Exhibit 10.4

To:      Kathi S. Child
         Human Resources
         J. C. Penney Company, Inc.
         P. O. Box 10001
         Dallas, TX 75301-8211


Re:      Directors' Compensation


Pursuant to the terms of the 2001 J. C. Penney Company Equity Compensation Plan,
I hereby  elect as a Director  of J. C.  Penney  Company,  Inc.  ("Company")  to
receive in shares of J. C. Penney Company,  Inc.  Common Stock ("Common  Stock")
_______%  of my  annual  retainer  and,  if  applicable,_______%  of  my  annual
Committee  Chairperson  Retainer and _______% of my annual  Representative under
Indemnification Trust Retainer.

I understand the terms of this election will be as follows:

o    The standard annual election date is June 1.

o    The payment in stock will be made in one annual  installment  covering  the
     period June 1 through May 31.

o    The  election  will  automatically  renew  unless,  prior to the end of the
     twelve-month  period,  I notify the Company in writing that the election is
     being terminated.

o    The shares issued will be based on the fair market value of Common Stock on
     June 1. The fair  market  value  will be the mean of the high and low sales
     prices on such date as reported in the composite transaction table covering
     transactions  of New York  Stock  Exchange  listed  securities,  or if such
     Exchange is closed,  or if the Common Stock does not trade on such date, by
     averaging  the mean of the high and low sales  prices on the trading  dates
     immediately before and immediately after such date.

o    All  Common  Stock  issued in payment of  Directors'  compensation  will be
     automatically vested (non-forfeitable) on the date of issue.

o    A check will be issued for fractional shares.

I also  understand that the retainer is subject to Federal Income Tax and Social
Security  Self-Employment  Tax as described in the  Compensation  section of the
Directors'  Compensation and Benefits book.  Further, I understand that the fair
market  value of these  shares,  as  determined  above,  will be reported to the
Internal  Revenue  Service  on a Form  1099,  as if this  compensation  had been
received in cash.

The  issuance of stock made  pursuant to this  election  must be reported to the
Securities and Exchange Commission on a Form 4 which must be filed by the end of
the second business day following the transaction. Any subsequent sale by you of
stock received  pursuant to this election  should be pre-cleared  with the Legal
Department  (Jeff Vawrinek,  972/431-1287;  Ralph  Richardson,  972/431-1288) or
Grant Hurst, 972/431-1211); depending on the number of shares to be sold, it may
be  necessary  to file a Form 144 notice of sale with the SEC prior to the sale.
The sale must also be  reported on Form 4, which is due by the end of the second
business day following the transaction.  All stock received in lieu of cash will
be beneficially owned by you, and will be reflected in the stock ownership table
in the Company's Proxy Statement.


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Signature                                                      Date