Exhibit 10.24



 






Exhibit 10.24



DSW INC.




2005 CASH INCENTIVE COMPENSATION PLAN




l.00 PURPOSE AND EFFECTIVE DATE



1.01 Purpose: This Plan is intended to foster and promote the financial success of the Company and
Related Entities and to increase shareholder value by [1] providing Participants an opportunity to
earn incentive compensation if specified objectives are met and [2] enabling the Company to attract
and retain the services of outstanding employees upon whose judgment, interest and special efforts
the successful conduct of the Company’s business is largely dependent.




     1.02 Effective Date: This Plan is effective on the date it is approved by the Board subject to
approval by the Company’s shareholders. Any Award granted before shareholder approval will be null
and void if the shareholders do not approve the Plan within the period just described.



2.00 DEFINITIONS



When used in this Plan, the following terms have the meanings given to them in this section unless
another meaning is expressly provided elsewhere in this document or clearly required by the
context. When applying these definitions and any other word, term or phrase used in this Plan, the
form of any word, term or phrase will include any and all of its other forms.



Act. The Securities Exchange Act of 1934, as amended or any successor statute of similar effect
even if the Company is not subject to the Act.



Award. A grant made under this Plan consisting of an opportunity to earn a cash bonus if terms and
conditions specified in the Award Agreement are met.



Award Agreement. The written or electronic agreement between the Company and each Participant that
describes the terms and conditions that must be met if an Award is to be earned. If there is a
conflict between the terms of this Plan and the terms of the Award Agreement, the terms of the Plan
will govern.



Award Date. The later of [1] the date the Committee establishes the terms of an Award or [2] the
date specified in the Award Agreement.



Board. The Company’s board of directors.



Cause. Unless the Committee specifies otherwise in the Award Agreement, with respect to any
Participant and subject to any cure provision included in any written agreement between the
Participant and the Company:





[1] A material failure to substantially perform his or her position or duties;



 









 






[2] Engaging in illegal or grossly negligent conduct that is materially injurious to the
Company or any Related Entity;




[3] A material violation of any law or regulation governing the Company or any Related
Entity;




[4] Commission of a material act of fraud or dishonesty which has had or is likely to have a
material adverse effect upon the Company’s (or any Related Entity’s) operations or financial
conditions;




[5] A material breach of the terms of any other agreement (including any employment
agreement) with the Company or any Related Entity; or




[6] A breach of any term of this Plan or Award Agreement.


If a Participant Terminates (or is Terminated) for any reason other than Cause and the Company
subsequently discovers an act, failure or event that, if known before the Participant’s Termination
would have justified a Termination for Cause and that act, event or failure was actively concealed
by the Participant and could not have been discovered through reasonable diligence before the
Participant Terminated, that Participant will be retroactively treated as having been Terminated
for Cause.



Change in Control. The earliest of any of the following events to occur after the completion of
the initial public offering of the Company’s stock which is the subject of the Registration
Statement:





[1] During any period consisting of 12-consecutive calendar months beginning after
completion of the initial public offering of the Company’s stock which is the subject of the
Registration Statement, the members of the Board specified in the Registration Statement
(“Incumbent Directors”) cease for any reason other than death to constitute at least a
majority of the members of the Board, provided [a] that any director whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of at least a
majority of the then Incumbent Directors also will be treated as an Incumbent Director
unless that person was nominated for election to the Board (or otherwise became a member of
the Board) in connection with an actual or threatened election contest relating to the
election or removal of Board members or other threatened or actual solicitation of proxies
of consent by or in behalf of any “person,” including a “group” [as those terms are used in
Act §§13(d) and 14(d)(2)], [b] this element of this definition will not apply if the Company
reorganizes into an entity that does not have a board of directors or analogous governing
body and that reorganization is not a Change in Control under another element of this
definition and [c] if the Company becomes a subsidiary of another entity (i.e., another
entity owns, directly or indirectly, more than 50 percent of the total combined voting power
of all classes of Stock) in a transaction that is not a Change in Control under another
element of this definition, subpart [1] of this definition will be applied by reference to
changes to the board of directors of the parent entity (or of the ultimate parent entity).



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[2] Any “person,” including a “group” [as these terms are used in Act §§13(d) and 14(d)(2)]
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or
indirectly, of 30 percent or more of the combined voting power of the Company and of
securities of the Company sufficient to elect a majority of the members of the Board but
disregarding the effect of [a] any acquisition by a person who on the Effective Date is the
beneficial owner of 30 percent or more of the combined voting power of the Company, [b] any
acquisition directly from the Company, including a public offering of securities, [c] any
acquisition by the Company or any Related Entity, [d] any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any Related Entity
or [e] any acquisition through a transaction described in subpart [3], [4] or [5] of this
definition, [f] any acquisition by Retail Ventures, Inc. or any corporation, partnership or
other form of unincorporated entity of which Retail Ventures, Inc. owns, directly or
indirectly, 50 percent or more of the total combined voting power of all classes of stock,
if the entity is a corporation, or of the capital or profits interest, if the entity is a
partnership or another form of unincorporated entity, [g] any acquisition by Schottenstein
Stores Corporation (the persons identified in subparts [a], [c], [f] and [g] of this subpart
being sometimes referred to as “Permitted Acquirers”) [h] any acquisition by any one or more
of the trusts established for the benefit of any of Jay L. Schottenstein, Susan S. Diamond,
Ann Desche, Lori Schottenstein, Geraldine Schottenstein or any of their respective spouses,
children or lineal descendants or any person controlled by any such trust or trusts, [i] any
acquisition by an entity that files SEC Form 13-G in connection with its ownership of Stock
unless and until that entity files SEC Form 13-D in connection with its ownership of Stock
or [j] any acquisition by Cerberus Partners, Ltd/ unless, at the time of the acquisition,
the Permitted Acquirers, as defined in subpart [2][g] of this definition and the trusts
described in subpart [2][h] of this definition, directly or indirectly, own less than 10
percent of the voting power of the Company’s stock.




[3] The completion of a transaction or a series of related transactions effecting [a] the
merger or other business combination of the Company with or into another entity other than a
Permitted Acquirer in which the shareholders of the Company immediately before the effective
date of such merger or other business combination own less than 50 percent of the voting
power in such entity; or [b] the sale or other disposition of all or substantially all of
the assets of the Company except a sale or other disposition to [i] an entity in which the
shareholders of the Company immediately before the sale or disposition own more than 50
percent of the voting power of such entity after that transaction or [ii] a Permitted
Acquirer.




[4] Liquidation or dissolution of the Company other than a liquidation or dissolution into
an entity [a] in which the shareholders of the Company before the effective date of the
liquidation or dissolution own more than 50 percent of the voting power of such entity after
the liquidation or dissolution or [b] which is a Permitted Acquirer.




[5] Any other transaction or event that the Board, in its sole discretion, decides will have
as material an effect on the Company as any transaction or event described in



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subparts [1] through [4] of this definition but which is not otherwise described in this
section.


However, and regardless of any other provision of this Plan or element of this definition, a Change
in Control will not occur solely as a result of the initial public offering of the Company’s stock
which is the subject of the Registration Statement or of any event directly related to that initial
public offering.



Code. The Internal Revenue Code of 1986, as amended or superseded after the Effective Date and any
applicable rulings or regulations issued under the Code.



Committee. The Board’s Compensation Committee which also constitutes a “compensation committee”
within the meaning of Treas. Reg. §1.162-27(c)(4). The Committee will be comprised of at least
two persons [1] each of whom is [a] an outside director, as defined in Treas. Reg.
§1.162-27(e)(3)(i) and [b] a “non-employee” director within the meaning of Rule 16b-3 under the Act
and [2] none of whom may receive remuneration from the Company or any Related Entity in any
capacity other than as a director, except as permitted under Treas. Reg. §1.162-27(e)(3)(ii).



Company. DSW Inc. an Ohio corporation, and any and all successors to it.



Covered Officer. Those employees whose compensation is subject to limited deductibility under Code
§162(m) as of the last day of any calendar year ending with or within any Performance Period.



Disability. Unless the Committee specifies otherwise in the Award Agreement, the Participant’s
inability with a reasonable accommodation, to perform his or her duties on a full-time basis for a
period of more than six-consecutive calendar months beginning before Termination due to a physical
or mental infirmity.



Employee. Any person who, on any applicable date, is a common law employee of the Company or any
Related Entity. A worker who is classified as other than a common law employee but who is
subsequently reclassified as a common law employee of the Company for any reason and on any basis
will be treated as a common law employee only from the date that reclassification occurs and will
not retroactively be reclassified as an Employee for any purpose of this Plan.



Participant. Any Employee to whom an Award has been granted.



Performance Criteria. The criteria described in Section 5.01.



Performance Period. The period over which the Committee will determine if applicable Performance
Criteria have been met.



Plan. The DSW Inc. 2005 Cash Incentive Compensation Plan.




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Registration Statement. The Form S-1 Registration Statement filed with the Securities and Exchange
Commission on March 14, 2005 (Registration #333-123289), as amended at the time it is declared
effective by the Securities Exchange Commission.



Related Entity. Any corporation, partnership or other form of unincorporated entity [1] of which
the Company owns, directly or indirectly, 50 percent or more of the total combined voting power of
all classes of stock, if the entity is a corporation, or of the capital or profits interest, if the
entity is a partnership or another form of unincorporated entity or [2] which owns 50 percent or
more of the total combined voting power of all classes of the Stock.



Retirement. The date a Participant Terminates on or after reaching age 65 and completing at least
five years of service.



Stock. The Class A common stock, without par value, issued by the Company or any security issued
by the Company in substitution, exchange or in place of these shares.



Termination or Terminated. Unless the Committee specifies otherwise in the Award Agreement, [1]
cessation of the employee-employer relationship between a Participant and the Company and all
Related Entities for any reason or [2] with respect to a Participant who is an Employee of a
Related Entity, a severance or diminution of the Company’s direct or indirect ownership after which
that entity is no longer a Related Entity and after which that person is not an Employee of the
Company or any entity that then is a Related Entity. However, [3] a Termination will not have
occurred while the Participant is absent from active employment for a period of not more than three
months (or, if longer, the period during which reemployment rights are protected by law, contract
or written agreement, including the Award Agreement, between the Participant and the Company) due
to illness, military service or other leave of absence approved by the Committee and [4] in the
Committee’s discretion, a Termination will not have occurred for the duration of a pending
Performance Period if a Participant’s status is changed from Employee to a consultant or
independent contractor during a Performance Period established before that status change occurred.




3.00 PARTICIPATION




3.01 Participation.





[1] Consistent with the terms of the Plan and subject to Section 3.02, the Committee will
[a] decide which Employees will be granted Awards; and [b] specify the type of Award to be
granted and the terms upon which an Award will be granted and may be earned.




[2] The Committee may establish different terms and conditions [a] for each Award, [b] for
each Participant receiving the same type of Award; and [c] for the same Participants for
each Award the Participant receives.




[3] The Committee (or the Board, as appropriate) also may amend the Plan and the Award
Agreements without any additional consideration to affected Participants to the



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extent necessary to avoid penalties arising under Code §409A, even if those amendments
reduce, restrict or eliminate rights granted under the Plan or Award Agreement (or both)
before those amendments.




[4] Unless permitted by Code §409A, no Award subject to Code §409A will be granted under
this Plan to any person who is performing services only for an entity that is not an
affiliate of the Company within the meaning of Code §414(b) and (c).


3.02 Conditions of Participation. By accepting an Award, each Participant agrees:





[1] To be bound by the terms of the Award Agreement and the Plan and to comply with other
conditions imposed by the Committee; and




[2] That the Committee (or the Board, as appropriate) may amend the Plan and the Award
Agreements without any additional consideration to the extent necessary to avoid penalties
arising under Code §409A, even if those amendments reduce, restrict or eliminate rights
granted under the Plan or Award Agreement (or both) before those amendments.



4.00 ADMINISTRATION



4.01 Committee Duties. The Committee is responsible for administering the Plan and has all powers
appropriate and necessary to that purpose. Consistent with the Plan’s objectives, the Committee
may adopt, amend and rescind rules and regulations relating to the Plan, to the extent appropriate
to protect the Company’s and any Related Entity’s interests and has complete discretion to make all
other decisions (including whether a Participant has incurred a Disability) necessary or advisable
for the administration and interpretation of the Plan. Any action by the Committee will be final,
binding and conclusive for all purposes and upon all persons.



4.02 Delegation of Ministerial Duties. In its sole discretion, the Committee may delegate any
ministerial duties associated with the Plan to any person (including Employees) that it deems
appropriate. However, the Committee may not delegate any duties it is required to discharge under
Code §162(m).



4.03 Award Agreement. At the time an Award is made, the Committee will prepare and deliver an Award
Agreement to each affected Participant. The Award Agreement:





[1] Will describe the Award and when and how it may be earned;




[2] To the extent different from the terms of the Plan, will describe [a] any conditions
that must be met before the Award may be earned, including Performance Criteria and [b] any
other applicable terms and conditions affecting the Award.



5.00 AWARDS



5.0l            Performance Criteria.




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[1] The Performance Criteria upon which the payment of an Award to a Covered Officer that is
intended to qualify as “performance-based compensation” under Code §162(m) will be based on
one or more (or a combination of) the following Performance Criteria and may be applied
solely with reference to the Company (and/or any Related Entity) or relatively between the
Company (and/or any Related Entity) and one or more unrelated entities:




[a] Net earnings or net income (before or after taxes);




[b] Earnings per share;




[c] Net sales or revenue growth;




[d] Net operating profit;




[e] Return measures (including, but not limited to, return on assets, capital,
invested capital, equity, sales, or revenue);




[f] Cash flow (including, but not limited to, operating cash flow, free cash flow,
cash flow return on equity, and cash flow return on investment);




[g] Earnings before or after taxes, interest, depreciation, and/or amortization;




[h] Gross or operating margins;




[i] Productivity ratios;




[j] Share price (including, but not limited to, growth measures and total
shareholder return);




[k] Expense targets;




[l] Margins;




[m] Operating efficiency;




[n] Market share;




[o] Customer satisfaction;




[p] Working capital targets; and




[q] Economic value added (net operating profit after tax minus the sum of capital
multiplied by the cost of capital).




[2] Performance Criteria upon which the payment of an Award to Participants who are not
Covered Officers may be based on one or more (or a combination of) the



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Performance Criteria listed in Section 5.01 or on other factors the Committee believes are
relevant and appropriate.




[3] Different Performance Criteria may be applied to individual Participants or to groups of
Participants and, as specified by the Committee, may be based on the results achieved [a]
separately by the Company or any Related Entity, [b] any combination of the Company and
Related Entities, or [c] any combination of segments, products or divisions of the Company
and Related Entities.




[4] The Committee:




[a] Will make appropriate adjustments to Performance Criteria to reflect the effect
on any Performance Criteria of any stock dividend or stock split affecting Stock,
recapitalization (including, without limitation, the payment of an extraordinary
dividend), merger, consolidation, combination, spin-off, distribution of assets to
shareholders, exchange of shares or similar corporate change. Also, the Committee
will make a similar adjustment to any portion of a Performance Criteria that is not
based on Stock but which is affected by an event having an effect similar to those
just described.




[b] May make appropriate adjustments to Performance Criteria to reflect a
substantive change in an Participant’s job description or assigned duties and
responsibilities.




[5] Performance Criteria will be established in an Award Agreement [a] as soon as
administratively practicable after established but [b] in the case of Covered Officers, no
later than the earlier of [i] 90 days after the beginning of the applicable Performance
Period; or [ii] the expiration of 25 percent of the applicable Performance Period.


5.02 Earning Awards. Subject to any terms, restrictions and conditions specified in the Plan or
the Award Agreement, as of the end of each Performance Period, the Committee will certify to the
Board the extent to which each Participant has or has not met his or her Performance Criteria.
Awards will be:





[1] Forfeited, if Performance Criteria have not been met at the end of the Performance
Period; or




[2] Subject to Section 5.04, valued and distributed, in a single lump sum cash payment, in
the form specified in the Award Agreement as soon as practicable after the last day of the
Performance Period to the extent that related Performance Criteria have been met.


5.03 Maximum Award. The maximum Award that any Covered Officer may earn in any single calendar
year is $3,000,000.



5.04 Deferral of Distribution. Each Participant may direct the Company to defer payment of all or
any portion of his or her Award by electing to have that amount [1] credited to his or her




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account under any nonqualified deferred compensation plan [as defined in Section 201(2) of the
Employee Retirement Income Security Act of 1974, as amended] maintained by the Company and
designated by the Committee as an appropriate repository for these deferrals or any successor plan
and [2] distributed under the terms of that plan. This election must be made at a time and in a
manner that complies with Code §409A.




5.05 Effect of Termination.





[1] Termination Other Than For Death or Disability. Except in the case of a Termination on
account of death or Disability, no Award will be paid to a Participant who Terminates before
the end of a Performance Period.




[2] Termination Because of Death or Disability. A prorated Award will be paid to a
Participant (or to his or her Beneficiary) who Terminates on account of death or Disability
but only if the Performance Criteria applicable to that Performance Period are met at the
end of that Performance Period. The amount paid will equal the Award the Disabled or dead
Participant would have received had his or her employment not Terminated before the end of
the Performance Period multiplied by the number of days between the beginning of the
Performance Period during which the Termination occurred on account of death or Disability
and divided by the total number of days in that Performance Period. This amount, if any,
will be paid at the same time and in the same manner as the Award would have been paid if
the Disabled or dead Participant had not Terminated.



6.00 CHANGE IN CONTROL



6.01 Accelerated Vesting and Settlement. Subject to Section 6.02, on the date of any Change in
Control, all Performance Criteria will be deemed to have been met on the date of the Change in
Control, all Performance Periods will be accelerated to the date of the Change in Control and all
Awards will be distributed in full as of the date of the Change in Control.



6.02 Effect of Code §280G. Unless otherwise specified in the Award Agreement or in another written
agreement between the Participant and the Company or a Related Entity executed simultaneously with
or before any Change in Control, if the sum (or value) of the payments described in Section 6.01
constitute an “excess parachute payments” as defined in Code §280G(b)(1) when combined with all
other parachute payments attributable to the same Change in Control, the Company or other entity
making the payment (“Payor”) will reduce the Participant’s benefits under this Plan so that the
Participant’s total “parachute payment” as defined in Code §280G(b)(2)(A) under this and all other
agreements will be $1.00 less than the amount that otherwise would generate an excise tax under
Code §4999. If the reduction described in the preceding sentence applies, within 10 business days
of the effective date of the event generating the payments (or, if later, the date of the Change in
Control), the Payor will apprise the Participant of the amount of the reduction (“Notice of
Reduction”). Within 10 business days of receiving that information, the Participant may specify
how and against which benefit or payment source (including benefits and payment sources other than
this Plan) the reduction is to be applied (“Notice of Allocation”). The Payor will be required to
implement




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these directions within 10 business days of receiving the Notice of Allocation. If the Payor has
not received a Notice of Allocation from the Participant within 10 business days of the date of the
Notice of Reduction or if the allocation provided in the Notice of Allocation is not sufficient to
fully implement the reduction described in this section, the Payor will apply the reduction
described in this section proportionately based on the amounts otherwise payable under Section 6.01
or, if a Notice of Allocation has been returned that does not sufficiently implement the reduction
described in this section, on the basis of the reductions specified in the Notice of Allocation.




7.00 AMENDMENT,
MODIFICATION AND TERMINATION OF PLAN



The Board or the Committee may terminate, suspend or amend the Plan at any time without shareholder
approval except to the extent that shareholder approval is required to satisfy applicable
requirements imposed by [1] Rule 16b-3 under the Act, or any successor rule or regulation, [2]
applicable requirements of the Code or [3] any securities exchange, market or other quotation
system on or through which the Company’s securities are listed or traded. Also, no Plan amendment
may [4] result in the loss of a Committee member’s status as a “non-employee director” as defined
in Rule 16b-3 under the Act, or any successor rule or regulation, with respect to any employee
benefit plan of the Company, [5] cause the Plan to fail to meet requirements imposed by Rule 16b-3
or [6] without the consent of the affected Participant (and except as specifically provided
otherwise in this Plan or the Award Agreement) adversely affect any Award granted before the
amendment, modification or termination. However, nothing in this section will restrict the
Committee’s right to amend the Plan and any Award Agreements without any additional consideration
to affected Participants to the extent necessary to avoid penalties arising under Code §409A, even
if those amendments reduce, restrict or eliminate rights granted under the Plan or Award Agreement
(or both) before those amendments.




8.00 MISCELLANEOUS



8.01 Assignability. Except as described in this section, an Award may not be transferred except by
will or the laws of descent and distribution.



8.02 Beneficiary Designation. Each Participant may name a Beneficiary or Beneficiaries (who may be
named contingently or successively) to receive or to exercise any Award that becomes payable on
account of or after the Participant’s death. Each designation made will revoke all prior
designations made by the same Participant, must be made on a form prescribed by the Committee and
will be effective only when filed in writing with the Committee. If a Participant has not made an
effective Beneficiary designation, the deceased Participant’s Beneficiary will be his or her
surviving spouse or, if none, the deceased Participant’s estate. The identity of a Participant’s
designated Beneficiary will be based only on the information included in the latest beneficiary
designation form completed by the Participant and will not be inferred from any other evidence.



8.03 No Guarantee of Continuing Services. Nothing in the Plan may be construed as:




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[1] Interfering with or limiting the right of the Company or any Related Entity to Terminate
any Employee’s employment at any time;




[2] Conferring on any Participant any right to continue as an Employee of the Company or any
Related Entity;




[3] Guaranteeing that any Employee will be selected to be a Participant; or




[4] Guaranteeing that any Participant will receive any future Awards.


8.04 Tax Withholding. The Company will withhold from the Award or from other amounts owed to the
Participant an amount sufficient to satisfy federal, state and local withholding tax requirements
on any Award.



8.05 Indemnification. Each individual who is or was a member of the Committee or of the Board will
be indemnified and held harmless by the Company against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding to which he or she may be made a party or in
which he or she may be involved by reason of any action taken or not taken under the Plan as a
Committee or Board member and against and from any and all amounts paid, with the Company’s
approval, by him or her in settlement of any matter related to or arising from the Plan as a
Committee or Board member or paid by him or her in satisfaction of any judgment in any action, suit
or proceeding relating to or arising from the Plan against him or her as a Committee or Board
member, but only if he or she gives the Company an opportunity, at its own expense, to handle and
defend the matter before he or she undertakes to handle and defend it in his or her own behalf.
The right of indemnification described in this section is not exclusive and is independent of any
other rights of indemnification to which the individual may be entitled under the Company’s
organizational documents, by contract, as a matter of law or otherwise. The foregoing right of
indemnification is not exclusive and is independent of any other rights of indemnification to which
the person may be entitled under the Company’s organizational documents, by contract, as a matter
of law or otherwise.



8.06 No Limitation on Compensation. Nothing in the Plan is to be construed to limit the right of
the Company to establish other plans or to pay compensation to its employees or directors, in cash
or property, in a manner not expressly authorized under the Plan.



8.07 Requirements of Law. The grant of Awards and the issuance of shares of Stock will be subject
to all applicable laws, rules and regulations and to all required approvals of any governmental
agencies or national securities exchange, market or other quotation system.



8.08 Governing Law. The Plan, and all agreements hereunder, will be construed in accordance with
and governed by the laws (other than laws governing conflicts of laws) of the State of Ohio.



8.09 No Impact on Benefits. Plan Awards are incentives designed to promote the objectives
described in Section 1.00. Also, Awards are not compensation for purposes of calculating a




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Participant’s rights under any employee benefit plan that does not specifically require the
inclusion of Awards in calculating benefits.





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