<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
J. C. PENNEY COMPANY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) 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) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
JCPENNEY William R. Howell
Chairman of the Board
April 7, 1995
Dear Stockholders:
On behalf of your Board of Directors and your management, I cordially invite
you to attend the Annual Meeting of Stockholders of your Company. It will be
held on Friday, May 19, 1995, at 10:00 A.M., local time, at the El San Juan
Hotel, 6063 Isle Verde Road, San Juan, Puerto Rico 00902.
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 on the
following pages of this booklet.
The vote of each and every stockholder is most important to us. We are
gratified that so many of you have in the past exercised your right to vote
your shares.
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE SIGN AND RETURN THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE SO THAT YOUR SHARES WILL BE
VOTED AT THE MEETING.
Please note that your completed proxy will not prevent you from attending the
meeting and voting in person should you so choose. We look forward to seeing
you at this meeting. If you plan to attend, please so indicate in the
appropriate box on your proxy. As in the past, there will be a report on
operations, an opportunity to meet your Company's directors and officers, as
well as time for questions.
Thank you for your cooperation and continued support and interest in
JCPenney.
Warmest Regards,
[SIGNATURE OF WILLIAM R. HOWELL APPEARS HERE]
ANY STOCKHOLDER HAVING A DISABILITY REQUIRING SPECIAL ASSISTANCE WHO WOULD LIKE
TO ATTEND THE ANNUAL MEETING SHOULD CALL THE SECRETARY OF THE COMPANY AT (214)
431-1201 AND REASONABLE EFFORTS WILL BE MADE TO ACCOMMODATE SUCH NEEDS.
------------------------------------------
Customer Service is Our Number One Priority
------------------------------------------
J. C. Penney Company, Inc. . P.O. Box 10001 . Dallas, TX 75301-0001
Home Office . 6501 Legacy Drive . Plano, TX 75024-3698
<PAGE>
J. C. PENNEY COMPANY, INC.
6501 Legacy Drive, Plano, Texas
75024-3698
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1995
The Annual Meeting of Stockholders of J. C. Penney Company, Inc. will be held
at the El San Juan Hotel, 6063 Isle Verde Road, San Juan, Puerto Rico 00902 on
Friday, May 19, 1995, at 10:00 A.M., local time, for the following purposes:
1. to elect four directors for a three-year term as described in the accom-
panying proxy materials;
2. to approve the employment of KPMG Peat Marwick LLP as auditors to audit
the accounts of the Company for the fiscal year ending January 27, 1996;
3. to act upon a resolution which the Company has been informed will be
proposed by a stockholder of the Company regarding classification of the
Board;
4. to act upon a resolution which the Company has been informed will be
proposed by a stockholder of the Company regarding submission of the
Company's stockholder rights plan to a stockholder vote; and
5. to transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 20, 1995, are
entitled to vote at the meeting. A complete list of those stockholders will be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours at the JCPenney Store, Plaza Carolina
Mall, Jesus Fragoso Avenue--Expreso Loiza, Carolina, Puerto Rico 00988, for a
period of 10 days prior to the meeting.
Plano, Texas [SIGNATURE OF C. R. LOTTER APPEARS HERE]
April 7, 1995 C. R. Lotter, Secretary
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE, & RETURN YOUR PROXY CARD
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of proxies in the accompanying form.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE IN ORDER TO BE SURE THAT YOUR
SHARES WILL BE VOTED AT THE MEETING.
You may revoke your proxy at any time before it is exercised at the meeting
by submitting a written revocation, a subsequently dated proxy, or by personal
vote at the meeting.
The enclosed proxy also serves as the voting instruction card for Chemical
Bank as agent ("Agent") holding shares of Common Stock of 50c par value of the
Company ("Common Stock") of record for participants under the Company's
Dividend Reinvestment Plan ("DRIP"). Such voting instructions are intended to
cover Common Stock allocated to accounts of DRIP participants from whom an
executed voting instruction card is received by the Agent by May 16, 1995
("Voted Stock") and Common Stock allocated to the accounts of DRIP participants
from whom an executed voting instruction card is not received by the Agent by
May 16, 1995 ("Undirected Stock"). The Agent will vote as follows: (a) for
Voted Stock, in accordance with the instructions given, and (b) for Undirected
Stock, in the same proportion as the vote for the Voted Stock. Separate voting
instruction cards are also being furnished to participants who beneficially own
Voting Stock (as defined below) in the trusts under the Company's Savings and
Profit-Sharing Retirement Plan ("Savings Plan"), the Company's Savings, Profit-
Sharing and Stock Ownership Plan ("LESOP"), and the JCPenney Financial Services
Thrift and Investment Retirement Plan.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, certain directors, officers, and employees of the Company
may solicit proxies in person, by telephone, telegraph, or mail. The Company
has also retained, on behalf of the Board of Directors, Morrow & Co., Inc. to
aid solicitation by mail, telephone, telegraph, and personal interview, for a
fee of approximately $22,500, plus reasonable expenses, which will be paid by
the Company. The Company may also reimburse brokers and other persons holding
shares in their names, or in the names of nominees, for their expenses in
sending proxy material to principals and obtaining their proxies.
The complete mailing address of the Company's principal executive offices is
J. C. Penney Company, Inc., P. O. Box 10001, Dallas, Texas 75301-0001. The
approximate date on which this proxy statement and the form of proxy were first
sent or given to stockholders was April 7, 1995.
VOTING RIGHTS
Stockholders of record at the close of business on March 20, 1995, the record
date for the Annual Meeting, are entitled to vote at the meeting. At the close
of business on such date, 228,317,807 shares of Common Stock, and 1,044,169
shares of Series B ESOP Convertible Preferred Stock ("ESOP Preferred Stock")
having a Common Stock voting equivalent of 20 votes per share for a combined
total voting equivalent of 249,201,187 shares ("Voting Stock"), were
outstanding and entitled to vote.
On that date, a trust maintained under the Company's Savings Plan held
30,951,576 shares of Common Stock representing approximately 12.42% of the
Voting Stock, and a trust maintained under the LESOP held 1,044,169 shares of
ESOP Preferred Stock and 8,077,627 shares of Common Stock, representing
approximately 11.62% of the Voting Stock. The holdings of both Plans represent
approximately 24.04% of the Voting Stock. These trusts have disclaimed
beneficial ownership of these shares of Voting Stock.
1
<PAGE>
The Company's Bylaws require an affirmative vote of the holders of a majority
of the shares of the Voting Stock outstanding and entitled to vote as of the
record date for approval of each proposal presented in this proxy statement.
Abstentions and broker nonvotes are counted only for purposes of determining
whether a quorum is present at the meeting.
GOVERNANCE OF THE COMPANY
BOARD OF DIRECTORS. The Board of Directors is responsible for establishing
broad corporate policies and for overseeing the general performance of the
Company. In keeping with its long-standing practice, the Company's Board
continues to be an independent board. The Company's Board structure is designed
to assure that there is independent review and oversight as well as approval of
significant strategic and management decisions affecting the Company. The Board
has seven meetings scheduled for fiscal 1995.
COMMITTEES OF BOARD OF DIRECTORS. The Board of Directors carries out many of
its functions through five principal standing committees, which are described
on page 3 and are composed entirely of directors who are not employees of the
Company. One of these committees, the Committee on Directors, selects and
recommends to the Board nominees for director on the basis of their recognized
experience and achievements, both in commerce and society, and for their
ability to bring a wide diversity of skills and experience to the deliberations
of the Board. Stockholders also may make recommendations of nominees for
director, as explained in greater detail on pages 24 and 25.
CONFIDENTIAL VOTING. In casting their votes, stockholders are also assured that
their votes are accorded confidential voting treatment as provided in the
Company's confidential voting policy described on page 25.
EXECUTIVE COMPENSATION. The Personnel and Compensation Committee of the Board
of Directors, which is composed entirely of non-employee directors, approves,
among other things, the annual salaries of executive officers and recommends to
the full Board for its approval the respective annual salaries of the three
employee directors. Please see the Report of Personnel and Compensation
Committee on Executive Compensation, which begins on page 10.
CLASSES OF BOARD OF DIRECTORS. The Company's Restated Certificate of
Incorporation and its Bylaws provide for a Board of not less than three
directors as fixed, from time to time, by the Board, and further provide for
three classes of directors to be as nearly equal in number as possible, with
each class serving a three-year term and with one class being elected each
year. Currently, the Board consists of ten members, with two classes consisting
of three directors each and one class consisting of four directors. Of the ten
current directors, three are currently Company employees and seven have
principal occupations or employment which are and have been outside the
Company.
Each director is required to be a stockholder of the Company.
BOARD MEETINGS. During fiscal 1994, seven meetings of the Board were held.
Attendance at such meetings for current directors averaged approximately 98%.
In addition to membership on the Board, directors who are not Company employees
also serve on one or more of the principal standing committees of the Board.
During fiscal 1994, these committees held a total of 14 meetings; no current
director attended fewer than 92% of the aggregate total of meetings of the
Board and committees on which he or she served.
2
<PAGE>
COMMITTEES
The following describes the principal standing committees of the Board of
Directors, which are composed entirely of directors who are not employees of
the Company:
AUDIT COMMITTEE. The Audit Committee's responsibilities include recommending to
the Board of Directors for stockholder approval the independent auditors for
the annual audit of the Company's consolidated financial statements. The
Committee reviews the audit strategy and plan, scope, fees, and audit results
of the auditors, reports on the adequacy of internal accounting controls, non-
audit services and related fees, the Company's ethics program, status of
significant legal matters, the scope of the internal auditors' plans and budget
and results of their audits, and the effectiveness of the Company's program for
correcting audit findings.
During fiscal 1994, this Committee met three times. Its members are M. A.
Burns, C. S. Sanford, Jr., and J. D. Williams, who serves as its Chair.
BENEFIT PLANS REVIEW COMMITTEE. This Committee's responsibilities include
reviewing and administering the Company's retirement and welfare plans and
reviewing annually the financial condition and investment performance results
of the Company's retirement plans, annual actuarial valuation reports for the
Company's Pension Plan, and the financial condition, investment performance
results, and actuarial valuation aspects of the Company's welfare plans.
During fiscal 1994, this Committee met one time. Its members are M. A. Burns,
J. D. Williams, and J. C. Pfeiffer, who serves as its Chair.
COMMITTEE ON DIRECTORS. The Committee on Directors' responsibilities include
making recommendations to the Board with respect to the size, composition, and
functions of the Board of Directors, the qualifications of directors,
candidates for election as directors, and the compensation of directors.
During fiscal 1994, this Committee met two times. Its members are C. H.
Chandler, George Nigh, J. C. Pfeiffer, C. S. Sanford, Jr., and V. E. Jordan,
Jr., who serves as its Chair.
Stockholders may propose nominations for directors in accordance with the
procedures described on pages 24 and 25.
PERSONNEL AND COMPENSATION COMMITTEE. This Committee's responsibilities include
reviewing and administering the Company's annual and long-term incentive
compensation plans, making recommendations in areas concerning personnel
relations, and taking action or making recommendations with respect to the
compensation of executive officers, including those who are directors.
During fiscal 1994, this Committee met six times. Its members are V. E.
Jordan, Jr., George Nigh, J. C. Pfeiffer, and C. H. Chandler, who serves as its
Chair.
PUBLIC AFFAIRS COMMITTEE. The responsibilities of the Public Affairs Committee
include identifying, analyzing, and bringing to the attention of the Board
social and environmental trends, community affairs, and public policy issues
which may have a potential impact on the business performance and investment
character of the Company, and assuring that Company policy and performance
reflect a sensitivity toward the social and physical environments in which the
Company does business and that such policy and performance are in accord with
the public interest.
During fiscal 1994, this Committee met two times. Its members are M. A.
Burns, V. E. Jordan, Jr., J. D. Williams, and George Nigh, who serves as its
Chair.
The mailing address for all of these committees is c/o C. R. Lotter,
Secretary, J. C. Penney Company, Inc., P. O. Box 10001, Dallas, Texas 75301-
1109.
3
<PAGE>
ELECTION OF DIRECTORS (PROPOSAL 1)
As indicated on page 2, under "Classes of Board of Directors", the Board of
Directors has been divided into three classes with two classes consisting of
three directors each and one class consisting of four directors. At the
meeting, four directors will be elected to hold office for a three-year term
expiring at the 1998 Annual Meeting of Stockholders. Other directors will
continue in office, in accordance with their previous election, until the
expirations of the terms of their classes at the 1996 or 1997 Annual Meeting of
Stockholders, as the case may be.
Brief statements setting forth certain information as of March 20, 1995, as
to the Board of Directors' nominees for directors for the three-year term
expiring at the 1998 Annual Meeting of Stockholders and as to each current
director in the classes continuing in office are shown on pages 5 to 7. Each of
the nominees is currently a director of the Company.
If properly executed and timely returned, the accompanying proxy will be
voted for all four nominees for a term expiring at the 1998 Annual Meeting of
Stockholders, except where authority so to vote is withheld. If any nominees
should become unavailable for election for any presently unforeseen reason, the
persons designated as proxies will have full discretion to cast votes for
another person designated by the Board, unless the Board reduces the number of
directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR.
4
<PAGE>
NOMINEES FOR DIRECTORS FOR THREE-YEAR TERM EXPIRING 1998
M. ANTHONY BURNS, 52
Chairman, President and Chief Executive Officer of Ryder System,
Inc. (a provider of transportation and logistics services) since
1985, with which he has served in positions of increasing
[PHOTO OF importance since 1974, including its President since 1979, Chief
M. ANTHONY Executive Officer since 1983, and a director since 1979;
BURNS APPEARS Director of The Chase Manhattan Bank, N. A., The Chase Manhattan
HERE] Corporation, Pfizer, Inc., American Red Cross, Boy Scouts of
America, and United Way of America; Trustee of the University of
Miami; Member of the Policy Committee of The Business Roundtable
and of The Business Council; Director of the Company since 1988.
COLBY H. CHANDLER, 69
Formerly Chairman and Chief Executive Officer of Eastman Kodak
[PHOTO OF Company from 1983 to 1990 and its President from 1977 to 1983;
COLBY H. Associated with Eastman Kodak Company since 1950 and a director
CHANDLER from 1974 to 1993; Director of Citicorp, Digital Equipment
APPEARS Corporation, Ford Motor Company, and M.I.T. Corporation; Trustee
HERE] of the International Museum of Photography at George Eastman
House, Rochester Institute of Technology, and the University of
Rochester; Director of the Company since 1983.
JAMES E. OESTERREICHER, 53
Vice Chairman of the Board and Chief Executive Officer of the
Company since January 1995; President, JCPenney Stores and
Catalog, from 1992 to 1995; Executive Vice President from 1988
[PHOTO OF to 1992; Associated with the Company since 1964; Director of
JAMES E. Brinker International, Inc., Circle 10 Council, Boy Scouts of
OESTERREICHER America, National 4-H Foundation, and Presbyterian Hospital of
APPEARS Plano; Advisory director of the University of Florida Retail
HERE] Management Institute; Director of the Company since January
1995.
CHARLES S. SANFORD, JR., 58
Chairman of Bankers Trust New York Corporation and its principal
subsidiary, Bankers Trust Company, since 1987, with which he has
[PHOTO OF served in positions of increasing importance since 1961,
CHARLES S. including its Deputy Chairman from 1986 to 1987 and President
SANFORD, JR. from 1983 to 1986; Director of Mobil Corporation; Member of The
APPEARS Business Roundtable and The Business Council; Overseer of The
HERE] Wharton School, University of Pennsylvania; Director of the
Company since 1992.
5
<PAGE>
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING 1996
WILLIAM R. HOWELL, 59
Chairman of the Board of the Company since 1983 and Chief
[PHOTO OF Executive Officer of the Company from 1983 to January 1995;
WILLIAM R. Associated with the Company since 1958; Director of Bankers
HOWELL Trust Company, Bankers Trust New York Corporation, Exxon
APPEARS Corporation, Halliburton Company, Warner-Lambert Company, Beta
HERE] Gamma Sigma, and National Retail Federation; Trustee of the
National Urban League; Director of the Company since 1981.
GEORGE NIGH, 67
President of the University of Central Oklahoma since 1992;
[PHOTO OF Formerly Governor of Oklahoma, during 1963 and from 1979 to
GEORGE NIGH 1987; Lieutenant Governor from 1958 to 1963 and from 1967 to
APPEARS 1979; Member of the Oklahoma House of Representatives from 1950
HERE] to 1958; Director of Boatmen's First National Bank of Oklahoma;
Director of the Company since 1987.
JOSEPH D. WILLIAMS, 68
Retired Chairman and Chief Executive Officer of Warner-Lambert
Company (pharmaceuticals, health care, and consumer products)
[PHOTO OF from 1985 to 1991, with which and with a related company he
JOSEPH D. served in positions of increasing importance since 1950,
WILLIAMS including its President and Chief Operating Officer from 1979 to
APPEARS 1985; Director of AT&T Corp., Exxon Corporation, Rockefeller &
HERE] Co., Therapeutic Antibodies Inc, Thrift Drug, Inc., Warner-
Lambert Company, and The Wyatt Co.; Trustee of Columbia
University, Project Hope, Liberty Science Center, and the United
Negro College Fund; Director of the Company since 1985.
6
<PAGE>
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING 1997
VERNON E. JORDAN, JR., 59
Senior Partner, law firm of Akin, Gump, Strauss, Hauer & Feld
since 1992; Partner since 1982; President from 1977 to 1981 and
Executive Director from 1972 to 1977 of the National Urban
[PHOTO OF League; Director of American Express Company, Bankers Trust
VERNON E. Company, Bankers Trust New York Corporation, Corning
JORDAN, JR. Incorporated, Dow Jones & Company, Inc., Revlon Group
APPEARS Incorporated, Ryder System, Inc., Sara Lee Corporation, Union
HERE] Carbide Corporation, and Xerox Corporation; Trustee of the
Brookings Institution, The Ford Foundation, Howard University,
and the Joint Center for Political and Economic Studies;
Director of the Company since 1973.
JANE C. PFEIFFER, 62
Independent management consultant; Chairman of the Board of
National Broadcasting Company, Inc. from 1978 to 1980;
Independent management consultant from 1976 to 1978; Vice
[PHOTO OF President of Communications and Government Relations of
JANE C. International Business Machines Corporation from 1972 to 1976;
PFEIFFER Director of Ashland Oil, Inc., International Paper Company, The
APPEARS Mutual Life Insurance Company of New York, and Overseas
HERE] Development Council; Trustee of The Conference Board and of the
University of Notre Dame; Director of the Company since 1977.
W. BARGER TYGART, 59
President and Chief Operating Officer of the Company since
January 1995; Senior Executive Vice President from 1992 to 1995;
[PHOTO OF Executive Vice President from 1987 to 1992; Associated with the
W. BARGER Company since 1960; Chairman, The Fashion Association of
TYGART America; Director and Executive Committee Member, North Texas
APPEARS Public Broadcasting; Director of the Education Foundation for
HERE] the Fashion Industries--Fashion Institute of Technology, and the
Corporate Advisory Board, National Council of LaRaza; Advisory
director of American Studies at Harding University; Member of
the College Advisory Board at the University of Arkansas;
Director of the Company since January 1995.
7
<PAGE>
MANAGEMENT OWNERSHIP OF COMMON STOCK AND ESOP PREFERRED STOCK
The following table shows, as of March 20, 1995, the beneficial ownership of
shares of Voting Stock by each present director, by each individual serving as
the Company's Chief Executive Officer during fiscal 1994, and by the four most
highly compensated executive officers other than the individuals serving as
Chief Executive Officer during the last fiscal year (such executive officers,
together with the two individuals serving as Chief Executive Officer, being
hereinafter referred to as the "Named Executive Officers"), and by all present
directors and all executive officers of the Company as a group. The information
includes shares held under certain restrictions and, in the case of executive
officers, also includes the number of shares of Voting Stock credited to their
accounts under the Company's Savings Plan and LESOP. As shown in the last two
columns, substantial portions of the shares indicated as beneficially owned are
actually unissued shares attributable to unexercised and unexpired options for
Common Stock. The combined beneficial ownership of shares of Common Stock and
Common Stock voting equivalents of each director and Named Executive Officer
and of all directors and executive officers as a group (not including shares
attributable to unexercised and unexpired options) constitutes less than 1% of
the total Voting Stock as of March 20, 1995.
<TABLE>
<CAPTION>
Number
attributable Number
to unexercised attributable
Number and unexpired to options
of shares options for exercisable within
beneficially Common 60 days of
Name or Group owned Stock March 20, 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Directors:
M. A. Burns 9,200 7,200 7,200
C. H. Chandler 21,200 7,200 7,200
W. R. Howell 270,076 194,357 134,357
V. E. Jordan, Jr. 11,122 10,400 10,400
George Nigh 7,835 7,200 7,200
J. E. Oesterreicher 177,469 127,434 100,434
J. C. Pfeiffer 10,094 9,200 9,200
C. S. Sanford, Jr. 7,200* 3,200 3,200
W. B. Tygart 189,061 122,718 99,718
J. D. Williams 25,200 7,200 7,200
Named Executive Officers:**
J. T. Cody, Jr. 139,814 83,936 64,936
T. D. Hutchens 119,634 84,706 65,706
R. E. Northam 176,604 109,082 90,082
All present directors and
executive officers as a group 1,675,331 1,081,023 858,523
- ------------------------------------------------------------------------------
</TABLE>
* Excludes 4,251,115 shares held in accounts of Bankers Trust Company, of
which Mr. Sanford is the Chairman, but as to which he disclaims beneficial
ownership.
** In addition to Messrs. Howell, Oesterreicher, and Tygart who also serve as
directors.
8
<PAGE>
CERTAIN FILINGS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the New York Stock Exchange. Through an inadvertent
omission, there was a failure to file a Form 4 on behalf of Mr. Oesterreicher
to report shares of Common Stock and ESOP Preferred Stock held by a bank
trustee under the Savings Plan and LESOP for his adult son's account when his
son returned to live in his household in September 1992. A Form 4 reporting
these shares was filed after discovery of this omission. Mr. Oesterreicher
disclaims beneficial ownership of these shares.
DIRECTORS' FEES
Company employees are not paid additional amounts for serving as directors.
Directors who are not Company employees ("Non-Associate Directors") are paid an
annual retainer of $26,400, plus $1,200 for attendance at each meeting of the
Board and $1,000 for attendance at each meeting of any committee of the Board.
The chair of the Audit Committee and the Personnel and Compensation Committee
of the Board are each paid an additional annual fee of $4,500; the chair of the
Benefit Plans Review Committee, the Committee on Directors, and the Public
Affairs Committee of the Board are each paid an additional annual fee of
$4,000. Directors are also reimbursed for expenses incurred for attending any
meeting which they attend in their official capacities as directors. One Non-
Associate Director sits on the Board of Directors of Thrift Drug, Inc., a
wholly-owned subsidiary of the Company ("Thrift"). This Non-Associate Director
receives $2,000 for attendance at each meeting of Thrift's Board, $2,000 for
attendance at each meeting of a committee of the Thrift Board on which he sits,
and is reimbursed for expenses incurred for meeting attendance. He does not
receive an annual retainer for serving on the Thrift Board. Directors who are
Representatives under an Indemnification Trust Agreement between the Company
and Chemical Bank, as trustee, (currently Directors Jordan, Pfeiffer, and
Williams), are paid an annual retainer of $5,000, plus $600 for each meeting of
the Representatives and are reimbursed for expenses of meeting attendance.
During fiscal 1994, no such meetings were held. Non-Associate Directors are
also paid $800 for each full day of service to the Company in addition to those
services which they perform in connection with Board and committee
responsibilities, and are reimbursed for expenses in connection with their
performance of such services. No director received payment for such services
during fiscal 1994. A director may elect to defer payment of all or part of any
of the above fees under the terms of a deferred compensation plan for
directors. During fiscal 1994, three directors elected to so defer.
Pursuant to a retirement plan for Non-Associate Directors, any director who
is not entitled to receive benefits under the Company's Pension Plan will be
paid a retirement benefit after serving as a member of the Board for a period
of not less than five years. Annualized benefits will not exceed the then
current annual retainer for directors. Pursuant to the Company's Bylaws, no
person may continue to serve as a director after the Company's annual meeting
of stockholders in the calendar year in which such person attains age 72.
During fiscal 1994, each Non-Associate Director was also automatically given
a tandem restricted stock award/stock option grant under the Company's 1993
Equity Compensation Plan. Each such award/grant consisted of 200 shares of
restricted Common Stock and an option to purchase 800 shares of Common Stock.
All such options became exercisable six months from the date of grant, but
shares which may be acquired upon any such exercise may not be sold by a
director until that director's termination. If on the date of a "Qualifying
Termination" the "option value" of any unexpired option is greater than the
fair market value of the Common Stock covered by the tandem stock award, such
stock award will be forfeited and the stock option will remain exercisable for
two years, but if the option value is less than the fair market value of the
Common Stock covered by the tandem stock award, the
9
<PAGE>
stock option will automatically expire and the tandem stock award will
automatically vest. For any "Non-qualifying Termination", unless otherwise
determined by the plan committee, all outstanding stock awards and unexercised
options will be forfeited or canceled, as the case may be. Generally,
termination by reason of misconduct will be considered a Non-qualifying
Termination and all other terminations will be considered Qualifying
Terminations. The shares under option grant are included in the table on page
8.
Directors are eligible to participate in the Company's Directors' Charitable
Award Program ("Charitable Award Program"). The Charitable Award Program is
designed to acknowledge the service of directors and to benefit and recognize
the mutual interest of directors and the Company in supporting worthy
charitable and educational institutions. In addition, it enhances the Company's
ability to attract and retain directors of the highest caliber and experience.
Pursuant to the Charitable Award Program, the Company has purchased joint life
insurance policies on groups of directors. Each group generally consists of two
directors with the Company named as the beneficiary of each joint life policy.
With respect to each group, the Company will receive a $1,000,000 death benefit
upon the death of the second director of the group. The Company in turn has
informally agreed to donate a total of $1,000,000; $500,000 upon the earlier of
(i) five years after the date of death of the first director of the group to
die or (ii) the death of the second director of the group, and an additional
$500,000 upon the death of the second director of the group, to one or more
charitable organizations as recommended by the individual directors. Because
all charitable deductions accrue solely to the Company, the individual
directors derive no financial benefits from this Program. The Board may, at any
time, without the consent of any participating director, amend, suspend, or
terminate this Program. All directors currently participate in the Charitable
Award Program.
REPORT OF PERSONNEL AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Personnel and Compensation Committee of the Board of Directors
("Committee"), which is composed entirely of non-employee directors, is
responsible for establishing and implementing the compensation policies for the
Company. Based upon its evaluation of the performance of both the Company and
the executive officers, the Committee determines and approves the annual
salaries of these officers and recommends to the full Board for its approval
the respective annual salaries of the Company's Chairman of the Board, its Vice
Chairman of the Board and Chief Executive Officer ("CEO"), and its President
and Chief Operating Officer, who also serves as a Company director. The
Committee also determines and approves the amounts of annual and long-term
incentive compensation payments to be made to executive officers as well as the
awards which may be made to them under the Company's 1993 Equity Compensation
Plan ("Equity Plan") and predecessor plans. In carrying out these
responsibilities, the Committee is advised by outside consultants with respect
to the competitiveness of the Company's executive compensation policies and
programs and, as needed, meets with these consultants without any Company
representative being present. As part of its ongoing review of executive
compensation, in January 1994 the Committee commissioned an internal study of
the Company's short and long-term executive pay programs. This study was
reviewed by outside consultants, and approved by the Committee in November
1994.
COMPENSATION PHILOSOPHY. Since the Company's founding in 1902 by James Cash
Penney and as set forth in the Penney Idea adopted in 1913, the JCPenney
compensation philosophy has been based on the following: To reward the men and
women in our organization through participation in what the business produces.
Implementation of this philosophy is based on tying compensation directly to
the achievement of the Company's annual and long-term performance goals.
Through the consistent and fair application of this philosophy the Company
believes it can attract and retain executives who are most able to contribute
to the long-term success of the Company and
10
<PAGE>
the enhancement of stockholder value. This is accomplished through a
compensation package consisting of: (1) base salary, (2) annual profit
incentive compensation, and (3) long-term incentive compensation of both cash
and stock. (See "Summary Compensation Table" on page 15.) As an executive
officer's Position Responsibility Level ("PRL") increases, a greater portion of
his or her compensation is based upon Company performance, and this is
reflected in the annual and long-term incentive components of such officer's
compensation.
BASE SALARY AND INCENTIVE COMPENSATION PAYMENTS. Total annual cash compensation
consists of base salary and annual awards under the Company's short and long-
term incentive compensation plans. Base salary is set by the Committee from a
range determined by the officer's PRL. At the executive officer level, the
midpoint of such base salary range has typically been set 25-30% below median
competitive base pay rates for comparable executives. Rather, emphasis is
placed upon incentive compensation tied to Company performance as a means to
provide competitive pay levels. In determining base salary, consideration is
given to the following factors: job responsibilities and tasks; knowledge,
skills, and experience required for successful job performance; and competitive
positioning, both within and outside the Company. No specific weighting is
given to any of these factors. In determining competitive position,
consideration is given to the companies constituting the S&P 500 Retail Index
for department stores as well as other major retailers in the United States and
selected Fortune 200 companies. It is believed that these are the companies
with which the Company competes for executive talent. In setting base salaries
the Committee considers the competitiveness of the Company's cash compensation
package as compared with the cash compensation packages of these selected
companies. The Company targets its total cash compensation package for its
executive officers, as a group, and its CEO at or near the 50th percentile of
competitive pay for comparable executives when Company performance goals are
"met" and at or near the 75th percentile when Company performance "exceeds"
pre-established targets. The Committee reviews base salary levels at least
annually and, based on the factors described above and a review of competitive
data, approves salary increases for executive officers. The length of time
between increases generally ranges from 12 to 14 months.
Under the Company's 1989 Management Incentive Compensation Program
("Incentive Program"), annual profit incentive compensation can be earned and
added to base salary. The amount of annual incentive compensation, which is a
cash payment, is based on the number of profit incentive units credited to a
particular PRL and the value assigned to each unit. The number of profit
incentive units credited is a given percentage, based on PRL level, of base
salary. The value of each unit is determined by the Committee. A unit value is
determined for the total Company based on the Company's performance against two
factors: total revenues as measured against the Company's goal for the year
(weighted at approximately 30%), and primary earnings per share for the current
year as measured against primary earnings per share for the preceding year
(weighted at approximately 70%). Unit values are also determined for each of
the Company's major operating divisions, based on performance against its sales
and profit goals for the year (typically the sales and profit factors are given
equal weight). For executive officers with broad Company responsibility,
including Messrs. Howell, Oesterreicher, and Northam, 1994 unit values were
based 50% on total Company revenue and earnings per share ("EPS") results and
50% on a blended unit value called "Company Management". The Company Management
unit value is based 30%, 30%, and 20%, respectively, on the sales and profit
results of the Company's Region, Merchandising, and Catalog operating units,
and 20% on total Company revenue and EPS results. For other executive officers
with operating responsibilities, 50% of their annual incentive pay is tied to
total Company performance, using the same factors described above, and 50% to
the operating division which they direct.
The cash payment of long-term incentive compensation is set by the Committee
under the Company's 1984 Performance Unit Plan ("PUP"). Similar to the
Incentive Program, the annual amount paid under the PUP is based on the number
of performance units credited to a particular PRL and the value assigned to
each unit. The number of performance units is calculated by multiplying the sum
of
11
<PAGE>
base salary and profit incentive compensation opportunity valued at $1.00 per
unit by a given percentage, based on PRL. The value of each performance unit is
determined by the Committee and is based on the Company's return on equity
("ROE") measured over a three-year period and EPS, as determined by the
Committee, measured over this same period and the five consecutive fiscal years
immediately preceding this three-year period, as well as the Company's
financial performance (i.e., ROE and EPS), relative to a selected group of
retail competitors. The calculation is based upon a matrix award schedule
having various performance unit value ranges at specified ROE/EPS performance
combinations. While there is no specific weighting of these factors, ROE
generally has a greater impact on the value than does EPS. The selected group
of competitors includes those making up the S&P 500 Retail Index for department
stores and other major retailers which, based upon size and target customer,
have a reasonable basis for comparison to the Company. The Committee may, in
its discretion, assign a performance unit value outside of the matrix award
schedule if it determines that such unit value is warranted by the Company's
ROE and EPS performance results for the measurement period. (See "Long-Term
Incentive Plans--Awards in Last Fiscal Year", page 18.)
For fiscal 1994, the combined payments from these two incentive programs
accounted for from 63% to 69% of the Named Executive Officers' total cash
compensation, depending on the Company's sales and earnings performance and the
executive's PRL.
EQUITY AWARDS. The stock or equity portion of the Company's compensation
package is designed to align the interests of its executives with its
stockholders. Generally, an executive's participation in the Equity Plan and
the size of awards made are a function of the executive's PRL. The Committee
does not consider the amounts and terms of prior grants of stock options when
determining equity awards. To date, stock options, stock awards, and
shareholder value awards have been granted under the Equity Plan.
As of February 27, 1995, options covering approximately 1,227,000 shares of
Common Stock under the Equity Plan (to approximately 1,700 management employees
of the Company and its subsidiaries) were granted at an option price of $43.00
per share. Additionally, shareholder value award units were granted on February
1, 1993, February 1, 1994, and February 1, 1995 (see "Shareholder Value Award
Program" below).
The Company has never reduced the exercise prices of outstanding stock
options under the present or any prior option plan.
SHAREHOLDER VALUE AWARD PROGRAM. Effective January 31, 1993, the Committee
approved the J. C. Penney Company, Inc. Shareholder Value Award Program as an
additional equity incentive element of the Equity Plan. This Program is
intended to encourage and reward the creation of sustainable stockholder value
by providing equity awards which cause participants to manage the business from
the perspective of an owner, with a personal stake in the Company's long-term
growth and profitability.
Participants receive Shareholder Value Awards ("SVAs") which will be earned
in restricted stock, if and when they vest, depending on the Company's
cumulative Total Shareholder Return ("TSR") over a three-year measurement
period relative to the TSR for the S&P 500 Retail Index for department stores
and the S&P 500 Index. Each SVA unit is equivalent to one share of Common Stock
for valuation purposes, and, if earned, will be paid in shares of Common Stock
subject to a three-year non-transferability period. During the measurement
period, dividend equivalents will be credited and converted into additional SVA
units subject to the same TSR measurement requirements. In no case may an SVA
vest prior to 1996.
1994 COMPENSATION. In 1994, the annual profit incentive compensation unit value
for the measurement comprising total Company performance under the Incentive
Program was $2.15 as compared to $2.12 in 1993 and $1.95 in 1992. No employee's
1994 incentive compensation, however,
12
<PAGE>
was comprised solely of the total Company performance measurement. As noted
previously, for executive officers with broad Company responsibility, 50% of
the unit value is based upon the blended Company Management unit value.
Accordingly, the 1994 Incentive Program unit values for each of Messrs. Howell,
Oesterreicher, and Northam was $2.095. For certain other officers, 50% of the
unit value is based upon the sales and profit results of the particular
operating division(s) for which they are responsible. Accordingly, the 1994
Incentive Program unit values for Messrs. Tygart, Cody, and Hutchens were
$2.085, $2.10, and $2.085, respectively.
Correspondingly, the performance unit value under the PUP for the three-year
measurement period ending in 1994 was $2.20 as compared to $1.80 in 1993 and
$1.50 in 1992. Average return on equity was 19.5%, 17.0%, and 14.6% for the
measurement periods ending in 1994, 1993, and 1992, respectively. Average EPS
percentage growth, as determined by the Committee, for each of these same three
years was 16.9% (1994), 8.3% (1993), and 4.4% (1992). Due to its long-term
nature, the PUP awards are less sensitive to year-to-year changes in Company
performance than are Incentive Program awards.
CEO COMPENSATION. Effective January 1, 1995, James E. Oesterreicher was elected
Chief Executive Officer of the Company, succeeding William R. Howell, who
continues to serve as the Company's Chairman of the Board. For 1994, over 69%
of the total cash compensation for the CEO position was comprised of annual and
long-term cash incentive awards. (The comparable percentages for fiscal 1993
and 1992 were 68% and 65%, respectively.) This level of compensation was based
on the same performance factors applicable to all executive officers, as
discussed in the preceding paragraphs. No unique evaluation factors are
utilized with respect to determining the CEO's compensation. CEO compensation
in fiscal 1994 reflected the Company's third consecutive year of strong
performance in both sales and earnings.
As discussed above, the Company's executive compensation philosophy
emphasizes incentive compensation tied to Company performance. In 1993, Section
162(m) of the Internal Revenue Code was introduced, which, in certain
circumstances, limits the deductibility of executive compensation. The
Committee believes that the Company's compensation programs provide the
necessary incentives and flexibility to promote the Company's performance-based
compensation philosophy while being consistent with Company culture and
objectives. Accordingly, while the Committee continues to study the Company's
compensation programs in light of new Section 162(m), it has determined not to
amend the Company's existing plans at this time. The provisions of Section
162(m) apply to compensation paid to one Company executive.
PERSONNEL AND COMPENSATION COMMITTEE
C. H. Chandler, Chair George Nigh
V. E. Jordan, Jr. J. C. Pfeiffer
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Personnel and Compensation Committee is composed entirely of persons who
are neither employees nor former or current officers of the Company. C. H.
Chandler, V. E. Jordan, Jr., George Nigh, and J. C. Pfeiffer are the members of
the Committee. Mr. Jordan is a senior partner of Akin, Gump, Strauss, Hauer &
Feld, which is one of a number of firms which have provided or will provide
legal services to the Company and its subsidiaries.
Mr. Sanford is Chairman of the Board and Chief Executive Officer of Bankers
Trust New York Corporation. W. R. Howell, the Company's Chairman of the Board,
serves on the Board of Directors and Human Resources Committee of Bankers Trust
New York Corporation.
FIVE-YEAR TOTAL STOCKHOLDER RETURN COMPARISON
The following is a line-graph presentation comparing cumulative five-year
stockholder returns on an indexed basis with the S&P 500 Stock Index and the
S&P 500 Retail Index for department stores. A list of these companies follows
the graph below:
[GRAPH APPEARS HERE]
S&P DEPARTMENT STORES:
JCPenney, Dillard, May, Mercantile, Nordstrom
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
JCPenney 100 75 90 122 182 150
S&P 500 100 107 136 148 165 167
S&P Dept. Stores 100 98 130 142 161 142
</TABLE>
The Common Stock prices shown are neither determinative nor indicative of
future performance.
14
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------
Annual Compensation Awards Payouts
---------------------------------- --------------------- -------
Securities
Other Restricted Underlying
Annual Stock Options/ LTIP All Other
Name and Salary Bonus Compensation Award(s) SARs Payouts Compensation
Principal Position Year ($) ($) ($)(3) ($)(4) (#)(5) ($) ($)(6)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Howell, W. R. 1994 721,256 1,080,388 -- -- 20,000 544,260 99,363
(Chairman of the 1993 691,967 1,048,884 -- -- -- 427,221 105,771
Board)(1) 1992 637,528 888,874 95,834 -- 12,000 328,008 56,395
Oesterreicher, J. E. 1994 294,077 378,200 -- -- 11,500 193,752 33,266
(Vice Chairman of the 1993 255,154 314,790 18,671 -- -- 136,796 32,523
Board and Chief 1992 211,134 242,210 (2) 20,853 15,257 14,500 91,616 16,479
Executive Officer)(1)
Tygart, W. B. 1994 272,924 329,421 -- -- 9,500 171,183 30,385
(President and Chief 1993 244,853 282,989 -- -- -- 124,949 30,745
Operating Officer) 1992 205,666 225,689 (2) -- 8,328 9,300 86,126 16,167
Northam, R. E. 1994 308,486 371,610 -- -- 9,500 192,403 36,605
(Executive Vice 1993 290,118 353,654 368,272 -- -- 148,047 38,112
President) 1992 258,115 289,411 -- -- 3,800 109,763 21,175
Cody, J. T., Jr. 1994 208,075 237,669 -- -- 8,000 124,085 22,410
(President of JCPenney 1993 185,881 204,265 -- -- -- 90,171 21,867
Stores) 1992 154,855 151,215 (2) -- 22,186 12,750 59,107 11,417
Hutchens, T. D. 1994 206,121 233,699 -- -- 8,000 122,896 22,253
(President of 1993 185,881 201,756 -- -- -- 90,171 22,215
Merchandising Worldwide) 1992 154,702 157,537 (2) 35,809 22,186 12,750 59,057 11,892
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Effective January 1, 1995, Mr. Oesterreicher was elected Chief Executive
Officer of the Company, succeeding Mr. Howell, who continues to serve as
the Company's Chairman of the Board. Prior to January 1, 1995, Mr.
Oesterreicher served as the Company's President, JCPenney Stores and
Catalog.
(2) Does not include $15,257, $8,328, $22,186, and $22,186 attributable to
incremental stock awards of 458, 250, 666, and 666 shares of Common Stock
granted and vested in 1992 under the Motivational Stock Award Program (see
footnote (4) below) to Messrs. Oesterreicher, Tygart, Cody, and Hutchens,
respectively, which amounts are set forth in the Restricted Stock Award(s)
column. These incremental awards have a five-year mandatory retention
period from the date of vesting and, as a result, future value realized on
these stock award shares may differ from the value on the date of grant.
(3) Tax benefit rights paid on exercise of certain stock options. No tax
benefit rights have been granted on options since 1987, and cannot be
granted under the Equity Plan.
(4) Due to retention period requirements, future value realized on these stock
award shares may differ from the value on the date of grant reported in
this column. These numbers reflect incremental motivational stock awards
made under the Motivational Stock Award Program ("MSAP") due to promotions
for these individuals in the years shown. The original motivational stock
awards were made in 1987 to key Company executives to retain them during
the Company's relocation from New York to Texas and to motivate them to
increase their efforts on the Company's behalf with respect to its
strategic repositioning. Pursuant to the terms of the MSAP, ability to
issue additional motivational stock awards ended on September 30, 1992.
Stock awards vesting in 1992 have a five-year mandatory retention period
from the date of vesting. Dividends are paid on all shares from the date
of grant. Messrs. Oesterreicher, Tygart, Cody, and Hutchens received
incremental awards as described in footnote (2) above. The restricted
stock award shares with continuing retention periods and their aggregate
value as of January 28, 1995, respectively, are as follows: Mr. Howell,
8,001 shares, $332,042; Mr. Oesterreicher, 12,458 shares, $517,007; Mr.
Tygart, 11,294 shares, $468,701; Mr. Northam, 13,078 shares, $532,737; Mr.
Cody, 7,618 shares, $316,147; and Mr. Hutchens, 8,666 shares, $359,639.
(5) No SARs have been granted since 1987.
(6) Represents Company contributions or allocations on behalf of these
executive officers under the LESOP and the Supplemental Retirement Program
for Management Profit-Sharing Associates, which, for the last fiscal year
were, respectively, as follows: Mr. Howell $6,788 and $92,575; Mr.
Oesterreicher $6,788 and $26,478; Mr. Tygart $6,788 and $23,597; Mr.
Northam $6,788 and $29,817; Mr. Cody $6,788 and $15,622; and Mr. Hutchens
$6,788 and $15,465.
15
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information regarding stock options granted to the
Named Executive Officers during fiscal 1994. The values assigned to each
reported option are shown using arbitrarily assumed annualized rates of stock
appreciation of 5% and 10% over the full 10 year term of the options, which
would result in a stock price of $90.10 and $143.47, respectively. In assessing
these values it should be kept in mind that regardless of the theoretical value
that is placed on a stock option on the date of grant, its ultimate value will
be dependent on the market value of the Company's Common Stock at a future
date, and as a result of the efforts of such executives to contribute to the
creation of sustainable stockholder wealth.
<TABLE>
<CAPTION>
Individual Grants
- -----------------------------------------------------------------------
Number of Potential Realizable
Securities % of Total Value at
Underlying Options/SARs Exercise Assumed Annual
Options/SARs Granted to or Base Rates of Stock
Granted Employees in Price Expiration Price Appreciation
Name (#)(2) Fiscal Year ($/Sh) Date for Option Term(3)
- ---------------------------------------------------------------------------------------------
5% 10%
<S> <C> <C> <C> <C> <C> <C>
Howell, W. R.
(Chairman of the
Board)(1) 20,000 2.0 55.313 2/27/04 $ 695,740 $ 1,763,140
Oesterreicher, J. E.
(Vice Chairman of the
Board and Chief
Executive Officer)(1) 11,500 1.2 55.313 2/27/04 $ 400,051 $ 1,013,806
Tygart, W. B.
(President and Chief
Operating Officer) 9,500 1.0 55.313 2/27/04 $ 330,477 $ 837,492
Northam, R. E.
(Executive Vice
President) 9,500 1.0 55.313 2/27/04 $ 330,477 $ 837,492
Cody, J. T., Jr.
(President of JCPenney
Stores) 8,000 0.8 55.313 2/27/04 $ 278,296 $ 705,256
Hutchens, T. D.
(President of
Merchandising Worldwide) 8,000 0.8 55.313 2/27/04 $ 278,296 $ 705,256
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Effective January 1, 1995, Mr. Oesterreicher was elected Chief Executive
Officer of the Company, succeeding Mr. Howell, who continues to serve as
the Company's Chairman of the Board. Prior to January 1, 1995, Mr.
Oesterreicher served as the Company's President, JCPenney Stores and
Catalog.
(2) No SARs were granted in the last fiscal year.
(3) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Company's stock price. The Company did not use an alternative
formula for a grant date valuation, as the Company is not aware of any
formula which will determine with reasonable accuracy a present value based
on future unknown or volatile factors.
16
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
The following table shows stock option exercises by Named Executive Officers
during fiscal 1994, including the aggregate value of gains on the date of
exercise. In addition, this table includes the number of shares covered by both
exercisable and non-exercisable stock options at fiscal year-end. Also reported
are the values for "in-the-money" options which represent the positive spread
between the exercise price of any such existing stock options and the fiscal
1994 year-end price of the Company's Common Stock.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized ($)(2) Unexercisable Unexercisable(3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Howell, W. R. 7,700 325,922 277,694 (E) 4,502,518
(Chairman of the 20,000 (U) -0-
Board)(1)
Oesterreicher, J. E. 1,422 46,546 88,934 (E) 1,117,845
(Vice Chairman of the 11,500 (U) -0-
Board and Chief
Executive Officer)(1)
Tygart, W. B. 3,848 152,775 94,718 (E) 1,355,384
(President and Chief 9,500 (U) -0-
Operating Officer)
Northam, R. E. 11,090 215,048 80,582 (E) 1,061,429
(Executive Vice 9,500 (U) -0-
President)
Cody, J. T., Jr. 5,140 207,392 56,936 (E) 698,933
(President of JCPenney 8,000 (U) -0-
Stores)
Hutchens, T. D. -- -- 57,706 (E) 712,709
(President of 8,000 (U) -0-
Merchandising Worldwide)
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Effective January 1, 1995, Mr. Oesterreicher was elected Chief Executive
Officer of the Company, succeeding Mr. Howell, who continues to serve as
the Company's Chairman of the Board. Prior to January 1, 1995, Mr.
Oesterreicher served as the Company's President, JCPenney Stores and
Catalog.
(2) Since most shares reported here continue to be held by participants, and
considering certain shares have holding period requirements, the future
value realized on such shares upon actual disposition may differ from the
value reported here on the exercise date.
(3) Value is based on the closing price on the last trading day of the fiscal
year, which, as of January 27, 1995, was $41.50.
17
<PAGE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The table on page 19 represents 1994 payouts under the 1984 Performance Unit
Plan ("PUP") and units granted under the Shareholder Value Award Program
("SVA"). The percent of the PUP award earned is based on the Company's
performance against the following indices: (1) average return on equity; (2)
average annual percent increase in earnings per share, as determined by the
Committee; and (3) the performance of a selected group of competitors. The
value of each performance unit, as determined by the Committee, times the
number of performance units yields the annual payout under PUP. (See "Report of
Personnel and Compensation Committee on Executive Compensation--Base Salary and
Incentive Compensation Payments" on pages 11 and 12).
Average ROE and EPS performance will yield the percent of PUP awards earned,
which can range from 0 to 200%. The range of percent of awards earned increases
with improved average ROE and EPS performance. For example, the average ROE and
EPS performance in 1992-94 are 19.5% and 16.9%, respectively, resulting in an
award range of $1.65 to $2.00 per unit. The Committee may, in its discretion,
grant PUP awards outside of this range if it determines that such grant is
warranted by the Company's ROE and EPS performance results for the measurement
period.
The SVA units, which, if earned, will be paid out in restricted stock, vest
depending on the Company's cumulative Total Shareholder Return ("TSR") over a
three-year measurement period relative to the TSR for the S&P 500 Retail Index
for department stores and the S&P 500 Index. Awards will vest, if at all, in
1996.
18
<PAGE>
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price-
Performance or Based Plans (4)
Number of Shares, Other Period Until -------------------------
Units or Other Maturation or Threshold Target Maximum
Name Rights (#) Payout ($) ($) ($)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Howell, W.R. 247,391 (2) 1992-1994 408,195 451,489 494,782
(Chairman of the 4,230 (3) 1993-1995 43,886 175,545 351,090
Board)(1)
Oesterreicher, J. E. 88,069 (2) 1992-1994 145,314 160,726 176,138
(Vice Chairman of the 2,432 (3) 1993-1995 25,232 100,928 201,856
Board and Chief
Executive Officer)(1)
Tygart, W. B. 77,810 (2) 1992-1994 128,387 142,003 155,620
(President and Chief 2,009 (3) 1993-1995 20,843 83,374 166,747
Operating Officer)
Northam, R. E. 87,456 (2) 1992-1994 144,302 159,607 174,912
(Executive Vice 2,009 (3) 1993-1995 20,843 83,374 166,747
President)
Cody, J. T., Jr. 56,402 (2) 1992-1994 93,063 102,934 112,804
(President of JCPenney 1,692 (3) 1993-1995 17,555 70,218 140,436
Stores)
Hutchens, T. D. 55,862 (2) 1992-1994 92,172 101,948 111,724
(President of 1,692 (3) 1993-1995 17,555 70,218 140,436
Merchandising Worldwide)
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Effective January 1, 1995, Mr. Oesterreicher was elected Chief Executive
Officer of the Company, succeeding Mr. Howell, who continues to serve as
the Company's Chairman of the Board. Prior to January 1, 1995, Mr.
Oesterreicher served as the Company's President, JCPenney Stores and
Catalog.
(2) This number represents the number of PUP performance units granted in
fiscal 1994 and is a function of base salary plus profit incentive
compensation valued at one dollar per unit and the individual's PRL.
(3) This number represents the number of SVA units granted in fiscal 1994 and
is based on the individual's PRL.
(4) The amounts shown represent fiscal 1994 award payout ranges for PUP and
theoretical ranges for the SVA unit awards assuming the closing price on
the last trading day of the fiscal year, which, as of January 27, 1995 was
$41.50, and also assuming, for purposes of this table, that all such SVA
units granted vest. As noted above, the Committee may grant PUP awards
outside of the award payout range.
19
<PAGE>
ASSOCIATE STOCK OWNERSHIP GUIDELINES. The Company has adopted a Stock Ownership
Guidelines Program for certain of its management employees and store managers.
The Guidelines were enacted to further encourage and support a "stakeholder"
mentality among these employees in order to align their interests with other
Company stockholders. Pursuant to the Guidelines, all participants in the
Company's Equity Plan, including store managers, are required to own a minimum
amount of Common Stock based upon a multiple (the "Ownership Multiple") of
their annual base salary. Under the Guidelines, the Ownership Multiples range
from seven times base salary for the CEO to one-half times base salary for non-
officers and store managers. The compliance period for these Guidelines is five
years from the implementation of the Guidelines, or election as officer or
change in status, if later.
DEFERRED COMPENSATION PLAN. Participant contributions to qualified savings
plans are limited by a $150,000 compensation limit imposed by the Internal
Revenue Service. Effective July 1, 1995, the Board of Directors of the Company
approved the J. C. Penney Company, Inc. 1995 Deferred Compensation Plan as a
vehicle for associates earning more than the compensation limit to defer a
portion of their base salary and incentive compensation payments exceeding the
$150,000 limit as a means of saving for retirement. Participants in the
Deferred Compensation Plan elect to defer a percentage of their compensation
each year. Deferred amounts are generally payable upon a participant's
retirement, death, or other separation from the Company.
RETIREMENT INCOME. The following table shows various estimated maximum
aggregate annual retirement incomes payable to management employees who receive
profit incentive compensation and retire at age 60 (the age at which most
management personnel currently voluntarily retire).
ESTIMATED RETIREMENT INCOME TABLE
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------
Average
Final
Compensation 15 20 25 30 35 40
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000 $ 87,500 $100,000 $112,500 $125,000 $131,250 $137,500
500,000 175,000 200,000 225,000 250,000 262,500 275,000
750,000 262,500 300,000 337,500 375,000 393,750 412,500
1,000,000 350,000 400,000 450,000 500,000 525,000 550,000
1,250,000 437,500 500,000 562,500 625,000 656,250 687,500
1,500,000 525,000 600,000 675,000 750,000 787,500 825,000
1,750,000 612,500 700,000 787,500 875,000 918,750 962,500
Each additional
$ 50,000 17,500 20,000 22,500 25,000 26,250 27,500
- ----------------------------------------------------------------------
</TABLE>
Average Final Compensation for pension formula purposes includes "Salary",
"Bonus", and "LTIP Payouts" as reported under these columns of the Summary
Compensation Table on page 15.
The present annual pension benefit payable after normal retirement (age 65 or
later) to participants in the Company's Pension Plan ("Pension Plan") with
service after December 31, 1988, generally is equal to the sum of .75% times
the "average final compensation" up to the "Average Social Security Wage Base"
plus 1.25% times the "average final compensation" in excess of the "Average
Social Security Wage Base" multiplied by the number of years of "credited
service". "Average final compensation" is the average of the highest five
consecutive full calendar years of compensation out of the employee's last ten
years in the Plan. "Average Social Security Wage Base" is the average of the 35
consecutive years of wages subject to the Social Security Tax, ending with the
year an employee qualifies for unreduced Social Security retirement benefits.
The Pension Plan contains provisions for early retirement and optional forms of
benefit payments.
20
<PAGE>
A Supplemental Retirement Program for Management Profit-Sharing Associates
("Supplemental Retirement Program") provides benefits, including Social
Security substitute payments until age 62, to certain management employees,
including executive officers, who voluntarily retire in accordance with the
Supplemental Retirement Program and whose aggregate retirement and estimated
Social Security benefits would otherwise be below specified minimum retirement
income levels.
Estimated annual retirement incomes reflected in the table are assumed for
this purpose to comprise the total of (i) the benefit under the Pension Plan,
(ii) the value at retirement of the aggregate of Company contributions made to
the Company's LESOP and predecessor plans, and earnings thereon, and (iii) the
benefit under the Company's Supplemental Retirement Program, assuming the
payment of all such benefits in the form of a straight life annuity. The
Omnibus Budget Reconciliation Act of 1993 limits the amount of annual
compensation which may be taken into account under a "qualified plan" to
$150,000, adjusted for future cost of living increases. Therefore, annual
retirement benefits which exceed Internal Revenue Code limitations for
qualified plans may be paid pursuant to the Supplemental Retirement Program.
The individuals named in the table on page 15 currently have, respectively, the
following years of "credited service" and approximate assumed "average final
compensation" recognized for calculation of benefits under the Supplemental
Retirement Program: Mr. Howell, 36 years, $2,118,976; Mr. Oesterreicher, 30
years, $700,388; Mr. Tygart, 34 years, $643,088; Mr. Northam, 19 years,
$771,952; Mr. Cody, 31 years, $467,972; and Mr. Hutchens, 33 years, $467,122.
APPROVAL OF AUDITORS (PROPOSAL 2)
KPMG Peat Marwick LLP, independent certified public accountants, and members of
the Securities and Exchange Commission Practice Section of the American
Institute of Certified Public Accountants' Division of Certified Public
Accounting firms, have been auditors of the Company's consolidated financial
statements since 1916. Their employment for the purpose of auditing the
Company's financial statements for the fiscal year ending January 27, 1996, has
been authorized by the Board, upon the recommendation of the Audit Committee.
Stockholder approval of such employment is requested.
It is anticipated that a representative of KPMG Peat Marwick 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 desire so to do.
The total amount paid to KPMG Peat Marwick LLP for all services related to
the fiscal 1994 audit of the Company's consolidated financial statements was
approximately $2,000,000.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL.
STOCKHOLDER RESOLUTIONS
The Company has been informed that Evelyn Y. Davis, Watergate Office Building,
2600 Virginia Avenue, N.W., Suite 215, Washington, D.C. 20037, a recordholder
of 100 shares of Common Stock, intends to submit a resolution for adoption at
the Annual Meeting, as follows:
STOCKHOLDER RESOLUTION NUMBER ONE (PROPOSAL 3)
RESOLUTION AND REASONS STATED BY SUBMITTING STOCKHOLDER
RESOLVED: "That the shareholders of J. C. Penney recommend that the Board of
Directors take the necessary steps to reinstate the election of directors
ANNUALLY, instead of the stagger system which was recently adopted."
REASONS: "Until recently, directors of J. C. Penney were elected annually by
all shareholders."
21
<PAGE>
"The great majority of New York Stock Exchange listed corporations elect all
their directors each year."
"This insures that ALL directors will be more accountable to ALL shareholders
each year and to a certain extent prevents the self-perpetuation of the Board."
"Last year the owners of 89,402,993 shares representing approximately 42.0% of
shares voting, voted FOR this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL.
Prior to the 1985 Annual Meeting of Stockholders, directors were elected
annually for a one-year term. At the 1985 meeting, stockholders by a
substantial majority approved amendments to the Company's Restated Certificate
of Incorporation, as amended, and to its Bylaws providing, among other things,
that the Board be divided into three classes of directors serving staggered
three-year terms with each class being as nearly equal as possible ("Classified
Board Amendments").
In the proxy statement for that meeting, which contained a detailed
discussion of the reasons for the Board's recommendation, the Board stated that
the overall purpose of the Classified Board Amendments was to assure continuity
and stability in the Company's operations. With a classified Board, it is more
likely that a majority of the directors at any time will have had prior
experience as directors of the Company, thereby facilitating continuity and
planning for the Company's business. The Board believes that the longer time
period required to elect a majority of a classified Board will protect the
interests of stockholders.
The Board continues to hold the view that the reasons set forth in the 1985
proxy statement are valid and that the election of directors by classes should
be continued.
It should be noted that adoption of this proposal would not in itself
"reinstate" the annual election of directors but would simply amount to a
request that the Board take the "necessary steps" to accomplish such
reinstatement.
At the 1994, 1993, 1992, 1991, 1990, 1989, and 1988 Annual Meetings of
Stockholders, a stockholder proposal virtually identical to this proposal was
defeated, having received votes of 34.6%, 29.9%, 23.0%, 21.8%, 19.2%, 19.0%,
and 19.1%, respectively, of the outstanding shares entitled to vote on the
proposal.
ACCORDINGLY, THE BOARD CONTINUES TO RECOMMEND A VOTE AGAINST THIS PROPOSAL.
The Company has also been informed that the Amalgamated Clothing and Textile
Workers Union, 1808 Swann Street, N.W., Second Floor, Washington, D.C. 20009, a
recordholder of 50 shares of Common Stock, intends to submit a resolution for
adoption at the Annual Meeting, as follows:
STOCKHOLDER RESOLUTION NUMBER TWO (PROPOSAL 4)
RESOLUTION AND REASONS STATED BY SUBMITTING STOCKHOLDER
Resolved: The shareholders of J. C. Penney Company, Inc. ("Company") hereby
request the Board of Directors to redeem the Preferred Stock Purchase Rights
issued February 14, 1990, unless said issuance is approved by the affirmative
vote of a majority of the outstanding shares at a meeting of shareholders as
soon as practical.
The resolution received 43.8% of votes cast last year.
In February 1990, the Company's Board of Directors authorized the
distribution of preferred stock purchase rights ("right" or "rights"). These
rights are a type of corporate anti-takeover device commonly known as a poison
pill.
22
<PAGE>
Under its terms, one right was declared for each common share outstanding.
Each right entitles shareholders to purchase, under certain conditions, one
two-hundredth of a share of the Company's Series A Preferred Stock at a
purchase price of $280. The rights will be exercisable only if a person or
group acquires beneficial ownership of 15% or more of the common shares or has
commenced or intends to commence a tender offer upon consummation of which such
person or group would own 30% or more of the common shares. The Company may
redeem the rights for $.01 per right subject to adjustment.
We believe the terms of the rights are designed to discourage or thwart an
unwanted takeover of our Company. While management and the Board of Directors
should have appropriate tools to ensure that all shareholders benefit from any
proposal to buy the Company, we do not believe that the future possibility of a
takeover justifies the unilateral implementation of such a poison pill-type
device.
We believe that shareholders should have the opportunity to vote on the
necessity of such a powerful tool that could be used to entrench existing
management. The Company already has in place other devices for countering
hostile takeover attempts, including a staggered board of directors.
Rights plans like ours have become increasingly unpopular in recent years. In
1994, a majority of shareholders at Intel, Advanced Micro Devices, and
Community Psychiatric Centers voted in favor of proposals asking management to
repeal or redeem poison pills.
The effects of poison pill rights plans on the trading value of companies'
stock have been the subject of extensive research. A 1986 study by the Office
of the Chief Economist of the U. S. Securities and Exchange Commission on the
economics of the rights plans stated that "The stock-returns evidence suggest
that the effect of poison pills to deter prospective hostile takeover bids
outweighs the beneficial effects that might come from increased bargaining
leverage of the target management." Another more recent study by Professor
Michael Ryngaert singled out rights plans such as the one authorized by our
Company for their negative effect on shareholder value.
In light of what can best be described as the debatable economic benefit of
our preferred share rights and the undeniably undemocratic way in which they
were assigned to shareholders, we believe these rights should be either
redeemed or voted on.
WE URGE SHAREHOLDERS TO VOTE FOR THIS RESOLUTION.
THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL.
In February 1990, the Board of Directors unanimously adopted a Rights Agreement
("Rights Plan") and declared a dividend distribution of one Preferred Stock
Purchase Right (collectively, "Rights") on each outstanding share of the
Company's Common Stock. The Rights Plan was established in connection with the
Company's redemption of the rights issued pursuant to its original rights plan
adopted in 1986. The Rights Plan is designed to encourage potential acquirors
to negotiate directly with the Board of Directors, which the Company believes
is in the best position to negotiate on behalf of all stockholders, evaluate
the adequacy of any potential offer, and protect stockholders against potential
abuses during the takeover process, such as partial and two-tiered tender
offers and creeping stock accumulation programs, which do not treat all
stockholders fairly and equally.
The Rights Plan will allow the Board adequate time and flexibility to
negotiate on behalf of the stockholders and enhance the Board's ability to
negotiate the highest possible bid from a potential acquiror, develop
alternatives which may better maximize stockholder values, preserve the long-
term value of the Company for the stockholders, and ensure that all
stockholders are treated fairly and equally. The Rights Plan is not intended to
prevent a takeover on terms that are fair and equitable to all stockholders.
The Board of Directors may, pursuant to the terms of the Rights Plan, redeem
the Rights to permit an acquisition that it determines, in the exercise of its
fiduciary duties, adequately reflects the
23
<PAGE>
value of the Company and to be in the best interests of all stockholders.
Moreover, a number of other companies with existing rights plans have received
unsolicited offers and have redeemed their rights after their directors were
satisfied that the offer, as negotiated by the target company's board of
directors, adequately reflected the underlying value of the company and was
fair and equitable to all stockholders. The Board believes that rather than
deterring good-faith negotiations between a potential acquiror and the Board,
the Rights Plan will assist the Board in maximizing the price paid to
stockholders in the event the Company is acquired.
The proponent references two studies regarding the effect of rights plans on
the trading value of the adopting companies' stock. However, March and October
1988 studies by Georgeson & Company, a nationally recognized proxy solicitation
and investor relations firm, found that companies adopting rights plans do not
lessen the value of their stock, and, more importantly, that companies with
rights plans received higher takeover premiums than those companies without
rights plans. The March 1988 Georgeson study concluded that companies with
rights plans received takeover premiums averaging 69% higher than those
received by companies not protected by such plans. Similarly, a March 1993
study by Robert Comment and G. William Schwert of the Bradley Policy Research
Center, University of Rochester, determined that rights plans do not deter
takeovers. Additionally, Comment and Schwert found that rights plans are
associated with higher takeover premiums for selling stockholders.
The Board specifically examined its fiduciary responsibilities under Delaware
law when it adopted the original rights plan in 1986 and the current Rights
Plan. It is important to note that the Company's Board of Directors is an
independent board, and that this preponderance of independent outside directors
has consistently been the case for over fifteen years, thus providing further
assurance that the Rights Plan will not be used for entrenchment purposes. The
Board adopted the Rights Plan with the aim of protecting the interests of all
stockholders and maximizing the value of their investments in the Company.
Based on the Board's collective business experience and knowledge of the
Company, it believes that the adoption of the Rights Plan was a valid exercise
of its fiduciary obligations to all stockholders, and is in accord with the
Board's responsibility under Delaware law to manage and direct the management
of the Company's business and affairs. The Board does not believe that the
Rights Plan will deter an acquisition offer that adequately reflects the
underlying value of the Company and that is fair to all stockholders.
At the 1994, 1993, and 1992 Annual Meetings of Stockholders stockholder
proposals virtually identical to this proposal were defeated, having received
votes of 36.0%, 34.1%, and 31.1%, respectively, of the outstanding shares
entitled to vote on the proposal. Also, substantially similar proposals
relating to the original 1986 rights plan were defeated at the 1987 and 1988
Annual Meetings of Stockholders, receiving votes of only 25.2% and 27.6%,
respectively, of the outstanding shares entitled to vote.
ACCORDINGLY, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS, AND OTHER BUSINESS BY STOCKHOLDERS
Under the rules of the Securities and Exchange Commission, the date by which
proposals of stockholders intended to be presented at the 1996 Annual Meeting
of Stockholders must be received by the Company for inclusion in its proxy
statement and form of proxy relating to that meeting is December 9, 1995.
Under the Company's Bylaws, certain procedures are provided which a
stockholder must follow to nominate persons for election as directors or to
introduce an item of business at an annual meeting of stockholders. These
procedures provide, generally, that stockholders desiring to make nominations
for directors, and/or bring a proper subject of business before the meeting,
must do so by a written notice
24
<PAGE>
timely received (not later than 90 days in advance of such meeting) by the
Secretary of the Company containing the name and address of the stockholder,
and a representation that the stockholder is a holder of record and intends to
appear in person or by proxy at the meeting. If the notice relates to a
nomination for director, it must also set forth the name and address of any
nominee(s), all arrangements or understandings between the stockholder and each
nominee and any other person(s) (naming such person(s)) pursuant to which the
nomination(s) are to be made, such other information regarding each nominee as
would have been required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission had each nominee been
nominated by the Board, and the consent of each nominee to serve. Notice of an
item of business shall include a brief description of the proposed business and
any material interest of the stockholder in such business.
The chairman of the meeting may refuse to allow the transaction of any
business not presented, or to acknowledge the nomination of any person not
made, in compliance with the foregoing procedures.
Stockholders were advised by a notice to stockholders included with the
February 1, 1995, dividend that any nomination for director and notice of any
such business to be properly brought before the 1995 Annual Meeting had to be
made by stockholders no later than February 18, 1995. It is currently expected
that the 1996 Annual Meeting of Stockholders will be held on or about May 17,
1996, 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, which as noted above must be received by December
9, 1995) must be given by stockholders by February 17, 1996. The Company does,
however, retain the right to change this date 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 Company's Bylaws are available from the Secretary of the Company.
CONFIDENTIAL VOTING
The Company, considering it to be in the best interest of stockholders, has a
policy to the effect that all proxy (voting instruction) cards, ballots, and
vote tabulations which identify the particular vote of a stockholder are to be
kept secret from the Company, its directors, officers, and employees.
Accordingly, proxy cards are returned in envelopes addressed to the tabulator,
which receives and tabulates the proxies. The final tabulation is inspected by
inspectors of election who are independent of the Company, its directors,
officers, or employees. The identity and vote of any stockholder shall not be
disclosed to the Company, its directors, officers, or employees, nor to any
third party except (i) to allow the independent election inspectors to certify
the results of the vote to the Company, its directors, officers, and employees;
(ii) as necessary to meet applicable legal requirements and to assert or defend
claims for or against the Company; (iii) in the event of a proxy solicitation
based on an opposition proxy statement filed, or required to be filed, with the
Securities and Exchange Commission; or (iv) in the event a stockholder has made
a written comment on such material.
OTHER MATTERS
The Board of Directors does not intend to present any other business at the
meeting. However, if any other matter calling for a vote of stockholders is
properly presented at the meeting, it is the intention of the persons named in
the accompanying proxy to vote in accordance with their judgment on such
matters.
[SIGNATURE OF C. R. LOTTER APPEARS HERE]
C. R. Lotter, Secretary
25
<PAGE>
APPENDIX
Graphic and Image Material
1. Photographs of nominees for director and current directors appear next to
their biographies on pages 5 through 7.
2. Tabular description of performance graph appears on page 14.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, /x/ Please mark your
THIS PROXY WILL BE VOTED FOR ELECTION OF ALL DIRECTORS votes as this
AND FOR PROPOSAL 2 AND AGAINST PROPOSALS 3 AND 4.
- ------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS AS DESCRIBED IN THE PROXY STATEMENT:
- ------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Election of Directors 2. Approval of Auditors. / / / / / /
(see reverse).
FOR all AUTHORITY
nominees WITHHELD
except as as to all
noted nominees
/ / / /
- -------------------------
- -----------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE FOLLOWING PROPOSALS AS DESCRIBED IN THE PROXY STATEMENT:
- -----------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Stockholder resolution / / / / / /
regarding classification
of Board.
FOR AGAINST ABSTAIN
4. Stockholder resolu- / / / / / /
tion regarding rights
dividend.
- -------------------------------------------------------------------------------
I/we plan to attend the meeting [_]
PLEASE SIGN AND DATE
Please sign your name or names exactly as stenciled
hereon. For a joint account, each joint owner should
sign. Persons signing in a representative capacity
should indicate their capacity.
-----
| -------------------------------------------------
SIGNATURE DATE
-------------------------------------------------
SIGNATURE DATE
- ----------------------------------------------------------------------------
J. C. PENNEY COMPANY, INC.
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
By properly executing this card on the reverse, you are authorizing V.E. Jordan,
Jr., W.R. Howell, W. B. Tygart, or any one 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 El San
Juan Hotel, 6063 Isle Verde Road, San Juan, Puerto Rico 00902, on Friday, May
19, 1995, 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").
AS DESCRIBED IN THE PROXY STATEMENT, THIS CARD ALSO PROVIDES VOTING INSTRUCTIONS
AT SUCH MEETING FOR CHEMICAL BANK ("AGENT") FOR SUCH BUSINESS FOR PARTICIPANTS
IN THE COMPANY'S DIVIDEND REINVESTMENT PLAN ("DRIP") BOTH FOR COMMON STOCK (IF
ANY) ALLOCATED TO YOUR ACCOUNTS AND FOR COMMON STOCK ALLOCATED TO OTHER DRIP
PARTICIPANTS' ACCOUNTS FOR WHICH VOTING INSTRUCTIONS ARE NOT RECEIVED BY MAY 16,
1995 ("UNDIRECTED STOCK"). IF THIS VOTING INSTRUCTION CARD IS EXECUTED AND
RECEIVED BY MAY 16, 1995, THE AGENT WILL VOTE AS FOLLOWS: (A) FOR COMMON STOCK
ALLOCATED TO THE UNDERSIGNED'S ACCOUNTS, IN ACCORDANCE WITH THE INSTRUCTIONS
HEREIN AND (B) FOR UNDIRECTED STOCK, IN THE SAME PROPORTION AS ALL COMMON STOCK
ALLOCATED TO ACCOUNTS FOR WHICH INSTRUCTION CARDS RECEIVED BY MAY 16, 1995 HAS
BEEN VOTED.
Nominees for Election of Directors for the term set forth in the Proxy Statement
are M.A. Burns, C.H. Chandler, J.E. Oesterreicher, and C.S. Sanford, Jr. TO
WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED ON THE REVERSE.
Your vote is important and cannot be recorded by the proxies or Agent unless
this card is properly executed by you and returned. Therefore, please sign,
date, and return this card promptly in the envelope provided. No postage is
required if this envelope is mailed in the United States.
(Continued on reverse side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, /x/ Please mark your
THIS PROXY WILL BE VOTED FOR ELECTION OF ALL DIRECTORS votes as this
AND FOR PROPOSAL 2 AND AGAINST PROPOSALS 3 AND 4.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS AS DESCRIBED IN THE PROXY STATEMENT:
- -------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Election of Directors 2. Approval of Auditors. / / / / / /
(see reverse).
FOR all AUTHORITY
nominees WITHHELD
except as as to all
noted nominees
/ / / /
- ------------------------
- ---------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE FOLLOWING PROPOSALS AS DESCRIBED IN THE PROXY STATEMENT:
- ---------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Stockholder resolution / / / / / /
regarding classification
of Board.
FOR AGAINST ABSTAIN
4. Stockholder resolu- / / / / / /
tion regarding rights
dividend.
- --------------------------------------------------------------------------------
PLEASE SIGN AND DATE
Please sign your name exactly as stenciled hereon.
-----
| -------------------------------------------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
J. C. PENNEY COMPANY, INC.
PROXY/VOTING INSTRUCTION CARD
ALLOCATED STOCK
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
TO PARTICIPANTS IN THE COMPANY'S SAVINGS AND PROFIT-SHARING RETIREMENT PLAN AND
THE COMPANY'S SAVINGS, PROFIT-SHARING AND STOCK OWNERSHIP PLAN (TOGETHER,
"PLANS"):
BY PROPERLY EXECUTING THIS CARD ON THE REVERSE, 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 VOTING STOCK HELD FOR YOU IN
ACCOUNTS UNDER THE PLANS ("ALLOCATED STOCK"), AT THE ANNUAL MEETING OF COMPANY
STOCKHOLDERS, TO BE HELD AT THE EL SAN JUAN HOTEL, 6063 ISLE VERDE ROAD, SAN
JUAN, PUERTO RICO 00902 ON FRIDAY, MAY 19, 1995, 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 BY MAY 16, 1995,
YOUR ALLOCATED STOCK WILL BE VOTED IN THE SAME PROPORTION AS INSTRUCTIONS
RECEIVED BY THE TRUSTEE BY THAT DATE FROM THE PLANS' PARTICIPANTS WHO HAVE
RETURNED THEIR UNALLOCATED/UNDIRECTED PROXY/VOTING INSTRUCTION CARDS IN A TIMELY
MANNER.
For your information, a copy of the Board of Directors' Proxy Statement for the
meeting is enclosed herewith.
Nominees for Election of Directors for the term set forth in the Proxy Statement
are M.A. Burns, C.H. Chandler, J.E. Oesterreicher, and C.S. Sanford, Jr. TO
WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED ON THE REVERSE.
Your instructions as to your Allocated Stock are important and cannot be
followed by the Trustee unless this card is properly executed by you and
received by the Trustee by MAY 16, 1995. Therefore, please sign, date, and
return this card promptly in the envelope provided. No postage is required if
this envelope is mailed in the United States.
(Continued on reverse side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, /x/ Please mark your
THIS PROXY WILL BE VOTED FOR ELECTION OF ALL DIRECTORS votes as this
AND FOR PROPOSAL 2 AND AGAINST PROPOSALS 3 AND 4.
- --------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS AS DESCRIBED IN THE PROXY STATEMENT:
- --------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Election of Directors 2. Approval of Auditors. / / / / / /
(see reverse).
FOR all AUTHORITY
nominees WITHHELD
except as as to all
noted nominees
/ / / /
- -------------------------
- ---------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE FOLLOWING PROPOSALS AS DESCRIBED IN THE PROXY STATEMENT:
- ---------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Stockholder resolution / / / / / /
regarding classification
of Board.
FOR AGAINST ABSTAIN
4. Stockholder resolu- / / / / / /
tion regarding rights
dividend.
- -------------------------------------------------------------------------------
PLEASE SIGN AND DATE
Please sign your name exactly as stenciled hereon.
-----
| -------------------------------------------------
SIGNATURE DATE
- ------------------------------------------------------------------------------
J. C. PENNEY COMPANY, INC.
PROXY/VOTING INSTRUCTION CARD
UNALLOCATED AND UNDIRECTED STOCK
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
TO PARTICIPANTS IN THE COMPANY'S SAVINGS AND PROFIT-SHARING RETIREMENT PLAN AND
THE COMPANY'S SAVINGS, PROFIT-SHARING AND STOCK OWNERSHIP PLAN (TOGETHER,
"PLANS"):
BY PROPERLY EXECUTING THIS CARD ON THE REVERSE, YOU ARE INSTRUCTING STATE STREET
BANK AND TRUST COMPANY ("TRUSTEE") TO VOTE, IN PERSON OR BY PROXY, SHARES OF
VOTING STOCK HELD UNDER THE PLANS (I) NOT YET ALLOCATED TO THE ACCOUNTS OF
PLANS' PARTICIPANTS ("UNALLOCATED STOCK") AND (II) ALLOCATED TO THE ACCOUNTS OF
PLANS' PARTICIPANTS FROM WHOM AN EXECUTED PROXY/VOTING INSTRUCTION CARD IS NOT
RECEIVED BY THE TRUSTEE BY MAY 16, 1995 ("UNDIRECTED STOCK"), AT THE ANNUAL
MEETING OF COMPANY STOCKHOLDERS, TO BE HELD AT THE EL SAN JUAN HOTEL, 6063 ISLE
VERDE ROAD, SAN JUAN, PUERTO RICO 00902 ON FRIDAY, MAY 19, 1995, 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.
UNDIRECTED STOCK AND UNALLOCATED STOCK WILL BE VOTED IN THE SAME PROPORTION AS
INSTRUCTIONS RECEIVED BY THE TRUSTEE BY MAY 16, 1995 FROM THE PLANS'
PARTICIPANTS WHO HAVE RETURNED THIS PROXY/VOTING INSTRUCTION CARD IN A TIMELY
MANNER.
For your information, a copy of the Board of Directors' Proxy Statement for the
meeting is enclosed herewith.
Nominees for Election of Directors for the term set forth in the Proxy Statement
are M.A. Burns, C.H. Chandler, J.E. Oesterreicher, and C.S. Sanford, Jr. TO
WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED ON THE REVERSE.
Your instructions as to Unallocated Stock and Undirected Stock are important and
cannot be followed by the Trustee unless this card is properly executed by you
and received by the Trustee by MAY 16, 1995. Therefore, please sign, date, and
return this card promptly in the envelope provided. No postage is required if
this envelope is mailed in the United States.
(Continued on reverse side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, /x/ Please mark your
THIS PROXY WILL BE VOTED FOR ELECTION OF ALL DIRECTORS votes as this
AND FOR PROPOSAL 2 AND AGAINST PROPOSALS 3 AND 4.
- --------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS AS DESCRIBED IN THE PROXY STATEMENT:
- --------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Election of Directors 2. Approval of Auditors. / / / / / /
(see reverse).
FOR all AUTHORITY
nominees WITHHELD
except as as to all
noted nominees
/ / / /
- -------------------------
- ---------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE FOLLOWING PROPOSALS AS DESCRIBED IN THE PROXY STATEMENT:
- ---------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Stockholder resolution / / / / / /
regarding classification
of Board.
FOR AGAINST ABSTAIN
4. Stockholder resolu- / / / / / /
tion regarding rights
dividend.
- -------------------------------------------------------------------------------
PLEASE SIGN AND DATE
Please sign your name exactly as stenciled hereon.
-----
| -------------------------------------------------
SIGNATURE DATE
- ------------------------------------------------------------------------------
J. C. PENNEY COMPANY, INC.
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
TO PARTICIPANTS IN THE JCPENNEY FINANCIAL SERVICES THRIFT AND INVESTMENT
RETIREMENT PLAN:
By properly executing this card on the reverse, you are instructing NationsBank
of Texas, N.A. ("Trustee") to vote, on your behalf, in person or by proxy,
shares of stock held for you in accounts under the JCPenney Financial
Services Thrift and Investment Retirement Plan at the Annual Meeting of
Stockholders of J. C. Penney Company, Inc., to be held at the El San Juan Hotel,
6063 Isle Verde Road, San Juan, Puerto Rico 00902, on Friday, May 19, 1995, 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.
THE TRUSTEE HAS INDICATED ITS INTENT TO VOTE THE SHARES REPRESENTED HEREBY (A)
IF AN INSTRUCTION CARD IS EXECUTED BY YOU AND RECEIVED BY MAY 16, 1995, IN
ACCORDANCE WITH THE DIRECTIONS ON THE REVERSE AND (B) IF NO SUCH INSTRUCTION
CARD IS SO RECEIVED, FOR ELECTION OF ALL DIRECTORS AND FOR PROPOSAL 2 AND
AGAINST PROPOSALS 3 AND 4.
For your information, a copy of the Board of Directors' Proxy Statement for the
meeting is enclosed herewith.
Nominees for Election of Directors for the term set forth in the Proxy Statement
are M.A. Burns, C.H. Chandler, J.E. Oesterreicher, and C.S. Sanford, Jr. TO
WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED ON THE REVERSE.
Your instructions as to your shares of stock are important and cannot be
followed by the Trustee unless this card is properly executed by you and
received by the Trustee by MAY 16, 1995. Therefore, please sign, date, and
return this card promptly in the envelope provided. No postage is required if
this envelope is mailed in the United States.
(Continued on reverse side)
