JCPenney 2004 Annual Report Download - page 52

J.C. PENNEY COMPANY, INC.2 004 ANNUAL REPORT
50
CORPORATE GOVERNANCE
The Company shares its stockholders’ interest in matters of cor-
porate governance, and is, and for many years has been, commit-
ted to assuring that the Company is managed in a way that is fair
to all its stockholders and that allows its stockholders to maximize
the value of their investment by participating in the present and
future growth of JCPenney. The Corporate Governance Committee
of the Board of Directors continually reviews developments in the
governance area as they affect relations between the Company
and its stockholders and makes recommendations to the full Board
regarding such issues. A complete listing of the Company’s
corporate governance guidelines is available online at
www.jcpenney.net.
Certifications
The Company submitted a Section 12(a) CEO Certification to the
New York Stock Exchange in 2004. The Company filed the CEO
and CFO certifications required under Section 302 of the
Sarbanes-Oxley Act of 2002 with the Securities and Exchange
Commission as exhibits to its 2004 Annual Report on Form 10-K.
Independent Board of Directors
In keeping with its long-standing practice, the Company’s Board
continues to be an independent board. Nominees for directors are
selected by a committee composed entirely of directors who are
not Company employees. The wide diversity of expertise, experi-
ence and achievements that the directors possess in business,
investments, large organizations and public affairs allows the
Board to most effectively represent the interests of all the
Company’s stockholders.
Independent Committees
The Audit Committee, Corporate Governance Committee,
Finance Committee and Human Resources and Compensation
Committee, all standing committees of the Board of Directors, are
composed entirely of independent directors. These committees,
as well as the entire Board, consult with and are advised by outside
consultants and experts in connection with their deliberations, as
needed. Copies of the charters of each of these committees are
available online at www.jcpenney.net.
Executive Compensation Set by Independent Directors
Asignificant portion of the cash compensation received by the
Company’s executive officers consists of performance incentive
compensation payments derived from compensation plan "values."
The amounts of these plan values are directly related to the sales
and earnings of the Company and, consequently, vary from year to
year based upon Company performance. The total compensation
package for the Company’s executive officers is set by the Human
Resources and Compensation Committee, which is composed
entirely of independent directors and which receives the advice of
independent outside consultants. Please refer to the Company’s
2005 Proxy Statement for a report from the Company’s Human
Resources and Compensation Committee describing how com-
pensation determinations are made.
Confidential Voting
The Company has a long-standing confidential voting policy.
Under this policy, all proxy (voting instruction) cards, ballots and
vote tabulations, including telephone and Internet voting records,
that identify the particular vote of a stockholder, are kept secret
from the Company, its directors, officers and employees. Proxies
are returned directly to the tabulator, who receives and tabulates
the proxies. The final tabulation is inspected by inspectors of elec-
tion who are independent of the Company, its directors, officers
and employees. The identity and vote of a stockholder is not dis-
closed to the Company, its directors, officers or employees, or any
third party except: (1) to allow the independent election inspectors
to certify the results of the vote; (2) as necessary to meet applica-
ble legal requirements and to assert or defend claims for or against
the Company; (3) 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 (4) in the event a stock-
holder has made a written comment on such material.
CORPORATE CITIZENSHIP
Community Relations
The Company remains committed to investing in community pro-
grams that are important to its customers and its employees.
JCPenney’s commitment focuses on three major endeavors. The
Company is a contributor to JCPenney Afterschool Fund, a chari-
table organization committed to providing children with high-quali-
ty after-school programs. The Company supports community
health and welfare issues primarily through support of local United
Ways nationwide. The Company annually recognizes its associ-
ates’ personal volunteer endeavors through the James Cash
Penney Awards for Community Service. A more complete review
of JCPenney’s community relations efforts is available online at
www.jcpenney.net/company/commrel.
Diversity
JCPenney has been a corporate member of the National Minority
Supplier Development Council (NMSDC) since 1972 and continues to
invest in the NMSDC’s Business Consortium Fund, which makes loans
to minority-owned businesses. The Company is a founding member
of the Women’s Business Enterprise National Council. In 2004, the
Company’s purchases from minority-owned and women-owned busi-
nesses totaled $430 million and $218 million, respectively.
Environmental Affairs
The Company’s commitment to doing business in a responsible
manner includes a determination to make environmental, health
and safety considerations an important factor in corporate deci-
sion-making and policy. Copies of “Matters of Principle: JCPenney
and Environmental Responsibility” may be obtained as indicated
on the inside back cover of this Annual Report.