April 23, 201820, 2020

Dear Shareholder:

You are cordially invited to attend theThe Annual Meeting of Shareholders to be held at the Corporate Office of the Company, 8100 Denmark Road, Charlotte, North Carolina 28273 on Thursday, May 24, 201821, 2020 at 11:00 A.M., Eastern Time.

The Notice of the Annual Meeting of Shareholders and Proxy Statement are attached. The matters to be acted upon by our shareholders are set forth in the Notice of Annual Meeting of Shareholders and discussed in the Proxy Statement.

We would appreciate your signing, dating, and returning to the Company the enclosed proxy card in the enclosed postage paid envelope or voting online or telephonically at your earliest convenience.

We look forwardAlthough we still intend to seeing you athold the Annual Meeting in person, we are actively monitoring developments related to the coronavirus (COVID-19) and are sensitive to the public health concerns and the protocols that federal, state and local governments may impose. In the event that alternative arrangements for our Annual Meeting.Meeting become required or advisable, we will announce these arrangements as promptly as practicable, which may include holding the meeting partially or solely by means of remote communication. Please monitor our website atwww.catofashions.com/info/investor-relations for updated information and check the website in advance of the meeting. Please retain your 16-digit control number, which can be found on your proxy card and on the instructions that accompanied your proxy materials, as this control number will be necessary to facilitate your remote participation if the meeting format is changed.

Sincerely yours,

JOHN P. D. CATO
Chairman, President and
Chief Executive Officer

8100 Denmark Road
P. O. Box 34216
Charlotte, NC 28234
(704) 554-8510

The Cato Corporation

TO THE SHAREHOLDERS OF
THE CATO CORPORATION

Notice is hereby given that the Annual Meeting of Shareholders of The Cato Corporation (the “Company”) will be held on Thursday, May 24, 201821, 2020 at 11:00 A.M., Eastern Time, at the Corporate Office of the Company, 8100 Denmark Road, Charlotte, North Carolina 28273, for the following purposes:

The Board of Directors has fixed the close of business on March 20, 201823, 2020 as the record date for determination of shareholders entitled to notice of, and to vote, at the meeting or any adjournments thereof.

The foregoing items of business are more fully described in the Proxy Statement accompanying this notice. As described in the Proxy Statement, although our current certificate of incorporation does not include a provision providing our board of directors the power to adopt, amend or repeal our Bylaws, since the time of our initial public offering in 1987, our Board has amended our Bylaws to effect the following changes:

Our Board has determined that it is in the best interest of the Company and our stockholders to ratify, and has approved the ratification of, each of these Bylaw amendments in accordance with Section 204 of the Delaware General Corporation Law (“DGCL”) and Delaware common law. This notice constitutes the notice required to be given to our stockholders under Section 204 of the DGCL in connection with such ratification. Under Section 204 of the DGCL, when a matter is submitted for ratification at a stockholder meeting, any claim that a defective corporate act ratified under Section 204 is void or voidable due to the failure of authorization, or that the Delaware Court of Chancery should declare in its discretion that a ratification in accordance with Section 204 of the DGCL not be effective or be effective only on certain conditions, must be brought within 120 days from the validation effective time, which would be the time the stockholders approve the ratification.

Although we still intend to hold the Annual Meeting in person, we are actively monitoring developments related to the coronavirus (COVID-19) and are sensitive to the public health concerns and the protocols that federal, state and local governments may impose. In the event that alternative arrangements for our Annual Meeting become required or advisable, we will announce these arrangements as promptly as practicable, which may include holding the meeting partially or solely by means of remote communication. Please monitor our website atwww.catofashions.com/info/investor-relations for updated information and check the website in advance of the meeting. Please retain your 16-digit control number, which can be found on your proxy card and on the instructions that accompanied your proxy materials, as this control number will be necessary to facilitate your remote participation if the meeting format is changed.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 24, 2018:21, 2020:

This Proxy Statement, the accompanying proxy card and The Cato Corporation Annual Report on Form
Form 10-K for the 20172019 fiscal year is available at:

www.catofashions.com/info/investor-relations

By Order of the Board of Directors

Christin J. Reische Assistant Secretary

Dated: April 23, 201820, 2020

The Cato Corporation

8100 Denmark Road
Charlotte, North Carolina 28273

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of The Cato Corporation (the “Company”) for use at the Annual Meeting of Shareholders of the Company (the “meeting”) to be held on May 24, 2018,21, 2020, and at any adjournment or adjournments thereof. This Proxy Statement and the accompanying proxy card are first being mailed to shareholders on or about April 23, 2018.20, 2020.

Only shareholders of record at the close of business on March 20, 201823, 2020 are entitled to notice of and to vote at the meeting. As of March 20, 2018,23, 2020, the Company had outstanding and entitled to vote 23,046,90221,881,638 shares of Class A Common Stock (“Class A Stock”) and 1,763,652 shares of Class B Common Stock (“Class B Stock”). Holders of Class A Stock are entitled to one vote per share and holders of Class B Stock are entitled to ten votes per share. Holders of Class A Stock and holders of Class B Stock vote as a single class.

In the event that alternative arrangements for the meeting become required or advisable, we will announce these arrangements as promptly as practicable, which may include holding the meeting partially or solely by means of remote communication. Please monitor our website atwww.catofashions.com/info/investor-relations for updated information and check the website in advance of the meeting. Please retain your 16-digit control number, which can be found on your proxy card and on the instructions that accompanied your proxy materials, as this control number will be necessary to facilitate your remote participation if the meeting format is changed.

All proxies properly executed and received prior to the meeting will be voted at the meeting. If a shareholder specifies how the proxy is to be voted on any of the business to come before the meeting, the proxy will be voted in accordance with such specification. If no specification is made, the proxy will be votedFORthe election of nominees John P. D. Cato,Pamela L. Davies, Thomas E. MeckleyB. Henson and Bailey W. Patrick,Bryan F. Kennedy, III,FORapproval of the Company’s Amended and Restated Certificate of Incorporation to expressly authorize the Board to amend the Company’s Bylaws, as amended, along with certain technical changes,FORratification of the Board’s previously adopted amendments to the Bylaws,FORapproval of the Company’s Amended and Restated Bylaws,FORthe resolution approving the Company’s executive compensation program,FORthe resolution to approve The Cato Corporation 2018 Incentive Compensation Plan, andFORthe ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending February 2, 2019.January 30, 2021. A proxy may be revoked at any time prior to its exercise by written notice to the Secretary of the Company at the Corporate Office of the Company, by executing and delivering a proxy with a later date, or by voting in person at the meeting.

If you plan to attend and vote at the meeting and your shares are held in the name of a broker or other nominee, please bring with you a proxy or letter from the broker or nominee to confirm your ownership of shares.

In accordance with applicable Delaware law and the Company’s Bylaws, the holders of a majority of the combined voting power of Class A Stock and Class B Stock present in person or represented by proxy at the meeting will constitute a quorum. Abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum. Broker non-votes arise when beneficial shareholders do not give their banks, brokers or other nomineesnominees’ instructions for voting their shares and the banks, brokers or other nominees do not have authority to vote the shares on a matter because the matter is not considered routine. The only such routine item on the ballot for which uninstructed banks or other nominees may vote is the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm.

With regard to the election of directors, votes may either be cast in favor of or withheld and, assuming the presence of a quorum, directors will be elected by a plurality of the votes cast. Votes that are withheld will be excluded entirely from the vote and will have no effect on the outcome of the election. Abstentions and broker non-votes are not counted for purposes of election of directors. The affirmative vote of 66 2/3% of the combined voting power of the Class A Stock and Class B Stock entitled to vote is required to approve the Company’s Amended and Restated Certificate of Incorporation. The affirmative vote of a majority of the combined voting power of the Class

A Stock and Class B Stock entitled to vote is required to ratify each of the Board’s previously adopted amendments to the Bylaws. The affirmative vote of a majority of the combined voting power of the Class A Stock and Class B Stock entitled to vote is required to approve the Company’s Amended and Restated Bylaws. The affirmative vote of a majority of the combined voting power of the Class A Stock and Class B Stock present in person or represented by proxy at the meeting and entitled to vote is required to approve the non-binding advisory vote on the Company’s executive compensation. The proposal to approve the 2018 Incentive Compensation Plan requires the affirmative vote of a majority of the combined voting power of the Class A Stock and Class B Stock present in person or represented by proxy at the meeting and entitled to vote. The ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm requires the affirmative vote of a majority of the combined voting power of the Class A Stock and Class B Stock present in person or represented by proxy at the meeting and entitled to vote. On any proposal other than the election of directors, abstentions and broker non-votes will have the same effect as a negative vote against the proposal.

The Company will bear the cost of this solicitation including the expense of preparing, printing, and mailing these proxy materials to shareholders. The Company will reimburse brokers, dealers, banks, and other custodians, nominees, and fiduciaries for their reasonable expenses in forwarding proxy solicitation materials to beneficial owners of the Company’s Class A Stock and Class B Stock and securing their voting instructions. The Company has also retained Georgeson, LLC., a proxy solicitation firm, to assist in the solicitation of proxies for a fee of $9,500.00 plus reasonable out-of-pocket expenses.

The independent election inspector(s) appointed for the Annual Meeting will determine whether or not a quorum is present and will tabulate votes cast by proxy or in person at the Annual Meeting.

These proxy materials are available in PDF and HTML format atwww.catofashions.com/info/investor-relations and will remain posted until the conclusion of the meeting. Information on the Company’s website, however, does not form a part of this Proxy Statement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth, as of March 20, 2018,23, 2020, certain information regarding the ownership of the outstanding shares of Class A Stock and Class B Stock by (i) each director and nominee, (ii) each person who is known by the Company to own more than 5% of such stock, (iii) each executive officer listed in the Summary Compensation Table, and (iv) all directors and executive officers as a group. Unless otherwise indicated in the footnotes below, each shareholder named has sole voting and investment power with respect to such shareholder’s shares. Unless otherwise indicated, the address of each shareholder listed below is 8100 Denmark Road, Charlotte, North Carolina 28273.

PROPOSAL 1 —– ELECTION OF DIRECTORS

The Board of Directors, currently consisting of eight members, is divided into three classes with terms expiring alternately over a three-year period. The terms of three incumbent directors, John P. D. Cato,Pamela L. Davies, Thomas E. MeckleyB. Henson and Bailey W. Patrick,Bryan F. Kennedy, III expire at this year’s Annual Meeting. Each of them hasThe directors have been recommended by the Corporate Governance and Nominating Committee and nominated by the Board for re-election and to serve until the 20212023 Annual Meeting and until their successors are elected and qualified. The Corporate Governance and Nominating Committee reviews and recommends, and the Board nominates, director candidates in accordance with the Company’s Bylaws and the policies described below under “Corporate Governance Matters – Director Nomination Criteria and Process.”

It is the intention of the persons named in the proxy to vote for John P. D. Cato,Pamela L. Davies, Thomas E. MeckleyB. Henson and Bailey W. PatrickBryan F. Kennedy, III to serve until the 20212023 Annual Meeting and until their successors are elected and qualified, except to the extent authority to so vote is withheld with respect to one or more nominees. Should any nominee be unable to serve, which is not anticipated, the proxy will be voted for the election of a substitute nominee selected by the Board of Directors. The three nominees shall be elected by a plurality of the votes of Class A Stock and Class B Stock voting as a single class.

The directors recommend that shareholders voteFORthe election of Dr. Davies and Messrs. Cato, MeckleyHenson and PatrickKennedy as members of the Board of Directors.

As discussed in the Director Nomination Criteria and Process section below, the Board believes its directors possess a diverse and extensive background of knowledge and both professional and life experience that can support growth, evaluate risk and provide sufficient oversight to the Company. The members of the Board were selected based on their professional achievements, broad experience, wisdom, character, integrity, ability to make independent, analytical inquiries and intelligent decisions, sound and mature business judgment, ability to understand the business environment and ability to collaborate in an effective manner at the Board level. In addition, individual directors were selected based on many factors including, but not limited to, the following:

In particular, for each director identified below, the Board believes that the sum of the experience, qualifications, attributes and skills described below in such director’s biographical information qualifies that director for service on the Board of Directors.

Nominees

Information with respect to each nominee, including biographical data for at least the last five years, is set forth below.

John P. D. Cato,Dr. Pamela L. Davies67,has been employed as an officer of the Company since 1981 and 63, has been a director of the Company since 1986. Since January 2004, he has served as Chairman,April 2018. Dr. Davies was the President and Chief Executive Officer. From May 1999of Queens University of Charlotte, Charlotte, North Carolina, from 2002 to January 2004, he served as President, Vice Chairman2019. Prior to that, she was Dean of the Board and Chief Executive Officer. From June 1997McColl School of Business at Queens University of Charlotte from 2000 to May 1999, he served as President, Vice Chairman of the Board and Chief Operating Officer. From August 1996 to June 1997, he served as Vice Chairman of the Board and Chief Operating Officer. From 1989 to 1996, he managed the Company’s off-price concept, serving as Executive Vice President and as President and General Manager of the It’s Fashion! concept from 1993 to August 1996. Mr. Cato previously served as2002. She is currently a director of Harris Teeter Supermarkets,the YMCA, USA Sonoco Products, Inc., formerly Ruddick Corporation.and Atrium Health. She was previously a director of Charming Shoppes from 1998 to 2009, C&D Technologies, Inc. from 1998 to 2010, and Family Dollar Stores, Inc. from 2009 to 2015. The Board nominated Mr. Catoconcluded that Dr. Davies is qualified to serve as a Board member based on his knowledge of all aspects of the Company’sher background in business education and his substantialBoard experience onwith other retailers and contributions to the Company’s Board,public companies, among other skills and attributes.

Thomas E. MeckleyB. Henson, 73,65, has been a director of the Company since May 2009.2011. Mr. Meckley formerlyHenson is a licensed attorney and is a founder and has served as a consultant to Agility Recovery Solutions, an onsite mobile business continuity solutions company, from 2005 through May 2015. He was employed byCEO of American Spirit Media, LLC, which owns network-affiliated television stations in the public accountingsouth and mid-west. Mr. Henson practiced law at the firm of ErnstRobinson, Bradshaw & Young LLP from 1967 to 2005 and served as a Managing Partner of theHinson in Charlotte, North Carolina, office from 19851980 to 1995.1999. Mr. Meckley previouslyHenson is an investor in several privately owned real estate,

hospitality and leisure related businesses. Mr. Henson served on the BoardBoards of Trustees of Elizabethtown College, a liberal arts college in Pennsylvania.Portrait Innovations from 2002 to 2017, and Park Sterling Bank from 2006 to 2017. The Board nominatedconcluded Mr. MeckleyHenson is qualified to serve as a Board member based on his experience in public accounting,electronic and print media and legal experience with retail companies, among other skills and attributes.

Bailey W. PatrickBryan F. Kennedy, III, 56,62, has been a director of the Company since MayAugust 2009. Since October 2010, Mr. PatrickKennedy has been a Managing Partner of MPV Properties LLC, formerly Merrifield Patrick Vermillion, LLC, a privately held company specializing in real estate brokerage and development services. Mr. Patrick served as a Managing Partnerthe North Carolina/Virginia Division President for South State Bank since the sale of Merrifield Patrick from FebruaryPark Sterling Corporation (holding company for Park Sterling Bank) to October 2010 andSouth State Corporation on November 30, 2017. Prior to that, Mr. Kennedy served as President of Bissell-Patrick, LLCPark Sterling Bank from 1999 to 2010, both predecessor firms to Merrifield Patrick Vermillion, LLC, holding various other positions with Bissell-Patrick since 1984. He2006 until November 2017 and was a member of its Board from 2006 until 2010. Mr. Kennedy also serves onserved as the BoardPresident of Directors forPark Sterling Corporation from January 2011 until 2017, and carried the additional title of Chief Executive Officer of Park Sterling Bank from January 2006 until August 2010. Mr. Kennedy was the North Carolina Thread TrailMarket President of Regions Bank, located in Charlotte, North Carolina, thefrom January 2004 to January 2006. The Board of Visitors for UNC-Chapel Hill, a Trustee for the YMCA of Greater Charlotte and Trustee Emeritus of Queens University. He previously served on the Board of Directors of Harris Teeter Supermarkets Inc., formerly Ruddick Corporation, as the Chairman of the Board of Trustees of the YMCA of Greater Charlotte, andconcluded that Mr. Kennedy is qualified to serve as a Trustee of Queens University in Charlotte, NC. The Board nominated Mr. Patrickmember based on his experience in commercial real estate leasingbanking and development and experience gained in service on other boards,finance, among other skills and attributes.

Continuing Directors

Information with respect to the five continuing members of the Board of Directors, including biographical data for at least the last five years, is set forth below.

John P. D. Cato, 69, has been employed as an officer of the Company since 1981 and has been a director of the Company since 1986. Since January 2004, he has served as Chairman, President and Chief Executive Officer. From May 1999 to January 2004, he served as President, Vice Chairman of the Board and Chief Executive Officer. From June 1997 to May 1999, he served as President, Vice Chairman of the Board and Chief Operating Officer. From August 1996 to June 1997, he served as Vice Chairman of the Board and Chief Operating Officer. From 1989 to 1996, he managed the Company’s off-price concept, serving as Executive Vice President and as President and General Manager of the It’s Fashion! concept from 1993 to August 1996. Mr. Cato previously served as a director of Harris Teeter Supermarkets, Inc., formerly Ruddick Corporation. The Board nominated Mr. Cato based on his knowledge of all aspects of the Company’s business and his substantial experience on and contributions to the Company’s Board, among other skills and attributes.

Theresa J. Drew, 62, has been a director of the Company since May 2019. Ms. Drew was the Managing Partner for the Carolinas practice of Deloitte LLP from 2011 to 2019. Previously, she served as the Managing Partner in San Diego, California, from 2001 to 2011, and as the Partner in Charge of the Audit practice in Phoenix, Arizona, from 1998 to 2001. Ms. Drew started her career with Deloitte in 1979, and primarily served clients in the retail, manufacturing and hospitality industries, and is licensed as a Certified Public Accountant. Ms. Drew has served on the Board of Directors of Sonoco Products Company since 2018. Ms. Drew is a trustee of The University of North Carolina at Charlotte and is Chair of the Board of Directors of the YMCA of Greater Charlotte. The Board nominated Ms. Drew based on her experience in public accounting, among other skills and attributes.

Thomas E. Meckley, 75, has been a director of the Company since May 2009. Mr. Meckley formerly served as a consultant to Agility Recovery Solutions, an onsite mobile business continuity solutions company, from 2005 through May 2015. He was employed by the public accounting firm of Ernst & Young LLP from 1967 to 2005 and served as a Managing Partner of the Charlotte, North Carolina, office from 1985 to 1995. Mr. Meckley previously served on the Board of Trustees of Elizabethtown College, a liberal arts college in Pennsylvania. The Board nominated Mr. Meckley based on his experience in public accounting, among other skills and attributes.

Bailey W. Patrick, 58, has been a director of the Company since May 2009. Since October 2010, Mr. Patrick has been a Managing Partner of MPV Properties LLC, formerly Merrifield Patrick Vermillion, LLC, a privately held company specializing in real estate brokerage and development services. Mr. Patrick served as a Managing Partner of Merrifield Patrick from February to October 2010 and President of Bissell-Patrick, LLC from 1999 to 2010, both predecessor firms to Merrifield Patrick Vermillion, LLC, holding various other positions with Bissell-Patrick since 1984. He also serves on the Board of Directors for the Carolina Thread Trail in Charlotte, North Carolina, a Trustee for the YMCA of Greater Charlotte and Trustee of Queens University. He previously served on

the Board of Directors of Harris Teeter Supermarkets Inc., formerly Ruddick Corporation. The Board nominated Mr. Patrick based on his experience in commercial real estate leasing and development and experience gained in service on other boards, among other skills and attributes.

D. Harding Stowe, 62,64, has been a director of the Company since February 2005. Mr. Stowe was the President and Chief Executive Officer of R.L. Stowe Mills, Inc. from 1994 to 2009. Mr. Stowe also has been the Chairman and Chief Executive Officer of New South Pizza (Brixx Wood Fired Pizza) since 1997. Additionally, he serves as the Secretary and Treasurer of The Stowe Foundation, Inc., as the President of the Daniel J. Stowe Botanical Garden, and as the Vice President of Seven Oaks Farm Foundation. The Board concluded that Mr. Stowe is qualified to serve as a Board member based on his experience in senior management and leadership positions with several companies and boards, among other skills and attributes.

Edward I. Weisiger, Jr., 57, has been a director of the Company since May 2010. Mr. Weisiger has served as President of CTE since 1991 and Chairman since 2010 and served in various positions with the firm since 1988. Mr. Weisiger is a principal and founding partner of Beacon Partners, a commercial real estate development and asset management firm and a principal and founding partner of Cresset Capital Partners and WSC & Company, both private equity entities that invest in small and medium size manufacturers, distributors and asset intensive services businesses. Mr. Weisiger is a past member of the Executive Committee of the North Carolina Chamber and a past member of the Board of Directors of the North Carolina Trucking Association and a past chair of the Charlotte Chamber of Commerce. The Board concluded that Mr. Weisiger is qualified to serve as a Board member based on his experience in senior management with various companies and commercial real estate development, among other skills and attributes.

Dr. Pamela L. Davies, 60, has been a director of the Company since April 2018. Dr. Davies has been President of Queens University of Charlotte, Charlotte, NC, since 2002. Prior to that, she was Dean of the McColl School of Business at Queens University of Charlotte from 2000 to 2002. She is currently a director of YMCA, USA Sonoco Products, Inc., and Atrium Health. She was previously a director of Charming Shoppes from 1998 to 2009, C&D Technologies, Inc. from 1998 to 2010, and Family Dollar Stores, Inc. from 2009 to 2015. The Board concluded that Dr. Davies is qualified to serve as a Board member based on her background in business education and Board experience with other retailers and public companies, among other skills and attributes.

Thomas B. Henson, 63, has been a director of the Company since May 2011. Mr. Henson is a licensed attorney and is a founder and has served as CEO of American Spirit Media, LLC, which owns network-affiliated television stations in the south and mid-west. Mr. Henson practiced law at the firm of Robinson, Bradshaw & Hinson in Charlotte, North Carolina from 1980 to 1999. Mr. Henson is an investor in several privately owned real estate, hospitality and leisure related businesses. Mr. Henson served on the Boards of Portrait Innovations

from 2002 to 2017, and Park Sterling Bank from 2006 to 2017. The Board concluded Mr. Henson is qualified to serve as a Board member based on his experience in electronic and print media and legal experience with retail companies, among other skills and attributes.

Bryan F. Kennedy, III, 60, has been a director of the Company since August 2009. Mr. Kennedy has served as the North Carolina/Virginia Division President for South State Bank since the sale of Park Sterling Corporation (holding company for Park Sterling Bank) to South State Corporation on November 30, 2017. Prior to that, Mr. Kennedy served as President of Park Sterling Bank from 2006 until November 2017 and was a member of its Board from 2006 until 2010. Mr. Kennedy also served as the President of Park Sterling Corporation from January 2011 until 2017, and carried the additional title of Chief Executive Officer of Park Sterling Bank from January 2006 until August 2010. Mr. Kennedy was the North Carolina Market President of Regions Bank, located in Charlotte, North Carolina, from January 2004 to January 2006. The Board concluded that Mr. Kennedy is qualified to serve as a Board member based on his experience in banking and finance, among other skills and attributes.

The five continuing members of the Board of Directors are divided into two classes with current terms expiring in 20192021 and 2020.2022. On the expiration of each director’s term, his or her successor in office will be elected for a three-year term. The terms of Messrs. StoweCato, Meckley and WeisigerPatrick expire in 2019.2021. The terms of Dr. DaviesMs. Drew and Messrs. Henson and KennedyMr. Stowe expire in 2020.2022.

PROPOSAL NO. 2

APPROVAL OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE
THE BOARD THE POWER TO ADOPT, AMEND OR REPEAL THE BYLAWS

General

Under Delaware law, a corporation’s stockholders have the power to adopt, amend or repeal the corporation’s bylaws. The certificate of incorporation may also confer that power concurrently on the board of directors. Predecessor versions of the Company’s Certificate of Incorporation date back to 1946. Certain versions of these predecessor certificates of incorporation include a provision authorizing the board the power to adopt,  amend, or repeal the Company’s Bylaws. However, such a provision was not included in the Company’s Certificate of Incorporation as of the time of the Company’s initial public offering in 1987.

Our Board believes that it was the intent at the time of the 1987 initial public offering to provide the Board with the power to adopt, amend or repeal the Company’s Bylaws. The Bylaws, which were included with the Company’s registration statement filed with the SEC in connection with the Company’s 1987 initial public offering, include a provision stating that either the stockholders or the Board have authority to amend the Bylaws.

Since the time of the Company’s initial public offering, the Board has amended the Bylaws to effect the following changes:

A more detailed description of these amendments previously adopted by the Board is set forth in Proposal No. 4 (Ratification of Board’s Previously Adopted Amendments to the Bylaws), and Attachment B contains a marked version of the provisions in the current Bylaws as modified by these amendments.

Description of the Proposed Amendment

The Board believes it is in the best interest of the stockholders to provide the Board the power to adopt, amend or repeal our Bylaws. The proposed Amended and Restated Certificate of Incorporation would add the following provision, which is consistent with what the Board believes was the intent at the time of the 1987 initial public offering and is consistent with similar provisions included in the certificates of incorporation of most publicly-traded companies:

THIRTEENTH. The Board of Directors is expressly empowered to adopt, amend or repeal the By-Laws of the Corporation. The stockholders shall also have the power to adopt, amend or repeal the By-Laws of the Corporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Amended and Restated Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

Attachment [A] includes a marked version of the Company’s current Certificate of Incorporation, as proposed to be amended and restated with the proposed amendments included. In addition to the new provision to give the Board power to amend the Bylaws, the Amended and Restated Certificate of Incorporation includes a number of other technical changes, which are primarily cleanup to make consistent the use of defined terms and similar clarifying changes. A small number of changes that are more substantive are explained below:

Reasons for the Proposed Amendments to the Certificate of Incorporation

The Board believes that approval of the Amended and Restated Certificate of Incorporation giving our Board power to adopt, amend and repeal our Bylaws is consistent with the intent to confer power on the Board at the time of the Company’s initial public offering to adopt, amend or repeal the Bylaws.

The Board also believes this power is standard among public companies. According to data from FactSet’s SharkRepellent, a corporate governance database, boards of directors have authority to amend the bylaws without stockholder approval at more than 97% of the companies it tracks in each of the S&P 500, S&P 1500 and Russell 3000 indices.

If the Company’s Certificate of Incorporation does not confer power to adopt, amend and repeal the Bylaws upon the board of directors, stockholders would need to approve all future amendments to the Bylaws, which would be burdensome and unnecessary, and is an inefficient use of Company resources. For example, bylaws typically contain provisions pertaining to the internal operations of a company and its board, such as provisions related to the conduct of board meetings and the appointment of officers. Seeking stockholder approval of every change to these types of provisions would be cumbersome and would involve stockholders in day-to-day aspects of the Company’s governance practices. Adoption of these amendments will facilitate the Board’s ability to efficiently implement and adapt corporate policies and procedures as changing circumstances may necessitate, without having to incur the expense and delay of soliciting proxies and votes from stockholders and holding a meeting of our stockholders. If this proposal is approved, the power that will be conferred upon the directors will not divest or limit the power of stockholders to adopt, amend or repeal our Bylaws.

Vote Requirement and Board Recommendation

Approval of the proposed Amended and Restated Certificate of Incorporation requires the affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the combined voting power of the Class A Stock and Class B Stock entitled to vote. Abstentions and broker non-votes will be counted as present for purposes of determining the presence of a quorum and will have the effect of a vote “against” the proposal.

The Board unanimously proposes and recommends that you vote “FOR” approval of the proposed Amended and Restated Certificate of Incorporation to provide our Board the power to adopt, amend or repeal our Bylaws.

If the proposed Amended and Restated Certificate of Incorporation is approved, it will become legally effective upon the filing of the Amended and Restated Certificate of Incorporation with the Delaware Secretary of State. If stockholders approve the proposal, the Company intends to make that filing promptly after the 2020 Annual Meeting.

If the proposed Amended and Restated Certificate of Incorporation is not approved, as discussed above, the Company will continue to operate under the Bylaws and stockholders will need to approve any future amendments.

PROPOSAL NO. 3

RATIFICATION OF THE BOARD’S PREVIOUSLY ADOPTED
AMENDMENTS TO THE BYLAWS

As previously discussed, since the time of the Company’s 1987 initial public offering, the Board has amended the Bylaws to effect the following changes:

These amendments were adopted by our Board, but were not adopted by the stockholders. Our Board has determined that it is in the best interests of the Company and its stockholders to ratify each of these Bylaw amendments in accordance with Section 204 of the DCGL and Delaware common law.

Section 204 of the DGCL allows a Delaware corporation, by following specified procedures, to ratify a defective corporate act retroactive to the date the defective corporate act was originally taken. If any one or more of the Bylaw amendments listed above is ratified by stockholders, this ratification will be retroactive to the date the Board approved that Bylaw amendment. This Proxy Statement and the notice provided to stockholders in connection with the annual meeting constitute the notice required to be given to our stockholders under Section 204 of the DGCL in connection with the ratification of these Bylaw amendments.

Attachment [B] to this Proxy Statement contains a marked version of the text of each of the 1993 Amendment, the 2007 Amendment and the 2009 Amendment, showing changes to the respective provisions of the Bylaws affected by these amendments. Each of these amendments is explained in more detail below.

Proposal 3A: Ratification of Bylaw Amendment vesting power in Chairman and Chief Executive Officer to appoint other officers and reassign duties.The 1993 Amendment made certain changes to the first paragraph of Section 1 of Article V relating to the listing of officers that are or may be appointed to the Board and adopted a new second paragraph to vest the Chairman and Chief Executive Officer “with the authority to appoint such other officers and reassign such duties as he may deem appropriate from time to time” and provided that all officers serve at the discretion of the Chairman and Chief Executive Office and that the Chairman and Chief Executive Officer would keep the Board informed of any such appointments and changes at regular Board meetings. The Board has approved the ratification of this Bylaw amendment previously adopted by the Board.

Proposal 3B: Ratification of Bylaw amendment authorizing uncertificated shares.The 2007 Amendment was implemented in a response to a change in New York Stock Exchange rule that required listed companies to provide in their governing documents their stock be issuable in uncertificated as well as certificated form in order to facilitate participation in the Direct Registration Program. Accordingly, the amendment to Sections 1 and 4 of Article VI regarding “Certificates” and “Transfers of Stock” were revised to include wording that contemplated and authorized the issuance of uncertificated shares of stock. The Board has approved the ratification of this Bylaw amendment previously adopted by the Board.

Proposal 3C: Ratification of Bylaw amendment changing the maximum advance period for which a record date may be set from fifty (50) to sixty (60) days.The 2009 Amendment increased the maximum time in advance of a meeting date, dividend date, or other events that a record date could be set from what had previously been fifty (50) days in Article VI, Section 5 to sixty (60 days). The Board has approved the ratification of this Bylaw amendment previously adopted by the Board.

There may be uncertainty regarding the validity and effectiveness of the 1993 Amendment, the 2007 Amendment or the 2009 Amendment or actions taken in reliance on the 1993 Amendment, the 2007 Amendment or the 2009 Amendment. Accordingly, we are submitting these amendments for ratification by the stockholders.

Vote Requirement and Board Recommendation

Ratification of each of these Bylaw amendments requires the affirmative vote of a majority of the combined voting power of the Class A Stock and Class B Stock entitled to vote. Abstentions and broker non-votes will be counted as present for purposes of determining the presence of a quorum and will have the effect of a vote “against” each proposal.

The Board unanimously proposes and recommends that you vote “FOR” approval of each proposal described above to ratify amendments to the Bylaws that were previously adopted by the Board.

The ratification of any one or more of the Bylaw amendments described above is not conditioned on the approval of Proposal No. 2 —(approval of the Company’s Amended and Restated Certificate of Incorporation) or on Proposal No. 4 (approval of the Company’s Amended and Restated Bylaws). If the stockholders approve Proposal No. 2, but do not approve Proposal No. 4 or one or more of the Bylaw amendments previously adopted by the Board, the Board may adopt any or all such non-ratified amendments any time in the future. Also, if the stockholders ratify one or more of the previously adopted Bylaw amendments described above, any such ratified provisions will become a part of the Company’s Bylaws, even if the stockholders do not approve Proposal No. 4 (approval of the Amended and Restated Bylaws).

Time Limitations on Legal Challenges to the Ratifications

If stockholders ratify any Bylaw amendment described above, under the DGCL any claim that (1) the ratified Bylaw amendment is void or voidable due to a failure of authorization, or (2) the Delaware Court of Chancery should declare in its discretion that the ratification of that Bylaw amendment not be effective or be effective only on certain conditions, must be brought within 120 days from the time the stockholders approved that ratification.

PROPOSAL NO. 4

APPROVAL OF AMENDED AND RESTATED BYLAWS

General

Our Board has determined that it is in the best interests of the Company and our stockholders to approve the proposed Amended and Restated Bylaws of the Company. These amendments are intended to conform the Bylaws to what the Board believes was the original intent prior to the Company’s 1987 initial public offering that the Board have authority to amend the Bylaws, to include substantially similar versions (with changes as discussed below) of the 1993 Amendment, 2007 Amendment and 2009 Amendment adopted by the Board, to conform the Bylaws to the Amended and Restated Certificate of Incorporation that is also being submitted for stockholder approval pursuant to Proposal No. 2 and to make certain other cleanup and technical changes.

Since the time of the Company’s initial public offering, the Board has amended the Bylaws to effect the following changes:

Attachment [C] to this Proxy Statement contains a marked version of the proposed Amended and Restated Bylaws showing the versions of the 1993 Amendment, the 2007 Amendment and the 2009 Amendment proposed to be included in the Amended and Restated Bylaw. Each of these amendments is explained in more detail below.

The 1993 Amendment made certain changes in the first paragraph of Section 1 of Article V relating to the listing of officers that are or may be appointed by the Board and adopted a new second paragraph to vest the Chairman and Chief Executive Officer “with the authority to appoint such other officers and reassign such duties as he may deem appropriate from time to time” and provided that all officers serve at the discretion of the Chairman and Chief Executive Officer and that the Chairman and Chief Executive Officer would keep the Board informed of any such appointments and changes at regular Board meetings. The 1993 Amendment is proposed to be carried forward in the Amended and Restated Bylaws with minor typographical and cosmetic changes, except that this power would be vested solely in the Chief Executive Officer as opposed to the Chairman and the Chief Executive Officer and would be qualified as “subject to the authority of the Board,” and the statement that officers and agents serve at the discretion of the Chief Executive Officer would be limited to those officers appointed by the Chief Executive Officer.

The 2007 Amendment was implemented in a response to a New York Stock Exchange rule change that required listed companies to provide in their governing documents their stock be issuable in uncertificated as well as certificated form in order to facilitate participation in the Direct Registration Program. Accordingly, the amendment to Sections 1 and 2 of Article VI regarding “Certificates” and “Transfers of Stock” were revised to include wording that contemplated and authorized the issuance of uncertificated shares of stock. The 2007 Amendment is proposed to be carried forward in the Amended and Restated Bylaws with minor typographical and cosmetic changes.

The 2009 Amendment increased the maximum time in advance of a meeting date, dividend payment date or other events that a record date could be set from what had previously been fifty (50) days in Article VI, Section 5 to sixty (60) days. The 2009 Amendment is proposed to be carried forward in the Amended and Restated Bylaws with minor typographical and cosmetic changes.

In addition, the proposed Amended and Restated Bylaws include minor technical, typographical and clarifying changes as shown in Attachment [C]. A small number of changes that are more substantive are explained below:

Reasons for the Proposed Amendments to the Bylaws

The Board believes that these proposed amendments reflected in the proposed Amended and Restated Bylaws, which give effect to the 1993 Amendment, the 2007 Amendment and the 2009 Amendment adopted by the Board, with changes as described above, and make certain cleanup and other changes described above, are consistent with the intent to confer power on the Board at the time of the Company’s 1987 initial public offering to adopt, amend or repeal the Bylaws and are consistent with the Board’s role in overseeing the day-to-day aspects of the Company’s governance practices and freshening the Bylaws from time to time to reflect changing circumstances.

Vote Requirement and Board Recommendation

Approval of the Amended and Restated Bylaws requires the affirmative vote of a majority of the combined voting power of the Class A Stock and Class B Stock entitled to vote. Abstentions and broker non-votes will be counted as present for purposes of determining the presence of a quorum and will have the effect of a vote “against” the proposal.

The Board unanimously proposes and recommends that you vote “FOR” approval of the Amended and Restated Bylaws.

If the proposed Amended and Restated Bylaws are approved, they will become legally effective immediately upon stockholder approval.

Approval of the Amended and Restated Bylaws is not conditioned on the approval of Proposal No. 2 (approval of the Company’s Amended and Restated Certificate of Incorporation) or on any of Proposal Nos. 3A, 3B, or 3C (ratification of the Board’s previously adopted amendments to the Bylaws). If the stockholders adopt Proposal No. 2, but do not approve the Amended and Restated Bylaws, the Board may adopt any or all of the proposed amendments reflected in the Amended and Restated Bylaws at any time in the future. Also, if the stockholders ratify one or more of the previously adopted Bylaw amendments described in Proposal Nos. 3A, 3B, 3C, any such ratified provisions will become a part of the Company’s Bylaws, even if the stockholders do not approve the Amended and Restated Bylaws.

PROPOSAL 5 – A NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Board is committed to corporate governance best practices and recognizes the significant interest of shareholders in executive compensation matters. As part of its commitment to a “pay for performance and retention” based compensation philosophy, and as required by Section 14A of the Securities Exchange Act, the Board will hold a non-binding advisory vote to approve the compensation of our named executive officers. Although this vote is advisory and is not binding on the Board, the Compensation Committee of the Board will take into account the outcome of the vote when considering future executive compensation decisions.

As discussed in the Compensation Discussion and Analysis included in this proxy statement, the Board believes that the current executive compensation program directly links executive compensation to performance and aligns the interests of executive officers with those of shareholders. For example:

For these reasons, the Board recommends that shareholders vote in favor of the following resolution:

“Resolved, that the shareholders approve, on a non-binding advisory basis, the compensation of the named executive officers of The Cato Corporation, as disclosed pursuant to the compensation disclosure rules of the SEC (which disclosure shall include the Compensation Discussion and Analysis, the compensation tables, and any related material).”

The above referenced disclosures appear at pages 2320 to 3736 of this proxy statement.Proxy Statement.

For the reasons stated above, the Board believes the compensation of our named executive officers is appropriate and recommends a voteFORapproval of this resolution.

PROPOSAL 3 — APPROVE THE 2018 INCENTIVE COMPENSATION PLAN

We are asking our shareholders to approve The Cato Corporation 2018 Incentive Compensation Plan (the “2018 Plan”). The 2018 Plan is intended to replace our 2013 Incentive Compensation Plan (the “2013 Plan”). In connection with recent changes in applicable law as well as other considerations, the Compensation Committee of the Board of Directors believes that it is in the best interests of the Company and its shareholders to establish a replacement incentive compensation plan to transition from the 2013 Plan and continue to allow the Company to provide a variety of equity-based incentives to key employees and directors of the Company and its subsidiaries. Therefore, the Compensation Committee adopted the 2018 Plan on March 28, 2018, with the 2018 Plan subject to and to be effective upon the requisite approval of the Company’s shareholders at our 2018 Annual Meeting of Shareholders.

The 2013 Plan was initially approved by our shareholders at our 2013 annual meeting. Under the 2013 Plan, the Company is authorized to issue up to 1,500,000 shares of Class A Stock. As of April 3, 2018, approximately 643,527 shares of Class A Stock are subject to currently outstanding awards and 856,473 shares of Class A Stock are available for future awards under the 2013 Plan. If the 2018 Plan is approved at the 2018 Annual Meeting, the 2013 Plan will automatically terminate on that date and no further awards will be granted thereunder. In addition to the initial share reserve of 4,000,000 shares of Class A Stock established for the 2018 Plan, any shares remaining available for issuance under the 2013 Plan upon its termination will become available for issuance under the 2018 Plan, and any shares subject to outstanding stock awards granted under the 2013 Plan that expire or terminate for any reason prior to exercise or settlement also will become available for issuance under the 2018 Plan. Approval of the 2018 Plan will not adversely affect rights under any outstanding awards previously granted under the 2013 Plan.

If the 2018 Plan is not approved by our shareholders, the 2013 Plan will continue in effect and the Company will continue to have the ability to grant awards under the 2013 Plan until its scheduled termination on February 28, 2023 or earlier termination by the Compensation Committee.

The 2018 Plan will allow the Company to continue to attract and retain key employees and directors as well as provide them with incentives to contribute to the Company’s growth and success and align their interests with those of the Company’s shareholders. The Company also reserves the right to pay discretionary bonuses or other types of compensation outside of the 2018 Plan.

The following is a summary of the 2018 Plan submitted for shareholder approval. The summary describes the principal features of the 2018 Plan, but it is qualified by reference to the full text of the 2018 Plan, which is included in this Proxy Statement as APPENDIX A.

Summary of Proposed 2018 Plan

Administration

The 2018 Plan will be administered by the Compensation Committee of the Board of Directors. The Compensation Committee will have the full authority to select the recipients of awards under the 2018 Plan, to grant awards under the 2018 Plan, to determine the type and size of awards, and to determine and amend the terms, restrictions and conditions of awards. Among other things, the Compensation Committee also will have the full authority to construe and interpret the 2018 Plan and any related award agreement, to establish rules and regulations relating to the administration of the 2018 Plan, to delegate administrative responsibilities, to determine rules and conditions for the deferral of payments under awards, and to make all other determinations and take any other actions that may be necessary or advisable for the administration of the 2018 Plan. The Committee also has the discretion to vary or amend the terms of awards and establish administrative rules, procedures and sub-plans to conform to or accommodate differences in laws, rules, regulations, customs or policies of applicable non-U.S. jurisdictions.

To the extent permitted by applicable law and to the extent that any such action will not prevent the 2018 Plan or any award from satisfying certain regulatory exemptions and requirements, the Compensation Committee may delegate to a subcommittee or executive officers of the Company (or other such persons it deems appropriate) the authority to perform such functions that the Compensation Committee determines; provided that awards to executive officers and related substantive matters will be determined solely by the Compensation Committee or an appropriate subcommittee.

Eligibility

Awards may be granted under the 2018 Plan to key employees of the Company and its subsidiaries who occupy responsible managerial or professional positions and who have the capability of making a substantial contribution to the success of the Company as determined by the Compensation Committee. Awards also may be granted to non-employee directors of the Company. In selecting recipients of awards and determining the applicable terms and conditions, the Compensation Committee may take into account any factors it deems relevant, including, among other things, their duties and the Compensation Committee’s assessment of their present and potential contributions to the success of the Company and its subsidiaries. The number of individuals who are eligible to participate in the 2018 Plan varies and, in light of the Compensation Committee’s discretion, the actual number of individuals who will be granted an award in the future cannot be determined. As of April 3, 2018, the Company had approximately 10,250 employees and non-employee directors.

Types of Awards

Awards under the 2018 Plan may be granted in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, incentive bonus awards and stock awards. Each type of award is discussed in more detail below.

Shares Subject to the 2018 Plan and Award Limits

If the shareholders approve the 2018 Plan, the number of shares of Class A Stock available for issuance under the 2018 Plan will be 4,000,000 shares, plus any shares remaining available for issuance under the 2013 Plan upon its automatic termination and any shares subject to outstanding stock awards granted under the 2013 Plan that expire or terminate for any reason prior to exercise or settlement. The number of shares of Class A Stock available for issuance under the 2018 Plan also will subject to adjustment as described below.

Shares of Class A Stock covered by awards that expire or are forfeited, canceled, settled in cash or otherwise terminated without the delivery of the full number of covered shares will be available for further awards under the 2018 Plan to the extent of such expiration, forfeiture, cancellation, cash settlement, etc. However, shares of Class A Stock subject to an award that are withheld or retained by the Company in payment of the exercise or purchase price of an award (including shares withheld or retained by the Company or not issued in connection with the net settlement or net exercise of an award), or tendered to, withheld or retained by the Company in payment of tax withholding obligations relating to an award, will not become available again for awards under the 2018 Plan.

The maximum number of shares of Class A Stock that may be issued pursuant to incentive stock options under the 2018 Stock Incentive Plan also will be 4,000,000 shares, subject to adjustment as described below.

The 2018 Plan provides that no employee may be granted options and/or stock appreciation rights under the 2018 Plan with respect to an aggregate of more than 300,000 shares of Class A Stock during any calendar year. With respect to all other types of awards, the 2018 Plan provides that no employee may be granted awards (whether such awards may be settled in shares of Class A Stock and/or cash) consisting of, covering or relating to, in the aggregate, more than 300,000 shares of Class A Stock during any calendar year. The 2018 Plan also provides that no non-employee director may be granted awards (whether such awards may be settled in shares of Class A Stock and/or cash) consisting of, covering or relating to, in the aggregate, more than 50,000 shares of Class A Stock during any calendar year.

In the event of any change in the number of outstanding shares of Class A Stock due to a stock split, stock dividend, spin-off or similar equity restructuring event, then to prevent the dilution or enlargement of rights, corresponding equitable adjustments shall be made in accordance with the 2018 Plan to, among other things, the limits on the number of shares of Class A Stock which may be issued under the 2018 Plan and the number and price of shares of Class A Stock subject to outstanding awards under the 2018 Plan. In the event of a change in corporate capitalization due to a reorganization, recapitalization, merger, consolidation or similar transaction affecting the Class A Stock, the Compensation Committee shall make adjustments to the number and kind of shares which may be issued under the 2018 Plan and to outstanding awards as it determines, in its discretion, to be appropriate.

Stock Options

Stock options may be granted under the 2018 Plan in the form of either incentive stock options (also referred to as “ISOs”) intended to qualify under Section 422 of the Code or nonstatutory stock options. Stock options give the recipient an opportunity to purchase shares of Class A Stock from the Company at a designated exercise price. Incentive stock options can be granted only to employees of the Company and eligible subsidiaries.

The exercise price of options granted under the 2018 Plan is determined at the discretion of the Compensation Committee, but the exercise price per share generally may not be less than the fair market value of a share of Class A Stock on the grant date of the option. In the case of incentive stock options granted to any holder on the grant date of more than 10% (directly or by attribution through relatives or entities in which the holder has an ownership interest) of the total combined voting power of all classes of stock of the Company or a parent or subsidiary corporation (a “10% Shareholder”), the exercise price per share may not be less than 110% of the fair market value of a share of Class A Stock on the grant date. Under the 2018 Plan, fair market value generally is based on the average of the high and low sale prices of the Class A Stock on the NYSE on the grant date of the option.

Unless otherwise provided by the Compensation Committee, the exercise price of an option generally may be paid in cash, and subject to applicable law and such rules as may be established by the Compensation Committee, (i) by tendering previously acquired shares of Class A Stock having an aggregate fair market value equal to the total exercise price as long as certain requirements are met, (ii) by means of a “cashless exercise” through an approved broker, and/or (ii) by means of a “net share settlement” procedure. The Compensation Committee also may provide that options may be exercised by other means consistent with applicable law.

The Compensation Committee establishes the time period within which options must be exercised, but this period may not exceed ten years from the grant date of the option or, in the case of incentive stock options granted to a 10% Shareholder, five years from the grant date of the option. Options may expire before the end of the option period if the option holder’s service with the Company terminates. Stock options will be exercisable at such time or times and subject to such restrictions as determined by the Compensation Committee. To the extent that the fair market value of incentive stock options (determined based on the fair market value on the grant date) that become exercisable for the first time in a calendar year exceeds $100,000, such options generally will be deemed nonstatutory stock options.

Except as otherwise provided by the Compensation Committee, the following rules apply if an option holder’s service with the Company and its subsidiaries terminates. If an option holder’s service terminates for any reason other than cause, death, disability or an eligible retirement, the option holder generally may exercise his or her stock options (to the extent then vested) within the 90-day period following such termination. If the option holder is terminated for cause, the option holder’s stock options will immediately expire and can no longer be exercised. If the option holder’s service terminates due to his or her death, disability or eligible retirement, options (to the extent then vested) generally may be exercised during the one-year period following termination. In no event can an option be exercised after the expiration of its term (i.e., the option period fixed by the Compensation Committee).

Options generally may not be transferred except by will or the laws of descent and distribution and options generally may be exercised during the lifetime of the option holder only by the option holder. However, the Compensation Committee, in its discretion, may permit the transfer of nonstatutory stock options, without consideration, to certain family members or family-related trusts, foundations or other entities, subject to limitations determined by the Compensation Committee.

Stock Appreciation Rights

Stock appreciation rights (or “SARs”) allow a recipient to receive upon exercise an amount equal to the excess of the then fair market value at that time of the shares of Class A Stock with respect to which the SARs are being exercised over the initial value assigned to such SARs. This amount may be payable in cash, shares of Class A Stock or a combination, as determined by the Compensation Committee. The initial value of SARs granted under the 2018 Plan is determined at the discretion of the Compensation Committee, but the initial value per share of Class A Stock covered by the SARs may not be less than the fair market value of a share of Class A Stock on the grant date. For this purpose, fair market value generally is based on the average of the high and low sale prices of the Class A Stock on the NYSE on the grant date of the SAR.

SARs may be granted in tandem with stock options or independently. The Compensation Committee will establish the time period within which SARs must be exercised, but this period cannot exceed ten years from the grant date of the SARs. SARs granted in tandem with stock options must have the same term as the options to which they relate. SARs may expire before the end of the exercise period if the recipient’s service with the Company and its subsidiaries ends. SARs will be exercisable at such time or times and subject to such restrictions as determined by the Compensation Committee. However, SARs granted in tandem with stock options may be exercised only with respect to the shares of Class A Stock for which their related stock options are then exercisable. The exercise of either options or SARs that are granted in tandem will result in the termination of the other to the extent of the number of shares of Class A Stock with respect to which such options or SARs are exercised.

If an individual’s service with the Company and its subsidiaries terminates, SARs then held by such individual will terminate on the same terms and conditions that apply to stock options as described above, unless otherwise provided by the Compensation Committee.

SARs generally may not be transferred except by will or the laws of descent and distribution and SARs generally may be exercised during the lifetime of the recipient only by the recipient.

Restricted Stock and Restricted Stock Units

Restricted stock is an award of shares of Class A Stock that is subject to restrictions and other terms and conditions set by the Compensation Committee. Restricted stock units are non-voting units of measurement that represent the contingent right to receive shares of Class A Stock, or the value of shares of Class A Stock, in the future, but no shares are actually awarded to recipients on the grant date. Once applicable restrictions lapse or have been satisfied, restricted stock units may be payable in cash, shares of Class A Stock or a combination thereof, as specified by the Compensation Committee.

The Compensation Committee determines the type of restrictions applicable to the award, which can include restrictions based on the occurrence of a specific event, continued service for a period of time or other time-based restrictions, or the achievement of financial or other business objectives. The Compensation Committee also determines the purchase price, if any, to be paid for the restricted stock or restricted stock units. Restricted stock units are not transferable and restricted stock generally may not be transferred until all restrictions applicable to the award have lapsed or been satisfied.

If the recipient’s service with the Company and its subsidiaries ends, all shares of restricted stock or restricted stock units, as the case may be, that are still subject to restrictions generally will be forfeited unless the Compensation Committee provides otherwise.

Except as otherwise provided by the Compensation Committee, a recipient of restricted stock generally will have certain rights and privileges of a shareholder, including the right to vote such shares of restricted stock and to receive cash dividends, if any (although the Compensation Committee may require that any dividends be reinvested in additional shares of restricted stock). A recipient of restricted stock units will not have any voting or other shareholder rights. However, the Compensation Committee may, in its discretion, provide that, if the Board of Directors declares a dividend with respect to the Class A Stock, a recipient of restricted stock units will receive dividend equivalents on terms set by the Compensation Committee.

Stock Awards

The Compensation Committee may grant other types of stock awards that involve the issuance of shares of Class A Stock or that are denominated or valued by reference to shares of Class A Stock. The terms and conditions applicable to such stock awards will be determined by the Compensation Committee in its discretion.

Incentive Bonus Awards

The Compensation Committee may award a key employee the opportunity to receive a cash bonus based on the achievement of one or more performance goals. The Compensation Committee will establish these performance goals and any other criteria that must be met, the period during which achievement of the performance goals and other criteria will be measured, the formula or basis by which the actual amount of the incentive bonus will be

determined, the timing and form of payment, and any forfeiture events. Incentive bonuses will be paid in cash. The Compensation Committee may, in its discretion, reduce the amount of or eliminate an incentive bonus award. The 2018 Plan provides that in no event may a participant receive an incentive bonus for any calendar year greater than $3,000,000.

In general, a participant must remain employed by the Company and its subsidiaries through the last day of the performance period and at the time of the payment in order to receive an incentive bonus, unless otherwise provided by the Compensation Committee.

Change in Control

In the event of a change in control (as defined in the 2018 Plan) of the Company, all outstanding stock options and SARs will become fully vested and exercisable. In addition, the Compensation Committee may (i) require holders of options or SARs to surrender such awards in exchange for a payment, in cash or Class A Stock as determined by the Compensation Committee, equal to the amount by which the “change in control price” for each share of Class A Stock subject to the outstanding awards exceeds the option price of such options or initial value of such SARs, as the case may be; (ii) after giving award holders an opportunity to exercise their outstanding options and SARs, terminate any or all unexercised options and SARs; or (iii) provide for the assumption or substitution of such outstanding awards by the surviving company in the change in control. The term “change in control price” is defined in the 2018 Plan and generally means, with certain exceptions, the higher of (a) the highest sales price per share of Class A Stock reported on the NYSE Composite Index during the 60-day period ending on the date of the change in control; or (b) if the change in control is the result of a tender or exchange offer or certain specified corporate transactions, the highest price paid per share of Class A Stock in such transaction.

In the event of a change in control of the Company, all outstanding restricted stock, restricted stock units and other stock awards (other than those that have been designated as performance compensation) also will fully vest with all restrictions and conditions related thereto being deemed satisfied.

Incentive bonuses and performance compensation that have been earned but remain outstanding as of the date of a change in control will be payable in full immediately upon a change in control. Upon a change in control of the Company, any other incentive bonus and performance compensation awards will be accelerated and immediately vested, paid or delivered, as the case may be, on a pro rata basis based upon assumed achievement of all target performance goals and the length of time within the performance period that has elapsed prior to the change in control.

Amendment, Suspension or Termination

The Compensation Committee may at any time amend, suspend or terminate the 2018 Plan in whole or in part for any reason, provided that such action may be subject to shareholder approval if necessary to comply with legal, regulatory or securities exchange listing requirements or the action is intended to allow the exercise price of outstanding stock options to be reduced by repricing or replacing such options. Unless terminated earlier, the 2018 Plan will terminate on May 23, 2028, a term of ten years from its effective date upon receipt of shareholder approval at the 2018 Annual Meeting. The Compensation Committee also may amend the terms of an outstanding award. Generally, no amendment, suspension or termination of the 2018 Plan (or amendment of an outstanding award) may adversely affect in any material way the rights of the holder of an outstanding award without his or her consent. However, the Compensation Committee may amend the 2018 Plan and/or any outstanding award without obtaining the award holder’s consent if it deems the amendment necessary or advisable to comply with applicable law or address other regulatory matters.

The 2018 Plan also provides that, to the extent necessary to comply with or as required by applicable law, all awards granted under the 2018 Plan are intended to be subject to the terms and conditions of any policy regarding clawbacks, forfeitures or recoupments adopted by the Company.

Forfeiture and Clawback

The 2018 Plan provides that, in addition to forfeitures due to vesting schedules or termination of service, the Compensation Committee may specify in an award agreement that an award and/or a participant’s rights, payments and benefits with respect to an award (including, but not limited to, the right to receive an award, to exercise an award, to retain an award, to retain cash or Class A Stock acquired in connection with an award and/or to retain the profit or gain realized in connection with an award) will be subject to reduction, rescission, forfeiture or recoupment by the Company upon certain events, such as termination of service for cause, breach of confidentiality or other restrictive covenants, engaging in competition against the Company or other conduct or activity that is detrimental to the business or reputation of the Company. The 2018 Plan also provides that all awards granted under the 2018 Plan are, to the extent necessary to comply with or as required by applicable law, intended to be subject to the terms and conditions of any policy regarding clawbacks, forfeitures or recoupments adopted by the Company.

Market Price of Class A Stock

The closing price of a share of the Class A Stock on the NYSE on April 3, 2018 was $15.15.

2018 Plan Benefits

At its March 2018 meeting, the Compensation Committee approved stock awards based on a value of $50,000 to each non-employee Director effective June 1, 2018, subject to shareholder approval of the 2018 Plan, that are not subject to vesting requirements or any other restrictions. The number of shares to be awarded to each director is 3,628 shares of Class A Stock.

At the same March 2018 meeting, the Compensation Committee also approved opportunities for the Named Executive Officers to be awarded performance-based cash incentive bonuses under the 2018 Plan for the 2018 fiscal year.

Since all awards under the 2018 Plan are made at the discretion of the Compensation Committee, all other future awards that may be received by any executive officers or directors pursuant to the 2018 Plan are not presently determinable.

2018 Incentive Compensation Plan New Plan Benefits

Certain Federal Income Tax Consequences

The following is a brief summary of the current federal income tax consequences that generally apply with respect to awards that may be granted under the 2018 Plan. Applicable laws and regulations may change in the future. This summary is not intended to be exhaustive and does not describe a number of tax rules, including any foreign, state or local tax consequences, tax withholding requirements or various other rules that could apply to a particular individual or to the Company and its subsidiaries under certain circumstances (and references to the Company in this section include the applicable subsidiary, if any). This summary is not intended or written to be used (and cannot be used by any taxpayer) to avoid penalties that may be imposed on a taxpayer. Tax implications may vary due to individual circumstances. Participants should consult their personal tax advisors about the tax consequences related to awards under the 2018 Plan.

Nonstatutory Stock Options

The grant of nonstatutory stock options generally should have no federal income tax consequences to the Company or the option holder. Upon the exercise of a nonstatutory stock option, the option holder will recognize ordinary income equal to the excess of the fair market value of the acquired shares on the date of exercise over the exercise price paid for the shares. The Company generally will be allowed a federal income tax deduction equal to the same amount that the option holder recognizes as ordinary income (subject to deduction limitations under Section 162(m) of the Code). In the event of the disposition of the acquired shares of Class A Stock, any additional gain (or loss) generally will be taxed to the option holder as either short-term or long-term capital gain (or loss) depending on how long the shares were held.

Incentive Stock Options

The grant and exercise of incentive stock options generally should have no federal income tax consequences to the Company. The grant and exercise of incentive stock options generally have no ordinary income tax consequences to the option holder. However, upon the exercise of an incentive stock option, the option holder treats the excess of the fair market value on the date of exercise over the exercise price as an item of tax adjustment for alternative minimum tax purposes, which may result in alternative minimum tax liability.

If the option holder retains the shares of Class A Stock acquired upon the exercise of an incentive stock option for at least two years following the grant date of the option and one year following exercise of the option, the subsequent disposition of such shares will ordinarily result in long-term capital gains or losses to the option holder equal to the difference between the amount realized on disposition of the shares and the exercise price. The Company will not be entitled to any deduction in such case. If the holding period requirements described above are not met, the option holder will recognize ordinary income upon disposition of the Class A Stock equal to the excess of the fair market value of the shares on the date of exercise (or, if less, the sale price received on disposition of the shares) over the exercise price. The Company will be entitled to a corresponding tax deduction in the same amount (subject to deduction limitations under Section 162(m) of the Code). Any additional gain or loss realized by the option holder on the disposition of the Class A Stock will be taxed as short-term or long-term capital gain or loss, as applicable.

Stock Appreciation Rights

The grant of SARs generally should have no federal income tax consequences to the Company or the recipient. Upon the exercise of SARs, the recipient will recognize ordinary income equal to the amount of cash received and the fair market value of any shares of Class A Stock received. The Company generally will be allowed a federal income tax deduction equal to the same amount that the recipient recognizes as ordinary income (subject to deduction limitations under Section 162(m) of the Code).

Restricted Stock

The recipient of restricted stock normally will recognize ordinary income when the restrictions on the restricted stock lapse (i.e., at the time the restricted shares are no longer subject to a substantial risk of forfeiture or become transferable, whichever occurs first). However, a recipient instead may elect to recognize ordinary income at the time the restricted stock is granted by making an election under Section 83(b) of the Code within 30 days

after the grant date. In either case, the recipient will recognize ordinary income equal to the fair market value of such shares of stock at the time the income is recognized (reduced by the amount, if any, the recipient paid for the stock). The Company generally will be entitled to a corresponding tax deduction (subject to deduction limits under Section 162(m) of the Code). If the recipient subsequently disposes of the shares of Class A Stock, any additional gain or loss should be eligible for short-term or long-term capital gain or loss tax treatment, depending on how long the shares were held after the ordinary income was recognized. If a recipient makes an “83(b) election” and then forfeits the shares of Class A Stock, the recipient normally will not be entitled to any tax deduction or refund with respect to the tax already paid.

Restricted Stock Units

The grant of restricted stock units generally should have no federal income tax consequences to the Company or the recipient. When the restricted stock units vest and become payable, the recipient will recognize ordinary income equal to the amount of cash received and the fair market value of any shares of Class A Stock received. The Company generally will be allowed a federal income tax deduction equal to the same amount that the recipient recognizes as ordinary income (subject to deduction limitations under Section 162(m) of the Code).

Other Stock Awards

The federal income tax consequences of other stock awards will depend on the form of such awards.

Incentive Bonus Awards

An employee will not have taxable income upon the grant of a contingent right to an incentive bonus. The incentive bonus will be taxable income to the employee at the time it is paid and the Company will be entitled to a corresponding tax deduction (subject to deduction limitations under Section 162(m) of the Code).

Section 409A of the Code

Section 409A of the Code provides requirements for certain nonqualified deferred compensation arrangements. If applicable, Section 409A of the Code also imposes penalties (including an additional 20% tax) on the recipient of deferred compensation in the event such compensation fails to comply with Section 409A of the Code. Unless otherwise provided by the Compensation Committee, awards granted under the 2018 Plan generally are intended to either comply with or meet the requirements for an exemption from Section 409A of the Code. The Company does not guarantee to any participant that the 2018 Plan or any award granted under the 2018 Plan complies with or is exempt from Section 409A of the Code and the Company will not have any liability to, or indemnify or hold harmless any individual with respect to any tax consequences that arise from any failure to comply with or meet an exemption under Section 409A of the Code.

The full text of the 2018 Plan can be found in APPENDIX A of this Proxy Statement.

The directors recommend that shareholders voteFORadoption of the 2018 Plan.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information regarding the shares of the Company’s Class A Stock and Class BStock issuable under all of the Company’s equity compensation plans as of February 3, 2018:

MEETINGS AND COMMITTEES

During the fiscal year ended February 3, 2018,1, 2020, the Company’s Board of Directors held fourfive meetings. The Board typically schedules a meeting in conjunction with the Company’s Annual Meeting of Shareholders and expects that all directors will attend the Annual Meeting absent a schedule conflict or other valid reason. All directors attended the Company’s 20172019 Annual Meeting.

The Board of Directors, pursuant to authority granted in the Company’s Bylaws, has established a standing Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee. During the fiscal year ended February 3, 2018,1, 2020, the Audit Committee held eightnine meetings; the Compensation Committee held three meetings and the Corporate Governance and Nominating Committee held fourthree meetings.

All directors attended 100% of the scheduled Board of Directors meetings and applicable Committee meetings during fiscal 2017.2019.

Audit Committee

The Board of Directors established the Audit Committee in accordance with Section 3(a) (58) (A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities regarding the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the safeguarding of the Company’s assets, the independence, qualifications, and performance of the independent auditors, the performance of the CompanyCompany’s internal audit function, the Company’s internal control over financial reporting and such other matters as the Committee deems appropriate or as delegated to the Committee by the Board of Directors from time to time. See “Corporate Governance Matters - Board of Directors Risk Management Oversight” below for the Committee’s role in that process. During the fiscal year ended February 3, 2018,1, 2020, the Audit Committee held eightnine meetings. The Board of Directors has determined that each member of the Audit Committee is an independent director in accordance with the independence requirements of the New York Stock Exchange (“NYSE”). In addition, the Board has determined that each member of the Audit Committee meets the heightened standards of independence for audit committee members under the Exchange Act and that each is “financially literate” in accordance with the requirements of the NYSE. No member of the Audit Committee simultaneously serves on the audit committee of more than two other public companies. Messrs. Thomas E. Meckley (Chair), Thomas B. Henson, and Bryan F. Kennedy, III, and Ms. Theresa J. Drew are the members of the Audit Committee. The Board of Directors has determined that Thomas E. Meckley, Thomas B. Henson, and Bryan F. Kennedy, III, and Theresa J. Drew qualify as audit committee financial experts within the meaning of SEC rules. The Audit Committee operates under a Board-approved charter, a copy of which is available on the Company’s website atwww.catofashions.com/info/investor-relations. Additional information concerning the Audit Committee is set forth below under “Proposal 56 – Ratification of Independent Registered Public Accounting Firm.”

Compensation Committee

The Compensation Committee assesses the Company’s overall compensation programs and philosophies. The Committee reviews and approves, on an annual basis, the Company’s goals and objectives for compensation of the Chief Executive Officer and evaluates the Chief Executive Officer’s performance in light of those goals and objectives at least annually. Based on this evaluation, the Compensation Committee determines and reports to the Board the Chief Executive Officer’s compensation, including salary, incentive bonus and performance-based equity compensation.

The Compensation Committee also reviews and approves, on an annual basis, the evaluation process and compensation structure of the Company’s other executive officers and evaluates those other officers’ performance at least annually. Based on this evaluation, the Compensation Committee determines and reports to the Board the other executive officers’ compensation, including salary, incentive bonus and equity compensation. The Compensation Committee also reviews on an annual basis and recommends to the Board the form and amount of director compensation. In addition, the Compensation Committee grants restricted stock and other awards to associates of the Company and its subsidiaries pursuant to the Company’s benefit and incentive compensation plans and reports such actions to the Board of Directors. See “Corporate Governance Matters - Board of Directors Risk Management Oversight” below for the Committee’s role in that process.

The Compensation Committee has the power to delegate its authority to subcommittees. The chairmanchair of any such subcommittee must report regularly to the full Compensation Committee.

The Board of Directors has determined that each member of the Compensation Committee is an independent director in accordance with the independence requirements of the NYSE listed company manual.NYSE. Under such rules, the Board has reviewed the source of compensation of each committee member and whether each member is affiliated with the Company, any subsidiary of the Company or an affiliate of a subsidiary of the Company.

The Compensation Committee held three meetings during the fiscal year ended February 3, 2018.1, 2020. The Compensation Committee operates under a Board-approved charter, a copy of which is available on the Company’s website atwww.catofashions.com/info/investor-relations. Messrs. D. Harding Stowe (Chair), and Bailey W. Patrick and Edward I. Weisiger, Jr.Dr. Pamela Davies are the members of the Compensation Committee. Effective April 1, 2018, Dr. Pamela L. Davies is a member of the Compensation Committee.

Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee reviews, evaluates and recommends nominees for the Board of Directors. In addition, the Corporate Governance and Nominating Committee monitors and evaluates the performance of the directors on a periodic basis, individually and collectively. The Committee also periodically reviews the Company’s Governance Guidelines, Code of Conduct and Code of Ethics and recommends changes to the Board of Directors. The Board of Directors has determined that each member of the Corporate Governance and Nominating Committee is an independent director in accordance with the independence requirements of the NYSE. The Corporate Governance and Nominating Committee held fourthree meetings during the fiscal year ended February 3, 2018.1, 2020. The Corporate Governance and Nominating Committee operates under a Board-approved charter, a copy of which is available on the Company’s website atwww.catofashions.com/info/investor-relations. Messrs. Bryan F. Kennedy, III (Chair), Thomas B. Henson, Bailey W. Patrick and D. Harding Stowe, Ms. Theresa J. Drew and Edward I. Weisiger, Jr.Dr. Pamela L Davies are the members of the Corporate Governance and Nominating Committee. Effective April 1, 2018, Dr. Pamela L. Davies is a member of the Corporate Governance and Nominating Committee.

CORPORATE GOVERNANCE MATTERS

Corporate Governance Guidelines

In furtherance of its longstanding goal of providing effective governance of the Company’s business and affairs for the benefit of shareholders, the Board of Directors has approved Corporate Governance Guidelines for the Company. The Guidelines are available on the Company’s website atwww.catofashions.com/info/investor-relations.

Director Independence

The Board of Directors made a determination as to the independence of each of its members. The Board of Directors determined that each of the following Board members is independent: Dr. Pamela L. Davies, Ms. Theresa J. Drew, Mr. Thomas B. Henson, Mr. Bryan F. Kennedy, III, Mr. Thomas E. Meckley, Mr. Bailey W. Patrick and Mr. D. Harding Stowe and Mr. Edward I. Weisiger, Jr.Stowe. The Board determined that Mr. John P. D. Cato, an employee of the Company, is not independent. The Board made these determinations based upon the definition of an “independent director” set forth in the NYSE listing standards (the “NYSE Independence Tests”). A director will be independent only if the director has no material relationship with the Company. For purposes of such determination, the Board must affirmatively determine whether a material relationship exists between the director and the Company. This determination is in addition to the analysis under the NYSE Independence Tests and SEC Exchange Act Rules 1-A-310A-3 (for Audit Committee members) and 10C-1 (for Compensation Committee members) and must be based on the overall facts and circumstances specific to that director.

In order to assist the Board in making determinations of independence, and consistent with NYSE IndependenceNYSEIndependence Tests, a director will not be deemed independent if:

Additionally, the Board of Directors determines annually and at such time that a director is appointed to the Compensation Committee that the members of the Compensation Committee qualify as “outside directors” under Section 162(m) of the Internal Revenue Code (the “Code”), and qualify as “Non-Employee Directors” under Rule 16b-3 of the Exchange Act.

Board Leadership Structure

Mr. John Cato has served in the combined role of Chairman of the Board of Directors and Chief Executive Officer (“CEO”) since 2004. The Board annually considers his effectiveness in both capacities. The Board believes that its current governance structure provides independent Board leadership while deriving benefit from having the CEO serve as the Board chair. This structure provides an opportunity for the individual with primary responsibility for managing the Company’s day-to-day operations in a historically volatile industry segment to chair meetings of the Board as it discusses key business and strategic issues. The Board also believes having the positions combined facilitates the implementation and execution of both the Company’s short- and long-term strategies with a single vision.

As Lead Independent Director, Mr. Bryan Kennedy, III assists the Board in providing independent oversight of the Company’s operations, short- and long-term strategic plans and the Chairman and CEO’s performance and compensation among other duties. The Lead Independent Director, through his role as chair of the Corporate Governance and Nominating Committee, also manages the process of annual director self-assessment and evaluation of the Board as a whole.

Executive Sessions of Non-Management Directors

Non-management Board members meet without management at regularly scheduled executive sessions. In addition, to the extent that the group of non-management directors includes directors that are not independent, at least once a year there will be scheduled an executive session including only independent directors. The Lead Independent Director presides over meetings of the non-management or independent directors.

Board of Directors Risk Management Oversight

As the Company’s principal governing body, the Board of Directors has the ultimate responsibility for overseeing the Company’s risk management practices. As part of its oversight function, the Board reviews and monitors financial, strategic and operational risk through annual and periodic reviews with management.

Pursuant to its charter, the Audit Committee has primary responsibility for monitoring financial reporting risk. As part of its responsibilities, the Committee reviews with management and the independent auditors the Company’s policies in regard to risk assessment and management and assesses the steps management has taken to minimize risks to the Company. The Committee regularly meets with the independent auditor and management, as appropriate, to review significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements. The Audit Committee also reviews the effectiveness and integrity of the Company’s financial reporting processes and the Company’s internal control structure (including both disclosure controls and procedures and internal control over financial reporting).

As part of its oversight responsibilities, the Board of Directors relies upon the Compensation Committee to monitor and assess the Company’s compensation policies and practices as they relate to risk management and risk-taking incentives. On an annual basis, the Committee reviews the Company’s compensation policies and practices to determine how it compensates and incentivizes its employees (sometimes referred to herein as “associates”)associates and whether these policies and practices create risks that are reasonably likely to have a material adverse effect on the Company.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee consists of Messrs. D. Harding Stowe and Bailey W. Patrick and Edward I. Weisiger, Jr. and effective April, 1, 2018, Dr. Pamela L. Davies. Since the beginning of the Company’s last fiscal year, no member of the Compensation Committee is or has been an officer or employee of the Company and no executive officer of the Company served on the compensation committee or board of any company that employed any member of the Company’s Compensation Committee or the Board.

Code of Ethics and Code of Business Conduct and Ethics

The Company has adopted a written Code of Ethics (the “Code of Ethics”) that applies to the Company’s Chief Executive Officer (principal executive officer), Chief Financial Officer (principal financial officer), and Controller (principal accounting officer). The Company has adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) that applies to all directors, officers, and associates of the Company. The Code of Ethics and Code of Conduct are available on the Company’s website atwww.catofashions.com/info/investor-relations, under the “Corporate Governance” caption. Any amendments to the Code of Ethics or Code of Conduct with respect to directors or executive officers will be disclosed on the Company’s website promptly following the date of such amendment. In addition, any waivers of the Code of Ethics, or waivers of the Code of Conduct with respect to directors or executive officers, will be made only by the Board or a designated committee thereof, and will be disclosed within four business days.

Insider Trading and Hedging Policies

The Company has established policies prohibiting directors, officers and associates from purchasing or selling Cato securities while in possession of material, nonpublic information. The Company also has established policies that acknowledge Company associates may become aware of material nonpublic information of other companies in the course of their association with Cato. All directors, officers and associates are prohibited from purchasing or selling securities of other companies while they are in possession of, or aware of, such information and from passing such information on to other persons or entities who might purchase or sell the securities of such other companies.

In addition, no director, officer or associate of the Company may engage in any transaction in which they may profit from short-term speculative swings in the value of the Company’s securities. This prohibition includes “short sales” (selling borrowed securities to profit if the market price of the Company’s stock decreases), “put” or “call” options (publicly available rights to sell or buy securities within a certain period of time at a specified price) and hedging or any other type of derivative instrument designed to minimize the risk inherent in owning the Company’s stock.

Communications with Directors

All interested parties may communicate directly with any member or committee of the Board of Directors, or any group of directors, by writing to: Chair of the Corporate Governance and Nominating Committee, c/o Office of the Corporate Secretary, The Cato Corporation, 8100 Denmark Road, Charlotte, North Carolina 28273. Depending on the subject matter, the Chair of the Corporate Governance and Nominating Committee, with the assistance of the Company’s Vice President, General Counsel will determine whether to forward it to the director or directors to whom it is addressed, attempt to handle the inquiry directly (for example, where it is a request for information about the Company or it is a stock-related matter), or not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.

If the subject matter involves a matter relating to accounting, internal accounting controls or auditing matters, the Vice President, General Counsel or other designated compliance officer will report the matter to the Chair of the Audit Committee and also, unless directed otherwise by the Audit Committee in case such officer is subject of a complaint relating to such matters, advise the Chief Executive Officer and Chief Financial Officer. The Chair of the Audit Committee and the Chief Executive Officer will determine what action, if any, should be taken.taken including investigation of the matter if necessary. The Office of the Corporate Secretary and Chair of the Audit Committee will investigate the matter, if necessary, and file a report with the Audit Committee. The Audit Committee, at its discretion, may discuss the matter with the Board of Directors.

The Vice President, General Counsel will maintain a log of all complaints, tracking their receipt, investigation, and resolution and will prepare a periodic summary thereof for the Board of Directors, and the Audit Committee, as appropriate.

Director Nomination Criteria and Process

Directors may be nominated by the Board of Directors in accordance with the Company’s Bylaws or by shareholders in accordance with the procedures specified in Article II, Section 3 of the Company’s Bylaws. The Company’s Corporate Governance and Nominating Committee will consider all nominees, including any submitted by shareholders, for the Board of Directors. The assessment of a nominee’s qualifications will include a review of Board of Director qualifications as described in the Company’s Corporate Governance Guidelines.

As specified in Article II, Section 3 of the Company’s Bylaws, notice of a shareholder nomination for a director nominee to be considered at an Annual Meeting must be in writing and received by the Secretary of the Company at the Company’s principal executive offices, 8100 Denmark Road, Charlotte, North Carolina 28273-5975, no later than 90 days prior to the anniversary of the preceding year’s Annual Meeting.Meeting (no later than February 20, 2021 in the case of the Company’s 2021 Annual Meeting). The shareholder’s notice must also set forth, with respect to any director nominee, his or her name, age, business and residential addresses, principal occupation, the class and number of shares of the Company owned by the nominee, the nominee’s consent to being named in the proxy statement and serving if elected, and any other information required by the proxy rules of the Securities and Exchange Commission pursuant to Regulation 14A of the Exchange Act. The notice must also include the name and address of the nominating shareholder as it appears on the Company’s stock transfer records and the class and number of shares of the Company beneficially owned by the nominating shareholder.

The Corporate Governance and Nominating Committee will select qualified nomineescandidates and review its recommendations for nominees with the full Board of Directors. TheDepending on the timing of consideration of a candidate and such other factors as it deems appropriate, the Board of Directors will decide whether to invite the nomineecandidate to join the Board.Board or to stand for election as a nominee at an Annual Meeting of the Company. The Board believes that greater diversity leads to better corporate governance and that potential nominees should possess a diverse and extensive background of knowledge and both professional and life experience that can support growth, evaluate risk and provide sufficient oversight to the Company. Nominees for director will be selected on the basis of the diversity they bring to the Board, outstanding achievement in their professional careers, broad experience, wisdom, character, integrity, ability to make independent, analytical inquiries and intelligent decisions, sound mature business judgment, understanding of the business environment, willingness to devote adequate time to Board duties and ability to collaborate effectively at the Board level. The Board further believes that each director should have a basic understanding of (i) the principal operational and financial objectives and plans and strategies of the Company, (ii) the results of operations and financial condition of the Company and of any significant subsidiaries or business segments, and (iii) the relative standing of the Company and its business segments in relation to its competitors.

The Board will have a majority of directors who meet the criteria for independence required by the NYSE. The Corporate Governance and Nominating Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics that the Board seeks in Board members as well as the composition of the Board as a whole. The Board will also evaluate on an annual basis whether members qualify as independent under applicable standards. During the course of a year, directors are expected to inform the Board of any material changes in their circumstances or relationships that may impact their designation by the Board as independent.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information regarding the shares of the Company’s Class A Stock and Class BStockB Stock issuable under all of the Company’s equity compensation plans as of February 3, 2018:1, 2020:

20172019 EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview of Compensation Program for Named Executive Officers

Pay for performance and retention, both at the corporate and individual levels, is the overriding philosophy behind the design of the compensation program for Named Executive Officers (“NEOs” –see“Summary Compensation Table”) at The Cato Corporation. The Compensation Committee has established this philosophy to motivate superior individual and team performance among the executives. The elements of the compensation program are designed to reward higher levels of performance, which the Compensation Committee believes will attract and retain qualified and high-performing executives and, in turn, result in increased productivity and more effective execution of strategic decisions, leading ultimately to maintaining a competitive edge within the retail industry.

NEOs receive a base salary that recognizes the value of executive talent within the retail marketplace, and these salaries generally increase annually based upon individual and Company performance. The Company also provides NEOs with an annual cash incentive opportunity designed to reward achievement of annual business objectives, which the Compensation Committee believes will translate into long-term shareholder value.

The Company grants annual equity incentive awards that allow NEOs the opportunity to accumulate long-term capital in the form of Company stock, which alignsin order to align NEOs with shareholder interests and encourages retention through five-year vesting schedules.schedules, with vesting not beginning until year three. The Compensation Committee’s intent is to continue including annual equity incentive awards as an element of NEO compensation. The Compensation Committee also imposes strong stock ownership requirements for equity incentive awards which provide that all long-term incentive (“LTI”) eligible associates, including NEOs, must continue to maintain a multiple of their base salaries in Company stock before they can sellafter giving effect to any sale of vested restricted stock.

The Company maintains a nonqualified deferred compensation plan as a competitive measure that the Company believes will assist in attracting and retaining qualified and high-performing associates and to allow associates whose ability to contribute to the Company’s 401(k) plan are limited under discrimination testing to defer current compensation. The plan is generally open to associates in management, including NEOs and all members of the Board of Directors. The Company does not make contributions to the plan.

The Company provides its NEOs with the same core benefits that are offered to all full-time salaried associates. NEOs do not have employment or change of control agreements (see“Executive Agreements and Potential Payments on Termination or Change of Control”).

Say-on-Pay and Say-on-Frequency Results

The Compensation Committee reviewed the results of the non-binding “say-on-pay” proposal in the fiscal 20172019 proxy statement, which was the most recent advisory “say on pay” vote by the Shareholders. A substantial majority (96%(66%) of our shareholders who voted on our “say-on-pay” proposal approved our executive compensation as described in our fiscal 20172019 Compensation Discussion and Analysis and tabular disclosures. The Compensation Committee did not implement changes as a direct result of the vote. The Compensation Committee will review the results of the vote at the 20182020 Annual Meeting and will determine if any changes should be made to the compensation program, as a result of the vote or otherwise. The Compensation Committee will again submit its executive compensation program to a non-binding shareholder “say-on-pay” at the 20192021 Annual Meeting.

The Compensation Committee has decided that the Company will hold an advisory vote on the compensation of NEOs annually until the next required vote on the frequency of shareholder votes on executive compensation, which we expect to occur at the Company’s 2023 Annual Meeting.

External Benchmarking for Named Executive Officers

In reviewing the NEOs’ compensation structure, the Committee relies on multiple external benchmarking sources, including (1) a customized peer group of competitors and other retail companies within a reasonable revenue range, and (2) web-based data to stay abreast of current compensation practices and to determine geographic cost of living differences.

Peer Group

In 2017,2019, the Committee removed fromdecided to maintain the same peer group Ann Taylor Stores Corp. after it was acquired and removed Aeropostale Inc. and Pacific Sunwear of California Inc. after each filed for bankruptcy.as 2018. The peer group reflects those companies believed to be most comparable to the Company based on several factors, including, for example, revenue, market capitalization, number of stores, number of employees and shareholders’ equity. In addition to these factors, the Company has chosen to include companies that recruit from a similar candidate pool.

In 2018, the Committee added one company and removed one company from the group. Bebe Stores, Inc. was removed from the group after it filed for bankruptcy. The peer group reflects those companies believed to be most comparable to the Company based on several factors, including, for example, revenue, market capitalization, number of stores, number of employees and shareholders’ equity. In addition to these factors, the Company has chosen to include companies that recruit from a similar candidate pool. J. Jill, Inc. was added to the group based on these factors.

Competitive Positioning of Named Executive Officers

The CEO is compared to the industry peer group based on compatible title match, while the other NEOs are compared to retail survey matches based upon job content. The Committee believes annual equity awards allow it to employ a leveraged pay strategy for NEOs. The CEO’s base salary in 2019 comprised approximately 26% of his target total direct compensation, while the other NEOs’ base salaries ranged from 43% to 45% of their target total direct compensation. The CEO’s base salary in 2020 will comprise approximately 26% of his target total direct compensation, while the other NEOs’ base salaries will comprise approximately 45% of their target total direct compensation.

Target total direct compensation is defined as base salary plus target annual cash incentive opportunity plus target annual equity opportunity. For 2017,2019, total direct compensation of NEOs was between the 25^thand 75^thpercentiles of the appropriate market. In 2018,2020, the Committee also established target total direct compensation of NEOs between the 25^thand 75^thpercentiles of the appropriate market.

Total direct compensation for any particular NEO may fall above or below the percentiles discussed above, depending upon the Company’s financial performance and the NEO’s individual performance, experience in the function and/or tenure with the Company.

Components of Compensation

Our compensation program is designed around attracting and retaining talented leadership and to reward them for achieving key strategic and financial metrics. The CEO is compared to the industry peer group based on compatible title match, while the other NEOs are compared to retail survey matches based upon job content. The Committee believes annual equity awards allow it to employcompensation program provides a leveraged pay strategy for NEOs. The CEO’s base salary, in 2017 comprised approximately 28%a cash incentive bonus linked to pre-tax, pre-bonus income targets, and a long-term equity program designed to align executives’ interests with shareholder interests and the long-term performance of his target total directthe Company. The following table provides a summary of compensation while the other NEOs’ base salaries ranged from 45%components, objectives and details with respect to 47% of their target total direct compensation. The CEO’s base salary in 2018 will comprise approximately 26% of his target total direct compensation, while the other NEOs’ base salaries will comprise approximately 45% of their target total direct compensation.each component for fiscal 2019.

Annual Base Salary

The Committee believes that annual base salaries should be competitive within the retail industry for jobs of similar size and scope in order to attract and retain talented NEOs. Base salaries serve as the foundation for annual cash incentives (discussed below), which express incentive opportunity as a percentage of annual base salary. NEO base salary levels and potential increases are linked to individual performance. Furthermore, Company financial performance is a consideration when determining salary budgets, which determine annual salary increases for the NEOs and other members of management.

The Committee uses a formal job evaluation methodology to evaluate both the internal and external equity of the NEOs’ base salary levels. Internal equity is considered in order to ensure that NEOs are compensated at an appropriate level relative to other members of executive management, while external equity is a measure of how NEO compensation compares to compensation for comparable jobs at similar companies. The Committee, with the assistance of its outside consultant, intends to periodically review the Company’s NEO positions to assess the relative size of each position, specifically evaluating scope of responsibilities, complexity of the role, and its impact on the success of the business. Once the jobs are valued independently, the next step is to compare them to determine relative relationships. The final step then relates the job evaluation data to market-based pay opportunities. In addition, the Company’s retail peer group proxy data is reviewed annually as another method of evaluating the NEOs’ base salary competitiveness.

Based upon individual performance, in 20172019 the continuing NEOs received merit increases to their base salaries from 2016.2018. The CEO received an increase of 2.5% or $30,322,$31,857, while merit increases for the other continuing NEOs were 2.5%, ranging from $8,500$8,930 to $10,800.$11,347. Base salary represented 44%23% of the CEO’s total compensation for 20172019 (as reported in the Summary Compensation Table), and ranged from 64%41% to 68%43% for the three continuing NEOs.

Annual Cash Incentive Program

Pursuant to the Company’s 20132018 Incentive Compensation Plan (the “Plan”), which allows for a variety of cash and equity-based incentive awards, the Company provides NEOs with annual cash incentive opportunities conditioned upon achievement of consolidated pre-tax, pre-bonus income relative to a pre-established target.target, provided the Company is profitable. NEOs’ annual cash incentives are determined based upon two factors: (1) the degree to which the overall Company’s pre-tax, pre-bonus net income performance target is achieved, and (2) the NEO’s individual performance. The Committee believes establishing annual consolidated pre-tax, pre-bonus income targets focuses NEOs on achieving profitability through top-line revenue growth and margin improvement coupled with expense management.

NEOs have the opportunity to earn an annual incentive that is a percentage of their base salary. The CEO’s 2019 maximum annual incentive opportunity was set at 150% of base salary and other NEOs was set at 75%. Based on pre-defined performance goals, payouts can range from 0% to a maximum percentage of their base salaries, with100% of this incentive opportunity. Unlike many of our peer group, we do not allow payouts to exceed the CEO’s 2017 maximum potential setannual incentive opportunity, so that achievement of Company performance goal over target (maximum), does not result in payouts in excess of the bonus potential. Unlike many in of our peer group, we cap NEO annual incentive payout at 150% and other NEOs set at 75%the top end of these ranges, so that achievement of Company performance goals in excess of target results in broader sharing through additional Company payments under its ESOP program for the benefit for all qualified employees (sometimes referred to herein as “associates”) rather than enhancement of NEO incentive payouts; see “Employee Stock Ownership/Profit Sharing”. However, NEOs may receive less than their maximum potential (as would normally be calculated solely based upon Company financial performance) if their individual performance does not meet objective goals and expectations during the fiscal year. The Committee believes these maximum bonus opportunities provide sufficient motivation for the NEOs to strive to increase consolidated net income.

For fiscal 2017,2019, the Committee established a consolidated pre-tax, pre-bonus income target as the performance metric for the target annual cash incentive. In addition, the Committee established a threshold level of profitability target for the payment of a 20% bonus (the minimum), as well as a target for bonus payment of 100% (the maximum). Fiscal 2019 exceeded target by 58%, therefore bonuses were paid at 100%. Since bonuses are capped at 100%, the Company in 2019 contributed $7.2 million to the Employee Stock Ownership Plan (“ESOP”) for the benefit for all qualified associates.

For fiscal 2020, the Committee established a consolidated pre-tax, pre-bonus income target as the performance metric for the target annual cash incentive. The Committee has established a minimumtarget for the payment of a 20% bonus level(the minimum), as well as a target for bonus payment of 20%100% (the maximum).

Employee Stock Ownership Program/Profit Sharing

The Committee believes that associates should share in the profits and ownership of target annual cash incentive if the Company achieved fiscal 2017 consolidatedand has an Employee Stock Ownership Program (‘ESOP”)/Profit Sharing plan. All associates are automatically enrolled if they are over 21, worked at least 1,000 hours, and are employed on the last day of the plan year. Each year the company contributes 1% of pre-tax, pre-bonus income greater than 80%to the plan which is contributed to every associate’s individual ESOP account. The plan has a 5-year vesting with 20% vesting each year.

As many of fiscal 2016 consolidated pre-tax, pre-bonus income.

For fiscal 2018,our peer group, we cap NEO annual incentive payout at the Committee has established a consolidated pre-tax, pre-bonus incometop end of the incentive bonus ranges, so that achievement of Company performance goals in excess of target as the performance metricresults in broader sharing through additional Company payments under its ESOP program for the target annual cash incentive. The Committee has also established a minimum bonus levelbenefit for all qualified associates rather than enhancement of 20% of target annual cashNEO incentive ifpayouts. When the Company achievesperforms above the maximum target for any given year, any additional amount above the maximum target is contributed to the ESOP/Profit Sharing plan for distribution to all associates’ accounts. Because fiscal 2018 consolidated net income2019 exceeded the maximum target by 58%, the Company contributed $7.2M to the ESOP program for the benefit of $1,000,000.all qualified associates.

Long-Term Equity Incentives and Ownership Requirements

The Committee believes that LTI equity awards offer balance among the following goals of the Company’s LTI strategy:

The Committee currently grants restricted stock to NEOs other than the CEO with a five-year time-based vesting requirement, with 33%, 33% and 34% of the grant vesting on the third, fourth and fifth anniversaries of the grant date, respectively, to link NEO compensation with creation of long-term shareholder value, align management focus with shareholder interests and increase retention of key employees. The Committee believes that relying on meaningful stock ownership requirements with a range of 300% - 600% of base salary (details discussed below), along with time-based vesting (when coupled with the annual cash incentive) that does not begin until the third year, continues the financial performance incentive of increasing stock appreciation through higher net income, continues to promote ownership and long-term capital accumulation and enhances the long-term retention of key associates by increasing the value of shares subject to the time-based vesting requirements. Mr. Cato historically has received performance-based LTI awards tied to financial performance, which had also promoted the goal of preserving tax deductibility of the awards under Section 162(m) of the Code. See “Tax and Accounting Implications” below for further discussion of Section 162(m) and changes made to it by recent tax reform legislation. If an NEO terminates employment for any reason, the LTI award is forfeited to the extent it is not vested. Discretionary exceptions to forfeiture may be approved by the Committee (e.g., upon normal retirement).

To encourage management ownership of Company stock and thus further align their interests with shareholders, the Committee also established meaningful stock ownership requirements for LTI awards (i.e., a recipient cannot sell vested stock unless his/her ownership requirement is achieved and maintained, except for the payment of tax exception noted below). NEOs (as well as other LTI eligible associates) can satisfy these requirements through ownership of stock acquired with personal funds (including the exercise of stock options and stock held in the Employee Stock Purchase Plan) or by retaining vested restricted stock.

The Company’s current restricted stock ownership requirements vary depending upon position. The CEO must holdcannot sell vested stock unless he continues to own Company stock with a fair market value equal to at least 600% of his then base salary and the other NEOs must holdcannot sell vested stock unless they continue to own Company stock with a fair market value equal to at least 300% of their then base salary. The single exception to this ownership requirement is that up to 45% of vesting restricted stock may be sold to meet tax liabilities associated with that vesting. In setting these ownership requirements, the Committee relied upon prevalent data from its outside

compensation consultant regarding the general market. While the Committee chose to set the CEO’s ownership requirement higher than what was most prevalent for the general market, the other NEOs’ ownership requirements were established based upon the most prevalent multiples in the survey. The CEO has achieved the ownership requirements.

LTI award targets are expressed as a percent of base salary–140% for the CEO, and range from 50% to 60% for the remaining three NEOs. Under the Plan, the number of restricted shares granted to NEOs and other eligible associates are determined using the rolling average 90-day price set within the 30 days prior to the Compensation Committee meeting where the broad-based annual LTI award is approved. This methodology smoothes fluctuations in stock price, which could otherwise significantly impact the share calculation. Individual performance, based upon input from the CEO and/or Compensation Committee, can adjust final award payouts up or down.

The Committee believes that LTI equity awards offer balance among the following goals of the Company’s LTI strategy:

At its March 20172019 meeting, the Committee certified that the performance measures for Mr. Cato’s May 2017 grant at the full LTI award target were met.

Also, at its March 2017 meeting, the Committee established a performance-based grant for Mr. Cato with a target of 2017 consolidated net income of at least 50% of 2016 consolidated net income for the May 2017 LTI award. At the same meeting, the Committee also granted LTI awards based on the full LTI award targets to NEOs besides Mr. Cato and non-NEOs that are subject to five-year time-based vesting, with vesting not beginning until year three and previously described ownership requirements.

At its March 20182020 meeting, the Committee granted LTI awards based on the full LTI award targets to NEOs besides Mr. Cato and non-NEOs that are subject to five-year time-based vesting, with vesting not beginning until year three and previously described ownership requirements. At that meeting the Committee determined that the Company’s fiscal year 2017 Net Earnings Performance Goal previously established by the Committee relative to the contingent restricted stock award to be granted to Mr. Cato was not satisfied and therefore did not meet the requirements for making such grant. However, consistent with the terms of the Plan, the Committee has retained the right to make awards of equity compensation to the CEO and other Plan participants even if such arrangement does not meet the requirements for performance-based compensation. Further, the Committee remains committed to aligning the interests of the CEO with the interests of the Company and its shareholders, and believes that time-based vesting of equity compensation over an extended period provides a financial performance incentive. Therefore, in recognition of the CEO’s services to the Company during the challenging environment the Company experienced during the 2017 fiscal year, the Committee granted a discretionary LTI award to Mr. Cato in the amount of 50% of the potential performance-based grant subject to the same vesting and other terms and conditions as applied to the 2018 LTI awards granted to the Company’s other NEOs.

Stock option grants under the Plan cannot have exercise prices set at less than 100% of fair market value of the Company’s stock on grant date. The Plan defines “fair market value” as the average of the high and low share price on the grant date. The grant date for all broad-based LTI awards occurs on a pre-established future date set by the Committee. However, within guidelines established by the Committee, the CEO may make LTI awards in the case of new hires and promotions not involving NEOs, and the Committee shall ratify such awards provided they are consistent with established guidelines.

Nonqualified Deferred Compensation

The Company offers certain associates, generally management level and above, including NEOs, and all members of the Board of Directors the opportunity to participate in a nonqualified deferred compensation plan, which is an unsecured nonqualified defined contribution plan. The Deferred Compensation Plan allows participants to defer a maximum of 50% of their base salary and 100% of any bonuses paid, or in regard to Directors, 100% of the fees earned for board and committee services. Elections to participate in the Deferred Compensation Plan and the percentage of compensation to defer are made by participants on an annual basis, prior to the beginning of the year in which the compensation is earned. The Company does not currently make any contributions to the Deferred Compensation Plan.

The aggregate balance of each participant’s account consists of amounts that have been deferred by the participant plus earnings (or minus losses). In accordance with tax requirements, the assets of the Deferred Compensation Plan are subject to claims of our creditors. Account balances are deemed invested in accordance with investment elections designated by the participant. Investment option transfers may be made daily. The plan offers investment options similar to those available to participants in the Company’s 401(k) plan including fixed income funds, domestic and international equity funds, blended funds and pre-allocated lifestyle fund investments. Earnings and gains or losses on each deemed investment are credited or debited to each participant’s account on a monthly basis based on the actual performance of the funds in which the participant is deemed invested. The participants are 100% vested in their contributions and all earnings on those contributions.

A “Rabbi Trust” was established to provide a funding vehicle for the nonqualified obligations to the participants and this trust holds life insurance policies on some of the plan participants. The Company contributes cash to these life insurance policies in amounts equal to the compensation deferred by plan participants. The cash value of the life insurance policies is allocated among funds that are similar to the funds offered to participants as investments under the plan. Distributions from the plan may be made from the cash surrender value investments or from Company funds.

Deferred account balances are distributed to the plan participants in accordance with elections made by the participant at the time the deferral is made, subject to Section 409A of the Code. A participant may elect to receive distributions, either in a lump sum or in installments, upon his or her termination of employment with the Company, disability, death, an unforeseeable emergency or a change of control, each of the last two events as defined in Section 409A of the Code. A participant may also elect to receive distributions while still employed by the Company if he or she elects to have in-service or education distributions, made at a date specified by the participant.

Benefits and Perquisites

The Company provides NEOs with core benefits offered to its other full-time associates (e.g., medical, dental, vision care, prescription drugs, basic life insurance, short-term disability, long-term disability, 401(k), profit sharing, employee stock ownership plan, and employee stock purchase plan). In addition, NEOs and all salaried associates receive relocation assistance. The Company does not provide any other perquisites, including, for example, country club memberships, airplane usage or car allowances.

The Committee’s overall benefits philosophy for NEOs focuses on providing basic core benefits, with NEOs using their own cash compensation to obtain such other services as they individually determine appropriate.

Benefits and perquisites provided to the NEOs are summarized in the Summary Compensation Table. No NEO received perquisites in 20172019 with a total value equal to or greater than $10,000.

Executive Agreements and Potential Payments on Termination or Change of Control

The Company does not have individual employment agreements with NEOs, and the Committee does not intend to commence this practice in 2018.2020. No NEO has specific change of control benefits or protection different from any other salaried associate. Change of control treatment for NEOs will follow standard Company policies as outlined in LTI award agreements and the Plan (see “Potential Payments Upon Termination or Change in Control” below)below).

Tax and Accounting Implications

Section 162(m) of the Internal Revenue Code as in effect prior to the tax reform legislation signed into law on December 22, 2017, does not allow a tax deduction to public companies for compensation in excess of $1 million paid to any NEO unless the compensation qualifies as “performance-based.” .

The performance-based exception under Section 162(m) was repealed in the tax reform legislation. As a result of the change in law and pending guidance regarding the treatment of various arrangements that predated the law change or that may be grandfathered under certain circumstances, there are uncertainties whether compensation that the Committee intended to structure as performance-based compensation under Section 162(m) will be deductible.

In addition to Section 162(m), the Committee, with the assistance of management, alsohas considered other tax and accounting provisions in developing the pay programs for our NEOs, including the CEO. These include the accounting treatment of various types of equity-based compensation under Financial Accounting Standards Board Accounting Standards Codification Topic 718, as well as the overall income tax rules applicable to various forms of compensation. Nevertheless, the focus in the design of the NEO compensation program washas been to retain and motivate NEOs, not to achieve potential tax, accounting or other regulatory advantages. Therefore, while the Committee considers the potential deductibility of awards and accounting considerations as a factor in determining executive compensation, the Committee also looks at other factors in making its decisions, as noted above, and retains the flexibility to award compensation that it determines to be consistent with the goals of the Company’s executive compensation program even if the awards are not deductible for income tax purposes or provide favorable accounting treatment.

Engagement and Use of Independent Compensation Consultants

The Compensation Committee’s charter provides the Committee with the authority to engage compensation consultants (and other advisors) as it deems appropriate to assist with the performance of its duties.

The Committee has retained Aon Hewitt, an external compensation consultant, to advise the Committee on executive compensation issues. At the direction of the Committee, Aon Hewitt advised the Committee with comparative market data based on analyses of the practices of the peer group as well as advising on the composition of the peer group. Aon Hewitt provided guidance on industry best practices and advised the Committee on the structure of the executive compensation program for the CEO and other Senior Executive positions. The consultant’s primary contact with management is the Senior Vice President, Human Resources & Chief Legal Officer, who serves as the liaison with other members of management, as needed. Interaction with management occurs mainly to provide the consultant with Company data and a better understanding of the Company’s pay

policies and practices, which will assist them with the consulting engagement. The Compensation Committee has assessed the independence of Aon Hewitt pursuant to SEC rules and concluded that no conflict of interest exists that would prevent Aon Hewitt from independently representing the Compensation Committee.

Role of Executives in Establishing Compensation

Members of management are essential in providing input to the Compensation Committee throughout the year concerning the effectiveness of the executive compensation program, selection of performance criteria, financial performance of the Company, and performance of individual executives. The Chief Executive Officer, Chief Financial Officer and Senior Vice President, Human Resources & Chief Legal Officer are the key members of management who advise the Committee and supply needed and accurate information. The Committee regularly invites them to attend Committee meetings, participate in the presentation of materials, and facilitate discussions concerning management’s perceptions of the executive compensation programs and general views concerning a variety of compensation issues. Additional senior members of management participate in meetings as requested by the Committee. However, the Committee makes final decisions concerning all aspects of NEO compensation, including the design, structure and levels of NEO compensation, including salary increases, performance measures and targets, variable pay targets as a percent of base salaries, determination of annual incentive bonus payouts based upon individual and Company performance, and determination of LTI awards.

Compensation Committee Report

The Compensation Committee of the Board of Directors of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the management of the Company and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and, through incorporation by reference from this Proxy Statement, the Company’s Annual Report on Form 10-K for the year ended February 3, 2018.1, 2020.

Compensation Committee Members:

D. Harding Stowe, Chair
Bailey W. Patrick
Edward I. Weisiger, Jr.Dr. Pamela L. Davies

Summary Compensation Table

The amount of each component of All Other Compensation for each Named Executive Officer is as follows:

Fiscal 20172019 All Other Compensation

Grants of Plan-Based Awards in Fiscal 20172019

All restricted stock awards made during fiscal year 20172019 were of Class A Stock. All of the awards are subject to a five-year vesting requirement with 33%, 33% and 34% of the grant vesting on the third, fourth and fifth anniversaries of the grant date, respectively. The unvested awards are subject to forfeiture if the named executive terminates employment with the Company. Each grantee is required to own a certain multiple of theirhis base salary before being able to sell the restricted stock. However, each grantee may sell up to 45% of vesting restricted stock to meet associated tax liabilities.

Outstanding Equity Awards at 20172019 Fiscal Year-End

Option Exercises and Stock Vested in Fiscal 20172019

Nonqualified Deferred Compensation for Fiscal 20172019

Please see “Compensation Discussion and Analysis – Nonqualified Deferred Compensation” for a description of the Company’s Nonqualified Deferred Compensation Plan.

Potential Payments Upon Termination or Change in Control

Upon any change in control, all unvested restricted stock awards would immediately vest. Therefore, if any change in control had occurred on February 3, 2018,1, 2020, the following table shows the number of shares that would have vested and the value of those shares for each NEO based on the closing market value of the Company’s stock of $11.41$16.04 on the last trading day of the fiscal year, February 2, 2018.January 31, 2020.

Chief Executive Officer Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of the Securities and Exchange Commission’s Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. John Cato, our Chief Executive Officer. The pay ratio included below is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. Because the SEC rules for identifying the median-compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the amount of compensation of the median-compensated employee and the pay ratio reported by other companies may not be comparable to our estimates reported below, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

For our fiscal year ended February 3, 20181, 2020 (“fiscal 2017”2019”) the total compensation of the Company’s Chief Executive Officer of $2,802,436,$5,271,448, as presented in the Summary Compensation Table, was approximately 289507 times the total compensation of the Company’s median employee of $9,682$10,382 calculated in the same manner. The median employee is a part-time employee and was identified by reviewing the total cash compensation for all employees, excluding the Company’s Chief Executive Officer, who were employed by the Company on December 31, 2017.2019. All of the Company’s employees were included, whether employed on a full-time or part-time basis. Adjustments were made to annualize the compensation of employees who were not employed by the Company for the entire year. After identifying the median employee based on total cash compensation, the 20172019 annual total compensation was calculated for the median employee using the same methodology used for the Company’s Chief Executive Officer as presented in the Summary Compensation Table.

As additional information, the total compensation of the Company’s Chief Executive Officer was approximately 82178 times the total compensation of the Company’s median full-time employee of $34,314$29,611 calculated in the same manner as the Chief Executive Officer’s total compensation. The median full-time employee is a store manager and was identified by reviewing the total cash compensation for all full-time employees, excluding the Company’s Chief Executive Officer, who were employed on a full-time basis for the entire year.

FISCAL YEAR 20172019 DIRECTOR COMPENSATION

Directors who are not employees of the Company receive a fee for their services of $60,000 per year. Each non-employee director is paid $1,500 for attending each Board of Directors meeting and each committee meeting scheduled other than in conjunction with a regularly scheduled Board of Directors meeting. The Committee Chairs of the Corporate Governance and Nominating Committee and the Compensation Committee receive an additional $5,000 per year. The Committee Chair of the Audit Committee receives an additional $10,000 per year.

The Compensation Committee approved stock awards valued at $50,000. The number of shares granted on June 1, 20172019 is determined using the rolling average 90-day price set within the 30 days prior to the Compensation Committee meeting. The Company believes this methodology smoothes fluctuation in stock price, which could otherwise significantly impact the share calculation. The 90-day average price was $29.17$16.16 and was calculated using the stock prices between October 11, 201625, 2018 and February 20, 2017.25, 2019. The resulting 1,7153,095 shares per Director were not subject to vesting requirements or any other restrictions. The Committee intends to grant similar stock awards in future years. All subsequent grants will be effective June 1 each year.

Directors are reimbursed for reasonable expenses incurred in attending director meetings and committee meetings.

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

Review, Approval or Ratification of Related Person Transactions

The Company reviews all relationships and transactions in which the Company and its directors, executive officers, nominees or beneficial owners of more than 5% of any class of the Company’s stock or their immediate family members have a direct or indirect material interest. The Company’s internal controls require the Chief Financial Officer to review and approve all such related person transactions. Thereafter, the Company’s Audit Committee, in accordance with its charter, reviews all related person transactions required to be disclosed. The Related Person Policy for the Company is set forth in the Audit Committee Charter.

Related Person Transactions

During fiscal 2017,2019, there were no transactions between the Company and any related person that met the requirements for disclosure.

DELIQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common shares and other equity securities of the Company. Executive officers, directors and greater than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, during the fiscal year ended February 3, 2018,1, 2020, all Section 16(a) filing requirements applicable to its executive officers and directors and any greater than 10% beneficial owners were met.met except that one Form 4 with respect to one transaction, the annual stock grant to non-employee directors, was filed late for each of Dr. Davies, Mr. Henson, Mr. Kennedy, Ms. Drew, Mr. Meckley, Mr. Patrick, and Mr. Stowe.

PROPOSAL 46 — RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected PricewaterhouseCoopers LLP as independent auditor to examine the Company’s financial statements for the fiscal year ended February 2, 2019.January 30, 2021. This selection is being presented to the shareholders for their ratification at the Annual Meeting. PricewaterhouseCoopers LLP audited the Company’s financial statements for the fiscal years ended January 31, 2004 through February 3, 2018.1, 2020. A representative of PricewaterhouseCoopers LLP is expected to attend the meeting,respond to appropriate questions from shareholders present at the meeting and, if such representative desires, to make a statement. The affirmative vote of a majority of the votes present or represented at the Annual Meeting and entitled to vote by the holders of Class A Stock and Class B Stock, voting as a single class, is required to approve the proposal.

The directors recommend that shareholders voteFORthe proposal to ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent auditor.

Audit Committee Report

Management is responsible for the Company’s internal controls and the financial reporting process. PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing a report thereon. The Audit Committee, among other things, is responsible for monitoring and overseeing these processes and is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm.

In recommending to the Board of Directors the reappointment of PricewaterhouseCoopers LLP, the Audit Committee took into consideration a number of factors including the length of time PricewaterhouseCoopers LLP has been engaged, the quality of the Audit Committee’s discussions with representatives of PricewaterhouseCoopers LLP, reports of the Public Company Accounting Oversight Board (“PCAOB”)PCAOB on PricewaterhouseCoopers LLP, PricewaterhouseCoopers LLP fees and the performance of the lead audit and consulting partners. Under SEC rules and PricewaterhouseCoopers LLP practice, the lead engagement audit partner, as well as consulting partner, areis each required to change every five years, and a new lead audit partner has been appointed for the fiscal year ending February 2, 2019. The Committee interviewed potential lead engagement audit partners and approved the incoming audit partner.years.

The primary purpose of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibility for safeguarding the Company’s assets and for the integrity of the accounting and reporting practices of the Company and such other duties as directed by the Board. As set forth in the Audit Committee Charter, the Audit Committee is not responsible for conducting audits or preparing or determining whether the Company’s financial statements are accurate or complete or conform with accounting principles generally accepted in the United States of America. The Company’s independent registered public accounting firm is responsible for expressing an opinion on the conformity of audited financial statements to accounting principles generally accepted in the United States of America.

In the performance of its oversight function and in accordance with its responsibilities under its charter, the Audit Committee has reviewed and discussed the audited financial statements for the year ended February 3, 20181, 2020 with management and the independent registered public accounting firm. The Audit Committee also discussed with management and the independent registered public accounting firm the adequacy of the Company’s internal controls, and discussed with management the effectiveness of the Company’s disclosure controls and procedures used for periodic public reporting. The Audit Committee reviewed with the independent registered public accounting firm their audit plans, audit scope and identification of audit risks. The Audit Committee has discussed with the independent registered public accounting firm the communications required by the Public Company Accounting Oversight Board (United States).PCAOB. In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and letter required by the Ethics and Independence Rule 3526 titled “Communication with Audit Committees Concerning Independence” and discussed with the

independent registered public accounting firm their independence from the Company and its management. The Audit Committee also has considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with the auditor’s independence.

Based on the reviews and discussions mentioned above, the Audit Committee recommended to the Board of Directors that the audited financial statements for the year ended February 3, 20181, 2020 be included in the Company’s Annual Report to shareholders and Annual Report on Form 10-K to the Securities and Exchange Commission.

Audit Committee Members:

Thomas E. Meckley (Chair)
Thomas B. Henson
Bryan F. Kennedy, III
Theresa J. Drew

Audit Fees

PricewaterhouseCoopers LLP audited the Company’s consolidated financial statements for the fiscal years ended February 3, 20181, 2020 and January 28, 2017.February 2, 2019. The aggregate fees paid to PricewaterhouseCoopers LLP for all professional services rendered for fiscal years ended February 3, 20181, 2020 and January 28, 2017February 2, 2019 were:

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services by the Independent Registered Public Accounting Firm

The Audit Committee is responsible for the appointment, compensation and oversight of the work of the independent registered public accounting firm. As part of this responsibility, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent registered public accounting firm in order to assure that they do not impair the auditor’s independence from the Company. Accordingly, the Audit Committee has adopted procedures and conditions under which services proposed to be performed by the independent registered public accounting firm must be pre-approved.

Pursuant to this policy, the Audit Committee will consider annually and approve the terms of the audit engagement. Any proposed engagement relating to permissible non-audit services must be presented to the Audit Committee and pre-approved on a case-by-case basis. In addition, particular categories of permissible non-audit services that are recurring may be pre-approved by the Audit Committee subject to pre-set fee limits. If a category of services is so approved, the Audit Committee will be regularly updated regarding the status of those services and the fees incurred. The Audit Committee reviews requests for the provision of audit and non-audit services by the Company’s independent registered public accounting firm and determines if they should be approved. Such requests could be approved either at a meeting of the Audit Committee or upon approval of the Chair of the Audit Committee, or another member of the Audit Committee designated by the Chair. If the Chair or his designee approves a permissible non-audit service, that decision is required to be presented at the next meeting of the Audit Committee. Prior to approving any services, the Audit Committee considers whether the provision of such services is consistent with the SEC’s rules on auditor independence and is compatible with maintaining the auditor’s independence. All of the Company’s Audit-Related Fees, Tax Fees and All Other Fees were pre-approved by the Audit Committee.

SHAREHOLDER PROPOSALS

Shareholders who intend to present proposals for consideration at next year’s Annual Meeting are advised that, pursuant to rules of the Securities and Exchange Commission, any such proposal must be received by the Secretary of the Company at the Company’s principal executive offices, 8100 Denmark Road, Charlotte, North Carolina 28273-5975 no later than the close of business on January 24, 2019December 21, 2020 if such proposal is to be considered for inclusion in the proxy statement and proxy appointment form relating to that meeting. Only persons who have held beneficially or of record at least $2,000 in market value, or 1% of the combined class of Class A Stock and Class B Stock, for at least one year on the date the proposal is submitted and who continue in such capacity through the meeting date are eligible to submit proposals to be considered for inclusion in the Company’s proxy statement. In addition, the Company may direct the persons named in the Company’s Annual Meeting proxy to exercise discretionary voting authority to vote against any matter, without any disclosure of such matter in the Company’s proxy statement, unless a shareholder provides notice of the matter pursuant to the procedures specified in Article II, Section 4 of the Company’s Bylaws.Bylaws (no later than February 20, 2021 in the case of the Company’s 2021 Annual Meeting). Such notice must be received by the Secretary of the Company at the Company’s principal executive offices as described above in this paragraph not later than ninety days prior to the anniversary date of the immediately preceding Annual Meeting. The shareholder’s notice must set forth, as to each matter of business proposed for consideration, a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, the name and address, as they appear on the Company’s stock transfer records, of the proposing shareholder, the class and number of shares of the Company’s stock beneficially owned by the proposing shareholder, and any material interest of the proposing shareholder in the proposed business.

OTHER MATTERS

The Board of Directors of the Company knows of no matters that will be presented for consideration at the meeting other than those set forth in this Proxy Statement. However, if any other matters are properly presented for action, it is the intention of the persons named in the proxy to vote on them in accordance with their best judgment.

For the Board of Directors

THE CATO CORPORATION

CHRISTIN J. REISCHE

Assistant Secretary

April 23, 201820, 2020

THE CATO CORPORATION
2018 INCENTIVE COMPENSATION PLANATTACHMENT A

ARTICLE 1. PURPOSEAMENDED AND EFFECTIVE DATERESTATED CERTIFICATE OF INCORPORATION
OF
THE CATO CORPORATION

1.1Purposes of the Plan. The Cato Corporation, (“Cato”a corporation organized and existing under the laws of the State of Delaware(the “Corporation”) has established , hereby certifies as follows:

1.The name of thecorporationCorporationis “The Cato Corporation 2018 Incentive Compensation Plan (the “Plan”),” and the name under which thecorporationCorporationwas originally incorporated is “Cato Stores, Inc.” The date of filing its original Certificate of Incorporation with the Secretary of State was March 28, 1946.

2.The text of theAmended andRestated Certificate of Incorporation as amended or supplemented heretofore is further amendedand restatedhereby to promote the interests of Cato and its stockholders.read as herein set forth in full:

FIRST. The purposesname of the Plan areCorporation is

THE CATO CORPORATION

SECOND. Its registered office in the State of Delaware is located at 1209 Orange Street, in the City of Wilmington, County of New Castle. The name and address of its resident agent is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, 19801.

THIRD. The purpose of thecorporationCorporationis to provide key employeesengage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

FOURTH. (A) The total number of shares of all classes of capital stock which the Corporation shall have the authority to issue is 65,100,000, consisting of:

(1) 50,000,000 shares of Class A Common Stock having a par value of $.03 1/3 per share,

(2) 15,000,000 shares of Class B Common Stock having a par value of $.03 1/3 per share, and directors

(3) 100,000 shares of Cato and its Subsidiaries (collectively,Preferred Stock having a par value of $100.00 per share.

The issued shares of the “Company”) with incentives to contributeCorporation’s capital stock as of the date of filing of this Amendment shall be reclassified as shares of Class A Common Stock, without any further action required by the holders thereof.

(B) Except to the Company’s performanceextent otherwise provided below, the holders of Class A Common Stock and growth,the Class B Common Stock shall have the same powers, designations, preferences and participation rights and privileges. The holders of Class A Common Stock and Class B Common Stock shall have the following specific powers, designations, preferences, and relative participating rights and privileges:

(1) Each holder of Class A Common Stock shall be entitled to offer such persons stock ownershipone (1) vote per share of Class A Common Stock standing in Catohis name on the transfer books of the Corporation, and each holder of Class B Common Stock shall be entitled to ten (10) votes per share of Class B Common Stock standing in his name on the transfer books of the Corporation, with respect to each matter to be voted upon.

(2) The holders of Class A Common Stock and Class B Common Stock shall have the right to vote, but not as separate classes except to the extent required by law or as otherwise provided in subsection (B)(3) below, upon all matters submitted to the stockholders of the Corporation.

(3) In addition to any other vote required by law, the Corporation may not alter or change, by rights, preferences, privileges, restrictions, dividend rights, voting power or other compensation that aligns their interests with thosepowers given to the holders of Cato’s stockholdersClass A Common Stock and Class B Common stock pursuant to enhance the Company’s ability to attract, reward and retain such persons upon whose efforts the Company’s success and future growth depends.

1.2Effective Date. The Plan was adoptedthis Article Fourth other than by the Compensation Committeeaffirmative vote of not less than sixty-six and two thirds (66 2/3) percent of all the votes entitled to be voted by the holders of each class of stock to be adversely affected thereby voting as a separate class, except that the Corporation may increase the total number of authorized shares of Class A Common Stock or Class B Common Stock that may be issued by the corporation by the affirmative vote of a majority of all the votes entitled to be voted by the holders of Class A Common Stock and Class B Common Stock voting together, without regard to class.

(4) Subject to the rights of any holders of Preferred Stock, holders of Class A Common Stock and Class B Common Stock shall be entitled to receive such dividends and other distributions in cash, stock or property of the Corporation as may be declared thereon by the Board of Directors on March 28, 2018, subjectfrom time to and to be effective upontime out of assets or funds of the requisite approval of Cato’s stockholders at the 2018 Annual Meeting of Stockholders.Corporation legally available therefor; provided, however, that:

(a) No Awardscash dividend may be granted underdeclared and paid on the Plan prior to requisite stockholder approvalClass B Common Stock unless a dividend of an equal or greater amount of cash per share has been declared and paid on the Class A Common Stock.

(b) In the event of any dividend or other distribution payable in stock of the Plan.

1.3SuccessorCorporation, other than Preferred Stock, including a distribution pursuant to Prior Plan. The Plan is intended asany stock split or division, which occurs after the successor to The Catoinitial issuance of Class B Common Stock by the Corporation, 2013 Incentive Compensation Plan (the “Prior Plan”). Following the effective dateonly shares of the Plan and the requisite approval of stockholders at the 2018 Annual Meeting of Stockholders, no additional stock awards mayClass A Common Stock shall be granted under the Prior Plan but the Prior Plan shall remain effectivedistributed with respect to any awards previously grantedClass A Common Stock, and the Corporation’s Board of Directors, in its discretion, shall determine whether to distribute shares of Class A or Class B Common Stock, in an amount per share equal to the extent they remain outstanding. Any shares remaining available for grants under the Prior Plan shall become available for issuance pursuant to Awards granted hereunder, as provided in Section 4.1(a) hereof. Any shares subject to outstanding stock awards granted under the Prior Plan that expire or terminate for any reason prior to exercise or settlement shall become available for issuance pursuant to Awards granted hereunder, as provided in Section 4.1(b) hereof. All outstanding stock awards granted under the Prior Plan shall remain subject to the terms of the Prior Planamount per share distributed with respect to which they were originally granted.

ARTICLE 2. DEFINITIONS

2.1Definitions. The following terms, when capitalized in this Plan, shall have the meanings set forth below:

(a) “Award” means, individually or collectively, an IncentiveClass A Common Stock, Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Stock Award, or Incentive Bonus Award granted under this Plan.

(b) “Award Agreement” means an agreement between Cato and a Participant, setting forth the terms and conditions applicable to an Award granted to the Participant under this Plan. The Award Agreement may be in such form as the Committee shall determine, including a master agreement with respect to all or any types of Awards supplemented by an Award notice issued by the Company.Class B Common Stock.

(c) “Board”In the case of any combination, reclassification or “Boardrecapitalization of Directors” means the BoardClass A Common Stock, the shares of DirectorsClass B Common stock shall also be combined, reclassified or recapitalized so that the number of Cato.shares of Class B Common stock outstanding immediately following such combination reclassification or recapitalization shall bear the same relationship to the number of shares of Class B Common Stock outstanding immediately prior to such combination, reclassification or recapitalization as the number of shares of Class A Common Stock outstanding immediately following such combination, reclassification or recapitalization bears to the number of shares of Class A Common Stock outstanding immediately prior to such combination, reclassification or recapitalization.

(d) “Cato” meansShares of Class B Common stock outstanding at any time shall not be reverse split or combined, whether by reclassification, recapitalization or otherwise, so as to decrease the number of shares thereof issued and outstanding unless at the same time the shares of Class A Common Stock are reverse split or combined so that the number of shares of Class A Common Stock outstanding immediately following such reclassification or recapitalization shall bear the same relationship to the number of shares of Class A Common Stock outstanding immediately prior to such reclassification or recapitalization as the number of shares of Class B Common Stock outstanding immediately following such reclassification or recapitalization bears to the number of shares of Class B Common Stock outstanding immediately prior to such reclassification or recapitalization.

(5) Any outstanding shares of Class B Common Stock shall be convertible on or after July 1, 1988 into fully paid and nonassessable shares of Class A Common Stock at the option of the holders thereof on a one share for one share basis. In order for a stockholder to effect any such conversion; such stockholder must furnish the Corporation with a written notice of the request for conversion, which notice shall be addressed to the principal office of the Corporation or to the Corporation’s designation transfer agent, shall state the number of shares of Class B Common Stock to be converted into shares of Class A Common Stock, shall state the name of the person(s) in whose name(s) the shares of Class A Common Stock are to be registered and shall be accompanied by a certificate or certificates representing such shares, properly endorsed and ready for transfer. A conversion shall be deemed to be made (and the holder of such shares shall be deemed to be the holder of record of an equal number of shares of Class A Common Stock) on the close of business of the date when the Corporation or transfer agent has received the prescribed written notice and required certificate or certificates, properly endorsed and ready for transfer. The Cato Corporation hereby reserves and shall at all times reserve and keep available out of its authorized and unissued shares of Class A Common Stock, for the purposes of effecting conversion such number of duly authorized shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class BCommonStock.

(6) In the event of a Delawareliquidation or dissolution of the Corporation, or a winding up of its affairs, whether voluntary or involuntary, or a merger or consolidation of the Corporation, after payment or provision for payment of the debts or liabilities of the Corporation and the amounts to which holders of the Preferred Stock shall be entitled, holders of Class A Common Stock shall be entitled to receive out of the net assets of the Corporation, the amount of $1.00 per share, prior to any successor thereto.distribution to be made with respect to Class B Common Stock. After such payment or provision for such payment to the holders of Class A Common Stock, the holders of Class A Common stock and the holders of Class B Common Stock shall be entitled to share ratably (i.e., an equal amount of assets for each share of either Class A Common Stock or Class B Common Stock) in the remaining assets of the Corporation.

(e) “Cause” means,(C) (1) No person holding shares of Class B Common Stock of record (hereinafter called a “Class B Holder”) may transfer, and the Corporation shall not register the transfer of, such shares of Class B Common Stock, as Class B Common Stock, whether by sale, assignment, gift, bequest, appointment or otherwise, except to a Permitted Transferee (as hereinafter defined). Shares of Class B Common Stock transferred to any party other than a Permitted Transferee (as hereinafter defined) shall be converted into shares of Class A Common Stock as provided by subsection (4) of this Section(C). A“Permitted Transferee” shall mean, with respect to each person from time to time shown as the extentrecord holder of shares of Class B Common Stock:

(a) In the applicable Award Agreement provides otherwise or incorporates a different definition of “Cause,” (i) the commission by the ParticipantCase of a crime or other act or practice that involves dishonesty or moral turpitudeClass B Holder who is a natural person;

(i)anyAny lineal descendant of such Class B Holder (the Class B Holder and either has an adverse effect on Catosuch lineal descendants herein collectively referred to as “Class B Holder’s Family Members”);

(ii) The trustee of a trust (including a voting trust) principally for the benefit of such Class B Holder and/or one or more Subsidiariesof his or her Permitted Transferees described in each subclause of this clause (a) other than this subclause (ii), provided that such trust may also grant a general or special power of appointment to one or more of such Class B Holder’s Family Members and may permit trust assets to be used to pay taxes, legacies and other obligations of the reputation thereoftrust or of the estates of one or more of such Class B Holder’s Family Members payable by reason of the death of any of such Family Members;