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                       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): August 1, 2006


                           J. C. PENNEY COMPANY, INC.
             (Exact name of registrant as specified in its charter)


   Delaware                         1-15274                     26-0037077
(State or other jurisdiction    (Commission File No.)        (I.R.S. Employer
    of incorporation )                                      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

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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  13d-4(c)  under the
     Exchange Act (17 CFR 240.13e-4(c))





    Item 1.01         Entry into a Material Definitive Agreement

     On August 1, 2006, J. C. Penney Company, Inc. (the "Company") adopted a new
form of Notice of Grant of Stock Options to be used in connection with grants of
stock options  pursuant to the Company's  2005 Equity  Compensation  Plan ("2005
Equity Plan") to executive  officers who have signed  Executive  Termination Pay
Agreements,  a  copy  of the  form  of  which  was  previously  filed  with  the
Commission.

     The form of grant  notice  sets  forth the terms  and  conditions  of stock
options  granted  pursuant to the 2005 Equity Plan. The new form of Stock Option
Grant  Notice  has been  updated  to  reflect  100%  vesting  acceleration  upon
Involuntary  Termination  of  the  executive's  employment,  as  defined  in the
Executive Termination Pay Agreement.

     A copy of the Form of Notice of Grant of Stock Options is filed herewith as
Exhibit 10.1 and is incorporated herein by reference.



   Item 9.01         Financial Statements and Exhibits.

(c)      Exhibits

Exhibit 10.1      Form of Notice of Grant of Stock Options









                                   SIGNATURES

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/ Joanne L. Bober
                                               -------------------------------
                                               Joanne L. Bober
                                               Executive Vice President,
                                               General Counsel and Secretary



Date:  August 7, 2006







                                  EXHIBIT INDEX

Exhibit Number             Description

Exhibit 10.1               Form of Notice of Grant of Stock Options







                                                                    Exhibit 10.1
                                                               
JCPenney
J. C. Penney Company, Inc.                      Notice of Grant of Stock Options

2005 Equity                  -----------------------------------------------------------------------------------
Compensation Plan            Name               Date of Grant           Option Price Per Share
                             -----------------------------------------------------------------------------------
                             Employee ID        Unit Number             Area of Responsibility / District Number
                             -----------------------------------------------------------------------------------
                                                                        Number of NSO Shares Granted
                             -----------------------------------------------------------------------------------



This  Notice of  Non-Qualified  (also  known as  "Non-Statutory")  Stock  Option
("NSO")  gives you the right to  purchase  the total  number of shares of Common
Stock of 50 cent par  value  ("Common  Stock")  of J. C.  Penney  Company,  Inc.
("Company") at the price per share as shown above. This option is subject to all
the terms,  rules, and conditions of the J. C. Penney Company,  Inc. 2005 Equity
Compensation  Plan  ("Plan") and the  implementing  resolutions  ("Resolutions")
approved  by the Human  Resources  and  Compensation  Committee  of the Board of
Directors.  Capitalized  terms  not  otherwise  defined  herein  shall  have the
respective  meanings  assigned to them in the Plan and the  Resolutions.  In the
event of a change in  capitalization  of the Company or other similar event, the
option price and number of shares shall be adjusted as provided in the Plan.

Terms of Exercise
- ------------------

Effective Exercise Date

When an option  exercise  instruction is given in conjunction  with a sell order
for the underlying stock that is a Sell-to-Cover Order, a Same-Day-Sale Exercise
Order, a Limit Order or a Good-till Cancelled Order, the effective exercise date
shall be the date on which  such  sale  order is  executed.  For a Cash  Payment
(Exercise and Hold)  transaction,  the effective exercise date shall be the date
the  requisite  funds are  received  by the Company at its home office in Plano,
Texas, or such other location as the Company may designate,  or by a third party
duly  designated by the Company at the offices of such third party.  For a Stock
Payment transaction,  the effective exercise date shall be the date the properly
completed  option  exercise  form/instructions  and any  necessary  accompanying
documents  and payment are  received by the Company at its home office in Plano,
Texas, or such other location as the Company may designate,  or by a third party
duly  designated  by the  Company at the offices of such third  party.  Exercise
instructions received after the close of the New York Stock Exchange for the day
shall be deemed received as of the opening of the next Business Day (a "Business
Day" being any day on which the New York Stock Exchange is open and  operating).
An  effective  exercise  date  shall  never  mean  a  non-Business  Day.  If any
"effective  exercise date," as defined above, falls on a day Common Stock is not
traded,  all transactions shall be postponed until the next trading day, and the
effective exercise date shall be deemed to be the next trading date, unless such
day is after the Normal  Expiration Date (as defined  below),  in which case the
option shall expire.

Transferability
- ----------------

This option may be assigned  or  transferred  by will or the laws of descent and
distribution.  No Stock  Option shall be  exercisable  except by you or (a) upon
your  incapacity,  by your  guardian or legal  representative,  or (b) upon your
death, by the beneficiary you have designated on the J.C. Penney Company,  Inc.,
Equity Compensation Plan Beneficiary  Designation Form or in the absence of such
beneficiary, your legal representative (collectively, "Legal Transferees").

Date Option Becomes Exercisable
- --------------------------------

This option shall become exercisable  ("vest") over a ---------------  period in
accordance with the following schedule:


- ----------------------------- -----------------------------------------------
     Normal Vesting Dates        Percent of this Option Grant vesting
- ----------------------------- -----------------------------------------------
- ----------------------------- -----------------------------------------------

- ----------------------------- -----------------------------------------------
- ----------------------------- -----------------------------------------------


This option shall be 100% vested on -----------------.

(Rev. 8/06)                     1                            (continued on back)


However, 100% of this option becomes immediately exercisable,  without regard to
these  dates,  upon a "Change of Control"  (as defined in  Attachment  A) of the
Company or in the event of Involuntary  Termination (as defined in the Executive
Termination Pay Agreement between you and J. C. Penney Corporation, Inc.), and a
portion of this option becomes immediately exercisable,  without regard to these
dates, in the event of your employment termination due to retirement,  death, or
Disability, as described below.

Additional Exercise Terms Of This Option Are:
- ---------------------------------------------

While you are Employed
- -----------------------

While you are employed by the Company,  subsidiary,  or other entity  affiliated
with the  Company,  you may  exercise  vested  options  any time on or after the
Normal  Vesting  Dates  until the  Expiration  Date of  --------------  ("Normal
Expiration Date").

This option can be exercised by:

    o   Cash Payment Method (Exercise and Hold)
    o   Stock Payment Method
    o   Same-Day-Sale Method
    o   Sell To Cover Method

After your Employment Termination
- ----------------------------------

In all cases,  the option  exercise period  following  termination of employment
cannot  extend  beyond  the  applicable  date  described  below  or  the  Normal
Expiration Date, whichever comes first.

1) Retirement, Death, or Disability:  If your employment terminates due to your:

    o   Retirement at age 60 or more,
    o   Retirement between ages 55 and 59 with at least 15 years of service,
    o   Death, or
    o   Disability,

     before the final Normal  Vesting Date,  you shall be entitled to a prorated
     number of stock options.  The proration  shall be based on the ratio of (a)
     the number of calendar days from the date of grant to the effective date of
     termination to (b) the total number of calendar days in the vesting period.
     The number of options that have already vested shall be subtracted from the
     prorated amount and the remaining prorated options shall become immediately
     exercisable.  Any  options  which  have not  already  vested  or for  which
     exercisability   is  not  accelerated   shall  expire  on  such  employment
     termination.

     If your employment  terminates due to any of the three circumstances listed
     above, all vested stock options may be exercised for a period of five years
     after employment  termination or until the option's Normal Expiration Date,
     whichever comes first.

2)   Involuntary  Termination  (as  defined  in the  Executive  Termination  Pay
     Agreement  between  you  and J.  C.  Penney  Corporation,  Inc.)  - If your
     employment  terminates  due to Involuntary  Termination,  this option shall
     become  immediately  exercisable  and may be  exercised  until the option's
     Normal Expiration Date.

3)   Resignation, Summary Dismissal or Resignation in Lieu of Summary Dismissal:
     If your employment terminates due to your resignation, summary dismissal or
     resignation in lieu of summary dismissal,  then this option shall expire as
     of the date of your employment termination.


This stock option grant does not constitute an employment contract.  It does not
guarantee  employment  for the length of the  vesting  period or for any portion
thereof.




                                       2


                                  Attachment A



A Change of Control Event shall have occurred if there is a change of ownership,
a change of effective control, or a change in ownership of a substantial portion
of the assets of the  Company  (as  "Company"  is  defined  in the J. C.  Penney
Company, Inc. 2005 Equity Compensation Plan).

     1.   Change of ownership occurs on the date that a person or persons acting
          as a group  acquires  ownership of stock of the Company that  together
          with  stock  held by such  person  or group  constitutes  more than 50
          percent of the total fair market  value or total  voting  power of the
          stock of such corporation.

     2.   Notwithstanding   whether  the  Company  has  undergone  a  change  of
          ownership,  a Change of Effective  control occurs (a) when a person or
          persons acting as a group acquires within a 12-month period 35 percent
          of total voting power of the stock of the Company or (b) a majority of
          the board of Directors is replaced  within 12 months if not previously
          approved by a majority of the members.  A change in effective  control
          also  may  occur  in any  transaction  in  which  either  of  the  two
          corporations  involved  in the  transaction  has a Change  in  Control
          Event, i.e. multiple change in control events.

     3.   Change in ownership of a substantial  portion of the Company's  assets
          occurs when a person or persons acting as a group acquires assets that
          have a total gross fair market  value equal to or more than 40 percent
          of the total  gross fair  market  value of all  assets of the  Company
          immediately  prior to the  acquisition.  A  transfer  of assets by the
          Company is not treated as a change in the  ownership of such assets if
          the assets are transferred to -
          (i) A  shareholder  of  the  Company  (immediately  before  the  asset
          transfer) in exchange for or with respect to its stock;
          (ii) An entity,  50 percent or more of the total value or voting power
          of which is owned, directly or indirectly, by the Company;
          (iii) A person,  or more than one person acting as a group, that owns,
          directly  or  indirectly,  50  percent  or more of the total  value or
          voting power of all the outstanding stock of the Company; or
          (iv) An entity, at least 50 percent of the total value or voting power
          of which is owned,  directly or indirectly,  by a person  described in
          paragraph (iii).

Persons  will not be  considered  to be acting as a group  solely  because  they
purchase  assets of the  Company  at the same  time,  or as a result of the same
public  offering.  However persons will be considered to be acting as a group if
they are  owners of a  corporation  that  enters  into a merger,  consolidation,
purchase or  acquisition of assets,  or similar  business  transaction  with the
Company.