,
      after your earned Performance Units have been credited to your account, you
      shall begin to accrue dividend equivalents on such Performance Units in the
      amount of any quarterly dividend declared on the Common Stock. Dividend
      equivalents shall continue to accrue until your Performance Units vest and
      you
      receive actual shares of Common Stock in cancellation of the vested Performance
      Units. The dividend equivalents shall be credited as additional Performance
      Units in your account to be paid out in shares of Common Stock on each
      applicable Vesting Date along with the Performance Units to which they relate.
      The number of additional Performance Units to be credited to your account shall
      be determined by dividing the aggregate dividend payable with respect to the
      number of Performance Units in your account by the closing price of the Common
      Stock on the New York Stock Exchange on the dividend payment date. The
      additional Performance Units credited to your account are subject to all of
      the
      terms and conditions of this Performance Unit award and the Plan and you shall
      forfeit your additional Performance Units in the event that you forfeit the
      Performance Units to which they relate. 

    


    Employment
      Termination

    If
      your employment
      terminates during the Performance Cycle because of Retirement, Disability,
      death
      or job restructuring/reduction in force/unit closing, then you shall be entitled
      to a prorated number of the Performance Units earned in accordance with the
      Payout Matrix, determined as of the end of the Performance Cycle. The proration
      shall be based on the ratio of (a) the number of calendar days from the date
      of
      grant to the effective date of termination to (b) the total number of calendar
      days in the vesting period. Any Performance Units earned under this termination
      provision, shall be immediately vested and delivered in shares of JCPenney
      Common Stock within 2 1⁄2 months following the end of the Performance
      Cycle.

    


    If
      your employment
      terminates following the end of the Performance Cycle because of Retirement,
      Disability, death or job restructuring/reduction in force/unit closing, you
      shall be entitled to a prorated number of the Performance Units earned under
      the
      Payout Matrix. The proration shall be based on the ratio of (a) the number
      of
      calendar days from the date of grant to the effective date of termination to
      (b)
      the total number of calendar days in the vesting period. Any Performance Units
      that have already vested shall be subtracted from the prorated amount and the
      remaining prorated Performance Units shall vest immediately and be delivered
      as
      shares of JCPenney Common Stock as soon as practicable but in no event later
      than 2 1⁄2 months following your termination date. Any Performance Units which
      have not already vested or for which vesting is not accelerated shall expire
      on
      such employment termination. The beneficiary listed on your J. C. Penney Company
      Equity Plan Beneficiary Designation Form shall receive the vested shares covered
      by the Performance Unit award in the case of termination of employment due
      to
      death. 

    


    If
      your employment
      terminates due to an Involuntary Separation from Service without Cause under,
      and as defined in, the Executive Termination Pay Agreement, any outstanding
      Performance Units shall immediately vest and be payable in shares of JCPenney
      Common Stock, in an amount equal to (1) if termination occurs prior to the
      end
      of the Performance Cycle, the target number of Performance Units for such
      Performance Cycle, and (2) if the termination occurs after the end of the
      Performance Cycle, the number of Performance Units earned for such Performance
      Cycle, subject to (a) the execution and delivery of a release in such form
      as
      may be required by the Company and (b) the expiration of the applicable
      revocation period for such release. 

    


    If
      your employment
      terminates for any reason other than Retirement, Disability, death, job
      restructuring/reduction in force/unit closing, or Involuntary Separation from
      Service without Cause under, and as defined in, the Executive Termination Pay
      Agreement you shall forfeit any unearned and/or unvested Performance Units
      at
      the time of such employment termination.

    


    Change
      of Control

    If
      a Change of
      Control (as defined in Attachment A to this Notice of Grant) occurs during
      the
      Performance Cycle, any outstanding Performance Units shall immediately vest
      and
      be payable in shares of JCPenney Common Stock, in an amount equal to (1) if
      a
      Change of Control occurs prior to the end of the Performance Cycle, the target
      number of Performance Units for such Performance Cycle, and (2) if the Change
      of
      Control occurs after the end of the Performance Cycle, the number of Performance
      Units earned for such Performance Cycle.

    


    Taxes
      and Withholding

    At
      the time your
      Performance Units vest and you are issued shares of Common Stock or cash in
      lieu
      of fractional shares, the fair market value of the shares of Common Stock issued
      to you shall be included in your W-2 form and the Company shall be required
      to
      withhold applicable taxes on such amount. Your withholding rate with respect
      to
      this award may not be higher than the minimum statutory rate. The Company shall
      retain and cancel the number of issued shares equal to the value of the required
      minimum tax withholding in payment of the required minimum tax withholding
      due.
      For purposes of this grant notice, “fair market value” means the closing price
      of the Common Stock on the New York Stock Exchange, or if the Exchange is closed
      on the applicable date, or if the Common Stock does not trade on such date,
      the
      closing price of the Common Stock on the New York Stock Exchange on the last
      trading day immediately preceding such date.

    


    Transferability
      of Your Performance Units

    The
      Performance
      Units awarded hereunder are non-transferable. 

    


     

     

     

     

     

    Effect
      on Other Benefits

    The
      value of the
      shares covered by the Performance Unit award shall not be included as
      compensation or earnings for purposes of any other compensation, retirement,
      or
      benefit plan offered to Company associates. 

    


    Administration

    The
      Committee has
      full authority and discretion, subject only to the terms of the Plan, to decide
      all matters relating to the administration and interpretation of the Plan and
      this Performance Unit award. The Committee’s determinations shall be final,
      conclusive, and binding on you and your heirs, legatees and
      designees.

    


    This
      performance unit grant does not constitute an employment contract. It does
      not
      guarantee employment for the length of the vesting period or for any portion
      thereof.

    


    


    
      	
               

               

              2008
                Performance Unit Award Payout
                Matrix

            


    

    


    


    
      	 	
              2008
                EPS

            	
              Plan
                Payout
                %

            
	
              Maximum

            	
              $4.50
                

            	
              200%

            
	 	
              $4.40
                

            	
              180%

            
	 	
              $4.30

            	
              160%

            
	 	
              $4.20
                

            	
              140%

            
	 	
              $4.10
                

            	
              120%

            
	
              Target

            	
              $4.00
                

            	
              100%

            
	 	
              $3.90
                

            	
              80%

            
	 	
              $3.80
                

            	
              60%

            
	 	
              $3.70
                

            	
              40%

            
	 	
              $3.60
                

            	
              20%

            
	
              Threshold

            	
              $3.50

            	
              0%

            


    

    


    For
      EPS results
      that fall in between the intervals shown above, the payout percent increases
      approximately 2% for each $0.01 above target and decreases approximately 2%
      for
      each $0.01 of EPS below target.


    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    


    Attachment
      A

    


    A
      Change of Control Event shall have occurred if there is a change of ownership,
      a
      change of effective control, or a change in ownership of a substantial portion
      of the assets of the Company (as “Company” is defined in the J. C. Penney
      Company, Inc. 2005 Equity Compensation Plan).

    


    
      	1.  	
              Change
                of
                ownership occurs on the date that a person or persons acting as a
                group
                acquires ownership of stock of the Company that together with stock
                held
                by such person or group constitutes more than 50 percent of the total
                fair
                market value or total voting power of the stock of the
                Company.

            


    

    


    
      	2.  	
              Notwithstanding
                whether the Company has undergone a change of ownership, a change
                of
                effective control occurs (a) when a person or persons acting as a
                group
                acquires within a 12-month period 30 percent of the total voting
                power of
                the stock of the Company or (b) a majority of the Board of Directors
                is
                replaced within 12 months if not previously approved by a majority
                of the
                members. A change in effective control also may occur in any transaction
                in which either of the two corporations involved in the transaction
                has a
                Change in Control Event, i.e. multiple change in control
                events.

            


    

    


    
      	3.  	
              Change
                in
                ownership of a substantial portion of the Company’s assets occurs when a
                person or persons acting as a group acquires assets that have a total
                gross fair market value equal to or more than 40 percent of the total
                gross fair market value of all assets of the Company immediately
                prior to
                the acquisition. A transfer of assets by the Company is not treated
                as a
                change in the ownership of such assets if the assets are transferred
                to -
                

            


    

    (i)
      A shareholder
      of the Company (immediately before the asset transfer) in exchange for or with
      respect to its stock; 

    (ii)
      An entity, 50
      percent or more of the total value or voting power of which is owned, directly
      or indirectly, by the Company; 

    (iii)
      A person, or
      more than one person acting as a group, that owns, directly or indirectly,
      50
      percent or more of the total value or voting power of all the outstanding stock
      of the Company; or 

    (iv)
      An entity, at
      least 50 percent of the total value or voting power of which is owned, directly
      or indirectly, by a person described in paragraph (iii). 

    


    Persons
      will not be
      considered to be acting as a group solely because they purchase assets of the
      Company at the same time, or as a result of the same public offering. However
      persons will be considered to be acting as a group if they are owners of a
      corporation that enters into a merger, consolidation, purchase or acquisition
      of
      assets, or similar business transaction with the Company.