8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

_________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 Date of Report (Date of earliest event reported): March 25, 2019

J. C. PENNEY COMPANY, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-15274		26-0037077
(State or other jurisdiction of incorporation)	(Commission File No.)		(IRS Employer Identification No.)
6501 Legacy Drive Plano, Texas		75024-3698
(Address of principal executive offices)		(Zip code)

Registrant's telephone number, including area code: (972) 431-1000

 Not Applicable

 (Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging Growth Company	o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	o

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) and (c) On March 26, 2019, J. C. Penney Company, Inc. (the “Company”) announced that its Board of Directors has elected Bill Wafford as Executive Vice President, Chief Financial Officer of the Company, effective April 8, 2019. In connection with Mr. Wafford’s election, Michael Fung will cease to serve as the Company’s Interim Executive Vice President, Chief Financial Officer effective April 8, 2019. Mr. Fung continues to serve as Interim Controller of the Company.

Mr. Wafford, 47, most recently served as Executive Vice President, Chief Financial Officer of Vitamin Shoppe, Inc. since 2018. He served as Senior Vice President, Strategy and Business Development of Vitamin Shoppe from 2017 to 2018. Mr. Wafford was a Partner in the Advisory Practice group of KPMG LLP from 2015 to 2017. Prior to that, he served in positions of increasing responsibility with Walgreens Boots Alliance from 2009 to 2014, including Divisional Vice President, Retail Finance from 2009 to 2012, Vice President, International Finance from 2012 to 2013, and Vice President and Managing Director, Well Ventures LLC from 2013 to 2014.

In connection with his employment, Mr. Wafford and the Company entered into a letter agreement dated March 25, 2019 describing certain terms of his employment. A copy of the letter agreement is filed herewith as Exhibit 10.1 and is incorporated herein by reference. Mr. Wafford will also be eligible to participate in the J. C. Penney Corporation, Inc. 2011 Change in Control Plan, a copy of which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 14, 2011.

     Mr. Wafford and the Company have not entered into an employment agreement. There are no arrangements or understandings between Mr. Wafford and any other person pursuant to which he was elected as an executive officer of the Company.

 Mr. Wafford will receive base salary, annual incentive compensation, and long-term incentive awards as set forth in the letter agreement. In addition, as an inducement to join the Company, he will receive a cash signing bonus and a long-term incentive award, also as set forth in the letter agreement. Mr. Wafford will also be eligible to enter into an Executive Termination Pay Agreement, the form of which was filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended November 3, 2018.

A copy of the press release announcing Mr. Wafford’s election is attached hereto as Exhibit 99.1.

Item 9.01	Financial Statements and Exhibits.
(d)	Exhibit 10.1	Letter Agreement dated March 25, 2019 between J. C. Penney Company, Inc. and Bill Wafford
	Exhibit 99.1	J. C. Penney Company, Inc. News Release issued March 26, 2019

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	J. C. PENNEY COMPANY, INC.
By:	/s/ Brynn Evanson
	Brynn Evanson
	Executive Vice President, Human Resources

Date:  March 26, 2019

EX-10.1

Exhibit 10.1

Bill Wafford

March 21, 2019

Dear Bill:

I am pleased to extend this offer of employment as EVP Chief Financial Officer with J.C. Penney Corporation, Inc. (“J.C. Penney”)¹ , reporting to me. Your new office will be in 6501 Legacy Drive, Plano, Texas 75024. Your start date will be April 8, 2019. The components of your offer are below.

Compensation

Your annualized base salary will be $650,000.

Performance-Based Bonus

You are eligible to participate in a performance-based bonus program. Your annual target bonus opportunity is 85% of your base salary. Assuming employment for a full fiscal year, your bonus opportunity at target would be $552,500, for total annual cash earnings opportunity of $1,202,500. For the 2019 fiscal year your bonus will be prorated based upon the actual duration of your participation in the program and your actual bonus will be no less than 50% of the target amount, assuming continued employment through the end of the fiscal year.

Inducement Awards

In addition to your base salary and performance-based bonus, you will receive a one-time sign-on bonus of $750,000 less applicable taxes, within 30 days of your date of hire.  To receive this sign-on bonus, you must sign and return the attached sign-on bonus agreement.

After you commence employment with J.C. Penney, you will receive an equity award having a fair market value of $2,000,000 on the date of grant. The equity award will be granted as follows:

• 50% ($1,000,000) as time-based restricted stock units (“TBRSUs”). One-third of the TBRSUs will vest on each of the first three anniversaries of the grant date.

• 50% ($1,000,000) in the same form as the annual equity awards granted in March 2019 to the other EVPs at the Company: half as TBRSUs that vest in full on the third anniversary of the grant date, and half as performance cash continent upon the attainment of three one-year bonus-adjusted EBITDA goals.

The vesting of the equity awards is contingent on your active employment with the Company on the applicable vesting date with no break in service. The awards will be subject to other terms and conditions as set forth in your award agreements, which will be delivered following your grant date. The grant date for your equity inducement awards will be the third full trading date following the date your employment begins.

_________________________

¹Depending on your organization, you may be employed by J.C. Penney Corporation, Inc., or one of its subsidiaries, (e.g., JCP Logistics, Inc., J.C. Penney Purchasing Corporation, JCP Procurement, Inc. or JCPenney Puerto Rico, Inc.).

Long-term Incentive Compensation

Your position entitles you to participate in J.C. Penney’s Long-Term Incentive Compensation Program.

Long-term incentive awards are made on an annual basis, typically in the first quarter, and are subject to approval by the Human Resources and Compensation Committee (“HRCC”) of the Board of Directors. Each year, the HRCC determines the amount and type of awards that will be delivered in the annual grant. Award amounts are determined by position and individual performance. For the 2020 fiscal year, your Long-Term Incentive Award will have a grant date target economic value of $1,000,000. Past awards have consisted of stock options, time-based restricted stock units, performance cash and/or performance-based restricted stock units.  

Relocation

To assist with your move, J.C. Penney will provide relocation benefits. Upon acceptance of the offer and clear background check, J.C. Penney will initiate your relocation with our provider Altair Global Relocation. To ensure your move is as smooth as possible, Altair will contact you directly to administer the relocation benefits. Before any benefits can be initiated, you will be required to sign and return a payback agreement (administered by Altair).

Benefits

We offer a comprehensive benefits package. In addition to the standard benefits offering, J.C. Penney currently offers an annual allowance up to $5,000 for a health exam.

Termination Arrangements

We recognize the need to provide protection to our executive officers in the event of an executive officer’s involuntary termination of employment without Cause, or following a change in control of JCPenney. Accordingly, you are eligible for the company’s executive termination pay agreement (ETPA) and will participate in the JCPenney 2011 Change in Control Plan to address termination situations not precipitated by the conduct of the executive officer.

The terms and conditions of this offer letter supersede any previous representations concerning any terms or conditions of your employment with J.C. Penney.  Additionally, this offer, including referenced agreements, is governed by the federal and state law of the State of Texas, without regard to choice of law provisions of any other state. While we are confident that we will have a mutually beneficial employment relationship, employment with J.C. Penney is voluntary and at-will and does not create a contract for employment. Under this relationship, J.C. Penney may, at any time, decide to end an individual’s employment with or without cause, prior notice or discipline at J.C. Penney’s sole discretion. Likewise, any employee is free to end his or her employment at any time for any reasons with or without notice. Nothing in this offer or any attached agreement is intended to alter the at-will employment relationship.

This offer of employment and your continued employment with J.C. Penney are expressly contingent upon J.C. Penney receiving the following:

• I-9 required documentation - Please remember to bring documentation to support the I-9 Statement that shows your eligibility to work in the United States. You will complete this form electronically on your first day.

• Acceptable results from a background investigation. 

• Your signature agreement to respect confidential information (this agreement is attached to your offer letter).

• Your signature agreement to participate in the J.C. Penney Binding Arbitration Program. You will sign this document electronically on your first day of employment.

• Your signature agreement to certify your compliance with J.C. Penney’s Statement of Business Ethics. You will sign the associated Certificate of Compliance on your first day of employment.

• Satisfactory assurance that you are not subject to any non-compete or other restrictive covenant that could impair your ability to perform the job responsibilities of the position you are offered or could subject the company to potential liability. If you are subject to any such restrictions, please provide us with a copy of relevant documents.

Please confirm your acceptance of this offer by signing below and returning the signed offer letter along with signed agreements to Brynn Evanson, EVP Human Resources.

We are excited about the opportunity to work with you and welcome you to the J.C. Penney team!

Best Regards,

Jill Soltau

Chief Executive Officer

J.C. Penney

6501 Legacy Drive

Plano, TX, 75024

www.jcpenney.com

My signature acknowledges that I am accepting your offer of employment as outlined in the offer letter. I acknowledge that this is not a contract of employment.

Name (Print):    Bill Wafford        

Signature:    /s/ Bill Wafford         

Date:        3-25-19            

J.C. Penney Company, Inc.

Agreement to Respect Confidential Information

Congratulations and welcome to J.C. Penney!  We are pleased and excited that you have agreed to join our team. With your help, we will accelerate our customer and growth strategies.

While you have been hired based on your prior accomplishments and experiences, we ask that you do not bring any confidential business information with you from any prior employer(s). Confidential information is information that may be marked as “confidential”, “proprietary” or “privileged” or any other business information that may not be known by the public. While bringing such information to J.C. Penney may seem innocent, it is a violation of our Statement of Business Ethics to do so - a violation at which can result in disciplinary action up to and including termination of your employment. Further, doing so can expose both you and J.C. Penney to civil and criminal liability.

The type of confidential information that should not be shared with us is the same type of information that J.C. Penney would not want you to share with our competitors. If you have any questions whether the information you have from any prior employer(s) is confidential information, please contact your Human Resources Representative to discuss.

Please sign below to acknowledge your understanding and agreement. 

Name (Print):    Bill Wafford        

Signature:    /s/ Bill Wafford         

Date:        3-25-19            

J.C. Penney Corporation, Inc.

Bonus Agreement

In addition to your base salary, you will receive a one-time sign-on bonus in the amount of $750,000less applicable taxes, within 30 days of your date of hire.

By accepting this bonus agreement and signing the agreement below, if you voluntarily terminate your employment with J.C. Penney Corporation, Inc. (“J.C. Penney”)²or your employment is terminated for cause, including specifically, a breach of any of J.C. Penney’s policies, practices, procedures or Statement of Business Ethics as determined by J.C. Penney, within:

• 24 months of your start date, you agree to reimburse J.C. Penney for the full amount of any bonus or bonuses received

• 36 months of your start date, you agree to reimburse J.C. Penney for 50% of any bonus or bonuses received

You will not be required to reimburse J.C. Penney for any portion of your bonus or bonuses if your employment is involuntarily terminated by J.C. Penney for any reason other than for cause, or if your employment is terminated as a result of your death or disability.

To the extent permitted by law, associate agrees that J.C. Penney may deduct reimbursement payments from associate’s final paycheck and/or vacation payout. If reimbursement payments are not timely paid, J.C. Penney shall be entitled to recover reasonable collection agency fees and attorney's fees incurred by J.C. Penney because of such noncompliance. Nothing in this agreement is intended to alter the at-will employment relationship between you and J.C. Penney.

Name (Print):    Bill Wafford        

Signature:    /s/ Bill Wafford         

Date:        3-25-19            

_________________________

²Your offer of employment is with J.C. Penney Corporation, Inc. or one of its subsidiaries.

EX-99.1

Exhibit 99.1

JCPenney Names Bill Wafford as Chief Financial Officer

PLANO, Texas - (Mar. 26, 2019) - J. C. Penney Company, Inc. (NYSE: JCP) today announced that Bill Wafford, a highly accomplished retail executive with over 25 years of broad finance experience, has been named executive vice president, chief financial officer, effective April 8. Reporting to Jill Soltau, chief executive officer, Wafford will be responsible for providing strategic leadership and driving operational excellence in addition to leading all aspects of the Company’s finance and accounting operations. He succeeds Michael Fung, interim chief financial officer, who will remain with the Company through the end of April to allow for a seamless leadership transition.

“Bill brings extraordinary depth and breadth of experience to our executive team. His first-hand knowledge and understanding of financial turnarounds will help JCPenney deliver improved results and drive profitable growth,” said Soltau. “Additionally, his extensive career supporting global retail and consumer brand companies will prove instrumental as we continue to strengthen our capabilities, optimize our product selection, and reduce unproductive inventory to effectively meet and exceed shoppers’ expectations.”

Wafford most recently served as executive vice president, chief financial officer for The Vitamin Shoppe where he oversaw all aspects of the company’s finance strategy and execution including accounting, real estate, international operations, mergers and acquisitions, corporate strategy, advanced analytics, investor relations, procurement and internal audit functions. During his tenure with The Vitamin Shoppe, he played a significant role in reducing debt, decreasing inventory and exceeding operating income in 2018. He joined The Vitamin Shoppe in 2017 as senior vice president overseeing strategy, finance, international operations and business development.

Prior to The Vitamin Shoppe, Wafford served as a partner in the advisory practice group of KPMG following a five-year career at Walgreens Boots Alliance. While at Walgreens, he served in positions of increasing responsibility and became vice president of international finance where he was involved in the acquisition of Alliance Boots, which created the world’s largest retail pharmacy, health and daily living destination. He was subsequently appointed to vice president and managing director for the company’s global venture capital portfolio where he evaluated investment opportunities in digital categories, including online retail and customer loyalty. Before Walgreens, Wafford held multiple finance-related positions with Archstone Consulting, Bank of America and at Target Corporation where he managed the financial planning and analysis for their $8 billion women’s and men’s apparel divisions.

“I am delighted to welcome Bill to our team of highly talented retail experts. Together we will work to make meaningful progress and deliver an engaging and rewarding shopping experience for our customers. I also wish to thank Michael Fung for joining the organization several months ago and providing invaluable expertise as interim CFO while we completed the search for an accomplished successor,” added Soltau.

To download a copy of this news release, and access company information, bios and photos, please visit: https://www.jcpnewsroom.com/news-releases/2019/0326_jcpenney_announces_cfo.html

Media Relations:

(972) 431-3400 or jcpnews@jcp.com

Follow @jcpnews on Twitter for the latest announcements and Company information.

Investor Relations:

(972) 431-5500 or jcpinvestorrelations@jcp.com

About JCPenney:

J. C. Penney Company, Inc. (NYSE: JCP), one of the nation’s largest apparel and home retailers, combines an expansive footprint of over 860 stores across the United States and Puerto Rico with a powerful e-commerce site, jcp.com, to deliver style and value for all hard-working American families. At every touchpoint, customers will discover stylish merchandise at incredible value from an extensive portfolio of private, exclusive and national brands. Reinforcing this shopping experience is the customer service and warrior spirit of approximately 95,000 associates across the globe, all driving toward the Company's mission to help customers find what they love for less time, money and effort. For additional information, please visit jcp.com.

Forward-Looking Statements

This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as "expect" and similar expressions identify forward-looking statements, which include, but are not limited to, statements regarding sales, cost of goods sold, selling, general and administrative expenses, earnings and cash flows.  Forward-looking statements are based only on the Company's current assumptions and views of future events and financial performance. They are subject to known and unknown risks and uncertainties, many of which are outside of the Company's control that may cause the Company's actual results to be materially different from planned or expected results. Those risks and uncertainties include, but are not limited to, general economic conditions, including inflation, recession, unemployment levels, consumer confidence and spending patterns, credit availability and debt levels, changes in store traffic trends, the cost of goods, more stringent or costly payment terms and/or the decision by a significant number of vendors not to sell us merchandise on a timely basis or at all, trade restrictions, the ability to monetize assets on acceptable terms, the ability to implement our strategic plan including our omnichannel initiatives, customer acceptance of our strategies, our ability to attract, motivate and retain key executives and other associates, the impact of cost reduction initiatives, our ability to generate or maintain liquidity, implementation of new systems and platforms, changes in tariff, freight and shipping rates, changes in the cost of fuel and other energy and transportation costs, disruptions and congestion at ports through which we import goods, increases in wage and benefit costs, competition and retail industry consolidations, interest rate fluctuations, dollar and other currency valuations, the impact of weather conditions, risks associated with war, an act of terrorism or pandemic, the ability of the federal government to fund and conduct its operations, a systems failure and/or security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information, legal and regulatory proceedings and the Company’s ability to access the debt or equity markets on favorable terms or at all.  There can be no assurances that the Company will achieve expected results, and actual results may be materially less than expectations. Please refer to the Company's most recent Form 10-K for a further discussion of risks and uncertainties. Investors should take such risks into account and should not rely on forward-looking statements when making investment decisions. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made.  We do not undertake to update these forward-looking statements as of any future date.

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