Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

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Stock-Based Compensation
3 Months Ended
May 03, 2014
Share-based Compensation [Abstract]  
Stock-Based Compensation
Stock-Based Compensation
We grant stock-based compensation awards to employees and non-employee directors under our equity compensation plan. On May 18, 2012, our stockholders approved the J. C. Penney Company, Inc. 2012 Long-Term Incentive Plan (2012 Plan), reserving 7 million shares for future grants (1.5 million newly authorized shares plus up to 5.5 million reserved but unissued shares from our prior 2009 Long-Term Incentive Plan (2009 Plan)). In addition, shares underlying any outstanding stock award or stock option grant canceled prior to vesting or exercise become available for use under the 2012 Plan. The 2009 Plan terminated on May 18, 2012, except for outstanding awards, and all subsequent awards have been granted under the 2012 Plan. As of May 3, 2014, there were approximately 3.1 million shares of stock available for future grant under the 2012 Plan.
On May 16, 2014, our stockholders approved the J. C. Penney Company, Inc. 2014 Long-Term Incentive Plan (2014 Plan), which has a fungible share design in which each stock option will count as one share issued and each stock award will count as two shares issued. The 2014 Plan reserves 16 million shares or 32 million options for future grants.
Stock-based compensation expense for the three months ended May 3, 2014 and May 4, 2013 was $10 million and $14 million, respectively. During the first quarter of 2014, the Company granted the following stock-based compensation awards:
 
 
Restricted Stock Units (RSU)
 
Stock Options
 
Weighted Average Grant Date Fair Value
Grant Date
 
Time-based
 
Performance-based
 
Performance-based
 
Weighted Average Exercise Price
 
March 3, 2014
 
25,000

 

 

 
$

 
$
7.96

March 20, 2014
 
2,328,000

 
329,000

 
2,322,000

 
8.36

 
6.09

March 27, 2014
 
84,000

 

 
185,000

 
8.97

 
5.59

Total
 
2,437,000

 
329,000

 
2,507,000

 
8.41

 
6.07



Performance-based stock options and awards that ultimately vest are dependent on market performance targets measured by either the performance of the Company’s common stock (market condition) or on the achievement of a 2014 internal profitability target (performance condition).

In addition, on March 20, 2014, we granted approximately 2.3 million phantom units as part of our management incentive compensation plan, which are similar to RSUs in that the number of units granted was based on the price of our stock, but the units will be settled in cash based on the value of our stock on the vesting date, limited to $16.72 per phantom unit. The fair value of the awards is remeasured at each reporting period and was $8.58 per share as of May 3, 2014. Compensation expense, which is variable, is recognized over the vesting period with a corresponding liability, which is recorded in Other accounts payable and accrued expenses in our unaudited Interim Consolidated Balance Sheets.