THE BONuTON STORES, INC.

2801 East Market Street

York, PA 17402

www.bonton.com

May ~~14, 2008~~4, 2010

Dear Shareholder:

You are cordially invited to attend our Annual Meeting of Shareholders to be held at the Company’s offices, 2801 East Market Street, York, Pennsylvania on Tuesday, June ~~17, 2008,~~15, 2010, beginning at 9:00 a.m. Enclosed is the official notice of meeting, the proxy statement, the proxy card and our ~~2007~~2009 Annual Report.

We are using the Securities and Exchange Commission rule that allows companies to furnish proxy materials over the internet. We are mailing to many of our shareholders a notice that the proxy materials, including our 2009 Annual Report, are available on our website rather than sending a paper copy of this proxy statement and our 2009 Annual Report. We believe this electronic proxy process will expedite shareholders’ receipt of proxy materials, conserve valuable natural resources and reduce the Company’s costs of printing and distributing proxy materials.

Your vote is important to us. Even if you plan to attend the meeting, please sign, date and return your proxy in the enclosed postage-paid envelope or vote by telephone or over the internet.

Sincerely,

Tim Grumbacher

Executive Chairman of the Board

THE ~~BON-TON~~BONuTON STORES, INC.
2801 East Market Street
York, PA 17402
www.bonton.com

NOTICE OF ANNUAL MEETING

The Annual Meeting of Shareholders of The Bon-Ton Stores, Inc. will be held on Tuesday, June ~~17, 2008,~~15, 2010, at 9:00 a.m., at the Company’s offices, 2801 East Market Street, York, Pennsylvania.

The purposes of the meeting are:

1. To elect ~~a ten-member~~an eight-member Board of Directors for a one-year term.


	2.	To ~~amend the Amended and Restated 2000 Stock Incentive and Performance-Based Award Plan to increase by 1,000,000 the number of shares available for grant or award.~~

	3.	To ratify the appointment of KPMG LLP as independent registered public accounting firm for ~~2008.~~2010.

	3.	To consider any other matters as may properly come before the meeting.

~~4. To consider any other matters as may properly come before the meeting.~~

Shareholders who owned shares of our stock at the close of business on April ~~25, 2008~~16, 2010 may attend and vote at the meeting. You may vote by telephone or over the internet or by mailing the proxy card in the enclosed postage-paid envelope. Any shareholder attending the meeting may vote in person, even ~~though~~if he or she has already returned a proxy card or voted by telephone or over the internet.

Robert E. Stern

Vice President,

General Counsel and Secretary

York, Pennsylvania

May ~~14, 2008~~4, 2010

Please vote by telephone or over the internet as instructed on the enclosed proxy card or complete, sign and date the proxy card as promptly as possible and return it in the enclosed envelope. If you vote by telephone or over the internet, do not return your proxy card.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON JUNE ~~17, 2008~~15, 2010

This proxy statement and the Company’s Annual Report for the fiscal year ended ~~February 2, 2008~~January 30, 2010 are both available in the Investor Relations section of the Company’s website at ~~www.bonton.com under Investor Relations.~~

www.bonton.com.

TABLE OF CONTENTS


	Page

Proxy Statement		1
Voting Procedures and Security Ownership		1
Outstanding Shares and Voting Rights		1
Principal Shareholders		3
Security Ownership of Directors and Executive Officers		5
Proposal One: Election of Directors		76
Corporate Governance and Board of Directors Information		98
Governing Documents		98
Code of Conduct		8
Director Independence		98
~~Attendance at~~Leadership Structure		8
Meetings of the Board ~~Meetings~~of Directors		9
Board Committees		9
Role of the Lead Director		11
Role of the Board in Risk Oversight		11
Director Nominations Process and Director Qualifications		12
Director Attendance at Annual Meetings		1213
Shareholder Communication with the Board of Directors		1213
Compensation of Directors		1213
Share Ownership Guidelines		14
Proposal Two: ~~Amendment of the Stock Incentive Plan~~		15
~~Proposal Three:~~ Ratification of the Appointment of the Independent Registered Public Accounting Firm		2015
Report of the Audit Committee		2116
Executive Compensation		2217
Compensation Discussion and Analysis		2217
Report of the Human Resources and Compensation Committee		3127
Risk Considerations in our Compensation Policies		27
Summary Compensation Table		3228
Grants of Plan-Based Awards		3330
Outstanding Equity Awards at Fiscal Year-End		3431
Pension Benefits		3532
Option Exercises and Stock Vested During ~~2007~~2009		3734
Summary of Employment Agreements with Named Executive Officers		3734
Potential Payments Upon Termination or Change in Control		39
Equity Compensation Plan Information		42
Section 16(a) Beneficial Ownership Reporting Compliance		4342
Related Party Transactions		4342
Shareholder Proposals		43
Householding of Proxy Materials		43

THE BON-TON STORES, INC.

PROXY STATEMENT

We are providing this proxy statement to solicit your proxy for use at the ~~annual meeting~~Annual Meeting of ~~shareholders~~Shareholders (the “meeting”) which will be held at 9:00 a.m. on Tuesday, June ~~17, 2008.~~15, 2010. The proxy materials, which consist of the Annual Report, the Notice of Annual Meeting, this proxy statement and the proxy card, are ~~first~~ being ~~sent~~made available to our shareholders on or about May ~~14, 2008.~~4, 2010.

The Company is furnishing proxy materials over the internet pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”). We are mailing to many of our shareholders a notice that the proxy materials are available on our website. The notice provides instructions on accessing the proxy materials and submitting your proxy on-line. The notice also provides instructions for requesting paper copies of the proxy materials, which are available free of charge.

We do not anticipate that any matters will be raised at the meeting other than those described in the notice. If any other matters come before the meeting, your proxies will be authorized to act in accordance with their best judgment.

When your proxy card is signed and returned, or you have submitted your proxy over the internet or by telephone, your shares will be voted in accordance with your instructions. If your proxy card is signed and returned without specifying choices, your shares will be voted “for” the Board nominees “for” amendment of The Bon-Ton Stores, Inc. Amended and Restated 2000 Stock Incentive and Performance-Based Award Plan (sometimes referred to in this proxy statement as the “Stock Incentive Plan”) and “for” ratification of the appointment of KPMG LLP as independent registered public accounting firm.

You may revoke your proxy before its exercise by notifying the Secretary of the Company in writing, by delivering a properly executed, later-dated proxy card, by submitting your proxy again over the internet or by telephone or by voting in person at the meeting.

Your proxy is being solicited by the Board of ~~Directors.~~Directors (the “Board”). We will bear the cost of this solicitation, including the charges of brokerage houses, nominees and fiduciaries in forwarding these materials to beneficial owners. This solicitation may be made in person, by telephone or by other means of communication by our directors, officers or employees.

References in this proxy statement to a year refer to our fiscal year, which is the 52 or 53 week period ending on the Saturday nearer to January 31 of the following calendar year (for example, a reference to ~~2007~~2009 is a reference to the fiscal year ended ~~February 2, 2008)~~January 30, 2010).

VOTING PROCEDURES AND SECURITY OWNERSHIP

Outstanding Shares and Voting Rights

Shareholders of record at the close of business on April ~~25, 2008~~16, 2010 are entitled to vote at the meeting. At that time, there were ~~14,737,506~~16,069,827 shares of common stock and 2,951,490 shares of Class A common stock outstanding. The common stock and the Class A common stock vote together on all matters. Holders of common stock are entitled to one vote per share and holders of Class A common stock are entitled to ten votes per share. There are no other classes of voting securities outstanding. In the election of directors, shareholders do not have cumulative voting rights.

The presence at the meeting, in person or by proxy, of persons entitled to cast a majority of the shareholder votes will constitute a quorum.

The ~~ten~~eight nominees receiving a plurality of the votes cast (that is, the ~~ten~~eight nominees receiving the greatest number of votes) will be elected. A proxy marked “withhold” with respect to the election of a director will not be voted as to the director indicated, but will be counted for purposes of determining whether there is a quorum.

Approval of any other matter requires the affirmative vote of a majority of the votes cast. Abstentions and broker non-votes are counted to determine whether a quorum is present at the

meeting but are not counted as a vote in favor of or against a particular matter. A “broker non-vote” occurs when a ~~nominee~~holder of record for a beneficial owner does not vote on a particular matter because the

Principal Shareholders

This table shows owners of 5% or more of the Class A common stock or common stock as of March ~~28, 2008.~~12, 2010. Each person listed has sole voting power and sole investment power as to the shares indicated unless otherwise noted.

Class A Common Stock Common Stock(1)
Number of
Percent
Number of
Percent

Name and Address Shares of Class Shares of Class

Tim Grumbacher 2,406,253 81.53 % 5,438,008 (2) 31.72 %
2801 E. Market Street
York, PA 17402
Buckingham Capital Management Inc. — — 1,550,570 (3) 10.52 %
750 Third Avenue, 6^th Floor
New York, NY 10017
Paradigm Capital Management, Inc. — — 1,009,800 (3) 6.85 %
Nine Elk Street
Albany, NY 12207
Brigade Capital Management, LLC — — 900,000 (3) 6.11 %
717 Fifth Avenue, Suite 1301
New York, NY 10022
Henry F. Miller 545,237 (4) 18.47 % 1,039,733 (5) 6.80 %
1650 Arch Street — 22^nd Floor
Philadelphia, PA 19103
Michael L. Gleim 545,237 (4) 18.47 % 1,270,465 (6) 8.31 %
2801 E. Market Street
York, PA 17402
David R. Glyn 545,237 (4) 18.47 % 638,512 (7) 4.18 %
1650 Arch Street — 22^nd Floor
Philadelphia, PA 19103
M. Thomas Grumbacher Trust 181,746 6.16 % 200,342 1.34 %
dated March 9, 1989 for the benefit
of Matthew Reed Grumbacher(8)
1650 Arch Street — 22^nd Floor
Philadelphia, PA 19103
M. Thomas Grumbacher Trust 181,746 6.16 % 200,342 1.34 %
dated March 9, 1989 for the benefit
of Beth Anne Grumbacher Elser(8)
1650 Arch Street — 22^nd Floor
Philadelphia, PA 19103
M. Thomas Grumbacher Trust 181,746 6.16 % 200,342 1.34 %
dated March 9, 1989 for the benefit
of Max Aaron Grumbacher(8)
1650 Arch Street — 22^nd Floor
Philadelphia, PA 19103


	Class A Common Stock						Common Stock(1)
	Number of			Percent			Number of			Percent
Name and Address	Shares			of Class			Shares			of Class


Tim Grumbacher		2,406,253	(2)		81.53	%		4,980,358	(2)		27.69	%
2801 E. Market Street
York, PA 17402
Buckingham Capital Management, Inc.		—			—			1,267,841	(3)		8.14	%
750 Third Avenue
New York, NY 10017
Byron L. Bergren		—			—			1,075,613	(4)		6.81	%
331 W. Wisconsin Avenue
Milwaukee, WI 53203
Michael L. Gleim		545,237	(5)		18.47	%		1,084,860	(6)		6.73	%
2801 E. Market Street
York, PA 17402
State Street Bank and Trust Company		—			—			1,030,005	(3)		6.61	%
One Lincoln Street
Boston, MA 02111
Dimension Fund Advisors LP		—			—			1,024,072	(3)		6.57	%
Palisades West, Building One		��
6300 Bee Cave Road
Austin, TX 78746
Troob Capital Management LLC		—			—			972,797	(3)		6.24	%
Douglas M. Troob & Peter J. Troob
777 Westchester Avenue, Suite 203
White Plains, NY 10604
Gamco Investors, Inc.		—			—			861,500	(3)		5.53	%
One Corporate Center
Rye, NY10580-1435
David R. Glyn		545,237	(5)		18.47	%		777,355	(7)		4.82	%
1900 Market Street
Philadelphia, PA 19103
M. Thomas Grumbacher Trust		181,746			6.16	%		194,144			1.23	%
dated March 9, 1989 for the benefit
of Max Aaron Grumbacher(8)
1900 Market Street
Philadelphia, PA 19103
M. Thomas Grumbacher Trust		181,746			6.16	%		181,746			1.15	%
dated March 9, 1989 for the benefit
of Matthew Reed Grumbacher(8)
1900 Market Street
Philadelphia, PA 19103
M. Thomas Grumbacher Trust		181,746			6.16	%		181,746			1.15	%
dated March 9, 1989 for the benefit
of Beth Anne Grumbacher Elser(8)
1900 Market Street
Philadelphia, PA 19103

3

Security Ownership of Directors and Executive Officers

This table shows, as of March ~~28, 2008,~~12, 2010, the holdings of our Chief Executive Officer, our Chief Financial Officer, the three other most highly compensated executive officers during ~~2007~~2009 (collectively, the “named executive officers”), each director, and all directors and executive officers as a group. Each person listed has sole voting power and sole investment power with respect to the shares indicated unless otherwise noted.

Class A Common Stock Common Stock(1)
Shares
Shares

Beneficially
Percent
Beneficially
Percent

Name Owned of Class Owned(2) of Class

Tim Grumbacher 2,406,253 81.53 % 5,438,008 (3) 31.72 %
Lucinda M. Baier — 10,000 *
Robert B. Bank — —
Byron L. Bergren — 669,653 4.49 %
Philip M. Browne — 7,600 *
Anthony J. Buccina — 119,865 *
Stephen R. Byers — 35,282 *
Shirley A. Dawe — 2,500 *
Marsha M. Everton — 860 *
Michael L. Gleim 545,237 (4) 18.47 % 1,270,465 (5) 8.31 %
Thomas K. Hernquist — 3,000 *
Todd C. McCarty — —
Keith E. Plowman — 43,727 (6) *
Robert E. Salerno — 2,400 *
All directors and executive
officers as a group (17
persons) 2,951,490 100.00 % 7,435,842 (7) 41.47 %


	Class A Common Stock						Common Stock(1)
	Shares						Shares
	Beneficially			Percent			Beneficially			Percent
Name	Owned			of Class			Owned(2)			of Class

Tim Grumbacher		2,406,253	(3)		81.53	%		4,980,358	(3)		27.69	%
Byron L. Bergren		—						1,075,613			6.81	%
Michael L. Gleim		545,237	(4)		18.47	%		1,084,860	(5)		6.73	%
Anthony J. Buccina		—						369,994			2.36	%
Stephen R. Byers		—						192,831			1.23	%
Keith E. Plowman		—						108,079	(6)		*
Lucinda M. Baier		—						10,000			*
Philip M. Browne		—						8,600			*
Shirley A. Dawe		—						2,500			*
Marsha M. Everton		—						860			*
Todd C. McCarty		—						—
All directors and executive officers as a group (13 persons)		2,951,490			100.00	%		7,949,802	(7)		41.91	%


*	less than 1%

(1)	See note (1) to Principal Shareholders table.

5

PROPOSAL ONE

ELECTION OF DIRECTORS

The Board proposes the following nominees for election as directors to hold office until the ~~2009~~2011 Annual Meeting of Shareholders and until their respective successors have been elected. Each is currently a director and has agreed to serve if elected. Should a nominee become unable or decline to serve before the ~~Annual Meeting,~~meeting, the proxies may vote for a substitute recommended by the Governance and Nominating Committee of the Board, unless the Board reduces the number of directors.

LUCINDA M. BAIER — Director since 2007. Age 43
45

Ms. Baier iswas Executive Vice President and Chief Financial Officer of Movie Gallery, Inc., a home entertainment specialty retailer that operates approximately 2,600 stores in the United States and Canada under the brands Movie Gallery, Hollywood Video and Game Crazy, until February 2010. In February 2010, Movie Gallery, Inc. filed for reorganization under Chapter 11 of the Bankruptcy Code. Prior to joining Movie Gallery, Inc. in July 2008, Ms. Baier served from 2006 as Chief Financial Officer of World Kitchen, ~~LLC, which manufactures and markets bakeware, dinnerware, kitchen and household tools, rangetop cookware and cutlery products under well-known brands such as Corelle~~^®~~, Pyrex~~^®~~, Revere~~^®~~, Corning Ware~~^® ~~and Chicago Cutlery~~^®~~. Prior~~LLC. From 2004 to ~~joining World Kitchen in 2006,~~2005, Ms. Baier was President and Chief Operating Officer at Whitehall Jewelers, Inc. ~~from 2004 to 2005,~~, and from 2000 to 2004, she held senior management positions at Sears, Roebuck & Company.

~~ROBERT B. BANK~~ ~~— Director since 2002. Age 61~~
~~Mr. Bank has been President of Robert B. Bank Advisory Services, a private capital investment and consulting firm, since 1990.~~

BYRON L. BERGREN — Director since 2004. Age 61
63

Mr. Bergren has been President and Chief Executive Officer of Bon-Ton since August 2004. Mr. Bergren ~~who~~ joined Bon-Ton in November 2003 as Vice Chairman and served as President and Chief Executive Officer of Elder-Beerman from February 2002 through August ~~2004, served as Chairman of the Southern Division of Belk, Inc. from 1999 to February 2002, and in senior executive positions at Belk, Inc. from 1985 to 1999.~~2004.

PHILIP M. BROWNE — Director since 2002. Age 48
50

Mr. Browne has been Senior Vice President and Chief Financial Officer of Advanta Corp., since June 1998. Most recently, Advanta was one of the nation’s largest credit card issuers in the small business ~~market, since June 1998.~~market. In November 2009, Advanta Corp. filed for reorganization under Chapter 11 of the Bankruptcy Code. Prior to ~~that,~~joining Advanta Corp., Mr. Browne was a partner at Arthur Andersen LLP, where he was employed for more than 15 years.

SHIRLEY A. DAWE — Director since 2002. Age 61
63

Ms. Dawe is a Corporate Director and President of Shirley Dawe Associates, Inc., a Toronto-based retail management consulting group, since 1986. Prior to 1986, she held progressively senior merchandising and marketing positions with the Hudson’s Bay Company, a Canadian national department store chain, for over 15 years. Ms. Dawe is a director of the National Bank of Canada and Birks & Mayors, Inc., a North American fine jewelry retail chain. From 1997 to 2005, she was a director of Oshkosh B’Gosh, Inc.

MARSHA M. EVERTON — Director since 2003. Age 56
58

Ms. Everton has been President of Marsha Everton LLC, a York, Pennsylvania-based consulting firm, since September 2006. She was President of The Pfaltzgraff Co., a casual dinnerware manufacturer, from its acquisition by Lifetime Brands, Inc., a multi-channel retail company, in July 2005 to August 2006, and was President and Chief Executive Officer of The Pfaltzgraff Co. from January 2002 until its acquisition by Lifetime Brands. Ms. Everton was Vice President of The Pfaltzgraff Co. for more than ten years prior. Ms. Everton is also a director of the National Retail Federation Foundation and holds ~~an NACD~~a Certificate of Director ~~Education.~~Education from the National Association of Corporate Directors.

MICHAEL L. GLEIM — Director since 1991. Age 65
67

Mr. Gleim has been the Company’s Lead Director since January 1, 2010. He was Vice Chairman and Chief Operating Officer of Bon-Ton from December 1995 to February 2002. From 1991 to December 1995 he was Senior Executive Vice President of Bon-Ton, and from 1989 to 1991 he was Executive Vice President of Bon-Ton.

76

TIM GRUMBACHER — Director since 1967. Age 68
70

Mr. Grumbacher has been Executive Chairman of the Board of Directors of Bon-Ton since February 2005. He served as Chairman of the Board of Directors of Bon-Ton from August 1991 to February 2005. He was Chief Executive Officer of Bon-Ton from 1985 to 1995 and from June 2000 to August 2004. From 1977 to 1989 he was President of Bon-Ton.

~~THOMAS K. HERNQUIST~~ ~~— Director since 2007. Age 50~~
Mr. Hernquist served as Senior Vice President — Global Chief Growth Officer of The Hershey Company from November 2005 to December 2007. Prior to that, he served in various senior executive positions at Hershey since April 2003. Prior to joining Hershey, Mr. Hernquist was Senior Vice President — Marketing at Jim Beam Brands Worldwide, Inc. for more than two years.

TODD C. MCCARTY — Director since 2007. Age 42
44

Mr. McCarty ~~was appointed Global~~became Senior Vice President, of Human Resources atof The New York Times Company effective December 31, 2009. Prior to that, Mr. McCarty served as Senior Vice President, Global Human Resources of Readers Digest ~~effective~~Association, Inc. from March ~~1, 2008.~~2008 to December 2009. In August 2009, Readers Digest Association, Inc. filed for reorganization under Chapter 11 of the Bankruptcy Code. From 2005 to February 2008, he served as Senior Vice President — Human Resources of Rite Aid Corporation. Prior to joining Rite Aid in 2005, Mr. McCarty was Senior Vice President — Human Resources of Starwood Hotels & Resorts Worldwide, Inc. from 2000 to 2005.

87

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS INFORMATION

Governing Documents

The key documents that constitute our corporate governance framework are ~~as follows:~~our:


	•	Articles of Incorporation

	•	Bylaws

	•	Corporate Governance Policies

	•	Audit Committee Charter

	•	Human Resources and Compensation Committee Charter

	•	Governance and Nominating Committee Charter

	•	Executive Committee Charter

	•	Code of Ethical Standards and Business ~~Conduct~~Practices

Each of the committee charters and the Code of Ethical Standards and Business ~~Conduct~~Practices is available on our website at www.bonton.com by clicking on “Investor Relations,” then “Corporate Governance.”

Code of Conduct

The Company maintains a Code of Ethical Standards and Business Practices (the “Code of Conduct”) that sets forth the Company’s policies and expectations. The Code of Conduct, which applies to every director, officer and employee, addresses a number of topics, including conflicts of interest, relationships with others, corporate payments, disclosure policy, compliance with laws, corporate opportunities and the protection and proper use of the Company’s assets. The Code of Conduct meets NASDAQ’s requirements for a code of conduct as well as the SEC’s definition of a code of ethics applicable to the Company’s senior officers.

Director Independence

The Board of Directors has determined that each of Messrs. ~~Bank,~~ Browne ~~Hernquist,~~and McCarty ~~and Salerno~~ and Mmes. Baier, Dawe and Everton is an “independent” director as that term is defined in the listing standards of the ~~Nasdaq~~NASDAQ Stock Market. In determining independence, the Board of Directors carefully reviewed any possible related party transactions between ~~Bon-Ton~~the Company or any of its affiliates and each of the independent directors. From 2006 to July 2008, Ms. Baier iswas Chief Financial Officer of World Kitchen, LLC. In determining whether Ms. Baier is an independent director, the Board considered the Company’s transactions with World Kitchen and determined that purchases by the Company of merchandise from World Kitchen were made in arms-length transactions that were not material to either company. Further, the Board determined that Ms. Baier did not have any direct or indirect material interest in the transactions.

~~Attendance at~~Leadership Structure

Since 2004, the Company has chosen to separate the roles of Chairman of the Board and Chief Executive Officer. The Company believes that this structure allows the Chairman of the Board to focus on leadership of the Board to ensure that the Board fulfills its duties and responsibilities while the Chief Executive Officer focuses on leadership of the Company, including its strategic direction, the quality of its management and continuous operational improvement to enhance shareholder value. In addition, beginning January 1, 2010, the Company has instituted the new position of Lead Director. The role of the Lead Director is described on page 11.

8

Meetings of the Board of Directors

During ~~2007,~~2009, the Board of Directors held ~~five~~13 meetings and took action by unanimous consent without a meeting ~~six times.~~

once. No director attended fewer than 75% of the total number of meetings of the Board and committees on which he or she served while in office.

Board Committees

The Board has an Audit Committee, a Human Resources and Compensation Committee, a Governance and Nominating Committee and an Executive Committee. Beginning in May 2008 the Board also established, on a temporary basis, the Ad Hoc Leadership Transition Committee. The primary functions of each committee, its members, the number of times the committee met during ~~2007,~~2009, and certain other information regarding each committee, are described below.

Audit Committee

The current members of the Audit Committee are Philip M. Browne (Chair), Lucinda M. Baier ~~Robert B. Bank~~ and ~~Robert E. Salerno.~~Todd C. McCarty. The Board has determined that each of Mr. Browne and Ms. Baier is an “audit committee financial expert” as defined by SEC rules and the listing standards of the ~~Nasdaq~~NASDAQ Stock Market. The Audit Committee is comprised entirely of “independent” directors

9

and management of critical risks and management’s risk mitigation strategies and practices. These areas of focus include compensation, financial (including accounting, reporting, credit, liquidity and tax), operational, legal, regulatory, compliance, environmental, political and strategic risks. The full Board (or the appropriate Board committee), in concert with the appropriate management within the Company, reviews management reports to formulate risk identification, risk management and risk mitigation strategies. When a Board committee initially reviews management reports, the Chairman of the relevant Board committee briefs the full Board on the specifics of the matter at the next Board meeting. This process enables the Board to coordinate the risk oversight role, particularly with respect to risks spanning more than one operational area.

Director Nominations Process and Director Qualifications

The Governance Committee considers any appropriate recommendations for candidates for the Board. Any candidate recommended for the Board shall, at a minimum, possess a background that includes a solid education, sufficient business, professional or academic experience and the requisite reputation, character, integrity, skills, judgment and temperament and such other relevant characteristics, which, in the Governance Committee’s view, have prepared him or her for dealing with the multi-faceted financial, business and other issues that confront a board of directors of a corporation with the size, complexity, reputation and success of the Company. The Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. Candidates for Board membership are reviewed in the context of the current Board composition, the operating requirements of the Company and the long-term interests of the Company’s shareholders. The Governance Committee seeks to ensure that backgrounds and qualifications of the Company’s directors, as a group, provide a significant breadth of experience, knowledge and abilities that will assist the Board in fulfilling its responsibilities to shareholders.

Although the Governance Committee does not have a formal written policy regarding diversity in composition of the Board, the Governance Committee does consider the contribution of a candidate to the overall diversity of the Board. Diversity is considered broadly and includes variety in personal and professional backgrounds, experience and skills, geographic location, as well as differences in gender, race, ethnicity and age.

Each candidate for Board membership commits to participate fully in Board activities, including active membership on at least one Board committee and attendance at, and participation in, meetings of the Board and the committees of which he or she is a member.

When considering whether candidates for Board membership have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively, the Governance Committee focuses on the information provided in each of the Director’s individual biographies set forth on pages 6 — 7. The Governance Committee also carefully reviews the other factors used in selecting nominees to the Board as discussed above. In particular, with regard to Ms. Baier and Mr. Browne, the Governance Committee considered their significant experience, expertise and background with regard to accounting and financial matters, as well as their expertise in financial and strategic planning, regulatory compliance reporting and corporate financing. With regard to Ms. Dawe, the Governance Committee considered the broad perspective brought by her experience in consulting and providing strategic advisory services to clients in retail and other industries as well as her executive management and corporate governance expertise. With regard to Ms. Everton, the Governance Committee considered her substantial management and operations expertise gained through her experience as chief executive officer for amulti-channel retail company as well as her broad knowledge of compensation and corporate governance issues. With regard to Mr. McCarty, the Governance Committee considered his many years of experience in the field of human resources, specialized knowledge which is invaluable in assisting the Board of Directors in its formulation of compensation strategies and objectives. With regard to Messrs. Bergren, Gleim and Grumbacher, the Governance Committee considered their numerous years of executive leadership with the Company and management experience in the

12

department store industry as well as their expertise in strategic planning, business expansion, financing and corporate governance.

The Governance Committee will consider shareholder recommendations for candidates for the Board from any shareholder who has been a continuous record owner of at least 3% of the common stock of the Company for at least one year prior to submission of the recommendation and who provides a written statement that the shareholder intends to continue share ownership through the date of the meeting at which directors are to be elected. Any such shareholder recommendation should be sent to the Governance and Nominating Committee,c/o Office of ~~General Counsel,~~the Secretary, TheBon-Ton Stores, Inc., P.O. Box 2821, York, PAPennsylvania 17405. No shareholder recommendations have been received since the ~~2007~~2009 shareholder meeting.

In addition, the Governance Committee considers potential candidates recommended by current directors, Company officers, employees and others. When appropriate, the Governance Committee may retain executive recruitment firms to assist in identifying suitable candidates. The Governance Committee screens all potential candidates in the same manner regardless of the source of the recommendation.

In ~~nominating candidates~~re-nominating incumbent directors to ~~fill vacancies created by the expiration of the~~continue for an additional term, ~~of a member of the Board,~~ the Governance Committee determines whether the incumbent director is willing to stand for re-election. If so, the Governance Committee evaluates his or her performance in office to determine suitability for continued service, taking into consideration the value of continuity and familiarity with the Company’s business.

Director Attendance at Annual Meetings

The Company has adopted a policy ~~which~~that encourages Board members in the York area to attend the annual meeting of shareholders. Four of the eight members of the ~~then eight-member~~ Board attended the ~~2007~~2009 Annual Meeting of Shareholders.

Shareholder Communication with the Board of Directors

Any shareholder who wishes to communicate with the Board of Directors, or any individual director, may do so by directing correspondence which prominently displays the fact that it is a shareholder-board communication, to such director or directors,c/o Office of ~~General Counsel,~~the Secretary, The Bon-Ton Stores, Inc., P.O. Box 2821, York, PAPennsylvania 17405. Until and unless a procedure is adopted by a majority of the independent members of the Board whereby it may be deemed unnecessary or inappropriate to relay certain shareholder communications to the appropriate parties, all shareholder communications will be relayed to the intended director or directors.

Compensation of Directors

Messrs. Grumbacher and Bergren are employees of the Company and are not paid any separate compensation for serving as directors. They are the only employees who serve as directors.

12

~~Each~~In 2009, each non-employee director ~~receives~~received both cash compensation and stock compensation comprised of the following:


	•	a $110,000 annual fee, $50,000 of which iswas paid in cash (the “annual cash retainer”) and $60,000 of which iswas paid in ~~restricted stock units (“RSUs”)~~RSUs that ~~vest~~vested at the end of the fiscal ~~year in which they are granted;~~year;

	•	a $20,000 annual fee for serving on the Executive Committee;

	•	a $5,000 annual fee for serving on each committee other than the Executive Committee;

	•	a $10,000 supplemental annual fee for each committee chair; and

	•	a $3,000 annual fee for serving on the Ad Hoc Leadership Transition Committee, ~~chair.~~with an additional annual fee of $5,000 paid to the chair of this committee.

~~Robert B. Bank, one~~One of the Company’s non-employee directors, currently Lucinda M. Baier, serves as the Board’s representative on the committee that oversees the Company’s Retirement Contribution Plan. For ~~his~~her service on this committee, ~~Mr. Bank~~Ms. Baier receives $1,250 for each meeting attended.

13

As of January 1, 2010, the Board elected Mr. Gleim as Lead Director of the Board. For his service as Lead Director, Mr. Gleim receives a supplemental fee of $150,000 per year. Mr. Gleim was previously paid a fee under a consulting agreement with the Company. That consulting agreement expired December 31, 2009.

Directors may defer all or any part of their cash compensation into additional ~~restricted stock units.~~RSUs.

The following table presents the compensation provided by the Company during ~~2007~~2009 to each non-employee director:


					Change in												Change in
					Pension												Pension
					Value and												Value and
					Nonqualified												Nonqualified
	Fees Earned				Deferred								Fees Earned				Deferred
	or Paid		Stock		Compensation			All other					or Paid		Stock		Compensation			All Other
	in Cash		Awards		Earnings			Compensation			Total		In Cash		Awards		Earnings			Compensation			Total
Name	($)		($)(1)		($)			($)			($)		($)		($)(1)		($)			($)			($)

Lucinda M. Baier~~(2)~~		26,250		30,000		—			—			56,250		58,000		60,000		—			2,500	(2)		120,500
Robert B. Bank		63,750		60,000		—			5,000	(3)		128,750
Philip M. Browne		67,500		60,000		—			—			127,500		65,000		60,000		—			—			125,000
Shirley A. Dawe		97,500		60,000		—			—			157,500		83,000		60,000		—			—			143,000
Marsha M. Everton		66,250		60,000		—			—			126,250		73,000		60,000		—			—			133,000
Michael L. Gleim		85,000		60,000		—	(4)		180,000	(5)		325,000		85,000		60,000		21,565	(3)		150,000	(4)		316,565
Thomas K. Hernquist(2)		26,250		30,000		—			—			56,250
Todd C. McCarty(2)		26,250		30,000		—			—			56,250
Robert E. Salerno		55,000		60,000		—			—			115,000
Todd C. McCarty														57,500		60,000		—			—			117,500


(1)		The amounts reported in this column reflect the ~~amount~~aggregate grant date fair value of ~~compensation cost recognized~~RSUs computed in ~~2007 for financial statement reporting purposes~~accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718,Compensation — Stock Compensation(“ASC 718”) for RSUs granted ~~in 2007~~on August 24, 2009 to each non-employee director. ~~These grants were all made on August 21, 2007, except the grant to Ms. Baier was made September 10, 2007.~~ The amounts do not reflect compensation actually received by the non-employee directors. RSUs do not confer on the non-employee director voting or dispositive control over common shares until one year following termination of Board services. Assumptions used in the calculation of these amounts are included in Note 1715 to our audited financial statements included in ourForm 10-K filed with the SEC on April 16, ~~2008.~~2010.


		The aggregate number of RSUs ~~at the end of 2007~~ held by each non-employee director as of January 30, 2010 was:

~~1,198~~28,863 held by Ms. Baier
~~1,275~~

28,940 held by ~~each of Messrs. Hernquist and~~Mr. McCarty
~~11,581~~

39,246 held by each of Mmes. Dawe and Everton and Messrs. ~~Bank,~~ Browne ~~Gleim~~ and ~~Salerno~~Gleim


(2)	~~Ms. Baier and Messrs. Hernquist and McCarty were elected to the Board mid-year.~~

~~(3)~~	Fees received for ~~Mr. Bank’s~~Ms. Baier’s service on the Company’s Retirement Contribution Plan Committee.

~~(4)~~ (3)	~~The~~	This amount is the actuarial valuation of the change in the pension value of Mr. Gleim’s benefit in the Bon-Ton ~~SERP was a decrease of $54,771.~~SERP.

~~(5)~~ (4)		Mr. Gleim and the Company ~~have~~ entered into a consulting agreement under which Mr. Gleim ~~receives $180,000~~received $150,000 in cash compensation ~~per year.~~in 2009. The consulting agreement terminated December 31, 2009.

13

Share Ownership Guidelines

In December 2007, the Company adopted guidelines requiring each director to maintain an equity stake in ~~Bon-Ton~~the Company equal to three times the annual cash retainer paid to the director. This links the directors’ interests with those of other shareholders. Shares actually owned and ~~restricted share units~~RSUs that are time-based count towards the equity ownership requirement. Each director is required to achieve this share ownership level by the later of five years after joining the Board or five years after adoption of the guideline. Accordingly, each non-employee director standing for election in 2010 must meet this guideline by December 2012.

~~Seven~~All of the non-employee directors standing for election currently satisfy the ~~guideline now; the remaining non-employee director standing for election is positioned to satisfy the guideline by December 2012.~~guideline.

THE BOARD OF DIRECTORS RECOMMENDS

VOTING “FOR” THE ELECTION OF

THE NOMINEES LISTED ABOVE

14

PROPOSAL TWO

~~AMENDMENT OF~~
~~THE STOCK INCENTIVE PLAN~~

The Stock Incentive Plan was adopted by the Board of Directors and approved by the Company’s shareholders in June 2000. The purpose of the Stock Incentive Plan is to recognize the contributions made to the Company by its employees, consultants and advisors, to provide these individuals with additional incentives to devote themselves to the future success of the Company, and to improve the ability of the Company to attract, retain and motivate individuals upon whom the sustained growth and financial success of the Company depends.

The Stock Incentive Plan provides for the grant of options (“Options”) to purchase shares of common stock and awards (“Awards”) of shares of common stock subject to risk of forfeiture (“Restricted Shares”) and restricted stock units (“RSUs”). Under the Stock Incentive Plan, Options and Awards presently can be granted for up to an aggregate of 2,600,000 shares (exclusive of shares granted and thereafter cancelled). The Board of Directors, at the recommendation of the HRCC, amended the Stock Incentive Plan (the “Plan Amendment”), subject to shareholder approval, to increase the number of shares available under the Stock Incentive Plan by 1,000,000 to an aggregate of 3,600,000 shares.

The Plan Amendment will become effective immediately if approved by shareholders at the Annual Meeting. If the Plan Amendment is not approved at this Annual Meeting, the Plan Amendment will not become effective and the Stock Incentive Plan as it presently exists will continue in effect. The results of the vote will not affect any awards outstanding under the Stock Incentive Plan as of the date of this proxy statement.

As of March 28, 2008, an aggregate of 47,474 shares of common stock remain reserved for issuance under the Stock Incentive Plan. The Board believes that the availability of an adequate number of shares in the share reserve of the Stock Incentive Plan is an important factor in attracting, motivating and retaining qualified employees and advisors essential to the success of the Company.

~~Future Options and Awards, if any, that will be made to eligible participants in the Stock Incentive Plan are subject to the discretion of the HRCC and, therefore, are not determinable at this time.~~

~~The key provisions of the Stock Incentive Plan, as proposed to be amended, are as follows:~~

~~Number of Shares.~~ The maximum number of shares that may be issued under the Stock Incentive Plan is 3,600,000. The maximum number of shares will be adjusted to reflect certain changes in the Company’s capitalization. If any shares subject to any Option or Award are forfeited, or an Option is terminated without the issuance of shares, the shares subject to such Option or Award will again be available pursuant to the Stock Incentive Plan. The closing sale price for a share of common stock on March 28, 2008 was $5.39 as reported by the Nasdaq Stock Market.

~~Administration.~~ The Stock Incentive Plan is administered by the Board of Directors, or, at the discretion of the Board of Directors, by a committee composed of two or more members of the Board of Directors (for purposes of this Proposal Two, the “Committee”). To the extent possible, and to the extent the Board of Directors deems it necessary or appropriate, each member of the Committee shall be a “non-employee director” under applicable SEC rules, and an “outside director” under applicable Internal Revenue Service Rules; however, the Board may designate two or more committees to operate and administer the Stock Incentive Plan in its stead. The Stock Incentive Plan presently is administered by the HRCC.

~~Eligibility.~~ All employees (including all executive officers), directors, consultants and advisors of the Company or its subsidiaries and affiliates, approximately 32,700 persons, are eligible to receive Options or Awards under the Stock Incentive Plan.

15

~~Term of the Stock Incentive Plan.~~ ~~The Stock Incentive Plan became effective March 3, 2000 and provides that no Options or Awards may be granted after March 2, 2010.~~

~~Options and Awards.~~ From time to time, at its discretion, the Committee may select eligible recipients to whom Options or Awards will be granted, determine when each Option or Award will be granted, determine the number of shares subject to such Option or Award and, subject to the provisions of the Stock Incentive Plan, determine the terms and conditions of each Option or Award. The Stock Incentive Plan allows the Committee to determine certain terms in a grant of Options or Awards, including terms regarding payment methods, vesting schedules, restrictions on restricted stock and the timing and conditions of the lapse of such restrictions, acceleration of expiration or termination dates, and imposing or removing restrictions on an Award. Some of these terms may deviate from the standard terms of the Stock Incentive Plan itself.

~~Options.~~ Options granted under the Stock Incentive Plan may be either incentive stock options (“ISOs”) or non-qualified stock options. ISOs are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code (the “Code”). Unless an Option is specifically designated at the time of grant as an ISO, Options are non-qualified options. Options are not transferable by the optionee except by will or by the laws of descent and distribution. No Option granted under the Stock Incentive Plan may be exercised unless at least six months has elapsed since the date of the grant.

The exercise price of the Options is determined by the Committee, provided that the exercise price of an ISO must be at least 100% of the fair market value of a share of common stock on the date the Option is granted, or at least 110% of the fair market value if the recipient owns shares possessing more than 10% of the total combined voting power of all classes of stock of the Company. The term of each Option is fixed by the Committee. The aggregate fair market value, determined as of the time of grant, of the shares with respect to which an ISO is exercisable for the first time by the recipient during any calendar year (under all incentive stock option plans of the Company) may not exceed $100,000.

~~Maximum Grants.~~ ~~The Stock Incentive Plan provides that the maximum number of shares for which options may be granted to any single optionee in any fiscal year is 400,000 shares.~~

~~Termination of Options.~~ ~~All Options terminate on the earliest of:~~


	a.	The expiration of the term specified in the Option, which shall not exceed ten years from the date of grant or five years from the date of grant of an ISO if the recipient owns shares possessing more than 10% of the total combined voting power of all classes of stock of the Company.

	b.	The expiration of 90 days from the date the optionee’s employment or service with the Company terminates for any reason other than disability (as defined in the Code) or death or as otherwise specified in subparagraphs d. or e. below;

	c.	~~The expiration of one year from the date the optionee’s employment or service with the Company terminates due to the optionee’s death or disability;~~

	d.	~~A finding by the Committee that the optionee has breached his or her employment contract with the Company or has engaged in disloyalty to the Company; or~~

	e.	~~Such time as the Committee may determine if there is a Change of Control of the Company as defined in the Stock Incentive Plan.~~

~~Payment for Options.~~ ~~An optionee may pay for shares in cash, certified check or such other mode of payment as the Committee may approve, including payment in shares held by the optionee for at least six months.~~

~~Awards.~~ The Committee will determine the period, which under the Stock Incentive Plan must extend for at least six months from the date of grant, during which the grantee may not sell, transfer, pledge or assign Restricted Shares (the “Restrictions”). Restrictions may lapse in

16

installments, as determined by the Committee. The Committee may, at its sole discretion, waive any Restrictions in whole or in part. The Committee will determine the rights that grantees have with respect to Restricted Shares, including the right to vote Restricted Shares and the right to receive dividends paid with respect to Restricted Shares. In the event a grantee terminates employment with the Company for any reason other than death or disability, all Restricted Shares remaining subject to Restrictions will be forfeited by the grantee and canceled by the Company. In addition, the Stock Incentive Plan contains special provisions regarding Awards that will be “Performance-Based,” as outlined in more detail, below, in the discussion of Federal Income Tax Consequences.

~~Provisions Relating to a Change of Control of the Company.~~ Notwithstanding any other provisions of the Stock Incentive Plan, in the event of a Change of Control of the Company, the Committee may take whatever action with respect to Options and Awards outstanding as it deems necessary or desirable, including acceleration of the expiration or termination date or the date of exercisability of an Option or removing any restrictions from or imposing any additional restrictions on outstanding Awards.

~~A “Change of Control” will occur if:~~ (a) the Company is dissolved or liquidated; (b) an agreement to sell or dispose of substantially all of the assets of the Company is approved; (c) subject to certain exceptions, an agreement to merge or consolidate the Company with or into another corporation is approved; (d) any entity, person or group (within the meaning of certain provisions of the Securities Exchange Act), other than Tim Grumbacher, members of his family, his lineal descendants or entities of which such persons are the beneficial owners of at least 50% of the voting interests, the Company or any of its subsidiaries or any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company, becomes the beneficial owner or has obtained voting control over securities of the Company representing more than 50% of the voting power of the Company’s outstanding voting stock; or (e) directors constituting a majority of the Board of Directors have been members of the Board of Directors for less than 12 months, unless the nomination for election of each new director who was not a director at the beginning of such~~12-month~~ ~~period was approved by a vote of at least two-thirds of the directors then still in office who were the directors at the beginning of such period.~~

~~Amendment and Termination.~~ The Board of Directors may amend the Stock Incentive Plan at any time, provided the Board may not (a) change the class of individuals eligible to receive an ISO, (b) increase the maximum number of shares as to which Options and Awards may be granted or (c) make any other change or amendment as to which shareholder approval is required in order to satisfy the conditions set forth in~~Rule 16b-3~~ under the Securities Exchange Act, in each case without obtaining shareholder approval within 12 months before or after such action. No Option or Award will be adversely affected by any such amendment without the consent of the optionee or grantee.

~~Federal Income Tax Consequences.~~ The following discussion is a summary of certain federal income tax consequences of the issuance of Options and the acquisition of shares of common stock by exercising Options or receiving Awards of Restricted Shares under the Stock Incentive Plan and does not present a complete analysis of all tax consequences which may be relevant to any particular recipient. It does not purport to discuss state or local income tax laws.

~~(a) Options.~~ With respect to ISOs, for federal income tax purposes an optionee will not have taxable income upon grant or exercise. However, upon exercise of an ISO, an optionee will generally recognize income for alternative minimum tax purposes in an amount equal to the difference between the exercise price of the ISO and the fair market value of the shares received. Any gain realized on sale of the shares acquired upon exercise of an ISO will be treated as long-term capital gain, provided the optionee does not dispose of the shares for at least two years after the date of grant or within one year after the date of exercise. No gain or loss will generally be recognized by an optionee upon, nor will any deduction be allowed to the Company as a result of, the grant or exercise of ISOs.

17

In general, in the case of non-qualified stock options or ISOs as to which the foregoing holding period limitations have not been satisfied, an optionee will have taxable income at ordinary income rates upon exercise (or at the time of a sale of ISO stock which does not satisfy the holding periods) for the difference between the exercise price and the fair market value at the date of exercise or, if the optionee is subject to certain restrictions imposed by federal securities laws, upon the lapse of those restrictions, unless the optionee elects under Section 83(b) of the Code within 30 days after exercise to be taxed upon exercise. The amount of that difference will generally be a deductible expense to the Company.

The ability of the Company to deduct compensation expense is generally subject to limitations under Section 162(m) of the Code (applicable to compensation in excess of $1,000,000 paid to certain “covered” employees). Any income recognized as ordinary compensation income on the exercise of a non-qualified stock option should, however, be exempt from these Code limitations as “performance-based” compensation provided the option grant meets certain requirements. It is the Company’s intention to administer the Stock Incentive Plan in accordance with all applicable “performance-based” compensation requirements, including administration of the Stock Incentive Plan with respect to “covered” employees by a committee of two or more “outside” directors (as that term is used in applicable IRS regulations) and to make Option grants to such employees with an exercise price that is at least equal to the fair market value of the shares on the date of grant. Under these circumstances, such Options should, on exercise, result in a deductible compensation expense that is exempt from Section 162(m) of the Code as “performance-based” compensation.

~~(b) Restricted Shares/Restricted Share Units.~~ For federal income tax purposes, the recipient of an Award will not recognize income and the Company will not be entitled to a deduction at the time of the Award because the Restricted Shares are subject to risk of forfeiture and are not transferable. When the risk of forfeiture and non-transferability restrictions lapse, the recipient will recognize compensation income and the Company will be entitled to a deduction (subject generally to a $1,000,000 limitation on deductible compensation of certain employees of the Company as provided under Section 162(m) of the Code) in an amount equal to the then fair market value of the Restricted Shares.

~~(c) Performance-Based Awards.~~ The Committee may grant Awards that have vesting requirements linked to the attainment of one or more “performance targets” applicable to any such Award. In the event the grantee of any such Award terminates employment prior to the end of the “performance period” applicable to the Award, the grantee will forfeit his or her rights to the Award. In addition, in the event the “performance target” that applies to an Award is not attained by the end of the applicable “performance period,” all rights to the Award will also be forfeited. The Committee also has the right to cause any performance-based Award to be forfeited, at its discretion, without regard to whether applicable performance targets are attained if the Committee determines that such a forfeiture is appropriate.

If performance-based Awards are granted, the Committee must establish one or more performance targets for each performance period, which may vary for different grantees. In all cases, the performance target(s) established with respect to any performance period will be established within the first 90 days of the performance period or, if shorter, within the first twenty-five percent (25%) of such performance period. Each performance target will be in the form of a goal as to which an objective method or methods is available for determining whether it has been achieved. In addition, the Committee will establish in connection with the performance targets applicable to a performance period an objective method for computing the portion of a particular performance-based Award that will be treated as vested as a result of attaining such performance target(s).

If performance-based Awards are granted, the performance targets established must be based upon one or more of the following business criteria (which may be determined for these purposes by reference to (i) the Company as a whole, (ii) any of the Company’s subsidiaries, operating divisions, business segments or other operating units, or (iii) any combination thereof):

18

earnings before interest, taxes, depreciation, and amortization; profit before taxes; stock price; market share; gross revenue; net revenue; pretax income; net operating income; cash flow; earnings per share; return on equity; return on invested capital or assets; cost reductions and savings; return on revenues or productivity; loss ratio; expense ratio; combined ratio; product spread; or any variations or combinations of the preceding business criteria, which may also be modified at the discretion of the Committee to take into account extraordinary items or which may be adjusted to reflect such costs or expense as the Committee deems appropriate.

Performance-based Awards cannot be made in excess of the limitations established under the special performance-based provisions of the Stock Incentive Plan. Specifically, no grantee may receive performance-based Awards for Restricted Shares having a fair market value, as of the date the performance-based Award is granted, in excess of $3,000,000. This limitation is an annual limitation, so that if performance-based Awards relate to a performance period longer than one year, the limitation is increased proportionately. If a performance period is less than a full year, this annual limitation applies without adjustment, except that if there are multiple performance periods within any one twelve month period, the limitation cannot be exceeded in the aggregate taking into account the multiple performance-based Awards granted with respect to those performance periods, and a similar limitation applies to overlapping performance periods.

Unlike Awards of Restricted Shares that vest solely by reason of a period of continuous employment, performance-based Awards are intended to qualify as “performance-based” compensation for purposes of Section 162(m) of the Code because vesting of the Awards is linked to bona fide performance targets established by the Committee consistent with the requirements set forth in the Stock Incentive Plan. As a consequence, it is anticipated that at the time a performance-based Award becomes vested, the value of the Restricted Shares will be included in the income of the grantee and will be deductible by the Company without regard to the limitations imposed on deductibility under Section 162(m) of the Code.

~~(d) Election under Section 83(b) of the Code.~~ Except as provided below, an Award recipient may nevertheless elect pursuant to Section 83(b) of the Code to include the Restricted Shares in his income at their fair market value at the time of award, in which event the Company would be entitled to a corresponding deduction. Such election must be made within 30 days after the Award. If this election is made, any appreciation in value recognized by the Award recipient on a subsequent disposition of the Restricted Shares will in general be taxed at capital gains rates and not as ordinary income. If, however, an Award recipient who makes a Section 83(b) election forfeits the Restricted Shares back to the Company, the recipient will not recognize a loss on such forfeiture. In some cases, the particular restrictions with respect to an Award may be such that an Award recipient will not be entitled to make the Section 83(b) election.

The Board of Directors approved the Plan Amendment on March 18, 2008. Approval of the Plan Amendment requires the affirmative vote of a majority of the votes cast by holders of common stock and Class A common stock.

~~See “Equity Compensation Plan Information” on page 42 for information regarding securities authorized for issuance under equity compensation plans.~~

~~THE BOARD OF DIRECTORS RECOMMENDS~~
~~VOTING “FOR” AMENDMENT OF~~
~~THE STOCK INCENTIVE PLAN~~

19

~~PROPOSAL THREE~~

RATIFICATION OF THE APPOINTMENT

OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has recommended ratification of its appointment of KPMG LLP (“KPMG”), which served as our independent registered public accounting firm in ~~2007,~~2009, to serve as our independent registered public accounting firm for ~~2008. If the shareholders do not ratify this appointment, another independent registered public accounting firm will be considered by the Audit Committee.~~2010.

In making its selection of KPMG, the Audit Committee considered whether the non-audit services provided by KPMG are compatible with maintaining KPMG’s independence.

FEES PAID TO KPMG


	2007		2006		2009		2008


Audit Fees(1)	$	1,959,919	$	2,469,200	$	1,819,436	$	1,813,925
Audit-Related Fees~~(2)~~		—		325,725		—		—
Tax Fees~~(3)~~(2)		626,850		366,606		315,942		358,833
All Other Fees		—		—		—		—


(1)		Audit Fees include fees associated with audit services, consultation on matters related to the consolidated financial statements, consents, reviews of the Company’s quarterly reports onForm 10-Q and reviews of the Company’s filings under the Securities Exchange Act of 1934.

(2)	~~Audit-Related Fees relate primarily to services provided in connection with the acquisition of the Carson’s division of Saks Incorporated and the related financing.~~

~~(3)~~	Tax Fees reflect ~~all~~various tax-related services, including consultation, return preparation, planning and compliance.

The Audit Committee is responsible for the pre-approval of all audit services and non-audit services performed by the Company’s independent registered public accounting firm. All of the fees shown in the chart above were pre-approved by the Audit Committee. The Audit Committee may delegate to one of its members the authority to grant such pre-approvals, and any such approvals are presented to the full Audit Committee at its next scheduled meeting.

A representative of KPMG is expected to be present at the meeting, will have the opportunity to make a statement if he or she so desires, and will be available to respond to appropriate questions from shareholders.

THE BOARD OF DIRECTORS RECOMMENDS
VOTING “FOR” RATIFICATION OF THE APPOINTMENT
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2015

REPORT OF THE AUDIT COMMITTEE

The Audit Committee is comprised of ~~four~~three independent directors. The members of the Audit Committee are not professionally engaged in the practice of auditing or accounting, and rely, without independent verification, on the information provided to them and on the representations made to them by management and the Company’s independent registered public accounting firm.

The role of the Audit Committee is to assist the Board of Directors in its general oversight of the integrity of the Company’s consolidated financial statements and compliance with legal and regulatory requirements. The Audit Committee is directly responsible for the appointment, compensation and oversight of the Company’s independent registered public accounting firm, KPMG. Management is responsible for the preparation, presentation and integrity of the Company’s consolidated financial statements, for its accounting and financial reporting principles and for the establishment and effectiveness of internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. KPMG is responsible for performing an independent audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board and expressing an opinion as to the conformity of such consolidated financial statements with accounting principles generally accepted ~~accounting principles~~in the United States and an opinion on the effectiveness of internal control over financial reporting based on criteria established in the Internal Control-Integrated Framework issued by the Committee on Sponsoring Organizations of the Treadway Commission. KPMG has free access to the Audit Committee to discuss any matter it deems appropriate.

The Audit Committee has reviewed and discussed with management and KPMG the audited consolidated financial statements, management’s assessment of the effectiveness of the Company’s internal control over financial reporting and KPMG’s evaluation of the Company’s internal control over financial reporting. Management represented to the Audit Committee that the Company’s audited consolidated financial statements were prepared in accordance with accounting principles generally accepted ~~accounting principles,~~in the United States, and the Audit Committee has discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees.”

KPMG also provided the Audit Committee with the written disclosures and the letter required by ~~Independence Standards~~the applicable requirements of the Public Company Accounting Oversight Board ~~Standard No. 1, “Independence Discussions~~regarding KPMG’s communications with the Audit ~~Committees,”~~Committee concerning independence and the Audit Committee discussed KPMG’s independence with them.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Annual Report onForm 10-K for the fiscal year ended ~~February 2, 2008.~~January 30, 2010.

Members of the Audit Committee:

Philip M. Browne, Chairperson

Lucinda M. Baier

~~Robert B. Bank~~

~~Robert E. Salerno~~Todd C. McCarty

2116

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

This Compensation Discussion and Analysis primarily addresses the compensation of the Company’s Chief Executive Officer, the Chief Financial Officer and the three other highest paid executive ~~officers who are listed below.~~officers. These five executive officers are referred to as the “named executive officers” throughout this proxy statement:


Name		Title

Tim Grumbacher		Executive Chairman of the Board
Byron L. Bergren		President and Chief Executive Officer
Anthony J. Buccina		Vice Chairman, ~~and~~ President — Merchandising
Stephen R. Byers		Vice Chairman — Stores, ~~Distribution,~~Visual, Construction, Real Estate, ~~and Construction~~Distribution & Logistics, Loss Prevention
Keith E. Plowman		Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Due primarily to the acquisition of The Elder-Beerman Stores Corp. in October 2003 and the acquisition of the Carson’s division of Saks Incorporated in March 2006, the Company has grown dramatically. Sales increased from $713 million in 2002 to $3.4 billion in 2007, and the number of stores increased from 72 stores operating in nine states to 280 stores in 23 states. As the Company has transitioned into a larger organization, the Company’s executives have assumed additional responsibilities. Therefore, the HRCC has implemented a compensation program for executive officers designed to recognize these changes. This program provides compensation that is competitive with similarly sized retail businesses and that retains and rewards executives for performance. The HRCC has increased base salaries and has granted stock options, awarded restricted stock and introduced performance-based restricted stock units with increasing frequency to better align the interests of executives and shareholders. In addition, the HRCC has established challenging performance goals in connection with annual cash incentive compensation.

Our Compensation Philosophy and Objectives

The HRCC’s philosophy is to directly link an increasing portion of an executive officer’s compensation with corporate performance and ~~increases~~ in alignment with shareholder value and to decrease an executive officer’s base salary as a percentage of his total compensation as his scope of responsibility increases. The following are the objectives that guide the HRCC’s decisions regarding compensation:


	•	Provide a compensation package that enables the Company to attract, motivate and retain key personnel.

	•	Provide variable compensation opportunities, primarily on an annual basis, that are directly linked to corporate performance goals that drive operational success and enhance shareholder value.

	•	Provide long-term equity incentive compensation opportunities through the award of stock options, shares of restricted stock and restricted stock units that align executive compensation with increases in shareholder value. These opportunities are available primarily to those executive officers who can influence the Company’s medium- and long-term results, generate value for shareholders and ensure the long-term growth of the Company. Equity grants are also ~~seek~~designed to reward significant achievement of top performing officers and to attract new talent.

Based on the foregoing objectives, the HRCC has structured annual and long-term executive compensation to provide incentives to ~~executives~~executive officers to achieve the business goals set by the Company and reward ~~the executives~~them for achieving such goals. In addition, in structuring compensation, especially performance-based compensation, the HRCC conducts a risk assessment to ensure that the Company’s compensation program does not encourage unreasonable risk.

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Share Ownership Guidelines

In December 2007, the Company adopted share ownership guidelines for our executive officers. The guidelines help ensure that our executive officers maintain an equity stake in ~~Bon-Ton,~~the Company, and by doing so, appropriately link their interests with those of other shareholders. Shares beneficially owned, time-based restricted shares, time-based restricted share units and vested stock options with an exercise price below the market price count towards the equity ownership requirement. Outstanding non-vested stock options, performance-based restricted shares and

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performance-based restricted stock units do not count towards the requirement. Executive officers are required to achieve these share ownership levels within five years of becoming an executive officer, or by December 2012 for those who were executive officers at the time we adopted the guidelines. The guidelines are:


Position		Ownership Guideline

Chief Executive Officer		3x base salary
Vice Chairman		2x base salary
Executive Vice President		1x base salary

~~These share~~Share ownership requirements for fiscal 2009 were measured ~~at $46.05 per share,~~based on the average price of the Company’s common stock during the ~~spring season~~first six months of fiscal 2007. Share ownership requirements are reviewed annually by the HRCC.

Each of the named executive officers currently owns shares sufficient to meet the ~~requirement with the exception of Mr. Byers. Mr. Byers is positioned to meet the requirement by December 2012.~~requirement.

Role of the HRCC in Compensation Decisions

The HRCC’s responsibilities ~~include:~~include the following:


	•	Review and approve, and in some cases recommend for the approval of the full Board, ~~of Directors,~~ the compensation for the Company’s executive officers, including the named executive officers. The total compensation of each of the executive officers is evaluated to ensure it is competitive in the marketplace and reflects the HRCC’s assessment of each executive officer’s contributions and value to the Company.

	•	Approve the performance goals and metrics with respect to annual performance-based bonuses and equity awards to executive officers, including the Executive Chairman, the Chief Executive Officer and the other named executive officers.

	•	Monitor total compensation paid to the named executive officers and other key executives and consider whether such compensation is fair, reasonable and competitive in consideration of each ~~named executive officer’s~~executive’s capacity to influence shareholder value and promote the long-term growth of the Company.

	•	Prepare an annual review and evaluation of the Chief Executive Officer’s performance for the year compared to pre-determined, HRCC-approved, performance metrics.

	•	Prepare an annual review and evaluation of the Executive Chairman’s performance for the year compared to pre-determined, HRCC-approved, performance metrics.

Role of Management in Compensation Decisions

The Chief Executive Officer annually prepares a review of his direct reports, including the named executive officers and other key executives, excluding the Executive Chairman, compared to pre-determined, HRCC-approved performance metrics. The total compensation for the respective executives, the performance appraisals and the recommendations made by the Chief Executive Officer are presented for HRCC approval.

Other members of management also support the HRCC in its work. Management assists the Chair of the HRCC in establishing the agendas for HRCC meetings and preparing materials for the

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review of HRCC members in advance of each meeting. With respect to most compensation and benefit matters, including compensation of the named executive officers excluding the Executive Chairman and the President and Chief Executive Officer, management provides recommendations to the HRCC. The HRCC relies on management and, as appropriate, the advice of outside experts to evaluate employee performance and to make recommendations for salary and bonus levels as well as for grants of stock options or awards of restricted stock. Management also works with the HRCC to

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establish performance goals under the Company’s performance-based annual incentive compensation program. Members of management who provide this support include Byron L. ~~Bergren and~~Bergren; Dennis R. Clouser, Executive Vice President, — Human Resources, ~~both~~Corporate Procurement & Operations and Information Services; and J. Gregory Yawman, Divisional Vice President and Associate General Counsel, each of whom generally attend meetings of the HRCC. Each of them is excused from a meeting during deliberation and approval of matters regarding his own compensation and from regularly scheduled HRCC executive sessions.

Benchmarking

The HRCC compares salary, annual incentive compensation and long-term equity incentive values against ~~all~~various retail companies ~~in Hewitt Associates’ Total Compensation Database~~ (the “Compensation Peer Group”). In ~~2007, there were 55~~2009, the following retail companies were included in the ~~database with median~~Compensation Peer Group:


Abercrombie & Fitch Co.		Macy’s, Inc.
Auto Zone, Inc.		McDonald’s Corporation
Belk, Inc.		Nordstrom, Inc.
Big Lots, Inc.		OfficeMax Incorporated
Brown Shoe Company, Inc.		Papa John’s International
Collective Brands, Inc.		Sears Holding Corporation
CVS Corporation		Staples, Inc.
Darden Restaurants, Inc.		Target Corporation
Dollar General Corporation		The Gap, Inc.
Eddie Bauer, Inc.		The Home Depot, Inc.
Hot Topic, Inc.		Toys R Us, Inc.
J. C. Penney Company, Inc.		True Value Company
Limited Brands, Inc.		Williams-Sonoma, Inc.
L.L. Bean Incorporated		Yum! Brands, Inc.
Lowe’s Companies, Inc.

The companies in the Compensation Peer Group have revenues ~~of $2.9 billion and~~ ranging ~~in size~~ from ~~$200~~$761 million to ~~$313 billion in sales.~~$87 billion. Because of the ~~large~~ variance in size among these companies, Hewitt Associates assists the ~~companies comprising the Compensation Peer Group,~~Company in preparing a regression analysis ~~was used to adjust~~that adjusts the compensation data for differences in company sales. Regression analysis is a statistical technique that establishes a “line of best fit” or “trend line” between variables. In the context of compensation, regression analysis is used to determine the relationship between company size (typically defined by revenue) and pay level. This enables organizations to use a peer group that includes companies both larger and smaller than the organization in question and, through regression analysis, “size adjust” the compensation data to reflect the organization’s revenue. This adjusted value is used as the basis of comparison of compensation between the Company and the companies in the Compensation Peer Group.

The HRCC has currently determined that it is appropriate to deliver total compensation at approximately the 50th percentile of the Compensation Peer Group for each element of compensation. However, as the Company competes with many larger companies for the best executive-level talent, the HRCC may decide it is in the best interests of the Company and its shareholders to provide compensation for selected positions that exceeds the targeted compensation levels depending on the circumstances, including the Company’s needs, market factors, the executive’s experience, the contribution of the executive to the Company, and in the HRCC’s view, the positive impact the executive may have on the Company as a whole.

In addition, in ~~2007,~~2009, the HRCC reviewed proxy compensation data from specific retailers in its benchmarking effort with respect to compensation of the Chief Executive Officer. These retailers included Kohl’s Corporation; J.C. Penney Company, Inc.; ~~Federated Department Stores, Inc.; The Talbots,~~Macy’s, Inc.; Dillard’s Inc.; Belk Inc. and ~~The TJX Companies,~~

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Nordstrom, Inc. These companies were chosen because they are retailers with competitive assortments and a similar customer base as the Company. The HRCC recognizes that most of these retailers are larger in size than the Company, but the HRCC also believes that the Company competes directly with them for executive talent. The HRCC reviewed the compensation practices of, and the compensation packages provided by, these retailers. The data also provided context for ongoing deliberations of the HRCC.

Components of Named Executive Officer Compensation

The principal components of compensation for the named executive officers are base salary, performance-based annual cash incentive compensation, long-term equity incentive compensation, perquisites, and retirement and other benefits. The HRCC seeks to achieve a mix of these components such that ~~the~~ total compensation is competitive in the marketplace. The HRCC also assesses the risks relating to performance-based compensation. The HRCC is transitioning the Company’s compensation program from its historical short-term orientation, which focused on base salary and annual incentive compensation, to a program with an increasing emphasis on long-term equity incentive compensation to better align the interests of the named executive officers with the interests of shareholders in long-term growth. The HRCC does not have a pre-established policy for allocation between cash and non-cash or short-term and long-term incentive compensation. Rather, it ~~monitors~~evaluates the actual mix against market data and attempts to provide each named executive officer with a balanced compensation package that addresses retention and competitive requirements.

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The following table shows the components of named executive officer ~~compensation.~~compensation:


~~Element~~Component	Purpose	Characteristics

Base Salary	Compensate named executive officers for performing their roles and assuming their levels of executive responsibility. Intended to provide a competitive level of compensation, it is a necessary ~~to recruit~~component in recruiting and ~~retain~~retaining executives.	Fixed component. Annually reviewed by the HRCC and adjusted as appropriate.
Performance-based Annual Incentive Compensation	Promote improvement of the Company’s financial results and performance. Intended to drive performance in a particular year without being a deterrent to long-term Company goals and ~~initiatives.~~initiatives or encouraging unreasonable risk.	~~Performance-based bonus~~Bonus opportunity based on the achievement of certain goals, which may be individual performance goals, Company performance goals or a combination of the two. Where applicable, goals are typically established annually and bonus amounts awarded will vary based on performance.
Long-Term Equity Incentive Compensation	Promote the achievement of the Company’s long-term financial goals and stock price appreciation. Align named executive officers and shareholder interests, promote named executive officers’ retention and reward named executive officers for superior Company performance over time.	Reviewed annually and granted, if appropriate, by the HRCC in the form of stock options, stock awards and ~~stock awards.~~RSUs. Amounts actually earned by each named executive officer will vary and will depend on stock ~~price appreciation.~~price.
Perquisites and Other Benefits	Provide health and welfare benefits as available to all employees. Additional perquisites and benefits are designed to attract, retain and reward named executive officers by providing an overall benefit package similar to those provided by comparable companies.	Health and welfare benefits are a fixed component that may vary based on employee elections. Perquisites and other benefits may vary from year to year.
Retirement Benefits	Provide basic retirement benefits as available to all associates and supplemental coverage necessary to retain key executives.	Participation in pension plans for certain named executive officers is a required element under applicable employment agreements.

The HRCC has reviewed a summary, or “tally sheet,” with all components of compensation of the named executive officers, including base salary, performance-based cash incentive compensation, long-term equity incentive compensation, accumulated realized and unrealized stock option and restricted stock gains, the dollar value to the executive and cost to the Company of all perquisites and other benefits and obligations under the Company’s supplemental executive retirement plans. The HRCC did not use the tally sheet in making individual pay decisions, but rather reviewed it to ensure the total package met the needs of both the Company and the executives. The HRCC believes the level of compensation of the Company’s named executive officers reflects the Company’s performance and total compensation to each of the named executive officers is appropriate.

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Base Salary

The base salaries of the Company’s named executive officers are determined by evaluating their roles and responsibilities and compensation data ~~regarding~~compared with the Compensation Peer Group. The base salary of each named executive officer is reviewed annually. If appropriate, the Chief Executive Officer recommends ~~annual~~ salary increases for each of the named executive officers other than himself and the Executive Chairman of the Board. The HRCC’s decision to increase base salary for any named executive officer is based on the HRCC’s compensation philosophy and takes into specific account the level of responsibility of the named executive officer, the Company’s performance, the named executive officer’s individual performance and the named executive officer’s compensation compared to similarly situated executives in the Compensation Peer Group.

Minimum base salaries for Tim Grumbacher, Byron L. Bergren, Anthony J. Buccina and Stephen R. Byers were established in employment agreements approved by the HRCC and, with respect to Mr. Bergren’s and Mr. Grumbacher’s employment agreements, the ~~Company’s~~ Board of ~~Directors.~~Directors at the recommendation of the HRCC. These minimum base salaries were based on a variety of factors, including market data from the Compensation Peer Group and an evaluation of each person’s capacity to positively affect the Company’s performance. The HRCC decided that ~~most~~the current base salaries were properly aligned with competitors and more emphasis should be placed on variable compensation linked to corporate performance. As

2009 was a ~~result, there were no increases in~~challenging year for the Company and virtually all retail companies. In determining executive compensation for 2009, the HRCC anticipated the continuing difficult economic environment and did not approve base salary increases for ~~any of~~ the named executive officers ~~in 2007 other than a $15,000 increase in Mr. Plowman’s base salary. His base salary was increased based upon market considerations.~~during the year.

Performance-Based Annual Incentive Compensation

The Company has an annual incentive Cash Bonus Plan (the “Cash Bonus Plan”) in which the named executive officers participate. Awards of cash bonuses under this plan are variable, and the payout of any cash bonus under the plan is dependent upon the achievement of pre-determined Company performance goals which are pre-approved by the HRCC.

For ~~2007,~~2009, the ~~annual cash bonus program~~Cash Bonus Plan for the named executive officers focused on the achievement of two or three of the following goals:


	~~(1)~~•	net income (loss), with a “threshold” of approximately ~~$55.2~~$(42.3) million, a “target” of approximately ~~$59.6~~$0.9 million and a “maximum” of approximately ~~$77.3~~$65.4 million;

	~~(2)~~•	net sales, with a “threshold” of approximately ~~$3.457~~$2.912 billion, a “target” of approximately ~~$3.524~~$3.021 billion and a “maximum” of approximately ~~$3.753~~$3.276 billion;

	~~(3)~~•	~~a specified level of~~EBITDA (defined as earnings before interest, income taxes, depreciation and amortization, ~~or EBITDA,~~including amortization of lease-related interests, and non-cash impairment charges), with a “threshold” of approximately ~~$315.650~~$170.1 million, a “target” of approximately ~~$322.669~~$212.6 million and a “maximum” of approximately ~~$350.454~~$311.9 million; and

	~~(4)~~•	borrowing availability (excess capacity) under the Company’s revolving credit agreement at a ~~specified~~minimum level of ~~gross margin return on inventory dollars, or GMROI dollars.~~$150.0 million at the end of each fiscal month.

The methodology utilized to determine the achievement level for GMROI dollars requires that total Company gross margin, total Company average inventory at cost and total Company sales are balanced. The GMROI dollar goals require achievement of Company sales at pre-determined levels related to the total financial goals of the Company, which is then multiplied by the approved gross margin return on investment rate for the Company. The GMROI formula is as follows: (1) the quotient of Gross Margin Dollars divided by Average Inventory Dollars at Cost, (2) multiplied by Sales Dollars. The GMROI dollar goal was reached in 2006; it was not achieved in 2007. In the view of the HRCC, the GMROI dollar goals are challenging but attainable.

The HRCC assigns goals and weightings for each named executive officer depending on the capacity of the named executive officer to influence the goal and the named executive officer’s area of responsibility. Payment of any portion of a bonus under the ~~plan~~Cash Bonus Plan is dependent upon the Company’s achievement of at least the “threshold” level of net income. If the threshold level of net income is not

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achieved, there is no bonus payout under any of the goals ~~of the plan~~ for that year. In addition, if the net income “threshold” is attained, but the “threshold” performance for a goal other than net income is not attained, the portion of the bonus attributable to such other goal is forfeited.

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The HRCC reviewed and established competitive “threshold,” ~~“target,”~~“target” and “maximum” payout potentials under the ~~cash bonus program~~Cash Bonus Plan for each named executive officer. The following table sets forth (1) the approximate payouts, stated as a percentage of base salary, ~~that~~which could be earned by each named executive officer under the ~~cash bonus program~~Cash Bonus Plan for ~~2007,~~2009, and (2) the ~~cash bonus~~Cash Bonus Plan performance goals and the weighting of such goals for each named executive officer for ~~2007.~~2009:


	Payout at			Payout at			Payout at			Bonus Criteria			Payout at			Payout at			Payout at			Bonus Criteria
Name	Threshold			Target			Maximum			(weighting)			Threshold			Target			Maximum			(weighting)

Tim Grumbacher		30	%		40	%		80	%		Net income (80	)%		20	%		40	%		80	%		Net income (80	)%
											Net sales (20	)%											Excess capacity (20	)%
Byron L. Bergren		112.5	%		150	%		200	%		Net income (80	)%		50	%		100	%		200	%		Net income (80	)%
											Net sales (20	)%											Excess capacity (20	)%
Anthony J. Buccina		93.75	%		125	%		187.5	%		EBITDA (50	)%		50	%		100	%		200	%		Net sales (50	)%
											GMROI dollars (25	)%											EBITDA (30	)%
											Net sales (25	)%											Excess capacity (20	)%
Stephen R. Byers		56.25	%		75	%		112.5	%		EBITDA (60	)%		50	%		100	%		200	%		Net sales (60	)%
											GMROI dollars (20	)%											EBITDA (40	)%
											Net sales (20	)%
Keith E. Plowman		37.5	%		50	%		75	%		Net income (80	)%		50	%		100	%		200	%		Net income (80	)%
											Net sales (20	)%											Excess capacity (20	)%

~~None~~The HRCC reviewed performance data as of the ~~goals was achieved~~end of 2009 and determined the extent to which the targeted levels of performance were achieved. The amount of annual incentive compensation paid for 2009 to each named executive officer is reflected in ~~2007 and consequently no compensation was paid under~~ the ~~performance-based incentive plan.~~“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 28.

In addition to bonuses that may be awarded under the ~~Company’s~~ Cash Bonus Plan, a cash bonus may be awarded at the discretion of the HRCC for extraordinary individual achievement or for other reasons, such as a signing bonus upon joining the Company or an executive extending the term of his employment agreement. ~~In 2007, Mr. Bergren received a $150,000 bonus in connection with entry into an amendment of his employment agreement. Other than the payment to Mr. Bergren, no~~No extraordinary bonuses were awarded to any of the named executive officers for ~~2007.~~2009.

Long-Term Equity Incentive Compensation

Another component of named executive officer compensation is long-term incentive compensation in the form of stock options, time-based and performance-based restricted stock and time-based and performance-based RSUs. The HRCC annually reviews the performance and compensation of the named executive officers to determine whether annual grants of options or awards of restricted stock or RSUs are warranted. Option grants and awards of restricted stock and RSUs are made periodically at the discretion of the HRCC but generally are made within the first quarter of each fiscal year. Grants and awards are made on the recommendation of the Company’s Chief Executive Officer, primarily to reward significant individual achievement and to motivate and retain key talent. The proportion of long-term equity incentive compensation in relation to base salary is a function of the named executive officer’s level of responsibility and capacity to enhance shareholder value.

The HRCC has decided that grants made to the Company’s Chief Executive Officer should be directly aligned towith the short- and long-term performance of the Company. In addition, the Chief Executive ~~officer~~Officer and the other named executive officers are awarded restricted stock as a retention tool. The other named executive officers are also granted options to align their interests with those of shareholders.

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Generally, the value of the grants and awards made to the named executive officers, excluding the Chief Executive Officer, have been distributed so that 60% of the value is granted as options and 40% of the value is awarded as time-based restricted stock. This proportionate weighting is consistent with the HRCC’s objectives. The compensation value to the executive of a grant of stock options depends solely on future stock price appreciation, thereby aligning the interests of executives with those of shareholders. The compensation value to the executive of an award of restricted stock does not depend solely on future stock price increases. Rather, the award will have value in the long-term, thereby encouraging retention.

The exercise price of options granted by the HRCC is usually set at the closing price of the Company’s common stock on the ~~Nasdaq~~NASDAQ Stock Market on the date of the HRCC meeting at which the grant is approved. In certain instances, the HRCC has set the exercise price at the closing price on

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a grant date in the future to allow time to notify the grantee of the option grant or to set the grant date and exercise price on the same date as the starting date of a new employee. If the HRCC sets ana grant date and option exercise price based on the closing price on the ~~Nasdaq~~NASDAQ Stock Market on a date in the future, the HRCC confirms that management does not anticipate any material announcements during the period from the HRCC meeting until such future date.

During 2007, the HRCC granted each of Messrs. Buccina, Byers and Plowman an award of 2,865 time-based restricted shares and options to acquire 11,019 shares as reflected in the “Grants of Plan-Based Awards” table on page 33. The HRCC also awarded time-based and performance-based restricted stock to Byron L. Bergren in 2007. The awards to Mr. Bergren were made pursuantPursuant to the amendment of Mr. Bergren’s employment ~~agreement. He received 41,297~~agreement on March 18, 2009, the HRCC granted Mr. Bergren an award of 400,000 time-based restricted stock shares, ~~worth $1.35 million at the time~~100,000 of ~~grant: 6,195 shares~~which vested on February ~~2, 2008, 14,454 shares~~1, 2010, 100,000 of which will vest on ~~January 31, 2009~~February 1, 2011, and ~~20,648 shares~~200,000 of which will vest on February 5, ~~2010. He also~~2012. In addition, Mr. Bergren received ~~41,297~~400,000 performance-based restricted shares, ~~half~~200,000 of which were subject to vesting based on achievement of Company performance goals for ~~2007,~~2009, and ~~half~~100,000 of which are subject to vesting based on achievement of Company performance goals for ~~2008. As~~each of 2010 and 2011. Ninety percent of the 2009 performance-based restricted shares (180,000 shares) vested based upon the achievement of performance ~~goals~~targets for ~~2007 were not attained, the restricted stock award relating to 2007 performance goals was forfeited.~~

~~These awards~~2009. Awards of performance-based restricted stock reflect the HRCC’s objectives to link an increasing portion of compensation to Company performance and to align the interests of key executives with those of shareholders.

Pursuant to respective employment agreements dated February 1, 2009, the HRCC granted Mr. Buccina and Mr. Byers an award of 100,000 and 70,000 time-based restricted shares, respectively, all of which vest on April 30, 2011, and 100,000 and 70,000 performance-based restricted shares, respectively, half of which were subject to vesting based on achievement of Company performance goals for 2009, and half of which are subject to vesting based on achievement of Company performance goals for 2010. Ninety percent of the 2009 performance-based restricted shares (45,000 and 31,500 shares for Mr. Buccina and Mr. Byers, respectively) vested based upon the achievement of performance targets for 2009. Awards of performance-based restricted stock reflect the HRCC’s objectives to link an increasing portion of compensation to Company performance and to align the interests of key executives with those of shareholders.

During 2009, the HRCC granted Mr. Plowman an award of 50,000 time-based restricted shares, all of which vest on April 27, 2012.

The aforementioned awards are reflected in the “Grants of Plan-Based Awards” table on page 30.

Perquisites and Other Benefits

The Company provides the named executive officers with perquisites and other benefits that the Company and the HRCC believe are reasonable and consistent with the Company’s objective to motivate and retain superior employees for key positions. The HRCC periodically reviews the levels of perquisites and other benefits provided to named executive officers. Perquisites primarily consist of supplemental medical benefits, automobile allowances, ~~club memberships,~~ relocation benefits and reimbursement of legal fees incurred in connection with the negotiation of employment agreements. In addition, the Company provided Mr. Bergren with rental housing in Milwaukee, Wisconsin for use during his frequent trips to the Company’s merchandising operations prior to Mr. Bergren relocating to Milwaukee on January 30, 2008. Perquisites traditionally have not constituted significant portions of an executive’s compensation.

The named executive officers also participate in benefit programs available to employees generally, such as health and dental insurance, life insurance and long-term disability insurance.

Retirement Benefits

The named executive officers participate in The Bon-Ton Stores, Inc. Retirement Contribution Plan, a tax-qualified defined-contribution plan. Under this plan, employees are able to contribute a portion of their annual salaries on a pre-tax basis and the Company may make discretionary retirement contributions to each eligible ~~associate’s~~employee’s account. ~~The~~In past years, the Company generally has matched

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30% of the first 6% of eligible compensation that is contributed to the plan. No contribution was made in 2009 for 2008. For 2009, a 30% matching contribution was made by the

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Company in March 2010. In addition to the matching contribution, the Company ~~provides~~has provided a discretionary retirement contribution to each eligible ~~employee.~~employee in past years. No discretionary retirement contribution was made for 2008 (in 2009) or for 2009 (in 2010). For ~~2007,~~2009, each named executive officer received a ~~discretionary retirement contribution of $5,816 and a~~ matching contribution of ~~$4,108.~~$4,556. These amounts are included in the Summary Compensation Table on page ~~32.~~28.

In connection with ~~the~~an acquisition ~~of Carson’s~~ in March 2006, the Company assumed the Carson Pirie Scott & Co. Pension Plan (the “Carson’s Pension Plan”). The Carson’s Pension Plan is a qualified defined-benefit cash-balance plan in which the only named executive officer who participates is Anthony J. Buccina. The Carson’s Pension Plan was frozen to new participants in 2002 and all future benefit accruals were frozen in May 2006.

Additionally, in connection with the same acquisition, ~~of Carson’s,~~ a subsidiary of the Company assumed the Carson Pirie Scott & Co. Supplemental Executive Retirement Plan (the “Carson’s SERP”). The Carson’s SERP is a nonqualified, unfunded supplemental retirement plan. The Carson’s SERP was terminated by the Company effective December 31, 2008. The only named executive officer who ~~participates~~participated in the Carson’s SERP iswas Anthony J. Buccina. ~~The Company anticipates that there will be no new participants~~Pursuant to an employment agreement entered into on January 23, 2009, in the ~~Carson’s~~first quarter of 2009 the Company paid Mr. Buccina $2,931,821, the actuarial equivalent present value of his interest in the SERP. Additional detail on these plans can be found under the heading “Pension Benefits” on page ~~35.~~32.

Employment Agreements and Payments Upon Termination or Change ofin Control

As discussed more fully below, the Company has entered into employment agreements with Tim Grumbacher, Byron L. Bergren, Anthony J. Buccina and Stephen R. Byers. The decisions to enter into employment agreements and the terms of those agreements were based on the Company’s need to motivate and retain talent for the long-term growth of the Company.

Following Mr. Grumbacher’s resignation as Chief Executive Officer in 2004, the HRCC determined it would be beneficial to the Company to continue Mr. Grumbacher’s employment as Executive Chairman of the Board, and both Mr. Grumbacher and the HRCC desired to evidence the arrangement in a written agreement. In December 2007, the HRCC approved an extension of Mr. Grumbacher’s term as Executive Chairman by two years, through January 2010. In January 2010, the HRCC approved a further extension of his term as Executive Chairman to December 31, 2010. The HRCC’s key objectives in further extending Mr. Grumbacher’s term as Executive Chairman included: (1) retaining Mr. Grumbacher’s experience and expertise asto maximize the ~~Company moves from the integration of Carson’s to maximizing its~~Company’s potential as a larger retailer; and (2) maintaining stability of leadership and strategic focus.

The Company entered into an employment agreement with Mr. Bergren following the Company’s acquisition of ~~Elder-Beerman.~~The Elder-Beerman Stores Corp in 2003. The term of Mr. Bergren’s employment agreement originally ran through 2008. In July 2007, the Company and Mr. Bergren entered into an amendment of Mr. Bergren’s employment agreement that, among other matters, extended Mr. Bergren’s term as Chief Executive Officer through January 31, 2009 and provided for additional long-term incentive compensation. ~~Pursuant~~His employment agreement, as amended, provided that Mr. Bergren was to perform an important role with the ~~amendment, following~~Company from January 31, 2009 through February 5, 2010. In August 2008, the ~~end~~Company asked Mr. Bergren to continue in the role of ~~his term as~~ Chief Executive Officer ~~Mr. Bergren is to serve~~ through February 5, ~~2010~~2010. On March 18, 2009, the Company entered into an amendment of Mr. Bergren’s employment agreement that provides for Mr. Bergren to serve as President and Chief Executive Officer through January 31, 2011 and to serve in an important role asto be determined by the Board ~~based upon its decision~~of Directors from February 1, 2011 through February 5, 2012. In addition, the Board has agreed to nominate Mr. Bergren as ~~to what is in the best interest~~a member of the ~~Company. The “important role” means a role, as determined by~~Board of Directors for the ~~Board, consisting of Board-level activities, activities to facilitate the transition of a new Chief Executive Officerand/or~~ ~~such other activities as would be consistent with Mr. Bergren’s position at such time as a Director and former Chief Executive Officer of the Company.~~period through February 5, 2012. The HRCC’s key objectives in entering into the July 2007 ~~amendment~~and March 2009 amendments of Mr. Bergren’s employment agreement included: (1) retaining Mr. Bergren’s experience and expertise asto maximize the ~~Company moves from the integration of Carson’s to maximizing its~~Company’s potential as a larger retailer; (2) maintaining stability of leadership and strategic focus; and (3) facilitating the Company’s

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succession planning process and enabling Mr. Bergren to assist the HRCC and the Board of Directors with this process.

With respect to Mr. Buccina, the HRCC and management of the Company determined his services and merchandising expertise would be critical following the acquisition of Carson’s to ensure a smooth integration and to lead the development and execution of a comprehensive merchandising strategy for the combined Company. ~~The~~With respect to Mr. Byers, the HRCC and Company management

29

determined it would be in the best interests of the Company to enter into an employment agreement to retain Mr. Byers due to his significant level of experience in retail, his direct experience with the Carson’s stores, and for the long-term growth of the Company. In January 2009, the Company entered into new employment agreements with both Mr. Buccina and Mr. Byers, extending the term of their respective employment relationships with the Company.

The material terms of the employment agreements with the named executive officers are described under the heading “Summary of Employment Agreements with Named Executive Officers” beginning on page ~~37.~~34.

Under the employment agreements, the Company has agreed to provide severance compensation in the event of a termination, change ofin control or other triggering event. In addition, Keith E. Plowman, with whom the Company does not have an employment agreement, is a participant in the Company’s ~~Severance Plan.~~severance plan. These arrangements are designed to promote stability and continuity of senior ~~management.~~management through a change in control of the Company. Stock options and restricted stock will generally vest upon a change in control. The Company adopted “single trigger” treatment for equity awards to retain, focus and motivate executives during change in control discussions and to be competitive with current market practice in order to attract the best talent. However, any cash severance benefits require a “double trigger” (including the executive’s separation from the Company under specified circumstances) for payment.

Information on these arrangements for the named executive officers is provided under the heading “Potential Payments Upon Termination or Change ofin Control” on page 39.

Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code (the “Code”) limits the deductibility of compensation in excess of $1,000,000 paid to the Chief Executive Officer and certain executive officers unless specified criteria are satisfied. The HRCC reviews and considers the deductibility of executive compensation under Section 162(m), and ~~believes compensation recognized by such persons in 2007 is fully deductible for federal income tax purposes. The HRCC~~ has generally designed the Company’s compensation program in a manner that permits compensation to be ~~deductible; however,~~deductible. However, grants of restricted stock, when and if those grants vest for tax purposes, may create compensation for the grantee that ~~may be~~is subject to the limitations on deductibility under Section 162(m). The HRCC ~~reserves the right to~~may award non-deductible compensation when it believes such action would be in the best interests of the Company.

3026

Report of the Human Resources and Compensation Committee

The HRCC ~~of the Board of Directors~~ has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) ofRegulation S-K with management and, based on such review and discussion, the HRCC recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

The Human Resources and Compensation Committee

Marsha M. Everton, Chair

Shirley A. Dawe

Todd C. McCarty

Risk Considerations in our Compensation Policies

The HRCC has determined that the Company’s compensation program does not encourage excessive and unnecessary risk taking. The Company designs the individual components of its compensation programs to encourage appropriate risk-taking to maximize long-term business potential, while avoiding undue risk that does not align with short- and long-term shareholder objectives. This design encourages the Company’s managers to remain focused on both the short- and long-term operational and financial goals of the Company.

3127

Summary Compensation Table


													Change in																			Change in
													Pension																			Pension
													Value and																			Value and
													Nonqualified																			Nonqualified
											Non-Equity		Deferred																	Non-Equity		Deferred
							Stock		Option		Incentive Plan		Compensation		All Other										Stock			Option		Incentive Plan		Compensation			All Other
Name and			Salary		Bonus		Awards		Awards		Compensation		Earnings		Compensation		Total				Salary		Bonus		Awards			Awards		Compensation		Earnings			Compensation		Total
Principal Position	Year		($)(1)		($)(2)		($)(3)		($)(4)		($)(5)		($)(6)		($)(7)		($)		Year		($)(1)		($)(2)		($)(3)			($)(4)		($)(5)		($)			($)(6)		($)

Tim Grumbacher,		2007		650,000		—		1,344,830		—		—		142,934		28,092		2,165,856		2009		650,000		—		—			—		239,200		222,575	(7)		53,506		1,165,281
Executive Chairman of the Board		2006		675,000		—		1,344,830		—		361,563		139,004		13,533		2,533,930
Executive Chairman of																				2008		650,000		—		—			—		—		10,820			23,784		684,604
the Board																				2007		650,000		—		—			—		—		142,934			36,592		829,526
Byron L. Bergren,		2007		1,000,000		150,000		1,228,700		278,157		—		—		164,848		2,821,705		2009		1,000,000		—		794,829	(8)		—		920,000		—			75,908		2,790,737
President and Chief Executive Officer		2006		971,154		—		977,358		553,532		1,500,000		—		91,313		4,093,357
President and Chief																				2008		1,000,000		—		1,286,600	(9)		—		—		—			248,605		2,535,205
Executive Officer																				2007		1,000,000		150,000		2,490,378	(10)		—		—		—			173,348		3,813,726
Anthony J. Buccina,		2007		780,000		—		768,445		538,562		—		888,887		29,516		3,005,410		2009		791,800		—		197,000	(11)		—		649,276		—	(12)		17,461		1,655,537
Vice Chairman and President — Merchandising		2006		688,750		306,355		603,332		569,379		1,060,313		490,315		28,652		3,747,096
Vice Chairman,																				2008		780,000		—		49,600			93,500		—		—	(13)		20,241		943,341
President —																				2007		780,000		—		160,010			291,122		—		888,887			29,516		2,149,535
Merchandising
Stephen R. Byers		2007		525,000		—		96,772		320,370		—		—		21,184		963,326		2009		533,500		—		137,900	(14)		—		416,130		—			12,366		1,099,896
Vice Chairman — Stores, Distribution, Real Estate and Construction		2006		422,891		138,579		17,442		148,985		307,089		—		16,443		1,051,429
Vice Chairman —																				2008		525,000		—		49,600			93,500		—		—			12,890		680,990
Stores, Visual,																				2007		525,000		—		160,010			291,122		—		—			21,184		997,316
Construction, Real Estate, Distribution & Logistics, Loss Prevention
Keith E. Plowman,		2007		401,538		—		176,654		103,964		—		—		20,337		702,493		2009		450,000		—		110,000			—		414,000		—			15,402		989,402
Executive Vice President, Chief Financial Officer and Principal Accounting Officer		2006		380,769		—		127,516		29,144		209,625		—		23,103		770,157
Executive Vice																				2008		438,750		—		34,720			74,800		—		—			10,948		559,218
President, Chief																				2007		401,538		—		160,010			291,122		—		—			20,337		873,007
Financial Officer and Principal Accounting Officer


(1)		Actual base salary payments made in ~~2007~~2009, 2008 and ~~2006.~~2007.

(2)		“Bonus” refers to non-performance-based guaranteed cash payments. In 2007, Mr. Bergren received a $150,000 bonus pursuant to the terms of the amendment of his employment agreement. In 2006, Mr. Buccina received a $184,118 bonus with respect to his performance at Carson’s and a $122,237 retention payment following the Carson’s acquisition by the Company, and Mr. Byers received a $138,579 retention payment. Other cash incentives were performance-based and are reflected under the column labeled “Non-Equity Incentive Plan Compensation.”

(3)		The amounts reported in this column reflect the ~~amount~~aggregate grant date fair value of ~~compensation cost recognized~~restricted stock share or unit awards computed in ~~2007 and 2006 for financial statement reporting purposes~~accordance with ASC 718 for restricted stock ~~and RSUs~~ granted in 2009, 2008 and 2007 ~~and prior years for~~to each named executive officer. The calculation of these amounts disregards ~~the~~any estimate of forfeitures related to time-based vesting conditions. The amounts do not reflect compensation actually received by the named executive officers. Assumptions used in the calculation of these amounts are included in Note 1715 to our audited financial statements included in ourForm 10-K filed with the SEC on April 16, ~~2008. The grant date fair market value of the restricted stock granted in 2007 is reflected in Grants of Plan-Based Awards Table on page 33.~~2010.

(4)		The amounts reported in this column reflect the ~~amount~~aggregate grant date fair value of ~~compensation cost recognized~~option awards computed in ~~2007 and 2006 for financial statement reporting purposes~~accordance with ASC 718 for stock options granted in 2008 and 2007 ~~and prior years for~~to each named executive officer. The calculation of these amounts disregards the ~~estimate of~~estimated forfeitures related to time-based vesting conditions. The amounts do not reflect compensation actually received by the named executive officers. Assumptions used in the calculation of these amounts are included in Note 1715 to our audited financial statements included in our Form~~Form~~ 10-K filed with the SEC on April 16, ~~2008. The grant date fair market value of the stock options granted in 2007 is reflected in Grants of Plan-Based Awards table on page 33.~~2010.

(5)		The amounts reported in this column reflect the annual performance-based bonus awards to the named executive officers under the Company’s Cash Bonus Plan, which is ~~addressed~~discussed on page 2622 of the Compensation Discussion and Analysis under the heading “Performance-Based Annual Incentive Compensation.”

(6)		The amounts reported in this column reflect (i) the increase in value during 2007 of Mr. Grumbacher’s retiree continuing medical benefits, and (ii) the increase in value during 2007 of Mr. Buccina’s benefits under the Carson’s Pension Plan and the Carson’s SERP. See the Pension Benefits Table on page 35 for more information about these benefits.

32


~~(7)~~		~~The~~ compensation reflected in the “All Other Compensation” column for each of the named executive officers for 2009 includes the following:


			Supplemental		Insurance		Tax Gross-Up of		Life		Reimbursement		401(k) Plan
	Automobile		Medical		Consultation		Certain		Insurance		of Legal		Company		Furniture
Name	Usage($)		Benefits($)		Expenses($)		Perquisites($)		Premiums($)		Expenses($)		Match($)		Storage($)


Tim Grumbacher		5,711		—		14,075		9,612		12,760		—		4,556		6,792

Byron L. Bergren		24,596		8,000		8,500		6,733		15,444		8,079		4,556		—

Anthony J. Buccina		—		—		—		—		7,905		5,000		4,556		—

Stephen R. Byers		—		—		—		—		5,245		2,565		4,556		—

Keith E. Plowman		6,200		2,300		—		—		2,346		—		4,556		—


(7)		Amount reflects the increase in the actuarial present value during 2009 of Mr. Grumbacher’s retiree continuing medical benefits. See the Pension Benefits Table on page 32 for more information about these benefits.

(8)		The grant date fair value of 2009 time-based restricted stock awarded to Mr. Bergren was $284,000. The grant date fair value of 2009 performance-based restricted stock awarded to Mr. Bergren was $510,829, computed based upon an

28


		assessment, as of the grant date, that it was probable 100% of the performance target would be met for the 2009 year. Based upon the achievement of 90% of the 2009 performance target, the actual payout to Mr. Bergren for 2009 performance-based restricted stock was $459,747.

(9)		The grant date fair value of 2008 performance-based restricted stock awarded to Mr. Bergren was $1,286,600, computed based upon an assessment, as of the grant date, that it was probable 100% of the performance target would be met for the 2008 year. Based upon 2008 performance, the actual payout to Mr. Bergren for 2008 performance-based restricted stock was zero.

(10)		The grant date fair value of 2007 ~~includes Company matching contributions~~time-based restricted stock awarded to Mr. Bergren was $1,349,999. The grant date fair value of 2007 performance-based RSUs awarded to Mr. Bergren was $1,140,379, computed based upon an assessment, as of the grant date, that it was probable 100% of the performance target would be met for the 2007 year. Based upon 2007 performance, the actual payout to Mr. Bergren for 2007 performance-based RSUs was zero. The grant date fair value of 2007 performance-based restricted stock shares awarded to Mr. Bergren was zero, computed based upon an assessment, as of the grant date, that it was probable 0% of the performance target would be met for the 2007 year. The maximum value of restricted stock share awards assuming the highest level of performance conditions of this performance-based restricted stock was $674,983. Based upon 2007 performance, the actual payout to Mr. Bergren for 2007 performance-based restricted stock shares was zero.

(11)		The grant date fair value of 2009 time-based restricted stock awarded to Mr. Buccina was $135,000. The grant date fair value of 2009 performance-based restricted stock awarded to Mr. Buccina was $62,000, computed based upon an assessment, as of the grant date, that it was probable 100% of the performance target would be met for the 2009 year. Based upon the achievement of 90% of the 2009 performance target, the actual payout to Mr. Buccina for 2009 performance-based restricted stock was $55,800. An additional 50,000 performance-based restricted shares were awarded to Mr. Buccina in 2009 but are excluded from the Summary Compensation Table as the award is contingent upon 2010 performance for which criteria was not established by the HRCC until March 2010.

(12)		The actuarial valuation of the change during 2009 in Mr. Buccina’s benefits under ~~our Retirement Contribution~~the Carson’s Pension Plan and the ~~incremental cost~~Carson’s SERP was a net decrease of $2,898,985. The Company terminated the Carson’s SERP in 2008 and, as a result, Mr. Buccina received a payment of $2,931,821 for his accumulated benefits in the first quarter of 2009, reducing his accumulated benefits under the Carson’s SERP to zero. The actuarial valuation of the ~~Company~~change during 2009 in Mr. Buccina’s benefits under the Carson’s Pension Plan was an increase of ~~perquisites,~~$32,836. See the Pension Benefits Table on page 32 for more information about these benefits.

(13)		The actuarial valuation of the change during 2008 in Mr. Buccina’s benefits under the Carson’s Pension Plan and the Carson’s SERP was a decrease of $62,393.

(14)		The grant date fair value of 2009 time-based restricted stock awarded to Mr. Byers was $94,500. The grant date fair value of 2009 performance-based restricted stock awarded to Mr. Byers was $43,400, computed based upon an assessment, as ~~follows:~~of the grant date, that it was probable 100% of the performance target would be met for the 2009 year. Based upon the achievement of 90% of the 2009 performance target, the actual payout to Mr. Byers for 2009 performance-based restricted stock was $39,060. An additional 35,000 performance-based restricted shares were awarded to Mr. Byers in 2009 but are excluded from the Summary Compensation Table as the award is contingent upon 2010 performance for which criteria was not established by the HRCC until March 2010.

29

401(k) Plan

Rental
Company

Supplemental
Club
Housing in
Life
Match and

Automobile
Medical
Membership
Reimbursement of
Milwaukee
Insurance
Airfare for
Profit

Name
Usage($) Benefits($) Expenses($) Legal Expenses($) ($) Premiums($) Spouse($) Sharing($)

Tim Grumbacher — — — 17,520 — 472 176 9,924
Byron L. Bergren 19,256 8,030 4,340 13,000 99,804 10,494 — 9,924
Anthony J. Buccina 9,558 2,242 — — — 7,792 — 9,924
Stephen R. Byers 6,200 2,300 — — — 2,760 — 9,924
Keith E. Plowman 6,200 2,300 — — — 1,470 443 9,924

Grants of Plan-Based Awards

Stock options and awards of restricted stock generally vest over a number of years. Any vested options are usually forfeited 90 days after termination of the recipient’s employment, and any unvested shares of restricted stock and unvested options are usually forfeited upon termination of employment.

The table below provides information regarding grants of options and awards of restricted stock made during ~~2007~~2009 to the named executive officers under the Company’s ~~Cash Bonus Plan and~~ Stock Incentive Plan. ~~There were no cash payouts for 2007 performance or any RSU grants made during 2007.~~


															All				Grant																All				Grant
													All		Other				Date														All		Other				Date
													Other		Option				Fair														Other		Option				Fair
								Estimated Future					Stock		Awards;		Exercise or		Value of									Estimated Possible					Stock		Awards;		Exercise or		Value of
		Estimated Possible						Payouts Under Equity					Awards;		Number of		Base		Stock			Estimated Possible						Payouts Under Equity					Awards;		Number of		Base		Stock
		Payouts Under Non-Equity						Incentive Plan					Number of		Securities		Price of		and			Payouts Under Non-Equity						Incentive Plan					Number of		Securities		Price of		and
		Incentive Plan Awards(1)						Awards(2)					Shares of		Underlying		Option		Option			Incentive Plan Awards(1)						Awards(2)					Shares of		Underlying		Option		Option
	Grant	Threshold		Target		Maximum		Threshold		Target			Stock or		Options		Awards		Awards		Grant	Threshold		Target		Maximum		Threshold		Target			Stock or		Options		Awards		Awards
Name	Date	($)		($)		($)		(#)		(#)			Units (#)(3)		(#)(4)		($/share)		($)(5)		Date	($)		($)		($)		(#)		(#)			Units (#)(3)		(#)(4)		($/share)		($)(5)

Tim Grumbacher	N/A		195,000		260,000		520,000		—		—			—		—		—		—	N/A		130,000		260,000		520,000		—		—			—		—		—		—
Byron L. Bergren	N/A		1,125,000		1,500,000		2,000,000		—		—			—		—		—		—	N/A		500,000		1,000,000		2,000,000		—		—			—		—		—		—
	7/19/07		—		—		—		15,486		20,648	(6)		—		—		—		675,000	2/4/08		—		—		—		91,464		182,927	(6)		—		—		—		226,829
	7/19/07		—		—		—		—		—			41,297		—		—		1,350,000	3/25/09		—		—		—		100,000		200,000	(7)		—		—		—		284,000
																					3/25/09		—		—		—		—		—			200,000		—		—		284,000
Anthony J. Buccina	N/A		731,250		975,000		1,462,500		—		—			—		—		—		—	N/A		395,900		791,800		1,583,600		—		—			—		—		—		—
	3/27/07		—		—		—		—		—					11,019		55.85		291,122	3/17/09		—		—		—		25,000		50,000	(8)		—		—		—		62,000
	3/27/07		—		—		—		—		—			2,865		—		—		160,010	2/2/09		—		—		—		—		—			100,000		—		—		135,000
Stephen R. Byers	N/A		295,313		393,750		590,625		—		—			—		—		—		—	N/A		266,750		533,500		1,067,000		—		—			—		—		—		—
	3/27/07		—		—		—		—		—					11,019		55.85		291,122	3/17/09		—		—		—		17,500		35,000	(9)		—		—		—		43,400
	3/27/07		—		—		—		—		—			2,865		—		—		160,010	2/2/09		—		—		—		—		—			70,000		—		—		94,500
Keith E. Plowman	N/A		151,875		202,500		303,750		—		—			—		—		—		—	N/A		225,000		450,000		900,000		—		—			—		—		—		—
	3/27/07		—		—		—		—		—					11,019		55.85		291,122	4/27/09		—		—		—		—		—			50,000		—		—		110,000
	3/27/07		—		—		—		—		—			2,865		—		—		160,010


(1)		Represents the range of cash payouts targeted for ~~2007~~2009 performance under the ~~Company’s~~ Cash Bonus Plan described in the Compensation Discussion and Analysis on page 2622 under the heading “Performance-Based Annual Incentive Compensation.” The amounts shown in the “Threshold” column reflect the minimum payout opportunity if threshold performance was achieved. AsIf performance thresholds ~~were~~are not met, ~~there was~~it is possible to have no payout under the Cash Bonus Plan. Actual payout amounts for 2009 performance are included under “Non-Equity Incentive Compensation” in the Summary Compensation Table.

(2)		Represents the range of performance-based restricted share payouts targeted for ~~2007~~2009 performance. These performance-based restricted shares are earned based on the achievement of goals for ~~2007~~2009 established by the HRCC. AsIf performance thresholds ~~were~~are not met, it is possible to have no payout of these performance-based restricted shares. Dividends are not paid on performance-based restricted shares until such shares are vested. Because 90% of the performance target for 2009 was ~~made.~~met, 90% of the target performance-based restricted shares were actually earned.

(3)		Represents awards of restricted shares made under the Stock Incentive Plan. Information regarding the vesting schedules of these awards is included in the footnotes to the Outstanding Equity Awards at Fiscal Year-End table on page ~~34.~~31. Dividends are generally paid on unvested restricted shares when dividends are paid on Company common stock. Restricted shares ~~will vest on an accelerated basis upon the executive’s termination of employment under certain~~

33


		tranche is not reflected in this table because, for purposes of ASC 718 accounting, performance-based restricted shares are not considered to be “granted” until the respective performance goals have been established.

(9)		Represents the target award of the first tranche of two equal tranches of performance-based restricted shares granted to Mr. Byers on February 2, 2009. The performance goals for the first tranche were established by the HRCC on March 17, 2009. The performance goals for the second tranche were not established by the HRCC until March 16, 2010. The second tranche is not reflected in this table because, for purposes of ~~SFAS 123R,~~ASC 718 accounting, performance-based restricted shares are not considered to be “granted” until the respective performance goals have been established. ~~As of March 24, 2008, the grant date fair value of the second tranche of performance-based restricted shares, as determined in accordance with SFAS 123R, was $130,502.~~

Outstanding Equity Awards at Fiscal Year-End


	Option Awards											Stock Awards										Option Awards											Stock Awards
																				Equity																					Equity
																	Equity			Incentive																		Equity			Incentive
																	Incentive			Plan																		Incentive			Plan
																	Plan			Awards:																		Plan			Awards:
																	Awards:			Market																		Awards:			Market
																	Number			or Payout																		Number			or Payout
						Equity									Market		of			Value of							Equity									Market		of			Value of
						Incentive									Value of		Unearned			Unearned							Incentive									Value of		Unearned			Unearned
						Plan									Shares		Shares,			Shares,							Plan									Shares		Shares,			Shares,
						Awards:						Number of			or		Units or			Units or							Awards:						Number of			or		Units or			Units or
						Number						Shares or			Units of		Other			Other							Number of						Shares or			Units of		Other			Other
	Number of		Number of			of Securities						Units of			Stock		Rights			Rights		Number of		Number of			Securities						Units of			Stock		Rights			Rights
	Securities		Securities			Underlying						Stock			That		That			That		Securities		Securities			Underlying						Stock			That		That			That
	Underlying		Underlying			Unexercised		Option				That			Have		Have			Have		Underlying		Underlying			Unexercised		Option				That			Have		Have			Have
	Unexercised		Unexercised			Unearned		Exercise		Option		Have Not			Not		Not			Not		Unexercised		Unexercised			Unearned		Exercise		Option		Have Not			Not		Not			Not
	Options-		Options-			Options		Price		Expiration		Vested			Vested		Vested			Vested		Options-		Options-			Options		Price		Expiration		Vested			Vested		Vested			Vested
Name	Exercisable		Unexercisable			(#)		($)		Date		(#)			($)(1)		(#)			($)(1)		Exercisable		Unexercisable			(#)		($)		Date		(#)			($)(1)		(#)			($)(1)

Tim Grumbacher		—		—			—		—		—		365,205	(2)		2,779,210		—			—		—		—			—		—		—		365,205	(2)		3,195,544		—			—
Byron L. Bergren		125,000		—			—		13.05		8/23/2014		—			—		—			—		125,000		—			—		13.05		8/23/2014		—			—		—			—
		41,334		53,666	(3)		—		20.44		7/6/2012		—			—		—			—		95,000		—			—		20.44		7/6/2012		—			—		—			—
		—		—			—		—		—		40,519	(4)		308,350		—			—		—		—			—		—		—		20,648	(3)		180,670		—			—
		—		—			—		—		—		35,102	(5)		267,126		—			—		—		—			—		—		—		200,000	(4)		1,750,000		—			—
Anthony J. Buccina																							96,000		—			—		27.15		5/31/2013		—			—		—			—
		—		—			—		—		—		—			—		20,649	(6)		157,139		—		11,019	(5)		—		55.85		3/26/2014		—			—		—			—
Anthony J. Buccina		32,000		64,000	(7)		—		27.15		5/31/2013		—			—		—			—
																							—		50,000	(6)		—		4.96		3/17/2015		—			—		—			—
																							—		—			—		—		—		2,865	(7)		25,069		—			—
		—		11,019	(8)		—		55.85		3/26/2014		—			—		—			—		—		—			—		—		—		10,000	(8)		87,500		—			—
		—		—			—		—		—		55,000	(9)		418,550		—			—		—		—			—		—		—		100,000	(9)		875,000		—			—
		—		—			—		—		—		2,865	(10)		21,803		—			—		—		—			—		—		—		—			—		50,000	(10)		437,500
Stephen R. Byers		5,000		10,000	(11)		—		31.84		4/2/2013		—			—		—			—		15,000		—			—		31.84		4/2/2013		—			—		—			—
		7,167		14,333	(12)		—		29.90		10/1/2013		—			—		—			—		21,500		—			—		29.90		10/1/2013		—			—		—			—
		—		11,019	(8)		—		55.85		3/26/2014		—			—		—			—		—		11,019	(5)		—		55.85		3/26/2014		—			—		—			—
		—		—			—		—		—		5,250	(13)		39,953		—			—		—		50,000	(6)		—		4.96		3/17/2015		—			—		—			—
		—		—			—		—		—		2,865	(10)		21,803		—			—		—		—			—		—		—		2,865	(7)		25,069		—			—
																							—		—			—		—		—		10,000	(8)		87,500		—			—
																							—		—			—		—		—		70,000	(9)		612,500		—			—
																							—		—			—		—		—		—			—		35,000	(10)		306,250
Keith E. Plowman		3,334		6,666	(14)		—		17.91		5/26/2012		—			—		—			—		10,000		—			—		17.91		5/26/2012		—			—		—			—
		—		11,019	(8)		—		55.85		3/26/2014		—			—		—			—		—		11,019	(5)		—		55.85		3/26/2014		—			—		—			—
		—		—			—		—		—		8,000	(15)		60,880		—			—		—		40,000	(6)		—		4.96		3/17/2015		—			—		—			—
		—		—			—		—		—		2,865	(10)		21,803		—			—		—		—			—		—		—		2,865	(7)		25,069		—			—
																							—		—			—		—		—		7,000	(8)		61,250		—			—
																							—		—			—		—		—		50,000	(11)		437,500		—			—


(1)		Market values reflect the closing price of the Company’s common stock on the ~~Nasdaq~~NASDAQ Stock Market on ~~February 1, 2008~~January 29, 2010 (the last business day of the fiscal year), which was ~~$7.61~~$8.75 per share.

(2)		Restricted shares ~~vest~~vested 100% on February 1, 2010.

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Pension Benefits

The Pension Benefits Table below shows the actuarial present value of accumulated benefits payable to each of our named executive officers and the number of years credited to each named executive officer under each of the Carson’s ~~SERP;~~SERP, the Carson’s Pension ~~Plan;~~Plan and the Executive Transition Agreement dated February 1, 2005, as amended, between the Company and Mr. Grumbacher (the “Executive Transition Agreement”), pursuant to which Mr. and Mrs. Grumbacher are entitled to continue participation in the Company’s group medical plan upon cessation of Mr. Grumbacher’s employment with the Company.

The present values set forth have been calculated for the named executive officers assuming that each will remain in service until normal retirement age as defined under each plan. The assumptions set forth in Note 8 to our audited financial statements included in ourForm 10-K filed with the SEC on April 16, ~~2008 are~~2010 were used to calculate the numbers below and are incorporated by reference.


					Present Value of								Present Value of
		Number of Years			Accumulated		Payments During			Number of Years			Accumulated		Payments During
Name	Plan Name	Credited Service			Benefit ($)		Last Fiscal Year ($)		Plan Name	Credited Service			Benefit ($)		Last Fiscal Year ($)

Tim Grumbacher	Retiree Medical Benefits		N/A			281,938		—	Retiree Medical Benefits		N/A			515,333		—
Byron L. Bergren	—		—			—		—	—		—			—		—
Anthony J. Buccina	Carson’s Pension Plan		13	(1)		212,194		—	Carson’s Pension Plan		13	(1)		231,469		—
	Carson’s SERP		12	(2)		2,980,652		—	Carson’s SERP		—			—		2,931,821	(2)
Stephen R. Byers	—		—			—		—	—		—			—		—
Keith E. Plowman	—		—			—		—	—		—			—		—


(1)		Although Mr. Buccina has 1517 years of actual service, he is credited with only 13 years of service under the terms of the Carson’s Pension Plan as all future benefit accruals were frozen in May 2006.

(2)		~~Although~~The Company terminated the Carson’s SERP in 2008. Mr. Buccina ~~has 15 years~~received a payment of ~~actual service, he is credited with only 12 years~~$2,931,821 for his accumulated benefit in the first quarter of ~~service, the maximum service period under the terms of the Carson’s SERP.~~2009.

Description of Plans Named in Pension Benefits Table

Carson’s ~~Supplemental Executive Retirement Plan~~

In connection with the acquisition of Carson’s in March 2006, the Company assumed the Carson’s SERP. The Carson’s SERP is a nonqualified, unfunded supplemental retirement plan intended to provide supplemental retirement benefits to a select group of management or highly compensated employees. The only named executive officer who participates in the Carson’s SERP is Anthony J. Buccina.

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deferred vested pension. Payment of deferred vested pension benefits will commence at age 65, unless the employee elects to begin such payments earlier in which case the deferred vested pension benefit amount may be reduced. Mr. Buccina is currently eligible for deferred vested pension benefits under the Carson’s Pension Plan.

Form of Payment

For an unmarried employee, the normal form of payment is a life annuity. For a married employee, the normal form of payment is a qualified joint and surviving spouse annuity; however, the

36

Option Exercises and Stock Vested During ~~2007~~2009


	Option Awards				Stock Awards				Option Awards				Stock Awards
	Number of Shares		Value Realized		Number of Shares		Value Realized		Number of Shares		Value Realized		Number of Shares		Value Realized
	Acquired on Exercise		on Exercise		Acquired on Vesting		on Vesting		Acquired on Exercise		on Exercise		Acquired on Vesting		on Vesting
	(#)		($)		(#)		($)		(#)		($)		(#)		($)(1)

Tim Grumbacher		—		—		—		—		—		—		—		—
Byron L. Bergren		—		—		35,000		271,250		—		—		344,634		3,015,550	(2)
		—		—		6,195		47,144
Anthony J. Buccina		—		—		10,000		486,700		—		—		45,000		393,750	(2)
Stephen R. Byers		—		—		—		—		—		—		5,250		33,390
										—		—		31,500		275,625	(2)
Keith E. Plowman		—		—		6,000		83,700		—		—		8,000		13,440


(1)		Value reflects the closing price of the Company’s common stock on the NASDAQ Stock Market on the respective vesting date of the restricted stock awards.

(2)		2009 performance-based restricted stock awards vested January 30, 2010 as determined by the HRCC on March 16, 2010.

Summary of Employment Agreements with Named Executive Officers

Tim Grumbacher, Executive Chairman of the Board

Mr. Grumbacher and the Company entered into anthe Executive Transition Agreement on February 1, 2005, which was amended on December 6, ~~2007.~~2007 and January 28, 2010. The agreement, as amended, runs through ~~January~~December 31, 2010. Pursuant to the amended agreement, Mr. Grumbacher will serve as the Company’s Executive Chairman of the Board and as a member of the Executive Committee of the Board during the term of the agreement, ~~will~~ receive an annual base salary of $650,000 and ~~will~~ be eligible to earn an annual cash bonus in accordance with pre-determined criteria established by the HRCC under the ~~Company’s~~ Cash Bonus Plan. The amended agreement also provides that beginning January 1, 2011, Mr. Grumbacher will serve as non-Executive Chairman of the Board, for such term and with such duties and compensation as the Board of Directors and Mr. Grumbacher may agree.

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Pursuant to the December 6, 2007 amendment to the agreement, the provision for a payment by the Company to Mr. Grumbacher to cover, on a net after-tax basis, the excise tax imposed on all amounts treated as “excess parachute payments” under Section 280G of the Code was eliminated. The amended agreement also provides for a reduction of cash payable to Mr. Grumbacher upon a change in control if, and to the extent necessary, such reduction would be sufficient to avoid treatment of any payments or benefits as “excess parachute payments” under Section 280G of the Code.

Under his agreement, Mr. Grumbacher was granted 365,205 restricted shares of the Company’s common stock pursuant to the terms of the Stock Incentive Plan. The shares ~~will vest~~vested on February 1, ~~2010, subject to accelerated vesting under certain circumstances.~~2010. The Company has agreed to provide Mr. Grumbacher and his wife with medical insurance and supplemental medical benefits for the duration of each of their lives. In addition, for the duration of Mr. Grumbacher’s life, the Company will provide him with secretarial support and office space and allow him to participate in the Company’s associate discount program. For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Grumbacher may be entitled upon certain termination eventsand/or a change in control, see “Potential Payments Upon Termination or Change in Control” on page 39.

Byron L. Bergren, President and Chief Executive Officer

Mr. Bergren’s employment agreement with the Company was entered into on August 24, 2004 and amended on May 1, ~~2005,~~2005; May 23, ~~2006 and~~2006; July 19, ~~2007.~~2007 and March 18, 2009. The term of

34

his employment agreement continues to February 5, ~~2010~~2012 unless sooner terminated in accordance with its terms. Mr. Bergren’s employment agreement, as amended, provides for a minimum annual base salary of $1,000,000 and a bonus in accordance with the ~~Company’s~~ Cash Bonus Plan. Mr. Bergren’s agreement, as amended, provides that heMr. Bergren will ~~be nominated to~~ serve as President and Chief Executive Officer through January 31, 2011 and will serve in an important role to be determined by the Board of Directors from February 1, 2011 through February 5, 2012. In addition, the Board has agreed to nominate Mr. Bergren as a ~~director~~member of the ~~Company~~Board of Directors for ~~as long as he is employed by~~ the ~~Company during the term of the agreement.~~period through February 5, 2012.

Pursuant to the July 19, 2007 amendment to his employment agreement, Mr. Bergren was granted the following long-term incentive compensation awards:


	•	41,297 time-based restricted shares of the Company’s common stock which had an aggregate value of $1,350,000 as of July 19, 2007. Fifteen percent (6,195 shares) vested on February 2, ~~2008. Thirty-five~~2008, thirty-five percent (14,454 shares) ~~will vest~~vested on January 31, 2009 and fifty percent (20,648 shares) ~~will vest~~vested on February 5, 2010, provided, in each case, Mr. Bergren is continuously employed by the Company through such date, except that vesting of such shares may be accelerated in certain circumstances as described under the heading “Potential Payments Upon Termination or Change in Control” on page 39.2010.

	•	41,297 performance-based restricted shares with a value of $1,350,000 as of July 19, 2007. ~~One-half~~One hundred percent of these restricted shares were forfeited based upon the failure to achieve the net income performance targets for ~~2007. The other one-half vest, if at all, based upon the achievement of performance targets for~~2007 and 2008.

	•	365,854 performance-based restricted shares with a value of $2,700,000 as of February 4, 2008. One-half of these restricted shares ~~will vest, if at all,~~were forfeited based upon the ~~achievement of~~failure to achieve the performance targets for ~~2008, and~~2008. Ninety percent of the ~~other one-half will vest, if at all,~~remaining 182,927 performance-based restricted shares (164,634 shares) vested based upon the achievement of performance targets for 2009.

Pursuant to the fourth amendment to the employment agreement dated March 18, 2009, Mr. Bergren was granted the following long-term incentive awards:


	•	200,000 time-based restricted shares of the Company’s common stock which had an aggregate value of $354,000 as of March 25, 2009. Fifty percent (100,000 shares) vested on February 1, 2010, and the remainder (100,000 shares) will vest on February 1, 2011, provided Mr. Bergren is continuously employed by the Company through such date, except that vesting of such shares may be accelerated in certain circumstances. For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Bergren may be entitled upon certain eventsand/or a change in control, see “Potential Payments Upon Termination or Change in Control” on page 39.

	•	200,000 performance-based restricted shares with a value of $354,000 as of March 25, 2009. Ninety percent of these performance-based restricted shares (180,000 shares) vested based upon the achievement of performance targets for 2009.

The fourth amendment to the employment agreement also provides that Mr. Bergren will receive two grants of shares of restricted stock in fiscal year 2010:


	•	200,000 time-based restricted shares of the Company’s common stock shall vest one hundred percent on February 5, 2012, provided Mr. Bergren is continuously employed by the Company through such date, except that vesting of such shares may be accelerated in certain circumstances.

	•	200,000 performance-based restricted shares of the Company’s common stock shall vest based on the achievement of performance goals. These shares shall vest fifty percent (100,000 shares) based upon the achievement of performance goals for 2010 established by the HRCC and fifty percent (100,000 shares) based upon the achievement of performance goals for 2011 to be established by the HRCC.

35

In the event that Mr. Bergren is discharged without cause or resigns for good reason on or prior to January 31, 2011 and provided that Mr. Bergren executes a general release consistent with certain terms of his employment agreement, the 2010 grant of performance-based restricted shares based upon Company performance for 2010 granted to Mr. Bergren shall become vested, and the underlying shares shall be delivered, to the same extent as would have applied had Mr. Bergren remained employed through the date the determination of vesting for these shares would otherwise have been. In the event that Mr. Bergren is discharged without cause or resigns for good reason on or after January 30, 2011 and prior to January 29, 2012 and provided that Mr. Bergren executes a general release consistent with certain terms of his employment agreement, the 2010 grant of performance-based restricted shares based upon Company performance for 2011 granted to Mr. Bergren shall become vested, and the underlying shares shall be delivered, to the same extent as would have applied had Mr. Bergren remained employed through the date the determination of vesting for these shares would otherwise have been.

If Mr. Bergren is discharged without cause during the term of his employment agreement following a “Change in Control” (as defined in the employment agreement) or resigns from the Company with or without good reason during the term of his employment agreement after the expiration of three months following a Change in Control, Mr. Bergren will receive a payment equal to the lesser of 2.99 times his base salary (at the salary level immediately preceding the Change in Control plus his average bonus for the three immediately preceding fiscal years) or, if applicable, the “280G Permitted Payment” (as defined in the 2004 Agreement). The Change in Control severance payment is contingent on Mr. Bergren signing and not timely revoking a general release of claims.

Mr. Bergren’s employment agreement contains a non-competition clause that, during Mr. Bergren’s employment and for a period of one year after termination of his employment, prohibits Mr. Bergren from engaging in or being financially interested in the retail department stores business of any competitor of the Company identified in the employment agreement. Mr. Bergren’s employment agreement also contains confidentiality provisions relating to the Company’s confidential information. For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Bergren may be entitled upon certain termination eventsand/or a change in control, see “Potential Payments Upon Termination or Change in ~~Control.”~~Control” on page 39.

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Anthony J. Buccina, Vice Chairman, ~~and~~ President — Merchandising

On ~~June 1, 2006,~~January 23, 2009, the Company entered into an employment agreement (the “Buccina Employment Agreement”), Restricted Stock Agreement and Restricted Stock Agreement — Performance Shares with ~~Anthony~~Mr. Buccina.

The Buccina Employment Agreement follows an employment agreement ~~terminates on~~dated June 1, 2006 that expired January 31, 2009. The new Buccina Employment Agreement was effective as of February 1, 2009 and will terminate on April 30, 2011, unless sooner terminated in accordance with ~~its terms.~~ the terms of the Buccina Employment Agreement. Unless terminated, the Buccina Employment Agreement shall renew for successive one-year terms beginning May 1 of each year.

Mr. Buccina’s initial base salary under ~~his employment agreement~~the Buccina Employment Agreement is ~~$780,000~~$791,800 per year. This base salary is subject to review during the term of the ~~employment agreement~~Buccina Employment Agreement and may be increased in the sole discretion of the Company, upon approval of the HRCC.

~~Pursuant to his employment agreement,~~The Buccina Employment Agreement provides that Mr. Buccina ~~received~~is eligible for a bonus under the Cash Bonus Plan under the following parameters: a target bonus of 100% of base salary in effect on the last day of the relevant fiscal year, with threshold and maximum bonuses as determined by the HRCC. The performance measures to be utilized, and the weighting of these performance measures, will be determined by the HRCC consistent with its determinations for other senior executives under the Cash Bonus Plan.

36

The Buccina Employment Agreement provided that Mr. Buccina receive a grant of ~~options to purchase~~100,000 restricted shares of the Company’s common stock ~~and~~pursuant to the terms of the Company’s Stock Incentive Plan. Such grant was awarded on February 2, 2009. Such restricted shares shall vest on April 30, 2011, provided that Mr. Buccina is still employed by the Company on such date. In addition, Mr. Buccina received, as performance-based compensation, a grant of 50,000 restricted shares ~~all as reflected~~of the Company’s common stock for each of 2009 and 2010. The metrics for earning such performance-based shares shall be determined each year by the HRCC. The terms of the grants are set forth in the ~~table~~Restricted Stock Agreements. Ninety percent of ~~Outstanding Equity Awards~~the 2009 performance-based restricted shares (45,000 shares) vested based upon the achievement of performance targets for 2009.

For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Buccina may be entitled upon certain eventsand/or a change in control, see “Potential Payments Upon Termination or Change in Control” on page ~~34. The employment agreement also provides that~~ 39.

Mr. Buccina ~~will continue his participation~~is eligible to participate in plans and programs that are generally made available to the other employees of the Company. Mr. Buccina was a participant in the Carson’s ~~SERP.~~SERP, which was terminated by the Company in 2008. Pursuant to the Buccina Employment Agreement, the Company paid Mr. Buccina ~~is entitled to receive an immediate single sum distribution of~~$2,931,821, the ~~entire~~actuarial equivalent present value of his accrued ~~benefit within 60 days after~~benefits in the Carson’s SERP, in the first quarter of 2009.

In the event of discharge without cause or resignation for good reason during the initial term of the Buccina Employment Agreement ending April 30, 2011, during the first renewal term ending April 30, 2012 or if the Company has not offered to renew the Buccina Employment Agreement for the first renewal term ending April 30, 2012, Mr. Buccina will be entitled to receive severance pay equal to the greater of his base pay for the remaining contract term or two times his base salary, payable in a lump sum as soon as practicable following the six month anniversary of the termination of ~~employment for any reason.~~Mr. Buccina’s employment. The severance payment is contingent on Mr. Buccina signing and not timely revoking a general release of claims.

Upon a “Change in Control” (as defined in the Buccina Employment Agreement), (1) the vesting of stock options and restricted shares held by Mr. ~~Buccina’s employment agreement~~Buccina shall be governed by the terms of such stock option or restricted share grants and (2) Mr. Buccina is prohibited from resigning for good reason for a period of six months following the Change in Control. If following a Change in Control he is discharged without cause or resigns for good reason within two years of the Change in Control, Mr. Buccina will receive a severance payment equal to two times his average base pay for the most recently completed three years plus two times the average bonus paid to him for the most recently completed three years, or, if applicable, the “280G Permitted Payment” (as such term is defined in the Buccina Employment Agreement). The Change in Control severance payment is contingent on Mr. Buccina signing and not timely revoking a general release of claims.

The Buccina Employment Agreement contains a non-competition clause that, during Mr. Buccina’s employment and for a period equal to one-half of ~~one year~~the period for which he receives severance payments after termination of his employment, prohibits Mr. Buccina from engaging in or being financially interested in the retail department stores business of any competitor of the Company named in the Buccina Employment Agreement. The Buccina Employment Agreement also contains confidentiality provisions relating to the Company’s confidential information.

Stephen R. Byers, Vice Chairman — Stores, Visual, Construction, Real Estate, Distribution & Logistics and Loss Prevention

On January 23, 2009, the Company entered into an employment ~~agreement.~~ agreement (the “Byers Employment Agreement”), Restricted Stock Agreement and Restricted Stock Agreement — Performance Shares with Stephen R. Byers.

The Byers Employment Agreement follows an employment agreement dated June 28, 2006, as amended by the first amendment to the employment agreement dated December 20, 2006,

37

which expired January 31, 2009. The new Byers Employment Agreement was effective as of February 1, 2009 and will terminate on April 30, 2011, unless sooner terminated in accordance with the terms of the Byers Employment Agreement. Unless terminated, the Byers Employment Agreement shall renew for successive one-year terms beginning May 1 of each year.

Mr. Byers’s initial base salary under the Byers Employment Agreement is $533,500 per year. This base salary is subject to review during the term of the Byers Employment Agreement and may be increased in the sole discretion of the Company, upon approval of the HRCC.

The Byers Employment Agreement provides that Mr. Byers is eligible for a bonus under the Cash Bonus Plan under the following parameters: a target bonus of 100% of base salary in effect on the last day of the relevant fiscal year, with threshold and maximum bonuses as determined by the HRCC. The performance measures to be utilized and the weighting of these performance measures will be determined by the HRCC consistent with its determinations for other senior executives under the Cash Bonus Plan.

The Byers Employment Agreement provided that Mr. Byers receive a grant of 70,000 restricted shares of the Company’s common stock pursuant to the terms of the Company’s Stock Incentive Plan. Such grant was awarded on February 2, 2009. Such restricted shares shall vest on April 30, 2011, provided that Mr. Byers is still employed by the Company on such date. In addition, Mr. Byers received, as performance-based compensation, a grant of 35,000 restricted shares of the Company’s common stock for each of 2009 and 2010. The metrics for earning such performance-based shares shall be determined each year by the HRCC. The terms of the grants are set forth in the Restricted Stock Agreements. Ninety percent of the 2009 performance-based restricted shares (31,500 shares) vested based upon the achievement of performance targets for 2009.

For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. ~~Buccina~~Byers may be entitled upon certain ~~termination~~ eventsand/or a change in control, see “Potential Payments Upon Termination or Change in ~~Control.”~~Control” on page 39.

~~Stephen R.~~Mr. Byers ~~Vice Chairman — Stores, Distribution, Real Estate~~is eligible to participate in plans and ~~Construction~~programs that are generally made available to the other employees of the Company.

The Company entered into an employment agreement with Mr. Byers on June 28, 2006, as amended in December 2006, that continues to January 31, 2009 unless sooner terminated in accordance with its terms. This employment agreement, as amended, providesIn the event of discharge without cause or resignation for ~~a minimum annual base salary of $525,000, which is subject to review~~good reason during the initial term of the ~~employment agreement. If Mr.~~ Byers is discharged without Cause or resigns for Good Reason (as defined in the agreement), he will continue to receive his base salary for one year. Upon a change in control of the Company, all options and shares of restricted stock held by Mr. Byers will immediately vest and, upon termination of his employment under certain circumstances after a change in control,Employment Agreement ending April 30, 2011, Mr. Byers will be entitled to ~~a payment~~receive severance pay equal to the ~~lesser~~greater of ~~(i) 2.99~~his base pay for the remaining contract term or two times his base salary, atpayable in a lump sum as soon as practicable following the ~~time~~six month anniversary of the ~~change~~termination of Mr. Byers’s employment. The severance payment is contingent on Mr. Byers signing and not timely revoking a general release of claims.

Upon a “Change in ~~control,~~Control” (as defined in the Byers Employment Agreement), (1) the vesting of stock options and ~~(ii)~~restricted shares held by Mr. Byers shall be governed by the ~~maximum amount permitted by Section 280G~~terms of such stock option or restricted share grants and (2) Mr. Byers is prohibited from resigning for good reason for a period of six months following the Change in Control. If following a Change in Control he is discharged without cause or resigns for good reason within two years of the ~~Code.~~Change in Control, Mr. Byers will receive a severance payment equal to two times his average base pay for the most recently completed three years plus two times the average bonus paid to him for the most recently completed three years, or, if applicable, the “280G Permitted Payment” (as such term is defined in the Byers Employment Agreement). The Change in Control severance payment is contingent on Mr. Byers signing and not timely revoking a general release of claims.

~~Mr. Byers’ employment agreement~~The Byers Employment Agreement contains a non-competition clause that, during Mr. ~~Byers’~~Byers’s employment and for a period equal to one-half of ~~one year~~the period for which he receives severance payments after termination of his employment, prohibits Mr. Byers from engaging in or being financially interested in the retail department stores business of any competitor of the Company named ~~or otherwise identified~~ in the ~~employment agreement. For information regarding potential severance payments and accelerated vesting of equity awards~~Byers Employment Agreement. The Byers Employment Agreement also contains confidentiality provisions relating to ~~which Mr. Byers may be entitled upon certain termination eventsand/or~~ ~~a change in control, see “Potential Payments Upon Termination or Change in Control.”~~the Company’s confidential information.

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Potential Payments Upon Termination or Change in Control

The Company has entered into agreements and maintains plans that will require the Company to provide compensation to the named executive officers in the event of a termination of employment or a change in control of the Company. The potential amount of compensation payable to each named executive officer in each situation is set forth in the tables below. The amounts shown in the tables assume that termination of the named executive officerand/or a change in control occurred on ~~February 2, 2008.~~January 30, 2010. The actual amounts to be paid will depend on the circumstances and time of the termination or change in control.

39

Tim Grumbacher — Executive Chairman of the Board


			Mr. Grumbacher												Mr. Grumbacher
			Ceases to Serve as												Ceases to Serve as
			Chairman of the		Change in										Chairman of the		Change in
	Mr. Grumbacher		Board by Mutual		Control		Change in						Mr. Grumbacher		Board by Mutual		Control		Change in
	Ceases to Serve as		Consent with the		Without		Control and						Ceases to Serve as		Consent with the		Without		Control and
	Chairman of the		Company or as a		Termination of		Mr. Grumbacher						Chairman of the		Company or as a		Termination of		Mr. Grumbacher
	Board not as a		Result of the		Mr. Grumbacher’s		Ceases to be the						Board not as a		Result of the		Mr. Grumbacher’s		Ceases to be the
	Result of Breach of		Company’s		Position as		Executive Chairman
Executive Benefits and Payments Upon	the Agreement by		Breach of		Executive		by Reason of Such
Executive Benefits and													Result of Breach of		Company’s		Position as		Executive Chairman
Payments Upon													the Agreement by		Breach of		Executive		by Reason of Such
Termination	the Company		the Agreement		Chairman		Change in Control		Disability		Death		the Company		the Agreement		Chairman		Change in Control		Disability		Death

Cash Severance		—		—		—	$	1,300,000		—		—		—		—		—		—		—		—
Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(1)		—		—		—		520,000		—		—	$	239,200	$	239,200		—	$	239,200	$	239,200	$	239,200
Value of Accelerated Restricted Stock~~(1)~~(2)		—	$	2,779,210	$	2,779,210		2,779,210	$	2,779,210	$	2,779,210		—		3,195,544	$	3,195,544		3,195,544		3,195,544		3,195,544
Continuing Health and Welfare Benefits for Mr. Grumbacher and his Spouse for Life~~(2)~~(3)	$	281,938		281,938		—		281,938		281,938		281,938		515,333		515,333		—		515,333		515,333		515,333
Office Space and Secretarial Support(3)		416,756		416,756		—		416,756		416,756		—
Office Space and Secretarial Support(4)														459,303		459,303		—		459,303		459,303		—
Life Insurance		—		—		—		—		—		1,073,000		—		—		—		—		—		1,073,000

Total	$	698,694	$	3,477,904	$	2,779,210	$	5,297,904	$	3,477,904	$	4,134,148	$	1,213,836	$	4,409,380	$	3,195,544	$	4,409,380	$	4,409,380	$	5,023,077


(1)		This calculation is subject to reduction by the HRCC, but assumes no such reduction.

(2)		The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the ~~Nasdaq~~NASDAQ Stock Market on ~~February 1, 2008~~January 29, 2010 ($~~7.61~~8.75 per share).

~~(2)~~(3)		The actuarial present value of continuing health and welfare benefits for Mr. Grumbacher and his wife for their lifetimes.

~~(3)~~(4)		The actuarial present value of office space and secretarial support for Mr. Grumbacher’s lifetime at the Company’s office in York, Pennsylvania.

Byron L. Bergren — President and Chief Executive Officer

Involuntary

Termination

Voluntary
Without

Termination
Cause or
Change in
Change in

Termination
without
Resignation
Control
Control

for
Good
for Good
Without
with

Executive Benefits and Payments Upon Termination
Cause Reason Reason(1) Termination Termination(2) Retirement Disability Death

Cash Severance — — $ 2,000,000 — $ 4,731,319 (3) — — —
Pro-rated Non-Equity Incentive Compensation (Cash Bonus) — — — — — — — —
Value of Accelerated Options(4) — — — — — — — —
Value of Accelerated Restricted Stock(5) — — 575,476 $ 889,746 889,746 — $ 889,746 $ 889,746
Value of Performance RSUs(6) — $ 154,171 154,171 308,342 308,342 $ 154,171 308,342 308,342
Accrued Vacation Pay — — — — — — — —
Continuing Health and Welfare Benefits — — 29,435 — 44,153 — — —
Life Insurance — — — — — — — 2,000,000
Total
— $ 154,171 $ 2,759,082 $ 1,198,088 $ 5,973,560 $ 154,171 $ 1,198,088 $ 3,198,088


					Involuntary
					Termination
			Voluntary		Without
			Termination		Cause or		Change in		Change in
			without		Resignation		Control		Control
Executive Benefits and	For Cause		Good		for Good		Without		with
Payments Upon Termination	Termination		Reason		Reason(1)		Termination		Termination(2)			Retirement		Disability		Death


Cash Severance		—		—	$	2,000,000		—	$	4,217,867	(3)		—		—		—

Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(4)		—	$	920,000		920,000	$	920,000		920,000		$	920,000	$	920,000	$	920,000

Value of Accelerated Options(5)		—		—		—		—		—			—		—		—

Value of Accelerated Restricted Stock(6)		—		—		1,930,670		2,265,731		2,265,731			—		2,265,731		2,265,731

Value of Performance RSUs(7)		—		177,266		177,266		177,266		177,266			177,266		177,266		177,266

Continuing Health and Welfare Benefits		—		—		24,846		—		40,658			—		—		—

Life Insurance		—		—		—		—		—			—		—		2,000,000


Total		—	$	1,097,266	$	5,052,782	$	3,362,997	$	7,621,522		$	1,097,266	$	3,362,997	$	5,362,997

39


(1)		Payment requires the execution of a general release.

(2)		With regard to change in control, “termination” means either (i) Mr. Bergren is discharged without cause during the term of his employment agreement following the closing of the change in control transaction, or (ii) Mr. Bergren resigns for any reason after the expiration of three months following the change in control, including, without limitation, resignation by Mr. Bergren with or without “Good Reason.”

(3)		Pursuant to Mr. Bergren’s employment agreement, as amended, if the aggregate present value of the “parachute payments” determined under Section 280G exceeds three times his “base amount,” as defined in Section 280G, the payouts upon a change in control shall be reduced to be less than three times his base amount. The cash severance amount presented for a change in control with termination has been reduced to be less than three times Mr. Bergren’s base amount.

(4)		This calculation ~~did not require~~is subject to reduction by the HRCC, but assumes no such reduction.

~~(4)~~(5)		The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the ~~Nasdaq~~NASDAQ Stock Market on ~~February 1, 2008~~January 29, 2010 ($~~7.61~~8.75 per share). There is no value reflected for accelerated options as the exercise price of options exceeded the closing price of the Company’s stock on ~~February 1, 2008.~~

40

		January 29, 2010.
~~(5)~~
(6)		The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the ~~Nasdaq~~NASDAQ Stock Market on ~~February 1, 2008~~January 29, 2010 ($~~7.61~~8.75 per share).

~~(6)~~(7)		Mr. Bergren’s RSUs for 2006 vested on February 3, 2007 without regard to acceleration and their vesting would not have been affected by Mr. Bergren’s termination or a change in control on ~~February 2, 2008. Mr. Bergren’s RSUs for 2007 would have vested as a result of a change in control on February 2, 2008.~~January 30, 2010.

Anthony J. Buccina — Vice Chairman, ~~and~~ President — Merchandising


																							Involuntary
																							Termination
			Voluntary																		Voluntary		Without
			Termination		Involuntary		Resignation		Change in		Change in										Termination		Cause or		Change in		Change in
			Without		Termination		for		Control		Control										without		Resignation		Control		Control
Executive Benefits and Payments	For Cause		Good		Without		Good		Without		with								For Cause		Good		for Good		Without		with
Upon Termination	Termination		Reason		Cause(1)		Reason(1)		Termination		Termination(2)		Retirement		Disability		Death		Termination		Reason		Reason(1)		Termination		Termination(2)			Retirement		Disability		Death


Cash Severance		—		—	$	1,560,000	$	1,560,000		—	$	1,560,000		—		—		—		—		—	$	1,583,600		—	$	2,274,742	(3)		—		—		—

Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(4)		—		—		—		—		—		—		—		—		—		—	$	649,276		649,276	$	649,276		649,276		$	649,276	$	649,276	$	649,276

Value of Accelerated Options(3)		—		—		—		—		—		—		—		—		—

Value of Accelerated Restricted Stock(4)		—		—		—		—	$	440,353		440,353		—	$	440,353	$	440,353

Carson’s SERP(5)	$	2,980,652	$	2,980,652		2,980,652		2,980,652		—		2,980,652	$	2,980,652		2,980,652		2,980,652

Carson’s Pension Plan(5)		212,194		212,194		212,194		212,194		—		212,194		212,194		212,194		212,194

Value of Accelerated Options(5)																				—		—		—		189,500		189,500			—		—		—
Value of Accelerated Restricted Stock(6)																				—		—		875,000		1,425,069		1,425,069			—		1,425,069		1,425,069
Carson’s Pension Plan(7)																			$	231,469		231,469		231,469		—		231,469			231,469		231,469		231,469
Continuing Health and Welfare Benefits																				—		—		27,105		—		27,105			—		—		—
Life Insurance		—		—		—		—		—		—		—		—		1,560,000		—		—		—		—		—			—		—		1,584,000

Total	$	3,192,846	$	3,192,846	$	4,752,846	$	4,752,846	$	440,353	$	5,193,199	$	3,192,846	$	3,633,199	$	5,193,199	$	231,469	$	880,745	$	3,366,450	$	2,263,845	$	4,797,161		$	880,745	$	2,305,814	$	3,889,814


(1)		Payment requires execution of a general release.

(2)		If, within six months following a change ofin control, Mr. Buccina leaves the Company for any reason other than termination without cause, he may not collect any additional benefits.

(3)		Pursuant to Mr. Buccina’s employment agreement, if the aggregate present value of the “parachute payments” determined under Section 280G exceeds three times his “base amount,” as defined in Section 280G, the payouts upon a change in control shall be reduced to be less than three times his base amount. This calculation did not require such reduction.

(4)		This calculation is subject to reduction by the HRCC, but assumes no such reduction.

(5)		The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the NASDAQ Stock Market on January 29, 2010 ($8.75 per share).

(6)		The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the NASDAQ Stock Market on January 29, 2010 ($8.75 per share).

(7)		The actuarial equivalent present value of the accrued benefit.

40

Stephen R. Byers — Vice Chairman — Stores, Visual, Construction, Real Estate, Distribution & Logistics, Loss Prevention


					Involuntary
					Termination
			Voluntary		Without
			Termination		Cause or		Change in		Change in
Executive Benefits			Without		Resignation		Control		Control
and Payments	For Cause		Good		for Good		Without		with
Upon Termination	Termination		Reason		Reason(1)		Termination		Termination(2)			Retirement		Disability		Death


Cash Severance		—		—	$	1,067,000		—	$	1,141,258	(3)		—		—		—

Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(4)		—	$	416,130		416,130	$	416,130		416,130		$	416,130	$	416,130	$	416,130

Value of Accelerated Options(5)		—		—		—		189,500		189,500			—		—		—

Value of Accelerated Restricted Stock(6)		—		—		612,500		1,031,319		1,031,319			—		1,031,319		1,031,319

Continuing Health and Welfare Benefits		—		—		27,449		—		27,449			—		—		—

Life Insurance		—		—		—		—		—			—		—		1,068,000


Total		—	$	416,130	$	2,123,079	$	1,636,949	$	2,805,656		$	416,130	$	1,447,449	$	2,515,449


(1)		Payment requires execution of a general release.

(2)		If, within six months following a change in control, Mr. Byers leaves the Company for any reason other than termination without cause, he may not collect any additional benefits.

(3)		Pursuant to Mr. Byers’s employment agreement, if the aggregate present value of the “parachute payments” determined under Section 280G exceeds three times his “base amount,” as defined in Section 280G, the payouts upon a change in control shall be reduced to be less than three times his base amount. The cash severance amount presented for a change in control with termination has been reduced to be less than three times Mr. Byers’s base amount.

(4)		This calculation is subject to reduction by the HRCC, but assumes no such reduction.

(5)		The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the NASDAQ Stock Market on January 29, 2010 ($8.75 per share).

(6)		The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the NASDAQ Stock Market on January 29, 2010 ($8.75 per share).

Keith E. Plowman — Executive Vice President, Chief Financial Officer and Principal Accounting Officer


											Change in
											Control
					Involuntary			Change in			With
Executive Benefits and					Termination			Control			Termination
Payments Upon	For Cause		Voluntary		Without			Without			Without
Termination	Termination		Termination		Cause			Termination			Cause			Retirement		Disability		Death

Cash Severance		—		—	$	155,769	(1)		—		$	155,769	(1)		—		—		—
Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(2)		—	$	414,000		414,000		$	414,000			414,000		$	414,000	$	414,000	$	414,000
Value of Accelerated Options(3)		—		—		—			151,600	(4)		151,600	(4)		—		—		—
Value of Accelerated Restricted Stock(5)		—		—		—			523,819	(4)		523,819	(4)		—		523,819		523,819
Life Insurance		—		—		—			—			—			—		—		900,000

Total		—	$	414,000	$	569,769		$	1,089,419		$	1,245,188		$	414,000	$	937,819	$	1,837,819


(1)		Assumes Mr. Plowman signs a general release and is not rehired by the Company.

(2)		This calculation is subject to reduction by the HRCC, but assumes no such reduction.

(3)		The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the ~~Nasdaq~~NASDAQ Stock Market on ~~February 1, 2008~~January 29, 2010 ($~~7.61~~8.75 per share). ~~There is no value reflected for accelerated options as the exercise price of options exceeded the closing price of the Company’s stock on February 1, 2008.~~

(4)		The HRCC has discretion to fully vest the options and restricted stock of the Company upon a change in control. This calculation assumes the HRCC would choose to fully vest all options and restricted stock upon a change in control on January 30, 2010.

(5)		The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the ~~Nasdaq~~NASDAQ Stock Market on ~~February 1, 2008~~January 29, 2010 ($~~7.61~~8.75 per share).

~~(5)~~		~~The actuarial equivalent present value of the accrued benefit.~~

~~Stephen R. Byers — Vice Chairman — Stores, Distribution, Real Estate and Construction~~

Voluntary

Termination
Involuntary
Change in
Change in

Executive Benefits
Without
Termination
Resignation
Control
Control

and Payments
For Cause
Good
Without
for Good
Without
with

Upon Termination
Termination Reason Cause(1) Reason(1) Termination Termination(2) Retirement Disability Death

Cash Severance — — $ 787,500 $ 787,500 — $ 787,500 — — —
Pro-rated Non-Equity Incentive Compensation (Cash Bonus) — — — — — — — — —
Value of Accelerated Options(3) — — — — — — — — —
Value of Accelerated Restricted Stock(4) — — — — $ 61,755 (5) 61,755 (5) — $ 61,755 $ 61,755
Life Insurance — — — — — — — — 1,000,000
Total
— — $ 787,500 $ 787,500 $ 61,755 $ 849,255 — $ 61,755 $ 1,061,755


~~(1)~~		~~Payment requires execution of a general release.~~

~~(2)~~		~~If, within six months following a change of control, Mr. Byers leaves the Company for any reason other than termination without cause, he may not collect any additional benefits.~~

~~(3)~~		The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the Nasdaq Stock Market on February 1, 2008 ($7.61 per share). There is no value reflected for accelerated options as the exercise price of options exceeded the closing price of the Company’s stock on February 1, 2008.

~~(4)~~		The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the Nasdaq Stock Market on February 1, 2008 ($7.61 per share).

~~(5)~~		The HRCC has discretion to fully vest the restricted stock of the Company upon a change in control. This calculation assumes the HRCC would choose to fully vest all restricted stock upon a change in control on February 2, 2008.

41

~~Keith E. Plowman — Executive Vice President, Chief Financial Officer and Principal Accounting Officer~~

Change in

Control

Involuntary
Change in
With

Executive Benefits and
Termination
Control
Termination

Payments Upon
For Cause
Voluntary
Without
Without
Without

Termination
Termination Termination Cause Termination Cause Retirement Disability Death

Cash Severance — — $ 116,826 (1) — $ 116,826 (1) — — —
Pro-rated Non-Equity Incentive Compensation (Cash Bonus) — — — — — — — —
Value of Accelerated Options(2) — — — — — — — —
Value of Accelerated Restricted Stock(3) — — — $ 82,683 (4) 82,683 (4) — $ 82,683 $ 82,683
Life Insurance — — — — — — — 810,000
Total
— — $ 116,826 $ 82,683 $ 199,509 — $ 82,683 $ 892,683


~~(1)~~		~~Assumes Mr. Plowman signs a general release and is not rehired by the Company.~~

~~(2)~~		The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the Nasdaq Stock Market on February 1, 2008 ($7.61 per share). There is no value reflected for accelerated options as the exercise price of options exceeded the closing price of the Company’s stock on February 1, 2008.

~~(3)~~		The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the Nasdaq Stock Market on February 1, 2008 ($7.61 per share).

~~(4)~~		The HRCC has discretion to fully vest the restricted stock of the Company upon a change in control. This calculation assumes the HRCC would choose to fully vest all restricted stock upon a change in control on February 2, 2008.

Equity Compensation Plan Information

At ~~February 2, 2008,~~January 30, 2010, The Bon-Ton Stores, Inc. 2009 Omnibus Incentive Plan, the Amended and Restated 2000 Stock Incentive and Performance-Based Award Plan, and the Amended and Restated 1991 Stock Option and Restricted Stock ~~Plan and the Stock Incentive~~ Plan were in effect. Each of these plans has been approved by the shareholders. There were no other equity compensation plans in effect. The following information concerning these plans is as of ~~February 2, 2008:~~January 30, 2010:


					Number of							Number of
					securities							securities
					remaining available							remaining available
	Number of shares of				for future issuance			Number of shares of				for future issuance
	common stock to be				under equity			common stock to be				under equity
	issued upon		Weighted-average		compensation plans			issued upon		Weighted-average		compensation plans
	exercise of		exercise price of		(excluding			exercise of		exercise price of		(excluding
	outstanding		outstanding		securities			outstanding		outstanding		securities
	options, warrants		options, warrants		reflected in			options, warrants		options, warrants		reflected in
	and rights		and rights		column (a))			and rights		and rights		column (a))
	(a)		(b)		(c)			(a)		(b)		(c)

Equity compensation plans approved by security holders
Stock options		700,558	$	27.03		—	(1)		1,081,858	$	16.93		—	(1)
Restricted shares		594,658		—		—	(1)		1,749,059		—		—	(1)
Restricted stock units		102,525		—		—	(1)		278,592		—		—	(1)

Subtotal		1,397,741		—		923,941			3,109,509		—		2,557,986
Equity compensation plans not approved by security holders		—		—		—			—		—		—

Total		1,397,741		—		923,941			3,109,509		—		2,557,986


(1)		The referenced plans do not allocate available shares among stock options, restricted shares or RSUs.

42

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Executive officers, directors and persons who own more than 10% of the Company’s common stock are required to file reports of their holdings and transactions in Company stock with the Securities and Exchange Commission. To our knowledge, all such ~~2007~~2009 filings were made in a timely manner.

RELATED PARTY TRANSACTIONS

The Company’s Code of Ethical Standards and Business Conduct provides that no director or associate of the Company shall engage in any transactions with the Company unless approved by the Audit Committee. The Audit Committee Charter provides that the Audit Committee shall have the responsibility to review and approve all such related party transactions. All executive officers and directors are required to disclose any possible related party transaction in which such executive officer or director may participate and each such transaction must be approved by the Audit Committee.

The Company leases its Oil City, Pennsylvania store from Nancy T. Grumbacher, Trustee of the 2002 Indenture of Trust of M. Thomas Grumbacher, pursuant to a lease entered into on January 1, 1981. The Oil City lease terminates on July 31, 2011, and the Company has four five-year renewal options. The rental payments during ~~2007~~2009 under this lease were $223,500. The aggregate amount of all payments due under the terms of the lease at the beginning of ~~2008~~2010 through the remainder of the current term is approximately ~~$782,250.~~$335,250. Ms. Grumbacher is the wife of Tim Grumbacher, the Executive Chairman of the Board.

Michael L. Gleim, a non-employee Director, rendered consulting services to the Company during ~~2007~~2009 for which he was paid ~~$180,000.~~$150,000. In addition, Mr. Gleim received a $50,000

42

supplemental retirement benefit during ~~2007~~2009 from the Company which was paid pursuant to the terms of an employment agreement with Mr. Gleim with respect to his employment as Vice Chairman of the Company from 1995 to 2002.

SHAREHOLDER PROPOSALS

Shareholder proposals for the ~~2009~~2011 Annual Meeting of Shareholders must be received by the Company by January ~~15, 2009~~4, 2011 in order to be considered at the meeting and included in the Company’s proxy statement and form of proxy relating to that meeting.

If notice of any proposal with respect to a matter to be addressed at the ~~2009~~2011 Annual Meeting of Shareholders is received by the Company after March ~~30, 2009,~~20, 2011, the proposals with respect to such matter shall be deemed “untimely” for purposes ofRule 14a-4(c) under the Securities Exchange Act and, therefore, the Company will have the right to exercise discretionary voting authority with respect to such proposal.

HOUSEHOLDING OF PROXY MATERIALS

SEC regulations permit the Company to send a single set of proxy materials, ~~including~~which includes this ~~Proxy Statement and~~proxy statement, the Annual Report to Shareholders and the Notice of Internet Availability of Proxy Materials, to two or more shareholders that share the same address. Each shareholder will continue to receive his or her own separate proxy card. Upon written or oral request, the Company will promptly deliver a separate set of proxy materials to a shareholder at a shared address that only received a single set of proxy materials for this year. If a shareholder would prefer to receive his or her own copy, please contact Mary Kerr, Vice President — Investor Relations, by telephone at(717) 757-7660, by U.S. mail at 2801 E. Market Street, York, Pennsylvania 17402 or bye-mail at ir@bonton.com. Similarly, if a shareholder would like to receive his or her own set of the Company’s proxy materials in future years or if a shareholder shares an address with another shareholder and both would like to receive only a single set of the Company’s proxy materials in future years, please contact Ms. Kerr.

43

~~Appendix A~~

THE BON-TON STORES, INC. ~~SECOND AMENDED AND RESTATED~~
~~2000 STOCK INCENTIVE AND PERFORMANCE-BASED AWARD PLAN~~C/O PROXY SERVICES
PO BOX 9142
FARMINGDALE, NY 11735

~~(Amended~~VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and ~~Restated as~~for electronic delivery of information up until 11:59 P.M. Eastern Time on June ~~17, 2008)~~14, 2010. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

1. ~~Purpose.~~
If you would like to reduce the costs incurred by The Bon-Ton Stores, Inc. ~~(the “Company”) hereby adopts The Bon-Ton Stores, Inc. Amended~~, in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and ~~Restated 2000 Stock Incentive~~annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, ~~Performance-Based Award Plan (the “Plan”), effective as of~~when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on June ~~20, 2006. The Plan, as herein amended~~14, 2010. Have your proxy card in hand when you call and ~~restated, is intended to recognize~~then follow the ~~contributions made to the Company by employees (including employees who are members of the Board of Directors), directors, consultants~~instructions.

VOTE BY MAIL
Mark, sign and advisors of the Company or any Affiliate, to provide such persons with additional incentive to devote themselves to the future success of the Company or an Affiliate, to improve the ability of the Company or an Affiliate to attract, retain,date your proxy card and ~~motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest~~return it in the ~~Company through receipt of rights~~postage-paid envelope we have provided or return it to acquire the Company’s Common Stock, par value $.01 per share (the “Common Stock”), and to permit Awards of Restricted Stock that may be characterized as “performance-based” compensation for purposes of Section 162(m) of the Code. No Performance-Based Award shall become vested unless the Plan, as herein amended and restated, including the provisions of Section 16, has been disclosed to and approved by the Company’s shareholders.Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

2. ~~Definitions.~~ ~~Unless the context clearly indicates otherwise, the following terms shall have the following meanings:~~


	A.	~~“Affiliate” means a corporation that is a parent corporation or a subsidiary corporation with respect to the Company within the meaning of Section 424(e) or (f) of the Code.~~

	B.	~~“Award” means an award of Restricted Stock, granted under the Plan, designated by the Committee at the time of such grant as an Award, and containing the terms specified herein for Awards.~~

	C.	~~“Award Document” means the document described in Section 9 that sets forth the terms and conditions of each grant of an Award.~~

	D.	~~“Board of Directors” means the Board of Directors of the Company.~~

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
	E.	~~“Change of Control” shall have the meaning as set forth in Section 10.~~


	F.	~~“Code” means the Internal Revenue Code of 1986, as amended.~~


	G.	~~“Committee” shall have the meaning set forth in Section 3.A.~~


	H.	~~“Company” means The Bon-Ton Stores, Inc., a Pennsylvania corporation.~~


	I.	~~“Disability” shall have the meaning set forth in Section 22(e)(3) of the Code.~~


	J.	~~“Fair Market Value” shall have the meaning set forth in Section 8.B.~~


	K.	~~“Grantee” means a person who is granted Restricted Stock.~~


	L.	~~“ISO” means an Option granted under the Plan that is intended to qualify as an “incentive stock option” within the meaning of Section 422(b) of the Code.~~


	M.	“Non-qualified Stock Option” means an Option granted under the Plan that is not intended to qualify, or otherwise does not qualify, as an “incentive stock option” within the meaning of Section 422(b) of the Code.


	N.	~~“Option” means either an ISO or a Non-qualified Stock Option granted under the Plan.~~

~~A-1~~


	O.	~~“Optionee” means a person to whom an Option has been granted under the Plan, which Option has not been exercised and has not expired or terminated.~~


	P.	~~“Option Document” means the document described in Section 8 that sets forth the terms and conditions of each grant of Options.~~


	Q.	~~“Option Price” means the price at which Shares may be purchased upon exercise of an Option, as calculated pursuant to Section 8.B.~~


	R.	~~“Performance-Based Award” means an Award granted pursuant to Section 16.~~

	S.	~~“Performance-Based Award Limitation” means the limitation on the number of Shares that may be granted pursuant to Performance-Based Awards to any one Participant, as set forth in Section 16.F.~~


	T.	~~“Performance Period” means any period designated by the Committee as a period of time during which a Performance Target must be met for purposes of Section 16.~~


	U.	~~“Performance Target” means the performance target established by the Committee for a particular Performance Period, as described in Section 16.B.~~


	V.	~~“Restricted Stock” means Shares issued to a person pursuant to an Award.~~


	W.	~~“Shares” means the shares of Common Stock that are the subject of Options or Awards.~~


	X.	~~“Exchange Act” means the Securities Exchange Act of 1934, as amended.~~


	3.	~~Administration of the Plan.~~


	A.	~~Committee.~~ The Plan shall be administered by the Board of Directors, or, in the discretion of the Board of Directors, by a committee composed of two (2) or more of the members of the Board of Directors. To the extent possible, and to the extent the Board of Directors deems it necessary or appropriate, each member of the Committee shall be a “Non- Employee Director” (as such term is defined in~~Rule 16b-3~~ ~~promulgated under the Exchange Act) and an “Outside Director” (as such term is defined in Treasury RegulationsSection 1.162-27~~ promulgated under the Code); however, the Board of Directors may designate two or more committees to operate and administer the Plan in its stead. Any of such committees designated by the Board of Directors is referred to as the “Committee,” and, to the extent that the Plan is administered by the Board of Directors, “Committee” shall also refer to the Board of Directors as appropriate in the particular context. The Board of Directors may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, shall be filled by the Board of Directors.

	B.	~~Meetings.~~ The Committee shall hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee or acts approved in writing by the unanimous consent of the members of the Committee shall be the valid acts of the Committee.

	C.	~~Grants.~~ The Committee shall from time to time at its discretion direct the Company to grant Options or Awards pursuant to the terms of the Plan. The Committee shall have plenary authority to (i) determine the Optionees and Grantees to whom and the times at which Options and Awards shall be granted, (ii) determine the price at which Options shall be granted, (iii) determine the type of Option to be granted and the number of Shares subject thereto, (iv) determine the number of Shares to be granted pursuant to each Award and (v) approve the form and terms and conditions of the Option Documents and of each Award; all subject, however, to the express

~~A-2~~


		provisions of the Plan. In making such determinations, the Committee may take into account the nature of the Optionee’s or Grantee’s services and responsibilities, the Optionee’s or Grantee’s present and potential contribution to the Company’s success and such other factors as it may deem relevant. The interpretation and construction by the Committee of any provisions of the Plan or of any Option or Award granted under it shall be final, binding and conclusive.


	D.	~~Exculpation.~~ No member of the Committee shall be personally liable for monetary damages as such for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Options or Awards thereunder unless (i) the member of the Committee has breached or failed to perform the duties of his or her office within the meaning of subchapter B of Chapter 17 of the Pennsylvania Business Corporation Law of 1988, as amended, and (ii) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness;~~provided, however~~, that the provisions of this Section 3.D shall not apply to the responsibility or liability of a member of the Committee pursuant to any criminal statute or to the liability of a member of the Committee for the payment of taxes pursuant to local, state or federal law.


	E.	~~Indemnification.~~ Service on the Committee shall constitute service as a member of the Board of Directors. Each member of the Committee shall be entitled without further act on his or her part to indemnity from the Company to the fullest extent provided by applicable law and the Company’s Articles of Incorporation~~and/or~~ Bylaws in connection with or arising out of any action, suit or proceeding with respect to the administration of the Plan or the granting of Options or Awards thereunder in which he or she may be involved by reason of his or her being or having been a member of the Committee, whether or not he or she continues to be such member of the Committee at the time of the action, suit or proceeding.

4. ~~Grants of Options under the Plan.~~ ~~Grants of Options under the Plan may be in the form of a Non-qualified Stock Option, an ISO or a combination thereof, at the discretion of the Committee.~~

5. ~~Eligibility.~~ All employees (including employees who are members of the Board of Directors or its Affiliates), directors, consultants and advisors of the Company or its Affiliates shall be eligible to receive Options or Awards hereunder;~~provided,~~that only employees of the Company or its Affiliates shall be eligible to receive ISOs. The Committee, in its sole discretion, shall determine whether an individual qualifies as an employee of the Company or its Affiliates.

6. ~~Shares Subject to Plan.~~ The aggregate maximum number of Shares for which Options or Awards may be granted pursuant to the Plan is three million six hundred thousand (3,600,000) adjusted as provided in Section 11. The Shares shall be issued from authorized and unissued Common Stock or Common Stock held in or hereafter acquired for the treasury of the Company. If an Option terminates or expires without having been fully exercised for any reason, or if Restricted Stock is canceled or forfeited pursuant to the terms of an Award, the Shares for which the Option was not exercised or that were canceled or forfeited pursuant to the Award may again be the subject of an Option or Award granted pursuant to the Plan.

7. ~~Term of the Plan.~~ ~~No Option or Award may be granted under the Plan after March 2, 2010.~~

8.~~Option Documents and Terms.~~ Each Option granted under the Plan shall be a Non-qualified Stock Option unless the Option shall be specifically designated at the time of grant to be an ISO. Options granted pursuant to the Plan shall be evidenced by the Option Documents in such form as the Committee shall from time to time approve, which Option Documents shall comply with and be subject to the following terms and conditions and such other terms and conditions as the Committee shall from time to time require that are not inconsistent with the terms of the Plan.

~~A-3~~


	A.	~~Number of Option Shares.~~ Each Option Document shall state the number of Shares to which it pertains. An Optionee may receive more than one Option, which may include Options that are intended to be ISOs and Options that are not intended to be ISOs, but only on the terms and subject to the conditions and restrictions of the Plan. The maximum number of Shares for which Options may be granted to any single Optionee in any fiscal year, adjusted as provided in Section 11, shall be four hundred thousand (400,000) Shares.

	B.	~~Option Price.~~ Each Option Document shall state the Option Price that, for all ISOs, shall be at least 100% of the Fair Market Value of the Shares at the time the Option is granted as determined by the Committee in accordance with this Section 8.B;~~provided, however,~~that if an ISO is granted to an Optionee who then owns, directly or by attribution under Section 424(d) of the Code, shares of capital stock of the Company possessing more than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, then the Option Price shall be at least 110% of the Fair Market Value of the Shares at the time the Option is granted. If the Common Stock is traded in a public market, then the Fair Market Value per Share shall be, if the Common Stock is listed on a national securities exchange or included in the NASDAQ National Market System, the last reported sale price per share thereof on the relevant date, or, if the Common Stock is not so listed or included, the mean between the last reported “bid” and “asked” prices per share thereof, as reported on NASDAQ or, if not so reported, as reported by the National Daily Quotation Bureau, Inc., or as reported in a customary financial reporting service, as applicable and as the Committee determines, on the relevant date. If the Common Stock is not traded in a public market on the relevant date, the Fair Market Value shall be as determined in good faith by the Committee.

	C.	~~Exercise.~~ No Option shall be deemed to have been exercised prior to the receipt by the Company of written notice of such exercise and of payment in full of the Option Price for the Shares to be purchased. Each such notice shall specify the number of Shares to be purchased and shall (unless the Shares are covered by a then current registration statement or a Notification under Regulation A under the Securities Act of 1933, as amended (the “Act”)), contain the Optionee’s acknowledgment in form and substance satisfactory to the Company that (i) such Shares are being purchased for investment and not for distribution or resale (other than a distribution or resale that, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Act), (ii) the Optionee has been advised and understands that (A) the Shares have not been registered under the Act and are “restricted securities” within the meaning of Rule 144 under the Act and are subject to restrictions on transfer and (B) the Company is under no obligation to register the Shares under the Act or to take any action that would make available to the Optionee any exemption from such registration, (iii) such Shares may not be transferred without compliance with all applicable federal and state securities laws, and (iv) an appropriate legend referring to the foregoing restrictions on transfer and any other restrictions imposed under the Option Documents may be endorsed on the certificates. Notwithstanding the foregoing, if the Company determines that issuance of Shares should be delayed pending (I) registration under federal or state securities laws, (II) the receipt of an opinion that an appropriate exemption from such registration is available, (III) the listing or inclusion of the Shares on any securities exchange or in an automated quotation system or (IV) the consent or approval of any governmental regulatory body whose consent or approval is necessary in connection with the issuance of such Shares, the Company may defer exercise of any Option granted hereunder until any of the events described in this Section 8.C has occurred.

~~A-4~~


	D.	~~Medium of Payment.~~ An Optionee shall pay for Shares (i) in cash, (ii) by certified check payable to the order of the Company, or (iii) by such other mode of payment as the Committee may approve, including, without limitation, payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board. Furthermore, the Committee may provide in an Option Document that payment may be made in whole or in part in shares of Common Stock held by the Optionee for at least six months. If payment is made in whole or in part in shares of Common Stock, then the Optionee shall deliver to the Company certificates registered in the name of such Optionee representing the shares of Common Stock owned by such Optionee, free of all liens, claims and encumbrances of every kind and having an aggregate Fair Market Value on the date of delivery that is at least as great as the Option Price of the Shares (or relevant portion thereof) with respect to which such Option is to be exercised by the payment in shares of Common Stock, accompanied by stock powers duly endorsed in blank by the Optionee. Notwithstanding the foregoing, the Committee may impose from time to time such limitations and prohibitions on the use of shares of Common Stock to exercise an Option as it deems appropriate.


	E.	~~Termination of Options.~~

~~1. No Option shall be exercisable after the first to occur of the following:~~


	~~(a)~~	Expiration of the Option term specified in the Option Document, which shall not exceed (i) ten years from the date of grant, or (ii) five years from the date of grant of an ISO if the Optionee on the date of grant owns, directly or by attribution under Section 424(d) of the Code, shares of capital stock of the Company possessing more than ten percent (10%) of the total combined voting power of all classes of capital stock of the Company or of an Affiliate;

	~~(b)~~	Expiration of ninety (90) days from the date the Optionee’s employment or service with the Company or its Affiliate terminates for any reason other than Disability or death or as otherwise specified in Section 8.E.1(d) or Section 10 below;


	~~(c)~~	~~Expiration of one year from the date the Optionee’s employment or service with the Company or its Affiliate terminates due to the Optionee’s Disability or death;~~


	~~(d)~~	A finding by the Committee, after full consideration of the facts presented on behalf of both the Company and the Optionee, that the Optionee has breached his or her employment or service contract with the Company or an Affiliate, or has been engaged in any sort of disloyalty to the Company or an Affiliate, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment or service, or has disclosed trade secrets or confidential information of the Company or an Affiliate. In such event, in addition to immediate termination of the Option, the Optionee shall automatically forfeit all Shares for which the Company has not yet delivered the share certificates upon refund by the Company of the Option Price of such Shares. Notwithstanding anything herein to the contrary, the Company may withhold delivery of share certificates pending the resolution of any inquiry that could lead to a finding resulting in a forfeiture; or

	~~(e)~~	~~The date, if any, set by the Board of Directors as an accelerated expiration date pursuant to Section 10 hereof.~~

~~A-5~~


	2.	Notwithstanding the foregoing, the Committee may extend the period during which an Option may be exercised to a date no later than the date of the expiration of the Option term specified in the Option Documents, as they may be amended, provided that any change pursuant to this Section 8.E.2 that would cause an ISO to become a Non-qualified Stock Option may be made only with the consent of the Optionee.

	3.	During the period in which an Option may be exercised after the termination of the Optionee’s employment or service with the Company or any Affiliate, such Option shall only be exercisable to the extent it was exercisable immediately prior to such Optionee’s termination of service or employment, except to the extent specifically provided to the contrary in the applicable Option Document.


	F.	~~Transfers.~~ No Option may be transferred except by will or by the laws of descent and distribution. During the lifetime of the person to whom an Option is granted, such Option may be exercised only by him or her. Notwithstanding the foregoing, a Non-qualified Stock Option may be transferred pursuant to the terms of a “qualified domestic relations order” within the meaning of Sections 401(a)(13) and 414(p) of the Code or within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended.


	G.	~~Holding Period.~~ ~~No Option may be exercised unless six months, or such greater period of time as may be specified in the Option Documents, have elapsed from the date of grant.~~


	H.	~~Limitation on ISO Grants.~~ In no event shall the aggregate Fair Market Value of the Shares (determined at the time the ISO is granted) with respect to which an ISO is exercisable for the first time by the Optionee during any calendar year (under all incentive stock option plans of the Company or its Affiliates) exceed $100,000.


	I.	~~Other Provisions.~~ The Option Documents shall contain such other provisions including, without limitation, provisions authorizing the Committee to accelerate the exercisability of all or any portion of an Option, additional restrictions upon the exercise of the Option or additional limitations upon the term of the Option, as the Committee shall deem advisable.


	J.	~~Amendment.~~ The Committee shall have the right to amend Option Documents issued to an Optionee, subject to the Optionee’s consent if such amendment is not favorable to the Optionee, except that the consent of the Optionee shall not be required for any amendment made under Section 10.


	9.	~~Award Documents and Terms.~~ Awards shall be evidenced by an Award Document in such form as the Committee shall from time to time approve, which Award Document shall comply with and be subject to the following terms and conditions and such other terms and conditions as the Committee shall from time to time require that are not inconsistent with the terms of the Plan. A Grantee shall not have any rights with respect to an Award until and unless such Grantee shall have executed an Award Document containing the terms and conditions determined by the Committee.


	A.	~~Number of Shares and Price.~~ ~~Each Award Document shall state the number of Shares of Restricted Stock to which it pertains. No cash or other consideration shall be required to be paid by the Grantee for an Award.~~

	B.	~~Certificates.~~ ~~Each Grantee shall be issued a certificate in respect of Shares subject to an Award. Such certificate shall be registered in the name of the Grantee and shall~~

~~A-6~~


		bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award. The Company may require that the certificate evidencing such Shares be held by the Company until all restrictions on such Shares have lapsed.


	C.	~~Restrictions.~~ Subject to the provisions of the Plan and the Award Documents, during a period set by the Committee commencing with the date of such Award, which period shall extend for at least six months from the date of such Award (except as provided by Section 9.G), the Grantee shall not be permitted to sell, transfer, pledge, assign, or otherwise dispose of the Restricted Stock awarded under the Plan.

	D.	~~Lapse of Restrictions.~~ Subject to the provisions of the Plan and the Award Document, restrictions upon Restricted Stock shall lapse at such time or times and on such terms and conditions as the Committee may determine and set forth in the Award Document;~~provided, however,~~that the restrictions upon such Shares shall lapse only if the Grantee on the date of such lapse is, and has continuously been an employee of the Company or its Affiliate from the date such Award was granted. The Award Document may provide for the lapse of restrictions in installments, as determined by the Committee. In the event that a Grantee’s employment terminates as a result of the Grantee’s death or Disability, all remaining restrictions with respect to such Grantee’s Restricted Stock shall immediately lapse, unless otherwise provided in the Award Document.


	E.	~~Rights of the Grantee.~~ Grantees may have such rights with respect to the Shares subject to an Award as may be determined by the Committee and set forth in the Award Document, including, without limitation, the right to vote such Shares and the right to receive dividends paid with the respect to such Shares.


	F.	~~Dividends.~~ The Committee may, in its sole discretion, provide in an Award Document that an amount equivalent to any dividends payable with respect to the number of Shares of Restricted Stock granted, but not yet delivered, be invested and reinvested in additional Shares of Restricted Stock, which shall be subject to the same restrictions as Restricted Stock to which the dividends relate. Such Shares of Restricted Stock shall be reflected in accordance with the terms of the Award Document by the credit of additional full or fractional Shares, calculated to the thousandth of a Share, in an amount equal to the value of the declared dividend divided by the Fair Market Value of a Share on the date of payment of the dividend. Any arrangements for the credit of additional Shares of Restricted Stock shall terminate if, and to the extent that, under the terms of the Award Document the right to receive the Restricted Stock to which the dividends relate shall terminate or lapse.


	G.	~~Forfeiture of Restricted Stock.~~ In the event that a Grantee’s employment with the Company terminates for any reason other than because of death or Disability, any Restricted Stock held by such Grantee shall be forfeited by the Grantee and reacquired by the Company. The Company may, in its sole discretion, waive, in whole or in part, any remaining restrictions with respect to such Grantee’s Restricted Stock.


	H.	~~Delivery of Shares.~~ When the restrictions imposed on Restricted Stock expire or have been canceled with respect to one or more Shares (whether issued as an Award or as additional Restricted Stock pursuant to Section 9.F), the Company shall notify the Grantee that such restrictions no longer apply with respect to such Shares, and shall deliver to the Grantee (or the person to whom ownership rights in such Restricted Stock may have passed by will or the laws of descent and distribution) a certificate for the number of Shares for which restrictions have been canceled or have expired, without any legend or restrictions (except those that may be imposed

~~A-7~~


		by the Committee in its sole judgment to ensure compliance with the then existing requirements of the Act and the Exchange Act). The right to payment for any fractional Shares that may have accrued shall be satisfied in cash based on the Fair Market Value of a Share on the date the restriction with respect to such fractional Share lapsed or terminated.


	~~10.~~	~~Change of Control.~~ In the event of a Change of Control, the Committee may take whatever action with respect to Options and Awards outstanding as it deems necessary or desirable, including, without limitation, accelerating the expiration or termination date or the date of exercisability in any Option Documents, or removing any restrictions from or imposing any additional restrictions on any outstanding Awards.


		A “Change of Control” shall be deemed to have occurred upon the earliest to occur of the following events: (i) the date the shareholders of the Company (or the Board of Directors, if shareholder action is not required) approve a plan or other arrangement pursuant to which the Company will be dissolved or liquidated, or (ii) the date the shareholders of the Company (or the Board of Directors, if shareholder action is not required) approve a definitive agreement to sell or otherwise dispose of substantially all of the assets of the Company, or (iii) the date the shareholders of the Company (or the Board of Directors, if shareholder action is not required) and the holders of voting securities of the other constituent entity (or its board of directors or similar governing body if security holder action is not required) have approved a definitive agreement to merge or consolidate the Company with or into such other entity, other than, in either case, a merger or consolidation of the Company in which holders of shares of the Company’s Common Stock or other common voting stock immediately prior to the merger or consolidation will hold at least 50% of the voting power of the outstanding voting securities of the surviving entity immediately after the merger or consolidation, which voting securities are to be held in the same proportion to one another as such holders’ ownership of Common Stock or other common voting stock of the Company immediately before the merger or consolidation, or (iv) the date any entity, person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) other than M. Thomas Grumbacher, members of his family, his lineal descendants, or entities of which such persons are the beneficial owners of at least fifty percent (50%) of the voting interests, the Company or any of its Affiliates, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, shall have become the beneficial owner of, or shall have obtained voting control over, outstanding shares of the Company’s voting stock representing more than fifty percent (50%) of the voting power of all of the Company’s outstanding voting stock, or (v) the first day after the date this Plan is effective when directors constituting a majority of the Board of Directors shall have been members of the Board of Directors for less than twelve (12) months, unless the nomination for election of each new director who was not a director at the beginning of such twelve (12) month period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.


	~~11.~~	~~Adjustments on Changes in Capitalization.~~ The aggregate number of Shares and class of Shares as to which Options and Awards may be granted hereunder, the limitation as to grants to individuals set forth in Section 8.A hereof, the number of Shares covered by each outstanding Option or Award, and the Option Price for each related outstanding Option, shall be appropriately adjusted in the event of a stock dividend, stock split, recapitalization or other change in the number or class of issued and outstanding equity securities of the Company resulting from a subdivision or consolidation of the Common Stock and/or, if appropriate, other outstanding equity securities or a recapitalization or other capital adjustment (not including the issuance of Common Stock on the conversion of other securities of the Company that are convertible into Common

~~A-8~~


		Stock) affecting the Common Stock which is effected without receipt of consideration by the Company. The Committee shall have authority to determine the adjustments to be made under this Section, and any such determination by the Committee shall be final, binding and conclusive;~~provided, however,~~~~that no adjustment shall be made that will cause an ISO to lose its status as such without the consent of the Optionee, except for adjustments made pursuant to Section 10 hereof.~~


	~~12.~~	~~Amendment of the Plan.~~ The Board of Directors of the Company may amend the Plan from time to time in such manner as it may deem advisable. Nevertheless, the Board of Directors of the Company may not: (i) change the class of individuals eligible to receive an ISO, (ii) increase the maximum number of Shares as to which Options or Awards may be granted, or (iii) make any other change or amendment as to which shareholder approval is required in order to satisfy the conditions set forth in~~Rule 16b-3~~ promulgated under the Exchange Act, in each case without obtaining approval, within twelve months before or after such action, by (A) vote of a majority of the votes cast at a duly called meeting of the shareholders at which a quorum representing a majority of all outstanding voting stock of the Company is, either in person or by proxy, present and voting on the matter, or (B) a method and in a degree that would be treated as adequate under applicable state law for actions requiring shareholder approval, including, without limitation, by written consent of shareholders constituting a majority of the voting power of all shares of outstanding voting stock of the Company entitled to vote. No amendment to the Plan shall adversely affect any outstanding Option or Award, however, without the consent of the Optionee or Grantee.

	~~13.~~	~~No Commitment to Retain.~~ The grant of an Option or Award shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company or any Affiliate to retain the Optionee or Grantee in the employ of the Company or an Affiliate~~and/or~~ ~~as a member of the Company’s Board of Directors or in any other capacity.~~

	~~14.~~	~~Withholding of Taxes.~~ Whenever the Company proposes or is required to deliver or transfer Shares in connection with an Award or the exercise of an Option, the Company shall have the right to (a) require the recipient to remit or otherwise make available to the Company an amount sufficient to satisfy any federal, state~~and/or~~ local withholding tax requirements prior to the delivery or transfer of any certificate or certificates for such Shares or (b) take whatever other action it deems necessary to protect its interests with respect to tax liabilities. The Company’s obligation to make any delivery or transfer of Shares shall be conditioned on the Optionee’s or Grantee’s compliance, to the Company’s satisfaction, with any withholding requirement.

	~~15.~~	~~Interpretation.~~ ~~The Plan is intended to enable transactions under the Plan with respect to directors and officers (within the meaning of Section 16(a) under the Exchange Act) to satisfy the conditions ofRule 16b-3~~ promulgated under the Exchange Act; any provision of the Plan that would cause a conflict with such conditions shall be deemed null and void to the extent permitted by applicable law and in the discretion of the Board of Directors.

	~~16.~~	~~Special Rules for Performance-Based Awards.~~


	A.	~~Performance-Based Awards.~~ The Committee may grant Awards of Restricted Stock pursuant to the terms of this Section 16, and consistent with Section 9, above, which shall include vesting requirements based specifically on the attainment of one or more Performance Targets applicable to any such Award, as set forth in this Section 16. In the event a Participant who has been granted a Performance-Based Award terminates his or her employment with the Company prior to the date on which the applicable Performance Target or Targets have been met or prior to the

~~A-9~~


		satisfaction of any other applicable conditions or requirements have been met or satisfied, such Performance-Based Award shall be immediately forfeited. In addition, the Committee shall have the authority to cause a Performance-Based Award to be forfeited, in whole or in part, at any time prior to the Committee’s determination that such Performance-Based Award has become vested by reason of attainment of one or more of the applicable Performance Targets, at the Committee’s sole discretion. Such absolute right to reduce or eliminate a Performance-Based Award shall be exercised by the Committee in light of the Committee’s review of all facts and circumstances the Committee deems to be relevant. The Committee shall have no authority to cause any Performance-Based Award to become vested in the absence of the achievement of any applicable Performance Target(s).


	B.	~~Establishment of Performance Targets.~~


1.	~~The Committee shall establish one or more Performance Targets for each Performance Period, which Performance Targets may vary for different Participants who may be granted Performance-Based Awards.~~KEEP THIS PORTION FOR YOUR RECORDS

2.	~~In all cases,~~	DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

For

Withhold

For All

To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the ~~Performance Target(s) established with respect to any Performance Period shall be established within the first 90 days~~number(s) of the ~~Performance Period or, if shorter, within~~nominee(s) on the ~~first twenty five percent (25%)~~line below.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE FOLLOWING:

1. ELECTION OF DIRECTORS

All

Except

o

Nominees

01 Lucinda M. Baier

05 Marsha M. Everton

02 Byron L. Bergren

06 Michael L. Gleim

03 Philip M. Browne

07 Tim Grumbacher

04 Shirley A. Dawe

08 Todd C. McCarty


The Board of ~~such Performance Period.~~Directors recommends you vote FOR the following proposal(s):		For	Against	Abstain

3.2.	~~Each Performance Target established under~~Ratification of appointment of KPMG LLP as the Plan shall constitute a goal as to which an objective method or methods is available for determining whether such Performance Target has been achieved. In addition, the Committee shall establish in connection with the Performance Targets applicable to a Performance Period an objective method for computing the portion of a particular Performance-Based Award that may be treated as vested as a result of attaining such Performance Target(s).


	E.		~~Criteria to~~ NOTE: The shares represented by this proxy when properly executed will be ~~Used~~voted in ~~Establishing Performance Targets.~~ ~~In establishing~~the manner directed herein by the undersigned Stockholder(s). If no direction is made, this proxy will be voted FOR items 1 and 2. If any ~~Performance Target under~~other matters properly come before the ~~Plan,~~meeting, or if cumulative voting is required, the Committee shall establish an objective target based upon one or more of the following business criteria (which may be determined for these purposes by reference to (i) the Company as a whole, (ii) any of the Company’s subsidiaries, operating divisions, business segments or other operatingpersons named in this proxy will vote in their discretion.

~~A-10~~


		units, or (iii) any combination thereof): earnings before interest, taxes, depreciation, and amortization; profit before taxes; stock price; market share; gross revenue; net revenue; pretax income; net operating income; cash flow; earnings per share; return on equity; return on invested capital or assets; cost reductions and savings; return on revenues or productivity; loss ratio; expense ratio; combined ratio; product spread; or any variations or combinations of the preceding business criteria, which may also be modified at the discretion of the Committee, to take into account extraordinary items or which may be adjusted to reflect such costs or expense as the Committee deems appropriate.


	F.	~~Performance-Based Award Limitation.~~ ~~Notwithstanding anything to the contrary herein, no Participant shall receive a Performance-Based Award for Shares having a Fair Market Value, as of the date of grant, in excess of $3,000,000.~~


1.	The limitation set forth in this Section 16.F shall be applied with respect to Performance-Based Awards that relate to a Performance Period longer than one year by multiplying that limitation by a fraction equal to the number of full calendar months in the Performance Period divided by twelve (12).

2.
Please indicate if you plan to attend this meeting.		Yes o	No o
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a ~~Performance Period is less than a~~corporation or partnership, please sign in full ~~year, the limitation of this Section 16.F shall apply without adjustment;~~~~provided, however,~~that any such short Performance Period shall be treated as though it were a Performance Period that extends until the end of the one year period that starts as of the first day of the short Performance Period, and any other Performance Periods that overlap such one year period will be subject to further limitations as though such Performance Periods were overlapping Performance Periods, as described in subsection 16.F.3.corporate or partnership name, by authorized officer.

3.

If Performance-Based Awards with overlapping Performance Periods are granted to any one employee, the limitations of this Section 16.F shall be reduced with respect to any such overlapping Performance Periods so that the aggregate value of such multiple Performance-Based Awards does not exceed the limitation set forth in the first sentence of this Section 16.F, multiplied by a fraction, the numerator of which is the number of full calendar months occurring during the period commencing as of the first day of the first to start of such overlapping Performance Periods, and the last day of which is the last day of the last to end of such overlapping Performance Periods, and the denominator of which is twelve (12).

Signature [PLEASE SIGN WITHIN BOX]

The intent of subsections 1 through 3 of this Section 16.F is to cause each Performance-Based Award to satisfy the limitation of this Section 16.F as if such Award were the only Performance-Based Award granted, and to cause, in addition, the aggregate value of Performance-Based Awards granted for overlapping Performance Periods to comply with the limitation of this Section 16.F as though such multiple Performance-Based Awards constituted a single Performance-Based Award.Date

Signature (Joint Owners)

Date

~~A-11~~

o		Preliminary Proxy Statement

o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to Section 240.14a-12


(3)		Based solely on Schedules 13G filed with the Securities and Exchange Commission by: (a) Buckingham Capital Management, Inc. on February 10, 2010; (b) State Street Bank and Trust Company on February 12, ~~2008; (b) Paradigm Capital Management,~~2010; (c) Dimension Fund Advisors LP on February 10, 2010; and (d) Douglas M. Troob & Peter J. Troob on February 12, 2010, and on Schedule 13D filed with the Securities and Exchange Commission by Gamco Investors, Inc. on ~~February 14, 2008; and (c) Brigade Capital Management, LLC on January 16, 2008.~~March 4, 2009.

(4)		Includes (a) 500,000 shares of common stock which are subject to forfeiture as provided in the Company’s Stock Incentive Plan and Omnibus Incentive Plan, and (b) 220,000 options exercisable within 60 days of March 12, 2010.

(5)		Consists of Class A common stock held by trusts for the benefit of Tim Grumbacher’s children of which Michael L. Gleim ~~Henry F. Miller~~ and David R. Glyn are the trustees. Messrs. Gleim ~~Miller~~ and Glyn each disclaim beneficial ownership of all shares referred to in this note.

~~(5)~~ (6)	~~Consists of~~	Includes (a) 126,773 shares of common stock held by The Grumbacher Family Foundation, a charitable foundation of which Mr. Gleim, Tim Grumbacher and Nancy T. Grumbacher ~~Michael L. Gleim and Mr. Miller~~(Mr. Grumbacher’s wife) are the directors, (b) 545,237 shares of Class A common stock and ~~55,789~~12,398 shares of common stock held by trusts for the benefit of ~~Mr.~~Tim Grumbacher’s children of which ~~Mr. Miller, Mr.~~Messrs. Gleim and ~~David R.~~ Glyn are the trustees, (c) ~~21,928~~5,517 shares of common stock held by other trusts for the benefit of Mr. Grumbacher’s children of which Messrs. Gleim ~~Miller~~ and Glyn are the trustees, (d) ~~75,803~~15,558 shares of common stock held by ~~a trust~~trusts for the benefit of Mr. ~~Grumbacher~~Grumbacher’s grandchildren of which ~~Messrs.~~Ms. Grumbacher, Beth Elser and Mr. Gleim ~~and Miller~~ are the trustees, and (e) 214,203 shares of common stock held by trusts for the benefit of Mr. Grumbacher’s wife and his children of which Messrs. Gleim and ~~Miller are the trustees. Mr. Miller disclaims beneficial ownership of all shares referred to in this note.~~

~~(6)~~	Includes (a) 126,773 shares of common stock held by The Grumbacher Family Foundation, a charitable foundation of which Tim Grumbacher, Nancy T. Grumbacher, Mr. Gleim and Henry F. Miller are the directors, (b) 545,237 shares of Class A common stock and 55,789 shares of common stock held by trusts for the benefit of Tim Grumbacher’s children of which Mr. Gleim, Mr. Miller and David R. Glyn are the trustees (c) 21,928 shares of common stock held by other trusts for the benefit of Mr. Grumbacher’s children of which Messrs. Gleim, Miller and Glyn are the trustees, (d) 15,558 shares of common stock held by trusts for the benefit of Mr. Grumbacher’s grandchildren of which Ms. Grumbacher, Beth Elser and Messrs. Gleim and Glyn are the trustees, (e) 75,803 shares of common stock held by a trust for the benefit of Mr. Grumbacher of which Messrs. Gleim and Miller are the trustees, and (f) 214,203 shares of common stock held by trusts for the benefit of Mr. Grumbacher’s wife and his children of which Messrs. Gleim and Miller are the trustees. Also includes ~~93,367~~73,367 shares owned by Cathy Gleim, Mr. Gleim’s wife, and 2,300 shares which Mr. Gleim holds as custodian for his grandchildren. Mr. Gleim disclaims beneficial ownership of all shares referred to in this note. Does not include ~~11,581~~39,246 restricted stock units held by Mr. Gleim. ~~Those~~These restricted stock units do not confer on Mr. Gleim voting or dispositive control over shares of common stock until one year following termination of his Board service, at which time shares of common stock are issued.

(7)		Consists of (a) 545,237 shares of Class A common stock and ~~55,789~~12,398 shares of common stock held by trusts for the benefit of Tim Grumbacher’s children of which ~~Mr.~~Messrs. Glyn ~~Michael L.~~and Gleim ~~and Henry F. Miller~~ are the trustees, (b) ~~21,928~~5,517 shares of common stock held by other trusts for the benefit of Mr. Grumbacher’s children of which Messrs. Gleim ~~Miller~~ and Glyn are the trustees, and (c) ~~15,558~~214,203 shares of common stock held by trusts for the benefit of Mr. Grumbacher’s ~~grandchildren~~wife and his children of which ~~Nancy T. Grumbacher, Beth Elser and~~ Messrs. Gleim and Glyn are the trustees. Mr. Glyn disclaims beneficial ownership of all shares referred to in this note.

(8)		In notes ~~(4),~~ (5), (6), and (7) above, we discussed trusts for the benefit of Tim Grumbacher’s children, of which ~~Michael L.~~Messrs. Gleim ~~Henry F. Miller~~ and ~~David R.~~ Glyn serve as trustees. This is one of such trusts.


		circumstances. Additional information regarding the vesting acceleration provisions applicable to equity awards is included under the heading “Potential Payments upon Termination or Change in Control.”

~~(4)~~		Represents options issued under the Stock Incentive Plan. Information regarding the vesting schedules and expiration of these options is included in the footnotes to the Outstanding Equity Awards at Fiscal Year-End table on page 34. Options will vest on an accelerated basis upon the executive’s termination of employment under certain circumstances. Additional information regarding the vesting acceleration provisions applicable to equity awards is included under the heading “Potential Payments upon Termination or Change in Control.”

(4)		Represents options issued under the Stock Incentive Plan, of which there were none in 2009.

(5)		Represents the grant date fair value of each equity award computed in accordance with SFAS 123R. The value of the options shown represents the grant date fair value estimated using the Black-Scholes option pricing model in accordance with the provisions of SFAS 123R. For a discussion of valuation assumptions used in the SFAS 123R calculations, see Note 17 to our audited financial statements included in our~~Form 10-K~~ filed with the SEC on April 16, 2008. The actual value, if any, that an executive may realize on each option will depend on the excess of the stock price over the exercise price on the date the option is exercised and the shares underlying such option are sold.ASC 718. The dollar value of time-based restricted shares shown represents the grant date fair value calculated ~~based on~~as the fair market value of our common stock on the respective grant dates. The dollar value of performance-based restricted shares awarded to Messrs. Bergren, Buccina and Byers is computed based upon an assessment, as of the grant date, that it was probable 100% of the performance target would be met for the 2009 year. Because 90% of the performance target for 2009 was met, 90% of the 2009 target performance-based restricted shares were actually earned. Reference Notes 8, 11 and 14 to the Summary Compensation Table.

(6)		Represents the target award of the ~~first~~second tranche of two equal tranches of performance-based restricted shares granted to Mr. Bergren on ~~July 19, 2007.~~February 4, 2008. The performance goals for the second tranche were established by the HRCC on March 17, 2009.

(7)		Represents the target award of performance-based restricted shares granted to Mr. Bergren on March 25, 2009. The performance goals were established by the HRCC on March 17, 2009.

(8)		Represents the target award of the first tranche of two equal tranches of performance-based restricted shares granted to Mr. Buccina on February 2, 2009. The performance goals for the first tranche were established by the HRCC ~~in 2007.~~on March 17, 2009. The performance goals for the second tranche were not established by the HRCC until March ~~24, 2008.~~16, 2010. The second


(3)		~~Stock options vest as follows: 20,666~~Restricted shares vested 100% on ~~July 6, 2008 and 33,000 on July 6, 2009.~~February 5, 2010.

(4)		Restricted shares ~~vest 100%~~vested 50% on February ~~8, 2008.~~1, 2010 and vest 50% on February 1, 2011.

(5)		~~Restricted shares vest as follows: 14,454~~Stock options vested 100% on ~~January 31, 2009 and 20,648 on February 5,~~March 26, 2010.

(6)		Stock options vest 100% on March 17, 2011.

(7)		Restricted shares vested 100% on March 26, 2010.

(8)		Restricted shares vest 100% on March 17, 2011.

(9)		Restricted shares vest 100% on April 30, 2011.

(10)		These performance-based restricted shares vest based on ~~2008~~fiscal 2010 performance criteria established by the HRCC.

~~(7)~~		~~Stock options vest 1/2 on June 1, 2008 and 1/2 on January 31, 2009.~~

~~(8)~~		~~Stock options vest 100% on March 26, 2010.~~

~~(9)~~		~~Restricted shares vest as follows: 21,666 on June 1, 2008 and 33,334 shares on January 31, 2009.~~

~~(10)~~		~~Restricted shares vest 100% on March 26, 2010.~~

(11)		~~Stock options vest 1/2 on April 2, 2008 and 1/2 on April 2, 2009.~~

~~(12)~~		~~Stock options vest 1/2 on October 2, 2008 and 1/2 on October 2, 2009.~~

~~(13)~~		~~Restricted shares vest 100% on October 2, 2009.~~

~~(14)~~		~~Stock options vest 1/2 on May 27, 2008 and 1/2 on May 27, 2009.~~

~~(15)~~		Restricted shares vest 100% on April ~~2, 2009.~~27, 2012.

þ		No fee required.
o		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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




	(2)		Aggregate number of securities to which transaction applies:




	(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):




	(4)		Proposed maximum aggregate value of transaction:




	(5)		Total fee paid:

o		Fee paid previously with preliminary materials.

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.

	(1)		Amount ~~Previously Paid:~~previously paid:




	(2)		Form, ~~Schedule~~schedule or ~~Registration Statement No.~~registration statement no.:




	(3)		Filing ~~Party:~~party:




	(4)		Date ~~Filed:~~filed:


	•	Internet: You can vote over the internet at the internet address shown on your proxy card. Internet voting is available 24 hours a day. If you have access to the internet, we encourage you to vote this way.If you vote over the internet, do not return your proxy card.

	•	Telephone: You can vote by calling the toll-free telephone number on your proxy card. Telephone voting is available 24 hours a day.Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded.If you vote by telephone, do not return your proxy card.

	•	Proxy Card: You can vote by signing, dating and mailing your proxy card in the postage-paid envelope provided.

	•	Vote in Person: You can attend the Annual Meeting and vote at the meeting.


(1)		Each share of Class A common stock is convertible into one share of common stock at the holder’s option. Accordingly, the number of shares of common stock for each person includes the number of shares of common stock issuable upon conversion of all shares of Class A common stock beneficially owned by such person. Also, the total number of shares of common stock outstanding for purposes of calculating percentage ownership of a person includes the number of shares of Class A common stock beneficially owned by such person.

(2)	The number of shares of common stock includes (a) 126,773 shares of common stock held by The Grumbacher Family Foundation, a charitable foundation of which Mr. Grumbacher, Nancy T. Grumbacher (Mr. Grumbacher’s wife), Henry F. Miller and Michael L. Gleim are the directors, (b) 15,558 shares of common stock held by trusts for the benefit of Mr. Grumbacher’s grandchildren of which Ms. Grumbacher, Beth Elser, Mr. Gleim and David R. Glyn are the trustees, (c) 365,205 shares of common stock which are subject to forfeiture as provided in the Company’s Stock Incentive Plan,


	Options Exercisable						Options Exercisable
	Within 60 Days of		Restricted		Restricted Stock		Within 60 Days of		Restricted		Restricted Stock
Name	March 28, 2008		Shares		Units		March 12, 2010		Shares		Units

Tim Grumbacher		—		365,205		—		—		—		—
Lucinda M. Baier		—		—		1,198
Robert B. Bank		—		—		11,581
Byron L. Bergren		166,334		421,605		20,259		220,000		500,000		20,259
Philip M. Browne		—		—		11,581
Michael L. Gleim								—		—		39,246
Anthony J. Buccina		32,000		67,865		—		107,019		162,865		—
Stephen R. Byers		17,167		18,115		—		47,519		117,865		—
Keith E. Plowman								21,019		59,865		—
Lucinda M. Baier								—		—		28,863
Philip M. Browne								—		—		39,246
Shirley A. Dawe		—		—		11,581		—		—		39,246
Marsha M. Everton		—		—		11,581		—		—		39,246
Michael L. Gleim		—		—		11,581
Thomas K. Hernquist		—		—		1,275
Todd C. McCarty		—		—		1,275		—		—		28,940
Keith E. Plowman		6,667		17,865		—
Robert E. Salerno		—		—		11,581
All directors and executive officers as a group (17 persons)		242,169		919,070		93,493
All directors and executive officers as a group (13 persons)								436,896		907,044		235,046


(3)	See note (2) to Principal Shareholders Table.

(4)	See note ~~(4)~~(5) to Principal Shareholders Table.

(5)	See note (6) to Principal Shareholders Table.

(6)	Includes 675 shares held in an IRA by Mr. Plowman’s spouse. Mr. Plowman disclaims beneficial ownership of these shares.

(7)	See notes (1) — (6) above. Includes ~~20,001~~41,339 options exercisable within 60 days of March ~~28, 2008~~12, 2010 held by executive officers not named in this table. Includes ~~28,415~~66,449 restricted shares held by executive officers not named in this table. Restricted shares confer voting rights on the holder but are subject to forfeiture as provided in the Amended and Restated 2000 Stock Incentive ~~Plan.~~and Performance-Based Award Plan and the 2009 Omnibus Incentive Plan (together, the “Stock Incentive Plan”).


	•	~~Competitive~~competitive market pay analyses;

	•	~~Ongoing~~ongoing support with regard to market trends impacting compensation and benefit programs;

	•	~~Preparation~~preparation for and attendance at selected HRCC and Board of Director meetings; and

	•	~~Other~~other miscellaneous requests that occurred throughout the year.


	•	work closely with and serve in an advisory capacity to the Chairman, the Chief Executive Officer and the Executive Committee;

	•	assist the Board of Directors in assuring that the Board operates in compliance with applicable laws and regulations, the Company’s Charter and By-Laws and the Company’s corporate governance principles and practices;

	•	establish, in consultation with the Chairman, the Chief Executive Officer and non-employee directors, the frequency, duration, structure and location of Board meetings and review such from time to time, as considered appropriate or as requested by the Board;

	•	assist the Chairman and the Chief Executive Officer in setting Board meeting agendas;

	•	review and assess, in conjunction with the Chairman, the Chief Executive Officer and the relevant committees of the Board, director attendance, performance and the size and composition of the Board and its committees; and

	•	preside at all meetings of the Board at which the Chairman is not present and chair meetings of the Board, without management present, at every Board meeting.


															401(k) Plan
									Rental						Company
			Supplemental		Club				Housing in		Life				Match and
	Automobile		Medical		Membership		Reimbursement of		Milwaukee		Insurance		Airfare for		Profit
Name	Usage($)		Benefits($)		Expenses($)		Legal Expenses($)		($)		Premiums($)		Spouse($)		Sharing($)

Tim Grumbacher		—		—		—		17,520		—		472		176		9,924
Byron L. Bergren		19,256		8,030		4,340		13,000		99,804		10,494		—		9,924
Anthony J. Buccina		9,558		2,242		—		—		—		7,792		—		9,924
Stephen R. Byers		6,200		2,300		—		—		—		2,760		—		9,924
Keith E. Plowman		6,200		2,300		—		—		—		1,470		443		9,924


~~Note:~~ n		Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.


~~Note:~~		Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.

Company’s Independent Registered Public Accounting Firm.

~~Vesting of Performance-Based Awards.~~ ~~Vesting of Performance-Based Awards shall be determined at the time (or times) and in the manner established by the Committee for a Performance Period;~~~~provided, however,~~that no portion of a Performance-Based Award shall become vested unless and until (i) the Plan (including the provisions of this Section 16 of the Plan) is approved by the Company’s shareholders (and such shareholder approval is still effective for purposes of the rules on performance-based compensation applicable in connection with Code Section 162(m), as required under Section 16.D), and (ii) the Committee has certified in writing that each Performance Target for the particular Performance Period for which a Performance-Based Award is granted has been achieved.

~~Subsequent Shareholder Approval.~~ ~~The Plan (including the provisions of this Section 16) shall again be disclosed to the Company’s shareholders for approval at the time or times required under Code Section 162(m)and/or~~ Treasury Regulations promulgated thereunder in order for the Performance-Based Awards granted under the Plan to continue to qualify as performance-based compensation that is exempt from the limitations on deductibility by the Company of compensation under Code Section 162(m). No Performance-Based Awards shall become vested if such required shareholder approval has not been obtained.