UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

(Rule 14a-101)

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Stage Stores, Inc.
(Name of Registrant as Specified In Its Charter)
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STAGE STORES INC.
 
BEALLS GOODY’S PALAIS ROYAL PEEBLES STAGE
 

 
Notice of 20072010
Annual Meeting
and
Proxy Statement




This Page Intentionally Left Blank.


STAGE STORES INC.

BEALLS   GOODY’S    PALAIS ROYAL      PEEBLES       STAGE

10201 Main Street
Houston, Texas 77025
 
May 1 200710201 Main Street
Houston, Texas 77025
April 30, 2010
 
Dear Shareholder:
 
On behalf of the Board of Directors, it is my pleasure to invite you to attend the 20072010 Annual Meeting of Shareholders of Stage Stores, Inc. on Thursday, June 7, 2007,10, 2010, at 1:00 p.m. local time, in Houston, Texas.  Information about the Annual Meeting is presented in the following pages.
 
The Annual Meeting will begin with a discussion and vote on the matters set forth in the accompanying Notice of 2007 Annual Meeting of Shareholders and Proxy Statement, followed by a discussion on any other business matters that are properly brought before the meeting.
 
Your vote is very important.  We encourage you to read the Proxy Statement and vote your shares as soon as possible.  Whether or not you plan to attend, you can be sure your shares are represented at the Annual Meeting by promptly completing, signing, dating and returning your Proxy Card in the enclosed envelope or by submitting your vote and proxy by telephone or by the Internet.
 
If you will need special assistance at the Annual Meeting because of a disability, please contact Bob Aronson, Vice President, Investor Relations, at (800) 579-2302.
 
Thank you for your continued support of Stage Stores, Inc. We look forward to seeing you on June 710th.
 
Sincerely,
 
Stage Stores, Inc., Signature 1
James R. Scarborough
Chairman of the Board and Chief Executive Officer

i

TABLE OF CONTENTS
 
Notice of 20072010 Annual Meeting of Shareholders
 iii
Important Voting Information
 iv
Important Notice Regarding the Availability of Proxy Materials iv
Information Regarding Admission to the Annual Meeting iv
Proxy Statement 1
 
General
 1
 
VotingNotice Only Delivery Method
 1
 
Voting
 1
Matters to be Acted Upon 2
 
■ nItem 1 -Election of Directors 2
 
Information Relating to Directors and Director Nominees 2
 
Security Ownership of Certain Beneficial Owners and Management
3
 Information Relating to the Board of Directors and Committees 5
  
In General 5
  
Corporate Governance 5
  
Attendance at Board, Committee and Annual Meetings 7 8
  
Standing Committees 7 8
  
Anticipated Changes in Board and Committee Leadership  9
Corporate Governance and Nominating Committee 8
Audit Committee
9
  
CompensationAudit Committee 10 11
  
Compensation Committee 12
Shareholder and Other Interested Party Communications with the Board 12 13
 
Security Ownership of Certain Beneficial Owners and Management 14
Transactions with Related Persons 12 15
 
Compensation of Directors and Executive Officers 13 17
  
Compensation Discussion and Analysis 13 17
  
Compensation Committee Report 27 35
  
2009 Summary Compensation Table 27 36
  
2009 All Other Compensation Table 28 37
  
2009 Grants of Plan-Based Awards Table 28 38
  
2009 Outstanding Equity Awards at Fiscal Year-End Table 30 39
  
2009 Option Exercises and Stock Vested Table 32 41
  
2009 Pension Benefits Table  32 42
  
2009 Nonqualified Deferred Compensation Table 32 43
  
Potential Payments on Termination or Change In Control 33 44
  
2009 Director Compensation Table 41 54
 
n■ Item 2– 2 -Ratification of the Selection of Deloitte & Touche LLP as Independent Registered Public Accounting Firm For 2007Fiscal 2010  43 56
  
In General 56
Principal Accountant Fees and Services 43 56
  
Pre-Approval Policies 44 57
  
Audit Committee Report 44 57
Proposals to Amend Articles of Incorporation
45
nItem 3 - Amendment of Articles of Incorporation to Increase Authorized Common Stock
47
nItem 4 - Amendment of Articles of Incorporation to Specify Authorized Preferred Stock
49
nItem 5 - Amendment of Articles of Incorporation to Eliminate Bankruptcy Related Language
50
Securities Authorized for Issuance underUnder Equity Compensation Plans
 51 58
Section 16(a) Beneficial Ownership Reporting Compliance
52
Additional Information
52
■ To be voted on at the meeting
Appendix A - Amended and Restated Articles of Incorporation  59
Additional Information  59
 
n To be voted on at the meeting
EVERY SHAREHOLDER’S VOTE IS IMPORTANT.  PLEASE
COMPLETE, SIGN, DATE AND RETURN YOUR PROXY
CARD, OR SUBMIT YOUR VOTE AND PROXY BY
TELEPHONE OR BY THE INTERNET, AS SOON AS POSSIBLE.POSSIBLE


STAGE STORES INC.

BEALLS      GOODY’S      PALAIS ROYAL      PEEBLES       STAGE

NOTICE OF 20072010 ANNUAL MEETING OF SHAREHOLDERS
 
To the Shareholders:
 
The 20072010 Annual Meeting of Shareholders of Stage Stores, Inc. (the “Company”) will be held at the offices of the Company, 10201 Main Street, Houston, Texas 77025 on Thursday, June 7, 2007,10, 2010, at 1:00 p.m. local time.  If you need directions to attend the Annual Meeting, they can be found on our website, www.stagestoresinc.com, under “Investor Relations”.  The shareholders will vote on the following matters:
 
1.Election of eight directorssix Directors for a term of one year;
 
2.Ratification of the selection of Deloitte & Touche LLP as independent registered public accounting firm for 2007;
3.Amendment of Articles of Incorporation to increase authorized common stock;
4.Amendment of Articles of Incorporation to specify authorized preferred stock;
5.Amendment of Articles of Incorporation to eliminate bankruptcy related language;Fiscal 2010; and
 
6.3.Action upon suchSuch other matters as may properly come before the Annual Meeting or any adjournment thereof.
 
The Board of Directors has fixed the close of business on April 16, 200712, 2010 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting.
 
 By Order of the Board of Directors
  stage stores, inc., signature 2
 Michael E. McCreery Edward J. Record
 Executive Vice President, Chief Operating Officer,
 Chief Financial Officer and Secretary
 April 30, 2010Stage Stores, Inc.
iii
IMPORTANT VOTING INFORMATION
Broker Non-Vote.  If you are a beneficial owner whose shares are held of record by a broker, you must instruct the broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum, but will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange (“NYSE”). There is an important change this year regarding broker non-votes and Dire ctor elections. See “Important Change” below, for information about the change.
If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares on the ratification of Deloitte & Touche LLP, even if the broker does not receive voting instructions from you. However, your broker does not have discretionary authority to vote on the election of Directors without instructions from you, in which case a broker non-vote will occur and your shares will not be voted on the election of Directors.
Important Change: A change to NYSE Rule 452 that became effective January 1, 2010 no longer permits brokers to vote in the election of Directors if the broker has not received instructions from the beneficial owner. This represents a change from prior years, when brokers had discretionary voting authority in the election of Directors. Accordingly, it is particularly important that beneficial owners instruct their brokers how they wish to vote their shares.
 
May 1 2007IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 10, 2010.
 
The Company’s 2010 Proxy Statement, 2009 Annual Report and 2009 Annual Report on Form 10-K are available to review at http://bnymellon.mobular.net/bnymellon/ssi.
INFORMATION REGARDING ADMISSION TO THE ANNUAL MEETING
In accordance with the Company’s security procedures, all persons attending the Annual Meeting must present aneither their E-Notice, or the Admission Ticket found on their Proxy Card (if they requested and received a Proxy Card), or a brokerage statement or other proof of ownership of Stage Stores stock as of the Record Date, and picture identification.  If you are a shareholder of record and plan to attend the meeting in person, please bring theyour E-Notice or your Admission Card you received in this proxy mailingTicket with you to the meeting.  For security purposes, briefcases, bags, purses, backpacks and pursesother containers will be subject to search at the door.


PROXY STATEMENT
GENERGENERALAL
 
This Proxy Statement is furnished in connection with the solicitation of proxies by Stage Stores, Inc. (the “Company”, “we”, “our” or “us”) on behalf of the Board of Directors (the “Board”) for the 20072010 Annual Meeting of Shareholders (the “Annual Meeting”), which will be held at the principal executive offices of the Company, 10201 Main Street, Houston, Texas 77025, on Thursday, June 7, 2007,10, 2010, at 1:00 p.m. local time. This Proxy Statement and Proxy Card are first being sentmade available to the shareholders on or about May 1 2007.April 30, 2010.  The proxy will be voted at the Annual Meeting if the signer of the proxyProxy Card or the shareholder submitting his or hertheir vote and proxypro xy by mail, by telephone or by the Internet was a shareholder of record on April 16, 200712, 2010 (the “Record Date”).
 
VOTINGNOTICE ONLY DELIVERY METHOD
 
In 2009, we adopted the “Notice Only Delivery Method” of distributing our Proxy Statement, Proxy Card and Annual Report to shareholders.  Therefore, we will mail a Notice of Internet Availability of Proxy Materials (“E-Notice”) to shareholders rather than paper copies of these documents.  If you would like to receive a paper copy of these documents, you must request one.  Instructions on how to request a copy by telephone, email or the Internet are contained in the E-Notice.
VOTING
The holders of our common stock are entitled to one vote per share on all matters to be voted upon by the shareholders.  On the Record Date, there were 43,408,40338,449,491 shares of our common stock, par value $0.01, outstanding and entitled to vote at the Annual Meeting.  A list of the shareholders entitled to vote at the Annual Meeting will be available for inspection at the Annual Meeting for purposes relating to the Annual Meeting.
 
You can ensure that your shares are voted at the Annual Meeting by submitting your instructions by completing, signing, dating and returning the enclosedyour Proxy Card in the envelope provided (if you requested a paper copy of the Proxy Card) or by submitting your vote and proxy by telephone or by the Internet.  Submitting your instructions by Proxy Card, by telephone, or by the Internet will not affect your right to attend the Annual Meeting and vote.  A shareholder who gives a proxy may revoke it at any time before it is exercised by voting in person at the Annual Meeting, by delivering a subsequent proxy, or by notifying the Inspectors of Election in writing of such revocation.
 
The representation in person or by proxy of a majority of the outstanding shares of our common stock entitled to a vote at the Annual Meeting is necessary to provide a quorum for the transaction of business at the Annual Meeting. Shares can only be voted if the shareholder is present in person or is represented by a properly signed Proxy Card or by a vote and proxy submitted by telephone or by the Internet.  Each shareholder’s vote is very important. Whether or not you plan to attend the Annual Meeting in person, please sign and promptly return the  enclosed Proxy Card (if you requested a paper copy of the Proxy Card) or submit your vote and proxy by telephone or by the Internet.  All signed and returned Proxy CardsCard s and votes and proxies submitted by telephone or by the Internet will be counted towards establishing a quorum for the Annual Meeting, regardless of how the shares are voted.
 
A shareholder of record on the Record Date may vote in any of the following four ways:
 
·by toll-free number at 1-866-540-5760; or
 
·
by the Internet at http://www.proxyvoting.com/ssi; or
 
·by completing and mailing a Proxy Card (if you requested a paper copy of the Proxy Card;Card); or
 
·by written ballot at the Annual Meeting.
 
If you vote by mail, by the Internet or by telephone, your vote must be received by 11:59 p.m. Eastern Time on Wednesday, June 69th, the day before the Annual Meeting.  Your shares will be voted as you indicate.  If you return or otherwise complete your Proxy Card, but you do not indicate your voting preferences, the proxies will vote your shares FOR Items 1 2, 3, 4(election of Directors) and 52 (ratification of selection of Deloitte & Touche LLP) and in their discretion for Item 63 (such other matters as may properly come before the Annual Meeting or any adjournment thereof).
 
If your shares are held in a brokerage account in your broker’s name (this is called street name)“street name”), you should follow the voting directions provided by your broker or nominee.the broker.  You may complete and mail a voting instruction card to yourthe broker or nominee or, in most cases, submit voting instructions by mail, by telephone or by the Internet. Your shares should be voted by yourthe broker or nominee as you have directed.
 
1
If your shares are held in street name and you wish to have your shares voted for the election of Directors, you must either (i) instruct your broker how to vote your shares, (ii) vote your shares by phone or the Internet, or (iii) bring a brokerage statement, written proxy from your broker, or other proof of ownership of Stage Stores stock as of the Record Date with you to the Annual Meeting.
 
The CompanyWe will pass out written ballots to any shareholder entitled to vote at the Annual Meeting.
 
For additional information concerning the manner of proxy solicitation and voting, please see “Additional Information” on page 5259 of this Proxy Statement.
 
MATTERS TO BE ACTED UPONUPON
ITEM 1 - ELECTION OF DIRECTORS
INFORMATION RELATING TO DIRECTORS AND DIRECTOR NOMINEES
 
Jim Scarborough
 
Jim Scarborough, who served as our Chief Executive Officer from September 2000 to November 2008 and who has also served as the Chairman of our Board since August 2001, will be retiring from the Board after the conclusion of our Annual Meeting. Based upon his extensive years of experience in the retail industry and his long term service with our Company, Mr. Scarborough not only played the lead role in our successful reorganization efforts, but he was instrumental in growing the reach of our small market business model.  Thanks to his efforts and strategic vision, our Company is strong and is well positioned for the future. We thank him for his years of service, and his contributions to our Company, and wish him all of the best in his well deserved retirement.
Tom Mentzer
ITEM 1 - ELECTION OF DIRECTORSOn February 26, 2010, Tom Mentzer, who had been an independent Director of our Company since August 24, 2001, passed away at the age of 58.  At the time of his death, Dr. Mentzer was the Chairman of our Corporate Governance and Nominating Committee and a member of the Compensation Committee.  His membership on our Board, his outstanding expertise in supply chain management, his integrity and high ethical standards, and his extraordinary dedication to the Company brought great credit to both our Board and to the Company. Tom will be sorely missed.
INFORMATION RELATING TO DIRECTORS AND DIRECTOR NOMINEES
 
In GeneralSharon Mosse
 
After six years of dedicated service to the Company as a Director, Sharon Mosse will be retiring from the Board after the conclusion of the Annual Meeting. With her extensive experience in the retail industry, Ms. Mosse has brought an in-depth knowledge of marketing to the Board. We thank her for her years of valuable service and her contributions to our Company and we wish her all of the best.
Cheryl Nido Turpin
On March 25, 2010, Cheryl Nido Turpin was appointed a Director.
In General
Due to the retirement of Jim Scarborough and Sharon Mosse, the Company is conducting a search for a minimum of two additional Directors. To the extent required by the rules of the Securities and Exchange Commission (“SEC”), certain information concerning Mr. Scarborough, Dr. Mentzer and Ms. Mosse is provided in this Proxy Statement.
At the Annual Meeting, eightsix Directors are to be elected to hold office until the 20082011 Annual Meeting and until their successors have been elected and have qualified. Information concerning the eightsix nominees is set forth below.  All of the nominees are currently Directors of the Company.Directors.  The Board of Directors has determined that the following six Directorsfive Director nominees are Independent Directors, as independence is defined by the New York Stock Exchange:  Alan J. Barocas, Michael L. Glazer, John T. Mentzer, Margaret T. Monaco, William J. Montgoris, David Y. Schwartz and Sharon B. Mosse.Cheryl Nido Turpin.  Mr. Hall, the sixth Director nominee, is not an Independent Director as he is our President and Chief Executive Officer. The Board’s Corporate Governance and Nominating Committee recommended all of thesethose current Directors for re-election.  The Board knows of no reason whyw hy any nominee may be unable to serve as a Director.  If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board may nominate.
Board Composition
Nominees for Director are selected on the basis of broad experience, diversity (differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to the Board’s heterogeneity), wisdom, integrity, the ability to make independent analytical inquiries, an understanding of the Company’s business environment, and a willingness to devote adequate time to Board duties.
 
YourBelow we identify and describe the specific experience, qualifications, attributes or skills (collectively, “Director Qualifications”) our Directors bring to the Board that are important in light of Directors recommends a vote FORour business. The specific Directors’ Qualifications that the Corporate Governance and Nominating Committee and the Board considered in each nominee for Director set forth below.Director’s re-nomination follow their individual biographies.
 
·  
Leadership experience. We believe that Directors with experience in significant leadership positions over an extended period, especially Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”) positions, provide the Company with special insights. These people generally possess extraordinary leadership qualities and the ability to identify and develop those qualities in others. They demonstrate a practical understanding of organizations, processes, strategy, risk management and the methods to drive change and growth.
·  
Finance experience. We believe that an understanding of finance and financial reporting processes is important for our Directors. The Company measures its operating and strategic performance by reference to financial targets. In addition, accurate financial reporting and vigorous auditing are critical to our success. We seek to have at least two of the three members of our Audit Committee qualify as Audit Committee Financial Experts and we expect all of our Directors to be financially knowledgeable.
·  
Industry experience. We seek to have Directors with experience as executives, directors, consultants, professionals or other capacities in the retail industry.
·  
Marketing experience. As a retailer, marketing is critical to our success. Therefore, marketing expertise is very important to us.
·  
Real estate experience. As of January 30, 2010, we operated 758 stores in 39 states.  In addition to opening new stores, the Company has continued to invest in the expansion, relocation and remodeling of its existing stores.  Therefore, real estate expertise is very important to us.
The following information pertains to each nominee’s (i) age as of April 16, 2007,12, 2010, (ii) principal occupations for at least the past five years, and (iii) directorships in other public companies:companies at any time during the past five years.

Name
 
Age
 
Positions Currently Held
James R. Scarborough56Chairman, Chief Executive Officer
Michael E. McCreery59Executive Vice President, Chief Financial Officer, Director
Alan J. Barocas 5861 Director
Michael L. Glazer 5961 Director, Chairman of Compensation Committee
JohnAndrew T. MentzerHall 5549 Director, President and Chief Executive Officer
William J. Montgoris63Director, Lead Independent Director, Chairman of Corporate Governance and Nominating Committee
Margaret T. MonacoDavid Y. Schwartz 59Director
William J. Montgoris6069 Director, Lead Independent DirectorChairman of Audit Committee
Sharon B. MosseCheryl Nido Turpin 5762 Director

Mr. Scarborough has been Chairman of the Board since August 24, 2001.  He joined the Company as President and Chief Executive Officer in August of 2000.  He served as President of the Company until February 20, 2006.  From 1996 to 2000, Mr. Scarborough served as President and Chief Executive Officer of Busy Body, Inc.
3
Mr. McCreeryBarocas has been a Director of the Company since August 24, 2001.  He joined the Company as Executive Vice President and Chief Financial Officer in February of 2001.  From 1998 to 2001, Mr. McCreery was Senior Vice President and Chief Financial Officer of Levitz Furniture Company.
Alan J. Barocas was appointed a Director on January 15, 2007.  Since May 2006, he has been the principal of Alan J. Barocas and Associates, a real estate consulting firm.  From June 1981 untilto April 2006, Mr. Barocas was employed by GAP, Inc.  His last position with GAP, Inc. was Senior Vice President of Real Estate.  He is a past Trustee of the International Council of Shopping Centers (ICSC).
 
Director Qualifications:
2
·  Leadership and Industry experience: former Senior Vice President of Real Estate of a large public company in the retail industry; twenty-five years of experience with a large public company in the retail industry
·  Real estate experience:  more than thirty years of real estate experience, twenty-five of which were with a large public company in the retail industry
 
Mr. Glazer has been a Director since August 24, 2001.  Since October 2009, he has served as President and CEO of Mattress Giant Corporation located in Addison, Texas.  From August 2005 he hasto October 2009, Mr. Glazer served as Managing Director of Team Neu, located in Pittsfield, Massachusetts.  From May 1996 untilto August 2005, he served as President and Chief Executive Officer of KB Toys, Inc., which  KB Toys, Inc. filed a petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on January 14, 2004 and emerged from bankruptcyChapter 11 in August 2005.  From April 1995 to January 1999, Mr. Glazer also served as President of Big Lots.  From March 1990 to January 1995, he served as President of the Bombay Company.  Mr. Glazer is also a Director of CPI Corporation.   He also formerly served on August 29, 2005.the boards of Brookstone and Big Lots.
 
Director Qualifications:
·  Leadership experience: current President and CEO of a privately held company in the retail industry with 1,000 employees; former President and CEO of three public companies in the retail industry
·  Industry experience:  thirty-five years of experience in the retail industry
Dr. Mentzer has beenMr. Hall joined the Company in February 2006 as President and Chief Operating Officer and assumed the position of President and Chief Executive Officer in November 2008.  He became a Director since August 24, 2001.  Since Januaryin March 2008.  Mr. Hall was employed by Foley’s, a Houston-based division of 1994, he has been a professor of Business Policy in theMay Department of MarketingStores, Inc., from June 2002 to February 2006.  While at Foley’s, Mr. Hall served as Chief Financial Officer (June 2002 to April 2003) and Logistics at the University of Tennessee.  Professor Mentzer is currently the Bruce Excellence Chair of Business and Executive Director, Integrated Value Chain Forums.  He is also President of JTM & Associates, a consulting firm.as Chairman (May 2003 to February 2006).
 
Director Qualifications:
·  Leadership and Industry experience: current President and CEO of the Company;  former Chairman of Foley’s, a division of May Department Stores; seventeen years of experience in the retail industry
·  Finance experience:  Certified Public Accountant;  former CFO of a division of a large public company in the retail industry
Ms. MonacoMr. Montgoris has been a Director since June 3, 2004.  She returned to the position of Principal of Probus Advisors, a management and financial consulting firm which she founded in June of 1993, in October of 2003.  From April of 1999 until October of 2003, Ms. Monaco served as the Chief Operating Officer of KECALP Inc. and Merrill Lynch Ventures LLC.  She was KECALP Inc.’s Chief Administrative Officer from April of 1998 until April of 1999.  Ms. Monaco is also a Director of Barnes and Noble, Inc.
Mr. Montgoris has been a Director since June 3, 2004.  He retired from The Bear Stearns Companies, Inc. in June of 1999.  From June of 1996 until June ofDuring the 1987 to 1999 period, Mr. Montgoris served asin the following positions with Bear Stearns:  Chief Operating Officer (1996 to 1999), Chief Operating Officer and Chief Financial Officer (1993 to 1996) and Chief Financial Officer (1987 to 1993).  Mr. Montgoris is also a director of Bear Stearns.Carter’s, Inc. and OfficeMax Incorporated.  From June of 1993 until June of 1996,1999 to March 2009, he served as Chief Financial Officera director of Bear Stearns.  Mr. Montgoris isthe Reserve Fund, a Trustee of five funds within The Reserve Funds family of money market mutual funds.
Director Qualifications:
·  Leadership, Industry and Committee experience: former COO of a leading global investment banking, securities trading and brokerage firm; member of the Audit Committee of a large public company that is the largest branded marketer in the United States of apparel exclusively for babies and young children; member of the Audit and Compensation Committees of a large public company that is a leader in both business-to-business and retail office products distribution
·  Finance experience: accounting background; former CFO of a leading global investment banking, securities trading and brokerage firm
 
Ms. MosseMr. Schwartz has been a Director since October 4, 2004.July 2007.  Since MayJune 1997, Mr. Schwartz has been a business advisor and consultant to various companies principally in the retail, distribution and services industries.  Prior to that, Mr. Schwartz spent thirty-five years with Arthur Andersen, LLP, from which he retired as a Senior Partner in June 1997.  While at Arthur Andersen, he served clients in various industries, primarily retailing, distribution and communications.  Mr. Schwartz is also a director of 2006, Ms. Mosse has served as President of Strategic Marketing Group,Walgreen Co., Foot Locker, Inc., a marketing consulting firm which she founded in May of 2002.  From January of 2005 until April of 2006, she served as Chief Marketing Officer of Red Door Spa Holdings-Elizabeth Arden. From May of 2002 until January of 2005, Ms. Mosse served as President of Strategic Marketing Group, Inc.   From May of 2000 until May of 2002, she served as Chief Marketing Officer for Barnes & Noble, Inc. and True Value Company.
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTDirector Qualifications:
Security Ownership of Certain Beneficial Owners

The following table provides information regarding beneficial ownership of the Company’s common stock by any person or entity known by the Company to be the beneficial owner of more than five percent (5%) of the Company’s outstanding common stock as of April 16, 2007.  The amounts reflect the effects of a three-for-two split of outstanding common stock on January 31, 2007 (the “Stock Split”). As of April 16, 2007, there were 43,408,403 shares of common stock outstanding.

 
 
Name and Address
 
 
Number of Shares Beneficially Owned
 
 
Percent of Class
 
      
Dimensional Fund Advisors LP 3,037,133 7.0%(1)
1299 Ocean Avenue     
Santa Monica, CA 90401     
      
Paradigm Capital Management, Inc. 2,855,739 6.6%(2)
Nine Elk Street     
Albany, NY 12207     
      
Wellington Management Company, LLP 2,429,697 5.6%(3)
75 State Street     
Boston, MA 02109     
__________________________

(1)
 The information is based on the Schedule 13Gfiled with the Securities and Exchange Commission on February 9, 2007 by Dimensional Fund Advisors LP reporting on beneficial ownership as of December 31, 2006, then adjusted for the Stock Split.  According to the filing, the reporting person has sole voting and investment power with respect to 2,024,755 shares (3,037,133 shares after the Stock Split).
3
 
(2)·  
 The informationLeadership, Industry and Audit Committee experience: member of the Board of Directors of two large companies in the retail industry and one large company in the wholesale distribution industry; Chairman of the Audit Committee of two large companies, one of which is based ona public company in the Schedule 13Gfiled withretail industry and one of which is in the Securitieswholesale distribution industry; Chairman of the Finance and Exchange Commission on February 14, 2007 by Paradigm Capital Management, Inc. reporting on beneficial ownership asStrategic Planning Committee of December 31, 2006, and then adjusted fora large public company in the Stock Split.  According to the filing, the reporting person has sole voting and investment power with respect to 1,903,826 shares (2,855,739 shares after the Stock Split).
retail industry
 
(3)·  The information is based onFinance experience: Certified Public Accountant;  former partner with Arthur Andersen (partner in charge of Retail Industry Program and Managing Partner of the Schedule 13G filed with the SecuritiesChicago office’s Attest and Exchange Commission on February 14, 2007 by Wellington Management, LLP reporting on beneficial ownership as of December 31, 2006, and then adjusted for the Stock Split.  According to the filing, the reporting person has shared voting power with respect to 1,317,348 shares (1,976,022 shares after the Stock Split) and shared investment power with respect to 1,619,798 shares (2,429,697 shares after the Stock Split).Business Consulting Practice)
 
Security Ownership of ManagementMs.  Turpin

was appointed a Director on March 25, 2010.  She retired from The following table shows the number of shares of our common stock that are beneficially ownedLimited Stores, Inc. in August 1997.  From June 1994 to August 1997, Ms. Turpin served as of April 16, 2007 by each NamedPresident and Chief Executive Officer listed in the Summary Compensation Tableof The Limited Stores, Inc. From January 1990 to June 1994, she was President and eachCEO of our Directors, as well as the numberLane Bryant, a subsidiary of shares beneficially owned by allThe Limited Stores, Inc.  Ms. Turpin is also a director of our DirectorsFoot Locker, Inc. and executive officers as a group.  As of April 16, 2007, there were 43,408,403 shares of our common stock outstanding.  None of the shares are pledged as security.The table also includes information about stock options exercisable within 60 days and Deferred Stock Units credited to the accounts of each Director and Named Executive Officer under various compensation plans.  Unless otherwise indicated by footnote, individuals have sole voting and investment power.Warnaco Group, Inc.

 
Name
 Common Stock  Restricted Stock (1)  Stock Options Exercisable Within 60 Days  Deferred Stock Units (2)  Percent of Class 
James R. Scarborough  32,611   21,777   1,520,811   -   3.6%
Andrew T. Hall  9,533   30,000   37,500   -   (3)
Michael E. McCreery  12,681   10,889   148,782   -   (3)
Dennis E. Abramczyk  924   -   61,875   -   (3)
Cynthia S. Murray  -   22,500   56,250   -   (3)
Alan J. Barocas  -   2,569   -   -   (3)
Scott J. Davido  1,962   5,224   22,501   1,685   (3)
Michael L. Glazer  54,749   5,224   11,250   -   (3)
John T. Mentzer  1,350   5,224   56,248   3,065   (3)
Margaret T. Monaco  3,150   5,224   36,562   -   (3)
William J. Montgoris  2,959   5,224   36,562   -   (3)
Sharon B. Mosse  -   5,224   25,312   4,520   (3)
                     
All Directors and Executive Officers as a group (20 persons)  132,303   119,079   2,312,927   9,270   5.9%
 _______________________________
 
(1)·  Restricted stock is granted under the Stage Stores, Inc. AmendedLeadership and Restated 2001 Equity Incentive Plan.  The restricted stock granted to Messrs. ScarboroughCommittee experience:  former President and McCreery vests ratably over two years.  The restricted stock granted to Mr. Hall vests ratably over three years. The remainderCEO of a large specialty retail business; Chairman of the restricted stock granted vests atCompensation Committee and member of the endCorporate Governance and Nominating Committee of a three-year period fromlarge public company in the dateretail industry; member of grant.the Compensation Committee and Corporate Governance and Nominating Committee of another large public company in the retail industry
 
(2)·  Deferred Stock Units (“DSU”) are held under the Stage Stores, Inc. 2003 Non-Employee Director Equity Compensation Plan.  Each DSU is equalIndustry experience:  extensive experience in value to a share of Company stock, but does not have voting rights.  Individuals do not have investment power with respect to DSUs.  The number of DSUs credited to a Director’s account will be adjusted, as appropriate, to reflect any stock split, any dividend paid in cashdepartment store and any dividend payable in shares of Company stock.  At the election of the Director upon termination of his or her service as a Director, the DSUs will be distributed to the Director either (i) in cash, or (ii) in shares of Company stock.
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(3)Ownership is less than one percent of outstanding common stock.apparel specialty store retailing
 
Stock Ownership by Executive OfficersYour Board of Directors recommends a vote FOR each nominee for Director.
 
On December 28, 2006,the Board adopted a resolution stating that it believes that an officer of the Company who has reached the level of Executive Vice President or above should be a shareholder and should have a financial stake in the Company and that while the Board does not believe it appropriate to specify the level of stock ownership for those executive officers, the Board encourages those executive officers to either purchase stock in the open market or use their equity grants to acquire and retain, during their employment, shares of our common stock in an amount that the executive officer deems appropriate.
Stock Ownership by Directors
On August 29, 2006,the Board adopted a resolution stating that it believes that Directors should be shareholders and have a financial stake in the Company in an amount that a Director deems appropriate and that while the Board does not believe it appropriate to specify the level of stock ownership for individual Directors, each Director must develop and maintain a stock position in the Company with an original investment of at least four times the Annual Retainer, which is currently $30,000 for Independent Directors (the “Original Investment”), by the later of (i) three years of the date of the Director’s initial election to the Board, or (ii) August 29, 2009. In determining whether the Director has achieved the Original Investment, the Director can include (i) a Director’s tax basis in any stock acquired by the Director in open market purchases, and (ii) the amount of any Director fees which the Director has designated to be used for the acquisition of restricted stock or Deferred Stock Units under our 2003 Non-Employee Director Equity Compensation Plan.

INFORMATION RELATING TO THE BOARD BOARD OF DIRECTORS AND COMMITTEES
 
In GeGeneralneral
 
Our business is managed under the direction of our Board.  Our Board currently consists of eight Directors. Members of our Board are kept informed of our business through discussions with our Chairman and Chief Executive Officer and other officers, by reviewing materials provided to them, by visiting our offices, stores and distribution centers, and by participating in meetings of the Board and its Committees.
Our Board currently consists of nine Directors.  Scott Davido, a Director since August 24, 2001, is not standing for reelection.  On January 3, 2006, the Board retained the services of Spencer Stuart to assist it in the recruitment of a new Director as Walter Salmon retired from the Board effective June 1, 2006.  Several potential candidates were identified by Spencer Stuart. On January 15, 2007, Mr. Barocas accepted the Board’s offer and was appointed to the Board.
 
Corporate GoveGovernancernance
 
Board Leadership Structure.  Andy Hall, our Chief Executive Officer, does not serve as the Chairman of our Board.  We believe that this leadership structure is appropriate for the Company because while it allows the Chief Executive Officer to speak for and lead the Company and communicate with other members of senior management, it provides for effective oversight by our Board, all of whose members are independent with the exception of Messrs. Hall and Scarborough, and all of whom are highly qualified and experienced and, other than Messrs. Hall and Scarborough, exercise a strong independent oversight function.  This ove rsight function is enhanced by the fact that all of the Board’s standing committees—Audit, Compensation, and Corporate Governance and Nominating—are comprised entirely of independent Directors. Further, as set forth below in “Information Relating to the Board of Directors and Committees—Lead Independent Director”, the Board has designated one of the independent Directors as Lead Independent Director.
The Board’s Role in Risk Oversight. The Board’s role in the risk oversight of the Company is administered directly and through its standing committees as follows:
·  The Audit Committee has primary responsibility for financial oversight. In that regard, the Audit Committee’s purpose is to assist in the Board’s oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the Company’s independent auditor’s qualifications, independence and work, and (iv) the performance of the Company’s
internal audit function and independent auditors. The Committee acts independently as authorized and assists the Board in fulfilling its oversight responsibilities by reviewing certain financial information that is provided to the Board and others, the internal control structure, the audit process, and the adherence to applicable laws and regulations. Considering the size and complexity of the Company, the Committee must apply reasonable materiality standards to all of its activities. In addition, the Audit Committee has certain responsibilities with respect to our compliance program.  For additional information, see “Information Relating to the Board of Directors and Committees—Audit Committee” and “Item 2—Ratification of the Selection of Deloitte & Touche LLP as Independent Registered Public Accounting Fir m for Fiscal 2010—Audit Committee Report” later in this Proxy Statement.
·  The Compensation Committee considers the risks associated with our compensation policies and practices for all employees, including non-executive officers, to ensure that they do not create risks that are reasonably likely to have a material adverse affect on the Company. For additional information, see “Information Relating to the Board of Directors and Committees—Compensation Committee” later in this Proxy Statement.
·  The Corporate Governance and Nominating Committee assists the Board in fulfilling its corporate governance and oversight responsibilities by reviewing corporate governance issues that may be brought before the Board, by exercising oversight over the Company’s Corporate Governance Guidelines, by recommending qualified individuals for nomination as Directors and reviewing their performance, and by reviewing applicable laws and regulations related to corporate governance matters.  For additional information, see “Information Relating to the Board of Directors and Committees—Corporate Governance and Nominating Committee” later in this Proxy Statement.
·  The Board is kept abreast of its Committees' risk oversight and other activities via reports of each Committee Chairman to the full Board. These reports are presented at every regular Board meeting and include discussions of Committee agenda topics, including matters involving risk oversight.
·  Members of management who supervise the day-to-day risk management responsibilities periodically provide reports to the Board as a whole and to the Committees if requested.
The Board considers specific risk topics, including risks associated with our strategic plan, our capital structure and our development activities. In addition, the Board receives detailed regular reports from the members of our senior management team, which consists of the heads of our principal business and corporate functions—that include discussions of the risks and exposures involved in their respective areas of responsibility. These reports are provided in connection with regular Board meetings and are discussed, as necessary, at Board meetings. Further, the Board is routinely informed of developments affecting the Company that could affect our risk profile or other aspects of our business.
Director Independence. Six of our eight Directors are Independent Directors, as independence is defined by the New York Stock Exchange (“NYSE”).   Two of our Directors are not Independent Directors by virtue of the fact that they are our former Chief Executive Officer and current consultant (Jim Scarborough) and our current President and Chief Executive Officer (Andy Hall). All members of the Board’s Audit, Compensation, and Corporate Governance and Nominating Committees are Independent Directors.  Members of the Audit Committee m ust also satisfy, and they do satisfy, a separate SEC independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from us or any of our subsidiaries other than their Directors’ compensation.
Corporate Governance Guidelines.The Board has adopted written Corporate Governance Guidelines (the “Governance Guidelines”) to assist it in the exercise of its corporate governance responsibilities.  The purpose of the Governance Guidelines is to provide a structure within which our Directors and our management can monitor the effectiveness of policy and decision making both at the Board and management level, with a view to enhancing shareholder value over the long term. The Governance Guidelines are available on our website at www.stagestoresinc.com.  They can be accessed by clicking “Investor Relations”, then “Corporate Governance”, then “Corporate Governance Guidelines.”
Director Independence.Seven of our nine Directors are Independent Directors, as independence is defined by the New York Stock Exchange, and two are not Independent Directors by virtue of the fact that they are our Chief Executive Officer and Chief Financial Officer, respectively. All members of the Board’s Audit, Compensation, and Corporate Governance and Nominating Committees are Independent Directors.  Members of the Audit Committee must also satisfy, and they do satisfy, the additional independence requirement of Exchange Act Rule 10A-3, which provides that they may not accept directly or indirectly any consulting, advisory, or other compensatory fee from the Company or any of its subsidiaries other than compensation for their service as a Director.

 
Lead Independent Director.The Governance Guidelines provide that if the Chairman of the Board is not an Independent Director, the Independent Directors must appoint a Lead Independent Director.  Since Mr. Scarborough, the Chairman of the Board, is not an Independent Director, the Independent Directors have appointed Mr. Montgoris as the Lead Independent Director.  The Lead Independent Director is required to perform the following duties:
 
·Coordinate the activities of the Independent Directors;
·Provide the Chairman of the Board with input on agendas for the Board and Board committee meetings;
·Coordinate and develop the agenda for, and chair executive sessions and other meetings of, the Independent Directors;
·Facilitate communications between the Chairman of the Board and the other members of the Board, including communicating other members’ requests to call special meetings of the Board;
·Discuss the results of the Chief Executive Officer’s performance evaluation with the Chairman of the Compensation Committee;
·Convey to the Chief Executive Officer, together with the Chairman of the Compensation Committee, the results of the Chief Executive Officer’s performance evaluation; and
·Preside at regularly scheduled executive sessions of the Independent Directors.
 
Code of Ethics for Senior Officers.In order to promote ethical conduct in the practice of financial management throughout the Company, the Board has adopted a Code of Ethics for Senior Officers (the “Code”).  The Company believesWe believe that in addition to the Chief Executive Officer, the Chief Financial Officer and the Controller each holds an important and elevated role in corporate governance.  The Code is designed to deter wrongdoing and provides principles to which the Company’sour principal executive officer, principal financial officer, principal accounting officeroffic er or controller, or persons performing similar functions are expected to adhere and advocate.  These principles embody rules regarding individual and peer responsibilities, as well as responsibilities to the shareholders, the public and others who have a stake in the Company’sour continued success.  The Code is available on the Company’sour website at www.stagestoresinc.com.  It can be accessed by clicking “Investor Relations”, then “Corporate Governance”, then “Code of Ethics for Senior Officers.”  The Company intendsWe intend to disclose future amendments to certain provisions of the Code, or waivers of such provisions granted to Directors and executive officers, if any, on itsour website within four business days following the date of such amendment or waiver or as otherwise may be required by the SEC.
 
Code of Ethics and Business Conduct.The Board has also adopted a Code of Ethics and Business Conduct (the “Code of Ethics”), which is the basic set of policies and procedures governing the behavior of all Directors, executive officers, and other employees of the Company (each employee an “Associate” and collectively the “Associates”) in conformance with Section 303A.10 of the NYSE Listed Company Manual.  It is the Company’sour policy to adhere to the highest standards of business ethics in all of itsour business activities.  When AssociatesAssoc iates are engaged in any activity concerning the Company, itsour customers, competitors, suppliers, other Associates, shareholders or the general public, they must maintain standards of uncompromising integrity and conduct themselves in a professional manner with a positive, supportive attitude about the Company.  The Code of Ethics is available on the Company’sour website at www.stagestoresinc.com.  It can be accessed by clicking “Investor Relations”, then “Corporate Governance”, then “Code of Ethics and Business Conduct.”  The Company intendsWe intend to disclose future amendments to certain provisions of the Code of Ethics, or waivers of such provisions granted to Directors and executive officers, if any, on itsour website within four business days following the date of such amendment or waiver or as otherwise may be required by the NYSE or the SEC.
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Non-Accounting Complaints.The Company has We have established procedures to enable anyone who has a concern about a violation of the Code of Ethics and Business Conduct or any other Company policy to report that concern through normal Company channels or anonymously.  An Anonymous Ethics Hotline is maintained by an independent third party and is available 24 hours a day, 7 days a week.
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Accounting Complaints.   The Audit Committee has established procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by our employees of the Company of concerns regarding questionable accounting or auditing matters.  These procedures, which are incorporated into the Company’s Code of Ethics, and Business Conduct, (i) set forth a statement about the Company’sour commitment to comply with the laws; (ii) encourage employees to inform the Companyus of conduct amounting to a violationv iolation of the applicable standards; (iii) describe prohibited conduct; (iv) set forth compliance procedures that employees can easily use, including making anonymous complaints,complaints; and (v) provide assurances that there will be no retaliation for reporting suspected violations.
 
Policy on Poison Pills.The term “Poison Pill” refers to a type of shareholder rights plan that some companies adopt to provide an opportunity for negotiation during a hostile takeover attempt.  The Board has not adopted a Poison Pill.  However, as the Company iswe are a Nevada corporation, our Articles of Incorporation provide that the Company haswe have expressly elected to be governed by Chapter 78 of the Nevada Revised Statutes (“NRS”) with respect to the acquisition of a controlling interest in the Company.  NRS 78 provides that a person who seeksse eks to acquire a “Controlling Interest” (20% or greater) in the Companya Nevada corporation will only obtain such voting rights in the shares acquired (the “Control Shares”) as are granted by a vote of the holders of a majority of the remaining voting power of the Company at a special or annual meeting of the shareholders.  In addition, NRS 78 provides that the Company may redeem not less than all of the Control Shares at the average price of the Control Shares if the Control Shares are not granted full voting rights by the shareholders.
 
Attendance at Board,, Committee and Annual Meetings
 
Board Meetings.  The Board held four regular meetings and one special meeting during 2006.the 2009 fiscal year.  During 2006,the 2009 fiscal year, no current Director attended fewer than 75% of the aggregate of the total number of meetings of the Board and of meetings held by Committeescommittees of the Board on which he or she was a member.member during the time he or she was a Director.  In addition to regularly scheduled meetings, a number of Directors were involved in numerous informal meetings with management, offering valuable advice and suggestions on a broad range of corporate matters.
 
Executive Sessions.Sessions (Meetings of Independent Directors).As described in the Governance Guidelines, the Independent Directors meet in regularly scheduled executive sessions without members of the Company’s management.employees and non-independent Directors present.
 
Annual Meeting.It is the Board’s policy that Directors should attend the Company’sour annual meeting of the shareholders absent exceptional cause.  Last year, all Directors attended the annual meeting of shareholders with the exception of Mr. Barocas, who was not a Director at that time.shareholders.
 
Standing CommCommitteesittees
 
The Board has the following standing Committees:committees: Corporate Governance and Nominating, Audit and Compensation.  Each Committeecommittee operates under a written charter whichthat is periodically reviewed by the respective Committeecommittee and the Corporate Governance and Nominating Committee.  The following table provides information concerning the independence of our Directors and the current membership of each Committee.committee.
 
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DirectorBoard
Corporate
Governance and
Nominating
DirectorCommittee
Audit
Committee
Board
Corporate Governance and Nominating Committee
AuditCompensation
Committee
Compensation
Committee
Mr. Barocas (I)XXXX
Mr. Davido(I)XXX (C)(ACFE) 
Mr. Glazer (I)XX       X (C)
Mr. McCreeryHallX   
Mr. MentzerMontgoris (I)(LID)X       X (C)X (ACFE)X
Ms. Monaco (I)XXX
Mr. Montgoris (I)(LID)XX (ACFE)
Ms. Mosse (I)XXX X
Mr. Scarborough      X (C)   
Mr. Schwartz (I)XXX (C)(ACFE) 
Ms. Turpin (I)XX X

 
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(I)The named Director is an Independent Director.
(C)The named Director is the Chairman.
(LID)The named Director is the Lead Independent Director.
(ACFE)The named Director is an Audit Committee Financial Expert.

Corporate GovernanceAnticipated Changes in Board and Nominating Committee Leadership
 
Mr. Montgoris is serving as interim Chairman of the Corporate Governance and Nominating Committee and as a member of the Compensation Committee due to the death of Tom Mentzer.  If Mr. Montgoris is reelected at the Annual Meeting, we anticipate that he will be appointed Chairman of the Board, in which case his position as Lead Independent Director will no longer be needed.  If Mr. Glazer is reelected at the Annual Meeting, we anticipate that he will replace Mr. Montgoris as Chairman of the Corporate Governance and Nominating Committee. If Ms. Turpin is reelected at the Annual Meeting, we anticipate that she will replace Mr. Glazer as Chairman of the Compensation Committee.
Corporate Governance and Nominating Committee
In General.  The members of the Corporate Governance and Nominating Committee are John MentzerWilliam Montgoris (Chairman), Alan Barocas, Scott Davido, Michael Glazer, Margaret MonacoSharon Mosse, David Schwartz and William Montgoris,Cheryl Nido Turpin, all of whom are Independent Directors.  The Committee’s primary functionspurposes are (i) to develop, maintain and review the Governance Guidelines and propose changes to the Governance Guidelines as corporate governance developments warrant, (ii) to consider any Director candidates recommended by shareholders, (iii) to identify, recruit and recommend potential candidates for nomination as Directors to the Board consistent with criteria approved by the Board, and to nominate Directors for membership on Board committees, (iv) to evaluate the overall performance of the Board, the committees of the Board, the Directors and management and (v) to report annually to the Board on the status of the Chief Executive Officer’s succession plan.  The Committee assists the Board in fulfilling its corporate governance and oversight responsibilities by reviewing corporate governance issues that may be brought before the Board, by exercising oversight over the Governance Guidelines, by nominatingrecommending qualified individuals for nomination as Directors and reviewing their performance, and by reviewing applicable laws and regulations related to corporate governance matters.  Annually, the Committee evaluates the overall performance of the Board and the Governance Guidelines.  Periodically, the Committee reviews the compensation paid to the Directors.& #160; An annual performance evaluation of the Corporate Governance and Nominating Committee is conducted by the Board and the members of the Committee. The Committee met foursix times during 2006.the 2009 fiscal year.
 
Corporate Governance and Nominating Committee Charter.The Corporate Governance and Nominating Committee’s Charter is posted on the Company’sour website at www.stagestoresinc.com. It can be accessed by clicking “Investor Relations”, then “Corporate Governance”, then “CG&NC Charter”.
 
Evaluation of the Chairman, the Board, Board Committees and Individual Directors.The Corporate Governance and Nominating Committee is responsible for establishing the evaluation criteria and implementing the process for the annual evaluation of the Chairman, the Board, the Board Committees and the individual Directors.  Each Director annually evaluates the Chairman, the Board, the Board Committees and the other Directors.  With respect to the Chairman, the Board and the Board Committees, the evaluations are of the Chairman and the Board’stheir overall performance as a whole and specifically reviewt he Committee considers specific areas in which the Board believesDirectors believe a better contribution could be made.  The results of the evaluations of the Chairman, the Board and the ChairmanBoard Committees are reported to the entire Board by the Lead Independent Director.  With respect to the evaluation of individual Directors, the purpose of the evaluation is to increase the corporate governance effectiveness of the Board, not to target individual Directors.  The results of the individual Director evaluations are communicated to the respective Directors by the Lead Independent Director and, in the case of the Lead Independent Director, by outside counsel.
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Evaluation of the Guidelines, Committee Charters, Corporate Governance Policies and Related Party Transactions.  With input from the other Directors, the Corporate Governance and Nominating Committee reports annually to the Board on its evaluation of the Governance Guidelines, the committeeCommittee charters, any other corporate governance policies, and any related party transactions (transactions involving the Company and any executive officer, Director, employee or their affiliates and immediate family members).
 
Director Qualifications; Process for Identifying and Evaluating Nominees.Nominees for Director must possess the following minimum qualifications: broad experience, diversity (differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to the Board’s heterogeneity), wisdom, integrity, the ability to make independent analytical inquiries, an understanding of our business
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environment, and a willingness to devote adequate time to Board duties.  The Corporate Governance and Nominating Committee is responsible for assessing the appropriate balance of skills and qualifications required of Directors.  In identifying and evaluating nominees for Director, including nominees recommended by shareholders, the Corporate Governance and Nominating Committee will implement such processprocesses as it deems appropriate including, in its sole discretion, retaining a third party or third parties to identify or evaluate or assist in identifying or evaluating potential nominees.  However, at a minimum, each nominee for Director must (i) meet the minimum qualifications set forth above, (ii) have at least one interview with the Corporate Governance and Nominatin g Committee and with any other Board member who requests an interview, and (iii) complete and sign the Company’sa Director and Executive Officer Questionnaire in a form deemed appropriate by the Board prior to his or her nomination to the Board.  Each Director must no less than annually complete and sign a Director and Executive Officer Questionnaire in a form deemed appropriate by the Board.  In the event any information contained on a Director’s most recent Director and Executive Officer Questionnaire becomes incomplete or inaccurate, it is the responsibility of the Director to provide complete and accurate information to the Corporate Governance and Nominating Committee within thirty days. When formulating its Director recommendations, the Committee will also consider any advice and recommendations offered by the Company’sour Chief Executive Officer and any other members of the Board.
 
Diversity.  The Board endeavors to have a Board representing a range of experience in business and in other areas that are relevant to the Company’s activities. The goal of the Corporate Governance and Nominating Committee is to achieve a Board that, as a whole, provides effective oversight of the management and business of the Company, through, among other things, diversity (differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to the Board’s heterogeneity).  This policy with respect to the consideration of diversity in identifying Director no minees is implemented, and its effectiveness assessed, annually by both the Board and the Corporate Governance and Nominating Committee as part of the Director nomination process.
Consideration of Shareholder Nominees.When formulating its Director recommendations, the Corporate Governance and Nominating Committee will also consider any written recommendations received from our shareholders of the Company identifying the nominee and stating his or her qualifications.  The Committee evaluates all nominees for Director in the same manner regardless of the source of the recommendation.  For the Annual Meeting of Shareholders in 2008,2011, recommendations for Director nominees must be submitted in writing by January 1, 2008December 31, 2010 to the Corporate Governance and Nominating Committee, c/o Michael E. McCreery,Edward J. Record, Secretary, Stage Stores, Inc., 10201 Main Street, Houston, Texas 77025, and must include the names of such nominees, together with their qualifications for service as a Director of the Company.
 
Succession Planning.  The Governance Guidelines require (i) the Corporate Governance and Nominating Committee to make an annual report to the Board on emergency as well as expected Chief Executive Officer succession planning and (ii) the Chief Executive Officer to prepare, on a continuing basis, a short-term succession plan which delineates a temporary delegation of authority to certain officers of the Company, if all or a portion of the executive officers of the Company should unexpectedly become unable to perform their duties.  The short-term succession plan will be in effect until the Board has the opportunity to consider the situations ituation and take action, when necessary.
Audit Committee
 
Consultants.  The Corporate Governance and Nominating Committee has the authority to retain, from time to time and at our expense, search firms and other consultants to assist it in identifying and recruiting potential directors for nomination, in evaluating director compensation, and to otherwise carry out its responsibilities and duties and to approve the search firm or other consultant’s fees and other retention terms.
Engagement of Compensation Consultant-Director Compensation.  The Corporate Governance and Nominating Committee (i) has the authority to retain, from time to time and at our expense, a professional compensation consulting firm to review our Director compensation program and (ii) has selected and engaged Hay Group as its independent consultant to advise it on Director compensation.  Likewise, the decision to retain a consultant is at the sole discretion of the Corporate Governance and Nominating Committee and the consultant works at the direction of the Corporate Governance and Nominating Committee.  Since 2005, Hay Group, a leading human resource and compensation consulting firm, has been engaged from time to time by both the Corporate Governance and Nominating Committee and management for professional compensation consulting with respect to compensation of our Directors.
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Compensation of Directors; Role of Compensation Consultant in Determining or Recommending the Amount or Form of Director Compensation. It is the responsibility of our Corporate Governance and Nominating Committee to recommend to our Board alternative forms of Director compensation. Our management reports at least once a year to the Corporate Governance and Nominating Committee on the status of our Director compensation in relation to the compensation of directors of our Peer Group. With the assistance of Hay Group as its compensation consultant, the Corporate Governance and Nominating Committee periodically evaluates Director compensation to ensure that our Directors are compensated in a manner consistent with tho se of our Peer Group.  Changes in Director compensation, if any, are recommended by the Corporate Governance and Nominating Committee, but must be approved by our Board after a full discussion.
 The nature and role of Hay Group’s assignment with respect to Director compensation and its interaction with the Chairman of the Corporate Governance and Nominating Committee is essentially the same as it is with the Compensation Committee in the case of executive officer compensation.  However, Hay Group only attends meetings of the Corporate Governance and Nominating Committee that involve Director compensation, which is generally one meeting a year.
Audit Committee
In General.  The members of the Audit Committee are Scott DavidoDavid Schwartz (Chairman), Alan Barocas Tom Mentzer and William Montgoris, all of whom are Independent Directors.  It is expected that Mr. Montgoris will assumeThe Committee’s primary purposes are to (1) assist Board oversight of (a) the role of Chairman following the expiration of Mr. Davido’s term on June 7, 2007.  The primary functionintegrity of the Committee is to overseeCompany’s financial statements, (b) the accountingCompany’s compliance with legal and financial reporting processesregulatory requirements, (c) the Company’s independent auditor’s qualifications and independence, and (d) the performance of the CompanyCompany’s internal audit function and independent auditors; and (2) prepar e an audit committee report as required by the audits ofSEC to be included in the financial statements and internal controls of the Company.Company’s annual proxy statement.  The Committee’s primary responsibilities and duties are (i) to monitor the integrity of the Company’sour financial process and systems of internal controls regarding finance, accounting and legal compliance, (ii) to select, retain, terminate, determine compensation and oversee the work of the Company’sour independent registered public accounting firm, (iii) to ensure the independence and monitor the performance of the Company’sour independent registered public accounting firm and the performance of the Company’sour internal auditing department, (iv) to provide an avenue of communication between theour independent registered public accounting firm and the Company’sour internal auditing department, and (v) to provide an avenue of communication among the independent registered public accounting firm, our management, the Company’sour internal auditing department and the Board. An annual performance evaluation of the Audit Committee is conducted by the Board an d the members of the Committee.  The Committee met ten times during the 2009 fiscal year.
Authority to Engage Advisors and to Conduct Independent Investigations.  The Audit Committee has the authority to engage, at the Company’s expense, independent counsel and other advisers it determines necessary to carry out its duties.  The Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities and duties, and it has direct access to theour independent registered public accounting firm as well as anyone in the Company.  The Committee has the ability to engage, at the Company’s expense, independent counsel and other advisers as it determines necessary to carry out its duties.  The Committee met eighteen times in 2006.
 
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Audit Committee Charter.  The Audit Committee’s Charter is available on the Company’sour website at www.stagestoresinc.com.  It can be accessed by clicking “Investor Relations”, then “Corporate Governance”, then “Audit Committee Charter.”
 
Audit Committee Financial Expert.  The Board has determined that Messrs. Davido, MentzerMontgoris and MontgorisSchwartz are Audit Committee Financial Experts, as that term is defined by the SEC.
 
Audit Committee Report.  The Audit Committee Report beginsis on page44. 57 of this Proxy Statement.
 
ComService on Audit Committees of Public Companies.  Section 303A.07(a) of the NYSE Listed Company Manual states that if an audit committee member simultaneously serves on the audit committee of more than three public companies, the board must determine that such simultaneous service does not impair the director’s ability to effectively serve on the issuer’s audit committee. David Schwartz, the Chairman of our Audit Committee, also serves as the Chairman of the audit committee of Walgreen Co. and as a member of the audit committee of Foot Locker, Inc., both of which are public companies.  He also serves as the Chairman of the audit committee of True Value Company, which is not a public company.  Our Board has determined that Mr. Schwartz’s simultaneous service on our Audit Committee and the audit committees of those other companies does not impair his ability to effectively serve on our Audit Committee.
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Compensation Committee
 
In General.  The members of theour Compensation Committee are Michael Glazer (Chairman), John Mentzer, Margaret MonacoWilliam Montgoris, Sharon Mosse and Sharon Mosse,Cheryl Nido Turpin, all of whom are Independent Directors.  The primary functionpurpose of the Compensation Committee is to administer the cash salary, bonus and other incentive compensation programs for the executive officerscurrent and future Executive Officers of the Company.Company, as the term Executive Officer is defined in the Committee’s Charter.  In addition, the Committee’s purposes include the following: (i) review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO's perfor mance in light of those goals and objectives and, either as a committee or together with the other Independent Directors, determine and approve the CEO's compensation level based on this evaluation,  (ii) make recommendations to the Board with respect to non-CEO executive officer compensation, and incentive-compensation and equity-based plans that are subject to Board approval, and (iii) prepare a Compensation Committee Report and/or such other disclosure as may be required by applicable SEC rules or regulations.
An annual performance evaluation of the Compensation Committee is conducted by the Board and the members of the Committee. The Committee met threesix times in 2006.during the 2009 fiscal year.
 
Compensation Committee Charter.The Compensation Committee’s Charter is available on the Company’sour website at www.stagestoresinc.com.  It can be accessed by clicking “Investor Relations”, then “Corporate Governance”, then “Compensation Committee Charter.”
 
Compensation Committee Report.  The Compensation Committee Report beginsis on page 27.35 of this Proxy Statement.
 
Compensation and Compensation Principles.For a discussion of executive officer and Director compensation and compensation principles, please see “Compensation of Directors and Executive Officers-Compensation Discussion and Analysis” and the compensation tables and narrative discussions that follow beginning on page 1317 of this Proxy Statement.
 
Processes and Procedures for Executive Officer Compensation.  The primary responsibilities of the Compensation Committee includeare as follows: (i) reviewingreview the performance and approvingapprove the compensation of the Company’sour executive officers, (ii) reviewingreview and approvingapprove the terms and conditions of written employment agreements for our executive officers, (iii) providingprovide oversight of all cash compensation, equity compensation, benefits and perquisites for the entire officer population, and (iv) reviewingreview and monitoringmonitor equity incentive stock option plans as well as any pension, profit sharing and benefit plans.
 
The Compensation Committee meets as frequently as circumstances require, but typically meets at least threefour times per year.  Each meeting held in-person allows time for an executive session in which the Committee and others specifically requested by the Committee (such as outside advisor, if requested,consultants) have an opportunity to directly discuss all executive compensation issues.issues without the presence of management.  The Committee reviews compensation strategies proposedanalyses prepared by an independent compensation consultant and by management and assesses program design and recommendations for individual executives against these strategies.  The Committee determines theour Chief Executive Officer’s (“CEO’s) compensation and reviews and discusses recommendationsrec ommendations for other senior executives with the CEOour Chief Executive Officer and approves final pay packages.  The Committee also reviews overall program design and total costs compared to approved strategies.
 
The Compensation Committee believes that having the input of management is important to the overall effectiveness of the Company’sour executive compensation program. The CEOOur Chief Executive Officer and the Company’sour Executive Vice President, Human Resources (“EVP Human Relations”Resources”) are the primary representatives of management who interact with the Compensation Committee. The Committee seeks input from the CEOour Chief Executive Officer and theour EVP Human Resources regarding the performance of theour executive team and individual compensation levels (within parameters approved by the Committee) and also seeks recommendations on various executive compensation awards (e.g., new hire equity grants).  In addition, the CEOour Chief Executive Officer and theour EVP Human Relations regularlyResources regul arly attend Committee meetings (except for executive sessions) to participate in the presentation of materials and discussion of management’s point of view regarding compensation issues.
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The CEO mayOur Chief Executive Officer is not permitted to be present during deliberations and voting regarding his or her compensation. While the CEOour Chief Executive Officer may be present during deliberations and voting on the compensation of other executive officers, the CEOour Chief Executive Officer may not vote on their compensation.  The Committee meets at least once each year in Executive Session, without the CEO. Only Committee members and others specifically requested by the Committee (such as the outside consultants) participate in the Committee’s executive sessions.
 
The Compensation Committee has delegated authority to the CEOour Chief Executive Officer to grant equity awards to employees at the Vice President level and below, with a maximum number of 5,000 shares to any one person at any one time.  All equity awards, regardless of the number of shares, at the Senior Vice President level and above must be approved by the Board.  In addition, the CEOour Chief Executive Officer has authority to manage employee compensation at the Vice President level and below within the compensation guidelines approved by the Committee.
 
Engagement and Use of Independent Executive PayCompensation Consultant-Executive Officer Compensation.  The Compensation Committee has the authority to retain, from time to time and at the Company’s expense, a professional compensation consulting firm to review our executive officer compensation program. The Committee has selected and engaged Hay Group a leading human resource and compensation consulting firm, as its independent advisorconsultant to advise it on executive compensation.  The decision to retain an advisora consultant is at the sole discretion of the Committee and the consultants workconsultant works at the direction of the Committee.  Since 2005, Hay Group has been engaged from time to time by both the Committee and manage ment for professional compensation consulting with respect to compensation of the Company’s executive officers.
 
 Role of Compensation Consultant in Determining or Recommending the Amount or Form of Executive Officer Compensation. On an annual basis, Hay Group prepares competitive pay analyses regarding both our peer group of companies, as identified on page 21 of this Proxy Statement (the “Peer Group”), and the broader market; it provides information on our performance compared to the Peer Group and to our performance group of companies, as identified on page 21 of this Proxy Statement (the “Performance Group”); and it advises the Compensation Committee on the level and design of compensation programs for our executive officers.
The Chairman of the Committee works directly with the consultantsHay Group to determine the scope of the work needed to assist the Committee in its decision making processes.  For example, the consultants meetHay Group meets with the ChairmanCommittee to review issues and gain input on plan design and alternatives.  In this process, the consultants interactHay Group meets with the members of the Committee, the CEO,our Chief Executive Officer and our other senior management to facilitate the development of our executive compensation strategy and approach to determining compensation levels.
 
When requested, Hay Group prepares competitive pay analyses regarding both a peer groupattends Committee and the broader market, provides information on the Company’s performance compared to the peer group, and advises the Committee on the level and design of compensation programs for executives.  The consultants attend CommitteeBoard meetings and the Committee’s executive sessions to present and discuss market data and program design alternatives, and to provide advice and counsel regarding decisions facing the Committee.  Occasionally, Hay Group also meets individually with the Chairman of the Committee prior to Board meetings to discuss findings and issues.  In addition, with the agreement and approval of the Committee, Hay Group works with theour management team on broad-based compensation design and issues and links them to our overall executive compensation strategy.  Aggregate fees paid to Hay Group during the 2009 fiscal year did not exceed $120,000.
 
Processes and Procedures for Director Compensation.It is the responsibility of the Corporate Governance and Nominating Committee to recommend to the Board alternative forms of Director compensation.  The Company’s management reports at least once a year to the Committee on the status of our Directors’ compensation in relation to the compensation of directors of our peer group.  With the assistance of our compensation consultants, the Committee periodically evaluates Director compensation to ensure that our Directors are compensated in a manner consistent with those of our peer group.   Changes in Board compensation, if any, are recommended by the Committee, but must be approved by the Board after a full discussion.
Engagement and Use of Independent Executive Pay Consultant-Director Compensation.  As with the Compensation Committee, the Corporate Governance and Nominating Committee (i) has the authority to retain, from time to time and at the Company’s expense, a professional compensation consulting firm to review our Director compensation program, and (ii) has selected and engaged Hay Group as its independent advisor to advise it on Director compensation.  Likewise, the decision to retain an advisor is at the sole discretion of the Committee and the consultants work at the direction of the Committee.  The nature and scope of advisor’s assignment with respect to Director compensation, and its interaction with the Chairman of the Committee, is essentially the same as it is with the Compensation Committee in the case of executive officer compensation.  However, the advisor only attends meetings of the Corporate and Governance Committee that involve Director compensation, which is generally one meeting a year.
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Compensation Committee Interlocks and Insider Participation.  Participation.  None of the members of the Compensation Committee has ever been an officer or an employee of the Company or its subsidiaries.  Nosubsidiary.  None of our executive officer of the Companyofficers serves on any board of directors with any of the Company’sour Directors other than on our Board in the Company’s Board.case of Mr. Hall, our President and Chief Executive Officer.
 
Shareholder Communications withConsultants.  The Compensation Committee has the Boardauthority to retain, from time to time and at our expense, a professional compensation consulting firm to review the Company’s Executive Officer compensation program including, but not limited to, a review of our “performance based” compensation programs in light of Section 162(m) of the Internal Revenue Code, and to approve the consulting firm’s fees and other retention terms.  For a discussion of Section 162(m), see “Tax, Accounting and Other Implications-Deductibility of Executive Compensation” later in this Proxy Statement.
 
Shareholder and Other Interested Party Communications with the Board
In General.  Shareholders and other interested parties may send written communications to the Board and, if applicable, to specified individual Directors, including the Independent Directors, by mail, facsimile or courier to the Company’sour principal executive offices.  All correspondence received by the Companythat we receive will be relayed to the Board or, if applicable, to the individual Director.  Communications should be addressed in care of Michael McCreery,Edward Record, Secretary, Stage Stores, Inc., 10201 Main Street, Houston, Texas 77025, or sent by facsimile to Mr. McCreeryRecord at (713) 669-2621.669-2709.
 
Deadline for ShareholdersShareholder Proposals for Inclusion in Next Year’s Proxy Statement.  Shareholder proposals intended to be presented at the 20082011 Annual Meeting of Shareholders and included in the Company’sour proxy statement and form of proxy relating to that meeting pursuant to Rule 14a-8(e) under the Securities Exchange Act of 1934 must be received in writing by the Companyus at the Company’sour principal executive offices by January 1, 2008.December 31, 2010.  Proposals should be addressed to Michael McCreery,Edward Record, Secretary, Stage Stores, Inc., 10201 Main Street, Houston, Texas 77025.
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Other Shareholder Proposals for Presentation at Next Year’s Annual Meeting.  For any shareholder proposal that is not submitted to the Companyus for inclusion in next year’s proxy statement, but is instead sought to be presented by the shareholder directly at the 20082011 Annual Meeting, Rule 14a-4(c) under the Securities Exchange Act of 1934 permits management to vote proxies in its discretion if the Company:we: (1) receivesreceive written notice of the proposal before the close of business on March 17, 2008,16, 2011, and advisesadvise shareholders in the 20082011 Proxy Statement about the nature of the matter and how management intends to vote on the matter, or (2) does notdo no t receive written notice of the proposal before the close of business on March 17, 2008.16, 2011.  Notices of intention to present proposals at the 20082011 Annual Meeting should be addressed to Michael McCreery,Edward Record, Secretary, Stage Stores, Inc., 10201 Main Street, Houston, Texas 77025.
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table provides information regarding beneficial ownership of our common stock by any person or entity known by us to be the beneficial owner of more than five percent (5%) of our outstanding common stock as of April 12, 2010. As of April 12, 2010, there were 38,449,491 shares of our common stock outstanding.
 
 
Name and Address
 
 
Number of Shares
Beneficially Owned
 
 
Percent of Class
 
Wellington Management Company, LLP 3,738,000 9.7%(1)
75 State Street     
Boston, MA 02109     
      
BlackRock, Inc. 3,011,775 7.8%(2)
55 East 52nd Street
     
New York, NY 10022     
      
Dimensional Fund Advisors LP 2,998,629 7.8%(3)
Building One     
6300 Bee Cave Road     
Austin, TX 78746     
      
Keeley Asset Management Corp. 2,022,180 5.3%(4)
401 South LaSalle Street, Suite 1201     
Chicago, IL 60605     
__________________________
(1)The information is based on the Schedule 13G/A filed with the SEC on February 12, 2010 by Wellington Management Company, LLP reporting on beneficial ownership as of December 31, 2009.  According to the filing, the reporting person has shared voting power with respect to 2,640,625 shares and shared investment power with respect to 3,738,000 shares.
(2)The information is based on the Schedule 13G filed with the SEC on January 29, 2010 by BlackRock, Inc. reporting on beneficial ownership as of December 31, 2009.  According to the filing, the reporting person has sole voting power with respect to 3,011,775 shares and sole investment power with respect to 3,011,775 shares.  This Schedule 13G was filed in order to amend the most recent Schedule 13G filing made by Barclays Global Investors, NA, which was acquired by BlackRock on December 1, 2009.
(3)
The information is based on the Schedule 13G/A filed with the SEC on February 8, 2010 by Dimensional Fund Advisors LP reporting on beneficial ownership as of December 31, 2009.  According to the filing, the reporting person has sole voting power with respect to 2,963,216 shares and sole investment power with respect to 2,998,629 shares.
(4)The information is based on the Schedule 13G/A filed with the SEC on February 12, 2010 by Keeley Asset Management Corp. reporting on beneficial ownership as of December 31, 2009.  According to the filing, the reporting person has sole voting power with respect to 2,017,980 shares and sole investment power with respect to 2,022,180 shares.
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Security Ownership of Management
The following table provides information regarding the beneficial ownership of our common stock by each Named Executive Officer listed in the 2009 Summary Compensation Table and each of our Directors, as well as the number of shares beneficially owned by all of our Directors and executive officers as a group as of April 12, 2010.  Other than in the case of Mr. Glazer, as footnoted, none of the shares are pledged as security. As of April 12, 2010, there were 38,449,491 shares of our common stock outstanding.  The table also provides information about stock options exercisable within 60 days and Deferred Stock Units credited to the accounts of eac h Director and Named Executive Officer under various compensation plans.  Unless otherwise indicated by footnote, individuals have sole voting and investment power.
Name Common Stock Restricted Stock (1) Stock Options Exercisable Within 60 Days Deferred Stock Units (2) Percent of Class
Andrew T. Hall  77,318  30,000  280,500  - 1.0%
Edward J. Record  25,924  35,000  108,750  - (3) 
Richard A. Maloney  -  55,000  36,250  - (3) 
Ernest R. Cruse  9,275  -  -  - (3) 
Ron D. Lucas  37,982  -  194,764  - (3) 
Alan J. Barocas  12,726  21,556  -  - (3) 
Michael L. Glazer  67,573(4) 20,913  16,875  - (3) 
William J. Montgoris  11,482  20,913  50,625  - (3) 
Sharon B. Mosse  5,224  20,913  50,625  9,503 (3) 
James R. Scarborough  75,700  -  387,460  - 1.2%
David Y. Schwartz  -  15,513  5,129  10,549 (3) 
Cheryl N. Turpin  -  3,387  -  - (3) 
            
All Directors and Executive Officers as a group (15 persons)  334,711  228,195  1,211,216  20,052 5.4%
_____________________________
(1)Restricted stock was granted under our Amended and Restated 2001 Equity Incentive Plan.
(2)Deferred Stock Units (“DSU”) are held under our 2003 Amended and Restated Non-Employee Director Equity Compensation Plan.  Each DSU is equal in value to a share of our stock, but does not have voting rights.  Individuals do not have investment power with respect to DSUs.  The number of DSUs credited to a Director’s account will be adjusted, as appropriate, to reflect any stock split, any dividend paid in cash and any dividend payable in shares of our stock.  At the election of the Director upon termination of his or her service as a Director, the DSUs will be distributed to the Director either (i) in cash, or (ii) in shares of our stock.
(3)Ownership is less than one percent of our outstanding common stock.
(4)All 67,573 shares are pledged as security in a margin account.
TRANSACTIONS WITH RELATED PERSONS
Transactions with Related Persons
On November 3, 2008, we entered into a Consulting Agreement with James Scarborough, who retired as our Chief Executive Officer as of that date.  The term of the Consulting Agreement began on November 3, 2008 and will end on June 10, 2010 (the “Term”), unless earlier terminated or extended by mutual agreement of the parties.  We will pay Mr. Scarborough a retainer of $350,000 per Term year during the Term of the Consulting Agreement for an aggregate total of approximately $564,000.  As Mr. Scarborough was a Named Executive Officer at the time and is currently our Chairman of the Board, we filed the Consulting Agreement as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended January 3 1, 2009.  The Consulting Agreement is incorporated herein by reference.
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On February 26, 2010, we entered into a Retirement Agreement with Ernest Cruse, Executive Vice President, Store Operations, which terminated his Employment Agreement dated January 30, 2002. The approximate dollar value of the amount involved in the transaction is $566,900.  As Mr. Cruse is a Named Executive Officer, we filed the Retirement Agreement as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended January 30, 2010.  The Retirement Agreement is incorporated herein by reference.
 
Transactions with Related Persons
Other than those described above and related to their employment, with the Company, in the case of executive officers, and those related to their service to the Company,on our Board, in the case of non employeenon-employee Directors,there were no transactions, since the beginning of the Company’sour last fiscal year, or any currently proposed transaction, in which the Company waswe were or is towill be made a participant and in which any Director, nominee for Director or executive officer, of the Company, or any immediate family member of a Director, nominee for Director or executive officer of the Company had or will have a direct or indirect material interest.
 
Review, Approval or Ratification of Transactions with Related Persons

In General.Article XX. Related Party, Other Material Transactions and Loans of the Governance Guidelines (“Governance Guideline Article X”) and the Company’sour written Related Party and Material Transactions Policy (the “Policy”) contain the Company’sour policies and procedures for the review, approval or ratification of any transaction required to be reported in this Proxy Statement.  They provide as follows:

“Related Party Transactions.  No officer, director, or employee of the Company or any of its affiliate or subsidiary companies (collectively, the “Companies”) shall enter into any agreement, arrangement or contract with any person or entity pursuant to which any of the Companies may be obligated to:
 
(i)pay any money to a “Related Party,” or
 
(ii)assign or lease any property belonging to any of the Companies to a Related Party, or
 
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(iii)allow any Related Party to use any property belonging to any of the Companies,
 
if the aggregate fair market value of any monies paid to the Related Party and the property assigned or leased to or used by the Related Party exceeds Five Thousand Dollars ($5,000), without the express, prior, written approval of the Company’s Board of Directors.  The term “Related Party” includes:
 
(i)any person who is an officer or director of any of the Companies (each, an “Insider”); and
 
(ii)any person who is a child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of a director, executive officer or nominee for director, and any person (other than a tenant or employee) sharing the household of such director, executive officer or nominee for director (each, an “Immediate Family Member”); and
 
(iii)any entity for which an Insider or Immediate Family Member is an attorney, broker, commissioned sales agent, director, manager, officer, partner or profits participant; and
 
(iv)any entity in which an Insider or Immediate Family Member has beneficial ownership of five percent (5%) or more of the voting securities of the entity.
Notwithstanding anything to the contrary, if required by the Securities and Exchange Commission, New York Stock Exchange, or other regulatory authority, any transaction between the Company and a Related Party, regardless of the amount involved, shall be approved by the Audit Committee.
 
Other Material Transactions.  No officer, director, or employee of the Company or any of its affiliate or subsidiary companies (collectively, the “Companies”) shall enter into any agreement, arrangement or contract with any person or entity or authorize any transaction which the Company may be required to disclose to the Securities and Exchange Commission unless the agreement, arrangement, contract or transaction previously has been approved by the Company’s Board of Directors.
 
Audit Committee Approval.  Notwithstanding anything to the contrary, if required by the Securities and Exchange Commission, New York Stock Exchange, or other regulatory authority, any transaction between the Company and a Related Party, regardless of the amount involved, shall be approved by the Audit Committee.”
Loans to Directors, Executive Officers and Their Immediate Family Members.  GovernanceGuideline Article X provides that the Company shall not, directly or indirectly, including through any subsidiary, extend or maintain credit, arrange for or guarantee the extension of credit, or renew an extension of credit, in the form of a personal loan to or for any Director, executive officer, or Immediate Family Member of any Director or executive
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officer.  As used in the Governance Guidelines and this Proxy Statement, “executive officer” means our President, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the Company’s Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer,controller), any Vice Presidentvice president in charge of a principal business unit, division or function (such as sales,marketing, merchandising, administration or finance), or any other officer who performs a policy makingpolicy-making function, or any other person who performs similar policy making functions.policy-making functions for us, in all cases including officers of our subsidiaries if they perform policy-making functions for us.
 
COMPENSATIONCOMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

CompensationCompensation Discussion and Analysis
 
Our Fiscal 2009 Named Executive Officers
The following Compensation Discussion and Analysis (“CD&A”) describes the material objectives and principles underlying our compensation policies and decisions and the material elements of the compensation of ourthe following five executive officers identifiedduring our 2009 fiscal year (hereinafter, “Fiscal 2009”):
·  our Chief Executive Officer;
·  our Chief Operating Officer and Chief Financial Officer; and
·  the next three most highly compensated executive officers other than our Chief Executive Officer and our Chief Financial Officer.
These individuals are as follows and are collectively referred to in the Summary Compensation Table on page 27 (thethis Proxy Statement as our “Named Executive Officers”).  The:
        Name
Title
Andrew T. HallPresident and Chief Executive Officer
Edward J. RecordChief Operating Officer and Chief Financial Officer
Richard A. MaloneyChief Merchandising Officer
Ernest R. CruseExecutive Vice President, Store Operations
Ron D. LucasExecutive Vice President, Human Resources
This CD&A should be read in conjunction with the compensation tables beginning on page 27. As used in36 of this CD&A, references to “post split” amounts reflect the effects of the three-for-two split of outstanding common stock on January 31, 2007, which applies as well to awards granted under our Amended and Restated 2001 Equity Incentive Plan.Proxy Statement.
 
Overview of Compensation Program
 
The Compensation Committee of our Board of Directors (for purposes of this discussion,CD&A, the “Committee”) administers the base salary, bonus, long termlong-term incentive and other compensation and benefits programs with regard to our Named Executive Officers as well as our other executive officers.  Its primary responsibilities are listed on page 10set forth in “Information Relating to the Board of this Proxy Statement.Directors and Committees-Compensation Committee-Processes and Procedures for Executive Officer Compensation.” The Committee ensures that the total compensation paid to theour Named Executive Officers is fair, reasonable and competitive in relation to our peer group of companies, as identified below (the “Peer Group”).Peer Group. The Committee’s recommendations for the total compensation of theour Named Executive OfficersOffic ers are subject to the approval of our Board of Directors.Board.
 
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Compensation Objectives and Principles
 
The objectives of our compensation program are as follows:
 
·to enable us to recruit, motivate and retain the executive talent required to successfully manage and grow our business and to achieve our short and long-term business objectives;
 
·to maximize the long-term commitment of our executive officers to our success by providing compensation elements that align their interests andwith those of our shareholders in that the compensation elements are directly related to our stock performance and other financial metrics that the Committee believes influence the creation of long-term shareholder value; and
 
·to reward our executive officers upon the achievement of short-term and long-term business objectives and enhanced shareholder value.
 
The principles of our compensation program are as follows:
 
·Compensation arrangements shall emphasize pay-for-performance and encourage retention of those executive officers who enhance the Company’sour performance;
 
·Compensation arrangements shall maintain an appropriate balance between base salary and annual and long-term incentive compensation;
 
·Cash incentive compensation plans for our executive officers shall link pay to achievement of goals set in advance by the Committee;
 
·The Committee shall set annual and long-term performance goals for theour Chief Executive Officer and evaluate his or her performance against those goals related to the performance of the Company’sour Peer Group and  the Company’sour Performance Group as(currently the case may be;Dow Jones Apparel Index);
 
·Compensation arrangements shall align the interests of our executive officers andwith those of shareholders;
 
·In the event minimum thresholds for annual and long-term performance goals are not met, incentive compensation related to those goals shall not be paid;
 
·It is the policy of theour Board that the Companywe should not reprice or swap stock options granted to our executive officers, Directors and employees.employees without shareholder approval;
 
·The Committee shall meet at least once each year in executive session, without theour Chief Executive Officer;
 
·  		·TheOur Chief Executive Officer mayis not permitted to be present during deliberations and voting regarding his or her compensation.  While  theour Chief Executive Officer may be present during deliberations and voting on theour other executive officers’ compensation,  theour Chief Executive Officer makes recommendations, but does not vote on their compensation;
 
·The compensation of theour Chief Executive Officer and our other executive officers shall be recommended to theour Board for final approval by the Committee comprised solely of Independent Directors; and
 
·In approving compensation, the recent compensation history of the executive officer, including special or unusual compensation payments, and all forms of compensation to which the executive officer may be entitled, shall be taken into consideration using tally sheets or other comparable tools the Committee deems appropriate.
 
Key Considerations in Setting Compensation
In General
Based on the foregoing objectives and principles, the Committee has structured our compensation programs to motivate our Named Executive Officers to achieve the business goals set by our Board and to reward them for achieving those goals. The following is a summary of key considerations affecting the setting of compensation for our Named Executive Officers by the Committee. We describe in the section entitled “Committee Actions in Fiscal 2009 Concerning Named Executive Officer Compensation” beginning on page 26 of this Proxy Statement additional considerations that the Committee evaluated in establishing Fiscal 2009 compensation in the context of our performance and the economic environment at the time.
 
Emphasis on Future Pay Opportunity Versus Current Pay
The Committee strives to provide an appropriate mix of different compensation elements, including finding a balance among current versus long-term compensation and cash versus equity incentive compensation. Cash payments primarily reward more recent performance and equity awards encourage our Named Executive Officers to continue to deliver results over a longer period of time and serve as a retention tool. The Committee believes that Named Executive Officer compensation should be appropriately weighted on both long-term and short-term Company perfo rmance and operating results.
Discretion and Judgment
With the exception of our Senior Executive Bonus Plan and performance share awards, both of which depend on achieving specific quantitative performance objectives, the Committee does not use formulas in determining the amount and mix of compensation. Thus, the Committee evaluates a broad range of both quantitative and qualitative factors, including reliability in delivering financial and growth targets, performance in the context of the economic environment relative to other companies, a track record of integrity, good judgment, the vision and ability to create further growth and the ability to lead others. For annual equity incentive awards, the Committee primarily considers a Named Executive Officer’s potential for future successful performance and leadership as part of the executive management team, taking into account past performance as a key indicator. In any event, the Committee exercises its discretion and judgment.
Significance of Our Results
The Committee primarily evaluates our Chief Executive Officer and the other Named Executive Officer’s contributions to our overall performance rather than focusing only on their individual function. The Committee believes that each Named Executive Officer shares the responsibility to support our goals and performance, as key members of our leadership team. While this compensation philosophy influences all of the Committee’s compensation decisions, it has the biggest impact on annual equity incentive awards.
Compensation Policies and Practices as they Relate to the Company’s Risk Management
The Committee, the Board and management do not believe that there are any risks arising from the Company’s compensation policies and practices for the Company’s employees, including non-executive officers, that are reasonably likely to have a material adverse effect on the Company. Our compensation programs emphasize pay-for-performance, are balanced and are focused on the long term. Under this structure, the highest amount of compensation can be achieved through consistent superior performance over sustained periods of time. In addition, a significant percentage of compensation is tied to our long-term performance. This provides strong incentives to manage the Company for the long term, while avoiding excessive risk taking in th e short term. Goals and objectives reflect a balanced mix of quantitative and qualitative performance measures to avoid excessive weight on a single performance measure. Likewise, the elements of compensation are balanced among current cash payments and equity awards. With limited exceptions, the Committee retains discretion to adjust compensation for quality of performance and adherence to our values. The Committee, the Board and senior management monitor the Company’s compensation policies and practices on an ongoing basis to determine whether the Company’s risk management objectives are being met with respect to incentivizing the Company’s employees. The annual incentive is primarily linked to profitable growth (as opposed to sales) and the Company has a Compensation Recovery Policy as described in the next paragraph.
Compensation Recovery Policy
Our Board has adopted a Compensation Recovery Policy for Executive Officers. If our Board determines that an executive officer (an Executive Vice President or above) has engaged in fraudulent or intentional misconduct, the Board may take a range of actions to remedy the misconduct, prevent its recurrence, and impose such discipline on the wrongdoers as would be appropriate. Discipline would vary depending on the facts and circumstances, and may include, without limit, (i) termination of employment, (ii) initiating an action for breach of fiduciary duty, and (iii) if the misconduct resulted in a material inaccuracy in our financial statements or performance metrics, which affect the executive officer’s compensation, seeki ng reimbursement of any portion of any bonus or other incentive-based or equity-based  compensation paid or awarded to the executive that is greater than would have been paid or awarded if calculated based on the accurate financial statements or performance metrics. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.
Role of Executive Officers in Compensation Decisions
 
The Committee believes that having the input of our management is important to the overall effectiveness of the Company’sour executive officer compensation program. Our Chief Executive Officer and Executive Vice President,EVP, Human Resources regularly attend Committee meetings (except for executive sessions) to participate in the presentation of materials and discussion of management’s point of view regarding compensation issues. The Committee receives input from ourOur Chief Executive Officer with respectannually reviews and evaluates the performance of each Named Executive Officer (other than his own, which is reviewed and evaluated by the Committee). The conclusions reached and recommendations based on these reviews, including related salary adjustments and annual incentive award amounts, are presented to the compensation of the other Named Executive Officers.  However, asCommitt ee. The Committee can exercise its discretion in modifying any recommended adjustments or awards to our executive officers.
As stated in our principles, our Chief Executive Officer mayis not permitted to be present during deliberations and voting regarding his or her compensation. While theour Chief Executive Officer may be present during deliberations and voting on the other executive officers’ compensation, theour Chief Executive Officer makes recommendations, but does not vote on their compensation.
Use of Tally Sheets
 
Setting CompensationIn addition to the recommendations of our Chief Executive Officer, the Committee reviews tally sheets, which are prepared for each of our currently employed Named Executive Officers by our Human Resources Department.  The tally sheets present the Committee with specific dollar amounts for all elements of compensation, showing each Named Executive Officer’s annual total compensation, the individual’s accumulated and outstanding compensation, and the benefits to which the Named Executive Officer would be entitled upon various termination events.
 
In General
Based onThe Committee uses the foregoing objectives and principles,tally sheets to compare our overall executive compensation to the Committee has structuredoverall executive compensation of our Peer Group to ensure that our compensation programsis reasonable and competitive.  The Committee also uses the tally sheets to motivateevaluate past performance of our Named Executive Officers to achievedetermine if our compensation strategy achieved our goals in the business goals set by the Boardpast, and to reward them for achieving thosealign executive compensation with our near and long-term goals.
 
The Committee has selected and engaged Hay Group as its independent advisor to advise it on executive compensation.  Hay Group prepares competitive pay analyses regarding both theBenchmarking Overall Compensation; Our 2009 Peer Group and the broader market, provides information on the Company’s performance compared to the Peer Group, and advises the Committee on the level and design of compensation programs for executive officers.  The Chairman of the Committee works directly with Hay Group to determine the scope of the work needed to assist the Committee in its decision making processes.
 
Our 2006 Peer Group
In making overall compensation decisions, the Committee compares each element of total compensation againstto data from Hay Group’s published survey as well as a peer group of publicly-traded apparel companies listed below (collectively, the “Peer Group”).  The Committee developed the Peer Group in August 2005 in order to benchmark executive compensation at peer companies and to assess the Company’s performance relative to the Peer Group.  The Peer Group that the Committee uses to benchmark the compensation of our Named Executive Officers was developed in August 2005.  The Committee selected this Peer Group because it is representative of companies that the Company competeswe compete with for business and talent and because the Company’sour annual sales fall within the range of the companies in the Peer Group. The Peer Group and the Performance Group, as described later in this Proxy Statement, areis reviewed annually and updated as needed for certain business reasons, such as mergers,merg ers, acquisitions, etc. In general, the criteria for selecting the companies in the Peer Group are as follows:
 
·U.S. based, publicly traded companies in the retail industry;
 
·  		·Annualannual sales generally between one-half and two times the Company’sour annual sales;
 
·  		·Primarilyprimarily do business in apparel and/or accessories;
·Companies that target a middle income customer segment; and
 
·  		·Companiescompanies from which key talent may be recruited.
 
 
All of the companies in the Company’s current 21-member Peer Group meet a majority of those criteria.  The members of the Peer Group are as follows:follows:
 
·Abercrombie & Fitch Co.·Christopher & Banks Corporation·Pacific Sunwear of California, Inc.
·American Eagle Outfitters, Inc.·Collective Brands, Inc.·Stein Mart, Inc.
·AnnTaylor Stores Corporation·The Dress Barn, Inc.·The Talbots, Inc.
·The Cato Corporation·The Gymboree Corporation·Tween Brands, Inc.
·Charming Shoppes, Inc.·Hot Topic, Inc.·Urban Outfitters, Inc.
·Chico's FAS, Inc.·The Men's Wearhouse, Inc.
·The Children’s Place Retail Stores, Inc.·New York & Company, Inc.
·American Eagle Outfitters, Inc.·Christopher & Banks Corporation·Pacific Sunwear of California, Inc.
·AnnTaylor Stores Corporation·The Dress Barn, Inc.·Payless ShoeSource, Inc.
·Burlington Coat Factory Investments Holdings, Inc.·Goody’s Family Clothing, Inc.·Stein Mart, Inc.
·The Cato Corporation·The Gymboree Corporation·The Talbots, Inc.
·Charming Shoppes, Inc.·Hot Topic, Inc.·Tween Brands, Inc.
·Chico's FAS, Inc.·The Men's Wearhouse, Inc.·Urban Outfitters, Inc.
 
The Peer Group provides direct incumbent information on a job title match basis (e.g., Chief Executive Officer, Chief Operating Officer, Chief Financial Officer) for key competitors. Hay Group’s 2006annual Retail Industry Total Remuneration Survey (the “Hay Group Survey”) is used to provide an additional benchmark for theour Named Executive Officers’ base salarysalaries and annual variable pay target levels (both cash and equity).  The Hay Group Survey provides compensation data on the broader retail market placemarketplace (covering over 70approximately 100 retail organizations, a majority of which are specialty stores).  It provides market data by job, controlling for differences in responsibility and revenue size.  The data from both the Peer Group and the Hay Group Survey includes base salary, annual incentive bonus and equity incentive compensation for the named executive officers of those companies.
 
Benchmarking Incentive-Based Compensation; Our Current Performance Group
 
While the Committee uses the Peer Group and the Hay Group Survey to benchmark the overall compensation of our Named Executive Officers, it uses the companies in the Dow Jones Apparel Index (the “Index”), a separate performance group of companies,apparel retailers as identified below (theand collectively referred to herein as our “Performance Group”),  to measure the Company’sour relative performance with respect to comparable store sales for purposes of the Senior Executive Incentive Bonus Plan and the Company’sour total shareholder return for the purpose of awarding performance shares.  The Performance Group was developed in 2004. As with the Peer Group, the Committee selected the Index in 2007 as our Performance Group because it is representative of companies that the Company competeswe compete with for business, talent and talent.  However, unlike the Peer Group, the annual sales of the Performance Group are not limited to between one-half and two times the Company’s annual sales.  In general, the criteria for selecting the companies in the Performance Group are as follows:investor ca pital.
 
·U.S. based, publicly traded companies in the retail industry;
·Annual sales generally $500 million or greater;
·Primarily do business in apparel and/or accessories;
·Companies that target a middle income customer segment; and
·Companies from which key talent may be recruited.
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AllThe Index is comprised of approximately 30 apparel retailers and has been developed independently by Dow Jones, which has deemed it to be a relevant comparator group for individual investors to assess company performance.  Dow Jones periodically modifies the composition of the companies in the Company’sIndex. The current 26-member Performance Group meet a majority of those criteria.  The members of the Performance Group are as follows:
 
·Abercrombie & Fitch Co.·Federated Department Stores
Dillard’s, Inc.
·Limited Brands, Inc.
·Aeropostale, Inc.·Nordstrom,
The Dress Barn, Inc.
·The Men's Wearhouse, Inc.
·American Eagle Outfitters, Inc.·The Gap.
Foot Locker, Inc.
·Pacific Sunwear of California,Nordstrom, Inc.
·AnnTaylor Stores Corporation·Genesco
The Gap. Inc.
·
Polo Ralph Lauren Corporation
·The Buckle, Inc.·Payless ShoeSource,Genesco, Inc·
Ross Stores, Inc.
·The Cato Corporation·The Gymboree Corporation
Guess?, Inc.
·
SAKS Incorporated
·Chico's FAS, Inc.·Hot Topic, Inc.The Gymboree Corporation·Stein Mart, Inc.Signet Jewelers Limited
·The Children’s Place Retail Stores, Inc.·J.C. Penney Corporation,J. Crew Group, Inc.·Tween Brands,The TJX Companies, Inc.
·Christopher & Banks CorporationCollective Brands, Inc.·Kohl’s Corporation·The Wet Seal, Inc.
·Dillard’s, Inc.·Limited Brands, Inc.·
Urban Outfitters, Inc.
·The Dress Barn, Inc.·The Men's Wearhouse, Inc.Inc
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Compensation Elements
In General
 
The following six companies are in the Peer Group, but are not in the Performance Group:  Burlington Coat Factory Investments Holdings, Inc., Charming Shoppes, Inc., Goody’s Family Clothing, Inc., New York & Company, Inc. and The Talbots, Inc.  The following ten companies are in the Performance Group, but are not in the Peer Group: Dillard’s, Inc., Federated Department Stores, Inc., The Gap, Inc., Genesco Inc., J.C. Penney Corporation, Inc., Kohl’s Corporation, Limited Brands, Inc., Nordstrom, Inc., SAKS Incorporated and The Wet Seal, Inc.
Compensation Elements
In General
All of the compensation and benefits programs for our Named Executive Officers described below meet our primary purpose to recruit and retain the executive talent required to successfully manage and grow our business and to achieve our short and long-term business objectives.  Beyond that, different elements are designed for different purposes. The elements of compensation for our Named Executive Officers are as follows:
 
·  		·
Base salary, perquisites and other benefits, which are designed to attract and retain executives over time;
 
·  		·
Annual incentive (bonus) compensation, which is designed to focus executives on the business objectives established by theour Board for a particular year;
 
·  		·
Long-term Incentive Compensation,incentive compensation, which consists of stock appreciation rights (“SARs”), restricted stock, performance shares and stock options, is designed to focus executives on theour long-term success, of the Company, as reflected in increases to the Company’sour stock prices,price, growth in itsour earnings per share and other elements; and
 
·  		·
Termination and change in control compensation and benefits, which are designed to facilitate our ability to attract and retain executives as we compete for talented employees in a marketplace where those types of compensatory protections are commonly offered.  Termination compensation and benefits are designed to ease an employee’s transition due to an unexpected employment termination, while change in control compensation and benefits are designed to encourage employees to remain focused on our business in the event of rumored or actual fundamental corporate changes.
 
The Committee establishes the amount and mix of base salary and variable compensation by referencing Peer Group practices for each element.  The Committee does not have any specific formula for this determination, but rather targets fixed compensation (base salary) around the mediandetermination.   It considers factors relating to each Named Executive Officer’s individual position and performance, including professional history and experience, relevant skill set and scope of the market and variable compensation (both short and long-term) to be above the median of the market when the Company has superior performance.duties. In considering the total package of compensation, the Committee also considers the internal relationship of pay across all executive positions.  Total compensation packages as well as each element of compensation (i.e., base salary, annual incentive (bonus) compensation, long-term incentive compensation a nd perquisites and other benefits) are intended to provide a competitive compensation package as compared to similarly-situated executives at companies in our Peer Group.
 
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Base Salary
 
Base Salary
The Committee views a competitive base salary as an important component to attract and retain executive talent. Base salaries also serve as the foundation for the annual incentive (bonus) plan, which expresses the bonus opportunity as a percent of base salary.
 
The Committee considers both internal equity and external competitiveness in determining the base salary of our Named Executive Officers.  Base salaries for our Named Executive Officers are targeted in a range around the median of the Peer Group.  After considering input from our Chief Executive Officer regarding the performance of the other Named Executive Officers, the Committee uses its judgment regarding individual performance, market competitiveness, length of service, job responsibilities and other factors to determine the appropriate base salary for each Named Executive Officer.
 
Annual Incentive (Bonus) Compensation
 
Annual incentive (bonus) compensation for our Named Executive Officers is determined each year according to thea Senior Executive Incentive Bonus Plan (the “Bonus Plan”).  The current Bonus Plan establishes an annual cash bonus amount and is paid based on the following two metrics: (i) the Company’s pre-tax earnings and (ii) comparable store sales relative to the Performance Group.weighted parameters:
 
  Parameter Weight
Company Pre-Tax Earnings Relative to Target 75%
Comparable Store Sales Relative to Performance Group 25%
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In March of each year, the Committee evaluates the Company’sour annual and long-term strategic plan to determine if these financial metricsparameters are appropriate to measure achievement of the Company’sour objectives and to motivate executives.our executive officers.  Based on discussions with our Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer, the Committee approves the financial metricsparameters to be included in the Bonus Plan.  This final approval typically occurs at the Committee’s March Committee meeting.
The  An incentive matrix establishes threshold (minimum), target and maximum performance levels for each metricparameter based on the level of perceived difficulty in achieving the business plan as well as the risks associated with the Bonus Plan.our financial plan.  The incentive matrix clearly outlinesoutli nes a minimum level of performance below which no bonus will be paid and the relationship between the two metricsparameters (e.g. Pre-Tax Earnings Relative to Target and Comparable Store Sales Relative to Performance Group) that will generate payouts at or above the three target levels.payouts.
 
Annual incentive compensation targets for each Named Executive Officer under the Bonus Plan are expressed as a percentage of each Named Executive Officer’s base salary and targets increasewith the target percentage increasing with job scope and complexity. IfThe Committee can exercise discretion to reduce or increase the pre-tax earnings achievement level is less thanamount of any awards under the threshold amount, then no bonus will be paid for either of the metrics (i.e., total bonus will be zero).
Bonus Plan. For additional detailinformation on the 2006our 2009 Senior Executive Incentive Bonus Plan and examples of how the payout is calculated,formula used to calculate annual bonus amounts, please see “Committee ActionActions in 2006Fiscal 2009 Concerning Named Executive Officer Compensation-Annual Incentive Compensation”(Bonus) Compensation Paid in 2009 Under the 2008 Bonus Plan” beginning on page 21.27 of this Proxy Statement.
 
At its March meeting, the Committee also reviews the Company’sour stated financial results for the recently completed fiscal year, certifies the calculation of proposed bonus amounts, and reports them to the full Board.
Long-Term Incentive Compensation
 
Long-term Incentive Compensation
In General.The Committee considers long-term incentive compensation (“LTI”) critical to the alignment of executive compensation with the creation of shareholder value.  The Company’sOur long-term equity incentive compensation awards are currently granted pursuant to our Amended and Restated 2001 Equity Incentive Plan (the “Equity Incentive“2001 Plan”), which was approved by our shareholders at our 2004 Annual Meeting, and our Amended and Restated 2008 Equity Incentive Plan (the “2008 Plan”), which was approved by our shareholders at our 2009 Annual Meeting.
 
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At its March meeting, the Committee reviews the portfolio of long-term incentive vehicles, the targeted award size and the performance measures associated with any awards. The Committee also reviews recommendations provided by management and the Hay Group regarding LTI design. TheOur Board’s practice is to make annual grants of equity awards, including stock options, SARs, restricted stock and performance shares, and stock options, upon the recommendation of the Committee at that time.  The Committee believes that the use of multiple equity vehicles balances a focus on equity-driven growth with the retention and performance aspects of restricted stock.  The grant date is the same date that theour Board approves the awards.  The equity award is priced at fair market valuethe closing price on the NYSE of the sharesour common stock on that date.date (the “Fair Market Value”).  From time to time, theour Board will consider making grants under other special circumstances, such as when recruiting new executive talent, upon the promotion of an executive and to retain key individuals.  Any and all other grants (other than the March grants) are effective as of the date of the event (e.g., new hire or promotion date) and are priced at fair market valuethe Fair Market Value of our common stock on that date.
 
Stock Options.Stock options represent the right to purchase a share of Companyour common stock at a fixed price (the exercise price) for a specified period of time (the option term).  The exercise price is determinedthe Fair Market Value of our common stock on the date of grant.  The employeeexecutive officer benefits only if the stock'sour stock value appreciates from the grant date through the exercise date.  In 2006, the Company2009, we did not grant stock options to any executives,executive officers, but it haswe have granted them in past years.
 
Most of the stock options the Company haswe have awarded itsour Named Executive Officers vest at the rate of 25% per year over the first four years following the date of grant and some stock options vest at the end of three years following the date of grant.  Stock options issued prior to January 29, 2005 will generally expire if not exercised ten years from the date of grant while stock options granted after January 29, 2005 will generally expire if not exercised seven years from the date of grant. If an executive officer dies, unvested stock options will immediately vest and the executive officer’s estate will have one year from the date of death to exercise all vested stock options.  If an executive officer retiresofficer’s employment is terminated by reason of retirement or voluntarily terminates employment,disability (retirement as determined by our Board) , unvested stock options will immediately vest and he or she will normally have 60one year from the date of termination to exercise all stock options. Upon the termination of an executive officer’s employment for reason other than death, retirement or disability, the executive officer will have sixty days from the date of termination to exercise all vested stock options. In the event of a Change in Control, as that term is defined on page 52 of this Proxy Statement, all stock options will immediately vest
and will be exercisable by the executive officer. In any event, the exercise must occur within the remaining term of the stock option.  Any portion of the stock option not exercised within the remaining term of the stock option will terminate.
 
Stock Appreciation Rights (“SARs”).A stock appreciation rightis similar to a stock option in that it allows the recipient to benefit from any appreciation in the Company’sour stock price from the grant date through the exercise date.  However, with a SAR, the executive officer is not required to actually purchase all of the exercised shares (as with a stock option), but rather he or she just receives the amount of the increase in cash or in shares of our stock.  Because the value that mayma y be earned through SARs is dependent upon an increase in our stock price, the Committee views SAR grants as a critical link between management wealthcompensation accumulation and the creation of shareholder value. The Equity Incentive Plan provides2001 and 2008 Plans provide that SARs may not be granted at less than 100% of fair market value.the Fair Market Value of our common stock on the date of grant.
 
SARs have a seven-year term and vest one-fourth (25%) on each of the first, second, third and fourth anniversaries of the date of the grant.  If an executive officer dies, unvested SARs are immediately vested and the executive officer’s estate will have one year from the date of death to exercise all SARs.  If an executive officer retires or voluntarily terminates employment, he or she will have 60
        SARs have a seven-year term and vest one-fourth (25%) on each of the first, second, third and fourth anniversaries of the date of the grant.  If an executive officer dies, unvested SARs will immediately vest and the executive officer’s estate will have one year from the date of death to exercise all SARs.  If an executive officer’s employment is terminated by reason of retirement or disability (retirement as determined by our Board), unvested SARs will immediately vest and he or she will normally have one year from the date of termination to exercise all SARs. Upon the termination of an executive officer’s employment for reason other than death, retirement or disability, the executive officer will have sixty days from the date of termination to exercise all vested SARs.  I n the event of a Change in Control, all SARs will immediately vest and will be exercisable by the executive officer. In any event, the exercise must occur within the remaining term of the SARs.  Any portion of the SARs not exercised within the remaining term of the SARs will terminate.
 
Restricted Stock.  Restrictedstock is a share of our common stock that has vesting restrictions tied to continued employment.  Restricted stock provides executive officers with the opportunity to earn full value shares of our common stock.  Depending on the agreement, restricted stock grants may either cliff-vest, which means they vest all at once at the end of two or three years,a specified vesting period, or step vest, which means they vest in pro rata increments over a two or three yearspecified vesting period.  If the executive officer leaves for any reason other than death, disabilityretirement or retirementdisability before vesting (retirement as determined by our Board), the unvested portion of the restricted stock award iswill be forfeited.  If the executive officer dies, becomes disabled or retires, the Committee may,restricted stock award will fully vest.  In the event of a Change in its sole discretion, determine to cancel any or all restrictions and vest any or all ofControl, the restricted stock award.award will immediately vest and will be payable to the executive officer within thirty days of the Change in Control.
 
Performance Shares.  As with restricted stock,performance shares provide executive officers with the opportunity to earn full value shares of our stock.  However, a three-year performance cycle (the “Performance Cycle”) is established at the beginning of each grant and the amount of the award is determined by the Company’sour performance on total shareholder return relative to the then current Performance Group over the Performance Cycle.  If an executive officer leavesofficer’s employmen t is terminated for any reason other than death, disabilityretirement or retirementdisability before the end of the Performance Cycle, the performance share award is forfeited. AnIf an executive officer that dies, becomes disabledofficer’s employment is terminated due to death, retirement or retiresdisability during the Performance Cycle, he or she will be eligible to receive a proratedthe target number of shares correspondingset forth in his or her Performance Share Award Agreement within thirty days of the triggering event.  In the event of a Change in Control, the Target Number of performance shares will immediately vest and will be payable to the periodexecutive officer within thirty days of the Performance Cycle that they remained employed.Change in Control.
 
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Benefits and Perquisites
 
Benefits and Perquisites
The Committee supports a compensation philosophy for our Named Executive Officers that is more heavily weighted toward annual and long-term performance-based compensation rather than toward benefits and perquisites.
 
The perquisites and other benefits we provide our Named Executive Officers are summarized in the 2009 Summary Compensation Table, the 2009 All Other Compensation Table and the 2009 Nonqualified Deferred Compensation Table, including footnotes.  In addition, we provide our executive officers with core benefits available to all full-time employees (e.g., coverage for medical, dental, prescription drugs, basic life insurance and long termlong-term disability coverage) as well as a supplemental Executive Officer Medical Plan.  The supplemental Executive Officer Medical Plan is an insured plan which provides officers at the Executive Vice President level and above reimbursement for medical and dental out of pocket expenses whichthat are not covered by the underlying Company medical plan.  Typical payments are for deductibles, co-pays and similar expenses.

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Retirement Plans
 
The Company doesOther than a frozen defined benefit plan in which Messrs. Cruse and Lucas are participants, we do not provide a qualified retirement program for our Named Executive Officers nor is there a supplemental executive retirement plan or any other retirement plan available other than the our 401(k) Plan and our Nonqualified Deferred Compensation Plan.  The Committee provides our Named Executive Officers a nonqualified deferred compensation plan to “make whole” forPlease see the retirement plan limits applicable under the Internal Revenue Code (the “Code”).  The Company provides a dollar-for-dollar matching amount2009 Pension Benefits Table on the executive officer’s deferral up to the first 10%page 42 and “Retirement Benefits” beginning on page 43 of the executive officer’s base salary, and up to 10% of any earned bonus amounts.this Proxy Statement.
 
Termination and Change In Control Arrangements
 
In General.  Pursuantto theiremployment agreements, our Named Executive Officers are entitled to compensation and other benefits if their employment terminates or if there is a changeChange in control,Control, as described beginning on page 3344 of this Proxy Statement under “Potential& #8220;Potential Payments upon Termination or Change In Control”. Termination and changeChange in controlControl compensation and other benefits are established at the time a Named Executive Officer signs an employment agreement with the Company.agreement.
 
Termination.Our Named Executive Officers are entitled to compensation and other benefits in an amount the Committee believes is appropriate, taking into account the time it is expected to take a terminated employee to find another job.  Compensation and other benefits upon termination are intended to ease the consequences to an employee of an unexpected termination of employment.  The Company benefitsWe benefit in that the employment agreements contain a covenant not to compete, solicit or disparage provisionrestrictive covenants that continuescontinue for a period of up to three yearstime following termination.
 
Change in Control.Control-In General.The Committee and theour Board recognize the importance to the Companyus and our shareholders of avoiding the distraction and loss of key management personnel that may occur in connection with any rumored or actual changeChange in controlControl of the Company. To that end, properly designed changeChange in controlControl provisions in our Named Executive OfficerOfficer’s employment agreements protect shareholder interests by enhancing executive focus during rumored or actual changeChange in controlControl activity through:
 
·  		·Incentivesincentives to remain with the Companyus despite uncertainties while a transaction is under consideration or pending;pending,
 
·  		·Assurancesassurances of severance and other benefits in the event of termination;termination, and
 
·  		·Immediateimmediate vesting of equity elements of total compensation after a changeChange in control.Control.
 
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To diminish the potential distraction due to personal uncertainties and risks that inevitably arise when a changeChange in controlControl is threatened or pending, the Committee and theour Board have provided our Named Executive Officers with what the Committee and theour Board determined to be competitive changeChange in controlControl compensation and benefit provisions in their employment agreements.  The employment agreements of our Named Executive Officers provide for specific enhanced payments and benefits in the event of a changeChange in control.Control.
 
Change in Control-Double Trigger. The enhanced termination benefits payable in connection with a changeChange in controlControl require a “double trigger” which means that (a) if a changeChange in controlControl occurs, and (b) during the period beginning three (3) months before the change of controlChange in Control and ending twenty-four (24) months after the changeChange in controlControl (at any time in the case of Mr. AbramczykMaloney and Ms. Murray)Mr. Lucas), (i) an executive officer’s employment agreement is terminated by the Companyus or itsour successor without good cause, or (ii) the executive officer’s employment agreement is terminated by the executive officer with good reason, the executive officer will be eligible for the changeChange in controlControl compensation and benefits.  A double trigger was selected in order to enhance the likelihood that an executive officer will remain with the Companyus after a changeChange in control,Control, since the executive officer will not receive the change in control compensation payments and benefits if he or she voluntarily resigns after the changeChange in controlControl event.  Thus, the executive officer is protected from actual or constructive dismissal after a change of controlChange in Control, while any new controlling party or group is better able to retain the services of a key corporate asset.
Gross-Up Payments
 
Gross-Up Payments
In General.A gross-up payment is a payment to an executive officer to compensate the executive officer for the amount of the taxes payable by him or her related to his or her receipt of compensation or other cash benefit from the Company.benefit.  We would generally apply a gross-up payment to Named Executive Officers in only the following three following situations:
 
·Relocation expenses, which are taxable under the Code and qualify for reimbursement under our relocation policy, are grossed up for Federal, FICA, state and local tax rates, where applicable, on the executive’sexecutive officer’s reimbursement payments;
 
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·Payments for estate planning allowances are grossed up for Federal, FICA, state and local tax rates, where applicable; and
 
·As further discussed below,in the next paragraph, any payment made due to a change of control, which isChange in Control, if subject to an excise tax, will be grossed-up to compensate the executive officer for the amount of the tax.
 
Termination or Change in Control.   As described on page 39 under “Potential Payments Upon Termination or Change In Control-Gross-Up Payments”, ifIf any payments made to a Named Executive Officer due to termination or changea Change in controlControl subjects the Named Executive Officer to any taxes due under Section 4999 of the Code (excise(i.e., excise tax), the Companywe will pay to the Named Executive Officer a gross-up payment to compensate the executive officer for the amount of the taxes.  The effects of Section 4999 generally are unpredictable and can have widely divergent and unexpected effects based on an executive officer’s personal compensation history.  Therefore, to provide an equal level of benefit across individuals without regard to the effect of the excise tax, the Committee and theour Board have determined that Section 4999 gross-up payments are appropriate for our Named Executive Officers.
Other Compensation Practices
Stock Ownership by Executive Officers
 
Our Board believes that an officer who has reached the level of Executive Vice President or above should be a shareholder and should have a financial stake in the Company. While the Board does not believe it appropriate to specify the level of stock ownership for those executive officers, the Board encourages those executive officers to either purchase stock in the open market or use their equity grants to acquire and retain, during their employment, shares of our common stock in an amount that the executive officer deems appropriate.
Stock Ownership by Directors
Our Board believes that Directors should be shareholders and have a financial stake in the Company in an amount that a Director deems appropriate. Each Director must develop and maintain a stock position in the Company with an original investment of at least four times the Annual Retainer, which is currently $40,000 for Independent Directors (the “Original Investment”), within three years of the date of the Director’s initial election to the Board. In determining whether the Director has achieved the Original Investment, the Director can include (i) a Director’s tax basis in any stock acquired by the Director in open market purchases, and (ii) the amount of any Director fees which the Director has designated to be used for the acquisition of restricted stock or Deferred Stock Units under our 2003 Amended and Restated Non-Employee Director Equity Compensation Plan.  As of the date of this Proxy Statement, all of our Directors have met or exceeded the Original Investment requirement, with the exception of (i) Mr. Schwartz, who was appointed to the Board on July 5, 2007 and has until July 5, 2010 to meet the Original Investment requirement and (ii) Ms. Turpin, who was appointed to the Board on March 25, 2010 and has until March 25, 2013 to meet the Original Investment requirement.
Committee Actions in 2006Fiscal 2009 Concerning Named Executive Officer Compensation
In General
 
In General
In February 2006, the Committee approved the terms of Mr. Hall’s employment as our President and Chief Operating Officer effective February 20, 2006.
At its March 20062009 meeting, the Committee reviewed the market data and analyses provided by Hay Group and determined that the Company’sour overall compensation program is reasonably competitive and consistent with the Committee’s compensation objectives.  In determining compensation for our Named Executive Officers for our 2006 fiscal year,Fiscal 2009, the Committee considered many factors, including:
 
·  		·Theour Board’s judgment and satisfaction with the Company’s performance;
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·  		·Assessmentassessment of the individual executive officer’s performance;
 
·  		·Thethe nature and scope of the executive officer’s responsibilities and his or her effectiveness in leading the Company’sour initiatives to successfully increase customer satisfaction, enhance Companyour growth, and propose, implement and ensure compliance with Companyour policies;
 
·  		·Desireddesired competitive positioning of compensation;
 
·  		·Futurefuture potential for the executive officer; and
 
·  		·Retentionretention needs.
 
The Committee also considered the compensation practices and performances of the Company’sour Peer Group and our Performance Group.
Base Salaries
The Committee, with input from Hay Group with respect to market salary data of our Peer Group, and Mr. Hall, in his capacity as our Chief Executive Officer, recommended to our Board, and our Board agreed, that in view of the depressed economic conditions there should be no salary adjustments for our Named Executive Officers.  Therefore, the base salaries of our Named Executive Officers for Fiscal 2009 were as follows:
 
 
Executive
 
2008 Base
Salary
 
2009 Base
Salary
Base
Salary
Increase
Mr. Hall$650,000$750,000      0% (1)
Mr. Record$460,000$460,0000%
Mr. Maloney$475,000$475,0000%
Mr. Cruse$375,000$375,0000%
Mr. Lucas$345,000$345,0000%
      ______________________________
(1)On November 3, 2008 and as part of our succession plan, Mr. Hall was promoted to Chief Executive Officer and his title became President and Chief Executive Officer.  In connection with his promotion, Mr. Hall’s base salary was increased from $650,000 to $750,000, an increase of 15%.
Based on Hay Group’s analysis, it was determined that our base salaries are generally at or below the median of our Peer Group.
Annual Incentive (Bonus) Compensation Paid in 2009 Under the 2008 Bonus Plan
At their March 2008 meetings, the Committee recommended, and the Board approved, the 2008 Senior Executive Bonus Plan (the “2008 Bonus Plan”) as described in our 2009 Proxy Statement. As with the 2009 Bonus Plan described below, the 2008 Bonus Plan set threshold, target and maximum bonus opportunities as a percentage of each Named Executive Officer’s base salary based upon the achievement of specified Pre-Tax Earnings and our ranking within the Performance Group with respect to comparable store sales.
 
Base Salaries
AmongAt its March 2009 meeting, the Committee (i) reviewed our annual Pre-Tax Earnings results, (ii) reviewed Fiscal 2008 Comparable Store Sales results versus our Performance Group, (iii) discussed the Dow Jones Apparel Group reporting methodologies, and (iv) reviewed the 2008 Bonus Plan achievement level. As we did not achieve the Threshold Pre-Tax Earnings and Comparable Store Sales parameters (collectively, the “Threshold Parameters”) under the 2008 Bonus Plan, the Named Executive Officers there were no base salary increases for James Scarborough, our Chief Executive Officer, or Andrew Hall, our Presidentnot entitled to, and Chief Operating Officer (due to his hire on February 20, 2006). Dennis Abramczyk, our Executive Vice President and Chief Operating Officer Peebles Division, received a base salary increase from $335,000 to $430,000 and Cynthia Murray, our Executive Vice President and Chief Merchandising Officer, received a base salary increase from $390,000 to $425,000, in both cases due to promotions.  The base salary for Michael McCreery, our Chief Financial Officer, was increased from $445,000 to $460,000.were not awarded, any performance-based bonuses under the 2008 Bonus Plan.
 
Annual Incentive Compensation
Over the past three years (2004, 2005, 2006), the Company has achieved performance in excessEstablishment of the threshold level three times and in excess of the target level one time, but has not achieved the maximum level.  The payout percentage over the past threeyears has been between 68.3% and 103.1% of the Named Executive Officers’ target award opportunity with an average approximate payout percentage over the past three years of 81.8% of the target award opportunity.  Generally, the Committee sets the threshold, target and maximum levels such that the relative difficulty of achieving the target level is consistent from year to year.
With the exception of Mr. Hall, who did not receive a bonus for fiscal 2005 as he did not join the Company until February 20, 2006, each of the Named Executive Officers received the following bonus in 2006 for performance under the 20052009 Senior Executive Incentive Bonus Plan (the “2005 Bonus Plan”):
 
2005 Senior Executive Incentive Bonus Plan Awards
Name
2005 Bonus Plan Award
Mr.  Scarborough$772,950
Mr. McCreery$298,101
Mr. Abramczyk$172,625
Ms. Murray$200,967

On average, bonuses paid to the Named Executive Officers under the 2005 Bonus Plan were paid at 103% of target.
At theirits March 2006 meetings,2009 meeting, the Committee recommended, and the Board approved, the parameters for the 20062009 Senior Executive Incentive Bonus Plan (the “2006“2009 Bonus Plan”) and approved the annual cash incentive opportunities for the Named Executive Officers as set forth in the table below.  Mr. Scarborough’s bonus targetThe methodology and measurement parameters for the 2009 Bonus Plan are unchanged from the format of the 2008 Bonus Plan.
2009 Bonus Plan Parameters
While the methodology and measurement parameters for the 2009 Bonus Plan are unchanged from the 2008 Bonus Plan, the Pre-Tax Earnings Target Level for the Financial Plan was increased from 75%$46,700,000 (approximately 2008 earnings) under the 2009 Plan to 90%provide incentive to our management team in view of base salary; Mr. Hall’s bonus target was set at 65% of base salary; Mr. McCreery’s bonus target remained unchanged at 65%; and the bonus targets for Mr. Abramczyk and Ms. Murray were raised from 50% to 60% of base salary.overall downturn in the economy.  The 20062009 Bonus Plan design was as follows:

 
2006 Senior Executive Incentive Bonus Plan
 
FY06 Incentive – Percent of Salary
Weightings of Metrics
Executive Officer
Threshold
Target
Maximum
Pre-Tax Earnings
Comparable Store Sales
Mr. Scarborough, CEO
22.5%
($225,000)
90%
($900,000)
180%
($1,800,000)
75%25%
Mr. Hall, President & COO
16.25%
($89,375 )
65%
($357,500)
130%
($715,000)
75%25%
Mr. McCreery, CFO
16.25%
($74,750)
65%
($299,000)
130%
($598,000)
75%25%
Mr. Abramczyk, EVP
15%
($64,500)
60%
($258,000)
120%
($516,000)
75%25%
Ms. Murray, EVP
15%
($63,750)
60%
($255,000)
120%
($510,000)
75%25%
Pre-Tax Earnings Parameter
 
At their March 2006 meetings,This parameter of the Committee also recommended, andbonus formula is weighted to determine three-quarters (75%) of the Board approved,year-end bonus amount earned. Actual bonus payment will be prorated for Pre-Tax Earnings results between the Maximum and Threshold levels.
Pre-Tax
2009  Earnings
Target bonus amount will be paid by achieving Pre-Tax Earnings in 2009 equal to actual 2008 earnings.$ 46,700,000Target Level
Maximum bonus amount will be paid at 2 times Target by achieving Pre-Tax Earnings at 120% of Target Level.$ 56,040,00020% Above  Target
Minimum (Threshold) bonus amount begins at Pre-Tax Earnings at 80% of Target Level.  Graduated payout begins at zero bonus and is prorated up to Target Level.
$ 37,360,00020% Below Target
Comparable Store Sales asParameter
This parameter of the metricsbonus formula is weighted to determine one-quarter (25%) of the year-end bonus amount earned.  Measurement is based on fiscal year-end comparable store sales percent change, compared to our Performance Group.  Actual bonus payment will be prorated for determining payouts underresults between the 2006 Bonus Plan.  The Pre-Tax Earnings amounts were approved as follows:Maximum and Threshold ($82.9 million), Target ($97.5 million) and Maximum ($112.2 million).  The Comparable Store Sales levels were approved as set forth in the table below.  However, for the reasons given in footnote (1) to the following table, the Pre-Tax Earnings amounts were subsequently adjusted on June 1, 2006 and March 28, 2007.  The following table reflects the Comparable Store Sales levels approved by the Board on March 28, 2007 and the Pre-Tax Earnings amounts approved by the Board on March 28, 2007:levels.
Target amount will be paid if our ranking for total year-end comparable store sales change is at the fiftieth percentile (or middle mark) among our Performance Level
Pre-Tax Earnings
(75% of bonus opportunity)
Comparable Store Sales
(25% of bonus opportunity)
Group.
Threshold
$79.1 million (1)
If Company’sMaximum amount (2 times Target) will be paid if our ranking of total year-end comparable store sales change is at the 25thone-hundredth percentile of a select group of companies(or highest rank) among our Performance Group.
Target
$93.1 million (1)
If Company’sThreshold bonus amount (1/4 of Target) will be paid if our ranking of total year-end comparable store sales change is at the 50thtwenty-fifth percentile of a select group of companiesamong our Performance Group.
Potential 2009 Bonus Plan Bonuses
Depending on our Pre-Tax Earnings and our ranking among our Performance Group with respect to total year-end comparable store sales, our Named Executive Officers had the opportunity to earn bonuses under the 2009 Bonus Plan as follows, with actual bonus payment to be prorated for results between the Maximum and Threshold levels:
ExecutiveBase Salary($)
Bonus Range % (1)
(Threshold/Target/Maximum)
Bonus Range $ (2)
(Threshold/Target/Maximum)
MaximumMr. Hall$107.0 million750,0000-80-1600-600,000-1,200,000
Mr. Record460,0000-65-1300-299,000-598,000
Mr. Maloney475,0000-60-1200-285,000-570,000
Mr. Cruse375,0000-50-1000-188,000-375,000
Mr. Lucas345,0000-50-1000-172,000-345,000
_________________________
  (1)If Company’s rankingPercentage of total year-end comparable store sales change is atBase Salary.
  (2)Amounts have been rounded.  Amount paid will depend upon the 100th percentile (i.e., highest) of a select group of companiesextent to which the Company achieves Pre-Tax Earnings and Comparable Store Sales parameters established by the Board. Actual bonus payments will be prorated for Pre-Tax Earnings and Comparable Store Sales results between the threshold and maximum levels.
 

(1)The Pre-Tax Earnings amounts for fiscal 2006 were adjusted at the June 1, 2006 Board meeting in order to incorporate the expected impact on fiscal 2006 of the integration and operation of the B.C. Moore stores acquired by the Company on February 27, 2006.  The original Pre-Tax earnings amounts established by the Board at the March 17, 2006 meeting had not contemplated the effects of the B.C. Moore acquisition on fiscal 2006 operations as that transaction had just been consummated.  The Board made these adjustments as incentive for executive management to achieve the expected results in fiscal 2006 from making the acquisition.

The Pre-Tax Earnings amounts for fiscal 2006 were adjusted again by the Board at its meeting on March 28, 2007 for the impact that certain changes in accounting methods that occurred during fiscal 2006.  Those changes included changing from the retail method of accounting to the cost method including the capitalization of distribution center operating expenses, the deferral of vendor credits received for distribution handling allowances, and the recognition of breakage income associated with customer gift cards and merchandise credits which the Company believes will never be redeemed.  The Board’s reasoning in making these adjustments for these accounting method changes was that these changes had no impact on the trend of business operations which were the focus of the incentive program and had the effects of these changes been known at the time the original Pre-Tax Earnings amounts were established, the Pre-Tax Earnings amounts would have been established with these increases or decreases as the case might be.
 
IfSee “Committee Actions in 2010 Concerning Named Executive Officer Compensation – 2009 Bonus Plan Awards” on page 33 for bonuses approved by the Committee andin 2010 for performance under the Board had been aware of these adjustments at the time the Pre-Tax Earnings amounts were established, they would have been included in the design of the 20062009 Bonus Plan and these adjustments would not have been necessary.  Notwithstanding, the net effect of the adjustments was a decrease in the Pre-Tax Earnings amounts.Plan.
Long-Term Incentive Compensation Awards
 
Using Mr. Scarborough’s bonus opportunity under the 2006 Bonus Plan as set forth in the table, the following are examples of how the bonus payouts to him under the 2006 Bonus Plan would be calculated:
·If the Company's Pre-Tax Earnings did not meet the threshold performance level of $79.1 million, Mr. Scarborough would not have received a bonus regardless of the Company’s ranking of total year-end comparable store sales change; and

·If the Company’s Pre-Tax Earnings met the target performance level of $93.1 million and if the Company’s ranking of total year-end comparable store sales change is at the 50th percentile, Mr. Scarborough will be entitled to a bonus of $900,000 calculated using the following formula: $1,000,000 Base Salary X 67.5% (75% of 90%) + $1,000,000 X 22.5% (25% of 90%) = $900,000.
Long-Term Incentive Compensation
On February 20, 2006 and as a condition to his employment,At its March 2009 meeting, the Committee approved(i) reviewed the long-term incentive grantfinal Total Shareholder Return (“TSR”) results for Andy Hall,the three year performance cycle that ended on January 31, 2009 for the March 2006 Performance Based Restricted Share Grants for Senior Executives, (ii) discussed the attainment level based on our PresidentTSR results versus our Performance Group, (iii) reviewed the current standing and Chief Operating Officer.  The grant consistedattainment levels for LTI grants made in March 2007 and March 2008 based on the TSR matrix of 30,000 (45,000 post split)our Performance Group, (iv) discussed individual LTI grants for senior management executives recommended by management, (v) reviewed and discussed proposed SAR equity grants for mid management executives, (vi) reviewed estimated shares of restricted stock (with 3-year step vesting)needed for 2009 award s, and 100,000 (150,000 post split) SARs at a grant price of $28.11 ($18.74 post split) per common share (with 4-year ratable vesting).(vii) reviewed shares available for future grants.  To determine the size of theeach equity award, the Committee reviewed market data, Companyprevious year LTI practices, anddecisions, the valueperformance of compensation and benefits that Mr. Hall was surrendering at his former employer, Federated Department Stores Inc.
24
On March 17, 2006, the Board awarded LTI compensation for fiscal year 2006 to the Named Executive Officers other than Mr. Hall, since he was hired on February 20, 2006.and recommendations from Hay Group.
Based upon the recommendation of the Committee, our Board granted LTI awards for fiscal year 2009 to our Named Executive Officers. The annual equity grants were a combination of Performance Shares and SARs and performance shares.  Award values were split equally between the number of SARs and performance sharesgranted as follows:
 
20062009 LTI Awards Table
 
Executive 
Performance Shares
at Target (1)
 SARs (2) 
Mr. Hall 30,000 100,000 
Mr. Record 15,000 45,000 
Mr. Maloney 15,000 45,000 
Mr. Cruse 10,000 30,000 
Mr. Lucas 6,000 18,000 

(1)  
SARs (#)
Actual/Post Split
 TargetThe Performance Shares (#)
Actual/Post Split
Mr.  Scarborough55,500/83,25019,500/29,250
Mr. McCreery17,000/25,5006,000/9,000
Mr. Abramczyk15,000/22,5005,000/7,500
Ms. Murray15,000/22,5005,000/7,500cliff vest after a three-year measurement performance cycle (the “Performance Cycle”) which began on the first business day of our 2009 fiscal year (February 1, 2009) and ends on the last business day of our 2011 fiscal year (January 28, 2012). The number of Performance Shares earned will be based on our total shareholder return relative to our Performance Group at that time. The number of shares reflected in the table above are the “Target Shares”, which means the number of shares of our common stock the Named Executive Officer will earn (and receive) at the end of the Performance Cycle if our results are in the middle (fiftieth percentile) of the Performance Group. On a sliding scale, the shares earned can vary as follows:

The SARs have a grant price of $28.77 ($19.18 post split) and vest ratably over a four-year period (i.e., 25% per year).
 
The
 Percentile Ranking of Performance Group  Performance Shares Earned *
 100%  200%
 75%  150%
 50%  100%
 25%  25%
 <25%  0%
*    As a percentage of Target Performance Shares cliff vest aftershown in the 2009 LTI Awards table above.
(2) SARs have a grant price of $9.77 (the closing price of our common stock on March 27, 2009) and vest ratably over a four year period (i.e., 25% per year).

Performance Shares Earned in 2009 Upon Completion of the 2006 Performance Cycle
As the performance criteria for the three-year measurement performance cycle (the “Performance Cycle”), which beginsPerformance Cycle that began on the first business day of theour 2006 fiscal year (January 29, 2006) and ended on the last business day of our 2008 fiscal year (February 1, 2009) (the “2006 Performance Cycle”) were met, the Named Executive Officers who were granted Performance Shares at the beginning of the date of grant.  The number of2006 Performance Shares earned is based on the Company’s total shareholder return relative to the Performance Group. The “Target Performance Shares” in the table above refers to the number ofCycle were issued shares of our common stock at 111.2% attainment of the stock split adjusted Target Shares as follows:
Executive (1)
Target Shares
(Split Adjusted)
Performance
Attainment %
Payout
Shares Earned
Mr. Cruse7,500111.28,340
Mr. Lucas4,500111.25,004

(1)Messrs. Hall, Record and Maloney were not employed by the Company at the beginning of the 2006 Performance Cycle and therefore, they were not entitled to receive shares.
Significant 2010 Events Related to the Employment of our Named Executive Officers
Promotion of Edward Record. On February 15, 2010, Mr. Record was promoted to Chief Operating Officer. Mr. Record had been serving as our Executive Vice President and Chief Financial Officer.  We have begun a search for a Chief Financial Officer, who will report to Mr. Record.  Mr. Record will retain the Chief Financial Officer responsibilities until the successful conclusion of the search.  In connection with Mr. Record’s promotion:
·  his base salary was increased from $460,000 to $550,000;
·  he was awarded 100,000 SARs that have a grant price of $12.94, the closing price of the Company’s stock on February 12, 2010, and that will vest ratably over a four year period (i.e., 25% per year);
·  he was awarded 25,000 shares of restricted stock that will cliff vest three years from the date of his promotion (i.e., February 15, 2013); and
·  his target bonus potential under our 2010 Senior Executive Incentive Bonus Plan will be 70% of his base salary, which is an increase from 65% of his base salary under our 2009 Bonus Plan.
Promotion of Richard Maloney.  On February 15, 2010, Mr. Maloney was promoted to Chief Merchandising Officer.  Mr. Maloney had been serving as President and Chief Operating Officer of our South Hill Division. We have begun a search for a Chief Operating Officer of the South Hill Division, who will report to Mr. Maloney.  In connection with Mr. Maloney’s promotion:
·  his base salary was increased from $475,000 to $550,000;
·  he was awarded 100,000 SARs that have a grant price of $12.94, the closing price of the Company’s stock on February 12, 2010, and that will vest ratably over a four year period (i.e., 25% per year);
·  he was awarded 25,000 shares of restricted stock that will cliff vest three years from the date of his promotion (i.e., February 15, 2013); and
·  his target bonus potential under our 2010 Senior Executive Incentive Bonus Plan will be 70% of his base salary, which is an increase from 60% of his base salary under our 2009 Bonus Plan.
Retirement of Ernest Cruse.  On February 26, 2010, we entered into a Retirement Agreement with Mr. Cruse, Executive Vice President, Store Operations, which terminated his Employment Agreement dated January 30, 2002.  The approximate dollar value of the amount involved in the transaction is $566,900.  Mr. Cruse retired effective March 1, 2010.

Committee Actions in 2010 Concerning Named Executive Officer Compensation
CEO Fiscal 2009 Performance and Compensation
The Compensation Committee focuses much of its time on CEO and senior executive compensation to assure that it reflects operating and financial performance and demonstrates our awareness of shareholder sentiment. In Fiscal 2008, the Company faced one of the most challenging environments in its history.  As a result, no increases in base salaries and no bonuses were paid to our CEO or any of our other Named Executive Officers in Fiscal 2009.
The Board and Mr. Hall responded to the economic conditions in Fiscal 2009 by agreeing to a conservative business framework focusing on the following: fewer new store openings in Fiscal 2009, tight inventory levels, strong expense controls, protecting margin rates and aggressive promotional programs focused on our customer’s needs. This framework established a conservative business model for Fiscal 2009, which protected the Company’s long-term value and reputation. Under Mr. Hall’s leadership, management took actions and delivered the following results within this framework in Fiscal 2009:
·  successfully opened 27 new stores,
·  reduced total SG&A expenses by $12.7 million versus Fiscal 2008,
·  improved margin rate by 34 basis points over Fiscal 2008, and
·  achieved both Dollars and Rate EBITDA growth versus Fiscal 2008.
Additionally, during Fiscal 2009 management acquired the “Goody’s” trade name and also took important actions to hire and retain key leaders for the long term.
The Compensation Committee believes that Mr. Hall performed well in Fiscal 2009 by executing the Company’s business framework and by delivering a strong financial performance despite the depth and severity of the recession. Fiscal 2009 revenues were $1,431.9 million compared to $1,515.8 million in Fiscal 2008.  Fiscal 2009 earnings were $28.7 million compared $29.8 million (which excludes the impact of a non-cash goodwill impairment charge of $95.4 million) in Fiscal 2008.
As a result of Mr. Hall’s performance in Fiscal 2009,
·  his base salary, which was last increased in November 2008 when he was promoted to Chief Executive Officer, was increased from $750,000 to $800,000 effective April 1, 2010;
·  his threshold, target and maximum bonus percentages under the 2010 Senior Executive Bonus Incentive Plan were increased from the 2009 Bonus Plan (20%-80%-160% to 22.5%-90%-180%);
·  he was granted 25,000 Performance Shares and 100,000 Stock Appreciation Rights on March 26, 2010 at a grant price of $15.50; and
·  he earned and was paid a bonus of $408,000 under our 2009 Bonus Plan.
Other Named Executive Officers Fiscal 2009 Performance and Compensation
Edward Record.  As Chief Financial Officer during Fiscal 2009, Mr. Record’s responsibilities were to oversee the Company’s finance, information technology, internal audit, logistics, risk management and legal functions. He was instrumental in reducing Fiscal 2009 expenses by $12.7 million while operating 19 additional stores. He oversaw the Company’s purchase of the Goody’s trade name and increased free cash flow by $15 million, while reducing the Company’s net debt by $73 million versus Fiscal 2008.  Mr. Record oversaw the development and installation of the Company’s new POS platform a nd reduction of over $12 million in freight and distribution costs, both of which are components of Gross Margin. The Compensation Committee believes that Mr. Record performed well in Fiscal 2009. Upon being promoted to Chief Operating Officer on February 15, 2010, he was given added responsibilities for real estate and store construction. He possesses outstanding management capacity and leadership abilities, and has been instrumental in successfully navigating our Company through the current challenging economic environment. His financial acumen will add tremendous value to our real estate and store construction functions.

As a result of Mr. Record’s promotion and added responsibilities and his performance in Fiscal 2009,
·  his base salary was increased from $460,000 to $550,000 effective February 15, 2010;
·  his threshold, target and maximum bonus percentages under the 2010 Senior Executive Bonus Incentive Plan were increased from the 2009 Bonus Plan (16%-65%-130% to 17.5%-70%-140%);
·  he was granted 100,000 Stock Appreciation Rights and 25,000 Restricted Shares on February 15, 2010 at a grant price of $12.94;
·  he was granted 20,000 Performance Shares on March 26, 2010; and
·  he earned and was paid a bonus of $203,300 under our 2009 Bonus Plan.
Richard Maloney.  As Chief Operating Officer of the South Hill Division during Fiscal 2009, Mr. Maloney’s responsibilities were to oversee all of the merchandising, planning and allocation functions in addition to store operations of the South Hill Division. The Compensation Committee believes that Mr. Maloney is responsible for the improvement in both sales and margins in the South Hill Division during Fiscal 2009 and that overall he performed well.  Upon being promoted to Chief Merchandising Officer on February 15, 2010, he assumed responsibility for the merchandising, planning and allocation functions across the entire Company. He is a tremendously talented merchant and leader who has developed an in-depth understanding of our small town department store business model.
As a result of Mr. Maloney’s promotion and added responsibilities and his performance in Fiscal 2009,
·  his base salary was increased from $475,000 to $550,000 effective February 15, 2010;
·  his threshold, target and maximum bonus percentages under the 2010 Senior Executive Bonus Incentive Plan were increased from the 2009 Bonus Plan (15%-60%-120% to 17.5%-70%-140%);
·  he was granted 100,000 Stock Appreciation Rights and 25,000 Restricted Shares on February 15, 2010 at a grant price of $12.94;
·  he was granted 20,000 Performance Shares on March 26, 2010; and
·  he earned and was paid a bonus of $193,800 under our 2009 Bonus Plan.
Ernest Cruse.  After 44 years of dedicated service and invaluable contributions to our Company, Mr. Cruse retired effective March 1, 2010. During his long tenure at Stage, his many contributions have shaped the development, growth and success of our Company. He played a key role in our evolution and was instrumental in positioning us for future growth. The Compensation Committee believes that Mr. Cruse performed well in Fiscal 2009. Mr. Cruse earned and was paid a bonus of $127,500 under our 2009 Bonus Plan.
Ron Lucas. As Executive Vice President, Human Resources during Fiscal 2009, Mr. Lucas’ responsibilities were to oversee all recruitment, placement, training and development, benefits and compensation and associate relations for the entire Company.  He was instrumental in the hiring and retention of key business leaders and maintaining positive morale in Fiscal 2009 during a difficult business environment.  The Compensation Committee believes that Mr. Lucas performed well in Fiscal 2009.
As a result of Mr. Lucas’ performance in Fiscal 2009,
·  his base salary was increased from $345,000 to $357,100 effective April 1, 2010;
·  he was granted 6,000 Performance Shares and 18,000 Stock Appreciation Rights on March 26, 2010 at a grant price of $15.50; and
·  he earned and was paid a bonus of $117,300 under our 2009 Bonus Plan.
At their March 2010 meetings, the Compensation Committee and the Board took the following actions with respect to the compensation of the Company’s Named Executive Officers:

Base Salaries
Based on Mr. Hall’s performance during the 2009 fiscal year, in the case of Mr. Hall, and the input of Mr. Hall, in his capacity as our Chief Executive Officer, with respect to the individual performance of the other Named Executive Officers during the 2009 fiscal year, and with input from Hay Group with respect to market salary data of our Peer Group, the Committee and the Board approved the following base salaries for the Named Executive Officer will earn (and receive)Officers for fiscal 2010.  Unless otherwise indicated, base salaries were adjusted effective April 1, 2010.
 
 
Executive/Title
 
2009 Base
Salary
 
2010 Base
Salary
Base
Salary
Increase
Mr. Hall$750,000$800,0006.7%
Mr. Record (1)$460,000$550,00019.6%
Mr. Maloney (2)$475,000$550,00015.8%
Mr. Cruse (3)$375,000N/AN/A
Mr. Lucas$345,000$357,1003.5%

(1)Mr. Record was promoted to Chief Operating Officer of the Company on February 15, 2010, at which time his Base Salary was increased from $460,000 to $550,000 due to his increased duties and responsibilities.
(2)Mr. Maloney was promoted to Chief Merchandising Officer of the Company on February 15, 2010, at which time his Base Salary was increased from $475,000 to $550,000 due to his increased duties and responsibilities.
(3)  Mr. Cruse retired from the Company effective March 1, 2010.
Based on Hay Group’s analysis, it was determined that our based salaries are generally at or below the endmedian of the Performance Cycle if the Company’s results are in the middle (fiftieth percentile)our Peer Group.
2009 Bonus Plan Awards
As our 2009 Pre-Tax Earnings ($45,827,000) were 98% of the Performance Group.  On a sliding scale, the shares earned can vary as set forth inour 2009 Financial Plan ($46,700,000), the following table:bonuses were awarded on March 26, 2010 for performance under the 2009 Bonus Plan at 68% of Bonus Target Levels:
2009 Bonus Plan Awards
 
 
 
Executive
 
 
Bonus
Award
% of
2009
Base
Salary
Mr. Hall$408,000        54.4%
Mr. Record$203,300        44.2%
Mr. Maloney$193,800        40.8%
Mr. Cruse$127,500        34.0%
Mr. Lucas$117,300        34.0%
 
Percentile Ranking of Performance Group
 
Performance Shares Earned (1)
  100% 200%
   75% 150%
   50% 100%
   25%   25%
< 25%    0%
Long-Term Incentive Compensation Awards
            The following long-term equity incentive (“LTI”) awards were granted to the Named Executive Officers in consideration of their 2009 performance and as incentive for their future performance:
2010 LTI Awards
ExecutivePerformance Shares (1)Stock Appreciation Rights (2)
Mr. Hall25,000100,000
Mr. Record20,000(3)
Mr. Maloney20,000(3)
Mr. Lucas6,00018,000

 
(1)As a percentage of Target
The Performance Shares showncliff vest after a three-year measurement performance cycle (the “Performance Cycle”) which began on the first business day of the Company’s current fiscal year (January 31, 2010) and ends on the last business day of the Company’s 2012 fiscal year (February 2, 2013).  The number of Performance Shares earned will be based on the Company’s total shareholder return relative to the performance group of companies established by the Compensation Committee (the “Performance Group”). The number of shares reflected in the 2006 LTI Awards Table above.table above are the “Target Shares”, which means the number of shares of the Company’s common stock the Named Executive Officer will earn (and receive) at the end of the Performance Cycle if the Company’s results are in the middl e (fiftieth percentile) of the Performance Group.
(2)
The Stock Appreciation Rights (“SARs”) have a grant price of $15.50 (the closing price of the Company’s common stock on March 26, 2010) and vest ratably over a four year period (i.e. 25% per year).
(3)Upon their promotions on February 15, 2010, Messrs. Record and Maloney were each awarded (i) 100,000 SARs that have a grant price of $12.94, the closing price of the Company’s stock on February 12, 2010, and that will vest ratably over a four year period (i.e., 25% per year), and (ii) 25,000 shares of Restricted Stock that will cliff vest three years from the date of their promotion (i.e., February 15, 2013).
 
ContinuationReassessment of Medical CoveragePerquisites
We provide our Named Executive Officers with several perquisites, including automobile allowances, estate planning allowances and cell phone allowances, as reflected in the All Other Compensation column in the 2009 Summary Compensation Table on page 36 and in the 2009 All Other Compensation Table on page 37 of this Proxy Statement.  These perquisites have historically been offered as a means of providing additional compensation to the Named Executive Officers through the availability of benefits that provide convenience in light of the extraordinary demands on our executive officers’ time.  At their March 2010 meetings, the Committee and the Board reviewed our policies with respect to perquisites to consider whether the perquisites should be maintained and whether, and to what extent, it may be appropriate for Seniorus to discontinue particular perquisites or to require repayment of the cost of perquisites.  The Committee and the Board believe that the perquisites we currently provide our Named Executive Officers are reasonable, competitive and consistent with our overall executive compensation program.
 
During its December, 2006 meetingExecutive Officer Employment Agreements
We expect to enter into updated Employment Agreements with Messrs. Hall, Record, Maloney and based uponLucas in 2010. The new Employment Agreements will replace existing Employment Agreements with those executive officers.  They are being implemented for the recommendationfollowing primary reasons: (i) for compliance with Section 409A of the Committee,Internal Revenue Code, including the Board determined that a memberreplacement of the Company’s management who is 56 years old or olderformer Change in Control definition with the Section 409A Change in Control definition and has served at the level of Executive Vice President or higher should be allowed to continue medical coverage for himself or herself, and his or her eligible dependentsdefining disability as set forth in the Company’s regular medical plan until he or she reachesstatute, and (ii) for title, base salary and other updating as needed.  The current Employment Agreements have been filed with the age of eligibilitySEC and are listed as Exhibits to our Annual Report on Form 10-K for Medicare coverage (currently age 65) provided that (i) he or she must have six or more years continuous service atFiscal 2009.   They can be reviewed on the Company, (ii) he or she must continue to be available to the Company, (iii) he or she must pay the regular employee rate in effect for such coverage at that time, and (iv) this medical coverage must comply with applicable IRS rules and ERISA guidelines.SEC’s EDGAR
 
 
Committee Actionsdatabase.  Conformed copies of any new Employment Agreements will be filed as Exhibits to our Quarterly Report on Form 10-Q for the quarter in 2007 Concerning Named Executive Officer Compensationwhich they are signed and thereby become effective.
 
For the reasons set forth in footnote (1) to the table on page 24 of this Proxy Statement and at the recommendation of the Committee, the Pre-Tax Earnings amounts for the 2006 Senior Executive Bonus Plan were adjusted by the Board on March 28, 2007.
Tax, Accounting and Other Implications
 
Deductibility of Executive Compensation
 
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a $1 million limit on the amount that a public company may deduct for compensation paid to a company’s chief executive officer or any of the company’s fourthree other most highly compensated executive officers (other than the CEO) who are employed as of the end of the year. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance-based” compensation (i.e., compensation paid only if the individual’s performance meets pre-established objective goals based on performance criteria approved by the shareholders.)  The Committee’s policy is to design compensation programsprogra ms that further theour best interests and those of the Company and itsour shareholders and that preserve the tax deductibility of compensation expenses.
Incentive bonuses paid to executive officers under theour Senior Executive Incentive Bonus Incentive Plan and awards granted under the Amendedour 2001 Plan and Restated 2001 Equity Incentiveour 2008 Plan are designed to qualify as performance-based compensation.  The Committee also believes, however, that it must maintain the flexibility to take actions whichthat it deems to be in theour best interests of the Company but which may not qualify for tax deductibility under Section 162(m).  In this regard, if the amount of base salary for any of our executive officers exceeds $1 million, which is not anticipated to be the case, any amounts over $1 million will not be deductible for federal income tax purposes.
 
As required under the tax rules, the Company must obtain shareholder approval of the material terms of the performance goals for qualifying performance-based compensation every five years.  We last requested and received shareholder approval in 2004.2008. Therefore, we are not seeking shareholder approval at the 2010 Annual Meeting.
 
Accounting for Stock-Based CompensationCommittee Considerations
 
Beginning in the first quarter of 2006, we began accounting for stock-based payments made under our Amended and Restated 2001 Equity Incentive Plan in accordance with the requirements of FAS 123(R).
Committee Considerations
The Committee considered (i) the impact of the $1 million limit on the deductibility of non-performance based compensation imposed by Code Section 162(m), (ii) the accounting treatment of various types of equity-based compensation under Financial Accounting Standard FAS 123(R),Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, and (iii) the non-deductibility of excess parachute tax payments under Code Section 280G (and the related excise tax imposed on covered employees under Code Section 4999 as described on page 39 in “Potential Payments on Termination and Change in Control - Gross-Up Payments”)4999) in its design of executive compensation programs.  In addition, the Committee considered other tax and accounting provisions in developing the compensation programs for our Named Executive Officers.   These included the special rules applicable to non-qualified deferred compensation arrangements under Code Section 409A as well as the overall income tax rules applicable to various forms of compensation.  While the Committee strovestrives to compensate our Named Executive Officers in a manner that producedproduces favorable tax and accounting treatment, its main objective wasis to develop fair and equitable compensation arrangements that appropriately motivate, reward and retain those executives.
Compensation for Independent Directors in 2006
 
The compensation of our Independent Directors is set by the Board at the recommendation of the Corporate Governance and NominatingCompensation Committee (the “CGNC”). In developing its recommendations, the CGNC, is guided by the following objectives: compensation should fairly pay Independent Directors for work required in a company our size and compensation should align the Independent Directors’ interests with the long-term interest of shareholders.  Hay Group prepares competitive compensation analyses regarding both the Peer Group and the broader market and advises the CGNC on the level and design of compensation programs for the Independent Directors.  The Chairman of the CGNC works directly with Hay Group to determine the scope of the work needed to assist the CGNC in its decision making processes.  The compensation of our Independent Directors is described in the Director Compensation Table on page 41.Report

26
 
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with the Company’sour management.  Based on that review and discussions,discussion, the Compensation Committee recommended to theour Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for 2009 and in this Proxy Statement.
 
This Compensation Committee Report is provided by the following Independent Directors, who constitute all of the members of the Compensation Committee:
 
Michael L. Glazer (Chairman)
John T. Mentzer
Margaret T. MonacoWilliam J. Montgoris
Sharon B. Mosse
Cheryl Nido Turpin

2009 SUMMARY COMPENSATION TABLE
 
The following table summarizes the compensation of our ChiefNamed Executive Officers for our three fiscal years ended February 2, 2008 (“Fiscal 2007”), January 31, 2009 (“Fiscal 2008”) and January 30, 2010 (“Fiscal 2009”), with the exception of Messrs. Cruse and Lucas, who were not Named Executive Officers in Fiscal 2007 and Mr. Maloney, who was not a Named Executive Officer our Chief Financial Officer,in Fiscal 2007 and our three other most highly compensated executive officers (collectively, the “Named Executive Officers”) for our fiscal year ended February 3, 2007.Fiscal 2008.
 
 
Named and Principal Position
  
Fiscal Year
  
Salary ($)
  
Bonus ($) (1)
 
Stock Awards ($) (2)
  
Option Awards ($) (3)
  
Non-Equity Incentive Plan Compensation ($) (4)
  
Change in Pension Value and Nonqualified Deferred Compensation Earnings
  
 All Other Compensation ($) (5)
  
Total ($)
                   
James R. Scarborough
2006   1,000,000         -   367,865   252,556            733,500           543,216            220,696 3,117,833
     Chairman,                  
     Chief Executive Officer                
                   
Andrew T. Hall
 2006      507,692         -   270,318   234,056            291,363             10,725              73,988 1,388,142
     President and                  
     Chief Operating Officer                
                   
Michael E. McCreery
 2006      457,115         -     93,936     70,894            243,685           138,817            110,611 1,115,058
     Executive Vice President and              
     Chief Financial Officer                
                   
Dennis E. Abramczyk
 2006      419,039         -     67,550     52,327            105,135           226,196            150,173 1,020,420
     Executive Vice President,               
     Chief Operating Officer of              
     Peebles Division                  
                   
Cynthia S. Murray
 2006      420,962         -   185,518   227,400            207,825             21,771              89,942 1,153,418
     Executive Vice President,               
     Chief Merchandising Officer of              
     Stage Division                  
Named and Principal Position Fiscal Year    
Bonus
($) (1)
 
 Stock
Awards
($) (2)
 
Option
Awards
($) (3)
 
Non-Equity Incentive Plan Compensation
($) (4)
 Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) 
 All Other Compensation
($) (5)
 
Total
($) (6)
Salary ($)     
                    
Andrew T. Hall 2009  750,000   -  381,900  402,000  408,000  34,176  119,744  2,095,820
     President and 2008  675,000  (7) -  849,880  656,740  -  (70,936)  101,642  2,212,326
     Chief Executive Officer 2007  634,615   79,625  529,740  352,000  -  13,279  118,358  1,727,617
                    
Edward J. Record 2009  460,000   -  190,950  180,900  203,300  85,191  182,570  1,302,911
     Chief Operating Officer and 2008  460,000   -  367,950  229,050  -  (66,905)  163,078  1,153,173
     Chief Financial Officer 2007  386,154   52,325  598,800  614,000  -  (2,154)  119,599  1,768,724
                    
Richard A. Maloney 2009  475,000   -  190,950  180,900  193,800  53  156,276  1,196,979
     Chief Merchandising Officer                  
                    
Ernest R. Cruse 2009  375,000   -  127,300  120,600  127,500  221,872  63,496  1,035,768
     Executive Vice President, 2008  375,000   -  245,300  152,700  -  (219,830)  67,081  620,251
     Store Operations                   
                    
Ron D. Lucas 2009  345,000   -  76,380  72,360  117,300  489,208  66,239  1,166,487
     Executive Vice President, 2008  345,000   -  147,180  91,620  -  (535,046)  64,503  113,257
     Human Resources                   

 
(1)Amounts to be reflectedThe amounts shown in this column are guaranteed or discretionary cash bonuses.bonuses awarded for performance in the fiscal year indicated, but paid during the subsequent fiscal year.
 
(2)The amounts shown in this column reflect the dollar amount recognized for financial statement reporting purposesgrant date fair value for performance stock and restricted stock for the Named Executive Officers with respect to the fiscal year in accordance with SFAS 123 (R) and include amounts from awards granted in and prior to fiscal 2006.FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 108 to the Company’sour audited consolidated financial statements for fiscal 2006Fiscal 2009 included in the Company’sour Annual Report on Form 10-K.10-K for that fiscal year.  The 2007 and 2008 award values were recalculated from amounts shown in prior Proxy Statements to reflect their grant date fair values as required by SEC rules effective February 28, 2010. As a result, the amounts in the “Total ($)” column for 2007 and 2008 have also been recalculated from the amounts shown in prior Proxy Statements. Further information regarding the 2009 awards is included in the “2009 Plan-Based Awards” and “2009 Outstanding Awards at Fiscal Year-End” tables later in this Proxy Statement. The grant date fair value of the performance-based awards reflected in this column (the Performance Shares) is the Target payout based on the probable outcome of the performance criteria, determined as of the grant date.  The maximum potential values would be 200% of Target and would be as follows:  Mr. Hall ($763,800), Mr. Record ($381,900), Mr. Maloney ($381,900) and Mr. Lucas ($152,760).  As Mr. Cruse retired effective March 1, 2010, he will not be eligible to receive any payout of Performance Shares issued to him in 2008 or 2009.
 
(3)The amounts shown in this column reflect the dollar amount recognized for financial statement reporting purposesgrant date fair value for stock options and SARs for the NameNamed Executive Officers with respect to the fiscal year in accordance with SFAS 123 (R) and include amounts from awards granted in and prior to fiscal 2006.FASB ASC Topic 718.  Assumptions used in the calculation of these amounts are included in Note 108 to the Company’sour audited consolidated financial statements for fiscal 2006Fiscal 2009 included in the Company’sour Annual Report on Form 10-K.10-K for that year. The 2007 and 2008 award values were recalculated from amounts shown in prior Proxy Statements to reflect their grant date fair values as required by SEC rules effective February 28, 2010. As a result the amounts in the “Total ($)” column for 2007 and 2008 have also been recalculated from the amounts shown in prior Proxy Statements. Further information regarding the 2009 awards is included in the “2009 Plan-Based Awards” and “2009 Outstanding Awards at Fiscal Year-End” tables l ater in this Proxy Statement.
 
(4)
Salary and Non-Equity Incentive Plan Compensation (performance based cash bonus) amounts include any amounts deferred under the Executive Deferred Compensation Plan. Amounts reflect performance based bonuses earned during the fiscal year covered (and paid during the subsequent fiscal year). under the applicable Senior Executive Incentive Bonus Plan.
 
(5)All other compensation includes deferred compensation matching contributions, auto allowances, estate planning allowances, insurance premiums and other compensation, as set forth in the 2009 All Other Compensation Table below.
(6)    Since as described in footnotes (2) and (3) the 2007 and 2008 award values for performance stock, restricted stock, stock options and SARs were recalculated from the amounts shown in prior Proxy Statements to reflect their grant date fair values as required by SEC rules effective February 28, 2010, the amounts shown in this column for 2007 and 2008 were likewise recalculated from amounts shown in prior Proxy Statements.
 
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(7)    On November 3, 2008 and as part of our succession plan, Mr. Hall was promoted to Chief Executive Officer and his title became President and Chief Executive Officer.  In connection with his promotion, Mr. Hall’s base salary was increased from $650,000 to $750,000.
 
2009 ALL OTHEROTHER COMPENSATION TABLE
 
The following table provides information concerning the compensation of our Named Executive Officers found in the “All Other Compensation” column of the 2009 Summary Compensation Table on page 27.36.
Name Fiscal Year 
Deferred Compensation Matching Contributions
($)
  Auto Allowances ($) 
Estate Planning Allowances
($)
 
Life Insurance Premiums
($)
 
Health Insurance Premiums
($)
 
Relocation
Expense
Reimburse-ments
($)
 
Tax Reimburse-ments
($)
 
Cell
Phone
Allowances
($)
 
Total
($)
                     
Andrew T. Hall 2009  93,236  12,000  2,003  2,070  8,875  -  -  1,560  119,744
  2008  77,654  12,000  -  2,070  8,358  -  -  1,560  101,642
  2007  94,755  12,000  -  2,028  8,015  -  -  1,560  118,358
                     
Edward J. Record 2009  48,244  12,000  1,338  1,041  8,875  69,595  39,917  1,560  182,570
  2008  53,424  12,000  2,006  1,036  8,358  53,823  30,871  1,560  163,078
  2007  40,049  8,769  -  506  4,430  44,653  20,052  1,140  119,599
                     
Richard A. Maloney 2009  52,032  12,000  3,742  7,107  6,755  43,743  29,337  1,560  156,276
                     
Ernest R. Cruse 2009  39,879  12,000  780  3,602  6,755  -  -  480  63,496
  2008  42,774  12,000  771  3,612  6,364  -  -  1,560  67,081
                     
                     
Ron D. Lucas 2009  38,758  12,000  2,112  5,054  6,755  -  -  1,560  66,239
  2008  39,511  12,000  -  5,068  6,364  -  -  1,560  64,503
 
 
Name
  
Deferred Compensation Matching Contributions
($)
 
 Auto Allowances ($)
  
Estate Planning Allowances
($)
  
Life Insurance Premiums
($)
  
Health Insurance Premiums
($)
  
Tax Reimburse-ments($)
  
Other ($)
  
Total($)
James R. Scarborough               182,994          12,000            9,526          4,902          5,810             5,464               -   220,696
                 
                 
Andrew T. Hall                  54,764          11,077                    -          1,236          5,471                    -        1,440  (1)    73,988
                 
                 
Michael E. McCreery                 79,305          12,000            4,766          4,436          5,810             2,734        1,560  (1)  110,611
                 
                 
Dennis E. Abramczyk                 62,673          12,000                    -          3,840          5,810           26,433 (1)     39,417  (1)  150,173
                 
                 
Cynthia S. Murray                  65,407          12,000            3,178          1,396          5,810             2,151               -     89,942
37
 
(1)The amounts shown in the Tax Reimbursement and Other columns for Mr. Abramczyk are for moving expenses.The amounts shown for Messrs. Hall and McCreery are cell phone allowances.  The other Named ExecutiveOfficers have company cell phones, but Messrs. Hall and McCreery chose to use their own cell phone and receive the allowance.
GRANTS2009 GRANTS OF PLAN-BASED AWARDS TABLE
 
The following table provides information concerning each grant of an award made to a Named Executive Officer in our last completed fiscal yearFiscal 2009 under any plan. The amounts reflect the effects of a three-for-two split of outstanding common stock on January 31, 2007, which applies as well to awards granted under the Company’s Amended and Restated 2001 Equity Incentive Plan.  Definitions of Performance Shares, Restricted Stock and SARs as used in the footnotes to this table are found in the CD&A beginning on page 1917 of this Proxy Statement.
 
28
   Estimated Future Payouts Under Non-Equity Incentive Plan Awards Estimated Future Payouts Under Equity Incentive Plan Awards (1) All Other Stock Awards: Number of Shares of Stock or Units  (#) All Other Options Awards: Number of Securities Underlying Options  (#) (2) Exercise or Base Price of Option Awards ($/Sh) Grant Date Fair Value of Stock and Option Awards ($)
Name  Grant Date
Threshold  
($)
Target  
($)
Maximum
($)
 
Threshold 
(#)
Target  
(#)
Maximum
(#)
    
                  
Andrew T. Hall 3/27/2009 - - -  7,500 30,000 60,000  -  -  -  -
  3/27/2009 - - -  - - -  -  100,000  9.77  402,000
                  
Edward J. Record 3/27/2009 - - -  3,750 15,000 30,000  -  -  -  -
  3/27/2009 - - -  - - -  -  45,000  9.77  180,900
                  
Richard A. Maloney 3/27/2009 - - -  3,750 15,000 30,000  -  -  -  -
  3/27/2009 - - -  - - -  -  45,000  9.77  180,900
                  
Ernest R. Cruse 3/27/2009 - - -  2,500 10,000 20,000  -  -  -  -
  3/27/2009 - - -  - - -  -  30,000  9.77  120,600
                  
Ron D. Lucas 3/27/2009 - - -  1,500 6,000 12,000  -  -  -  -
  3/27/2009 - - -  - - -  -  18,000  9.77  72,360
 
   
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
  
Estimated Future Payouts Under Equity Incentive Plan Awards (1)  
        
 
Name
  Grant Date 
Threshold  ($)
 
Target  ($)
 
Maximum ($)
  
Threshold  (#)
 
Target  (#)
 
Maximum (#)
  
All Other Stock Awards: Number of Shares of Stock or Units  (#)
  
All Other Options Awards: Number of Securities Underlying Options  (#)(3)
  
Exercise or Base Price of Option Awards ($/Sh)
  
Grant Date Fair Value of Stock and Option Awards ($/Sh)
                  
James R. Scarborough3/17/2006                 -          -                -          7,313 29,250      58,500                  -                   -              -                  -
  3/17/2006                 -          -                -                 -           -                -                  -         83,250       19.18 6.73
                  
Andrew T. Hall 2/20/2006                 -          -                -                 -           -                -        45,000(2)                  -            -          18.74
  2/20/2006                    -           -                -                  -       150,000       18.74 6.57
                  
Michael E. McCreery3/17/2006                 -          -                -          2,250   9,000      18,000                  -      
  3/17/2006                 -          -                -                 -           -                -                  -         25,500       19.18 6.73
                  
Dennis E. Abramczyk3/17/2006                 -          -                -          1,875   7,500      15,000                  -      
  3/17/2006                 -          -                -                 -           -                -                  -         22,500       19.18 6.73
                  
Cynthia S. Murray3/17/2006                 -          -                -          1,875   7,500      15,000                  -      
  3/17/2006                 -          -                -                 -           -                -                  -         22,500       19.18 6.73
  ______________________________________________

 
(1)These columns reflect Performance Shares that vest over time in an amount depending on performance criteria.  The Performance Shares will vest after a three-year Performance Cycle based on the Company’s total shareholder return relative to the Performance Group, as described in the CD&A.
 
·
The “Threshold” number of shares refers to the lowest number of shares of our common stock the Named Executive Officer can earn (and receive) at the end of the Performance Cycle if the results are at the twenty-fifth percentile of the Performance Group.  Performance results below the 25thtwenty-fifth percentile at the end of the performance cycle will result in the executives earning no shares under this equity grant.
 
·The “Target” number of shares refers to the number of shares of our common stock the Named Executive Officer can earn (and receive) at the end of the Performance Cycle if the results are at the fiftieth percentile of the Performance Group.
 
·The “Maximum” number of shares refers to the number of shares of our common stock the Named Executive Officer can earn (and receive) at the end of the Performance Cycle if the results are at the one hundredth percentile of the Performance Group, which is twice the Target number of shares.
 
(2)Reflects grant of 30,000 (45,000 post split) shares of Restricted Stock with 3-year step vesting (i.e., 33% per year).
(3)(2)This column reflects stock appreciation rights (“SARs”).SARs.  The SARs vest ratably over a four-year period (i.e., 25% per year).
 
Employment Agreements
 
The Company has written Employment Agreements (the “Agreements”) with James Scarborough, Andrew Hall, Michael McCreery, Dennis AbramczykEdward Record, Richard Maloney and Cynthia MurrayRonald Lucas and had a written Employment Agreement with Ernest Cruse prior to his retirement on March 1, 2010 (individually an “Executive” and collectively, the “Named Executive Officers”). Under the terms of the respective Agreements, Mr. Scarborough is employed as Chairman of the Board and Chief Executive Officer; Mr. Hall is employed as President and Chief OperatingExecutive Officer; Mr. McCreeryRecord is employed as Chief Operating Officer and Chief Financial Officer; Mr. Maloney is employed as Chief Merchandising Officer; and Mr. Lucas is employed as Executive Vice President, and Chief Financial Officer; Mr. Abramczyk is employed as Executive Vice President and Chief Operating Officer of the Peebles Division; and Ms. Murray is employed as Executive Vice President and Chief Merchandising Officer of the Stage Division.Human Resources. The Agreements provide for a Base Salary as well as Incentive Compensation based upon the Company’s operating results for the applicable fiscal year and any extraordinary, unusual or non-recurring items realized or incurred by the Company during the applicable fiscal year deemed appropriate by the Board.  annual incentive (bonus) compensation. & #160;The Agreements also provide for perquisites such as an automobile allowance and a financial planning allowance and the Executive’s’Executive’s participation in all other bonus and benefit plans available to executive officers of the Company.  Other than Mr. Hall and Ms. Murray, the Employment Agreements of these Executives are included as exhibits to the Company’s 2001 and 2002 Annual Reports on Form 10-K.  Mr. Hall’s Employment Agreement is attached as an exhibit to the Company’s Current Report on Form 8-K as filed on February 15, 2006.  Ms. Murray’s Employment Agreement is attached as an exhibit to the Company’s Quarterly Report on Form 10-Q as filed August 30, 2004. Other provisionsProvisions of the Agreements related to termination and Change in Control are discussed in “Potential Payments on Termination or Change-In-Control”.Change In Control” beginning on page 44 of this Proxy Statement.

 
OUTSTANDING2009 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

The following table provides information, on an award by award basis, concerning unexercised options, stock that has not vested, and equity incentive plan awards for each Named Executive Officer outstanding as of the end of our last completed fiscal year (February 3, 2007).  The amounts reflect the effects of a three-for-two split of the outstanding common stock on January 31, 2007, which applies as well to awards granted under the Company’s Amended and Restated 2001 Equity Incentive Plan.Fiscal 2009.   Market value is computed using the closing market price of our common stock on February 2, 2007,January 29, 2010, the last trading day prior to the end of our last completed fiscal year ($22.26)12.92).
   
  Options/SARs Awards Stock Awards
Name Number of Securities Underlying Unexercised Options/SARs  Exercisable (#) 
Number of Securities Underlying Unexercised Options/SARs Unexercisable (#) (1)
 Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options /SARs(#) Option/ SARs Exercise Price ($/sh) Option/ SARs Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) (2) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plans Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) (3) Equity Incentive Plans Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)
                   
Andrew T. Hall  112,500  37,500  -  18.74 2/20/2013  -  -  -  -
   25,000  25,000  -  22.96 3/28/2014  -  -  -  -
   21,500  64,500  -  15.87 3/28/2015  -  -  -  -
   25,000  75,000  -  7.07 11/3/2015  -  -  -  -
   -  100,000  -  9.77 3/27/2016  -  -  -  -
   -  -  -  -  -  30,000  387,600  56,000  723,520
                   
Edward J. Record  50,000  50,000  -  19.96 5/14/2017  -  -  -  -
   11,250  33,750  -  15.87 3/28/2015  -  -  -  -
   -  45,000  -  9.77 3/27/2016  -  -  -  -
   -  -  -  -  -  10,000  129,200  30,000  387,600
                   
Richard A. Maloney  25,000  75,000  -  11.03 10/6/2015  -  -  -  -
   -  45,000  -  9.77 3/27/2016  -  -  -  -
   -  -  -  -  -  30,000  387,600  15,000  193,800
                   
Ernest R. Cruse (4)  10,926  -  -  17.01 3/30/2012  -  -  -  -
   16,875  5,625  -  19.18 3/17/2013  -  -  -  -
   11,250  11,250  -  22.96 3/28/2014  -  -  -  -
   7,500  22,500  -  15.87 3/28/2015  -  -  -  -
   -  30,000  -  9.77 3/27/2016  -  -  -  -
   -  -  -  -  -  -  -  20,000  258,400
                   
Ron D. Lucas  28,125  -  -  6.11 8/24/2011  -  -  -  -
   9,375  -  -  6.67 8/24/2011  -  -  -  -
   112,500  -  -  7.22 8/24/2011  -  -  -  -
   10,264  -  -  17.01 3/30/2012  -  -  -  -
   9,000  3,000  -  19.18 3/17/2013  -  -  -  -
   6,000  6,000  -  22.96 3/28/2014  -  -  -  -
   4,500  13,500  -  15.87 3/28/2015  -  -  -  -
   -  18,000  -  9.77 3/27/2016  -  -  -  -
   -  -  -  -  -  -  -  12,000  155,040
  
Options/SARs Awards    
 
Stock Awards    
 
Name
  
Number of Securities Underlying Unexercised Options/SARs  Exercisable (#)
  
Number of Securities Underlying Unexercised Options/SARs Unexercisable (#) (1)
 
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options /SARs(#)
 
Option/ SARs Exercise Price ($)
  
Option/ SARs Expiration Date
  
Number of Shares or Units of Stock That Have Not Vested (#) (2)
 
  Market Value of Shares or Units of Stock That Have Not Vested ($)
  
Equity Incentive Plans Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) (3)
 
Equity Incentive Plans Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)
                   
James R. Scarborough              618,748                         -                         - 6.67 8/24/2011                      -                    -                54,023          1,202,552
                881,250                         -                       - 7.22 8/24/2011                      -                    -                         -                        -
                           -               70,912                         - 17.01 3/30/2012                      -                    -                         -                        -
                           -               83,250                         - 19.18 3/17/2013                      -                    -                         -                        -
                   
Andrew T. Hall                         -             150,000                         -        18.74 2/20/2013            30,000          667,800                         -                        -
                   
Michael E. McCreery                32,467                         -                         - 6.11 8/24/2011                      -                    -                15,350             341,691
                  54,973                         -                         - 6.67 8/24/2011                      -                    -                       -                        -
                  54,967                         -                         - 7.22 8/24/2011                      -                    -                       -                        -
                           -               18,175                         - 17.01 3/30/2012                      -                    -                       -                        -
                           -               25,500                         - 19.18 3/17/2013                      -                    -                       -                        -
                   
Dennis E. Abramczyk                28,125                         -                         - 6.67 8/24/2011                      -                    -                11,143             248,043
                  28,125                         -                         - 7.22 8/24/2011                      -                    -                         -                        -
                           -               10,428                         - 17.01 3/30/2012                      -                    -                         -                        -
                           -               22,500                         - 19.18 3/17/2013                      -                    -                         -                        -
                   
Cynthia S. Murray                50,625               67,500                         - 15.79 8/2/2014            22,500          500,850                11,838             263,514
                           -               12,415                         - 17.01 3/30/2012                    -                    -                         -                        -
                           -               22,500                         - 19.18 3/17/2013                    -                    -                         -                        -
 __________________________________________

 
(1) Most of theAll stock options the Company has awarded its Named Executive Officers vest at the rate of 25% per year over the first four years following the date of grant and some stock options vest at the end of three years following the date of grant.  SARs have a seven-year term and vest one-fourth (25%) on each of the first, second, third and fourth anniversaries of the date of the grant.vested.  The future vesting dates of the stock options and SARs are as follows:
 
30
NameType of Award
NameNumber of
Options/
SARs (#)
 
Type of AwardVesting
Number of Options/ SARs (#)Date
Vesting Date
James R. ScarboroughStock options      70,9123/30/2008
SARs      20,8133/17/2007
SARs      20,8133/17/2008
SARs      20,8123/17/2009
SARs      20,8123/17/2010
       
Andrew T. Hall SARs  37,500 2/20/20072010
  SARs  37,50025,000 2/20/20083/27/2010
  SARs  37,50034,000 2/20/20093/28/2010
  SARs  37,50025,000 2/20/11/3/2010
SARs 25,0003/27/2011
SARs 34,0003/28/2011
SARs 25,00011/3/2011
SARs 25,0003/27/2012
SARs 21,5003/28/2012
SARs 25,00011/3/2012
SARs 25,0003/27/2013
       
Michael E. McCreeryEdward J. Record Stock optionsSARs  18,17511,250 3/30/200827/2010
  SARs  6,37511,250 3/17/200728/2010
  SARs  6,37525,000 3/17/20085/14/2010
  SARs  6,37511,250 3/17/200927/2011
  SARs  6,37511,250 3/17/201028/2011
SARs 25,0005/14/2011
SARs 11,2503/27/2012
SARs 11,2503/28/2012
SARs 11,2503/27/2013
       
Dennis E. AbramczykRichard A. Maloney Stock optionsSARs  70,91211,250 3/30/200827/2010
  SARs  5,62525,000 3/17/200710/6/2010
  SARs  5,62511,250 3/17/200827/2011
  SARs  5,62525,00010/6/2011
SARs 11,250 3/17/200927/2012
 SARs 25,00010/6/2012
SARs 11,2503/27/2013
Ernest R. Cruse SARs  5,625 3/17/2010
  SARs 7,5003/27/2010
SARs 13,1253/28/2010
SARs 7,5003/27/2011
SARs 13,1253/28/2011
SARs 7,5003/27/2012
SARs 7,5003/28/2012
SARs 7,5003/27/2013
     
Cynthia S. MurrayRon D. Lucas Stock optionsSARs  33,7503,000 8/2/2007
Stock options      22,7508/2/20083/17/2010
  SARs  12,4154,500 3/30/200827/2010
  SARs  5,6257,500 3/17/200728/2010
  SARs  5,6254,500 3/17/200827/2011
  SARs  5,6257,500 3/17/200928/2011
  SARs  5,6254,500 3/17/201027/2012
SARs 4,5003/28/2012
SARs 4,5003/27/2013

(2)Reflects Restricted Stock whichthat vests 15,00030,000 shares on December 31, 2007 and 15,000 shares on December 31, 2008,November 3, 2011, in the case of Mr. Hall, and 22,50010,000 shares that vest on August 2, 2007,May 14, 2010, in the case of Ms. Murray.Mr. Record and 30,000 shares that vest on October 6, 2011 in the case of Mr. Maloney.

 
(3)Reflects Target amount of Performance Shares, which cliff vest after a three-year Performance Cycle based on the Company’sour total shareholder return relative to the Performance Group, as described in the CD&A.  The vesting dates of these Performance Shares are as follows:

Name
NameNumber of
Performance
Shares (#)
 
Number of Performance Shares (#)Vesting
Vesting Date
     
James R. ScarboroughAndrew T. Hall  24,77326,000 2/2/20081/29/2011
   29,25030,000 1/31/200928/2012
     
Michael E. McCreeryEdward J. Record  6,35015,000 2/2/20081/29/2011
   9,00015,000 1/31/200928/2012
     
Dennis E. AbramczykRichard A. Maloney  3,6432/2/2008
            7,50015,000 1/31/200928/2012
     
Cynthia S. MurrayErnest R. Cruse  4,33810,000 2/2/20081/29/2011
   7,50010,000 1/31/200928/2012
Ron D. Lucas 6,0001/29/2011
 6,0001/28/2012

31
(4)Vesting and expiration dates shown in this and the following tables for Mr. Cruse’s outstanding equity awards as of fiscal year-end reflect the dates effective at fiscal year-end.  By virtue of his Retirement Agreement dated March 1, 2010, all of his outstanding equity awards have been canceled in exchange for cash payments.
 
OPTION2009 OPTION EXERCISES AND STOCK VESTED TABLE
 
The following table provides information concerning each exercise of stock options, stock appreciation rights and similar instruments, and each vesting of stock, including restricted stock, restricted stock units and similar instruments, during our last completed fiscal yearFiscal 2009 for each of our Named Executive Officers on an aggregated basis.
 
  
Options Awards
  
Stock Awards 
 
 
Name
 
Number of Shares Acquired on Exercise (#)
  
Value Realized on Exercise ($)
  
Number of Shares Acquired on Vesting (#)
     
Value Realized on Vesting ($) (3)
 
                
James R. Scarborough  500,000   10,873,370   15,910   (1)  368,317 
                     
Andrew T. Hall  -   -   10,000   (2)  305,000 
                     
Michael E. McCreery  65,000   1,461,534   1,945   (1)  45,027 
                     
Dennis E. Abramczyk  -   -   1,256   (1)  29,076 
                     
Cynthia S. Murray  11,250   115,988   -       - 
  Options Awards Stock Awards
Name 
Number of
Shares Acquired
on Exercise (#)
 
Value
Realized on
Exercise ($)
 
Number of
Shares
Acquired on
Vesting (#)
 
Value Realized
on Vesting
($) (1)
         
Andrew T. Hall  -  -  -  -
         
Edward J. Record  -  -  10,000 (2) 109,300
         
Richard A. Maloney  -  -  -  -
         
Ernest R. Cruse  -  -  8,340 (3) 82,483
         
Ron D. Lucas  -  -  5,004 (3) 49,490

 
(1)Reflects Performance Shares granted in 2004 and awarded as common stock on March 28, 2007 as a result of the completion of a three year Performance Cycle that began on the first business day of the 2004 fiscal year (February 2, 2004) and ended on the last day of the 2006 fiscal year (February 3, 2007).  These reflect the effect of a three-for-two split of outstanding common stock on January 31, 2007, which applies as well to awards granted under the Company’s Amended and Restated 2001 Equity Incentive Plan.
(2)Reflects restricted stock vested during fiscal 2006.
(3)Based on the average of the high and low market price of the Company’sour common stock on the date of issuance.
(2)Reflects restricted stock vested during Fiscal 2009.
(3)Reflects shares earned on the 2006 Performance Shares.


2009 PENSION BENEFITS TABLE
The following table provides information on the pension benefits for our Named Executive Officers who are participants under a defined benefit plan sponsored by the Company (the “Stage Plan”), which was closed to new participants and was frozen effective June 30, 1998.  
Name
 
 
Plan Name
 
Number of Years
Credited Service (1)
Present Value of
Accumulated
Benefit (2)
Payments During
Last Fiscal Year
Mr. CruseStage Plan33$288,351-
Mr. LucasStage Plan14$83,018-
_________________________
(1) 
Reflects the number of years of service credited to the Named Executive Officer under the Stage Plan, computed as of January 30, 2010, which is the same pension plan measurement date used for financial statement reporting purposes with respect to the Company’s audited financial statements for Fiscal 2009. The Company does not have a policy for granting extra pension service.
(2)
The accumulated benefit is based upon a percentage of the participant's earnings (salary and bonus) during each year of credited service through the date the plan was frozen (June 30, 1998).  Any service after June 30, 1998 will continue to count toward vesting and eligibility for normal and early retirement for existing participants.  Both Messrs. Cruse and Lucas are eligible for early retirement benefits as they both meet the guidelines for early retirement which are at least age 55 and 10 years of vesting service.  If a pension plan participant elects an early retirement benefit, that benefit is calculated by taking the normal retirement benefit (single life annuity payable at age 65) and reducing it by 6% for each year prior to age 65 for the participant’s current age.  The measurement date used to determine pension benefit obligations was January 30, 2010.  The present value has been calculated assuming the named executive will remain in service until age 65, the age at which retirement may occur without any reduction in benefits, and that the benefit is payable monthly or in a lump sum consistent with the assumptions as described in Note 9 of the Company’s financial statements in the Annual Report on Form 10-K for the year ended January 30, 2010, as filed with the SEC.  As described in Note 9, the discount rate assumption for Fiscal 2009 is 5.84%.

 
Pensi2009 NONQUALIFIED DEFERRED COMPENSATION TABLEon Benefits
 
The Company does not have any pension plans that provide for payments or other benefits at, following, or in connection with the retirement of a Named Executive Officer.
NONQUALIFIED DEFERRED COMPENSATION TABLE
The following table provides Fiscal 2009 information with respect to each defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified to a Named Executive Officer.
 
Name 
Executive
Contributions
in Last Fiscal
Year  ($) (1)
 
Registrant
Contributions
in Last Fiscal
Year ($)
 
Aggregate
Earnings in
Last Fiscal
Year ($)
 
Aggregate
Withdrawls/
Distributions 
($)
 
Aggregate
Balance at
Last FYE ($)
           
Andrew T. Hall  93,236  93,236  34,176  -  623,604
           
Edward J. Record  83,685  48,244  85,191  -  364,591
           
Richard A. Maloney  52,032  52,032  53  -  147,557
           
Ernest R. Cruse  39,879  39,879  172,513  -  1,348,975
           
Ron D. Lucas  151,565  38,758  477,395  -  1,944,719
32
__________________________
 
 
Name 
 
Executive Contributions in Last Fiscal Year ($)
  
Registrant Contributions in Last Fiscal Year ($)
  
Aggregate Earnings in Last Fiscal Year ($)
  
Aggregate Withdrawls/ Distributions ($)
  
Aggregate Balance at Last FYE ($)
 
 James R. Scarborough  182,994   182,994   543,216   -   3,074,469 
                     
Andrew T. Hall  54,764   54,764   10,725   -   120,254 
                     
Michael E. McCreery  79,305   79,305   138,817   -   1,194,893 
                     
Dennis E. Abramczyk  283,397   62,673   226,196   -   1,477,236 
                     
Cynthia S. Murray  85,504   65,407   21,771   -   319,610 
(1) Included in the amount reported as 2009 salary in the 2009 Summary Compensation Table.
 
Retirement Benefits
Deferred Compensation Plan
 
Deferred Compensation Plan.  The Company providesWe provide a deferred compensation plan (the “Deferred Compensation Plan”) which providethat provides executives and certain officers and key employees of the Company with the opportunity to participate in an unfunded, deferred compensation programsprogram that areis not qualified under the Internal Revenue Code of 1986, as amended (the “Code”).  Generally the Code and the Employee Retirement Income Security Act of 1974, as amended, restrict contributions to a 401(k) plan by highly compensated employees.  The Deferred Compensation Plan is intended to allow participants to defer income on a pre-tax basis.  Under the Deferred Compensation Plan, participants may defer up to 50% of their base salary and up to 100% of their bonus and earn a rate of return based on actual investments chosen by each participant.  The Company hasWe have established a grantor truststrust for the purposes of holding assets to provide benefits to the participants.  For the plan involving the executive officers and certain other officers, the CompanyWe will match 100% of each participant’s contributions, up to 10% of the sum of their base salary and bonus.
 
The Named Executive Officers have the opportunity to allocate the investment of the funds in their Participant Employee Account among fourteen investment options, including a Company Stock Investment Option.  In the case of the Company Stock Investment Option, the Deferred Compensation Plan provides the opportunity for increased pre-tax shareholding.
401(k) Savings Plans.  The Company hasPlan
We have a contributory 401(k) savings plan (the “401(k) Plan”) covering substantially all qualifying employees. Under the 401(k) Plan, participants may contribute up to 25% of their qualifying earnings, subject to certain restrictions.  The CompanyWe currently matchesmatch 50% of each participant’s contributions, limited up to 6% of each participant’s compensation under the 401(k) Plan. The CompanyWe may make discretionary bi-weekly matching contributions during the year.
Frozen Defined Benefit Plan
 
We sponsor a defined benefit plan, which covers substantially all employees who had met eligibility requirements and were enrolled prior to June 30, 1998 (the “Stage Plan”).  The Stage Plan was frozen effective June 30, 1998.  Of our Named Executive Officers, only Messrs. Cruse and Lucas are participants in the Stage Plan.  Please see the 2009 Pension Benefits Table on page 42 of this Proxy Statement for additional information concerning the Stage Plan.
Continuation of Medical Coverage. ACoverage
Upon the recommendation of the Compensation Committee and with the approval of the Board, a member of the Company’sour management who is 56 years old or older and has served at the level of Executive Vice President or higher will be allowed to continue medical coverage for himself or herself and his or her eligible dependants in the Company’sour regular medical plan until he or she reaches the age of eligibility for Medicare Coverage (currently 65) provided that (i) he or she must have six or more years continuous service at the Company, (ii) he or she must continue to be available to the Company, (iii)us, (ii) he or she must pay the regular employee rate in effect for such coverage at the time, and (iv)(iii) this medical coverage must comply with applicable IRS rules and ERISA guidelines.
 
PotentialPotential Payments Upon Termination or Change In Control
In General
The tables below reflect the amount of compensation to be paid to each of our Named Executive Officers, other than Mr. Cruse, in the event of termination of that executive’s employment under different circumstances. Since he retired on March 1, 2010, information with respect to Mr. Cruse is not provided in the tables. However, information concerning the retirement of Mr. Cruse is found under “Transactions with Related Persons” on page 15 and “Significant 2010 Events Related to the Employment of our Named Executive Officers” on page 30 of this Proxy Statement.
 
The following table provides information regarding each contract, agreement, planGenerally, under the post-termination arrangements described below, other than pursuant to a termination without Good Cause or arrangement, whether writtenfor Good Reason, as defined on page 52, or unwritten, that provides for payment(s)pursuant to a Change in Control, as defined on page 52, a Named Executive Officer who terminates his employment, or whose employment is terminated, is entitled to receive solely those amounts earned by the Named Executive Officer through the date of termination.
The amount of compensation payable to each Named Executive Officer upon (i) termination without Good Cause or for Good Reason, (ii) termination without Good Cause or for Good Reason after a Change in Control, (iii) termination by the Company for Good Cause or by the executive without Good Reason, (iv) retirement, (v) death or (vi) disability, is shown below. The amounts shown assume that the termination was effective as of January 30, 2010, and thus include amounts earned through that date and are estimates of the amounts that would be paid out to the executives upon their termination. The dollar value of stock-based compensation is calculated using the closing share price of our common stock on Friday, January 29, 2010, the last trading day prior to the end of Fiscal 2009, which was $12.92. The actual amounts to be paid out can only be determined at the time of the Named Executive Officer’s separation from the Company.
Payments Made Upon Termination
Depending upon the manner in which a Named Executive Officer’s employment terminates, he may be entitled to receive the following or in connection withpayments and benefits:
·  any base salary and fringe benefits earned and unpaid through the date of termination;
·  severance pay equal to a multiple of the executive’s base salary plus the executive’s annual bonus target amount;
·  any incentive (performance) bonus for the fiscal year in which the termination occurs pro-rated through the date of termination provided the Board determines, in good faith, that the executive would have been entitled to receive a performance bonus for the fiscal year in which the termination occurred;
·  continuation of medical, dental, life insurance or disability insurance (“Fringe Benefits”) under which the executive is participating for a specified period;
·  payment for outplacement services up to a specified maximum amount;
·  gross-up payments for excise taxes, if any;
·  payment for financial/estate planning (“Financial Planning”) up to a specified maximum amount;
·  amounts accrued and vested through the Deferred Compensation Plan; and
·  vesting of outstanding stock options, SARs, restricted stock and performance shares.
The Named Executive Officers will not receive any termination, including without limitation, resignation, severance, retirement or constructivecompensation for any unused vacation days and upon termination of employment for any reason, any unused vacation days will be forfeited.
Payments Made Upon Termination Without Good Cause or For Good Reason
The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that we terminated him without Good Cause or that he terminated his employment agreement for Good Reason on January 30, 2010.
NameSeveranceIncentive Bonus ($)Fringe Benefits ($) (1)Max Outplacement ($)Gross-Up ($)Max Financial Planning ($)Pension and Deferred Compensation ($)Stock Options, SARs, Restricted Stock and Performance Shares ($)
         
Mr. Hall$2.0 millionAmount earned and prorated through date of termination$27,639Provided for up to 1 year with $15,000 maximumNoneNone(2)All unvested Stock Options, SARs and Performance Shares are forfeited
         
Mr. Record$1.1 millionAmount earned and prorated through date of termination$18,426Provided for up to 1 year with $15,000 maximumNoneNone(2)All unvested Stock Options, SARs and Performance Shares are forfeited
         
Mr. Maloney$0.7 millionAmount earned and prorated through date of termination$16,205NoneNoneNone(2)All unvested Stock Options, SARs and Performance Shares are forfeited
         
Mr. Lucas$0.5 millionAmount earned and prorated through date of termination$16,205Provided for up to 1 year with $15,000 maximumNoneNone(2)All unvested Stock Options, SARs and Performance Shares are forfeited
________________________
(1)The amount shown reflects the estimated premiums to be paid by the Company on behalf of the Named Executive Officer for medical and dental insurance coverage.
(2)Please see the 2009 Pension Benefits Table and the 2009 Nonqualified Deferred Compensation Table for these amounts.

Payments Made Upon Termination Without Good Cause or For Good Reason After a Change In Control
The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that we terminated him without Good Cause or that he terminated his employment agreement for Good Reason on January 30, 2010 as a result of a Change In Control.
Payments that a Named Executive Officer orwould be entitled to receive under a changeChange in control ofControl are not considered by the Company or a change inCompensation Committee when making annual compensation decisions for the Named Executive Officer’s responsibilities, or retirementOfficers and do not factor into decisions made by the Company regarding other compensation elements.  Rather, these provisions in the employment agreements are intended to help provide us with respect to each Named Executive Officer.continuity of management and continued focus on the business by senior management in the event of a Change In Control.
NameSeveranceIncentive Bonus ($)Fringe Benefits ($) (1)Max Outplacement ($)Gross-Up ($)Max Financial Planning ($)Pension and Deferred Compensation ($)Stock Options, SARs, Restricted Stock and Performance Shares ($)
         
Mr. Hall$4.0 millionAmount earned and prorated through date of termination$55,277Provided for up to 2 years with $15,000 annual maximumGross up payments made to reimburse Executive's excise related taxesProvided for up to 3 years with $10,000 annual maximum(2)Unvested Stock Options and SARs automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control
         
Mr. Record$2.3 millionAmount earned and prorated through date of termination$55,277Provided for up to 1 year with $15,000 maximumGross up payments made to reimburse Executive's excise related taxesProvided for 3 years with $7,500 annual maximum(2)Unvested Stock Options and SARs automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control
     ��   
Mr. Maloney$1.5 millionAmount earned and prorated through date of termination$16,205NoneGross up payments made to reimburse Executive's excise related taxesNone(2)Unvested Stock Options and SARs automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control
         
Mr. Lucas$1.0 millionAmount earned and prorated through date of termination$16,205Provided for up to 1 year with $15,000 maximumGross up payments made to reimburse Executive's excise related taxesProvided for 1 year with $5,000 annual maximum(2)Unvested Stock Options and SARs automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control
_________________________
(1)The amount shown reflects the estimated premiums to be paid by the Company on behalf of the Named Executive Officer for medical and dental insurance coverage.
(2)Please see the 2009 Pension Benefits Table and the 2009 Nonqualified Deferred Compensation Table for these amounts.
 
 
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE
Payments Made Upon Termination by the Company for Good Cause or by the Executive without Good Reason
The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that we terminated him for Good Cause or that he terminated his employment without Good Reason on January 30, 2010.
 
Name
Severance
Benefit
Incentive Bonus ($)		Fringe Benefits ($)
Before Change in Control Termination without Good Cause or for Good Reason
Max Outplacement ($)		Gross-Up ($)
After Change in Control Termination without Good Cause or for Good Reason
Max Financial Planning ($)		Pension and Deferred Compensation ($)
Voluntary Termination
Retirement
Death
Disability
Stock Options, SARs, Restricted Stock and Performance Shares ($)
         
James R. ScarboroughSeverance$3.8 million$5.7 millionMr. HallNoneNoneNoneNone
BonusAmount earned and prorated through date of terminationNoneAmount earned and prorated through date of terminationNoneNoneAmount earned and prorated through date of terminationNone(1)Amount earned and prorated through date of terminationAmount earned and prorated through date of terminationAmount earned and prorated through date of termination
Stock OptionsUnvestedAll unvested Stock Options, are forfeitedUnvested Stock Options automatically vestUnvested Stock Options are forfeitedUnvested Stock Options are forfeitedUnvested Stock Options are forfeitedUnvested Stock OptionsSARs and Performance Shares are forfeited
         
Performance SharesEntire award of performance shares is forfeitedAll Performance shares are vested and payable to the Executive within 30 days of the effective date of the Change in ControlEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occurs
Stock Appreciation Rights (SAR’s)Unvested SAR’s are forfeitedUnvested SAR’s automatically vestUnvested SAR’s are forfeitedSAR’s fully vest and are exercisable within 60 days from termination dateSAR’s fully vest and are exercisable within 1 year from date of deathSAR’s fully vest and are exercisable within 60 days from termination date
OutplacementProvided for up to 2 years with $15,000 maximumProvided for up to 2 years with $15,000 maximumMr. RecordNoneNoneNoneNone
Gross up Payments for Excise TaxesNoneGross up payments made to reimburse executive's excise related taxesNoneNoneNoneNone
Financial/Estate PlanningNoneProvided for up to 3 years with $10,000 annual maximumNoneNoneNoneNone
34
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE (continued)
Name
Benefit
Before Change in Control Termination without Good Cause or for Good Reason
After Change in Control Termination without Good Cause or for Good Reason
Voluntary Termination
Retirement
Death
Disability
Andrew T. HallSeverance$1.4 million$2.7 millionNoneNoneNoneNone
BonusAmount earned and prorated through date of terminationNoneAmount earned and prorated through date of terminationNoneNoneAmount earned and prorated through date of terminationNone(1)Amount earned and prorated through date of terminationAmount earned and prorated through date of terminationAmount earned and prorated through date of termination
Stock OptionsUnvestedAll unvested Stock Options, are forfeitedUnvested Stock Options automatically vestUnvested Stock Options are forfeitedUnvested Stock Options are forfeitedUnvested Stock Options are forfeitedUnvested Stock OptionsSARs and Performance Shares are forfeited
         
Performance SharesEntire award of performance shares is forfeitedAll Performance shares are vested and payable to the Executive within 30 days of the effective date of the Change in ControlEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occurs
Stock Appreciation Rights (SAR’s)Unvested SAR’s are forfeitedUnvested SAR’s automatically vestUnvested SAR’s are forfeitedSAR’s fully vest and are exercisable within 60 days from termination dateSAR’s fully vest and are exercisable within 1 year from date of deathSAR’s fully vest and are exercisable within 60 days from termination date
OutplacementProvided for up to 1 years with $15,000 maximumProvided for 1 year with $15,000 maximumMr. MaloneyNoneNoneNoneNone
Gross up Payments for Excise TaxesNoneGross up payments made to reimburse executive's excise related taxesNoneNoneNoneNone
Financial/Estate PlanningNoneProvided for up to 3 years with $10,000 annual maximumNoneNoneNoneNone
35
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE (continued)
Name
Benefit
Before Change in Control Termination without Good Cause or for Good Reason
After Change in Control Termination without Good Cause or for Good Reason
Voluntary Termination
Retirement
Death
Disability
Michael E. McCreerySeverance$1.1 million$2.3 millionNoneNoneNoneNone
BonusAmount earned and prorated through date of terminationNoneAmount earned and prorated through date of terminationNoneNoneAmount earned and prorated through date of terminationNone(1)Amount earned and prorated through date of terminationAmount earned and prorated through date of terminationAmount earned and prorated through date of termination
Stock OptionsUnvestedAll unvested Stock Options, are forfeitedUnvested Stock Options automatically vestUnvested Stock Options are forfeitedUnvested Stock Options are forfeitedUnvested Stock Options are forfeitedUnvested Stock OptionsSARs and Performance Shares are forfeited
         
Mr. LucasNonePerformance SharesAmount earned and prorated through date of terminationNoneEntire award of performance shares is forfeitedNoneNoneNone(1)All unvested Stock Options, SARs and Performance sharesShares are vestedforfeited
__________________________
(1)Please see the 2009 Pension Benefits Table and payable to the Executive within 30 days of the effective date of the Change in Control2009 Nonqualified Deferred Compensation Table for these amounts.

Payments Made Upon Retirement
The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that he retired as of January 30, 2010.
NameSeveranceEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursIncentive Bonus ($)Fringe Benefits ($)Earns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursMax Outplacement ($)Gross-Up ($)Earns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursMax Financial Planning ($)Pension and Deferred Compensation ($)Earns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursStock Options, SARs, Restricted Stock and Performance Shares ($)
         
Mr. HallNoneStock Appreciation Rights (SAR’s)Amount earned and prorated through date of terminationNoneNoneNoneNone(1)Unvested SAR’s are forfeitedUnvested SAR’s automatically vestUnvested SAR’s are forfeitedSAR’sStock Options and SARs fully vest and are exercisable within 60 daysone year from termination dateSAR’s fully vestdate; all Performance Shares are vested at target level and are exercisable within 1 year from date of deathSAR’s fully vest and are exercisable within 60 days from termination datepayable to the Executive
         
OutplacementProvided for up to 1 years with $15,000 maximumProvided for 1 year with $15,000 maximumMr. RecordNoneAmount earned and prorated through date of terminationNoneNoneNoneNoneNone(1)Unvested Stock Options and SARs fully vest and are exercisable within one year from termination date; all Performance Shares are vested at target level and are payable to the Executive
         
Gross up Payments for Excise TaxesMr. MaloneyNoneGross up payments made to reimburse executive's excise related taxesAmount earned and prorated through date of terminationNoneNoneNoneNone(1)NoneUnvested Stock Options and SARs fully vest and are exercisable within one year from termination date; all Performance Shares are vested at target level and are payable to the Executive
         
Financial/Estate PlanningMr. LucasNoneProvided for 1 year with $7,500 annual maximumAmount earned and prorated through date of terminationNoneNoneNoneNone(1)NoneUnvested Stock Options and SARs fully vest and are exercisable within one year from termination date; all Performance Shares are vested at target level and are payable to the Executive
_________________________
(1)Please see the 2009 Pension Benefits Table and the 2009 Nonqualified Deferred Compensation Table for these amounts.
 
 
Payments Made Upon Death
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE (continued)The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that his employment was terminated as a result of death as of January 30, 2010.
Name
Severance
Benefit
Incentive Bonus ($)		Fringe Benefits ($)
Before Change in Control Termination without Good Cause or for Good Reason
Max Outplacement ($)		Gross-Up ($)
After Change in Control Termination without Good Cause or for Good Reason
Max Financial Planning ($)		Pension and Deferred Compensation ($)
Voluntary Termination
Retirement
Death
Disability
Stock Options, SARs, Restricted Stock and Performance Shares ($)
         
Dennis E. AbramczykSeverance$0.7 million$1.4 millionMr. HallNoneAmount earned and prorated through date of terminationNoneNoneNoneNoneNone(1)Unvested Stock Options and SARs fully vest and are exercisable within one year from termination date; all Performance Shares are vested at target level and are payable to the Executive
         
Mr. RecordBonusNoneAmount earned and prorated through date of terminationNoneAmount earnedNoneNoneNone(1)Unvested Stock Options and prorated through date ofSARs fully vest and are exercisable within one year from terminationAmount earned date; all Performance Shares are vested at target level and prorated through date of terminationAmount earned and prorated through date of terminationAmount earned and prorated through date of terminationAmount earned and prorated through date of terminationare payable to the Executive
         
Mr. MaloneyNoneStock OptionsAmount earned and prorated through date of terminationNoneNoneNoneNone(1)Unvested Stock Options and SARs fully vest and are forfeitedUnvested Stock Options automatically vestUnvested Stock Optionsexercisable within one year from termination date; all Performance Shares are forfeitedUnvested Stock Optionsvested at target level and are forfeitedUnvested Stock Options are forfeitedUnvested Stock Options are forfeitedpayable to the Executive
         
Mr. LucasNoneAmount earned and prorated through date of terminationNoneNoneNoneNone(1)Unvested Stock Options and SARs fully vest and are exercisable within one year from termination date; all Performance SharesEntire award of performance shares is forfeitedAll Performance shares are vested at target level and are payable to the Executive within 30 days of
_________________________
(1)Please see the effective date of2009 Pension Benefits Table and the Change in Control2009 Nonqualified Deferred Compensation Table for these amounts.


Payments Made Upon Disability
The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that his employment was terminated as a result of disability as of January 30, 2010.
NameSeveranceEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursIncentive Bonus ($)Fringe Benefits ($)Earns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursMax Outplacement ($)Gross-Up ($)Earns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursMax Financial Planning ($)Pension and Deferred Compensation ($)Earns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursStock Options, SARs, Restricted Stock and Performance Shares ($)
         
Mr. HallNoneStock Appreciation Rights (SAR’s)Amount earned and prorated through date of terminationNoneNoneNoneNone(1)Unvested SAR’s are forfeitedUnvested SAR’s automatically vestUnvested SAR’s are forfeitedSAR’sStock Options and SARs fully vest and are exercisable within 60 daysone year from termination dateSAR’s fully vestdate; all Performance Shares are vested at target level and are exercisable within 1 year from date of deathSAR’s fully vest and are exercisable within 60 days from termination datepayable to the Executive
         
OutplacementProvided for up to 1 years with $15,000 maximumProvided for 1 year with $15,000 maximumMr. RecordNoneAmount earned and prorated through date of terminationNoneNoneNoneNoneNone(1)Unvested Stock Options and SARs fully vest and are exercisable within one year from termination date; all Performance Shares are vested at target level and are payable to the Executive
         
Gross up Payments for Excise TaxesMr. MaloneyNoneGross up payments made to reimburse executive's excise related taxesAmount earned and prorated through date of terminationNoneNoneNoneNone(1)NoneUnvested Stock Options and SARs fully vest and are exercisable within one year from termination date; all Performance Shares are vested at target level and are payable to the Executive
         
Financial/Estate PlanningMr. LucasNoneProvided for 1 year with $5,000 annual maximumNoneNoneNoneNone

37
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE (continued)
Name
Benefit
Before Change in Control Termination without Good Cause or for Good Reason
After Change in Control Termination without Good Cause or for Good Reason
Voluntary Termination
Retirement
Death
Disability
Cynthia S. MurraySeverance$0.7 million$1.4 millionNoneNoneNoneNone
BonusAmount earned and prorated through date of terminationNoneAmount earned and prorated through date of terminationNoneNoneAmount earned and prorated through date of terminationNoneAmount earned and prorated through date of terminationAmount earned and prorated through date of terminationAmount earned and prorated through date of termination
Stock Options(1)Unvested Stock Options are forfeitedUnvested Stock Options automatically vestUnvested Stock Options are forfeitedUnvested Stock Options are forfeitedUnvested Stock Options are forfeitedUnvested Stock Options are forfeited
Performance SharesEntire award of performance shares is forfeited.All Performance shares are vested and payable to the Executive within 30 days of the effective date of the Change in ControlEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occursEarns proportion of shares related to completed years of service during the performance cycle, including the year in which termination occurs
Stock Appreciation Rights (SAR’s)Unvested SAR’s are forfeitedUnvested SAR’s automatically vestUnvested SAR’s are forfeitedSAR’sSARs fully vest and are exercisable within 60 daysone year from termination dateSAR’s fully vestdate; all Performance Shares are vested at target level and are exercisablepayable to the Executive
_________________________
(1)Please see the 2009 Pension Benefits Table and the 2009 Nonqualified Deferred Compensation Table for these amounts.
Timing of Payments
The payments reflected in the foregoing tables will be paid as follows:
·  Severance payment will be made to the executive in a lump sum within 1 year fromthirty days of the date of deathtermination;
·  Incentive bonus payments will be made to the executive in a lump sum on or before April 1 following the end of the fiscal year in which the termination occurred;
·  SAR’s fully vestFringe Benefits will be provided in accordance with our standard policies and are exercisable within 60 days from termination datepractices;
·  OutplacementProvided for up payments will be made directly to 1 years with $15,000 maximumProvided for 1 year with $15,000 maximumNoneNoneNoneNone
Gross up Payments for Excise TaxesNoneGross up payments made to reimburse executive's excise related taxesNoneNoneNoneNone
Financial/Estate PlanningNoneProvided for 1 year with $5,000 annual maximumNoneNoneNoneNonethe entity providing outplacement services within thirty days of receipt of an invoice or statement from the entity providing the outplacement services;
·  Any Gross-Up payments will be paid to the Executive within fifteen business days of the receipt of an accounting firm’s determination as to the amount;
·  Financial Planning reimbursements will be made in accordance with our or our successor’s policies and procedures; and

·  Pension and Deferred Compensation payments will be made in accordance with the provisions of the respective plan.
Termination
Termination.In General.  The Employment Agreements of Mr. Scarborough, Mr. Hall, Mr. McCreery, Mr. Abramczyk and Ms. Murrayour Named Executive Officers provide that if the Executive is terminated by the Companyus for Good Cause (as defined below), the Executive will be entitled to receive any Base Salary earned and unpaid, and certain fringe benefits accrued and unpaid, through the date of termination, and the Executive will automatically forfeit any unvested stock options, warrants or similar rights in the Company as of the date of termination.
 
If the Executive is terminated by the Companyus without Good Cause or terminates his employment with the Company for Good Reason (as defined below), the Executive will be entitled to receive:  (i) any Base Salary earned and unpaid, and certain fringe benefits accrued and unpaid, through the date of termination, (ii) an amount equal to two times in the case of Mr. Scarborough,Hall, one and one-half times in the case of Mr. Hall and Mr. McCreery,Record, and one timestime in the case of Mr. AbramczykMessrs. Maloney and Ms. MurrayLucas the aggregate of the Base Salary plus the Incentive Compensation at the Target Rate (as defined below) in effect as of the date of termination, (iii) the Incentive Compensation for the fiscal year in which the termination occurs pro-rated through the date of termination, (iv) continuation of certain fringe benefits to which the Executive is participating as of the dated ate of termination for a period of 24 months in the case of Mr. Scarborough, 18 months in the case of Mr. Hall and Mr. McCreery,  and 12 months in the case of Mr. AbramczykMessrs. Record, Maloney and Ms. MurrayLucas from the date of termination, and (v) payment of outplacement services for a period of 24 months in the case of Mr. ScarboroughHall and 12 months in the case of Mr. Hall,  Mr. McCreery, Mr. AbramczykMessrs. Record, Maloney and Ms. MurrayLucas from the date of termination with payments not to exceed $15,000 for any 12 month period, and the Executive will automatically forfeit any unvested stock options, warrants or similar rights in the Company as of the date of termination.
 
38
If the Executive terminates his employment with the Company without Good Reason, the Executive will be entitled to receive any Base Salary earned and unpaid, and certain fringe benefits accrued and unpaid, through the date of termination, and the Executive will automatically forfeit any unvested stock options, warrants or similar rights in the Company as of the date of termination.
 
Change in Control-Messrs. Scarborough, Hall and McCreery.  Record.  If a Change in Control (as defined below) occurs, and during the period beginning 3 months before and ending 24 months after the Change in Control, the Companywe or itsour successor terminates thisthe Employment Agreement without Good Cause or the Executive terminates his employment with the Companyus or itsour successor with Good Reason, the Executive will be entitled to receive:  (i) any Base Salary earned and unpaid, and certain fringe benefits accrued and unpaid, through the date of the Change in Control or termination, (ii) an amount equal to three times the aggregate of the Base Salary plus the Incentive Compensation at the Target Rate in effect as of the date of the Change in Control or termination, (iii) the Incentive Compensation for the fiscal year in which the Change in Control or termination occurs pro-rated through the date of the Change in Control or termination, (iv) continuation of certain fringe benefits to which the Executive is participating as of the date of Change in Control or termination for a period of 36 months from the date of the Change in Control or termination, (v) payment of outplacement services for a period of 24 months in the case of Mr. Scarborough and 12 months in the case of Mr. Hall and Mr. McCreery from the date of the Change in Control or termination with payments not to exceed $15,000, for any 12 month period, and (vi) continuation of the financial planning allowance for a period of 36 months from the date of the Change in Control or termination, with payments not to exceed $10,000 for any 12 month period in the case of Mr. Hall and $7,500 in the case of Mr. Record, and all the Executive’s stock options, warrants or similar rights in the Company will immediately become fully and completely vested and exercisable as of the date of the Change in Control or termination and the Companywe or itsour successor shall be obligated to compensate the Executive
51
for any options or rights the Executive does not exercise within 60 days of the date of the Change in Control or termination at the price and in the manner described in the Employment Agreement.
 
Change in Control-Mr. AbramczykControl-Messrs. Maloney and Ms. Murray.Lucas.  If a Change in Control occurs and the Executive is not employed with the Companyus or itsour successor thereafter, the Executive will be entitled to receive: (i) any Base Salary earned and unpaid, and certain fringe benefits accrued and unpaid, through the date of the Change in Control or termination; (ii) an amount equal to two times the aggregate of the Base Salary plus the Incentive Compensation at the Target Rate in effect as of the date of the Change in Control or termination; (iii) the Incentive Compensation for the fiscal year in which the Change in Control or termination occurs pro-rated through the date of the Change in Control or termination; (iv)  continuation of certain fringe benefits to which the Executive is participating as of the date of Change in Control or termination for a period of 12 months from the date of the Change in Control or termination; (v) payment of outplacement services, not to exceed $15,000, for a period of 12 months from the date of the Change in Control or termination; and (vi) continuation of the financial planning allowance for a period of 12 months from the date of the Change in Control or termination, and all stock options, warrants or similar rights of the Executive in the Company will immediately become fully and completely vested and exercisable as of the date of the Change in Control or termination and the Companywe or itsour successor shall be obligated to compensate the Executive for any options or rights the Executive does not exercise within 60 days of the date of the Change in Control or termination at the price and in the manner described in the Employment Agreement.
 
Gross-Up Payments.  If any payment to the Messrs. Scarborough, Hall, McCreery and Abramczyk or to Ms. MurrayNamed Executive Officer due to termination or changea Change in controlControl subjects the Executive to any excise tax, the Companywe will pay to the executiveExecutive a gross-up payment to compensate the Executive for the amount of the excise taxes.tax.
 
Defined Terms.  Definitions forsome of the terms used in this discussion in the order they are first used are as follows:
39
 
“Good Cause” means the Executive’s (i) conviction of, or plea of nolo contendere (no contest) or guilty to, any criminal violation involving dishonesty, fraud or moral turpitude; (ii) gross negligence; (iii) willful and serious misconduct; (iv) breach of trust or fiduciary duty in the performance of his or her duties or responsibilities; (v) willful failure to comply with reasonable directives and policies of the Board; or (vi) breach of any term or provision of his or her Employment Agreement.
 
“Good Reason”  shall exist if, without the Executive’s express written consent, the Company:we: (i) materially reducesreduce or decreasesdecrease the Executive’s Base Salary from the level in effect on the date of the Employment Agreement; (ii) failsfail to include the Executive in any incentive compensation plans, bonus plans, or other plans and benefits provided by the Companyus to other executive level executive;executives; (iii) materially reduces, decreasesreduce, decrease or diminishesdiminish the nature, status or duties and responsibilities of the Executive’s position from those in effect on the date of the Employment Agreement, and the reduction, decrease or diminution is not reasonably related to or the result of an adverse change in the Executive’s performance of assigned duties and responsibilities or the hiring by Companyus of an executive senior to the Executive; or (iv) requiresrequire the Executive to regularly perform the duties and responsibilities of his or her position at a location whichthat is more than fifty (50) miles from the location of the Executive’s principal place of employment.  Notwithstanding the above, Good Reason does not include the death, disability or voluntary retirement of the Executive or any other voluntary action taken by or agreed to by the Executive related to the Executive’s position or his or her employment with the Companyus or itsour subsidiaries.
 
“Change in Control” shall be deemed to have occurred as ofoccurred:
(a)  on such date within the 12-month period following the date (i)that any “person”one person, or “group” (as such terms are used in Section 13(b) of the Securities Exchange Act of 1934,more than one person acting as amended (the “Exchange Act”)) is or becomes the “beneficial owner”a group (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities§1.409A 3(i)(5)(v)(B) of the Company representingTreasury Regulations), acquires ownership of stock that represents twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities and within(the “Trigger Date”), that a majority of the individuals who, as of the Trigger Date, constitute the Board (the “Incumbent Board”) are replaced by new members whose appointment or election is not endorsed by a majority of the members of the Incumbent Board before the date of such appointment or election;
(b)  as of the date that any one (1) year after that “person” or “group” becomes the beneficial owner of twenty-five percent (25%)person, or more than one person acting as a group (as defined in §1.409A-3(i)(5)(v)(B) of the Treasury Regulations), acquires ownership of stock that, together with stock held by such person or group, constitutes more than 50% of either (1) the then outstanding shares of common stock of the Company or (2) the combined voting power of the Company (the “Trigger Date”), the membersthen
outstanding voting securities of the Company entitled to vote generally in which the Companyelection of directors; provided, however, if any one person or more than one person acting as a group, is not the surviving or continuing corporation, or pursuantconsidered to which sharesown more than fifty percent (50%) of the Company’s commontotal fair market value or total voting power of the stock would be converted into cash, securities or other property, other than a merger of the Company, the acquisition of additional stock by the same person or persons shall not be considered to cause a Change in whichControl; or
(c)  the holdersdate any one person, or more than one person acting as a group (as defined in §1.409A-3(i)(5)(v)(B) of the Company’s common stock immediately prior toTreasury Regulations), acquires (or has acquired during the merger have (directly or indirectly) at least a fifty one percent (51%) ownership interest in12-month period ending on the outstanding common stockdate of the surviving corporation immediately after the merger,most recent acquisition by such person or (iii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) ofpersons) all, or substantially all, of the assets of the Company, except for any sale, lease exchange or transfer resulting from any action taken by any creditor of the Company in enforcing its rights or remedies against any assets of the Company in which such creditor holds a security interest.  Provided further, a transfer of assets by the Company shall not be treated as a Change in Control 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% 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% or more of the total value or voting power of all the outstanding stock of the Company; or
(iv)            An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in paragraph (iii) herein.
For purposes of subsection (c) and except as otherwise provided in paragraph (i), a person’s status is determined immediately after the transfer of the assets.
“Incentive Compensation” means compensation based upon the Company’sour operating results for a fiscal year.
 
“Target Rate” means the amount of Incentive Compensation calculated as a percentage of the Base Salary in effect during a fiscal year, which percentage is determined and may be adjusted by theour Board based the Company’son our operating results for a fiscal year.


DIRECTOR2009 DIRECTOR COMPENSATION TABLE
 
The following table provides information concerning the compensation of our non employeeIndependent Directors for their service as Directors to the Company during our 2006 fiscal year.  The number of stock awards outstanding and stock options outstanding reflect the effects ofFiscal 2009.  Cheryl Nido Turpin was not a three-for-two split of outstanding common stock on January 31, 2007, which applies as well to awards granted under the Company’s Amended and Restated 2001 Equity Incentive Plan.Director in Fiscal 2009

Name
 
Fees Earned or Paid in Cash ($) (2)
  
Stock Awards ($) (3)
  
Option Awards ($) (4)
  
Non-Equity Incentive Plan Compensation ($)
  
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (5)
  
All Other Compensation ($)
  
Total ($)
  Fees Earned or Paid in Cash ($) (1) 
Stock Awards
($) (2)
 
Option Awards
($) (3)
 
Non-Equity
Incentive Plan
Compensation
($)
 
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($) (4)
 
All Other
Compensation 
($)
 Total  ($)
                                   
Alan J. Barocas (1)  1,250   756   -   -   -   -   2,006   55,500  108,575  -  -  -  -  164,075
                            
Scott J. Davido  58,000   25,807   19,786   -   3,060   -   106,653 
                                          
Michael L. Glazer  51,500   25,807   19,786   -   -   -   97,093   63,500  108,575  -  -  -  -  172,075
                                          
John T. Mentzer  54,166   25,807   19,786   -   5,565   -   105,324   63,500  108,575  -  -  17,936  -  190,011
                                          
Margaret T. Monaco  48,500   25,807   61,847   -   -   -   136,154 
                            
William J. Montgoris  121,500   25,807   61,847   -   -   -   209,154   119,500  108,575  -  -  -  -  228,075
                                          
Sharon B. Mosse  43,000   25,807   67,134   -   6,668   -   142,609   39,167  108,575  -  -  52,795  -  200,537
                                          
Walter S. Salmon (1)  21,000   -   50,290   -   -   -   71,290 
James R. Scarborough  -  -  -  -  -     350,000 (5)  350,000
              
David Y. Schwartz  15,500  108,575  -  -  73,356  -  197,431
 ______________________________________________

 
(1)		(1)   Mr. Barocas joined the Board effective January 15, 2007. Mr. Salmon retired from the Board effective June 1, 2006.
(2)   ThisThe amounts shown in this column reportsreflect the amount of cash compensation earned for 20062009 for Board and committee service.  Directors may elect to receive the Annual Retainer, the Lead Independent Director Retainer, the Committee Chairman Fee and such other compensation as the Board may deem appropriate, as the case may be, either (a) in restricted stock, deferred stock units (“DSU”), cash, or a combination of restricted stock, deferred stock units and cash at the time that such compensation is earned, or (b) in cash or restricted stock at a later date.  See “Compensation of Directors” below.
 
(2)		(3)   The amounts shown in this column reflect the dollar amount recognized for financial statement reporting purposesamounts of the aggregate grant date fair value of stock awards granted in 2009 for the named DirectorDirectors in accordance with SFAS 123 (R) and include amounts from awards granted in and prior to fiscal 2006. As of February 3, 2007, each Director had the following number of stock awards outstanding: Mr. Barocas (2,569), Mr. Davido (5,224), Mr. Glazer (5,224), Mr. Mentzer (5,224), Ms. Monaco (5,224), Mr. Montgoris (5,224), and Ms. Mosse (5,224).SEC rules.
 
(3)		No stock options were awarded to Directors in 2009.
(4)The amounts shown reflect the dollar amount recognized for financial statement reporting purposes for the named Director in accordance with SFAS 123 (R) and include amounts from awards granted in and prior to fiscal 2006.  As of February 3, 2007, each Director had the following number of options outstanding: Mr. Davido (28,126), Mr. Glazer (16,875), Mr. Mentzer (61,873), Ms. Monaco (50,625), Mr. Montgoris (50,625), and Ms. Mosse (50,625).

(5)   The amounts shown reflectdeferred compensation as well as the increase in value related to the DSU’sDSUs from dividends and changes in market price of the Company’sour common stock.
 
(5)Reflects the amount of consulting fees we paid Mr. Scarborough for services rendered to us under the terms of   his Consulting Agreement.  So long as the Consulting Agreement is in effect, he will not be entitled to receive any compensation he would otherwise receive or be entitled as a non-employee Director.
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Compensation of Directors
 
CompensationThe compensation of our Independent Directors is set by the Board at the recommendation of the Corporate Governance and Nominating Committee (the “CGNC”). In developing its recommendations, the CGNC is guided by the following objectives: compensation should fairly pay Independent Directors for work required in a company our size and compensation should align the Independent Directors’ interests with the long-term interest of our shareholders. Hay Group prepares competitive compensation analyses regarding both the Peer Group and the broader market for similarly situated companies and advises the CGNC on the level and design of compensation programs for the Independent Directors.  The Chairman of the CGNC works directly with Hay Group to determine the scope of the work needed to assist the CGNC in its decisio n making processes.
 
Directors who are our full-time employees of the Company receive no additional compensation for serving on the Board.  Directors who are not our full-time employees of the Company receive the following compensation:
 
Annual Retainer.  Directors receive a $30,000$40,000 Annual Retainer, which is earned and paid pro rata over their term at the beginning of each month. The Annual Retainer is intended to compensate the Director for
attendance at regularly scheduled quarterly Board meetings, as well as consultation and participation in teleconference meetings held for periodic Board updates.
 
Lead Independent Director Retainer.  In addition to the Annual Retainer, the Lead Independent Director receives a $70,000 Lead Independent Director Retainer, which is earned and paid pro rata over his or her term at the beginning of each month.  The Lead Independent Director Retainer is intended to compensate the Lead Independent Director for the additional duties set forth in the Governance Guidelines.
 
Special BoardMeeting Fee.  Directors receive a Special Board Meeting Fee of $1,500 per meeting for their preparation and attendance at special meetings of the Board (may be by teleconference) called for the purpose of specific actions by the Board (consents, resolutions, etc.) and held at times other than in conjunction with regular quarterly meetings of the Board.  No additional meeting feef ee is to be paid for attendance at regular quarterly board meetings.
 
Committee Meeting Fees.  Directors receive (a) a Regular Committee Meeting Fee of $1,000 per meeting for their preparation and attendance at regular quarterly meetings of the Committees on which they serve, and (b) a Special Committee Meeting Fee of $1,000 per meeting for (i) their preparation and attendance at Committee meetings (may be by teleconference) called for the purpose of specific actions by their Committees (consents, resolutions, etc.) and held at times other than in conjunction with regular quarterly meetings of their Committees, and (ii) their preparation and attendance at “ad hoc” Board Committee assignments held at times other than in conjunction with regular quarterly meetings of their Committees or the Board.
 
Committee Chairman Fees.  The Chairman of the Audit Committee receives a Committee Chairman Fee of $6,000$15,000 per year and the Chairmen of the Compensation and Corporate Governance and Nominating Committees receive a Committee Chairman Fee of $4,000$10,000 per year.  The Committee Chairman Fee is earned and paid pro rata over the Chairman’s term at the beginning of each month.
 
Stock Options and Restricted Stock GrantsGrants:                                                                           
 
Initial Grant.  Upon a Director’s initial election to the Board, the Director will be granted, at the Director’s election, either (a) stock options to purchase the Company’s common stock, or (b) restricted shares of the Company’s common stock, in either case valued at $50,000 based on a Net Present Value (the “Initial Grant”).  The exercise price and the share price used in granting stock options and the share price used in granting restricted shares shall be equal to the closing price of the Company’s
·  
Initial Grant.  Upon a Director’s initial election to the Board, the Director will be granted, at the Director’s election, either (a) stock options to purchase our common stock, or (b) restricted shares of the our common stock, in either case valued at $50,000 based on a Net Present Value (the “Initial Grant”).  The exercise price and the share price used in granting stock options and the share price used in granting restricted shares shall be equal to the closing price of our common stock on the date the Director is elected to the Board.  The Initial Grant will vest 25% per year over four years from the date the Director is elected to the Board.  The Initial Grant will vest 25% per year over four years from the d ate of grant and if stock options are granted, they will expire if not exercised within seven years from the date of grant.
·  
Reelection Grant.  Upon a Director’s reelection to the Board, the Director will be granted restricted shares of our common stock valued at $100,000 based on a Net Present Value (the “Reelection Grant”).  The share price used in granting the restricted shares shall be equal to the closing price of our common stock on the date the Director is reelected to the Board.  The Reelection Grant will vest, on a cliff basis, one year from the date of grant.
·  
Forfeiture of Grants. A Director will forfeit any unvested Initial Grant and Reelection Grants if the Director ceases to be a Director at any time prior to their vesting date other than due to (i) the fact that the Director’s age prohibits the Director from serving as a Director, (ii) death, or (iii) disability (as determined by the Board), at which time the unvested Initial Grant and Reelection Grants will fully vest.
 
Reelection Grant.  Upon a Director’s reelection to the Board, the Director will be granted restricted shares of the Company’s common stock valued at $100,000 based on a Net Present Value (the “Reelection Grant”).  The share price used in granting the restricted shares shall be equal to the closing price of the Company’s common stock on the date the Director is reelected to the Board.  The Reelection Grant will vest, on a cliff basis, three years from the date of grant.
Forfeiture of Grants. A Director will forfeit any unvested Initial Grant and Reelection Grants if the Director ceases to be a Director at any time prior to their vesting date other than due to (i) the fact that the Director’s age prohibits the Director from serving as a Director, (ii) death, or (iii) permanent disability (as determined by the Board), at which time the unvested Initial Grant and Reelection Grants will fully vest.
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Reimbursement of Expenses.  Directors shall be reimbursed for actual expenses they incur while attending, or otherwise participating in, Board meetings, Board Committee meetings and “ad hoc” committee assignments.
 
Election Concerning Receipt of Certain Compensation.  Under the Company’sour Amended and Restated 2003 Non-Employee Director Equity Compensation Plan (the “Plan”), a Director may elect to receive the Annual Retainer, the Lead Independent Director Retainer, theSpecial Board Meeting Fees, Committee Meeting Fees, Committee Chairman Fee and such other compensation as the Board may deem appropriate, as the case may be, either (a) in restricted stock, deferred stock units, cash, or a combination of restricted stock, deferred stock units and cash at the time that such compensationcompensatio n is earned, or (b) in cash or restricted stock at a later date.  Any issuance of restricted stock in lieu of cash will be made by the Companyus on such terms and conditions as the Board may establish.  In any event, in order to receive restricted stock, a Director must, at a minimum, (a) notify the Companyus of his or her current election to receive
restricted stock by executing an applicable Election Form, and (b) execute a Shareholder Agreement by which the Director agrees not to sell any of the restricted stock until the Director leaves the Board.
 
Health Benefits.  The Company hasWe have made arrangements with itsour medical provider to offer medical and dental coverage to the Directors and their eligible family members. The cost to the Directors will be the same premiums the Company’sour active employees pay through their payroll deductions.
 
ITEM 2 – RATIFICATIONRATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2007FISCAL 2010
 
In General
 
The Board has approved the Audit Committee’s selection of Deloitte & Touche LLP as the Company’sour independent registered public accounting firm for 2007.our 2010 fiscal year (“Fiscal 2010”).  This selection is being presented to the shareholders for their ratification.  Proxies solicited by the Board will, unless otherwise directed, be voted to ratify the selection by the Board of Deloitte & Touche LLP as the Company’sour independent registered public accounting firm for 2007.Fiscal 2010.  Deloitte & Touche LLP has been the Company’sour independent auditorsauditor since the Company’sour 2000 fiscal year.  The Board has been advised by Deloitte & Touche LLP that it is an independent registered public accounting firm with respect to the Company within the meaning of the Securities Exchange Act of 1934, as amended, and the rules andan d regulations promulgated under the Exchange Act.
 
A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting.  He or she will have the opportunity to make a statement, if he or she so desires, and will be available to respond to appropriate questions during the meeting.  For additional information regarding the Company’sour relationship with Deloitte & Touche LLP, please refer to the Audit Committee Report below.
 
PrincipalPrincipal Accountant Fees and Services
 
The CompanyAudit Committee selected, and we retained, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, the “Deloitte Entities”), as itsour independent registered public accounting firm to audit theour consolidated financial statements for 20062009 and 20052008 and to provide various advisory, auditing and consulting services in 20062009 and 2005.  The Company understands2008.  We understand the need for the Deloitte Entities to maintain objectivity and independence in their audit of the Company’sour financial statements and internal controls.  The Company doesWe do not use the Deloitte Entities for internal audit work and will only use the Deloitte Entities for non-audit work when the Audit CommitteeCommitte e concludes that the Deloitte Entities are the most appropriate provider of that service.  The Audit Committee annually evaluates whether the Company’sour use of the Deloitte Entities for non-audit services is compatible with the Deloitte Entities’ independence.  The aggregate fees billed by the Deloitte Entities in 20062009 and 20052008 for these various services were as follows:
Description of Professional ServiceAmount Billed
 20092008
Audit Fees are fees for (i) the audit of our annual financial statements, (ii) review of financial statements in our quarterly reports on Form 10-Qs, (iii) the audit of the effectiveness of our internal control over financial reporting, and (iv) for services that are provided by the independent registered public accounting firm in connection with statutory and regulatory filings.
 $898,380 $971,049
Audit-Related Fees are for professional services rendered in connection with the application of financial accounting and reporting standards, as well as acquisition related matters.
 - -
Tax Fees are fees for compliance, tax advice, and tax planning.
 - -
All Other Fees are fees for any service not included in the first three categories.  Indicates fees for services related to the audit of the financial statements of our Nonqualified Deferred Compensation Plan (Senior Executives) (the “Plan”), which are included in the Plan’s Annual Report on Form 11-K. All services were approved by the Audit Committee.
 $16,450 $17,000
 
 
       
Description of Professional Service
 
Amount Billed
 
  
2006
  
2005
 
Audit Fees are fees for (i) the audit of the Company’s annual financial statements, (ii) review of financial statements in the Company’s quarterly reports on Form 10-Qs, (iii) the audit of the Company's internal control over financial reporting, (iv) the attestation of Management's Report of Internal Control Over Financial Reporting and (v) for services that are provided by the independent registered public accounting firm in connection with statutory and regulatory filings.
 $1,686,419  $1,248,560 
Audit-Related Fees are for professional services rendered in connection with the application of financial accounting and reporting standards, as well as acquisition related matters.
  -  $218,120 
Tax Fees are fees for compliance, tax advice, and tax planning.
  -   - 
All Other Fees are fees for any service not included in the first three categories.
  -   - 
         
Pre-AppPre-Approval Policiesroval Policies
 
The Audit Committee has the direct responsibility to select, retain, terminate, determine compensation and oversee the work of the Company’sour independent registered public accounting firm.  Pre-approval by the Audit Committee is required for any engagement of the Company’sour independent registered public accounting firm and the Audit Committee has established the following pre-approval policies and procedures.  Annually, the Audit Committee pre-approves services to be provided by the Company’sour independent registered public accounting firm.  The Audit Committee also considers the engagement of the Company’sour independent registered public accounting firm to provide other services during the year.  Requests for approval are submitted to the Audit Committee by the Company’sour management.  Requests are required to include an adequate explanation of the services in sufficient detail for the Audit Committee to determine whether the request is consistent with the SEC’s rules on auditor independence.  In determining whether to approve the engagement of the Company’sour independent registered public accounting firm, the Audit Committee considers whether such service is consistent with the independence of the registered public accounting firm.  The Audit Committee also considers the amount of audit related fees in comparison to all other fees paid to the registered public accounting firm and reviews such comparison each year.

AuditAudit Committee Report
 
The Audit Committee reviewed and discussed the Company’s audited financial statements with management, which has primary responsibility for the financial statements, and with the Company’s independent registered public accounting firm, Deloitte & Touche LLP, which is responsible for expressing an opinion on whether the conformity ofconsolidated financial statements present fairly, in all material respects, the Company’s audited financial statementsposition, results of operations and the related cash flows in conformity with accounting principles generally accepted in the United States of America.America and whether the Company maintained, in all material respects, effective internal control over financial reporting based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
The Audit Committee met regularly with Deloitte & Touche LLP and the Company’s internal audit staff, with and without management present, to discuss the results of their audits, management’s assessment of the Company’s internal control over financial reporting, Deloitte & Touche’sTouche LLP’s opinions regarding the Company’s internal control over financial reporting, and the overall quality of the Company’s financial reporting.  The Audit Committee also reviewed Management’s Report on Internal Control Over Financial Reporting contained the Company’s Annual Report on Form 10-K for the year ended February 3, 2007January 30, 2010 as filed with the SEC, as well as Deloitte & Touche LLP’sLLP ’s Report of Independent Registered Public Accounting Firm included in the same Annual Report on Form 10-K related to its audits of (i) the Company’s consolidated financial statements, (ii) management’s assessment of the effectiveness of internal control over financial reporting, and (iii)(ii) the effectiveness of internal control over financial reporting.
 
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The Audit Committee discussed with Deloitte & Touche LLP the matters that are required to be discussed by Statement on Auditing Standards No. 61,114 (The Auditor's Communication With Those Charged With Governance), as amended (Communications with Audit Committees).adopted by the Public Company Accounting Oversight Board. The Audit Committee also discussed with internal audit and management any significant matters as a result of the internal audit work.
 
The Audit Committee has received from Deloitte & Touche LLP the written disclosures and the letter from Deloitte & Touche LLP required by Independence Standardsapplicable requirements of the Public Company Accounting Oversight Board Standard No. 1 (Independence Discussionsregarding Deloitte & Touche LLP’s communications with the Audit Committees)Committee concerning independence, and has discussed with Deloitte & Touche LLP that firm’sits independence. The Audit Committee has concluded that Deloitte & Touche LLP'sLLP did not provide any prohibited non-audit services to the Company and its affiliates, which is compatible with Deloitte & Touche LLP's independence.affiliates.
 
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for 20062009 for filing with the SEC.  The Audit Committee also selected Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2007.2010.
 
This Audit Committee Report is provided by the following Directors, who constitute all of the members of the Audit Committee:
 
Scott J. DavidoDavid Y. Schwartz (Chairman)
Alan J. Barocas
John T. Mentzer
William J. Montgoris
 
Ratification of the Selection of Deloitte & Touche LLP as Independent Registered Public Accounting Firm For 2007Fiscal 2010
 
Deloitte & Touche LLP has been selected by the Audit Committee as the independent registered public accounting firm for the Company and its subsidiariessubsidiary for the fiscal year 2007.Fiscal 2010.  Consequently, the Board has approved the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year 2007.Fiscal 2010.
 
Your Board of Directors recommends a vote FOR the following proposal:
 
RESOLVED that the selection by the Audit Committee of the firm of Deloitte & Touche LLP, as independent registered public accounting firm for the Company for the fiscal year 2007,Fiscal 2010, is hereby ratified.

PROPOSALS TO AMEND ARTICLES OF INCORPORATION

In General

InItems 3, 4 and 5, the Board recommends that the shareholders authorize amendments to the Company’s Articles of Incorporation to:
·Increase authorized common stock from 64,604,404 to 100,000,000 shares (Item 3);
·Specify that 25,000,000 shares of preferred stock are authorized (Item 4); and
·Eliminate bankruptcy related language (Item 5).
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        The remaining provisions of the Articles of Incorporation would not be amended.
The affirmative vote of the holders of a majority of the outstanding shares of common stock will be required for adoption of each amendment. Assuming the amendments to the Articles of Incorporation proposed in Items 3, 4 and 5 are authorized by our shareholders, the Articles of Incorporation attached to this Proxy Statement as Appendix A will be filed with the Secretary of State of the State of Nevada promptly after the Annual Meeting, at which time they will become effective.
The Board believes that the proposed increase to authorized common stock and the specification of the shares of preferred stock authorized are essential to the continued success of the Company’s growth.  It is the intent of the Board to use the additional shares of common stock and the preferred stock for possible future actions, such as corporate mergers, asset acquisitions, stock splits, stock dividends, equity compensation awards, or other corporate purposes. The Board has no intention to use preferred stock to discourage or impede an attempt to acquire or otherwise change control of the Company or to make it more difficult to remove incumbent Directors from office.  Specifically, the Board does not intend to issue any of the preferred stock being proposed with super-voting rights to deter a takeover attempt that it determined would be in the best interests of the shareholders.
Background
On August 8, 2001, the United States Bankruptcy Court for the Southern District of Texas Houston Division confirmed and directed the implementation of a Third Amended Plan of Reorganization of Stage Stores, Inc., a Delaware corporation (“Stage”), Specialty Retailers, Inc., a Texas corporation, and Specialty Retailers, Inc. (NV), a Nevada corporation (“SRINV”) (the “Plan”).  The merger of Stage into SRINV was one of the restructuring transactions set forth in the Plan. On August 24, 2001, Stage merged into SRINV, the Articles of Incorporation of SRINV continued in full force; the name of the surviving corporation was changed from Specialty Retailers, Inc. (NV) to Stage Stores, Inc. (the “Company”); and the Company emerged from bankruptcy as a Nevada corporation.  The Articles of Incorporation:
·provide that the total number of shares of stock that the Company is authorized to have outstanding at any one time is 50,000,000 shares of common stock with a par value of one cent ($.01) per share;
·provide that the Company has the authority to issue preferred stock, but prohibits the Company from issuing nonvoting equity securities to the extent set forth in Section 1123(a) of the Bankruptcy Code; and
·contain other bankruptcy related language.
Between August 24, 2001 and January 5, 2007, the Company took the following actions with respect to its common stock:
·On August 24, 2001, the Company issued approximately 20 million shares of common stock and Series A and Series B Warrants (collectively, the “Warrants”) for an aggregate of approximately 1.6 million shares of common stock pursuant to the Plan;
·On August 24, 2001, pursuant to the Plan and with the approval of the Company’s shareholders (former creditors), the Company adopted the 2001 Equity Incentive Plan (the “2001 Plan”) and reserved 4,000,000 shares for awards under the 2001 Plan;
·On May 29, 2003, the Company’s shareholders adopted the 2003 Non-Employee Director Equity Compensation Plan (the “2003 Director Plan”) and reserved 100,000 shares for awards under the 2003 Director Plan;
·On June 3, 2005, the Company’s shareholders adopted the Amended and Restated 2001 Equity Incentive Plan, which increased the aggregate number of shares that can be issued for awards under the 2001 Plan from 4,000,000 to 5,500,000;
·On August 19, 2005, the Company issued approximately 9.1 million shares to holders of outstanding common stock as a result of a three-for-two stock split (the “2005 Stock Split”).  As a result of the 2005 Stock Split, the number of shares available upon exercise of the Warrants was automatically increased to approximately 2.4 million, the number of shares reserved for awards under the 2001 Plan was automatically increased to 8,250,000, and the number of shares reserved for awards under the 2003 Director Plan was automatically increased to 150,000 due to the anti-dilution provisions of the Warrants, the 2001 Plan and the 2003 Director Plan;
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·From August 24, 2001 until their expiration on August 23, 2006, the Company issued approximately 2.4 million shares upon the exercise of the Warrants;
·On January 31, 2007, the Company issued approximately 14.6 million shares to holders of outstanding common stock as a result of a second three-for-two stock split (the “2007 Stock Split”).  As a result of the 2007 Stock Split, the number of shares reserved for awards under the 2001 Plan was automatically increased to 12,375,000 and the number of shares reserved for awards under the 2003 Director Plan was automatically increased to 225,000 due to the anti-dilution provisions of the 2001 Plan and the 2003 Director Plan; and
·In order to affect the “2007 Stock Split”, the Company amended the Articles of Incorporation to increase the number of shares of authorized common stock from 50.0 million  to 64.3 million. The increase in the number of authorized shares of common stock by 14.6 million corresponded to the 14.6 million shares issued by the Company in the 2007 Stock Split. Pursuant to Nevada law, this increase in the Company’s authorized common stock was accomplished by a resolution of the Board and by the filing of a Certificate of Change Pursuant to NRS 78.209 with the Secretary of State of the State of Nevada.
While there are currently no plans or arrangements for use of either the additional shares of authorized common stock or the shares of preferred stock for any purpose, the Board believes that it is in the best interests of the Company and its shareholders for the Company to have sufficient authorized stock, both common and preferred, for any contingency.  Therefore, the Board believes that the Articles of Incorporation should be amended to increase the total number of authorized shares of common stock from 64,604,404 to 100,000,000 and to specify that 25,000,000 shares of preferred stock are authorized.
If both of the proposed amendments to the Articles of Incorporation described in this proxy statement related to the common and preferred stock are authorized by our shareholders, the amendment will be filed with the Secretary of State of the State of Nevada promptly after the Annual Meeting, at which time it will become effective, and Article 4 –Authorized Stock will be amended and restated substantially as follows:

“ARTICLE 4 – AUTHORIZED STOCK

The total number of shares of capital stock which the Corporation shall have the authority to issue is One Hundred Million (100,000,000) shares of common stock with a par value of one cent ($.01) per share and Twenty-Five Million (25,000,000) shares of preferred stock with a par value of one cent ($.01) per share, undesignated as to class, powers, designations, preferences, limitations, restrictions or relative rights.  The board of directors of the Corporation is authorized to fix and determine any class or series of preferred stock and the number of shares of each class or series and to prescribe the powers, designations, preferences, limitations, restrictions and relative rights of any class or series established, all by resolution of the board of directors and in accordance with Sections 78.1955 and 78.195(1) of the Nevada Revised Statutes, as the same may be amended and supplemented.”
 

ITEM 3 – AMENDMENT OF ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK
The Board of Directors recommends that the shareholders authorize an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 64,604,404 to 100,000,000, with a par value one cent ($.01) per share.
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Reason for the Amendment to Increase Authorized Common Stock

An increase in authorized shares is necessary at this time because the Company has nearly depleted the amount of common stock available for future issuance.  As of April 16, 2007, our 64,603,404 shares of authorized common stock are held as set forth in the following table:

Allocation
Number of Shares
Outstanding43,408,403
Treasury (Issued and Repurchased)(1) 11,033,348
Reserved for Issuance Under 2001 Plan (2)6,423,866
Reserved for Issuance Under 2003 Director Plan (3)   150,000
Balance (Authorized But Not Issued) 3,587,787
Total64,603,404

(1)Treasury shares do not have voting rights and do not participate in dividends.  Treasury shares may be retired and restored to the status of authorized and unissued shares without an amendment to the Articles of Incorporation or may be disposed of for such consideration as the Board may determine.
(2)Includes 721,941 shares reserved for future issuance under the 2001 Plan and 5,701,925 shares issuable upon the vesting and/or exercise of outstanding awards granted under the 2001 Plan.
(3)Includes 140,709 shares reserved for future issuance under the 2003 Director Plan and 9,291 shares issuable upon the vesting and/or exercise of outstanding awards granted under the 2003 Director Plan.
The execution of the Company’s business strategy requires that common stock be available for acquisitions and other corporate purposes.  The additional common stock would be available for issuance from time to time as determined by the Board.  The Board believes that the increase in authorized shares of common stock is desirable to enhance the Company’s flexibility in taking possible future actions, such as corporate mergers, asset acquisitions, stock splits, stock dividends, equity compensation awards, or other corporate purposes. The proposed amendment will allow the Company to accomplish these objectives quickly.  The Board will determine whether, when and on what terms to issue shares of common stock.  Use of the shares proposed to be authorized will not require approval by a vote of the shareholders unless required under Nevada corporate law or the rules of the NYSE or any other national securities exchange on which the common preferred stock is then listed, which approval is not expected to be required.
Characteristics of Additional Common Stock
The additional common stock to be authorized will have rights identical to the currently outstanding common stock of the Company.  The proposed amendments will not affect the par value of the common stock, which will remain at one cent ($.01) per share. Under the Articles of Incorporation, shareholders do not have preemptive rights to subscribe to additional securities which may be issued by the Company.  This means that current shareholders do not have a prior right to purchase any of the additional common stock in order to maintain their proportionate ownership of common stock.
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Effect of the Issuance of Additional Common Stock
If the Company issues additional shares of common stock or other securities convertible into common stock in the future, it could dilute the proportionate share voting rights of existing shareholders and could also dilute earnings per share and book value per share of existing common shareholders.
Although the Board has no intention to do so, the Board will have the authority to issue common stock in a manner that could make it more difficult, or discourage an attempt, to obtain control of the Company by means of a merger, tender offer, proxy contest, or other method as a person seeking to acquire a Controlling Interest would be need to purchase more shares. Such an occurrence, in the event of a hostile takeover, may have an adverse impact on shareholders who may wish to participate in such offer. For example, such shares could be used to create a substantial voting block favorable to the Board, to effect an acquisition that would preclude a potential acquiring person from gaining control, or dilute the voting power of a potential acquirer. The Board is not aware of any effort by any person to obtain control of the Company and does not contemplate the issuance of authorized shares for the foregoing purposes.
If the amendment to the Articles of Incorporation is authorized by our shareholders, the amendment will be filed with the Secretary of State of the State of Nevada promptly after the Annual Meeting, at which time it will become effective, and Article 4 –Authorized Stock will be amended and restated substantially as follows:
“The total number of shares of capital stock which the Corporation shall have the authority to issue is One Hundred Million (100,000,000) shares of common stock with a par value of one cent ($.01) per share.”
Your Board of Directors recommends a vote FOR the proposed amendment to the Company’s Articles of Incorporation to increase the authorized common stock to 100,000,000 shares.

ITEM 4 – AMENDMENT OF ARTICLES OF INCORPORATION TO SPECIFY
AUTHORIZED PREFERRED STOCK
The Board of Directors recommends that the shareholders authorize an amendment to the Company’s Articles of Incorporation to specify that 25,000,000 shares of preferred stock with a par value of one cent ($.01) per share are authorized.
Reason for the Amendment to Specify Authorized Preferred Stock
Although the Articles of Incorporation authorize the Company to issue preferred stock, they do not specify how much preferred stock is authorized.

As with common stock, the Board believes that the specification of the number of authorized shares of preferred stock is desirable to enhance the Company’s flexibility in taking possible future actions, such as corporate mergers, asset acquisitions, or other corporate purposes. The proposed amendment will allow the Company to accomplish these objectives quickly as the preferred stock would be available for issuance from time to time as determined by the Board.  The Board will determine whether, when and on what terms to issue shares of preferred stock.  Use of the preferred stock proposed to be authorized will not require approval by a vote of the shareholders unless required under Nevada corporate law or the rules of the NYSE or any other national securities exchange on which the Company’s common stock is then listed, which approval is not expected to be required.

Characteristics of Preferred Stock
The par value of the preferred stock will be set at one cent ($.01) per share. The preferred stock proposed to be authorized will be undesignated. This means that the Board will be empowered to issue the preferred stock without any future shareholder action (unless otherwise required, which is not expected to be the case) and that the Board will be authorized to fix and determine any class or series of preferred stock and the number of shares of each class or series and to prescribe the powers, designations, preferences, limitations, restrictions and relative rights of any class or series established, all by resolution of the Board and in accordance with Sections 78.1955 and 78.195(1) of the Nevada Revised Statutes, as the same may be amended and supplemented.
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Effect of the Issuance of Preferred Stock
It is not possible to state the effects of the proposed amendment to specify the authorized shares of preferred stock upon the rights of holders of common stock until the Board determines the respective rights of the holders of one or more series of preferred stock. However, the issuance of shares of preferred stock pursuant to the Board’s authority described above may adversely affect the rights of the holders of common stock. Specifically, the effects of such issuances of preferred stock could include (i) reduction of the amount of cash otherwise available for payment of dividends on common stock, (ii) restrictions on dividends on common stock, (iii) dilution of the voting power of common stock, and (iv) restrictions on the rights of holders of common stock to share in the Company’s assets on liquidation until satisfaction of any liquidation preference granted to the holders of such subsequently designated series of preferred stock. For example, any preferred stock issued by the Company would likely rank senior to the common stock as to dividend rights, liquidation preferences or both, may have full or limited voting rights, and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock could decrease the amount of earnings and assets allocable to or available for distribution to holders of common stock and adversely affect the rights and powers, including voting rights of the common stock, and may discourage bids for the common stock or may otherwise adversely affect the market price of the common stock.

If the amendment to the Articles of Incorporation is authorized by our shareholders, the amendment will be filed with the Secretary of State of the State of Nevada promptly after the Annual Meeting, at which time it will become effective, and Article 4 –Authorized Stock will be amended and restated substantially as follows:
“The Corporation shall have the authority to issue Twenty-Five Million (25,000,000) shares of preferred stock with a par value of one cent ($.01) per share, undesignated as to class, powers, designations, preferences, limitations, restrictions or relative rights.  The board of directors of the Corporation is authorized to fix and determine any class or series of preferred stock and the number of shares of each class or series and to prescribe the powers, designations, preferences, limitations, restrictions and relative rights of any class or series established, all by resolution of the board of directors and in accordance with Sections 78.1955 and 78.195(1) of the Nevada Revised Statutes, as the same may be amended and supplemented.
Your Board of Directors recommends a vote FOR the proposed amendment to the Company’s Articles of Incorporation to specify that 25,000,000 shares of preferred stock with a par value of one cent ($.01) per share are authorized.

ITEM 5 – AMENDMENT OF ARTICLES OF INCORPORATION TO ELIMINATE
BANKRUPTCY RELATED LANGUAGE

As it has been nearly six years since the Company’s emergence from bankruptcy and since the Company has fully complied with the Plan, the Board believes that it is in the best interests of the Company and its shareholders to amend the Articles of Incorporation in order to eliminate all bankruptcy related language.
If the amendment to the Articles of Incorporation is authorized by our shareholders, the amendment will be filed with the Secretary of State of the State of Nevada promptly after the Annual Meeting, at which time it will become effective, and the following bankruptcy related language will be eliminated from Article IV:
“However, the Corporation shall be prohibited from issuing nonvoting equity securities to the extent set forth in Section 1123(a) of Title 11 of the United States Code, Sections 101-1330, as now in effect or hereafter amended (the "Bankruptcy Code")”
And the following Article V will be eliminated in its entirety:
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“ARTICLE V - ISSUANCE OF NEW COMMON STOCK
Effective immediately after the cancellation of the common stock of the Corporation, whether issued and outstanding or held in treasury, pursuant to terms and conditions of the Third Amended Plan of Reorganization of Stage Stores, Inc., Specialty Retailers, Inc. and Specialty Retailers, Inc.(NV) as confirmed on August 8, 2001(the "Plan"), the Corporation shall issue New Common Stock in amounts not less than the amounts necessary to permit the distributions thereof required or contemplated by the Plan.”
Your Board of Directors recommends a vote FOR the proposed amendment to the Company’s Articles of Incorporation to eliminate all bankruptcy related language.
SECURITIESSECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
 
               
The following table providestables provide information as of February 3, 2007January 30, 2010 concerning (a) the Company's Amended(i) our 2001 Plan and Restated 2001 Equity Incentiveour 2008 Plan, (the "2001 Plan"), under both of which the Company'sour common stock is authorized for issuance to officers, Directors and other key employees in the form of restricted stock, upon the exercise of stock options and stock appreciation rights (SARS)(SARs) granted to them, and as the result of performance shares granted to them, and (b) the Company's(ii) our  Amended and Restated 2003 Non-Employee Director Compensation Plan (the "2003 Director Plan"), under which the Company'sour common stock is authorized for issuance to non-employee Directors in lieu of all or a portion of their cash compensation if they so elect.
Plan category
 
Number of securities to be issued upon exercises of outstanding options, warrants and rights (a)
  
Weighted-average exercise price of outstanding options, warrants and rights (b)
  
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
 
          
Equity compensation plans approved by security holders:         
2001 Plan  4,562,836  $12.09   1,522,607(1)
2003 Director Plan  9,270(2)   (3)  140,730 
             
Equity compensation plans not approved by security holders: None  None  None 
             
Total  4,572,106  $12.09   1,663,337 

 
AS OF JANUARY 30, 2010
Plan category Number of securities to be issued upon exercises of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) 
         
Equity compensation plans approved by security holders:       
 2001 Plan (1)  3,599,440(2)$15.26  649,514 
 2008 Plan  1,025,000(2)$9.68  1,725,000 
 2003 Director Plan  23,104(3)(4)  201,896(5)
         
Equity compensation plans not approved by security holders None None None 
Total  4,647,544 $14.96  2,576,410 
___________________________________
(1)The number of securities remaining available for future issuance under the 2001 Plan has also been reduced to reflect an aggregate maximum of 336,830288,000 shares at the Target Number that may be issued as a result of the grant of performance shares and 101,416208,221 shares of restricted stock issued under the 2001 Plan.
 
(2)The weighted average remaining contractual life of these outstanding options and SARs is 3.4 years for the 2001 Plan and 6.1 years for the 2008 Plan.  The weighted average remaining contractual life for the 2001 Plan and the 2008 Plan together is 4.0 years.
(3)Reflects Deferred Stock Units ("DSUs") issued under the Directors'2003 Director Plan.  The number of DSUs credited to a Director's account is computed by dividing (i) the amount of compensation the Director has elected to defer by (ii) the average of the high and low prices of the Company's stock for the five trading days prior to the first day of the term of the Director during which the election has been made.  An election, once made, is irrevocable for the applicable period to which it relates.  The number of shares of common stock to be distributed to a Director will be equal to the number of DSUs credited to a Director's account.  Beginning March 28, 2007, the number of DSU’s credited will be computed by dividing (i) the amount of compensation the Director has elected to defer by (ii) the closing price of the Company's stock on the first day of the term of the Director during which the election has been made. 
 
(3)(4)Not applicable.
 
(5) Shares granted under the 2003 Director Plan are solely for non-employee Directors that elect to receive their fees or retainers in lieu of cash.  There is no Company match or premium applied to compensation received in the form of equity.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’sour Directors and executive officers (“reporting persons”) to file reports with the SEC disclosing their ownership, and changes in their ownership of the Company’sour common stock.  Copies of these reports must also be furnished to the Company.us.
 
Based solely upon itsour review of the copies of reports furnished to the Companyus and written representations that no other reports are required, during 2006, the Company believes2009, we believe that all of the Company’sour Directors and executive officers made all required filings on a timely basis.basis except for the following:
 
·  On March 31, 2009, Senior Vice President Russell Lundy II filed a Form 4 with the SEC on a timely basis reporting, among other things, the grant of Stock Appreciation Rights (“SARs”) to him by the Company.  Due to an inadvertent administrative error by the Company, the number of SARs (10,000) included on the Form 4 was not correct. On being informed of the error on January 21, 2010, Mr. Lundy filed an amendment to the Form 4 on January 22, 2010 reporting the correct number of SARs (12,000).
ADDITIONAL INFORMATION
ADDITIONAL INFORMATION
Voting Securities
 
Shareholders of record at the close of business on April 16, 2007,12, 2010, will be eligible to vote at the Annual Meeting.  The voting securities of the Company consist of its $0.01 par value common stock, of which 43,408,40338,449,491 shares were outstanding on April 16, 2007.12, 2010.  Each share outstanding on the recordthat date will be entitled to one vote.  Treasury shares are not voted.  Individual votes of shareholders are kept private, except as appropriate to meet legal requirements.  Access to proxies and other individual shareholder voting records is limited to the Independent Inspector of Election and certain employees of the Company and its agents who must acknowledge in writing their responsibility to comply with this policy of confidentiality.
 
Vote Required for Approval
 
The nominees receiving the ninesix highest vote totals (a plurality) of the votes cast at the Annual Meeting in person or by proxy will be elected as Directors.  All other matters require for approval the favorable vote of a majority of shares voted at the Annual Meeting in person or by proxy.  Abstentions, if any, will not be counted as
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votes cast.  Therefore, they will have no effect on the outcome of the other matters to be voted on at the Annual Meeting.  A broker non-vote occurs when a nominee holding shares for
Broker Non-Vote
If you are a beneficial holderowner whose shares are held of record by a broker, you must instruct the broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange (“NYSE”). There is an important change this year regarding broker non-votes and Director elections. See “Important Change” below for information about the change.
If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting power andauthority under NYSE rules to vote your shares on the ratification of Deloitte & Touche LLP, even if the broker does not receive voting instructions from you. However, your broker does not have discretionary authority to vote on the election of Directors without instructions from you, in which case a broker non-vote will occur and your shares will not be voted on the election of Directors.
Important Change: A change to NYSE Rule 452 became effective January 1, 2010 no longer permits brokers to vote in the election of Directors if the broker has not received instructions from the beneficial owner. Broker non-votes will not be treated as shares present and entitledThis represents a change from prior years, when brokers had discretionary voting authority in the election of Directors. Accordingly, it is particularly important that beneficial owners instruct their brokers how they wish to vote on a voting matter and will have no effect on the outcome of the vote.their shares.
 
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Manner for Voting Proxies
 
The shares represented by all valid proxies received by mail, or submitted by telephone or the Internet will be voted in the manner specified.  Where specific choices are not indicated, the shares represented by all valid proxies received will be voted:  (1)(i) for the nominees for Director named in this Proxy Statement (2)and (ii) for ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2007, (3) for amendment of the Articles of Incorporation to increase authorized common stock, (4) for amendment of the Articles of Incorporation to specify authorized preferred stock, and (5) for amendment of the Articles of Incorporation to eliminate bankruptcy related language.Fiscal 2010. Should any matter not described above be properly presented at the Annual Meeting, the persons named in the Proxy Card will vote in accordance with their judgment.
 
Voting in Person at the Annual Meeting
We encourage shareholders to submit proxies in advance by telephone, by the Internet or by mail. Shareholders may also vote in person at the annual meeting, or may execute a proxy designating a representative to vote for them at the meeting. If your shares are held in street name and you wish to have your shares voted for the election of Directors, you must either (i) instruct the record holder how to vote your shares, (ii) vote your shares by phone or the Internet, or (iii) bring a brokerage statement or other proof of ownership of State Store stock as of the Record Date with you to the Annual Meeting.
Other Matters to be Presented
 
The Board knows of no other matters which may be presented at the Annual Meeting.  If any other matters properly come before the Annual Meeting, including any adjournment or adjournments thereof, proxies received in response to this solicitation will be voted upon such matters in the discretion of the person or persons named in the Proxy Card.
 
Solicitation of Proxies
 
Proxies will be solicited on behalf of the Board by mail or in person, and all solicitation costs will be paid by the Company.  CopiesUpon written request, copies of proxy materialthis Proxy Statement, the Proxy Card and of theour Annual Report for 20062009 will be suppliedfurnished to holders of record, as well as to brokers, dealers, banks and voting trustees, or their nominees, for the purpose of soliciting proxies from beneficial owners, and the Companywe will reimburse such holders for their reasonable expenses. BNY Mellon InvestorShareowner Services LLC has been retained to assist in soliciting proxies at a fee of $8,500$7,500 plus reasonable out-of-pocket costs.

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Electronic Access to Proxy Statement and Annual ReportTable of Contents
 
This Proxy Statement andShareholders of Record Requesting Copies of the Company’s 20062009 Annual Report
A copy of our 2009 Annual Report on Form 10-K are available on the Company’s website at www.stagestoresinc.com by clicking “Investor Relations”, then “SEC Filings”, then the document to be viewed or obtained.  A copy of the Company’s 2006 Annual Report on Form 10-K will also be furnished without charge to shareholders beneficially or of record at the close of business on April 16, 2007,12, 2010, on written request to Bob Aronson, Vice President, Investor Relations, at (800) 579-2302.10201 Main Street, Houston, TX 77025.
Electronic Access to Proxy Statement and Annual Report
This Proxy Statement, our Annual Report to Shareholders for Fiscal 2009 and the Company’s 2006our Annual Report on Form 10-K for Fiscal 2009 are available at http://bnymellon.mobular.net/bnymellon/ssi. This Proxy Statement (DEF 14A) and our Annual Report on Form 10-K for Fiscal 2009 are also available on the SEC’s EDGAR database at www.sec.gov.

Documents Available in Print

In addition to being posted with printer friendly versions on the Investor Relations/Corporate Governance site on our website (www.stagestoresinc.com), our Audit Committee, Corporate Governance and Nominating CompensationCommittee and Compensation Committee Charters, our Corporate Governance Guidelines, our Code of Ethics for Senior Officers and our Code of Ethics and Business Conduct are available in print to any shareholder who requests them.  Written requests should be made to Bob Aronson, Vice President, Investor Relations, at 10201 Main Street, Houston, TX 77025.
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YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting are available through 11:59 PM Eastern Time the day prior to the shareholder meeting date.
STAGE STORES, INC.
VOTE BY INTERNET
http://www.proxyvoting.com/ssi
Use the Internet to vote your proxy. Have your proxy card in hand when you access the website.
OR
VOTE BY TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. There is no charge to you for this call.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
OR
VOTE BY MAIL
To vote by mail, mark, sign and date your proxy card and return it promptly in the enclosed postage-paid envelope.
72541Fulfillment
                 72541
‚ FOLD AND DETACH HERE ‚
The Board of Directors recommends a vote “FOR” items 1 and 2.
Please mark your votes as indicated in this examplex
ITEM 1 – ELECTION OF DIRECTORS
FORAGAINSTABSTAINFORAGAINSTABSTAINFORAGAINSTABSTAIN
1.1 Alan Barocas
ooo
1.4 William Montgoris
ooo
ITEM 2 –  Ratification of the Selection of Deloitte & Touche LLP as Independent Registered Public Accounting Firm for Fiscal 2010.
ooo
1.2 Michael Glazer
ooo
1.5 David Schwartz
ooo
ITEM 3 –  Such other matters as may properly come before the Annual Meeting or any adjournment thereof.
1.3 Andrew Hall
ooo
1.6 Cheryl Turpin
ooo
This proxy, when properly executed, will be voted in the manner directed herein. If no directions are given, this proxy will be voted “FOR” Items 1 and 2.
 
I plan to attend the Annual Meetingo
Mark Here for Address Change or Comments
SEE REVERSE
o

SignatureSignatureDate
53NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.

 
APPENDIXAdmission Ticket
STAGE STORES, INC.
Annual Meeting of Shareholders
Date – June 10, 2010
Time – 1:00 p.m. local time
Location – Stage Stores Corporate Headquarters
10201 Main Street, Houston, TX 77025
ADMITTANCE MAY BE DENIED WITHOUT A TICKET
In accordance with the Company’s security procedures, all persons attending the Annual Meeting must present an Admission Ticket and picture identification. If you are a shareholder of record and plan to attend the meeting in person, please bring this admission Ticket with you to the meeting. For security purposes, briefcases, bags, purses, backpacks and other containers will be subject to search at the door.


Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on to Investor ServiceDirect® at www.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you through enrollment.
AMENDED‚ FOLD AND RESTATED ARTICLES OF INCORPORATIONDETACH HERE‚
OF
STAGE STORES, INC.
Proxy for the 2010 Annual Meeting of Shareholders


ARTICLE 1 – NAMEJune 10, 2010

THIS PROXY IS SOLICITED ON BEHALF OF STAGE STORES, INC.’S
BOARD OF DIRECTORS
The nameundersigned hereby appoints Andrew Hall and Edward Record, and each of this corporation isthem, as proxies for the undersigned with full power of substitution to vote all shares of Stage Stores, Inc.’s common stock which the undersigned may be entitled to vote at the 2010 Annual Meeting of Shareholders of Stage Stores, Inc. (hereafter referred to asbe held at the “Corporation”).

ARTICLE 2 – RESIDENT AGENT

The name ofCompany’s headquarters in Houston, Texas on Thursday, June 10, 2010 at 1:00 P.M. local time, or at any adjournment thereof, upon the Corporation’s Resident Agent is The Corporation Trust Company of Nevada.  The street address of the Corporation’s Resident Agent where process may be servedmatters set forth on the Corporationreverse side and described in the State of Nevada is 6100 Neil Road, Suite 500, Reno, Nevada 89511.accompanying Proxy Statement and upon such other matters as may properly come before the meeting or any adjournment thereof.

ARTICLE 3 – PURPOSE

The purpose of the Corporation is to engage in any lawful activity for which a corporation may be organized under Chapter 78 of the Nevada Revised Statutes.

ARTICLE 4 – AUTHORIZED STOCK

The total number of shares of capital stock which the Corporation shall have the authority to issue is One Hundred Million (100,000,000) shares of common stock with a par value of one cent ($.01) per share and Twenty-Five Million (25,000,000) shares of preferred stock with a par value of one cent ($.01) per share, undesignated as to class, powers, designations, preferences, limitations, restrictions or relative rights.  The board of directors of the Corporation is authorized to fix and determine any class or series of preferred stock and the number of shares of each class or series and to prescribe the powers, designations, preferences, limitations, restrictions and relative rights of any class or series established, all by resolution of the board of directors and in accordance with Sections 78.1955 and 78.195(1) of the Nevada Revised Statutes, as the same may be amended and supplemented.

ARTICLE 5 – EXISTENCE

The Corporation shall have perpetual existence.

ARTICLE 6 – DIRECTORS

The business of the Corporation shall be managed by a Board of Directors.  The number of directors and their terms may be increased or decreased in such manner as shall be provided in the Corporation’s Bylaws; provided, however, the Corporation shall have at least one director.  In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized, subject to the Bylaws, if any, adopted by the shareholders, to make, alter, or amend the Bylaws of the Corporation.

ARTICLE 7 – ACQUISITION OF CONTROLLING INTEREST

The Corporation expressly elects to be governed by Chapter 78 of the Nevada Revised Statutes as the same may be amended or supplemented.  However, the Amended and Restated Articles of Incorporation, the Bylaws or a resolution adopted by the directors of the Corporation may impose stricter requirementsVoting instructions are set forth on the acquisitionreverse side.
Important notice regarding the Internet availability of a controlling interest inproxy materials for the Corporation than2010 Annual Meeting of Shareholders: Stage Stores, Inc.’s 2010 Notice of Annual Meeting and Proxy Statement, and Stage Stores, Inc.’s Annual Report to Shareholders and Annual Report on Form 10-K for the provisions of Chapter 78 of the Nevada Revised Statutes.  Furthermore, this election to be governed by Chapter 78 of the Nevada Revised Statutes is not intended to, and shall not, restrict the directors of the Corporation from taking any action to protect the interests of the Corporation and its stockholders including, but not limited to, adopting or executing plans, arrangements or instruments that deny rights, privileges, power or authority to a holder of a specified number of shares or percentage of share ownership or voting power.fiscal year ended January 30, 2010, are available at: htt p://bnymellon.mobular.net/bnymellon/ssi


ARTICLE 8 – AMENDMENT

The Corporation reserves and shall have the right to amend, alter, change or repeal any provision contained in these Amended and Restated Articles of Incorporation, in the manner now or hereafter prescribed, and all right conferred upon the stockholders of the Corporation herein are subject to this reservation.

I, THE UNDERSIGNED, being the President of this Corporation, do hereby certify pursuant to Nevada Revised Statutes Section 78.390 that the foregoing Amended and Restated Articles of Incorporation were adopted by resolution of the Board of Directors on March 28, 2007 and were adopted by ___% of the shareholders entitled to vote on the matter on June 7, 2007.

Dated this 7th day of June, 2007.


Andrew T. Hall, President
BNY MELLON SHAREOWNER SERVICES
Address Change/Comments
P.O. BOX 3550
(Mark the corresponding box on the reverse side)
SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed on the other side)\
 
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