--------------------------------------------------------------------------------

Exhibit 10-B
 
 
SHOE CARNIVAL, INC. 2006 EXECUTIVE
 
INCENTIVE COMPENSATION PLAN, AS AMENDED
 
 
Section 1.    Purpose of Plan
 
The purpose of the Plan is to promote the success of the Company by providing to
participating executives of the Company bonus incentives that qualify as
performance-based compensation within the meaning of Section 162(m) of the Code.
 
Section 2.    Definitions and Terms
 
2.1    Accounting Terms.    Except as otherwise expressly provided or the
context otherwise requires, financial and accounting terms are used as defined
for purposes of, and shall be determined in accordance with, generally accepted
accounting principles, as from time to time in effect in the United States of
America, as applied and reflected in the consolidated financial statements of
the Company, prepared in the ordinary course of business.
 
2.2    Specific Terms.    The following words and phrases as used herein shall
have the following meanings unless a different meaning is plainly required by
the context:
 
“Annual Return To Shareholders” means the Company’s return to shareholders as
represented by share price appreciation plus dividends paid on one share of
Common Stock during any Year during a Performance Period.
 
“Average Sales Per Square Foot” for any Year means the aggregate Net Sales of
all stores open during the entire Year, divided by the aggregate square footage
of such stores.
 
“Average Sales Per Square Foot for New Stores” for any Year means the aggregate
Net Sales of all stores opened in the prior Year and remaining open during the
entire Year, divided by the aggregate square footage of such stores.
 
“Base Salary” in respect of any Performance Period means the aggregate base
annualized salary of a Participant from the Company and all affiliates of the
Company at the time the Participant is selected to participate for that
Performance Period, exclusive of any commissions or other actual or imputed
income from any Company provided benefits or perquisites, but prior to any
reductions for salary deferred pursuant to any deferred compensation plan or for
contributions to a plan qualifying under Section 401(k) of the Code or
contributions to a cafeteria plan under Section 125 of the Code.
 
“Bonus” means a cash payment or payment opportunity as the context requires.
 
“Business Criteria” means any one or any combination of Annual Return to
Shareholders, Net Sales, Net Income, Net Income before Nonrecurring Items,
Operating Income, Return on Equity, Return on Assets, EPS, EBITDA, EBITDA before
Nonrecurring Items, Comparable Store Sales, Average Sales Per Square Foot or
Average Sales Per Square Foot for New Stores, in each case during any Year
during a Performance Period.  In addition, Business Criteria includes any of the
foregoing criteria calculated before any Bonus expense for that Year.

 
 

--------------------------------------------------------------------------------

 
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
 
“Committee” means the Compensation Committee of the Board of Directors or any
successor committee which will administer the Plan in accordance with Section 3
of the Plan and Section 162(m) of the Code.
 
“Common Stock” means the Common Stock, par value $0.01 per share, of the
Company.
 
“Company” means Shoe Carnival, Inc. and its consolidated subsidiaries, and any
successor, whether by merger, ownership of all or substantially all of its
assets or otherwise.
 
“Comparable Store Sales”  for any Year means the Net Sales in that Year of all
stores that have been open for 13 full months prior to the beginning of the
Year, including those stores that have been relocated or remodeled during the
Year, but excluding stores closed during the Year.
 
“EBITDA” for any Year means the consolidated net income before interest, income
taxes, depreciation and amortization of the Company as reflected in the
Company’s audited consolidated financial statements for the Year.
 
“EBITDA before Nonrecurring Items” for any Year means EBITDA of the Company
before any extraordinary or unusual one-time nonrecurring expenses or other
charges as reflected in the Company’s audited consolidated financial statements
for the Year.
 
“EPS” for any Year means diluted Net Income per share of the Company, as
reported in the Company’s audited consolidated financial statements for the
Year.
 
“Executive” means a key employee (including any officer) of the Company.
 
“Net Income” for any Year means the consolidated net income of the Company, as
reported in the Company’s audited consolidated financial statements for the
Year.
 
“Net Income before Nonrecurring Items” for any Year means the Net Income of the
Company before any extraordinary or unusual one-time nonrecurring expenses or
other charges as reflected in the Company’s audited consolidated financial
statements for the Year.
 
“Net Sales” for any Year means the Company’s total net sales as reported in the
Company’s audited consolidated financial statements for the Year.
 
“Operating Income” for any Year means the operating income of the Company as
reflected in the Company’s audited consolidated financial statements for the
Year.
 
“Participant” means an Executive selected to participate in the Plan by the
Committee.
 
“Performance Period” means the Year or Years with respect to which the
Performance Targets are set by the Committee.
 
“Performance Target(s)” means the specific objective goal or goals (which may be
cumulative and/or alternative) that are timely set in writing by the Committee
for each Executive for the Performance Period in respect of any one or more of
the Business Criteria.
 
“Plan” means this Shoe Carnival, Inc. 2006 Executive Incentive Compensation
Plan, as amended from time to time.

 
 

--------------------------------------------------------------------------------

 
 
“Return on Assets” for any Year means Net Income divided by the average of the
total assets of the Company at the end of the fiscal quarters of the Year, as
reflected in the Company’s audited consolidated financial statements for the
Year.
 
“Return on Equity” for any Year means the Net Income divided by the average of
the shareholders’ equity of the Company at the end of each of the fiscal
quarters of the Year, as reflected in the Company audited consolidated financial
statements for any Year.
 
“Section 162(m)” means Section 162(m) of the Code, and the regulations
promulgated thereunder, all as amended from time to time.
 
“Year” means any one or more fiscal years of the Company commencing on or after
January 28, 2006 that represent(s) the applicable Performance Period and end(s)
no later than January 30, 2016.
 
Section 3.    Administration of the Plan
 
3.1    The Committee.    The Plan shall be administered by the Committee, which
shall consist of at least three members of the Board of Directors of the
Company, duly authorized by the Board of Directors of the Company to administer
the Plan, who (i) are not eligible to participate in the Plan and (ii) are
“outside directors” within the meaning of Section 162(m).
 
3.2    Powers of the Committee.    The Committee shall have the sole authority
to establish and administer the Performance Target(s) and the responsibility of
determining from among the Executives those persons who will participate in and
receive Bonuses under the Plan and, subject to Sections 4 and 5 of the Plan, the
amount of such Bonuses and shall otherwise be responsible for the administration
of the Plan, in accordance with its terms. The Committee shall have the
authority to construe and interpret the Plan (except as otherwise provided
herein) and any agreement or other document relating to any Bonus under the
Plan, may adopt rules and regulations governing the administration of the Plan,
and shall exercise all other duties and powers conferred on it by the Plan, or
which are incidental or ancillary thereto. For each Performance Period, the
Committee shall determine, at the time the Business Criteria and the Performance
Target(s) are set, those Executives who are selected as Participants in the
Plan.
 
3.3    Requisite Action.    A majority (but not fewer than two) of the members
of the Committee shall constitute a quorum. The vote of a majority of those
present at a meeting at which a quorum is present or the unanimous written
consent of the Committee shall constitute action by the Committee.
 
3.4    Express Authority (and Limitations on Authority) to Change Terms and
Conditions of Bonus.    Without limiting the Committee’s authority under other
provisions of the Plan, but subject to any express limitations of the Plan and
Section 5.8, the Committee shall have the authority to accelerate a Bonus (after
the attainment of the applicable Performance Target(s)) and to waive restrictive
conditions for a Bonus (including any forfeiture conditions, but not Performance
Target(s)), in such circumstances as the Committee deems appropriate. In the
case of any acceleration of a Bonus after the attainment of the applicable
Performance Target(s), the amount payable shall be discounted to its present
value using an interest rate equal to Moody’s Average Corporate Bond Yield for
the month preceding the month in which such acceleration occurs.
 
Section 4.    Bonus Provisions.
 
4.1    Provision for Bonus.    Each Participant may receive a Bonus if and only
if the Performance Target(s) established by the Committee, relative to the
applicable Business Criteria, are attained. The applicable Performance Period
and Performance Target(s) shall be determined by the Committee consistent with
the terms of the Plan and Section 162(m). Notwithstanding the fact that the
Performance Target(s) have been attained, the Company may pay a Bonus of less
than the amount determined by the formula or standard established pursuant to
Section 4.2 or may pay no Bonus at all, unless the Committee otherwise expressly
provides by written contract or other written commitment.

 
 

--------------------------------------------------------------------------------

 
 
4.2    Selection of Performance Target(s).    The specific Performance Target(s)
with respect to the Business Criteria must be established by the Committee in
advance of the deadlines applicable under Section 162(m) and while the
performance relating to the Performance Target(s) remains substantially
uncertain within the meaning of Section 162(m). At the time the Performance
Target(s) are selected, the Committee shall provide, in terms of an objective
formula or standard for each Participant, and for any person who may become a
Participant after the Performance Target(s) are set, the method of computing the
specific amount that will represent the maximum amount of Bonus payable to the
Participant if the Performance Target(s) are attained, subject to Sections 4.1,
4.3, 4.7, 5.1 and 5.8.
 
4.3    Maximum Individual Bonus.    Notwithstanding any other provision hereof,
no Executive shall receive a Bonus under the Plan for any Year in excess of $2
million or, if less, 200% of his or her Base Salary for the Year. No Executive
shall receive aggregate bonuses under this Plan in excess of $10.0 million.
 
4.4    Selection of Participants.    For each Performance Period, the Committee
shall determine, at the time the Business Criteria and the Performance Target(s)
are set, those Executives who will participate in the Plan.
 
4.5    Effect of Mid-Year Commencement of Service.    To the extent compatible
with Sections 4.2 and 5.8, if an Executive commences employment with the Company
after the adoption of the Plan and the Performance Target(s) are established for
a Performance Period, the Committee may grant to that Executive a Bonus for that
Performance Period that is proportionately adjusted based on the period of
actual service during such Performance Period.
 
4.6    Accounting Changes.    Subject to Section 5.8, if, after the Performance
Target(s) are established for a Performance Period, a change occurs in the
applicable accounting principles or practices, the amount of the Bonuses paid
under this Plan for such Performance Period shall be determined without regard
to such change.
 
4.7    Committee Discretion to Determine Bonuses.    The Committee has the sole
discretion to determine the standard or formula pursuant to which each
Participant’s Bonus shall be calculated (in accordance with Section 4.2),
whether all or any portion of the amount so calculated will be paid, and the
specific amount (if any) to be paid to each Participant, subject in all cases to
the terms, conditions and limits of the Plan and of any other written commitment
authorized by the Committee. In addition to the establishment of Performance
Targets as provided in Section 4.2, the Committee may at any time establish
additional conditions and terms of payment of Bonuses (including but not limited
to the achievement of other financial, strategic or individual goals, which may
be objective or subjective) as it may deem desirable in carrying out the
purposes of the Plan and may take into account such other factors as it deems
appropriate in administering any aspect of the Plan. The Committee may not,
however, increase the maximum amount permitted to be paid to any individual
under Section 4.2 or 4.3 of the Plan or award a Bonus under this Plan if the
applicable Performance Target(s) have not been satisfied.
 
4.8    Committee Certification.    No Participant shall receive any payment
under the Plan unless the Committee has certified, by resolution or other
appropriate action in writing, that the amount thereof has been accurately
determined in accordance with the terms, conditions and limits of the Plan and
that the Performance Target(s) and any other material terms previously
established by the Committee or set forth in the Plan were in fact satisfied.

 
 

--------------------------------------------------------------------------------

 
 
4.9    Time of Payment.    Any Bonuses granted by the Committee under the Plan
shall be paid as soon as practicable following the Committee’s determinations
under this Section 4 and the certification of the Committee’s findings under
Section 4.8, but in no event later than two and one half months following the
last day of the year. Any such payment shall be in cash or cash equivalent,
subject to applicable withholding requirements.
 
Section 5.    General Provisions
 
5.1    No Right to Bonus or Continued Employment.    Neither the establishment
of the Plan nor the provision for or payment of any amounts hereunder nor any
action of the Company (including, for purposes of this Section 5.1, any
predecessor or subsidiary), the Board of Directors of the Company or the
Committee in respect of the Plan, shall be held or construed to confer upon any
person any legal right to receive, or any interest in, a Bonus or any other
benefit under the Plan, or any legal right to be continued in the employ of the
Company unless otherwise provided by the Committee by contract or agreement. The
Company expressly reserves any and all rights to discharge an Executive in its
sole discretion, without liability of any person, entity or governing body under
the Plan or otherwise. Notwithstanding any other provision hereof and
notwithstanding the fact that the Performance Target(s) have been attained
and/or the individual maximum amounts pursuant to Section 4.2 have been
calculated, the Company shall have no obligation to pay any Bonus hereunder nor
to pay the maximum amount so calculated, unless the Committee otherwise
expressly provides by written contract or other written commitment.
 
5.2    Discretion of Company, Board of Directors and Committee.    Any decision
made or action taken by the Company or by the Board of Directors of the Company
or by the Committee arising out of or in connection with the creation,
amendment, construction, administration, interpretation and effect of the Plan
shall be within the absolute discretion of such entity and shall be conclusive
and binding upon all persons. No member of the Committee shall have any personal
liability for actions taken or omitted under the Plan by the member or any other
person.
 
5.3    Absence of Liability.    A member of the Board of Directors of the
Company or a member of the Committee of the Company or any officer of the
Company shall not be personally liable for any act or inaction hereunder,
whether of commission or omission.
 
5.4    No Funding of Plan.    The Company shall not be required to fund or
otherwise segregate any cash or any other assets which may at any time be paid
to Participants under the Plan. The Plan shall constitute an “unfunded” plan of
the Company. The Company shall not, by any provisions of the Plan, be deemed to
be a trustee of any property, and any obligations of the Company to any
Participant under the Plan shall be those of a debtor and any rights of any
Participant or former Participant shall be limited to those of a general
unsecured creditor.
 
5.5    Non-Transferability of Benefits and Interests.    Except as expressly
provided by the Committee, no benefit payable under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such attempted action shall be void and no such
benefit shall be in any manner liable for or subject to debts, contracts,
liabilities, engagements or torts of any Participant or former Participant. This
Section 5.5 shall not apply to an assignment of a contingency or payment due
after the death of the Executive to the deceased Executive’s legal
representative or beneficiary.
 
5.6    Law to Govern.    All questions pertaining to the construction,
regulation, validity and effect of the provisions of the Plan shall be
determined in accordance with the internal laws of the State of Indiana.

 
 

--------------------------------------------------------------------------------

 
 
5.7    Non-Exclusivity.    Subject to Section 5.8, the Plan does not limit the
authority of the Company, the Board of Directors of the Company or the
Committee, or any subsidiary of the Company, to grant awards or authorize any
other compensation under any other plan or authority, including, without
limitation, awards or other compensation based on the same Performance Target(s)
used under the Plan.
 
5.8    Section 162(m) Conditions; Bifurcation of Plan.    It is the intent of
the Company that the Plan and Bonuses paid hereunder satisfy and be interpreted
in a manner, that, in the case of Participants who are or may be persons whose
compensation is subject to Section 162(m), satisfies any applicable requirements
as performance-based compensation. Any provision, application or interpretation
of the Plan inconsistent with this intent to satisfy the standards in Section
162(m) of the Code shall be disregarded. Notwithstanding anything to the
contrary in the Plan, the provisions of the Plan may at any time be bifurcated
by the Board of Directors of the Company or the Committee in any manner so that
certain provisions of the Plan or any Bonus intended (or required in order) to
satisfy the applicable requirements of Section 162(m) are only applicable to
persons whose compensation is subject to Section 162(m).
 
Section 6.    Amendments, Suspension or Termination of Plan
 
Except as otherwise expressly agreed to in writing by the Committee, the Board
of Directors of the Company or the Committee may, from time to time amend,
suspend or terminate, in whole or in part, the Plan, and if suspended or
terminated, may reinstate any or all of the provisions of the Plan; provided no
amendment, suspension or termination of the Plan shall in any manner affect any
Bonus theretofore granted pursuant to the Plan (whether or not the applicable
Performance Targets have been attained) without the consent of the Participant
to whom the Bonus was granted. Notwithstanding the foregoing, no amendment may
be effective without Board of Directors of the Company and/or shareholder
approval if such approval is necessary to comply with the applicable rules under
Section 162(m) of the Code.
 

 
Approved by the Board of Directors as of March 13, 2006.
     
Approved by the shareholders on June 12, 2006.
     
Re-Approved, as Amended, by the Board of Directors as of March 15, 2011.
     
Re-Approved, as Amended, by the shareholders on June 16, 2011.

 
 

--------------------------------------------------------------------------------