updated 12/29/2006 3:45:59 PM ET 2006-12-29T20:45:59

Department-store operator J.C. Penney Co. will pay a fired executive about $10 million in severance even though she worked at the company for only a few months.

A Penney spokeswoman said Friday the severance for Catherine G. West, who was hired as chief operating officer last summer, was outlined in her employment contract.

Penney announced Thursday it was terminating West immediately. It gave no explanation, although a spokeswoman said the move was not related to company performance or holiday sales.

West joined Penney from Capital One Financial Corp., where she had been president of its U.S. credit card division. She had no retail experience.

West’s severance includes 18 months of her $750,000 annual salary and bonuses plus $1 million to cover benefits she forfeited by leaving Capital One. Most of the package, however, comes in the form of accelerated stock options and restricted stock.

Although the company offered no reason for West’s dismissal, which was announced in a two-sentence news release, analysts briefed by Penney’s Chairman and Chief Executive Myron Ullman cited her lack of retail experience and said she didn’t appear to be a good fit for the Plano-based company.

The analysts downplayed the effect of West’s firing on the company’s operations.

One of the analysts, Robert F. Buchanan of A.G. Edwards, said his firm’s recommendation on retailers are based on the CEO and that West’s departure, “as unusual as it may be in the short run — does not alter one iota the regard we have” for Ullman.

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