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

SCHEDULE 14A

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

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2801 East Market Street
York, PA 17402
www.bonton.com

May 1, 20127, 2013

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 12, 2012,18, 2013, beginning at 9:00 a.m.

        We are using the Securities and Exchange Commission rule that allows companies to furnish proxy materials over the internet. The proxy materials consist of our official notice of meeting, the proxy statement and our 20112012 Annual Report. We are mailing to many of our shareholders a notice that the proxy materials, including our 20112012 Annual Report, are available on our website rather than sending a paper copy of this proxy statement and our 20112012 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 vote your shares by telephone or over the internet, or, alternatively, if you elect to receive a paper copy of the proxy card by mail, by signing, dating and mailing the proxy card in the postage-paid envelope provided. Instructions regarding these three methods of voting are contained in our proxy materials. If you attend the meeting, you may continue to have your shares voted as previously indicated or you may withdraw your proxy at the meeting and vote the shares in person.

		Sincerely,
		Byron L. Bergren Chairman of the Board

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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 12, 2012,18, 2013, 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 an eight-membera seven-member Board of Directors for a one-year term;



2.

To approve the Amendment and Restatement of The Bon-Ton Stores, Inc. Cash Bonus Plan;



3.

To approve the Amendment and Restatement of The Bon-Ton Stores, Inc. 2009 Omnibus Incentive Plan;



4.

To approve, on an advisory basis, the compensation of the Named Executive Officers of the Company, as disclosed in the Proxy Statement;



5.3.

To ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2012;2013; and



6.4.

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 13, 201219, 2013 may attend and vote at the meeting. You may vote by telephone or over the internet or, if you elect to receive a paper copy of the proxy card by mail, you may vote by signing, dating and mailing the proxy card in the postage-paid envelope provided. Any shareholder attending the meeting may vote in person, even if he or she has already returned a proxy card or voted by telephone or over the internet.

		J. Gregory Yawman Vice President, General Counsel and Secretary

York, Pennsylvania
May 1, 20127, 2013

        Please vote by telephone or over the internet as instructed on the proxy card or, if you have elected to receive a paper copy of our proxy materials by mail, complete, sign and date the proxy card as promptly as possible and return it in the envelope provided. 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 12, 2012
18, 2013

        This proxy statement and the Company's Annual Report for the fiscal year ended January 28, 2012February 2, 2013 are both available in the Investor Relations section of the Company's website at www.bonton.com.

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THE BON-TON STORES, INC.

PROXY STATEMENT

        We are providing this proxy statement to solicit your proxy for use at the Annual Meeting of Shareholders (the "meeting"), which will be held at 9:00 a.m. on Tuesday, June 12, 2012.18, 2013. The proxy materials, which consist of the 20112012 Annual Report, the Notice of Annual Meeting, this proxy statement and the proxy card, are being made available to our shareholders on or about May 1, 2012.7, 2013.

        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 of Annual Meeting. 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" the approval of the amendment and restatement of The Bon- Ton Stores, Inc. Cash Bonus Plan (the "Cash Bonus Plan"), "for" the approvalcompensation of the amendment and restatement of The Bon-Ton Stores, Inc. 2009 Omnibus Incentive Plan (the "Incentive Plan"), "for" the approval of the compensation of executive officers,Named Executive Officers, 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 (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 20112012 is a reference to the fiscal year ended January 28, 2012)February 2, 2013).

VOTING PROCEDURES AND SECURITY OWNERSHIP

Outstanding Shares and Voting Rights

        Shareholders of record at the close of business on April 13, 201219, 2013 are entitled to vote at the meeting. At that time, there were 16,945,01417,396,082 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.

        For Proposal One, the nominees receiving a majority of the votes cast will be elected. (A majority of votes cast means that the number of votes cast "for" a director must exceed the number of votes cast "against" that director.) 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.

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        For Proposal Two, an affirmative vote of the majority of the votes cast by shareholders present in person or represented by proxy at the Annual Meetingmeeting and entitled to vote on Proposal Two is required to

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approve, on an advisory basis, the amendment and restatementcompensation of the Cash Bonus Plan.our Named Executive Officers as described in this Proxy Statement.

        For Proposal Three, an affirmative vote of the majority of the votes cast by shareholders present in person or represented by proxy at the Annual Meetingmeeting and entitled to vote on Proposal Three is required to approve the amendment and restatement of the Incentive Plan.

        For Proposal Four, an affirmative vote of the majority of the votes cast by shareholders present in person or represented by proxy at the Annual Meeting and entitled to vote on Proposal Four is required to approve, on an advisory basis, the compensation of our Named Executive Officers as described in this Proxy Statement.

        For Proposal Five, an affirmative vote of the majority of the votes cast by shareholders present in person or represented by proxy at the Annual Meeting and entitled to vote on Proposal Five is required to approve the ratification of the appointment of KPMG LLP as our independent registered public accounting firm.

        Because your vote on Proposal FourTwo is advisory, it will not bind the Board or the Human Resources and Compensation Committee.Committee of the Board. However, the Board and the Human Resources and Compensation Committee will review the voting results and take the results into consideration in making future determinations on executive compensation.

        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 holder of record for a beneficial owner does not vote on a particular matter because the holder of record does not have discretionary voting power as to that item and has not received voting instructions from the beneficial owner.

        The rules that guide how most brokers vote your stock have changed over the last several years. The rules provide that brokerage firms or other nominees may not vote your shares with respect to matters that are not "routine" under the rules. The rules now provide that the election of directors is not a "routine" matter. Accordingly, most brokerage firms or other nominees may not vote your shares with respect to the election of directors without specific instructions from you as to how your shares are to be voted. Similarly, the approval of the Cash Bonus Plan and approval of the Incentive Plan are non-routine matters for which brokerage firms or other nominees require specific instructions from you. Additionally, asAs required by Section 957 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), an advisory vote on executive compensation is also considered a non-routine matter for which brokers do not have discretionary authority to vote shares held by account holders. The ratification and appointment of our independent registered public accounting firm for 20122013 is considered a "routine" matter under the rules and, therefore, brokerage firms and other nominees have the authority under the rules to vote your unvoted shares with respect to this matter if you have not furnished voting instructions within a specified period of time prior to the meeting.

        If you own common stock in your own name, you are an "owner of record." This means you may direct the persons named as proxies how to vote your shares. If you fail to return your proxy, the proxies cannot vote your shares at the meeting.

        You have four voting options:

•

Internet: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.

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•

Telephone: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 Meetingmeeting and vote at the meeting.in person.

        If a broker, bank or other nominee holds your common stock for your benefit but not in your name, your shares are held in "street name." In that case, your bank, broker or other nominee will send you a voting instruction form to use in voting your shares. The availability of internet and

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telephone voting depends on their voting processes. Please follow the voting instruction form sent to you by your bank, broker or other nominee.

        If you are a participant in The Bon-Ton Stores, Inc. Retirement Contribution Plan (the "401(k) Plan"), your proxy will incorporate all shares you own through the 401(k) Plan, assuming all your shares are registered in the same name. Your proxy will serve as a voting instruction for the trustee of the 401(k) Plan. If you own shares through the 401(k) Plan and you do not vote, the 401(k) Plan trustee will vote your shares in the same proportion as shares for which instructions were received from other shareholders under the 401(k) Plan.

        The NASDAQ Stock Market listing standards provide that if more than 50% of the voting power in a company is held by an individual, group or another company, the company is a "controlled" company. Bon-Ton is a "controlled" company because Tim Grumbacher, Executive Chairman of the Board through February 6, 2012 and currently a director and Strategic Initiatives Officer of the Company, is the beneficial owner of shares of common stock and Class A common stock entitled to vote more than 50% of the votes entitled to be cast at the meeting. Mr. Grumbacher has indicated that he will vote "for" each of the nominees for director, "for" the approval of the Cash Bonus Plan, "for" the approval of the Incentive Plan, "for" the approval of the compensation of the Named Executive Officers and "for" ratification of the appointment of KPMG LLP. Consequently, the election of each nominee for director, the approval of the Cash Bonus Plan, the approval of the Incentive Plan, the approval of the compensation of the Named Executive Officers, and the ratification of the appointment of KPMG LLP are assured.

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Principal Shareholders

        This table shows owners of 5% or more of the Class A common stock or common stock as of March 9, 2012.15, 2013. Each person listed has sole voting power and sole investment power as to the shares indicated unless otherwise noted.

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Security Ownership of Directors and Executive Officers

        This table shows, as of March 9, 2012,15, 2013, the holdings of Mr.Byron L. Bergren, our Chief Executive Officer through February 6, 2012; Brendan L. Hoffman, our Chief Executive Officer since February 7, 2012; our Chief Financial Officer; the three other most highly compensated executive officers during 20112012 (collectively, the "Named Executive Officers"); Brendan L. Hoffman, our Chief Executive Officer beginning February 7, 2012; 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.

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PROPOSAL ONE

ELECTION OF DIRECTORS

        The Board proposes the following nominees for election as directors to hold office until the 20132014 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 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.

        Byron L. Bergren and Marsha M. Everton are not nominees for re-election as directors this year. Mr. Bergren served as President and Chief Executive Officer of Bon-Ton from August 2004 to February 2012, when he retired as President and Chief Executive Officer and was named Chairman of the Board of Directors. He has served as a director since 2004. Ms. Everton has been a director since 2003. The Company thanks Mr. Bergren and Ms. Everton for their service to the Company.

LUCINDA M. BAIER—Director since 2007. Age 4748

        Ms. Baier has served as Executive Vice President of Navigant Consulting, Inc., a specialized, global expert services firm, since February 2013, and became Chief Financial Officer in March 2013. She had been Executive Vice President, Chief Financial Officer and Chief Administrative Officer of Central Parking System, Inc., a leading firm in parking management and marketing, since Junefrom August 2011 to October 2012, having previously served as Senior Vice President and Chief Financial Officer since September 2010. Prior to that, Ms. Baier was Executive Vice President and Chief Financial Officer of Movie Gallery, Inc., a home entertainment specialty retailer, from July 2008 to February 2010. In February 2010, Movie Gallery, Inc. filed for reorganization under Chapter 11 of the Bankruptcy Code. Ms. Baier served from 2006 until July 2008 as Chief Financial Officer of World Kitchen, LLC.

        In determining that Ms. Baier should serve as a director of the Company, the Board considered her significant experience as a chief financial officer of a public company, her expertise and background with regard to accounting and financial matters, as well as her expertise in financial and strategic planning, regulatory compliance and reporting and corporate financing.

BYRON L. BERGREN—Director since 2004. Age 65

        Mr. Bergren served as President and Chief Executive Officer of Bon-Ton from August 2004 to February 2012, when he retired as President and Chief Executive Officer and was named Chairman of the Board of Directors. Mr. Bergren joined Bon-Ton in November 2003 as Vice Chairman and served as President and Chief Executive Officer of The Elder-Beerman Stores Corp. from February 2002 through August 2004.

        In determining that Mr. Bergren should serve as a director of the Company, the Board considered his previous role as President and Chief Executive Officer, his numerous years of executive leadership with the Company and management experience in the department store industry as well as his expertise in strategic planning, business expansion, merchandising, marketing, financing and corporate governance.

PHILIP M. BROWNE—Director since 2002. Age 5253

        Mr. Browne has served as Managing Director, Finance and Administration, of Franklin Square Capital Partners, a sponsor and distributor of investment products, since April 2012. Prior to that, he was Senior Vice President and Chief Financial Officer of Advanta Corp., one of the nation's largest credit card issuers in the small business market, from June 1998 to March 2011. In November 2009, Advanta Corp. filed for reorganization under Chapter 11 of the Bankruptcy Code. Prior to that, Mr. Browne was a partner at Arthur Andersen LLP, where he was employed for more than 15 years. Mr. Browne serves on the national Board of Directors and as the treasurer of Living Beyond Breast Cancer.

        In determining that Mr. Browne should serve as a director of the Company, the Board considered his significant experience as a chief financial officer of a public company, his expertise and background with regard to accounting and financial matters, as well as his expertise in financial and strategic planning, regulatory compliance and reporting and corporate financing.

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MARSHA M. EVERTON—Director since 2003. Age 60

        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 the time of its acquisition by Lifetime Brands, Inc., a multi-channel retail company, in July 2005 until August 2006, and was President and Chief Executive Officer of The Pfaltzgraff Co. from January 2002 until its acquisition by Lifetime Brands in July 2005. Ms. Everton is also a director of the National Retail Federation Foundation and holds a Certificate of Director Education from the National Association of Corporate Directors.

        In determining that Ms. Everton should serve as a director of the Company, the Board considered her substantial management and operations expertise gained through her experience as chief executive officer of a multi-channel retail company, her broad knowledge of compensation and corporate governance issues and her completion of continuing director education programs concerning corporate governance and compensation matters.

MICHAEL L. GLEIM—Director since 1991. Age 6970

        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.

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        In determining that Mr. Gleim should serve as a director of the Company, the Board considered his numerous years of executive leadership with the Company and management experience in the department store industry as well as his expertise in strategic planning, business expansion, financing and corporate governance.

TIM GRUMBACHER—Director since 1967. Age 7273

        Mr. Grumbacher served as Executive Chairman of the Board of Directors of Bon-Ton from February 2005 to February 2012, when he was named Chairman Emeritus and Strategic Initiatives Officer. 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 in positions of senior management since 1977.

        In determining that Mr. Grumbacher should serve as a director of the Company, the Board considered his numerous years of executive leadership with the Company and management experience in the department store industry as well as his expertise in strategic planning, business expansion, financing and corporate governance and his significant ownership interest in the Company.

BRENDAN L. HOFFMAN—Director since February 2012. Age 4344

        Mr. Hoffman became President and Chief Executive Officer of Bon-Ton on February 7, 2012. Mr. Hoffman served as presidentPresident and chief executive officerChief Executive Officer of Lord & Taylor, a division of Hudson's Bay Trading Company, from October 2008 to January 2012. Prior to that, Mr. Hoffman served six years as presidentPresident and chief executive officerChief Executive Officer of Neiman Marcus Direct, where he oversaw the growth of neimanmarcus.com and the launch and growth of bergdorfgoodman.com. Mr. Hoffman has served as a director of Pier 1 Imports, Inc. since January 2011.

        In determining that Mr. Hoffman should serve as a director of the Company, the Board considered his current role as President and Chief Executive Officer, his numerous years of executive leadership in the retail department store industry as well as his expertise in strategic planning, business expansion, merchandising, marketing, financing and corporate governance.

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TODD C. MCCARTY—Director since 2007. Age 4647

        Mr. McCarty has served as Senior Vice President, Global Human Resources of Las Vegas Sands Corporation since September 2012. He had been Senior Vice President, Human Resources of The New York Times Company sincefrom December 2009.2009 to September 2012. Prior to that, Mr. McCarty served as Senior Vice President, Global Human Resources of Readers Digest Association, Inc. from March 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.

        In determining that Mr. McCarty should serve as a director of the Company, the Board considered his many years of experience as a senior executive in the field of human resources, including specialized knowledge beneficial to the Board of Directors in its formulation of compensation strategies and objectives.

JEFFREY B. SHERMAN—Director since March 2013. Age 64

        Mr. Sherman has been the President of The Echo Design Group, Inc., a company that designs, manufactures and distributes accessories and home products, since 2010. From 2008 to 2010, he served as President and Chief Executive Officer of Hudson's Bay Trading Company, a retailer with over 600 retail locations in Canada and the United States. Prior to that, Mr. Sherman served as President and Chief Operating Officer of the Polo Retail Group of Ralph Lauren Corporation, as Chief

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Executive Officer of Limited Stores and in positions of increasing responsibility for over thirty years with Federated Department Stores, including President and Chief Operating Officer of Bloomingdale's. Mr. Sherman serves on the Board of Directors of United Way, New York City.

        Mr. Sherman was recommended to the Board by Mr. Hoffman, the Company's President and Chief Executive Officer. In determining that Mr. Sherman should serve as a director of the Company, the Board considered his numerous years of executive leadership with companies in the department store and retail industries as well as his expertise in strategic planning, business expansion, merchandising, marketing, distribution, brand development and financing.

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CORPORATE GOVERNANCE AND BOARD OF DIRECTORS INFORMATION

Governing Documents

        The key documents that constitute our corporate governance framework are 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 Practices

        Each of the committee charters and the Code of Ethical Standards and Business 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 Company 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'sthe NASDAQ Stock Market'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. Browne, andGleim, McCarty and Mmes.Sherman and Ms. Baier and Everton is an "independent" director as that term is defined in the listing standards of the NASDAQ Stock Market. In determining independence, the Board of Directors carefully reviewed any possible related party transactions between the Company or any of its affiliates and each of the independent directors and determined there were no transactions that would compromise such director's independence. As discussed above, the Company is a "controlled company" and, as such, the Company may elect under Rule 5615(c) of the listing standards of the NASDAQ Stock Market and it has elected, not to have a majority of the Board consist of independent directors.

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 and 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 instituted the position of Lead Director. The role of the Lead Director is described on page 13.

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Meetings of the Board of Directors

        During 2011,2012, the Board of Directors held seventen meetings and took action by unanimous consent without a meeting threetwo times. 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. At each meeting of the Board of Directors, the independent directors also meet in executive session, at which only the independent directors are present.

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 2011,2012, and certain other information regarding each committee, are described below. The membership of each committee is as of the date of this proxy statement.

Audit Committee

        The members of the Audit Committee are Philip M. Browne (Chair), Lucinda M. Baier and Todd C. McCarty. The Board has determined that each of Mr. Browne and Ms. Baier is an "audit committee financial expert" as defined by applicable SEC rules and the listing standards of the NASDAQ Stock Market. The Audit Committee is comprised entirely of "independent" directors as defined by applicable SEC rules and NASDAQ Stock Market listing standards and operates under a charter that was adopted by the Board. This charter is posted in the Investor Relations section of the Company's website at www.bonton.com.

        The Audit Committee appoints and establishes the compensation for the Company's independent registered public accounting firm and approves in advance all engagements with the independent registered public accounting firm to perform audit or non-audit services. The Audit Committee oversees (1) the integrity of the Company's financial statements, (2) the Company's system of internal control over financial reporting and disclosure controls, (3) the Company's compliance with legal and regulatory requirements, (4) the qualification, independence and performance of the Company's independent registered public accounting firm and (5) the performance of the Company's internal audit function. The Audit Committee also oversees the financial reporting processes of the Company and the audits of the Company's financial statements. To assist it in carrying out its responsibilities, the Audit Committee is authorized to retain the services of independent advisors.

        The Audit Committee met seven times during 2011.2012.

Human Resources and Compensation Committee

        The members of the Human Resources and Compensation Committee (referred to in this proxy statement as the "HRCC") are Marsha M. Everton (Chair) and, Todd C. McCarty.McCarty and Jeffrey B. Sherman. The HRCC is comprised entirely of "independent" directors, as defined by the listing standards of the NASDAQ Stock Market, and bothall members are "non-employee directors" as defined by applicable SEC rules and "outside directors" as defined by applicable Internal Revenue Service Rules. The HRCC operates under a charter that was adopted by the Board. This charter is posted in the Investor Relations section of the Company's website at www.bonton.com.

        The HRCC reviews and evaluates the Company's overall compensation strategy to ensure that it promotes shareholder interests, supports the Company's strategic objectives and provides for appropriate rewards and incentives for the Company's management and employees. The HRCC reviews, evaluates and provides recommendations to the Board regarding the plans, policies and programs relating to the compensation of the Company's executive officers, the general compensation

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policies of the Company, succession planning, management development, and termination policies and arrangements. In addition, the HRCC reviews and approves the structure of the Company's bonus plans, administers the Company's stock incentive plans and oversees the Company's retirement, defined benefit and health and welfare plans.

        At the end of each year, the HRCC evaluates the performance of the President and Chief Executive Officer and the other executive officers of the Company with respect to approved goals and objectives, and establishes the compensation levels for the executive officers, including base pay, annual incentive compensation, long-term incentive plan participation, entrance into an agreement regarding employment and any special or supplemental benefits. The HRCC also establishes compensation levels for any newly-hired executive officer. (See "Compensation Discussion and Analysis" on page 3121 for additional discussion of the elements of executive officer compensation.) The compensation of the President and Chief Executive Officer is also reviewed by the full Board. The HRCC annually reviews with the President and Chief Executive Officer the performance of the other executive officers and approves their compensation for the next year. The HRCC establishes the corporate goals under the Company's Cash Bonus Plan and Management Incentive Plan and has the authority to determine whether the requirements for receipt of a bonus should be waived.

        The HRCC may delegate its authority to a subcommittee comprised solely of its members. To assist it in carrying out its responsibilities, the HRCC is authorized to retain the services of advisors. During 2011,2012, the HRCC engaged Meridian Compensation Partners, LLC ("Meridian") to provide counsel on executive compensation matters. The nature and scope of services rendered by Meridian were:

•

competitive market pay analyses;



•

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



•

preparation for and attendance at selected HRCC and Board meetings; and



•

other miscellaneous requests that occurred throughout the year.

        The HRCC did not direct Meridian to perform the above services in any particular manner or under any particular method. The HRCC has the final authority to hire and terminate the consultant, and the HRCC evaluates the consultant periodically.

        (See "Compensation Discussion and Analysis" on page 3121 for additional discussion of the processes and procedures for the consideration and determination of executive officer compensation.)

        During 2011,2012, the HRCC met 19eight times and took action by unanimous consent without a meeting once.

Governance and Nominating Committee

        The members of the Governance and Nominating Committee (referred to in this proxy statement as the "Governance Committee") are Michael L. Gleim (Chair) and, Marsha M. Everton. Mr. Gleim is not an "independent" director as set forth under the NASDAQ Stock Market listing standards.Everton and Tim Grumbacher. As discussed above, the Company is a "controlled company" and, as such, the Company may elect, under Rule 5615(c) of the listing standards of the NASDAQ Stock Market, and it has elected, not to have a Governance Committee comprised solely of independent directors. Mr. Gleim provides the Board with valuable insight with respect to both the governance of the Company and the nominations process, and, therefore, the Board believes that he should continue as a member, and Chair, of the Governance Committee.

        The Governance Committee reviews, develops and makes recommendations to the Board regarding the Company's governance processes and procedures. It also recommends candidates for election to fill vacancies on the Board, including renominations of members whose terms are due to

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expire. The Governance Committee is also responsible for making recommendations to the Board regarding the compensation of its non-employee members. The Governance Committee operates under

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a charter that was adopted by the Board. This charter is posted in the Investor Relations section of the Company's website at www.bonton.com.

        The Governance Committee met four times during 2011.2012.

Executive Committee

        The members of the Executive Committee are Byron L. Bergren (Chair), Michael L. Gleim and Tim Grumbacher. The Executive Committee has the authority to act in place of the Board on specified matters.

        The Executive Committee has the following responsibilities: to propose the Board agendameeting schedule for each year and to refine the agenda prior to each Board meeting, to keep the members of the Board informed of pertinent issues that arise between regularly scheduled quarterly Board meetings and to act as a sounding board for the Company's Chief Executive Officer when appropriate. The Executive Committee Charter under which the Executive Committee operates was adopted by the Board and is posted in the Investor Relations section of the Company's website at www.bonton.com.

        During 2011,2012, the Executive Committee met nine times.

Ad Hoc Leadership Transition Committee

        The Ad Hoc Leadership Transition Committee, which reviews, develops and makes recommendations to the Board regarding Chief Executive Officer succession, was established by the Board in May 2008 and completed its initial charge in November 2008. At the behest of the Board, the Committee was reconstituted in December 2009. The members of the Ad Hoc Leadership Transition Committee are Michael L. Gleim (Chair), Philip M. Browne and Todd C. McCarty. The Ad Hoc Leadership Transition Committee met four times during 20112012 and completed its duties upon the appointment of Mr. Hoffman as Chief Executive Officer in the CEO in Februaryfirst quarter of 2012.

Role of the Lead Director

        As ofIn January 1, 2010, the Board elected Michael L. Gleim as Lead Director of the Board. The primary duties of the Lead Director are, among other things, to:

•

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



•

assist the Board in assuring that the Board operates in compliance with applicable laws and regulations and the Company's Charter, By-Laws and corporate governance policies;



•

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 and the Executive Committee 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.present and chair executive sessions of the Board at every Board meeting.

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Role of the Board in Risk Oversight

        The Board as a whole has responsibility for risk oversight. The oversight responsibility of the Board and the Board committees is facilitated by management reporting processes designed to provide information to the Board concerning the identification, assessment 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, 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, management and 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. Additional review or reporting of risks is conducted as needed or as requested by the Board or relevant Board committee. 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 and reputation 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 Board 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 to satisfy its oversight responsibilities effectively, the Governance Committee focuses on the information provided in each of the Director's individual work histories set forth on pages 7 through 9.

        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 the Secretary, The Bon-Ton

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Stores, Inc., P.O. Box 2821,2801 East Market Street, York, Pennsylvania 17405.17402. No shareholder recommendations have been received since the June 14, 201112, 2012 shareholder meeting.

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        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 re-nominating incumbent directors to continue for an additional term, 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 that encourages Board members who reside in the York area to attend the annual meeting of shareholders. Four of the (then) eight members of the Board attended the 20112012 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 the Secretary, The Bon-Ton Stores, Inc., P.O. Box 2821,2801 East Market Street, York, Pennsylvania 17405.17402. 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

        During 2011,2012, Messrs. Grumbacher and BergrenHoffman were employees of the Company and were not paid any separate compensation for serving as directors. In February 2012, Mr. Hoffman became President and Chief Executive Officer of the Company and was elected as director. He is not paid any separate compensation for serving as a director. Messrs. Grumbacher and Hoffman are the only current employees who serve as directors.

        Each non-employee director receives both cash compensation and stock compensation comprised of the following:

•

a $120,000 annual fee, $50,000 of which is paid in cash (the "annual cash retainer") and $70,000 of which is paid in RSUs that vest at the end of the current term;



•

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



•

a $5,000 annual cash fee for serving on each committee (other than the Executive Committee), including the Ad Hoc Leadership Transition Committee; and



•

a $15,000 supplemental annual fee for each committee chair, including the Ad Hoc Leadership Transition Committee, $10,000 of which is paid in cash and $5,000 in RSUs that vest at the end of the current term. The chair of the Executive Committee is paid a supplemental annual fee of $40,000 in cash and $20,000 in RSUs that vest at the end of the current term.

        The RSUs issued to directors are distributable after the applicable period following termination of Board service. The current grant documents provide for a period of three months following termination of Board service.

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        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 her service on this committee, Ms. Baier receives $1,250 for each meeting attended.$5,000 annually.

        As ofIn 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 $140,000 per year.

Table        In February 2012, the Board elected Mr. Bergren as Chairman of Contentsthe Board. For his service as Chairman of the Board, Mr. Bergren receives a supplemental fee of $170,000 per year.

        During 2012, in recognition of the significant additional work performed by Ms. Everton as chair of the HRCC in the process of selecting a new Chief Executive Officer and negotiating the terms of such employment, the Board authorized an additional cash payment to Ms. Everton of $20,000.

        Directors may defer all or any part of their cash compensation into additional RSUs.

        The following table presents the compensation provided by the Company during 20112012 to each non-employee director:

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Share Ownership Guidelines

        In December 2007, the Company adopted guidelines requiring each non-employee director to maintain an equity stake in 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 of Common Stockcommon stock actually owned and time-based RSUs 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 2012 must2013, with the exception of Mr. Sherman, was required to meet, and did meet, this guideline by December 2012. Mr. Sherman will be required to meet this guideline by March 2018.

        Share ownership requirements for 20112012 were measured based on the average price of the Company's common stock during 2010. Share ownership requirements are reviewed annually by the HRCC.

        All of the non-employee directors standing for election currently satisfy the guideline.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR"
THE ELECTION OF THE NOMINEES LISTED ABOVE

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PROPOSAL TWO

APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF
THE BON-TON STORES, INC. CASH BONUS PLAN

        The Cash Bonus Plan was adopted by the Board of Directors and was approved by the Company's shareholders in July 2004, and was thereafter amended and restated, which amendment and restatement was approved by the Company's shareholders in June 2007. Subject to shareholder approval at the meeting, the Board of Directors has approved the continuation of the Cash Bonus Plan through the adoption of an amended and restated Cash Bonus Plan, which makes certain minor additions to the performance metrics available for use in setting performance goals and to be used in determining bonus payments, as described in more detail below. Approval of the amended and restated Cash Bonus Plan requires the affirmative vote of a majority of the votes cast by holders of common stock and Class A common stock.

        The Cash Bonus Plan is a performance-based plan that is intended to provide a means by which those key employees who are designated as participants may be compensated for their roles in the performance of the Company. The Cash Bonus Plan was adopted by the Board of Directors as a means to provide greater flexibility in the establishment of performance goals and setting of target bonuses while permitting such bonuses to be fully deductible as "performance-based compensation" (as that term is used under Section 162(m) of the Internal Revenue Code (the "Code")).

        The purpose of the modifications incorporated into the amended and restated Cash Bonus Plan adopted by the Board is to align the performance metrics available under the Cash Bonus Plan more closely with the performance metrics available for use under the Company's 2009 Omnibus Stock Incentive Plan. No bonuses will be payable under the amended and restated Cash Bonus Plan unless and until the amended and restated Cash Bonus Plan has been approved by the Company's shareholders.

        The specific changes to the performance metrics made by the adoption of the amended and restated Cash Bonus Plan clarify that the performance metrics can be established with respect to business segments as well as divisions, add the specific concepts of EBITDA (earnings before interest, taxes, depreciation and amortization), gross margin, stock price, loss ratio, expense ratio, combined ratio, product spread, as well as combinations or variations of such metrics, and also permit modifications and adjustments for extraordinary items or events, all as determined by the Committee (as defined below). As has always been the case, all such elements of the performance metrics are required to be established no later than 90 days after the beginning of the Company's fiscal year (which is the performance period for the Cash Bonus Plan).

        The design and administration of the Cash Bonus Plan are intended to cause all taxable compensation attributable to the Cash Bonus Plan to be treated as "performance-based compensation." As a consequence, the provisions of the Code which would otherwise limit the deductibility by the Company of certain executive compensation in excess of $1,000,000 should not be applicable to any compensation expense attributable to the Cash Bonus Plan. The Cash Bonus Plan is administered by the Human Resources and Compensation Committee (or such other committee consisting exclusively of two or more "outside directors" as may be designated to act in that capacity by the Board from time to time). This administrative committee for the Cash Bonus Plan is referred to in this Proposal Two as the "Committee."

        The material provisions of the amended and restated Cash Bonus Plan are described below. The description of the Cash Bonus Plan is qualified in its entirety by the amended and restated Cash Bonus Plan, as set forth in the attached Appendix A to this proxy statement, and is incorporated herein by reference.

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        Eligibility.    Participants in the Cash Bonus Plan are those key executives, including the Named Executive Officers, who are designated by the Committee to participate in the Cash Bonus Plan from time to time. As of March 31, 2012, six executives have been designated by the Committee to participate in the Cash Bonus Plan.

        Shareholder approval and term of Cash Bonus Plan.    The Cash Bonus Plan, as amended and restated and described in this proxy statement, will be continued if approved by the shareholders, until it is terminated by the Board. The Cash Bonus Plan may be submitted for reapproval by the shareholders from time to time, and must be so reapproved no later than the shareholders' meeting that occurs in the fifth year following its last shareholder approval in order to remain qualified as a "performance-based" compensation arrangement for purposes of Section 162(m) of the Code.

        Benefits under the Cash Bonus Plan.    In general, the benefits under the Cash Bonus Plan consist of a cash bonus payable to participants provided the performance goals established by the Committee are met and, if met, to the extent met. The maximum amount that can be paid to any one participant under the Cash Bonus Plan with respect to any one fiscal year is three times his or her base salary in effect for the relevant year, and in no event may any such bonus exceed $5,000,000.

        The bases for the performance goals that may be established under the Cash Bonus Plan, as amended, can include 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): earnings before interest, taxes, depreciation, and amortization; profit before taxes; gross margin; 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. In addition, the Committee may modify any of these criteria in order to take into account extraordinary items or to reflect objectively specified costs or expenses. The Committee is also authorized to establish performance measures related to participating executives' personal objectives and/or goals provided any such goals are established in a manner consistent with relevant federal income tax regulations governing performance-based compensation plans. Personal goals can include, but are not limited to, implementation of Company policies, negotiation of significant corporate transactions, development of long-term business goals or strategic plans for the Company, or the exercise of specific areas of managerial responsibility.

        In all cases, measurement of the Company's or a participant's achievement of one or more performance goals must be objectively determinable and, where applicable, determined in accordance with generally accepted accounting principles. In all cases, the performance goals for a fiscal year must be established no later than 90 days after the beginning of the fiscal year. The achievement of performance goals established under the Cash Bonus Plan must be certified by the Committee before any bonus may be paid.

        Administration of the Cash Bonus Plan.    The Cash Bonus Plan is administered by the Committee which, as noted above, will at all times consist exclusively of two or more "outside directors" (as that term is defined under Section 162(m) of the Code). The resolution of any questions arising with respect to the Cash Bonus Plan will be determined by the Committee, and all such determinations are final and conclusive.

        Amendment and termination of the Cash Bonus Plan.    The Board may terminate or revoke the Cash Bonus Plan at any time and may amend the Cash Bonus Plan from time to time, provided that none of the termination, revocation or amendment of the Cash Bonus Plan may, without the written approval of an affected participant, reduce the benefit to which the participant would otherwise be entitled, and provided further that no changes that would increase the benefit available will be effective without

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approval by the Committee and without disclosure to and approval by the shareholders in a separate vote prior to the date the participant would become entitled to such increased benefit. In addition, the Cash Bonus Plan may be modified or amended by the Committee as it deems appropriate in order to comply with any rules, regulations or other guidance promulgated by the Internal Revenue Service with respect to applicable provisions of the Code.

        Federal tax issues.    Section 162(m) of the Code limits the deductibility of compensation in excess of $1,000,000 to certain employees of publicly held companies (this limitation is referred to herein as the "million dollar cap"), unless the compensation comes within certain exceptions. One exception to the million dollar cap is available for "performance-based compensation." In order for taxable compensation to be within this exception to the million dollar cap, a number of requirements must be satisfied, including the establishment of performance goals by a committee of two or more "outside" members of the Company's Board, disclosure to the shareholders of the material terms of the performance-based bonus arrangement under which the bonus is to be paid, and approval by the shareholders of that arrangement. Additional rules apply to the ongoing administration of such an arrangement in order for compensation to qualify as performance-based.

        Bonuses under the Cash Bonus Plan are payable only on the attainment of the performance goals established by the Committee for the year for which the bonus is paid. Assuming the Cash Bonus Plan, as amended, is put into effect in accordance with its terms, is approved by the Company's shareholders, and is administered in accordance with the provisions set forth therein, the taxable compensation payable under the Cash Bonus Plan should qualify as "performance-based compensation" that is exempt from the million dollar cap.

        Compensation Recovery Provision.    In 2010, the Company amended the Cash Bonus Plan to include a "clawback" or compensation recovery provision. The provision provides that the Committee may determine that, as a result of a restatement of the Company's financial statements, an executive officer received more incentive compensation than the executive officer would have received absent the incorrect financial statements. In such case, the Committee, in its discretion, may take such action as it deems appropriate to address the impact of the restatement of financial statements. Such action may include, to the extent permitted under applicable law, directing the Company to recover from an executive officer the performance-based bonus earned or distributed to the executive officer based on the achievement of performance targets, if the incorrect financial statements resulted in an increase in a performance-based bonus to the executive officer. Recoupment of a performance-based bonus shall be required if the Company is required to prepare an accounting restatement due to its material noncompliance with any financial reporting requirements under applicable law.

        Recoverable compensation will include the performance-based bonus earned or distributed (as applicable) during the period(s), not to exceed three years, that required restatement of financial statements, up to the amount of the performance-based bonus that the executive officer obtained as a result of financial statements that were later restated. In the discretion of the Committee, recoverable compensation may include interest and expenses incurred by the Company to recoup a performance-based bonus.

        New Plan Benefits.    The following table sets forth the annual bonus opportunities for 2012 for the Named Executive Officers and Mr. Hoffman depending on the extent to which the performance goals established by the Committee are achieved, assuming the amendment and restatement of the Cash Bonus Plan is approved by shareholders.

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The Bon-Ton Stores Amended and Restated Cash Bonus Plan

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" APPROVAL OF THE ABOVE DESCRIBED AMENDED AND RESTATED CASH BONUS PLAN.

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PROPOSAL THREE

APPROVAL OF THE
AMENDMENT AND RESTATEMENT OF THE BON-TON STORES, INC.
2009 OMNIBUS INCENTIVE PLAN

        The Bon-Ton Stores, Inc. 2009 Omnibus Incentive Plan (the "Incentive Plan") was adopted by the Board of Directors on March 16, 2009 (replacing the Amended and Restated 2000 Stock Incentive and Performance-Based Award Plan) and was approved by the Company's shareholders in June 2009. Subject to shareholder approval at the meeting, the Board of Directors approved the amended and restated Incentive Plan on March 13, 2012. Approval of the amended and restated Incentive Plan requires the affirmative vote of a majority of the votes cast by holders of common stock and Class A common stock.

        The purpose of the 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 Incentive Plan provides for the grant of stock options, both non-qualified and incentive, to purchase shares of common stock (referred to in this proxy statement as "Options").

        The Incentive Plan also provides for awards (referred to in this proxy statement as "Awards") of (i) shares of common stock subject to risk of forfeiture (referred to in this proxy statement as "Restricted Shares"), (ii) rights to receive common stock subject to restrictions (referred to in this proxy statement as "Restricted Stock Units"), (iii) rights to receive a number of shares or an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the right during a stated period specified by the Award (referred to in this proxy statement as "Stock Appreciation Rights"), (iv) rights to receive a number of shares or an amount in cash or a combination of shares and cash, based on the fair market value of the shares and aggregate dividends underlying the right during a stated period specified by the Award (referred to in this proxy statement as "Phantom Stock"), (v) shares of common stock subject to vesting based on performance criteria (referred to in this proxy statement as "Performance Shares") and (vi) rights entitling the recipient to receive credits for dividends that would be paid if the recipient had held a specified number of shares of common stock (referred to in this proxy statement as "Dividend Equivalent Rights"). Under the Incentive Plan, as amended and restated, Options and Awards may be granted for up to an aggregate of 4,500,000 shares of common stock (exclusive of shares granted and thereafter cancelled).

        The Board of Directors has adopted an amendment and restatement of the Incentive Plan for the purpose of increasing the number of shares of common stock available for grants, and in order to modify the performance criteria available to be used in connection with the vesting of certain Performance Shares that may be granted under the Plan. The specifics of the changes made to the Incentive Plan by reason of the adoption of the amended and restated Incentive Plan are as follows: (1) an additional 2,000,000 shares of common stock are to be made available for future grants, and (2) the performance criteria that may be used to establish vesting targets for Performance Shares have been modified so as to add the specific concept of gross margin as an additional criteria, and also to permit the Committee (as defined below) to utilize as an additional performance measure the attainment by a Participant of one or more personal objectives and/or goals that the Committee (as defined below) deems appropriate, including, but not limited to, implementation of Company policies, negotiation of significant corporate transactions, development of long-term business goals or strategic plans for the Company, or the exercise of specific areas of managerial responsibility. The amended and restated Incentive Plan also reiterates the requirement that, in all events, achievement of any such performance goals must be objectively determinable. Such determination, to the extent applicable, shall

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be calculated according to generally accepted accounting principles as in existence on the date on which the Earned Percentage Schedule for the Plan Year is established and shall be established no later than 90 days after the beginning of the performance period applicable to the Performance Shares and shall establish such performance goals in a manner that is consistent with the relevant federal income tax regulations applicable to performance-based compensation plans.

        The amended and restated Incentive Plan will become effective immediately if approved by shareholders at the meeting.

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

        This summary is qualified in its entirety by the more detailed terms and conditions of the amended and restated Incentive Plan, a copy of which is filed as Appendix B to this Proxy Statement. The Company intends to file an amended registration statement under the Securities Act of 1933, as amended, to register the additional shares that may be issued pursuant to the Incentive Plan, as amended. The key provisions of the Incentive Plan are as follows:

        Number of Shares.    The maximum number of shares of common stock that may be issued under the Incentive Plan is 4,500,000 (representing an increase of 2,000,000 over the 2,500,000 shares of common stock that were previously approved for grants under the Incentive Plan). 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 expire or are forfeited, canceled or settled for cash without delivery of shares of common stock, the shares subject to such Option or Award will again be available pursuant to the Incentive Plan. The closing sale price for a share of common stock on April 9, 2012 was $7.84, as reported by the NASDAQ Stock Market.

        Administration.    The 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 Three, 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. In connection with the grant of Performance Shares, the Board of Directors intends to take appropriate steps to ensure that such grants are administered by a committee consisting solely of members of the Board of Directors who are properly treated as being both non-employee directors and outside directors. The 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 are eligible to receive Options or Awards under the Incentive Plan.

        Term of the Incentive Plan and Shareholder Approval/Reapproval.    The Incentive Plan became effective when it was approved by the Company's shareholders in June 2009, and provides that no Options or Awards may be granted after March 16, 2019. The performance criteria used for purposes of determining vesting of Performance Shares have been approved by the Company's shareholders, and must be reapproved from time to time consistent with applicable federal income tax regulations governing performance-based compensation plans. Generally, this requires that such performance criteria be disclosed to and reapproved by the Company's shareholders no later than the shareholders' meeting that occurs in the fifth year following the last shareholder approval.

        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 Incentive Plan, determine the terms and conditions of each Option or Award. The

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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.

        Options.    Options granted under the 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 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 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 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. The term of each Option is fixed by the Committee.

        Maximum Grants.    The 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:

        1.     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;

        2.     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 items 4 and 5;

        3.     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;

        4.     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

        5.     Such time as the Committee may determine if there is a "Change in Control" of the Company as defined in the 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.

        No Repricing.    Option and Stock Appreciation Rights repricing (including reducing the exercise price of Options or replacing an award with cash or another award type) is prohibited without shareholder approval under the Incentive Plan.

        Awards of Restricted Shares.    The Committee will determine the period, which under the 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 installments,

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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 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 in Control" of the Company.    Notwithstanding any other provisions of the Incentive Plan, in the event of a "Change in 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 in Control" will occur if:

        (1)   any person who is not an affiliate of the Company on the date the Plan becomes effective becomes a beneficial owner of a majority of the outstanding voting power of the Company's capital stock;

        (2)   the shareholders of the Company approve and there is consummated any plan of liquidation providing for the distribution of all or substantially all of the Company's assets;

        (3)   there is consummated a merger, consolidation or other form of business combination involving the Company, or, in one transaction or a series of related transactions, a sale of all or substantially all of the assets of the Company, unless, in any such case:

        (A)  the business of the Company is continued following such transaction by a resulting entity (which may be, but need not be, the Company) (the "Surviving Company"); and

        (B)  persons who were the beneficial owners of a majority of the outstanding voting power of the Company immediately prior to the completion of such transaction beneficially own, by reason of such prior beneficial ownership, a majority of the outstanding voting power of the Surviving Company (or a majority of the outstanding voting power of the direct or indirect parent of the Surviving Company, as the case may be) immediately following the completion of such transaction; or

        (4)   any person beneficially owns shares of the Company's capital stock possessing a greater voting power than held in the aggregate by Tim Grumbacher, any member of his family, any trust for the primary benefit of Tim Grumbacher or any member of his family, and any charitable foundation of which Tim Grumbacher is a founder or co-founder with his wife (collectively, the "Grumbacher Affiliates"), or if the Grumbacher Affiliates control less than twenty percent (20%) of the outstanding voting power of the Company's capital stock.

        Amendment and Termination.    The Board of Directors may amend the Incentive Plan at any time, provided the Board may not (1) change the class of individuals eligible to receive an ISO, (2) increase the maximum number of shares as to which Options and Awards may be granted or (3) 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 previously granted 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 current federal income tax consequences of the issuance of Options and the acquisition of shares of common stock by

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exercising Options, or receiving Awards of Restricted Shares under the 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.

        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.

        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 Incentive Plan in accordance with all applicable "performance-based" compensation requirements, including administration of the 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.

        Restricted Shares.    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 ordinary 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.

        Restricted Stock Units/ Stock Appreciation Rights/Phantom Stock.    For federal income tax purposes, there are no immediate tax consequences of receiving an award of Restricted Stock Units, Stock Appreciation Rights or Phantom Stock under the Incentive Plan. A grantee who is awarded any of these will be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such grantee at the end of the vesting or restriction period or, if later, the payment date. Assuming the Company complies with applicable reporting requirements and with the restrictions of Section 162(m) of the Code, the Company will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

        Dividend Equivalent Rights.    A grantee who receives Dividend Equivalent Rights will be required to recognize ordinary income for federal income tax purposes equal to any amount distributed to the

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grantee pursuant to the Award. Assuming the Company complies with applicable reporting requirements and with the restrictions of Section 162(m) of the Code, the Company will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

        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. Generally, 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 has discretion as to the determination of whether performance-based Awards will vest or be forfeited upon a change in control of the Company. 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): earnings before interest, taxes, depreciation, and amortization; profit before taxes; gross margin; 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. In addition, the Committee may utilize as an additional performance measure (to the extent consistent with relevant federal income tax regulations governing performance-based compensation plans), the attainment by a grantee of Performance Shares of one or more personal objectives and/or goals that the Committee deems appropriate, including, but not limited to, implementation of Company policies, negotiation of significant corporate transactions, development of long-term business goals or strategic plans for the Company, or the exercise of specific areas of managerial responsibility. In all cases, however, the achievement of any such performance goals must be objectively determinable. In all cases, the performance goal applicable to a grant of Performance Shares must be established no later than 90 days after the beginning of the performance period applicable to the Performance Shares and must be established consistent with the relevant federal income tax regulations applicable to performance-based compensation plans.

        Performance Shares cannot be granted in excess of the limitations established under the special performance-based provisions of the Incentive Plan. Specifically, no grantee may receive, individually or in aggregate under the Incentive Plan, Performance Shares in excess of 2,500,000 shares of common stock.

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        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.

        Election under Section 83(b) of the Code.    Except as provided below, an Award recipient may 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 grant date. 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.

        Code Section 409A.    The Company has structured the Incentive Plan with the intention that awards granted under the plan will either be exempt from Section 409A of the Code or will be compliant with the requirements of Code Section 409A.

        Code Section 280G.    To the extent payments that are contingent on a change in control are determined to exceed certain Code Section 280G limitations on "golden parachutes," the Code provides that these payments may be subject to a 20% nondeductible excise tax and the Company's deduction with respect to the associated compensation expense may be disallowed in whole or in part.

        Compensation Recovery Provision.    In 2010, the Company amended the Incentive Plan to include a "clawback" or compensation recovery provision. The provision provides that the Committee may determine that, as a result of a restatement of the Company's financial statements, an executive officer received more incentive compensation than the executive officer would have received absent the incorrect financial statements. In such case, the Committee, in its discretion, may take such action as it deems appropriate to address the impact of the restatement of financial statements. Such action may include, to the extent permitted under applicable law, directing the Company to recover from an executive officer the performance-based bonus earned or distributed to the executive officer based on the achievement of performance targets, if the incorrect financial statements resulted in an increase in a performance-based bonus to the executive officer. Recoupment of a performance-based bonus shall be required if the Company is required to prepare an accounting restatement due to its material noncompliance with any financial reporting requirements under applicable law.

        Recoverable compensation will include the performance-based bonus earned or distributed (as applicable) during the period(s), not to exceed three years, that required restatement of financial statements, up to the amount of the performance-based bonus that the executive officer obtained as a result of financial statements that were later restated. In the discretion of the Committee, recoverable compensation may include interest and expenses incurred by the Company to recoup a performance-based bonus.

        See "Equity Compensation Plan Information" on page 61 for information regarding securities authorized for issuance under equity compensation plans.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ABOVE DESCRIBED AMENDMENT AND RESTATEMENT OF THE BON-TON STORES, INC. 2009 OMNIBUS INCENTIVE PLAN

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PROPOSAL FOUR

APPROVAL, ON AN ADVISORY BASIS, OF COMPENSATION
OF THE NAMED EXECUTIVE OFFICERS

        The Dodd-Frank Act provides that the Company's shareholders have the opportunity to vote to approve, on an advisory (nonbinding) basis, the compensation of the Company's Named Executive Officers as disclosed in this proxy statement in accordance with the SEC's rules. In 2010,At the 2011 Annual Meeting, the shareholders voted, on an advisory basis, to approve on an advisory basis the compensation of the Company's Named Executive Officers annually, and the Company determined to present such matter for vote annually. Pursuant to Section 14A of the Securities Exchange Act, the Company is presenting the following "say on pay" proposal, which gives shareholders the opportunity to approve or not approve, on an advisory basis, the Company's compensation program for Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, by voting for or against the resolution set out below. While our Board intends to carefully consider the shareholder vote resulting from this proposal, the final vote will not be binding on the Company and is advisory in nature. The Company submits the following proposal:

"RESOLVED, that the compensation paid to the Company's Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED."

        As described in the "Executive Compensation" section, the Company's executive compensation programs are designed to attract, motivate and retain talented executives. In addition, the programs are structured to create an alignment of interests between the Company's executives and shareholders. The Board and the HRCC monitor executive compensation programs and adopt changes to reflect the competitive market in which the Company competes for talent, as well as general economic, regulatory and legislative developments affecting executive compensation. The HRCC will continue to emphasize compensation arrangements that align the financial interests of our executives with the interests of long-term shareholders. Accordingly, we believe that the Company's executive compensation programs are appropriately designed and work to ensure that management's interests are closely aligned with shareholders' interests to create long-term value. Please refer to the section entitled "Executive Compensation" of this proxy statement for a detailed discussion of the Company's executive compensation practices and philosophy.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" APPROVAL, ON AN ADVISORY
BASIS, OF COMPENSATION OF THE NAMED EXECUTIVE OFFICERS

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PROPOSAL FIVETHREE

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 2011,2012, to serve as our independent registered public accounting firm for 2012.2013.

        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

        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

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REPORT OF THE AUDIT COMMITTEE

        The Audit Committee is comprised of 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 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 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, the internal auditors 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 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" and the additional matters required to be discussed by Statement on Auditing Standards No. 114, as modified or supplemented, "The Auditor's Communication with Those Charged with Governance."

        KPMG also provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding KPMG's communications with the Audit 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 that the audited consolidated financial statements be included in the Annual Report on Form 10-K for the fiscal year ended January 28, 2012.February 2, 2013.

Members of the Audit Committee:
Philip M. Browne, Chairperson
Lucinda M. Baier
Todd C. McCarty

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Executive Summary

        This Compensation Discussion and Analysis ("CD&A") primarily addresses the compensation of the Company's Chief Executive Officer, the Chief Financial Officer and the three other highest paid executive officers in 2011.2012. These five executive officers are referred to as the "Named Executive Officers" throughout this proxy statement:

        The purpose of this CD&A is to provide shareholders with a description of the material elements of the Company's compensation program for its Named Executive Officers. The CD&A should be read in conjunction with the accompanying compensation tables, corresponding footnotes and narrative discussion, as they provide information and context to the compensation disclosures.

        The Company's compensation program is designed to balance near-term results with long-term success in alignment with the interests of our shareholders and the achievement of our business strategy. Bon-Ton has a pay-for-performance philosophy that forms the foundation for decisions regarding compensation made by the Company's management and the HRCC. The Company believes that a meaningful portion of each executive officer's compensation must be at risk in order to invest our executive officer in the long-term success of the Company.

        The framework of our executive compensation programs includes the following governance features:

•

The HRCC is comprised solely of independent directors.



•

The HRCC's independent compensation consultant, Meridian, is retained directly by the HRCC, and the HRCC has the authority to hire and fire its compensation consultant.



•

The Company performs an annual risk assessment of the Company's compensation practices that is reviewed by the HRCC.



•

Shareholders are provided an annual opportunity to cast an advisory vote on executive compensation.

        The Company's compensation program and related governance features are complemented by several specific elements designed to align the Company's executive compensation with long-term shareholder interests, including:

•

share ownership guidelines for the Company's executive officers, as described below;



•

a threshold and a cap for executive officer bonus payouts under the annual performance-based incentive program;



•

a compensation recoupment or "clawback" policy, as described below; and