def14a

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )


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	Filed by a Party other than the Registrant o

	Check the appropriate box:


	o Preliminary Proxy Statement
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	x Definitive Proxy Statement
	o Definitive Additional Materials
	o Soliciting Material Pursuant to §240.14a-12


	x No fee required.
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	o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

3231 Southeast Sixth Avenue

Topeka, Kansas 66607

April 14, 2010

Dear Fellow Stockholder,

On behalf of the Board of Directors and Management of Collective Brands, Inc., I cordially invite you to attend the Annual Meeting of Stockholders to be held at the Collective Brands, Inc. Worldwide Headquarters, at 3231 Southeast Sixth Avenue, Topeka, Kansas on Thursday, May 27, 2010, at 10:00 a.m., Central Daylight Saving Time. At the meeting, you will hear a report on the Company’s progress during fiscal 2009, our strategies for the future, and have a chance to meet the Company’s directors and executives. In addition, we will conduct the following business:


	I.	Elect three directors, each for a three-year term;

	II.	Ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountants for the 2010 fiscal year; and

	III.	Conduct other business, if properly raised.

In the following pages you will find the formal notice of the meeting and the proxy statement. The proxy statement provides more detail about the agenda and procedures for the meeting and includes biographical information about the director candidates. The Company’s Annual Report for the fiscal year ended January 30, 2010 is also enclosed.

Even if you only own a few shares, we want your shares to be represented at the meeting. I encourage you to vote via telephone or the Internet. Voting by telephone or the Internet is fast and convenient. More importantly, voting by telephone or the Internet is better for our environment and saves the Company money. If you prefer, you can sign, date and return your proxy card promptly in the enclosed envelope. To attend the meeting in person, please follow the instructions on page 1.

Thank you for your investment in Collective Brands, Inc.

Sincerely,

Matthew E. Rubel
Chief Executive Officer and President

NOTICE OF COLLECTIVE BRANDS, INC. ANNUAL MEETING OF STOCKHOLDERS

Date:

May 27, 2010

Time:

10:00 a.m., Central Daylight Saving Time

Place:

Collective Brands, Inc. Worldwide Headquarters
Pozez Auditorium
3231 Southeast Sixth Avenue
Topeka, Kansas 66607

Purposes:


	I.	Elect three directors, each for a three-year term;
	II.	Ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountants for the 2010 fiscal year; and
	III.	Conduct other business, if properly raised.

Who may vote?

Only stockholders of record on April 1, 2010, may vote.

Your vote is important. I encourage you to vote via telephone or the Internet. Voting by telephone or the Internet is fast and convenient. More importantly, voting by the Internet is better for the environment and saves the Company money. If you prefer, you can sign, date and return your proxy card promptly in the enclosed envelope. If you attend the meeting, you may revoke your proxy and vote in person, if you wish to do so.

Michael J. Massey
Secretary

April 14, 2010

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 2010

The Proxy Statement related to our 2010 Annual Meeting of Stockholders and our Annual Report on Form 10-K for the year ended January 30, 2010 are available on our website at http://www.collectivebrands.com/ by selecting Investor Relations.

PROXY STATEMENT

What are the purposes of this meeting?

The purposes of this meeting are to (i) elect three directors, each for a three-year term; (ii) ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountants for the 2010 fiscal year; and (iii) conduct other business, if properly raised.

Who may vote?

Stockholders of Collective Brands, Inc., a Delaware corporation (“Collective Brands” or the “Company”), as recorded in our stock register on April 1, 2010, may vote at the meeting.

How to vote?

Proxies may be submitted via telephone by calling toll free 1-800-652-VOTE (8683), or the Internet at www.investorvote.com or United States mail. Also, you may vote in person at the meeting. We recommend that you vote by proxy even if you plan to attend the meeting. If you attend the meeting, you may revoke your proxy and vote in person, if you wish to do so.

How do proxies work?

The Board of Directors is asking for your proxy. Giving us your proxy means you authorize us to vote your shares at the meeting in the manner you direct. You may vote for or withhold voting authority with respect to each director candidate. You also may vote for, against or abstain from voting on the other proposals. If you sign and return the enclosed proxy card, but do not specify how to vote, we will vote your shares in favor of our director candidates and in favor of Management’s proposals.

Why did I receive multiple proxy cards?

You may receive more than one proxy or voting instruction card depending on how you hold your shares. You will receive a combined proxy voting instruction card for shares registered in your name and for shares allocated to you under the Company’s profit sharing plans. If you hold shares through someone else, such as a stockbroker, you may also get material from them asking how you want to vote. Please vote each proxy or voting instruction card.

How do I revoke my proxy?

You may revoke your proxy before it is voted by submitting a new proxy card with a later date or subsequently voting via telephone or the Internet. Record holders may also revoke their proxy by voting in person at the meeting or by notifying the Company’s Secretary in writing at the address listed under “Questions” on page 42.

What is a quorum?

In order to carry on the business of the meeting, we must have a quorum. This means at least a majority of the outstanding shares eligible to vote must be represented at the meeting, either in person or by proxy. Shares owned by Collective Brands affiliated companies do not count for this purpose.

How many votes are needed?

The director candidates receiving the most votes will be elected to fill the seats on the Board. The other proposals of Management will pass if a majority of the votes are in favor of it. We count abstentions and broker non-votes to determine if a quorum is present, but not to determine if a proposal passes. When a broker returns a proxy, but does not have authority to vote on a particular proposal, we call it a “broker non-vote.”

Who may attend the meeting?

Only stockholders, their proxy holders and the Company’s guests may attend the meeting. The lower half of your proxy or voting instruction card is your admission ticket. Please bring the admission ticket with you to the meeting.

If you hold your shares through someone else, such as a stockbroker, send proof of your ownership to the Secretary at the address listed under “Questions” on page 42, and we will send you an admission ticket. Alternatively, you may bring proof of ownership with you to the meeting. Acceptable proof could include an account statement showing that you owned Collective Brands shares on April 1, 2010.

This Proxy Statement and the enclosed form of proxy are being mailed to stockholders

on or about April 14, 2010.

PROPOSAL I: ELECTION OF DIRECTORS

Proposal I on the accompanying proxy card

Directors and Nominees for Director

The Board currently consists of nine Directors, divided into three classes, serving staggered terms. Six of the Company’s current Directors are serving in two classes with terms that continue beyond the Annual Meeting, and they are not subject to election at the Annual Meeting. Three of the Company’s Directors who served in the preceding year, Messrs. Daniel Boggan Jr., Michael A. Weiss, and Robert C. Wheeler serve in a class with a term that expires at the 2010 Annual Meeting of Stockholders. Ms. Hofer retired as a director effective January 26, 2010. Messrs. Boggan, Weiss and Wheeler are the nominees of the Board for re-election at the Annual Meeting of Stockholders. If elected at the Annual Meeting, Messrs. Boggan, Weiss, and Wheeler will serve a term of three years that will expire at the Annual Meeting of Stockholders to be held in the year 2013, or until a successor is elected and qualified.

Messrs. Robert F. Moran, Matthew A. Quimet, and Matthew E. Rubel have terms expiring at the 2011 Annual Meeting of Stockholders. Messrs. John F. McGovern and D. Scott Olivet, and Ms. Mylle H. Mangum have terms expiring at the 2012 Annual Meeting of Stockholders.

Each nominee has consented to being named as a nominee and to serve as a Director, if elected. If any nominee should subsequently become unavailable for election, the holders of proxies may, in their discretion, vote for a substitute or the Board may reduce the number of Directors to be elected.

Directors Subject to Election:

DANIEL BOGGAN JR., 64, has served as a Director since September 1997. Mr. Boggan is retired. He served as Chief of Staff for Oakland, California Mayor Ron Dellums from January 2007 to July 2007. He served as Director of Business Development of Siebert Branford Shank & Co., LLC from September 2003 until his retirement in March 2006. Mr. Boggan served as Senior Vice-President of the National Collegiate Athletic Association (“NCAA”) from 1998 to his retirement in August 2003. He joined the NCAA in 1994 as Group Executive Director for Education Services and served as Chief Operating Officer from January 1996 to August 1998. Prior to his tenure with the NCAA, Mr. Boggan was Vice Chancellor of the University of California from 1986 to 1994, and City Manager of Berkeley, California from 1982 to 1986. Mr. Boggan is currently a member of the Board of Directors of Viad Corporation since 2005 and The Clorox Company since 1990. As a result of these and other professional experiences, Mr. Boggan possesses particular knowledge and experience in finance, strategy, technology, government, and academia that strengthen the Board’s collective qualifications, skills, and experience.

MICHAEL A. WEISS, 68, has served as a Director since January 2005. Mr. Weiss has served as the President and Chief Executive Officer of Express, LLC, a private company since July 2007. He previously served in such capacity from 1997 to 2004 when the company was public. Mr. Weiss joined Limited in 1981 and served in a number of positions of increasing responsibility including Vice Chairman from 1993 to 1997 and President of Express from 1982 to 1993. Previously, he had been General Manager for Trousers Up, a subsidiary of Apparel Industries, Inc., and Merchandise Manager for Casual Corner Group, Inc. Mr. Weiss began his career at Abraham & Straus, a subsidiary of Federated Department Stores. Mr. Weiss served as a Director of Chicos FAS, Inc. (also served as Non-executive Chairman) 2005 to 2007, Pacific Sunwear of California, Inc. 2005 to 2008, and Borders Group, Inc. 2005 to 2009. As a result of these and other professional experiences, Mr. Weiss possesses particular knowledge and experience in retail, merchandising, marketing, finance, strategy, technology, supply chain and logistics that strengthen the Board’s collective qualifications, skills, and experience.

ROBERT C. WHEELER, 68, has served as a Director since September 2001. Mr. Wheeler is retired. He served as President of Hill’s Pet Nutrition, Inc. from 1981 to April 2009. He assumed the title of Chairman and Chief Executive Officer in June 1996. From 1987 to 1992, he served as Vice President of Colgate-Palmolive Company and had been a Corporate Officer since 1992. Mr. Wheeler is currently a Director of Security Benefit Group since 1998. As a result of these and other professional experiences, Mr. Wheeler possesses particular knowledge and experience in merchandising, marketing, strategy, technology, supply chain, logistics, international business, integrated

technologies for global organization and multi-division general management experience that strengthen the Board’s collective qualifications, skills, and experience.

THE BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF COLLECTIVE BRANDS COMMON STOCK VOTE IN FAVOR OF THE ABOVE NOMINEES, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.

Continuing Directors:

MYLLE H. MANGUM, 61, has served as a Director since November 1997. She has served as Chief Executive Officer of IBT Enterprises, LLC (formerly International Banking Technologies) since October 2003 and has also served as Chairman and CEO of IBT Holdings since July 2007. Prior to this, Ms. Mangum served as Chief Executive Officer of True Marketing Services, LLC since July 2002. She served as Chief Executive Officer of MMS Incentives, Inc. from 1999 to 2002. From 1997 to 1999 she served as President-Global Payment Systems and Senior Vice President-Expense Management and Strategic Planning for Carlson Wagonlit Travel, Inc. From 1992 to 1997 she served as Executive Vice President-Strategic Management for Holiday Inn Worldwide. Ms. Mangum was previously employed with BellSouth Corporation as Director-Corporate Planning and Development from 1986 to 1992, and President of BellSouth International from 1985 to 1986. Prior to that she was with General Electric. Ms. Mangum served as a Director of Emageon, Inc. June 2004 to April 2009, Scientific-Atlanta, Inc. November 1993 to February 2006 and Respironics, Inc. from May 2004 to March 2008. She is currently a Director of Barnes Group Inc. since December 2002, Haverty Furniture Companies, Inc. since May 1999 and Decatur First Bank, a privately held company since May 2007. As a result of these and other professional experiences, Ms. Mangum possesses particular knowledge and experience in retail, merchandising, marketing, strategy, technology, supply chain, logistics, international business, and multi-division general management experience that strengthen the Board’s collective qualifications, skills, and experience.

JOHN F. MCGOVERN, 63, has served as a Director since June 2003. Mr. McGovern is the founder, and since 1999 a partner, of Aurora Capital LLC, a private investment and consulting firm based in Atlanta, GA. Prior to founding Aurora Capital, Mr. McGovern served in a number of positions of increasing responsibility at Georgia-Pacific Corporation from 1981 to 1999, including Executive Vice President/Chief Financial Officer from 1994 to 1999. Previously, Mr. McGovern had been Vice President and Division Executive, Forest Products Division (1978 to 1981) and Package Division of Chase Manhattan Bank (1971 to 1981). Mr. McGovern served as a Director of GenTek, Inc. (2003 to 2009), Golden Bear Golf, Inc. (1996-2000), Seabulk International, Inc. (2000-2002), Chart Industries, Inc. (2004-2005), and Maxim Crane Works Holdings, Inc. (a privately-held company 2005-2008). He also served as a Director and officer of ChannelLinx, Inc. (2000 to 2002), which filed bankruptcy subsequent to his resignation. He is currently a Director of Neenah Paper, Inc. (since 2006). As a result of these and other professional experiences, Mr. McGovern possesses particular knowledge and experience in finance, strategy, and international finance that strengthen the Board’s collective qualifications, skills, and experience.

ROBERT F. MORAN, 59, has served as a Director since March 2007. Mr. Moran has served as President and Chief Executive Officer of PetSmart, Inc. since June 2009 and as President and Chief Operating Officer of the company since December 2001. He joined PetSmart in July 1999 as President of North American stores. Mr. Moran served as President of Toys R Us, Ltd., Canada from 1998 to June 1999. Prior to that, he spent 20 years with Sears, Roebuck and Company in a variety of financial and merchandising positions, including President and Chief Executive Officer of Sears de Mexico. He was also Chief Financial Officer and Executive Vice President of Galerias Preciados of Madrid, Spain from 1991 to 1993. As a result of these and other professional experiences, Mr. Moran possesses particular knowledge and experience in retail, merchandising, marketing, strategy, technology, finance, supply chain, logistics, international finance, international business, and multi-division general management experience that strengthen the Board’s collective qualifications, skills, and experience.

D. SCOTT OLIVET, 47, has served as a Director since September 2006. Mr. Olivet has served as Executive Chairman of RED Digital Cinema, Chairman of Oakley, Inc. (“Oakley”) and Chief Executive Officer of Renegade Brands, LLC since July 2009. From 2005 to July 2009, Mr. Olivet served as Chief Executive Officer of Oakley. Prior to joining Oakley, Mr. Olivet served as Vice President, Nike Subsidiaries and New Business Development from August 2001 to September 2005. From 1998 to 2001, Mr. Olivet served as Senior Vice President of Real Estate,

Store Design and Construction, for the Gap, Inc. From 1984 to 1998, Mr. Olivet was a partner with Bain & Company. He currently serves as a Director of Oakley, a public company until 2007, since 2005 and RED Digital Cinema, a privately held company, since 2006. As a result of these and other professional experiences, Mr. Olivet possesses particular knowledge and experience in retail, merchandising, marketing, finance, strategy, technology, international business, and multi-division general management experience that strengthen the Board’s collective qualifications, skills, and experience.

MATTHEW A. OUIMET, 51, has served as a Director since June 2008. Mr. Ouimet has served as President and Chief Operating Officer for Corinthian Colleges since July 2009. He served as Executive Vice President — Operations for Corinthian Colleges from January 2009 to June 2009. Prior to Corinthian Colleges, he served as President, Hotel Group for Starwood Hotels and Resorts Worldwide from August 2006 to September 2008. Prior to joining Starwood, Mr. Ouimet spent 17 years at The Walt Disney Company, where he most recently served as president Disneyland Resort. Mr. Ouimet served in a variety of other business development and financial positions, including President of Disney Cruise Line during his employment with Disney. Prior to his work with Disney, Mr. Ouimet was Controller and Senior Vice President, Finance for Lincoln Property Company from 1983 to 1989 and served as a Certified Public Accountant with Price Waterhouse from 1980 to 1983. As a result of these and other professional experiences, Mr. Ouimet possesses particular knowledge and experience in merchandising, marketing, finance, strategy, technology, government, academia, international business, and multi-division general management experience that strengthen the Board’s collective qualifications, skills, and experience.

MATTHEW E. RUBEL, 52, has served as a Director since July 2005 and as Chairman of the Board since May 2008. Mr. Rubel has served as Chief Executive Officer and President of Collective Brands, Inc. since July 2005. Prior to joining Collective Brands, Mr. Rubel was Chairman and Chief Executive Officer for Cole Haan from 1999 to July 2005. He served as Executive Vice President, J. Crew Group and Chief Executive Officer of Popular Club Plan from 1994 to 1999. While at J. Crew Group, Mr. Rubel was responsible for all licensing and international activities, as well as brand marketing and served on its Group Executive Committee. Mr. Rubel has also served as President and Chief Executive Officer of Pepe Jeans USA, and President of the Specialty Division of Revlon. Mr. Rubel served as a Director of Furniture Brands, Inc. 2006 to 2008. As a result of these and other professional experiences, Mr. Rubel possesses particular knowledge and experience in retail, merchandising, marketing, finance, strategy, technology, supply chain, logistics, digital commerce, international business, and multi-division general management experience that strengthen the Board’s collective qualifications, skills, and experience.

Charters and Corporate Governance Principles

At its February 2010 meeting, the Board of Directors reviewed its charter and governance guidelines for the Company and the Board. The full text of the Company’s governance guidelines, and the charters for the Board, Audit and Finance Committee and the Compensation, Nominating and Governance Committee are each posted on the Company’s investor relations website at www.collectivebrands.com and will also be provided free of charge to any stockholder requesting a copy by writing to: Collective Brands, Inc., Attn: Investor Relations Department, 3231 Southeast Sixth Avenue, Topeka, Kansas 66607.

Purpose of the Board of Directors

The business of Collective Brands is managed under the direction of the Board. The purpose of the Board is to oversee Management’s conduct of the Company’s business.

Board Responsibilities

The Board’s responsibilities (acting as a whole and through its standing committees) include:


	•	Reviewing Management’s determination of objectives, strategies, policies and plans for the Company.

	•	Electing, monitoring, evaluating, compensating and, if necessary, replacing the Chief Executive Officer and other senior executives.

	•	Reviewing Management’s plans for guarding and preserving the Company’s assets including intangibles such as the Company’s reputation and maintaining a reservoir of successor management talent.


	•	Reviewing and approving equity and incentive compensation plans, and plans for major changes in the senior corporate organizational structure.

	•	Reviewing and approving Management’s strategic and business plans and conducting continuing appraisals of Management’s performance against established plans and objectives.

	•	Through the Audit and Finance Committee, recommending outside auditors for approval by stockholders.

	•	Reviewing and approving strategic business plans, major transactions, changes in corporate financial structure affecting balance sheet items, financial plans, objectives and actions, including significant capital allocations and expenditures.

	•	Designating and appointing members of committees of the Board, establishing appropriate limits of authority, and receiving reports from such committees and reviewing and approving such committee’s recommendations where necessary.

	•	Reviewing Management’s recommendations for maintenance and revision of the Company’s Certificate of Incorporation and By-laws.

	•	Reviewing the Compensation, Nominating and Governance Committee’s recommendations for perpetuation of a sound Board through planned and orderly recruitment activities, regular election and the filling of interim vacancies.

Board Organization

The Board consists of a substantial majority of independent directors who the Board has determined meet the New York Stock Exchange’s (the “NYSE”) definition of independence. Currently, Mr. Rubel is the only director that does not meet the NYSE’s definition of independence. Mr. Robert F. Moran currently serves as the Lead Director of the Board. The Lead Director of the Board is elected annually at the Board meeting immediately following the Annual Meeting of Stockholders.

The Board currently maintains three standing committees: (i) the Executive Committee, (ii) the Audit and Finance Committee, and (iii) the Compensation, Nominating and Governance Committee. The Audit and Finance and the Compensation, Nominating and Governance Committees are each comprised entirely of independent directors. Assignments to, and chairs of, the committees are recommended by the Compensation, Nominating and Governance Committee and selected by the Board. All committees regularly report to the Board on their activities. The Board may, from time to time, establish certain other committees to act on behalf of the Board of Directors.

Board Leadership Structure

The Board is currently comprised of nine directors, eight of whom are independent. Mr. Rubel, currently the only management director, also currently serves as Chairman of the Board and Chief Executive Officer. Mr. Rubel was elected Chairman of the Board in May 2008 and has been a member of the Board since 2005. The Board’s guidelines require that if the Chairman and Chief Executive Officer positions are held by the same individual, the Board elects a Lead Director.

The Board believes that the current governance structure consisting of the Chairman and Chief Executive Officer and the Lead Director combined with a vast majority of independent, experienced directors benefits the Company and its stockholders. The Lead Director is elected annually after the annual meeting of stockholders. The Lead Director is responsible for: (1) arranging for periodic executive sessions of the Board of Directors; (2) chairing all executive sessions of the Board of Directors; (3) chairing the Executive Committee of the Board; (4) providing input to the Chairman of the Board, in consultation with the Committee Chairs, with respect to the planning and organization of the activities of and agenda for the meetings of the Board of Directors; (5) providing input on a regular basis to the Chairman of the Board with respect to the quality, quantity and timeliness of the information that is to be provided to the Board; (6) facilitating on-going formal and informal communications between and among directors; and (7) providing appropriate feedback to the Chairman of the Board regarding the effectiveness of Board meetings. Mr. Moran currently serves as the Lead Director.

We recognize that different board leadership structures may be appropriate for companies in different situations and believe that no one structure is suitable for all companies at all times. We believe our current Board leadership structure, given the current composition of the Board, is optimal. Having a single leader for both the Company and the Board eliminates the potential for confusion or duplication of efforts, and provides clear leadership for Collective Brands.

Our Board conducts an annual evaluation in order to determine whether it and its committees are functioning effectively. As part of this annual self-evaluation, the Board evaluates whether the current leadership structure continues to be optimal for Collective Brands and its stockholders. Our Corporate Governance Guidelines provide the flexibility for our Board to modify or continue our leadership structure in the future, as it deems appropriate.

Risk Oversight

The Board is responsible for overseeing the Company’s risk management process. The Board focuses on the Company’s general risk management strategy, the most significant risks facing the Company, and regularly reviews risk management and risk mitigation strategies that are implemented by management. The Board is also apprised of particular risk management matters in connection with its general oversight and approval of corporate matters.

The Board has delegated to the Audit and Finance Committee oversight of the Company’s risk management process. The Audit and Finance Committee reviews with management (a) the Company’s policies with respect to risk assessment and management of risks that may be material to the Company, (b) the Company’s system of disclosure controls and system of internal controls over financial reporting, and (c) the Company’s compliance with legal and regulatory requirements. The Compensation, Nominating and Governance Committee is responsible for reviewing the Company’s compensation programs to evaluate whether they are likely to pose any risks that are likely to have a material adverse effect on the Company. All committees report to the full Board as appropriate. When a matter rises to the level of a likely material enterprise risk, it generally will be discussed with the entire Board.

The Company’s management is responsible for day-to-day risk management. The Company’s Internal Audit and Risk Insurance Departments serve as the primary monitoring and testing functions for company-wide policies and procedures. They are responsible for identifying and coordinating risk management with key business leaders and regularly reporting to the Audit and Finance Committee. These departments administratively report to the Company’s Chief Administrative Officer with the Internal Audit Department reporting directly to the Audit and Finance Committee. The Audit and Finance Committee also regularly receives reports from key business functions which discuss potential risks that may exist at the enterprise, strategic, financial, operational, and compliance and reporting levels.

This approach to risk management appropriately focuses the Board’s attention and allows management to run the Company with the oversight of the Board.

Board Operation

The Board generally has six regularly scheduled meetings per year. Audit and Finance and Compensation, Nominating and Governance Committee meetings are normally held in conjunction with Board meetings. The Board and committee chairs are responsible for conducting meetings and informal consultations in a fashion that encourages informed, meaningful and probing deliberations. Directors generally receive the agenda and materials in advance of meetings and may ask for additional information from, or meet with, senior executives at any time.

Board Advisors

The Board and its committees (consistent with their respective charters) may retain their own advisors, as they determine necessary, to carry out their responsibilities.

Board Evaluation

The Compensation, Nominating and Governance Committee coordinates an annual evaluation process of the Board and each of the Board’s standing committees. The Audit and Finance Committee and the Compensation,

Nominating and Governance Committee each annually perform a self evaluation and a review of the adequacy of its charter. The Compensation, Nominating and Governance Committee also periodically performs a board skill assessment which includes an evaluation of Board diversity.

Selection of Directors

The Board is responsible for selecting nominees for Board membership, and establishing criteria for identifying potential nominees. For more information regarding the Director nomination process, including nominations by stockholders, see “Committees of the Board — the Compensation, Nominating and Governance Committee.” In recommending candidates for election to the Board, the Compensation, Nominating and Governance Committee considers the following criteria:


	•	Personal qualities and characteristics, accomplishments and reputation in the business community;

	•	Current knowledge and contacts in the communities in which the Company does business and in the Company’s industry or other industries relevant to the Company’s business;

	•	Ability and willingness to commit adequate time to Board and committee matters;

	•	The fit of the individual’s skills and personality with those of other Directors and potential directors in building a Board that is effective, collegial and responsive to the needs of the Company;

	•	Diversity of viewpoints, background, experience and other demographics; and

	•	A commitment to represent the Company’s stockholders as a whole.

The Compensation, Nominating and Governance Committee (the “CN&G Committee”) considers nominees for Directors from any source, including individuals nominated by stockholders or outside consultants engaged by the CN&G Committee to recommend Director nominees. Director nominee suggestions must be submitted in writing to the Company’s Corporate Secretary at 3231 Southeast Sixth Avenue, Topeka, Kansas, 66607, and otherwise comply with the terms of the Company’s By-Laws. See also “About Shareholder Proposals and Nominations for Our 2011 Annual Meeting.”

Independence of Directors and Nominees for Director

The Board annually reviews and determines the independence of Directors. The Board also reviews and determines the independence of nominees for Director. No Director nominee or Director is considered independent unless the Board determines that he or she has no material relationship with the Company either directly, as a partner, stockholder or affiliate of an organization that has a material relationship with the Company, or indirectly. The Board has adopted categorical independence standards consistent with the New York Stock Exchange listing guidelines to evaluate the materiality of any such relationship. The Board has determined that each of the nominees for Director standing for election at the 2010 Annual Meeting, is independent of the Company, because none of the nominees for Director has a material relationship with the Company either directly or indirectly. The Board has made this determination based on the following:


	•	No nominee for Director is or has been an officer or employee of the Company or its subsidiaries or affiliates since the Company’s spin-off from The May Department Stores Company;

	•	No nominee for Director has an immediate family member who is an officer of the Company or its subsidiaries or has any current or past material relationship with the Company;

	•	No nominee for Director has worked for, consulted with, been retained by, or received anything of substantial value from the Company aside from his or her compensation as a Director;

	•	No nominee for Director is, or was within the past five years employed by the independent auditors for the Company;

	•	No executive officer of the Company serves on the compensation committee of any corporation that employs a nominee for Director or a member of the immediate family member of any nominee for Director;


	•	No nominee for Director is an executive officer of any entity which the Company’s annual sales to or purchases from exceeded one percent of either entity’s annual revenues for the last fiscal year; and

	•	No nominee for Director serves as a director, trustee, executive officer or similar position of a charitable or non-profit organization to which the Company or its subsidiaries made charitable contributions or payments in fiscal year 2009 in excess of $5,000.00.

As part of the independent review process, in February 2010, the Board reviewed a summary of each Director’s response to a questionnaire asking about their (and their immediate family members’) relationships with the Company and other potential conflicts of interest, as well as material provided by management regarding transactions, relationships or arrangements between the Company and the Directors or parties related to the Directors. Utilizing the above criteria, the Board also determined that all Directors (including Ms. Hofer who retired on January 26, 2010) other than Mr. Rubel are independent, and that the members of the Audit and Finance Committee and the Compensation, Nominating and Governance Committee are also independent.

Communications with the Board of Directors

The Board believes that Management speaks for the Company. The Board and individual members of the Board may, from time to time, meet or otherwise communicate with various constituencies. It is expected, however, that Board members will speak for the Company only with the knowledge of Management and, in most instances, at the request of Management. Stockholders and other interested parties may contact non-management members of the Board by sending written correspondence to the Director at the following address:

, Director
Collective Brands, Inc.
c/o Secretary
3231 Southeast Sixth Avenue
Topeka, KS 66607

The Secretary will review and forward such correspondence to the Board members. The Secretary will also direct inquiries most properly addressed by other departments, such as customer service or accounts payable, to those departments to ensure that the inquiries are responded to in a timely manner. Any inquiry that presents a matter relevant to accounting, audit or internal controls, or similar issues that is not addressed to a specific Director, will be forwarded to the Chairman of the Audit and Finance Committee.

Meetings of the Board

Meetings of the Board. The Board of Directors of the Company held a total of six meetings during fiscal 2009. No Director attended less than 75% of the aggregate of (i) the total number of Board meetings held during the period for which such Director held such office, and (ii) the total number of meetings held by all Board committees on which such Director served during the periods that such Director served on such committee.

While the Board of Directors understands that there may be situations that prevent a Director from attending an Annual Meeting of Stockholders, the Board strongly encourages all Directors to make attendance at all Annual Meetings of Stockholders a priority. Nine of the Company’s ten continuing Directors attended the Company’s Annual Meeting of Stockholders held on May 21, 2009.

Board Compensation

Director Compensation. Management Directors are not entitled to additional compensation for their service as a Director or for attendance at Board, committee or annual stockholder meetings. Non-management Director compensation did not change in 2009. The following table explains the key components of non-management

Director compensation, which is based on a Board year basis that runs from one Annual Meeting of Stockholders until the next Annual Meeting of Stockholders.

ELEMENTS OF COMPENSATION


	2009 Board Year

Annual Cash Retainer	$	50,000
Annual Stock Retainer	$	50,000
Meeting Fees (per meeting attended):
Board Meeting	$	1,500
Committee Meeting	$	1,000
Committee Chairperson Retainer:
Audit and Finance	$	25,000
Compensation, Nominating and Governance	$	20,000
Lead Director Retainer	$	20,000
Reimbursement for expenses attendant to Board membership		Yes

The annual cash retainer, committee chairperson retainer and Lead Director retainer are each earned (or vest, if deferred) in one-fifth increments on the date of each regular meeting of the Board following the Annual Meeting of Stockholders. The annual retainers for any Director elected subsequent to the Annual Meeting of Stockholders are prorated.

The 2009 Board-year stock portion of each non-management Director’s annual retainer was paid in 3,579 restricted shares of Collective Brands Common Stock granted on May 21, 2009. The number of shares granted to each Director was determined based upon the closing share price on the date of the Annual Meeting of Stockholders or on the Director’s date of election if not elected at the Annual Meeting of Stockholders. The restricted stock portion of the annual retainer vests on May 1 following the grant date. All shares of Collective Brands Common Stock granted to non-management Directors are subject to restrictions on transferability. Under these restrictions, Directors cannot transfer the shares granted to them until they cease membership on the Board or, if earlier, until the later of six months after they are awarded the grant or the date they have satisfied the stock ownership guidelines of the Company.

Annual stock retainers paid to the non-management Directors are granted under the Company’s Restricted Stock Plan for Non-Management Directors. This plan currently provides for the issuance of not more than 350,000 shares of Collective Brands Common Stock, subject to adjustment for changes in the Company’s capital structure.

The Board of Directors believes that the interests of Directors and stockholders are most closely aligned when the Directors themselves are stockholders and, accordingly, maintains Stock Ownership Guidelines for Non-Management Directors. The guidelines stipulate that Directors should hold Collective Brands Common Stock shares equivalent in value to four times the annual cash retainer in effect at the time the guideline is established for each Director. The Board reviews Director ownership levels annually to evaluate progress toward these guidelines. Under the guidelines, Directors may not sell or otherwise transfer any of the shares of Collective Brands stock awarded to them by the Company until the target ownership level under the guideline is achieved. The May 2009 review found that all Directors have met their ownership guidelines with the exception of Mr. Ouimet, whose compliance deadline is June 30, 2013.

The Company also maintains a Deferred Compensation Plan for Non-Management Directors that allows each Director to defer receipt of retainers (but not meeting fees) received for services as a Director, whether payable in stock or cash, until after the calendar year in which the Director’s service on the Board ceases. Under this Plan, the Directors may elect to use either Company Stock or the thirty-year Treasury Bill rate on May 1 of each year as the measurement fund for the return on cash payments that are deferred. Directors must use Company Stock as the measurement fund for any Company Stock which is deferred.

The following table reflects the Compensation paid to the Company’s non-management Directors in fiscal 2009.

2009 NON-MANAGEMENT DIRECTOR COMPENSATION


	Fees Earned or Paid				All other
	in Cash⁽¹⁾		Stock Awards^(1,2,3)		Compensation⁽⁴⁾		Total
Name of Director	($)		($)		($)		($)
(a)	(b)		(c)		(g)		(h)

Daniel Boggan Jr.		67,000		50,000		—		117,000
Judith K. Hofer		65,000		50,000		—		115,000
Mylle H. Mangum		86,000		50,000		—		136,000
John F. McGovern		95,000		50,000		—		145,000
Robert F. Moran		90,000		50,000		—		140,000
D. Scott Olivet		70,000		50,000		—		120,000
Matthew A. Ouimet		70,000		50,000		—		120,000
Michael A. Weiss		66,000		50,000		—		116,000
Robert C. Wheeler		66,000		50,000		—		116,000


(1)		Includes fees earned that were deferred under the Collective Brands, Inc. Non-Management Deferred Compensation Plan.

(2)		Values reflect the grant date fair value on May 22, 2009 (3,579 shares). Ms. Hofer’s award was not vested upon her retirement from the Board on January 26, 2010, and was therefore forfeited.

(3)		Total shares not vested as of January 29, 2010, for each Director, including those shares that have been deferred were:


Director	Shares Outstanding as of 1/29/10

Boggan		3,579
Hofer		0
Mangum		3,579
McGovern		3,579
Moran		3,579
Olivet		3,579
Ouimet		3,579
Weiss		3,579
Wheeler		3,579


(4)		On occasion, Directors receive footwear and other items of nominal (includes spouse paid travel to Board meetings) value that may be considered perquisites. In 2009, the value of all such items did not exceed $5,000 for any individual Director.

Committees of the Board

Executive Committee

Members, Authority and Meetings. The Executive Committee is composed of the Chief Executive Officer (“CEO”), the Lead Director of the Board, the chairperson of the Audit and Finance Committee and the chairperson of the Compensation, Nominating and Governance Committee. The Lead Director serves as the Executive Committee’s chairperson. The Executive Committee may exercise all the powers of the Board but does not have the power to (i) approve or adopt, or recommend to the Company’s stockholders, any matter expressly required by Delaware law to be submitted to stockholders for approval; (ii) adopt, amend or repeal any By-Law of the Company; (iii) elect Directors of the Company; (iv) declare any dividend or make any other distribution to the Company’s stockholders; or (v) take actions with respect to matters delegated to other committees of the Board. During the 2009 fiscal year, the Executive Committee met one time.

Audit and Finance Committee

Members, Authority and Meetings. Pursuant to its charter, the Audit and Finance Committee (the “Audit Committee”) is solely responsible for selecting the Company’s independent registered public accountants,

reviewing their independence, approving all engagements, and evaluating their performance. The Audit Committee reviews results of the audit for each fiscal year, all material accounting policies of the Company, the coordination between the independent registered public accountants and the Company’s internal auditing group, the scope and procedures of the Company’s internal audit work, the quality and composition of the Company’s internal audit staff, and maintains procedures for the confidential and anonymous receipt of employee concerns regarding questionable accounting or auditing matters. The Audit Committee is responsible for reviewing and making recommendations to the Board with respect to matters such as the following: the financial policies of the Company; debt ratings; short-term versus long-term debt positions; debt-to-capitalization ratios; fixed charge coverage; working capital and bank lines; dividend policy; the long-range financial plans of the Company; the Company’s capital expenditure program, including rate of return standards and evaluation methods; specific debt and/or equity placement activities; external financial relationships with investment bankers, commercial bankers, insurance companies, etc.; financial public relations and communication programs; financial aspects of proposed acquisitions and/or divestitures; and the Company’s insurance and risk management program. See also “Risk Oversight” and “Audit and Finance Committee Report.”

The Audit Committee regularly provides the Company’s internal auditor, Chief Financial Officer, General Counsel, Chief Administrative Officer and the Company’s independent registered public accountants with opportunities to privately meet with the Committee. The Audit Committee is also authorized to retain legal, accounting or other advisors as it determines appropriate at the Company’s expense. The members of the Audit and Finance Committee, during the 2009 fiscal year were Messrs. McGovern (Chairman), Boggan, Moran, Olivet, and Ouimet. The Board determined that each of the members of the Audit Committee is an independent director as required by the rules of the NYSE and an audit committee financial expert as defined by Item 401(h) of Regulation S-K. During the 2009 fiscal year, the Audit Committee met eleven times.

Compensation, Nominating and Governance Committee

Members, Authority and Meetings. The members of the Compensation, Nominating and Governance Committee (the “CN&G Committee”) during the 2009 fiscal year included Ms. Mangum (Chairman), Ms. Hofer (retired effective January 26, 2010), and Messrs. Wheeler and Weiss. Each of these Directors satisfied the NYSE’s independence requirements, was a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and was an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). During fiscal 2009, the CN&G Committee met six times. The agenda for each CN&G Committee meeting is determined by discussions among the CN&G Committee Chairman, the Company Secretary, Management and the CN&G Committee’s advisors, as appropriate. A copy of the CN&G Committee’s charter was last reviewed at its February 2010 meeting, and can be found on the Company’s Investor Relations website at www.collectivebrands.com.

The CN&G Committee is primarily responsible for establishing the Company’s compensation philosophy and various compensation programs and for monitoring the Company’s executive development efforts so that there is an adequate pool of personnel for orderly Management succession. In performing these functions, the CN&G Committee reviews and approves compensation arrangements for the Executive Compensation Group (the “ECG”) which consists of the CEO, other Section 16 officers, the principal executives of each of the Company’s operating units (if not Section 16 officers), and any other employee whose base compensation is in excess of $500,000. With the help of its compensation consultant, in 2010, the CN&G Committee reviewed the Company’s compensation policies and practices for all employees, including executive officers, and determined that the Company’s compensation programs are not reasonably likely to have a material adverse effect on the Company. Nonetheless, as part of its regular review of the Company’s compensation policies, management and the CN&G Committee regularly recommend improvements based upon market and environmental conditions and best practices. The CN&G Committee also reviews the Company’s Compensation Discussion and Analysis and, if appropriate, recommends to the Board that it be included in the proxy statement. In addition, the CN&G Committee serves as the “Committee” under the various Company incentive compensation and retirement plans (i.e., the stock-based incentive plans, executive incentive plans, supplementary retirement plan and deferred compensation plan).

As part of its corporate governance duties, the CN&G Committee establishes stock ownership guidelines for Company executives, reviews “related party transactions” and ethical issues involving the Company or

management, and oversees the implementation of the Company’s Code of Ethics. The CN&G Committee is also responsible for reviewing the Board of Directors’ performance and annually coordinates self assessments for the Board and each of its Committees, the mandatory retirement policy for Directors, and conflicts of interest involving a Director. In addition, the CN&G Committee identifies and recommends candidates to serve as Directors of the Board, the Lead Director, members and chairpersons of Board committees and the Chief Executive Officer. The CN&G Committee considers nominees for Directors from any source, including individuals nominated by stockholders or outside consultants engaged by the CN&G Committee to recommend Director nominees. Director nominee suggestions must be submitted in writing to the Company’s Corporate Secretary at 3231 Southeast Sixth Avenue, Topeka, Kansas, 66607, and otherwise comply with the terms of the Company’s By-Laws.

The CN&G Committee may delegate some of its duties or responsibilities to one or more individual members, but only to the extent permitted by law, the New York Stock Exchange’s listing standards and the Company’s governing documents. The CN&G Committee also engages outside consultants to advise on various issues, including CEO compensation, executive officer compensation and certain benefit programs. Such consulting arrangements with HayGroup related to matters of CEO compensation are discussed in the Compensation Discussion and Analysis under “Compensation Philosophy, Roles of Consultants and Executives, Benchmarking and New Initiatives.” The CN&G Committee engages other consultants from time to time to assist with specific projects, such as the engagement of HayGroup to assist with a review of employment and change of control agreements as discussed under “Employment Agreements.” The consultants engaged by the CN&G Committee report directly to the CN&G Committee and the CEO generally does not participate in recommendations prepared by these consultants regarding CEO compensation. The role of other executive officers in setting compensation is discussed in the Compensation Discussion and Analysis section.

Compensation Committee Interlocks and Insider Participation

No member of the CN&G Committee (Ms. Mangum, Ms. Hofer (retired effective January 26, 2010), Messrs. Wheeler and Weiss) has served as one of the Company’s officers or employees or has any relationship requiring disclosure under Item 404 of Regulation S-K promulgated under the Securities Act of 1933, as amended (see “Related Party Transactions”). None of the Company’s executive officers named in the Summary Compensation Table serves as a member of the board of directors or as a member of a compensation committee of any other company that has an executive officer serving as a member of the Company’s Board or the CN&G Committee.

Compensation, Nominating and Governance Committee Report

The following Report of the Compensation, Nominating and Governance Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.

The CN&G Committee has reviewed and discussed the Compensation Discussion and Analysis required under Item 402(b) of Regulation S-K set forth below with Management. Based on that review and discussion, the CN&G Committee recommended to the Company’s Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation, Nominating and Governance Committee:

Mylle H. Mangum — Chairman
Michael A. Weiss
Robert C. Wheeler

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation, Nominating and Governance Committee (the “CN&G Committee”) remained committed to its pay-for-performance philosophy in Fiscal 2009 as the Company navigated through global economic instability for much of the year. The CN&G Committee took a measured approach to executive compensation, avoiding wholesale changes in compensation structure and carefully monitoring compensation arrangements to ensure close alignment with shareholder interests, retention of key executive talent, and appropriate rewards that reflect executives’ contributions to the progress made during the year.

For 2009, the Company’s performance-based compensation programs delivered results consistent with the CN&G Committee’s compensation philosophy and the stated objectives of each element of compensation:


	•	No payouts under the long-term cash component of the Incentive Compensation Program for the 2007-2009 performance period.

	•	Payment of 2009 annual incentive awards above the target level, in accordance with goals set at the beginning of the period.

	•	Delivery of 2010 long-term equity incentives at the target grant-date fair value, in contrast to below-target values in 2009.

	•	Discretionary awards tied to specific and significant Fiscal 2009 accomplishments in the areas of reduced operating costs, strengthened capital structure, expanded gross margins, record free cash flow and positioning of the Company for continued growth.

	•	A modest return to merit increases for executive officers in 2010, after the elimination of such increases in 2009, with increases that directly correlate to each executive’s results on objectives established and evaluated through Company’s performance management program.

The compensation-related reviews and actions undertaken in Fiscal 2009 are described in detail in this Compensation Discussion and Analysis. Please read the entire report and the tables that follow to obtain a more complete understanding of our executive compensation program.

Throughout the Compensation Discussion and Analysis, the following definitions will apply:


	•	“CEO” refers to the Chairman, Chief Executive Officer and President of Collective Brands, Inc.

	•	“Executive officer” refers to the CEO and other executive officers named in the Summary Compensation Table. These include Mr. Rubel; Ms. LuAnn Via, President and Chief Executive Officer of Payless ShoeSource; Mr. Darrel Pavelka, Executive Vice President, Global Supply Chain and Merchandise Distribution & Planning; Mr. Douglas Treff, Executive Vice President and Chief Administrative Officer; and Mr. Douglas Boessen, Division Senior Vice President and Chief Financial Officer.

	•	“EBIT” refers to earnings before interest and taxes, which is defined for purposes of this discussion as operating profit from continuing operations.

	•	“EBITDA” refers to earnings before interest, taxes, depreciation and amortization.

	•	“ROIC” refers to return on invested capital.

	•	“TSR” refers to total shareholder return.

	•	“CBI” and “Company” refer to Collective Brands, Inc.

	•	“PSS” refers to the Payless ShoeSource business unit of CBI.

	•	“Fiscal 2007,” “Fiscal 2008,” “Fiscal 2009,” and “Fiscal 2010” refer to the fiscal years ended(ing) February 2, 2008; January 31, 2009; January 30, 2010; and January 29, 2011, respectively.


I.	*Compensation Philosophy, Roles of Consultants and Executives, Benchmarking, and New Initiatives*

Compensation Philosophy. The Company’s general compensation philosophy is that its compensation programs should attract, retain and motivate highly qualified executives; be competitive with the compensation programs of other comparable employers; and focus on “pay for performance,” which means that compensation programs should be aligned with Company, business unit and individual performance as measured against established goals and that executive compensation should be related to the value created for stockholders.

The Company employs a balanced approach to compensation that considers market pay data, achievement of individual and organization performance objectives, the Company’s overall progress toward strategic goals, the Company’s retention goals, and the results of an annual talent and organization planning process that helps link overall compensation to the sustained performance and potential of each executive. As a result:


	•	To foster a strong connection between executive compensation and business performance, a majority of the compensation of the executive officers is variable and performance-based, and a significant portion is paid in stock-based awards. As noted in the table below, more than 80% of the CEO’s target compensation opportunity, and 50% to 70% of the target compensation opportunity for the other executive officers, is provided through annual and long-term performance-based incentive programs. The differences in target pay between the positions reflect the Company’s philosophy that variable compensation should increase as an executive’s responsibility in the organization increases.


	Target Pay Mix for Fiscal 2009
				Annual Cash			Long-Term Cash			Long-Term Stock
	Base Salary			Incentive			Incentive			Incentive

Mr. Rubel		16	%		16	%		8	%		60	%
Ms. Via⁽¹⁾		32	%		20	%		8	%		40	%
Messrs. Pavelka and Treff		32	%		20	%		8	%		40	%
Mr. Boessen		47	%		19	%		10	%		24	%


(1)		The CN&G Committee increased the annual cash incentive target for Ms. Via from 65% to 75% of base pay, effective September 18, 2009. That change did not materially impact the target pay mix for the whole of 2009.


	•	In aggregate, base salaries for executive officers are expected to fall around the 50th percentile of the competitive market (defined primarily by the Compensation Comparison Group identified later in this report and a subset of HayGroup’s 2009 Retail Industry Survey identified in Appendix A, the “HayGroup Survey”) but may vary from around the 25^th percentile of the market to beyond the 75^th percentile, depending on the executive’s experience, performance, potential, and retention risk. These variations also reflect the reality that the Company competes with many larger companies for top-level executive talent.

	•	Annual and long-term incentive opportunities are designed to deliver variable compensation between the 50^th and 75^th percentile of the competitive market when performance targets are met, while superior performance can result in total direct compensation at or above the 75^th percentile.

Role of Consultants in Compensation Decisions. The CN&G Committee has retained HayGroup to provide benchmarking data, analysis and recommendations on executive compensation programs to assist the Committee in evaluating whether those programs are aligned with the Company’s compensation philosophy and strategy. In Fiscal 2009, to support compensation design and decision making for 2010, the CN&G Committee engaged HayGroup for benchmarking of CEO and other executive compensation arrangements, an incentive plan risk assessment review, and annual tally sheet development. All of these projects were subject to the Committee’s review and direction, and total fees for these projects were approximately $150,000. Management also utilized HayGroup for benchmarking of compensation below the ECG level, binomial valuations of annual stock grants and the purchase of broad-based HayGroup compensation surveys, incurring less than $70,000 in fees in 2009.

Role of Executives in Compensation Decisions. As noted in its charter, the CN&G Committee is responsible for evaluating and approving the compensation policies and arrangements applicable to the ECG. The CEO provides the CN&G Committee with performance feedback and compensation recommendations for ECG members (other than himself) during and at the end of each fiscal year. Initial employment offers, promotions,

discretionary awards and ongoing compensation arrangements for individuals in the ECG are recommended to the CN&G Committee by the CEO and Senior Vice President — Human Resources.

The CEO and Senior Vice President — Human Resources also provide their perspectives and recommendations to the CN&G Committee on a variety of human resource matters, such as annual and long-term incentive goals, plan design changes for Board-approved compensation plans, and officer succession. The Company’s General Counsel and outside counsel to the Company also advise the CN&G Committee on the legal aspects relating to compensation and employment matters.

Benchmarking in Fiscal 2009. The CN&G Committee in November 2009 retained HayGroup as its compensation consultant to assist with analyzing the appropriate level of compensation for the CEO position. Specifically, HayGroup provides the CN&G Committee with benchmarking data and directional recommendations to enable the Committee to make informed decisions and stay abreast of changing market practices. This helps the CN&G Committee to appropriately balance external forces with the Company’s objectives, values and compensation philosophy.

To complete its review, HayGroup compared the CEO’s compensation, by individual element and in aggregate, to the compensation arrangements of the Compensation Comparison Group (the peer group described below). HayGroup reported that the CEO’s aggregate pay mix is more heavily weighted toward long-term incentives than is the pay mix of the peer group and provided the following benchmarking information relative to the peer group:


Base salary		Competitive and slightly above median

Annual incentive target as % of base salary		Median
Target total cash compensation		Slightly above median
Target total direct compensation		Between median and 75^th percentile

Also in November 2009, the CN&G Committee engaged HayGroup to assist with compensation benchmarking for the ECG other than the CEO. To facilitate the benchmarking, HayGroup used the Compensation Comparison Group described below and the HayGroup Survey. For this group in aggregate, HayGroup reported that:


Base salary		Ms. Via and Mr. Treff: Median Mr. Pavelka: Slightly above median Mr. Boessen: Slightly below median
Annual incentive target as % of base salary		At or slightly above median
Target total cash compensation		Ms. Via: Median Messrs. Pavelka & Treff: Between median and 75^th percentile Mr. Boessen: Below 25^th percentile
Target total direct compensation		Ms. Via: Between median and 75^th percentile Messrs. Pavelka and Treff: Median Mr. Boessen: Below 25^th percentile

Based on the results of the HayGroup review and the CN&G Committee’s annual review of senior executive performance, potential and retention risk, the CN&G Committee adopted the following changes for Fiscal 2010:


	•	Increased Mr. Rubel’s annual incentive opportunity from 100% to 120% of base pay

	•	Increased Mr. Boessen’s annual incentive opportunity from 40% to 45% of base pay and authorized a base pay market adjustment of $10,000 in addition to the merit increase discussed below (both effective on April 18, 2010).

	•	Increased Ms. Via’s total long-term incentive target from 150% of base pay to 160% of base pay beginning in Fiscal 2010.

The Compensation Comparison Group Used for Benchmarking. As noted earlier, the CN&G Committee benchmarks executive compensation against a Compensation Comparison Group and a subset of the HayGroup

Retail Industry Survey (identified in Appendix A). The Compensation Comparison Group is comprised of a group of retail companies, a portion of which also are engaged in wholesaling and/or licensing activity, and may be revised by the CN&G Committee from time to time as the market and retail environment change.

In cases where a TSR multiplier is applicable, the Compensation Comparison Group will be used to calculate the amount payable under the long-term portion of the Company’s Incentive Compensation Plan (the “ICP”) by comparing the Company’s stock performance to the stock performance of companies in the Compensation Comparison Group. When used in this manner, the Compensation Comparison Group in place, upon the granting of an award, remains fixed through the term of the award.

The CN&G Committee considers the following criteria when identifying companies for inclusion in the Compensation Comparison Group:


	•	U.S.-domiciled, publicly-traded companies in retail, wholesale and licensing that primarily do business in footwear, apparel and/or accessories and that have customer targets similar to the Company;

	•	Annual sales from 1/2 to 21/2 times the Company’s annual sales;

	•	Recognized for a strong design focus, strong earnings growth, thought leadership, and/or strong brands across multiple lines or products; and/or

	•	Appropriately-sized companies from which the Company may recruit key talent.

If a company falls significantly outside the stated revenue parameter but meets other criteria, the compensation benchmarking data will be adjusted using a regression analysis to ensure appropriate comparisons.

The 19 companies that have constituted the Compensation Comparison Group from 2009 to present are:


Abercrombie & Fitch Co.	American Eagle Outfitters, Inc.	Brown Shoe Company, Inc.
The Children’s Place Retail Stores, Inc.	Decker’s Outdoor Corporation	DSW, Inc.
The Finish Line, Inc.	Foot Locker, Inc.	The Gap, Inc.
Genesco Inc.	Kohl’s Corporation	Limited Brands, Inc.
Polo Ralph Lauren Corporation	Ross Stores, Inc.	The Timberland Company
Urban Outfitters, Inc.	V.F. Corporation	Williams-Sonoma, Inc.
Wolverine World Wide, Inc.

Tally Sheets. As part of its review of executive officer compensation, and to aid in its oversight of executive compensation program design, the CN&G Committee continued its review of “tally sheets” detailing each element of compensation for the Company’s executive officers, including:


	•	Salary

	•	Annual and long-term incentives

	•	Costs incurred by the Company to provide various health and insurance benefits and perquisites to its executive officers

	•	Each executive officer’s stock awards and accumulated realized and unrealized stock gains

	•	The amounts each executive officer will receive if they leave the Company under various circumstances (such as retirement or termination in connection with a change of control)

The tally sheets for Fiscal 2009 were prepared by HayGroup and presented to the CN&G Committee in February 2010. HayGroup confirmed that, based on the tally sheets, executive officer compensation was generally consistent with the Company’s compensation philosophy and aligned with the interests of the Company’s stockholders.

Changes to Compensation Components/Programs. For 2010, the CN&G Committee shifted a portion of each executive officer’s long-term incentive target (as a % of base pay) from equity to the long-term cash component of the Incentive Compensation Plan as described in the following table:


	Fiscal 2009						Fiscal 2010
	Long-Term			Long-Term			Long-Term			Long-Term
	Cash Incentive			Equity Incentive			Cash Incentive			Equity Incentive

Mr. Rubel		50	%		385	%		75	%		360	%
Ms. Via		25	%		125	%		50	%		110	%
Messrs. Pavelka and Treff		25	%		125	%		50	%		100	%
Mr. Boessen		20	%		50	%		30	%		40	%

This change was made to reduce the utilization of shares in the Collective Brands, Inc. 2006 Stock Incentive Plan and provide increased focus on achievement of specific financial objectives.


*II.*	*Elements of Executive Compensation*

Elements of Compensation during Active Employment. For Fiscal 2009, the elements of compensation for executive officers including the CEO were:

A. Base salary;

B. Non-equity incentive plan compensation, such as annual and long-term cash incentives under the ICP;

C. Long-term stock incentive compensation, in the form of awards under the 2006 Collective Brands, Inc. Stock Incentive Plan;

D. Cash bonuses, including (i) Annual Lump Sum Merit Bonus, (ii) Annual Discretionary Cash Bonus, and (iii) Long-Term Discretionary Cash Bonus; and

E. Retirement and other benefits and perquisites.

A. Base Salary

The Company provides the executive officers and other employees with a base salary to compensate them for services rendered during the year. Salary levels are reviewed by the CN&G Committee annually and upon a promotion or other change in job responsibility. The base salaries of executive officers are determined in accordance with the factors and information described under “Compensation Philosophy” above. After reviewing that information, including individual performance results during Fiscal 2009, the CN&G Committee provided salary increases of 4.6% for Mr. Rubel, 3.7% for Ms. Via, 5.05% for Mr. Pavelka, 1.85% for Mr. Treff, and 5% for Mr. Boessen (1.67% merit increase and the market pay adjustment discussed under “Benchmarking in Fiscal 2009”). Base salaries for all executive officers increased by 4% from April 2009 to April 2010.

B. Non-Equity Incentive Plan Compensation — Cash Incentive Opportunities

The Company maintains the ICP that provides executive officers and selected other senior management members an opportunity to earn cash awards (incentive payments) if business results meet or exceed certain pre-established performance goals. Performance goals are established for annual and long-term (multi-year) performance periods. The CN&G Committee reserves the right to adjust upward or downward any award determined under the ICP; however, under the ICP, no upward adjustment may be made to an award for an employee who is deemed to be a “covered employee” under Internal Revenue Code Section 162(m).

The CN&G Committee, in its sole discretion, designates eligible employees as participants for each annual and/or long-term performance period. Each executive officer was eligible for an annual incentive award for Fiscal 2009. No long-term incentive awards were paid for the 2007-2009 performance period.

Both the annual portion and long-term portion of the ICP permit a participant to earn an incentive payment at or above a minimum level, depending on actual results relative to pre-established performance goals. For example, if the target performance goals are satisfied at 100%, the target incentive payment normally will be paid. The

threshold performance goals are the minimum performance results that must be attained by the Company for an incentive payment to be made. The target annual and long-term incentive awards are equal to a specific percentage of the executive’s base salary.

In addition, for the 2007-2009 performance period, the amount of the long-term incentive is increased or decreased by a specified percentage, based on the Company’s stock performance over the multi-year performance period relative to the average stock performance of the companies in the Compensation Comparison Group over the same period. For the 2007-2009 performance period, the following scale reflects the adjustment to be made based on the Company’s total stockholder return (actual results are interpolated between these points):


CBI Total Stockholder
Return Relative to Peers	Long-Term Cash Incentive Modifier

10th percentile		50% reduction in payout
25th percentile		25% reduction in payout
Median		Full payout
75th percentile		25% increase in payout
90th percentile		50% increase in payout

The annual portion of the ICP in Fiscal 2009 provided for a threshold and target but no cap as a specified percentage of salary. The long-term component of the ICP for the 2007-2009 performance period is capped at 300% of target (before the TSR modifier). The annual and long-term components each have a maximum individual incentive payment of $5,000,000.


*(1)*	*Annual Cash Incentive Awards*

Fiscal 2009 Annual Cash Incentive Award Performance Goals. The annual component of the ICP for Fiscal 2009 was based on CBI EBIT for all executive officers except Ms. Via, whose annual component was based on PSS EBIT. Incentive goals were established by the CN&G Committee for Fiscal 2009 based upon a variety of considerations as illustrated in the following table. The 2009 goal-setting methodology departed from past practice for the threshold and target levels, in light of uncertainty in the global economy and the challenging climate for CBI and other comparable companies.


			CBI
			Fiscal
			2009	PSS
Goal			EBIT	Fiscal 2009	Payout as % of
Achievement	Fiscal 2009 Goal Setting Approach		Goal	EBIT Goal	Target

Threshold	•	Threshold “range” to provide incentive and motivation even when results fall below target, at a payout in appropriate proportion to the EBIT performance.	$57.0 to $92.6 million	$43.1 to $70.0 million	20-50%
	•	Over the long run, threshold or higher payout anticipated to be achieved at least 75% of the time.
	•	Historically, the upper end of the threshold range has been similar in magnitude to the prior-year actual EBIT result, adjusted for extenuating or non-recurring circumstances.
	•	For Fiscal 2009, the upper end was set at 35% below 2008 actual EBIT for both CBI and PSS.
Target	•	Should be aligned with the Company’s long-standing financial goal of consistent low single-digit same-store sales growth that is leveraged into operating earnings increases in mid-teen percentages over time.	$142.5 million	$107.7 million	100%
	•	Over the long run, target payout anticipated to be achieved at least 50% of the time.
	•	For Fiscal 2009, the target EBIT was set at the 2008 actual EBIT for both CBI and PSS.


			CBI
			Fiscal
			2009	PSS
Goal			EBIT	Fiscal 2009	Payout as % of
Achievement	Fiscal 2009 Goal Setting Approach		Goal	EBIT Goal	Target

2x Target or Higher	•	Should generally be 115% of target EBIT or higher, mitigated by internal and external considerations.	2x = $173.9	2x = $137.0	200%+ (up to individual
	•	Over the long run, a payout significantly above target (i.e., twice the target) anticipated to be achieved about 10% of the time.	million	million	cap)
	•	For Fiscal 2009, the 200% funding level was set at 22% higher than the actual 2008 EBIT for CBI and 27% higher than the actual 2008 EBIT for PSS.

Fiscal 2009 Annual Cash Incentive Award Calculations. For CBI, the Fiscal 2009 EBIT of $161.5 million represents 161% of the target payout. For PSS EBIT, the Fiscal 2009 of $127.2 million represents 165% of the target payout. These EBIT results reflect adjustments for the following expenses not contemplated when the annual goals were established: certain expenses related to litigation ($1.4 million reflected in both CBI and PSS EBIT) and strategic realignment ($1.7 million reflected in CBI EBIT, $1.4 million reflected in PSS EBIT). Executive officers received annual awards under the ICP as reflected below. These amounts are included in the Summary Compensation Table under Column (g), “Non-Equity Incentive Plan Compensation.”


	Annual Cash Incentive
	(Fiscal 2009)
	Target Opportunity as			Actual % of Target
	% of Base Salary			Awarded			Award $

Mr. Rubel		100	%		161	%		1,808,835
Ms. Via		75	%		165	%		765,244	⁽¹⁾
Mr. Pavelka		65	%		161	%		559,878
Mr. Treff		65	%		161	%		565,895
Mr. Boessen		40	%		161	%		193,200


(1)		Includes $41,307 attributed to the prorated increase in Ms. Via’s incentive target.


*(2)*	*Long-Term Cash Incentive Awards*

The long-term component of the ICP utilizes long-term performance periods that operate concurrently (that is, a new performance period commences each year). Generally, each long-term performance period consists of three consecutive fiscal years.

2007-2009 Long-Term Cash Incentive Award Calculations. The long-term incentive awards under the ICP for the 2007-2009 performance period were calculated with respect to CBI EBIT and ROIC as compared to the performance goals established at the beginning of the performance period. For the 2007-2009 long-term performance period, the 3-year average ROIC was 9.1%, which was below the target of 12.6% for the performance period. The CBI 3-year cumulative EBIT was $503.0 million, which was below the target of $635.3 million. This EBIT reflects adjustments for the following expenses not contemplated when the goals were established in 2007: certain expenses related to litigation ($46.5 million), strategic realignment and other store and asset impairment ($21.7 million), purchase accounting ($95.0 million), and an intangibles write-off for trade name and goodwill impairments at Collective Brands Performance + Lifestyle Group ($130.2 million). Because ROIC fell short of threshold, no long-term cash incentive awards were paid for the 2007-2009 performance period.


	Long-Term Cash Incentive
	(Fiscal 2007-2009)
	Target Opportunity as			Actual % of Target		Award
	% of Base Salary			Awarded		$

Mr. Rubel		50	%		0		0
Ms. Via		25	%		0		0
Mr. Pavelka		25	%		0		0
Mr. Treff		25	%		0		0
Mr. Boessen		20	%		0		0

2009-2011 Long-Term Cash Incentive Award Performance Goals. In establishing the performance goals for the 2009-2011 performance period, the CN&G Committee set goals that reflected the business plan at the time the goals were established. For all executive officers other than Ms. Via, these goals require a specified level of CBI 3-year cumulative EBITDA and 3-year average ROIC. For Ms. Via, the goals require a specified level of PSS 3-year cumulative EBITDA and 3-year average ROIC. Earned payouts are further subject to a modifier of + 20% based on the Company’s TSR relative to the TSR of the 19 companies in the current Compensation Comparison Group (identified in an earlier section of this report). The EBITDA and ROIC goals were established by the CN&G Committee at the beginning of the performance period.

Long-term cash incentive awards for the 2009-2011 performance period will be based on the goals noted below for all executive officers. Earned payments will be interpolated between the stated levels. A payment may be earned on one measure but not the other, and any earned payment will be subject to the TSR modifier noted below.


	CBI					PSS
	3-Year			3-Year		3-Year			3-Year
	Average			Cumulative		Average			Cumulative
Payout %	ROIC			EBITDA		ROIC			EBITDA

50% (threshold)		6.2	%	$	784.9		10.6	%	$	643.9
100% (target)		8.0	%	$	906.3		14.2	%	$	746.0
200%		9.0	%	$	979.1		16.3	%	$	807.2
250%		9.5	%	$	1,015.5		17.4	%	$	837.9

CBI TSR Relative to the Peer Group (percentile rank)

10th

25th

50th

75th

90th

Modifier

−20

−10

+10

+20

C. Equity Incentive Plan Compensation

The Company may provide long-term incentives through various equity awards including stock options, restricted stock, stock appreciation rights, phantom stock and/or performance units. These equity awards are designed to attract, retain and motivate management employees and tie their compensation directly to the performance of the Company’s Common Stock. The CN&G Committee determines the mix of awards granted to executives and the grants are typically made annually. Throughout this discussion, all grants of stock appreciation rights settled in stock (“SSARs”) have an exercise price equal to the Company’s fair market value on the grant date and a 7-year term. Grants made prior to 2010 have a 200% maximum appreciation cap, meaning that the maximum payout is .6667 shares of Common Stock per SSAR; grants made in 2010 have a 125% maximum appreciation cap, meaning that the maximum payout is .5556 shares of Common Stock per SSAR. Vested SSARs will automatically exercise if the share price reaches the cap. The SSARs are capped to balance the amount of potential rewards from the grants and related potential dilution and expense.


*(1)*	*Fiscal 2010 Stock Incentive Awards*

The CN&G Committee authorized Fiscal 2010 long-term equity grants for selected management employees on March 25, 2010, under the 2006 Collective Brands, Inc. Stock Incentive Plan (“SIP”). For the executive officers, the 2010 annual award consists of the three components as described below.


	•	Performance shares subject to the achievement of CBI’s Fiscal 2010 EBITDA target. Any shares eligible for vesting based on performance will vest ratably over three years, beginning on the first anniversary of the grant date. The number of shares eligible for vesting will be interpolated if actual performance falls between the stated performance levels. The Fiscal 2010 EBITDA target represents an increase from the prior year’s actual EBITDA and is consistent with the 2010 EBITDA goal used in the CBI annual and long-term cash incentive plans.


% of 2010 EBITDA	Portion of Grant Eligible
Target Achieved	for Vesting

100% of Target		Full grant will vest
95% of Target		3/4 of grant will vest
90% of Target		1/2 of grant will vest
85% of Target		1/4 of grant will vest
<85% of Target		Entire grant will be forfeited


	•	Restricted stock, half of which will vest on the second anniversary of the grant date and half of which will vest on the third anniversary of the grant date. This vesting represents a change from the Company’s historical practice of granting restricted stock awards to executive officers using 3-year ratable vesting. To the extent that time-vested restricted stock is used for long-term incentive awards in 2011, the CN&G Committee anticipates increased use of extended vesting arrangements, up to 3-year cliff vesting.

	•	SSARs that will vest ratably over three years, beginning on the first anniversary of the grant. The CN&G Committee determined that the continued use of SSARs, which provide value only upon long-term stock price appreciation, is consistent with its pay-for-performance philosophy and its focus on the role of executive officers in creating and executing strategies that drive stock price appreciation over the long term.


*(2)*	*Equity Incentive Grant Dates*

The CN&G Committee established grant dates for Fiscal 2010 equity awards at its September 2009 meeting, based upon timing of the Company’s earnings releases and other relevant factors, as follows:


Annual 2010 Stock Incentive Grant Date		The date of the March CN&G Committee meeting, which occurred on March 25, 2010
Prorated 2010 Stock Incentive Grant Dates (for new hires and promotions during the period)		The second business day following each quarterly earnings release

D. Cash Bonuses

The CN&G Committee considered three types of special cash bonuses for Fiscal 2009:


*(1)*	*Annual Lump-Sum Merit Bonus*

The CN&G Committee annually may award a bonus to any executive officer who receives a rating of “clearly exceeds expectations” during the annual performance appraisal/review process with respect to both (i) individual results and (ii) the Company’s guiding principles. Based upon the CEO’s evaluation of Mr. Pavelka’s performance during 2009, Mr. Pavelka received such a rating and was awarded a lump-sum merit bonus of $21,400 by the CN&G Committee. This bonus is reflected in the Summary Compensation Table under Column (d), “Bonus” and is not considered performance-based compensation under Section 162(m) of the Code.


*(2)*	*Annual Discretionary Cash Bonus*

The CN&G Committee may provide cash bonuses to the CEO and other executive officers as recognition for their individual contributions to the Company’s business objectives and initiatives. The CN&G Committee chose to award a discretionary cash bonus of $25,000 to Ms. Via in recognition of her leadership role and contributions to the financial performance of PSS during 2009. The CN&G Committee also awarded a discretionary cash bonus of $25,000 to Mr. Pavelka in recognition of his leadership of the Company’s inventory management initiatives across the enterprise and his role in the Company’s gross margin performance improvement. This discretionary cash bonus is reflected in the Summary Compensation Table under column (d), “Bonus” and is not considered performance-based compensation under Section 162(m) of the Code.


*(3)*	*Long-Term Discretionary Cash Bonus*

For the past several years, the CN&G Committee has authorized supplemental stock awards to recognize specific contributions and encourage the retention of key talent. Those discretionary awards were made in the form of SSARs with 3-year cliff vesting. In an effort to reduce the utilization of shares in the SIP while still providing meaningful and retentive recognition awards, the CN&G Committee on March 25, 2010, authorized the following long-term discretionary cash awards that will vest on March 25, 2013, for any recipient who remains actively employed through that date. These awards will be reflected in the Fiscal 2010 Grants of Plan-Based Awards Table.


		Amount Payable on
		March 25, 2013
	Rationale	(if actively employed)

Ms. Via	PSS overall financial performance	$	203,500
Mr. Pavelka	Inventory management and gross margin performance improvement	$	101,750
Mr. Treff	Overall management of expense structure and continuous improvement initiatives	$	81,400
Mr. Boessen	Integration initiatives and progress on the execution of the Company’s capital strategy	$	40,700

E. Retirement Benefits

All executive officers other than the CEO are eligible to participate in the Collective Brands, Inc. Supplementary Retirement Account Balance Plan (“SERP”). The SERP is designed to provide a median or higher level of retirement benefits for eligible executives when combined with other retirement benefits (the 401(k) Plan described below along with Social Security benefits), reward eligible executives for their long-term contributions to the Company, and retain such executives until retirement. The CEO and other executive officers are also permitted to participate in one of the Company’s tax-qualified 401(k) profit sharing plans (the “401(k) Plan”). See “Pension Benefits for Fiscal 2009” for more details on the SERP and 401(k) Plan.

In addition, all executive officers are eligible to participate in the Collective Brands, Inc. Deferred Compensation Plan as described below under “Nonqualified Deferred Compensation for Fiscal 2009.”

The following retirement benefits may be available to executive officers but are contingent upon the executive remaining employed with the Company until age 55 and completing at least five years of service:


	•	A prorated portion of any annual and long-term incentive awards earned for the active performance periods in the year the executive retires from the Company, if specified in the executive officer’s employment agreement; and

	•	Unless a shorter period is specified in the applicable grant agreement, extended exercise period for outstanding stock options and SSARs that are vested as of the executive’s retirement date, allowing exercise until the earlier of: (i) the expiration date of the award or (ii) three years following the executive’s retirement.

The CEO is also eligible for three additional retirement benefits: (i) post-retirement life insurance coverage equivalent to annual compensation, as defined by the Company’s employer paid life insurance plan, up to

$1,000,000; (ii) an executive medical reimbursement plan providing up to $5,000 in benefits per year; and (iii) post-retirement medical coverage.

Other Benefits and Perquisites. The executive officers also participate in benefit plans on the same terms as other employees. Among these are welfare plans (health plans, life insurance, short-term disability), paid time off and ancillary benefits. In addition, the Company provides the executive officers with perquisites and other personal benefits that the CN&G Committee believes are reasonable and consistent with the Company’s compensation philosophy. The primary benefits provided to these executives include:


	•	Company-paid life insurance equal to two times annual compensation as defined by the Company’s employer paid life insurance plan, up to $1,000,000 of coverage;

	•	Company-paid long-term disability coverage for the first $110,000 of annual compensation;

	•	Automobile allowance of $10,000 per year for Ms. Via and Messrs. Pavelka and Treff; and

	•	Cellular telephone/wireless hand-held device.

Additional benefits provided to the CEO while he is employed by the Company, as specified in his 2005 employment agreement, as amended, include:


	•	A car service/driver up to four days per week for commuting;

	•	A club/car allowance of $16,000 per year;

	•	Reimbursement of annual income tax preparation expenses up to $2,900;

	•	A supplemental long-term disability benefit that covers 50% of base salary and any fixed bonuses (other than annual and long-term incentives) in excess of $400,000; and

	•	Use of company-provided aircraft for personal air travel, limited to $130,000 per fiscal year in accordance with the Company’s standard practice instructions for such use.

All or a portion of the benefits listed above may constitute taxable income to the executive officers. The amount of compensation attributable to the benefits described above and included in the Summary Compensation table under Column (i), “All Other Compensation” is determined based upon the Company’s incremental cost (as required by the Securities Exchange Commission (the “SEC”)).

III. Employment Agreements

Each executive officer has an employment agreement, and each executive officer other than Ms. Via has a change of control agreement, with the Company that may require the Company to pay the officer upon his termination of employment or in connection with a change of control. These agreements help the Company attract and retain these executive officers and, in the event of a change of control, would mitigate the significant level of uncertainty regarding job security and potential incentive compensation value that would likely arise in such a situation.

Pursuant to the employment agreements, each executive is entitled to receive salary, has the ability to earn annual and long-term incentive awards under the ICP, and may receive equity grants and other benefits generally available to the Company’s senior management.

The CEO’s employment agreement with the Company was scheduled to end on May 31, 2010, but was automatically extended by one year because neither party delivered to the other at least 90 days’ notice of non-extension.

The termination events requiring payments, and the amounts payable upon those events, are discussed and quantified under “Potential Payments upon Termination or Change of Control.”


*IV.*	*Stock Ownership/Retention Guidelines*

The Company believes it is important for its executive officers and other selected senior executives to establish and maintain a meaningful equity ownership interest in the Company. To this end, ownership levels and stock transactions for these individuals are reviewed annually by the Board of Directors to evaluate progress toward the Company’s stock ownership guidelines for executive officers (as specified below) and other senior executives who are subject to such guidelines.


	Value of CBI Shares Owned as
Position	a Multiple of Base Salary

Chairman, CEO and President		5.0 Times
President and CEO, PSS		2.0 Times
Executive Vice President		2.0 Times
Senior Vice President		1.5 Times
Division Senior Vice President		1.0 Times

Executives with ownership guidelines are expected to attain the guideline multiple within seven years of appointment to one of the positions listed above. The stock ownership requirements are satisfied with:


	•	Direct ownership of shares of Company common stock;

	•	Shares of Company stock owned in the Company’s employee stock purchase plan;

	•	Shares of Company stock equivalents under the Company’s Profit Sharing Plan;

	•	Company stock units credited under the Company’s Deferred Compensation Plan; and

	•	Unvested restricted shares and restricted stock units payable only in shares of the Company’s Common Stock granted under the Company’s stock plans (reduced by 40% to represent the executive’s tax liability).

Unvested awards subject to performance conditions and outstanding stock options and SSARs are not counted toward the ownership requirements. “Base Salary” means the executive’s base salary at the time of appointment to one of the positions listed above.

Until his or her respective ownership multiple is satisfied, the senior management member is expected to retain all shares of Company stock owned or otherwise acquired, except those shares used to pay required tax obligations upon the vesting of restricted stock or used to pay the exercise price or tax obligation upon exercise of stock options and SSARs. Once the senior management member attains the appropriate ownership multiple, he or she is considered to remain in compliance with the guidelines as long as the number of shares held is not reduced below the number at which the ownership threshold was met. Shares of Company stock owned in excess of those required to comply with the ownership guidelines may be traded only during designated window periods. If the ownership guidelines are not satisfied within the specified time period, the executive may not sell shares of Company stock without the written approval of the CEO. Messrs. Rubel and Pavelka have met their ownership guidelines. The compliance deadlines are July 22, 2015, for Ms. Via; September 4, 2014, for Mr. Treff; and November 30, 2015, for Mr. Boessen.


V.	*Tax and Accounting Impact of Executive Compensation*

Deductibility of Compensation. Under Section 162(m) of the Code, public corporations are generally not permitted a federal income tax deduction for compensation in excess of $1,000,000 paid in any fiscal year to the corporation’s chief executive officer and three other most highly compensated executive officers, other than the chief financial officer (determined as of the end of that fiscal year). “Qualifying performance-based compensation,” however, is exempt from Section 162(m), making it deductible for federal income tax purposes if certain requirements are met. It is generally the CN&G Committee’s intention to structure stock appreciation rights, performance units and annual and long-term incentives to executive officers who may be subject to Section 162(m) as performance-based compensation that satisfies the requirements of Section 162(m). The CN&G Committee, however, may award non-deductible compensation under circumstances as it deems appropriate. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, and other uncertainties including but not limited to the Company’s stock price, no assurance can be given, notwithstanding the Company’s stated intentions, that compensation intended by the Company to satisfy the requirements for deductibility under Section 162(m) will do so.

For Fiscal 2009, we believe that only the CEO had compensation that may not qualify as performance-based compensation under Section 162(m) of the Code, consisting of the following items:


	•	$123,500 of base salary that exceeded the $1,000,000 limit; and

	•	$9,059 of compensation provided in Fiscal 2009 as set forth in Column (i) “All other Compensation” of the Summary Compensation Table.

In addition, the outstanding stock options on 648,000 shares granted as an inducement award to the CEO upon commencement of employment in 2005 were granted outside of the Payless ShoeSource, Inc. 1996 Stock Incentive Plan and will not be deductible under Section 162(m) when and to the extent the options are exercised.

In developing the Company’s severance program, the CN&G Committee also took into account that some severance payments made after a change of control might not be fully deductible by the Company due to the limitations imposed under Section 280G of the Code.

Accounting for Stock-Based Compensation. Grants under the Company’s equity incentive plans are accounted for as required by FASB ASC Topic 718. The CN&G Committee takes into account the financial statement impact of awards when deciding whether to make them and how to structure them.

The following table summarizes the total compensation paid or earned by each of our executive officers, for the fiscal year ended January 30, 2010, as regulated by SEC rules and regulations. The Company has entered into employment agreements with all of the executive officers.

SUMMARY COMPENSATION TABLE


													Change in
													Pension
													Value and
													Non-Qualified
											Non-Equity		Deferred
							Stock		Option		Incentive Plan		Compensation		All Other
Name and			Salary		Bonus		Awards		Awards		Compensation		Earnings		Compensation		Total
Principal Position	Year		($)⁽¹⁾		($)⁽²⁾		($)⁽³⁾		($)⁽³⁾		($)⁽⁴⁾		($)⁽⁵⁾		($)⁽⁶⁾		($)
(a)	(b)		(c)		(d)		(e)		(f)		(g)		(h)		(i)		(j)

Matthew E. Rubel		2009		1,123,500		—		969,500		2,380,316		1,808,835		—		173,904		6,456,055
Chairman, CEO and		2008		1,123,500		—		1,436,369		1,201,181		1,166,996		—		175,086		5,103,132
President		2007		1,111,154		450,000		7,095,709		3,375,133		448,635		—		245,156		12,725,787
Douglas G. Boessen		2009		300,000		—		19,733		63,769		193,200		107,995		4,652		689,349
Division SVP, Chief		2008		259,152		—		16,437		56,008		41,654		31,553		4,692		409,496
Financial Officer and		2007
Treasurer
LuAnn Via		2009		675,000		25,000		189,745		476,532		765,244		118,473		44,853		2,294,847
President and CEO		2008
Payless ShoeSource		2007
Douglas J. Treff		2009		540,750		—		83,100		217,740		565,895		108,445		14,217		1,530,148
EVP-Chief		2008		537,115		—		83,400		77,633		241,240		30,327		10,893		980,608
Administrative Officer		2007		201,923		71,250		555,840		1,020,360		21,565		—		16,744		1,887,682
Darrel J. Pavelka		2009		535,000		51,400		83,100		229,042		559,878		188,930		14,881		1,662,231
EVP Global Supply		2008		515,185		50,000		83,400		77,633		306,478		141,260		14,069		1,188,025
Chain		2007		488,000		200,000		783,707		864,363		112,834		549,836		16,149		3,014,889


(1)		“Salary” reflects amounts paid to or deferred by the executive officers during each fiscal year. Annual salary changes for each of the executive officers normally occur on approximately May 1 of each year.

(2)		For 2009, “Bonus” reflects discretionary cash awards for Mr. Pavelka ($25,000) and Ms. Via ($25,000). It also includes a CE/CE performance rating bonus for Mr. Pavelka ($21,400) and a recognition spot award ($5,000). For 2008, “Bonus” reflects a discretionary cash award for Mr. Pavelka ($50,000). For 2007, “Bonus” reflects discretionary cash awards for Mr. Rubel ($450,000), Mr. Pavelka ($200,000). Bonus also includes amounts deferred (if any) by the respective officer under the Company’s Deferred Compensation Plan.

(3)		Amounts represent the 2009, 2008, and 2007 grant-date fair value, respectively, calculated in accordance with FASB ASC Topic 718.

(4)		“Non-Equity Incentive Plan Compensation” reflects the annual and long-term cash incentives paid under the Company’s Incentive Compensation Plan including any amounts deferred by the particular executive officer under the Company’s Deferred Compensation Plan. For all executive officers, the 2009 long-term performance period is Fiscal 2007-2009; the 2008 long-term performance period is Fiscal 2006-2008; the 2007 long-term performance period is Fiscal 2005-2007.

(5)		For 2007, this amount reflects the actuarial present value of the change in benefit under the Company’s Supplementary Retirement Plan. “Earnings” on amounts deferred under the Company’s Deferred Compensation Plan by executives are not included in this column. Amounts deferred by executives earn returns based solely on the actual return of the measurement fund selected by the executive. See the Non-Qualified Deferred Compensation Table for Fiscal 2009, Fiscal 2008, and Fiscal 2007, as well as the Pension Benefits Table for Fiscal 2009, Fiscal 2008, and Fiscal 2007.

(6)		For Fiscal 2009 this column includes the following for each of the executive officers: for Mr. Rubel, this column includes premiums paid for life insurance and long-term disability insurance ($6,000); premiums for the executive medical reimbursement plan ($5,000); car allowance ($15,208); company paid driver ($18,617); income for use of company-provided aircraft for personal air travel ($114,380); the Company’s contribution to his 401(k) account ($3,099); and tax preparation fee reimbursement (up to $2,900 per year) for 2005, 2006, 2007, and 2008 tax years ($11,600).
		For Mr. Boessen, this column includes premiums paid for life insurance and long-term disability insurance ($1,553) and the Company’s contribution to his 401(k) account ($3,099).
		For Ms. Via, this column includes premiums paid for life insurance and long-term disability insurance ($2,764); car allowance ($9,912); the Company’s contribution to her 401(k) account ($2,750); and relocation expenses ($29,427).
		For Mr. Treff, this column includes premiums paid for life insurance and long-term disability insurance ($2,346); car allowance ($8,772); and the Company’s contribution to his 401(k) account ($3,099).
		For Mr. Pavelka, this column includes premiums paid for life insurance and long-term disability insurance ($2,346); car allowance ($9,472); and the Company’s contribution to his 401(k) account ($3,063).
		The amounts shown for perquisites represent the incremental cost of such perquisites to the Company. With respect to personal use of Company provided aircraft, the amounts represent the incremental cost to the Company of providing such aircraft. For 2007, 2008 and 2009, all Company provided aircraft consisted of chartered flights and therefore the incremental cost to the Company for personal use of company provided aircraft is computed based on the actual costs of the charter or the incremental cost of any personal travel when combined with a business trip. If a passenger is flying for personal use in an otherwise available seat on a flight that is for Company business, calculating the incremental cost is not practical, and the Company has therefore used the greater of the Standard Industry Fare Level (“SIFL”) rate or first class airfare between the two closest commercial airports as an estimate.

FISCAL 2009 GRANTS OF PLAN-BASED AWARDS

All Other

Stock Awards:

Option

Exercise

Number of

Awards:

of Base

Estimated Future Payouts Under Non-

Estimated Future Payouts Under Equity

Shares of

Number of

Price of

Equity Incentive Plan Awards

Incentive Plan Awards

Stock or

Securities

Option

Grant Date

Award

Thres-hold

Target

Maximum

Thres-hold

Target

Maximum

Units⁽¹⁾

Underlying Options

Awards⁽²⁾

Fair Value

Name

Grant Date

Type

($)

(#)

($/Sh)

($)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

(k)

(l)

Matthew E. Rubel

2/26/2009

224,700

⁽³⁾

1,123,500

3,370,500

—

3/26/2009

280,875

⁽⁴⁾

561,750

1,685,250

—

3/26/2009

RSA

87,500

⁽⁵⁾

969,500

3/26/2009

SAR

450,000

⁽⁶⁾

11.08

2,380,316

Douglas G. Boessen

2/26/2009

24,000

⁽³⁾

120,000

360,000

1,781

⁽⁵⁾

8,500

⁽⁶⁾

11.08

—

3/26/2009

30,000

⁽⁴⁾

60,000

180,000

5,000

⁽⁷⁾

11.08

—

3/26/2009

RSA

19,733

3/26/2009

SAR

41,166

3/26/2009

SAR

22,603

LuAnn Via

2/26/2009

87,357

⁽³⁾

436,784

⁽⁸⁾

1,310,352

—

3/26/2009

84,375

⁽⁴⁾

168,750

506,250

—

3/26/2009

RSA

3,000

⁽⁵⁾

33,240

3/26/2009

RSA

14,125

⁽⁵⁾

156,505

3/26/2009

SAR

67,125

⁽⁶⁾

11.08

325,091

3/26/2009

SAR

33,500

⁽⁷⁾

11.08

151,441

Douglas J. Treff

2/26/2009

70,298

⁽³⁾

351,488

1,054,464

—

3/26/2009

67,594

⁽⁴⁾

135,188

405,563

—

3/26/2009

RSA

7,500

⁽⁵⁾

83,100

3/26/2009

SAR

35,625

⁽⁶⁾

11.08

172,534

3/26/2009

SAR

10,000

⁽⁷⁾

11.08

45,206

Darrel J. Pavelka

2/26/2009

69,550

⁽³⁾

347,750

1,043,250

—

3/26/2009

66,875

⁽⁴⁾

133,750

401,250

—

3/26/2009

RSA

7,500

⁽⁵⁾

83,100

3/26/2009

SAR

35,625

⁽⁶⁾

11.08

172,534

3/26/2009

SAR

12,500

⁽⁷⁾

11.08

56,508


(1)		Stock awards are eligible for dividends; however, the Company has not historically paid dividends.

(2)		Under the amendments to the stock plan approved by shareholders in May 2007, the FMV definition was changed from the average of the high and low stock price on the date of grant, to the closing stock price on the date of grant.

(3)		Annual portion of the incentive under the Company’s Incentive Compensation Plan (“ICP”) as described in the Compensation Discussion & Analysis (“CD&A”).

(4)		Long-term portion of the incentive under the ICP as described in the CD&A.

(5)		Restricted shares vest one-third per year for three years beginning on the first anniversary of the grant date.

(6)		Stock Settled Appreciation Rights (“SSARs”) vest one-third per year for three years beginning on the first anniversary of the grant date.

(7)		SSARs fully vest after three years on March 26, 2012.

(8)		Ms. Via’s incentive target was increased 9/18/09 and her target reflects the additional opportunity pro-rated for the remainder of the fiscal year.

OUTSTANDING EQUITY AWARDS AT THE END OF FISCAL 2009


	Option Awards										Stock Awards
	Number of										Number			Market Value of
	Securities			Number of							of Shares or			Shares or
	Underlying			Securities							Units of			Units of
	Unexercised			Underlying			Option				Stock That			Stock That
	Options			Unexercised Options			Exercise		Option		Have Not			Have Not
	(#)			(#)			Price		Expiration		Vested			Vested⁽¹⁾
Name	Exercisable			Unexercisable			($)		Date		(#)			($)
(a)	(b)			(c)			(e)		(f)		(g)			(h)

Matthew E. Rubel		648,000	⁽²⁾		—			20.6500		7/18/2012		—			—
		90,699			45,350	⁽³⁾		33.1150		3/29/2014		—			—
		101,164			50,582	⁽⁴⁾		23.1600		9/4/2014		—			—
		81,666			163,333	⁽⁵⁾		12.4500		3/27/2015		—			—
		—			450,000	⁽⁶⁾		11.0800		3/26/2016		—			—
												30,294	⁽⁷⁾		596,186
												76,914	⁽⁵⁾		1,513,668
												87,500	⁽⁶⁾		1,722,000



Douglas G. Boessen		7,000	⁽²⁾		—			16.8650		5/31/2012		—			—
		5,000	⁽²⁾		—			22.4800		4/7/2013		—			—
		2,100	⁽²⁾		—			22.4800		4/7/2013		—			—
		1,925	⁽²⁾		—			22.4800		4/7/2013		—			—
		5,500	⁽²⁾		—			22.4800		4/7/2013		—			—
		—			4,000	⁽⁷⁾		33.1150		3/29/2014		—			—
		2,616	⁽³⁾		1,309			33.1150		3/29/2014		—			—
		3,386	⁽⁴⁾		1,694			23.1600		9/4/2014		—			—
		—			5,000	⁽⁸⁾		12.4500		3/27/2015		—			—
		—			2,000	⁽⁹⁾		18.6300		9/8/2015		—			—
		1,133	⁽¹⁰⁾		2,267			11.2000		12/8/2015		—			—
		—			5,000	⁽¹¹⁾		11.0800		3/26/2016		—			—
		—			8,500	⁽⁶⁾		11.0800		3/26/2016		—			—
												178	⁽⁴⁾		3,503
												667	⁽⁵⁾		13,127
												238	⁽¹⁰⁾		4,684
												1,781	⁽⁶⁾		35,051



LuAnn Via		—			33,548	⁽⁹⁾		18.6300		9/8/2015		—			—
		12,580	⁽¹²⁾		25,161			18.6300		9/8/2015		—			—
		—			33,500	⁽¹¹⁾		11.0800		3/26/2016		—			—
		—			67,125	⁽⁶⁾		11.0800		3/26/2016		—			—
												2,516	⁽¹²⁾		49,515
												14,125	⁽⁶⁾		277,980
												3,000	⁽⁶⁾		59,040



Douglas J. Treff		19,000	⁽⁴⁾		9,500			23.1600		9/4/2014		—			—
		25,000	⁽³⁾		12,500			23.1600		9/4/2014		—			—
		—			37,500	⁽¹³⁾		23.1600		9/4/2014		—			—
		—			15,000	⁽⁸⁾		12.4500		3/27/2015		—			—
		—			10,000	⁽¹¹⁾		11.0800		3/26/2016		—			—
		—			35,625	⁽⁶⁾		11.0800		3/26/2016		—			—
												10,000	⁽¹³⁾		196,800
												2,667	⁽⁵⁾		52,487
												2,000	⁽¹⁰⁾		39,360
												7,500	⁽⁶⁾		147,600



Darrel J. Pavelka		6,500	⁽²⁾		—			14.4050		5/23/2013		—			—
		9,900	⁽²⁾		—			16.1900		5/28/2014		—			—
		34,000	⁽²⁾		—			16.8650		5/31/2012		—			—
		13,000	⁽²⁾		—			22.4800		4/7/2013		—			—
		5,850	⁽²⁾		—			22.4800		4/7/2013		—			—
		5,600	⁽²⁾		—			22.4800		4/7/2013		—			—
		20,000	⁽²⁾		—			22.4800		4/7/2013		—			—
		6,933	⁽³⁾		3,467			33.1150		3/29/2014		—			—
		—			12,500	⁽⁷⁾		33.1150		3/29/2014		—			—
		19,000	⁽⁴⁾		9,500			23.1600		9/4/2014		—			—
		18,066	⁽³⁾		9,034			23.1600		9/4/2014		—			—
		—			15,000	⁽⁸⁾		12.4500		3/27/2015		—			—
		—			12,500	⁽¹¹⁾		11.0800		3/26/2016		—			—
		—			35,625	⁽⁶⁾		11.0800		3/26/2016		—			—
												2,667	⁽⁵⁾		52,487
												2,000	⁽¹⁰⁾		39,360
												7,500	⁽⁶⁾		147,600


(1)		The closing stock price at the end of the fiscal year (1/30/10) was $19.68.

(2)		Award fully vested.

(3)		Remainder of award vests on 5/31/2010.


(4)		Remainder of award vests on 9/4/2010.

(5)		Remainder of award vests on 3/27/2010 and 3/27/2011.

(6)		Award vests in equal increments on 3/26/2010, 3/26/2011, and 3/26/2012.

(7)		Award fully vests on 5/31/2010.

(8)		Award fully vests on 3/27/2011.

(9)		Award fully vests on 9/8/2011.

(10)		Remainder of award vests in equal increments on 12/8/2010 and 12/8/2011.

(11)		Award fully vests on 3/26/2012.

(12)		Remainder of award vests in equal increments on 9/8/2010 and 9/8/2011.

(13)		Award fully vests 9/4/2010.

FISCAL 2009 OPTION EXERCISES AND STOCK VESTED

The table below summarizes the executive officers’ stock option exercises and stock vesting activity for the fiscal year ending January 30, 2010.


	Option Awards
	Number of Shares				Stock Awards
	Acquired on		Value Realized on		Number of Shares		Value Realized on
	Exercise		Exercise		Acquired on Vesting		Vesting
Name	(#)		($)		(#)		($)
(a)	(b)		(c)		(d)		(e)

Matthew E. Rubel⁽¹⁾		—		—		38,457		396,876
Douglas G. Boessen⁽²⁾		—		—		628		9,116
LuAnn Via⁽³⁾		—		—		1,258		21,851
Douglas J. Treff⁽⁴⁾		—		—		2,333		36,587
Darrel J. Pavelka⁽⁴⁾		—		—		2,333		36,587


(1)		Reflects restricted stock vesting from the 3/27/2008 grant.

(2)		Reflects restricted stock vesting from the 9/4/2007, 3/27/2008, and 12/8/2008 grants.

(3)		Reflects restricted stock vesting from the 9/8/2008 grant.

(4)		Reflects restricted stock vesting from 3/27/2008 and 12/8/2008 grants.

PENSION BENEFITS FOR FISCAL 2009

The table below shows the present value of accumulated benefits payable to each of the executive officers, including the number of years of service credited to each such executive officer, under the Supplemental Retirement Account Balance Plan as determined using interest rate assumption consistent with those used in the Company’s financial statements.

Currently, only Messrs. Boessen and Pavelka are eligible for benefits under the Plan.


			Account	Payments During Last
		Number of Years	Balances^(1,2)	Fiscal Year
Name	Plan Name	Credited Service⁽¹⁾	($)	($)
(a)	(b)	(c)	(d)	(e)

Matthew E. Rubel	Supplemental Retirement Account Balance Plan	n/a	n/a	n/a
Douglas G. Boessen	Supplemental Retirement Account Balance Plan	12.2	419,180	—
LuAnn Via	Supplemental Retirement Account Balance Plan	1.5	118,473	—
Douglas J. Treff	Supplemental Retirement Account Balance Plan	2.4	138,772	—
Darrel J. Pavelka	Supplemental Retirement Account Balance Plan	30.0	2,174,097	—


(1)		Years of service is calculated based on the number of years of service to the Company including any service with our former parent company, The May Department Stores Company, prior to our spin-off in 1996.

(2)		Included in the amount above is a transition credit that will vest after the attainment of age 55 and at least 5 years of company service. Currently included is $310,329 for Mr. Boessen and $1,949,446 for Mr. Pavelka.

Supplementary Retirement Account Balance Plan. The Company does not maintain a broad-based defined benefit retirement plan. The Company does, however, maintain the SERP that covers a select group of management and highly compensated employees, including executive officers other than the CEO. The SERP is a non-qualified, unfunded, “top-hat” plan.

An employee in the select “top-hat” group may be a participant in the SERP on January 1 if his or her base salary on December 31 is at least 150% of the federal “highly compensated employee” threshold in effect on that date under Section 414(q)(1)(B) of the Code. The base salary requirement for participation in the plan on January 1, 2010, was $165,000. Once the executive qualifies for participation in the SERP, he or she remains a participant contingent upon employment in a position that is part of the select top-hat group. All participants in the defined benefit plan continue as participants in the amended account balance plan.

Executive officers who are SERP participants are eligible for various types of credits after the completion of each plan year. The credits made in fiscal 2010 will be based on Fiscal 2009 eligible compensation, which is base salary plus annual incentive paid in the 2009 plan year.


	•	Basic credit: 5% of the participant’s eligible compensation

	•	Performance credit: 10% of the participant’s eligible compensation, contingent upon achievement of a pre-established performance goal


	–	The performance metric is established annually by the CN&G Committee.
	–	For 2009, the performance metric was CBI EBIT. Because the Company’s actual EBIT performance exceeded the target of $142.5 million, all executive officers who are SERP participants will receive a performance credit in April 2010.
	–	For 2010, the performance metric will be CBI EBIT. The credit will be awarded in April 2011 if the Company achieves its EBIT target, which is the same as the EBIT target under the annual cash incentive component of the ICP.


	•	Transition credit: SERP members prior to the plan amendment on January 1, 2008, received a transition credit in consideration of benefits accrued under the prior defined benefit plan design.

In addition to the credits described above, the CN&G Committee may authorize discretionary credits in the event of extraordinary circumstances.

SERP participants become 50% vested in the basic, performance and discretionary credits after five years of Company service. Vesting increases 10% per year thereafter, with full vesting after the completion of 10 years of

Company service. For those SERP participants who received a transition credit, that credit will vest if the participant reaches age 55 and has completed 5 years of service prior to retirement. Currently none of the eligible executive officers is vested in the transition credit.

Unvested basic, performance and discretionary account balances and transition account balances will be credited with interest at a rate established annually. The rate of 3.85% for Fiscal 2010 was set in November 2009 and was based on the trailing 12-month average U.S. Treasury 10-year note rate with a 120% modifier to approximate a long-term risk-free rate of return. Upon vesting, the basic, performance and discretionary account balances will be credited with earnings or debited for losses based on the performance of investment funds designated under the plan, which are the same funds identified under “Nonqualified Deferred Compensation Plan” except that a CBI Common Stock Fund is not available for the SERP.

In the event of a “Change of Control” of the Company, the SERP provides that the participant’s account balance will become 100% vested. See the discussion under the “Potential Payments upon Termination or Change of Control.”

401(k) Profit Sharing Plan. Participants (including executive officers) may make voluntary contributions to the 401(k) Plan on a before-tax and/or after-tax basis. Participants are permitted to direct that any Company contribution and/or participant contribution made to their account under the 401(k) Plan be invested in one of several investment funds, including a Collective Brands Common Stock fund. Subject to the Company’s discretion, the Company expects to contribute an aggregate of 2.5% of its “net profits” (as defined in the 401(k) Plan) to the 401(k) plans for U.S. and Puerto Rico Associates.

NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL 2009

Pursuant to the Company’s Deferred Compensation Plan, eligible executives including all executive officers may defer portions of their income including salary and bonus deferrals. An executive may defer up to 75% of base salary and up to 100% of annual and/or long-term cash incentives for the fiscal year. The table below shows the contributions, earnings, and withdrawals by each of the executive officers for Fiscal 2009.


	Executive			Aggregate		Aggregate		Aggregate
	Contributions in			Earnings (loss)		Withdrawals /		Balance at Last
	Last FY			in Last FY		Distributions		FYE
Name	($)			($)		($)		($)
(a)	(b)			(c)		(d)		(e)

Matthew E. Rubel		0			0		0		0
Douglas G. Boessen		0			129		0		42,993
LuAnn Via		0			0		0		0
Douglas J. Treff		163,913	⁽¹⁾		106,988		0		456,780
Darrel J. Pavelka		0			238,167		0		714,846


(1)		Includes $77,328 of Mr. Treff’s 2008 Annual Incentive Payment and $86,585 of Mr. Treff’s 2008 Long Term Incentive Plan Payment that were paid in 2009.

The Deferred Compensation Plan offers a diverse group of investment funds that the executive may select to measure the performance of the amount deferred. The measurement funds as of the end of Fiscal 2009 were: Evergreen Institutional Money Market Fund, American Funds Insurance Series Growth Fund — Class 2, DWS Eq 500 Index VIP — Class A, Delaware VIP Value Series, Neuberger Berman Advisers Management Trust Mid Cap Growth (Class I), Fidelity VIP Mid Cap Service Class, AllianceBernstein Small/Mid Cap Value Class A, Baron Capital Asset Fund: Insurance Shares, Delaware VIP Small Cap Value Series, Lincoln VIP International Fund, Janus Aspen Flexible Bond Service Fund, Delaware VIP High Yield Series, and the Collective Brands Common Stock Fund. Investment gains/losses are attributed to each executive’s account based on the actual performance of the investments selected. Participants may elect to receive distributions in the form of a lump-sum payment or up to 15 annual installments upon separation from service; all distributions are made in accordance with Section 409A of the Code.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

Employment Agreements. The material provisions of the employment agreements relating to termination are described below. The definition of “good reason” under the CEO’s employment agreement is consistent with the definition provided immediately below under “Change of Control Agreements,” except that the provision concerning relocation does not apply if the Company’s principal office is relocated to the New York City metropolitan area.


	•	Each of the agreements stipulates a period of non-competition and non-solicitation for a period of 18 to 24 months following termination of employment.

	•	Each agreement provides that in the event of termination by reason of death, disability, for cause or voluntarily by executive, the executive’s base salary and benefits will cease.

	•	If an executive officer other than the CEO is involuntarily terminated without cause, then the executive will be entitled to the following, provided that the executive is not in violation of the non-competition, non-solicitation, confidentiality and work product provisions of the employment agreement:


	–	A severance payment equal to two times (except for Mr. Boessen which is 1.5 times) the executive’s then-current base salary, by the later of (i) 21/2 months from the end of the fiscal year in which the executive’s employment terminates and (ii) April 15th of the year following the year in which the executive’s employment terminates;
	–	The prorated portion of any annual or long-term cash incentive compensation that may be earned and payable under the terms of the ICP;
	–	Except for Mr. Boessen and Ms. Via, accelerated vesting of unvested stock options and SSARs that would otherwise have vested during the 12-month period following termination;
	–	A special payment toward 18 months of COBRA; and
	–	An executive outplacement program through a Company-designated service provider.


	•	If the CEO is terminated without cause or terminates for good reason, then he will be entitled to the following, provided that he is not in violation of the non-competition, non-solicitation, confidentiality and work product provisions of his employment agreement:


	–	A severance payment equal to two times the sum of salary and target annual bonus for the year of termination;
	–	An additional severance payment in lieu of any annual and long-term cash incentives otherwise payable for performance periods in progress as of the termination date:


	n	First fiscal quarter $1,000,000
	n	Second fiscal quarter $1,425,000
	n	Third fiscal quarter $1,850,000
	n	Fourth fiscal quarter $2,275,000


	–	Accelerated vesting of unvested stock options, SSARs, and restricted stock that would have otherwise vested during the 24-month period following termination;
	–	Continued participation in the Company’s medical, dental and other health insurance during the 24-month period following termination; and
	–	A $15,000 allowance for reasonable outplacement expenses.

Change of Control Agreements. The Company has entered into Change of Control agreements with each of the executive officers except Ms. Via. These Change of Control agreements generally provide for the terms of employment after a Change of Control (generally superseding the terms of the employment agreement) and for benefits if he or she terminates employment for “good reason” or is involuntarily terminated other than for death, or disability within three years after a Change of Control. Good reason includes the Company’s relocation of the executive to an office more than 35 miles from executive’s principal office, a termination by the executive within twelve months after a “Potential Change of Control,” or a termination by the executive within 30-day window following the first anniversary of a Change of Control.

For this purpose, a Change of Control includes any of the following events:


	•	Any “person,” as defined in the Exchange Act, acquires 20% or more of the Company’s common stock or voting securities;

	•	A majority of the Company’s Directors are replaced and not approved by the “Incumbent Board”;

	•	Consummation of certain mergers (e.g., a merger after which the Company’s pre-merger voting shares represent less than 50% of the voting shares of the combined entity), or a sale of all or substantially all of the Company’s assets; or

	•	Approval by stockholders of a liquidation of the Company.

Upon a covered termination of employment, the agreements provide that the executive will receive a lump sum payment equal to the aggregate of: (1) three times the sum of (a) base salary in effect at termination or, if greater, base salary in effect immediately prior to the Change of Control, plus (b) the greater of the highest bonus actually paid in the previous three years or the bonus paid in the most recently completed fiscal year following a Change of Control, and (2) a cash payment for cancellation of all stock options or stock appreciation rights.

Each Change of Control agreement also provides that the executive will receive outplacement benefits and three years of continued participation in the Company’s welfare benefit plans (or such longer period as is provided in such plan).

The Change of Control agreements also provide a tax gross-up for any excise taxes that may be incurred under Section 4999 of the Code if payment under the agreement would result in the executive receiving at least 110 percent of the “safe harbor” amount. In the event that payments do not meet the 110 percent threshold, the payments are reduced so that no excise tax is imposed.

In addition, in the event of a Change of Control under the terms of the respective Company plans:


	•	Amounts deferred under the Company’s Deferred Compensation Plan will be distributed to all participants in a lump sum cash payment, subject to certain distribution limits under Section 409A of the Code;

	•	All options and stock appreciation rights outstanding on the date of the Change of Control will become immediately and fully exercisable;

	•	All account balances under the SERP will vest immediately; and

	•	All restrictions on any restricted or phantom stock units will lapse, and such shares and units will become fully vested.

If termination were to occur during a “Potential Change of Control,” an additional severance payment would be provided to the executive officers, excluding Ms. Via and Mr. Boessen, in lieu of any annual and long-term cash incentives otherwise payable for performance periods in progress as of the termination date:


	Additional Severance Payment – Termination During “Potential Change of Control”
	Fiscal Quarter in which Termination Occurs
	Q1		Q2		Q3		Q4

Mr. Rubel	$	1,000,000	$	1,425,000	$	1,850,000	$	2,275,000
Messrs. Treff and Pavelka	$	260,000	$	380,000	$	510,000	$	630,000

The following tables reflect the estimated compensation payable to the executive officers in the event of termination of employment due to retirement, voluntary termination (with and without good reason), death, disability, involuntary termination without cause, and following a Change of Control. The amounts assume that such termination was effective on January 30, 2010, and the Change of Control occurred on such date. The actual amounts to be paid can be determined only at the time of the executive’s actual termination of employment.


							Value of
							Vested
							Stock &
					Benefit		Accelerated
	Cash		Incremental		Continuation		Vesting of
	Severance		Pension		& Outplacement		Unvested			Incentive		Tax Gross
Executive Officer	Payment⁽¹⁾		Benefit⁽²⁾		Services⁽³⁾		Stock			Compensation⁽⁴⁾		Up⁽⁵⁾		Totals
(a)	(b)		(c)		(d)		(e)			(f)		(g)		(h)

Matthew E. Rubel
• Voluntary termination or for cause											1,808,835				1,808,835
• Disability		2,275,000						2,109,854	⁽⁶⁾		1,808,835				6,193,689
• Death		2,275,000						9,473,197	⁽⁷⁾		1,808,835				13,557,032
• Good Reason or without cause		6,769,000				37,572		8,365,993	⁽⁸⁾		1,808,835				16,981,400
• Change of Control (COC)								10,230,030	⁽⁹⁾						10,230,030
• Termination for good reason or without cause after COC		8,797,005				331,533					1,808,835		4,793,616		15,730,989
• Disability/Death after COC											1,808,835				1,808,835
• Potential Change of Control		11,072,005				331,533		8,365,993	⁽⁸⁾				5,041,616		24,811,147


Douglas Boessen
• Voluntary termination or for cause											193,200				193,200
• Disability								21,313	⁽⁶⁾		193,200				214,513
• Death								229,937	⁽⁷⁾		193,200				423,137
• Good Reason or without cause		450,000				17,929					193,200				661,129
• Change of Control (COC)				323,647				298,709	⁽⁹⁾						622,356
• Termination for good reason or without cause after COC		1,479,600				98,517					193,200		681,118		2,452,435
• Disability/Death after COC											193,200				193,200


LuAnn Via
• Voluntary termination or for cause											765,244				765,244
• Disability								49,515	⁽⁶⁾		765,244				814,759
• Death								1,313,554	⁽⁷⁾		765,244				2,078,798
• Good Reason or without cause		1,350,000				18,392					765,244				2,133,636


Douglas Treff
• Voluntary termination or for cause											565,895				565,895
• Disability								288,647	⁽⁶⁾		565,895				854,542
• Death								937,072	⁽⁷⁾		565,895				1,502,967
• Good Reason or without cause		1,081,500				17,929		392,073	⁽¹⁰⁾		565,895				2,057,397
• Change of Control (COC)				31,342				982,985	⁽⁹⁾						1,014,327
• Termination for good reason or without cause after COC		3,319,935				161,084					565,895		1,974,352		6,021,266
• Disability/Death after COC											565,895				565,895
• Potential Change of Control		3,949,935				161,084		392,073	⁽¹⁰⁾				2,217,039		6,720,131


Darrel Pavelka
• Voluntary termination or for cause											559,878				559,878
• Disability								91,846	⁽⁶⁾		559,878				651,724
• Death								761,771	⁽⁷⁾		559,878				1,321,649
• Good Reason or without cause		1,070,000				17,929		195,273	⁽¹⁰⁾		559,878				1,843,080
• Change of Control (COC)				2,068,667				1,037,178	⁽⁹⁾						3,105,845
• Termination for good reason or without cause after COC		3,284,634				159,646					559,878		1,423,252		5,427,410
• Disability/Death after COC											559,878				559,878
• Potential Change of Control		3,914,634				159,646		195,273	⁽¹⁰⁾				1,825,122		6,094,675


(1)		For termination with good reason not in connection with Change of Control (“COC”), the cash severance payment for Mr. Rubel is two times the sum of his base salary and target annual bonus for the fiscal year in which his employment is terminated. Mr. Rubel also receives an additional severance payout based upon the timing of his termination during the fiscal year as described in the CD&A. For all other


		executive officers the cash severance payment represents the payment of salary for the remainder of the employment contract term at the current salary level. For termination for good reason or without cause following a COC, the cash severance payment for all executive officers is three times the sum of his salary and highest annual bonus paid to date.

(2)		The amount reflects the immediate vesting of account balances following a COC for the Supplementary Retirement Plan.

(3)		The amount includes thirty-six months of benefit continuation in the Company’s welfare benefit plans and outplacement services.

(4)		Amounts shown include both the annual and long-term incentives earned for the last completed fiscal year.

(5)		Collective Brands utilizes a 100% modified gross-up calculation. Tax Gross Up calculations include the following assumptions: change-in-control stock price of $19.68, Applicable Federal Rate of 1.98%, annual volatility of 55%, and represent Income, FICA, and excise tax amounts.

(6)		Amount reflects the value of the acceleration of restricted awards outstanding granted greater than one year ago.

(7)		Amount reflects the value due to the acceleration of all stock options and/or stock-settled stock appreciation rights, and acceleration of restricted awards.

(8)		Amount reflects the value of all outstanding equity awards that would have vested within twenty-four months following the date of termination.

(9)		Amount reflects the accelerated vesting of all outstanding equity awards upon a COC.

(10)		Amount reflects the value of all outstanding equity awards that would have vested within twelve months following the date of termination.

Beneficial Stock Ownership of Directors, Nominees, Executive Officers, and More Than Five Percent Owners

The following table sets forth certain information known to the Company regarding beneficial ownership of the Company Common Stock as of April 1, 2010, (including shares of the Company’s Common Stock held in the Company Profit Sharing Plan account for the executive officers named in the Summary Compensation Table) by (a) each person known by the Company to own beneficially more than 5% of the Company’s Common Stock, (b) each Director and nominee for election as a Director of the Company, (c) each of the executive officers named in the Summary Compensation Table, and (d) all current Directors, nominees and executive officers as a group. The shares allocated to the accounts of participants named below in the Company’s Profit Sharing Plan constitute less than one percent of the Company Common Stock (see note (4) below).

On April 1, 2010, there were 64,783,038 Common Stock outstanding.


	Shares Beneficially
	Owned as of
	April 1,		Percent
Name	2010		of Class

Holders of More than Five Percent of Common Stock
PRIMECAP Management Company⁽¹⁾		7,033,180		10.9
BlackRock, Inc.⁽²⁾		6,090,390		9.4
Glenhill Advisors, LLC⁽³⁾		3,439,000		5.3
Directors, Nominees and Executive Officers⁽⁴⁾
Daniel Boggan Jr.⁽⁵⁾		5,051		*
Mylle H. Mangum⁽⁵⁾		300		*
John F. McGovern⁽⁵⁾		9,547		*
Robert F. Moran⁽⁵⁾⁽⁶⁾		35,826		*
D. Scott Olivet		31,269		*
Matthew A. Ouimet⁽⁵⁾		—		*
Michael A. Weiss⁽⁵⁾		11,718		*
Robert C. Wheeler⁽⁵⁾		10,709		*
Matthew E. Rubel⁽⁷⁾⁽⁸⁾		987,675		1.5
Douglas G. Boessen⁽⁷⁾⁽⁸⁾		20,193		*
Darrel J. Pavelka ^{(7)(8)(9)(10)}		135,690		*
Douglas J. Treff⁽⁷⁾⁽⁸⁾		63,458		*
LuAnn Via⁽⁷⁾⁽⁸⁾		34,770		*
All directors, nominees and executive officers as a group (16 Persons)^(5)(7)(8)(9)		1,475,616		2.2


*		Less than one percent.


(1)		This information is based on Amendment 3 to Schedule 13G filed with the SEC on February 11, 2010. The address of PRIMECAP Management Company is 225 South Lake Avenue, #400, Pasadena, CA 91101.

(2)		The information is based on Schedule 13G filed with the SEC on February 29, 2010.The address of Black Rock, Inc. is 40 East 52nd Street, New York, NY 10022.

(3)		This information is based on Amendment 3 to Schedule 13G filed with the SEC on February 16, 2010. Glenhill Advisors, LLC has shared voting and dispositive power with Glenn J. Krevlin and Glenhill Capital Management, LLC. Their address is 156 West 56th, 17th Floor, New York, NY 10019.

(4)		The Company’s profit sharing plans provide for an investment fund which is invested in shares of Collective Brands Common Stock (the “Common Stock Fund”). As of April 1, 2010, the trusts under the Company’s profit sharing plans owned approximately 906,664 shares of Collective Brands Common Stock (approximately 1.4% of the shares of Collective Brands Common Stock outstanding) in the Common Stock Fund. Executive Officers owned approximately 17,487 shares of Company Stock through the Common Stock Fund. Shares shown as beneficially owned by the persons referred to in the table include any shares allocated to their accounts under the profit sharing plans.

(5)		Does not include units credited to non-employee Director’s accounts under the Deferred Compensation Plan for Non-Management Directors. As of April 1, 2010, the following Directors had the indicated units credited to their account under the plan: Mr. Boggan — 28,797 units; Ms. Mangum — 31,212 units; Mr. McGovern — 38,757 units; Mr. Moran — 5,124 units; Mr. Ouimet — 7,519 units; Mr. Weiss — 4,088 units; and Mr. Wheeler — 13,843 units. At the end of the deferral period, the units will be paid out in an equivalent number of shares of Collective Brands common stock.

(6)		Includes 28,400 shares held by Mr. Moran’s spouse.

(7)		Shares shown as beneficially owned include shares subject to options which are presently exercisable or which will become exercisable on or before May 31, 2010 as follows: Matthew E. Rubel — 648,000 shares; Douglas G. Boessen — 14,100 shares; Darrel J. Pavelka — 76,000 shares, and all Directors, nominees and executive officers as a group — 827,300 shares.

(8)		Shares shown as beneficially owned do not include shares which may be acquired upon exercise of stock settled stock appreciation rights (“SSARs”). Each right provides the holder the right to acquire up to two-thirds of a share of stock if the maximum appreciation of 200% is achieved. The following executives have SSARs that will be exercisable before May 31, 2010 Matthew E. Rubel — 550,545 SSARs, Douglas G. Boessen — 24,396 SSARs, Darrel J. Pavelka — 99,725 SSARs, LuAnn Via — 34,955 SSARs, Douglas J. Treff — 68,375 and all Directors, nominees and executive officers as a group — 861,947 SSARs.

(9)		Does not include units credited to accounts under the Company’s Deferred Compensation Plan. As of April 1, 2010, Mr. Pavelka had 11,454 units credited to his account. At the end of the deferral period, the units will be paid out in an equivalent number of shares of Collective Brands Common Stock.

(10)		Mr. Pavelka’s ownership includes 14,531 shares held in a trust in his spouse’s name.

Audit and Finance Committee Report.

The following Report of the Audit and Finance Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.

In February 2010, the Audit and Finance Committee (the “Audit Committee”) of the Board of Directors reviewed its charter. The complete text of the charter is available on the Company’s Investor Relations website at www.collectivebrands.com.

Management has the primary responsibility for the Company’s financial statements and the reporting process, including the systems of internal control. The Company’s independent registered public accountants have the responsibility for the examination of the Company’s financial statements. On behalf of the Board of Directors, the Audit Committee monitors the Company’s financial reporting processes and systems of internal control, the independence and performance of the independent registered public accountants, and the performance of the internal auditors.

The Audit Committee met eleven times during fiscal 2009. The Audit Committee regularly meets with the Company’s internal auditors, Chief Financial Officer, Chief Administrative Officer, General Counsel and the Company’s independent registered public accountant each without the presence of Management.

As part of its oversight of the Company’s financial statements, the Audit Committee reviews and discusses with both Management and the Company’s independent registered public accountants all annual and quarterly financial statements prior to their issuance. During fiscal 2009, the Audit Committee reviewed significant accounting and disclosure issues with management and Deloitte & Touche LLP (“D&T”). These reviews included discussion with D&T of matters required to be discussed pursuant to Statement on Auditing Standards No. 61, as amended (Communication with Audit Committees), including the quality of the Company’s accounting principles,

the reasonableness of significant judgments and the clarity of disclosures in the financial statements. Our independent registered public accounting firm also provided to the Audit Committee the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with the independent registered public accounting firm its independence.

In addition, the Audit Committee reviewed initiatives and programs aimed at strengthening the effectiveness of the Company’s internal and disclosure control structures. As part of this process, the Audit Committee continued to monitor the scope and adequacy of the Company’s internal auditing program.

Taking all of these reviews and discussions into account, the Audit Committee members recommended to the Board that the Board approve the inclusion of the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2010, for filing with the Securities and Exchange Commission.

The Audit Committee believes its membership complies with the requirements of the New York Stock Exchange with respect to independence, financial literacy and financial management expertise, but its members are not professionally engaged in the practice of accounting and are not experts in the fields of accounting or auditing.

The Audit Committee also recommended the reappointment, subject to stockholder approval, of Deloitte & Touche LLP as the Company’s independent registered public accountants for fiscal 2010.

Audit and Finance Committee:

John F. McGovern — Chairman

Daniel Boggan Jr.

Robert Moran

D. Scott Olivet

Matthew A. Ouimet

Principal Accounting Fees and Services

The following table presents fees for professional services rendered by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively “DT”) for the audit of the Company’s annual financial statements for fiscal 2009 and fiscal 2008 and fees billed for audit-related services, tax services and all other services rendered by DT for fiscal 2009 and fiscal 2008.


	Fiscal 2009		Fiscal 2008
	(in thousands)

Audit fees	$	2,144	$	2,521
Audit-related fees^(a)		233		283
Tax fees		—		—
All other fees		—		—
Total audit-related fees & non-audit fees	$	2,377	$	2,804


(a)		Audit-Related Fees consist of attest and related services that are reasonably related to the performance of the audit or review of the Company’s international subsidiaries, joint venture and employee benefit plan financial statements. In 2009, this category includes fees related to audits for international subsidiaries and joint ventures for fiscal year 2009 ($183) and audits of employee benefit plans for the 2008 plan year ($50). In 2008, this category includes fees related to audits for international subsidiaries and joint ventures for fiscal year 2008 ($179) and audits of employee benefit plans for the 2007 plan year ($104).

The Audit and Finance Committee’s policy on the use of the Company’s independent public accountant requires pre-approval of all services. The policy authorizes the Committee to delegate to one or more of its members pre-approval authority with respect to permitted services. All-audit related services, tax services and other services were pre-approved by the Audit and Finance Committee consistent with its policy. Prior to approving services, the Committee or its designee concluded that the provision of such services by DT was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.

******************

PROPOSAL II: RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP
AS THE COMPANY’S INDEPENDENT REGISTERED ACCOUNTANTS
FOR FISCAL YEAR 2010

Proposal II on the accompanying proxy card

The Audit and Finance Committee appointed DT to serve as the Company’s independent registered public accountants for the fiscal year ending January 29, 2011, subject to ratification by the stockholders at the Annual Meeting. DT served as the Company’s independent registered public accountants for fiscal 2009.

A member of the firm of DT will be present at the meeting to make such statements as that firm may desire and to answer appropriate stockholder questions.

THE BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF COLLECTIVE BRANDS, INC. COMMON STOCK VOTE IN FAVOR OF PROPOSAL II, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.

******************

RELATED PARTY TRANSACTIONS

General. The Company has operated under a written Code of Ethics for many years. As part of that Code of Ethics, Directors and employees are expected to make business decisions and take actions based upon the best interests of the Company and not based upon personal relationships or benefits.

In March 2007, the Board of Directors formally adopted a written policy with respect to transactions involving “related parties” to document procedures pursuant to which such transactions are reviewed, approved or ratified. The policy applies to any transaction in which (1) the Company is a participant, (2) a related party has a direct or indirect material interest, and (3) the amount involved exceeds $120,000, but generally does not include a transaction that is not required to be disclosed under Item 404(a) of Regulation S-K. A “related party” includes Company Directors and executive officers and their immediate family members, and stockholders owning 5% or more of the Company’s outstanding stock.

Policy. The CN&G Committee, with the assistance of the Company’s Law Department, is responsible for reviewing, approving or ratifying all related party transactions. The CN&G Committee intends to approve only those related party transactions that are in, or not inconsistent with, the Company’s and its stockholders’ best interests. In considering any related party transaction, the Committee will consider all relevant facts and circumstances.

Procedures:


	•	The related party and/or the Company employee responsible for the transaction must notify the Company’s Law Department of the transaction and all of the related facts and circumstances.

	•	If the Law Department determines that the transaction is a related party transaction, it will submit the proposed transaction to the CN&G Committee or the Chairman of the CN&G Committee for review.

	•	Any Director involved in the transaction will be recused from all discussions and decisions regarding the transaction.

	•	The transaction must be approved in advance whenever practicable, and if not practicable, must be ratified as promptly as practicable.

	•	The CN&G Committee or the Chairman of the CN&G Committee will review the proposed related party transaction and determine whether to approve, terminate or ratify the transaction.

The CN&G Committee (or the Chairman) will consider all of the relevant available facts and circumstances, including but not limited to: (a) the benefits to the Company; (b) the impact on a Director’s independence — if the related party is a Director, a Director’s immediate family member or an entity in which a Director is a partner,

shareholder or executive officer; (c) the availability of other sources for comparable products or services; (d) the terms of the transaction; and (e) the terms available to unrelated third parties or to employees generally. No member of the CN&G Committee may participate in any review, consideration or approval of a related party transaction if such member or his or her immediate family member is the related party.

The Company began a relationship with Celadon Group, Inc. (“Celadon”) in 2002. Mr. Rubel’s father-in-law, Stephen Russell, is Chairman of the Board and Chief Executive Officer of Celadon. Pursuant to a competitive bid process, Celadon won the right to be the primary carrier on two of the Company’s transportation lanes. Beginning in April 2010, Celadon will also begin service for one additional lane. These lanes account for less than three percent of the Company’s linehaul budget. The Company periodically competitively bids its linehaul routes and as a result, Celadon could gain or lose routes based upon its bids.

In June 2006, the Company entered into a Marketing and License Agreement with Ballet Theatre Foundation, Inc., a nonprofit organization, to use the American Ballet Theatre and ABT marks in connection with development, manufacture, marketing, promotion, distribution, and sale of certain dance footwear. Mr. Rubel became a Trustee of Ballet Theatre Foundation, Inc. in January 2007.

ADDITIONAL INFORMATION

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s Directors, executive officers and greater than ten percent beneficial owners (“Reporting Persons”) to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Collective Brands Common Stock. Specific due dates for these reports have been established and the Company is required to report in this Proxy Statement any failure by the Reporting Persons to file by these dates. To the Company’s knowledge, all Section 16(a) filing requirements applicable to Reporting Persons were timely met during the fiscal year ended January 30, 2010.

Other Business

Under the laws of the State of Delaware, where Collective Brands is incorporated, no business other than procedural matters may be raised at the Annual Meeting unless proper notice to the stockholders has been given. We do not expect any business to come up for stockholder vote at the Annual Meeting other than the items described in this proxy statement. If other business is properly raised, your proxy card authorizes the people named as proxies to vote as they think best.

Persons with Disabilities

We can provide reasonable assistance to help you participate in the Annual Meeting if you tell us about your disability and your plans to attend. Please call or write the Secretary at least two weeks before the Annual Meeting at the number or address under “Questions.”

Code of Ethics

Collective Brands maintains a Code of Ethics that is applicable to all of its employees, officers and Directors, including the Chief Executive Officer, the Chief Financial Officer and the Chief Accounting Officer. The Code of Ethics contains written standards that are designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest; full, fair, accurate, timely and understandable public disclosures and communications, including financial reporting; compliance with applicable laws, rules and regulations; prompt internal reporting of violations of the code; and accountability for adherence to the code. A copy of Collective Brands’ Code of Ethics is posted on Collective Brands’ website at www.collectivebrands.com Collective Brands will post any disclosable waivers or amendments to the Code of Ethics on its investor relations website at www.collectivebrands.com. Copies of the Code of Ethics may be obtained by contacting the Company’s Investor Relation’s Department at (800) 626-3204, or writing to them at Collective Brands, Inc., Attn: Investor Relations, 3231 Southeast Sixth Avenue, Topeka, Kansas 66607.

Outstanding Shares

On April 1, 2010, the record date, 64,783,038 shares of common stock were outstanding. Each share of common stock has one vote.

How We Solicit Proxies

Proxies will be solicited on behalf of the Board of Directors by mail, telephone, other electronic means or in person. The Company pays the costs of soliciting this proxy. We are paying D.F. King & Co., Inc. a fee of $12,000 plus expenses to help with the solicitation. We also reimburse brokers and other nominees for their expenses in sending these materials to you and getting your voting instructions.

2011 ANNUAL MEETING

The 2011 Annual Meeting is anticipated to be held Thursday, May 26, 2011, at a time and location to be announced later. The Board may change this date in its discretion.

ABOUT SHAREHOLDER PROPOSALS AND NOMINATIONS FOR OUR 2011 ANNUAL MEETING

If you intend for your proposal to be included in next year’s proxy statement pursuant to the Securities and Exchange Commission Rule 14a-8, you must send it to the Corporate Secretary by the close of business on December 15, 2010. Submitting a stockholder proposal does not guarantee that we will include it in our proxy statement if it does not satisfy the standards set forth in the rules of the SEC.

Under our By-Laws, if a stockholder desires to bring a matter before the annual meeting of stockholders or if a stockholder wants to nominate a person for election to our Board, the stockholder must follow the procedures outlined in our By-Laws. A copy of our By-Laws is available without charge to stockholders of record upon written request to our Corporate Secretary. Our By-Law procedures are separate from the SEC’s requirements that a shareholder must meet in order to have a shareholder proposal included in our proxy statement.

Our By-Laws require timely notice in writing of any business a stockholder proposes to bring before the annual meeting of stockholders and/or the nomination any stockholder proposes to make at the annual meeting of stockholders. Notice of business proposed to be brought before the 2011 Annual Meeting of Stockholders and/or director nominations proposed to be made at the 2011 Annual Meeting of Stockholders must be received by our Corporate Secretary no earlier than February 25, 2011 and no later than March 12, 2011, assuming there is no change to the date of our Annual Meeting of Stockholders.

Capitalized terms not otherwise defined will have the meaning ascribed to them in our By-Laws. If a stockholder would like to bring any business before the annual meeting of stockholders the matter must be a proper matter for stockholder action and must provide and supplement within 10 days after the record date with respect to the stockholder and the beneficial holder, if any:


	•	your name and record address and the address of any beneficial holder;

	•	the class and number of shares of capital stock of the Corporation which are owned directly or indirectly;

	•	any Derivative Instrument or any other opportunity to profit or share in any profit derived from any change in the value of shares of the Corporation;

	•	any arrangement pursuant to which you have the right to vote any share of the Corporation;

	•	any short interest in securities of the Corporation;

	•	any rights to dividends that are separated or are separable from the underlying shares of the Corporation;

	•	any proportionate interest in shares of the Corporation or Derivative Instruments held directly or indirectly;

	•	any performance fees (other than an asset fee) based on a change in the value of the shares of the Corporation or Derivative Instruments; and


	•	any other information required to be disclosed in a proxy statement applicable to the proposal or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act.

If the stockholder brings before the meeting any action other than the nomination of a director or directors the stockholder notice must also include:


	•	a brief description of the proposal and the reasons why you favor the proposal and any material interest in such proposal; and

	•	a description of all agreements and understanding between the stockholder and the beneficial owner, if any, and any other person (including their names) in connection with such proposal.

If a stockholder would like to nominate a candidate for director at the 2011 annual meeting, your notice must include certain information, specified in the Company’s By-laws, about you and your nominee(s).

As to each person whom the stockholder proposes to nominate for election or re-election as a director you must provide:


	•	all information relating to the person that is required to be disclosed in solicitations for proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

	•	a description of all direct and indirect compensation, monetary and other material relationships between or among the stockholder and the beneficial holder on one hand and the each proposed nominee on the other hand including without limitation all information that would be required to be disclosed pursuant to Rule 404 of Regulation S-K if the stockholder and any beneficial owner on whose behalf the nomination is made were the registrant for purposes of such rule and nominee were a director or executive officer of the Corporation.

	•	completion of a signed questionnaire representation and agreement.

	•	such other information as may be reasonably required by the Corporation to determine the eligibility of such nominee to serve as an independent director of the Corporation or could be material to a reasonable stockholder’s understanding of the independence or lack thereof, of such nominee.

Such notice shall be accompanied by the executed consent of each nominee to serve as a director if so elected.

If you would like to make suggestions for Board nominees to the Compensation, Nominating and Governance Committee of the Board of Directors, those suggestions should be submitted to the attention of the Corporate Secretary.

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII COLLECTIVE Admission Ticket BRANDSINC- |||||||||||||||||||||||||||||||||||||||||||||||||||||||| C123456789 000004 000000000.000000 ext 000000000.000000 ext MR A SAMPLE 000000000.000000 ext 000000000.000000 ext DESIGNATION (IF ANY) 000000000.000000 ext 000000000.000000 ext AADDD 2 Electronic Voting Instructions ADD 3 You can vote by Internet or telephone! ADD 4 Available 24 hours a day, 7 days a week! ADD 5 nstead of mai ing your proxy, you may choose one of the two a ternate ADD 6 voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Daylight Saving Time, on May 27, 2010. ¦ Vote by Internet • Log on to the Internet and go to (Daanc 1 www.investorvote.com • Follow the steps outlined on the secured website. gSt Vote by telephone MM • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call Using a black ink pen, mark your votes with an X as shown in y • Follow the instructions provided by the recorded message. this example. Please do not write outside the designated areas. Annual Meeting Proxy Card ( 1234 5678 9012 345J T IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ? A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2. 1. Election of Directors: Each nominee to serve for a three-year term expiring in 2013. + 01 — Daniel Boggan Jr. 02 — Michael A. Weiss 03 — Robert C. Wheeler Mark here to vote FOR all nominees Mark here to WITHHOLD vote from all nominees 01 02 03 ? For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. For Against Abstain 2. Ratify the appointment of Deloitte & Touche LLP as independent registered public accountants for fiscal year 2010. B Non-Voting Items Change of Address — Please print your new address below. Comments — Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box / I ~| I 1 I I II Mill Mill Mill Mill Mill Mill I C 1234567890 J N T M R ACHSAARMAPCLETE (RTHSI)S M ARR AEASAISMPSELET AUNPD T O R A CA CSOAMMPMLOED AANT DE ¦ MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1UPX 0253171 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 016GDA

To the Stockholders of Collective Brands, Inc.: You are cordially invited to attend the Annual Meeting of Collective Brands Stockholders which will be held at Collective Brands, Inc., Pozez Auditorium, 3231 SE Sixth Avenue, Topeka, Kansas, on Thursday, May 27, 2010, at 10:00 a.m. Central Daylight Saving Time. Provided with this proxy card is a return envelope, the Company’s 2009 Annual Report to Stockholders and the Proxy Statement for the 2010 Annual Meeting. It is important that you vote by returning the proxy card, by using the Internet or by telephone. Management’s recommendation on each issue and the reasons for the recommendations are described in the Proxy Statement. 2010 Admission Ticket COLLECTIVE BRANDS INC.’” ANNUAL MEETING OF STOCKHOLDERS POZEZ AUDITORIUM 3231 SE SIXTH AVENUE TOPEKA, KANSAS THURSDAY, MAY 27, 2010 10:00 A.M., CENTRAL DAYLIGHT SAVING TIME PLEASE ADMIT NON-TRANSFERABLE T IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ? Proxy — Collective Brands, Inc. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING TO BE HELD ON MAY 27, 2010 The undersigned hereby appoints Douglas G. Boessen, Betty J. Click and Aaron G. Hove, as proxies, each with the full power of substitution, to vote and act with respect to all of the shares of common stock of the undersigned in Collective Brands, Inc., at the Annual Meeting, upon all matters that may properly come before the meeting, including the matters described in the Proxy Statement furnished herewith, subject to the directions indicated on the reverse side of this card, through the telephone or Internet proxy procedures, and at the discretion of the proxies on any other matters that may properly come before the meeting. This proxy card, when signed and returned, will also constitute voting instructions to the trustee for shares held under the Payless ShoeSource, Inc. 401(k) Profit Sharing Plan and the Payless ShoeSource, Inc. Profit Sharing Plan for Puerto Rico Associates. IF NO DIRECTIONS ARE GIVEN, AND THIS CARD IS RETURNED SIGNED, THE UNDERSIGNED UNDERSTANDS THAT THE PROXIES, TRUSTEE OR RECORDKEEPER WILL VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS AND IN THEIR DISCRETION ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE OR BY VOTE BY USING THE INTERNET OR BY TELEPHONE. IF YOU VOTE BY TELEPHONE OR THE INTERNET, DO NOT MAIL YOUR PROXY CARD.


	1) Title of each class of securities to which transaction applies:


	2) Aggregate number of securities to which transaction applies:


SEC 1913 (02-02)	Persons who potentially are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


Proxy Statement			1
Proposal I: Election of Directors			2
Charters and Corporate Governance Principles			4
Meetings of the Board			8
Board Compensation			8
Committees of the Board			10
Compensation Committee Interlocks and Insider Participation			12
Compensation, Nominating and Governance Committee Report			12
Compensation Discussion and Analysis			13
Summary Compensation Table			26
Fiscal 2009 Grants of Plan-Based Awards Table			27
Outstanding Equity Awards at the End of Fiscal 2009 Table			28
Fiscal 2009 Option Exercises and Stock Vested Table			29
Pension Benefits for Fiscal 2009 Table			30
Nonqualified Deferred Compensation for Fiscal 2009 Table			31
Beneficial Stock Ownership of Directors, Nominees, Executive Officers, and More Than Five Percent Owners			35
Audit and Finance Committee Report			36
Proposal II: Ratify the appointment of Deloitte & Touche LLP as the Company’s Independent Registered Accountants for Fiscal Year 2009			38
Related Party Transactions			38
Companies Comprising the HayGroup 2009 Retail Index Survey			A-1


*		Companies also represented in the Company’s Compensation Comparison Group


	1) Amount Previously Paid:


	2) Form, Schedule or Registration Statement No.:


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