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                                                                   Exhibit 10.13



                            PAYLESS SHOESOURCE, INC.

                     EXECUTIVE INCENTIVE COMPENSATION PLAN

                           AMENDED NOVEMBER 16, 2000


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                            PAYLESS SHOESOURCE, INC.
                      EXECUTIVE INCENTIVE COMPENSATION PLAN

         This document constitutes and sets forth the terms of the Payless
ShoeSource, Inc. Executive Incentive Compensation Plan for Payless Executives.

         Section 1. PURPOSES OF THE PLAN. The purposes of the Plan are (i) to
provide a means to attract, retain and motivate talented personnel and (ii) to
provide to participating management employees added incentive for high levels of
performance and for additional effort to improve the Company's financial
performance. Payments of awards under this Plan are intended to qualify for tax
deductibility under the provisions of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). Notwithstanding any other provisions of
this Plan, if any decision must be made before a specified date in order for
payments to qualify for such tax deductibility under the tax rules in effect
from time to time, then such decision is to be made before such date.

         Section 2. DEFINITIONS. Whenever used herein, the following terms shall
have the following meanings:

                  a.       "Annual Award" means, for a Participant for a Fiscal
Year, the product of the Participant's Minimum Annual Compensation for such
Fiscal Year multiplied by the aggregate of:

                           i. the Participant's Annual EPS Factor for such
                  Fiscal Year, plus

                           ii. the Participant's Annual RONA Factor for such
                  Fiscal Year.

                  b.       "Annual EPS Factor" means, for a Participant for a
Fiscal Year (i) five percent, if actual EPS Growth for such Fiscal Year equals
or exceeds the Participant's Threshold Annual EPS Growth Objective for such
Fiscal Year, plus (ii) ten percent multiplied by a fraction (not less than zero
and not greater than one), the numerator of which is the actual EPS Growth for
such Fiscal Year less the Participant's Threshold Annual EPS Growth Objective
for such Fiscal Year and the denominator of which is the Participant's Maximum
Annual EPS Growth Objective for such Fiscal Year less the Participant's
Threshold Annual EPS Growth Objective for such Fiscal Year; provided, however,


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                           i. that the Annual EPS Factor shall be subject to
                  adjustment as provided in Section 6(b);

                           ii. that the percentages referred to in this
                  definition may be adjusted by the Committee as provided in
                  Section 4(b); and

                           iii. that the percentages referred to in this
                  definition may be adjusted by the Committee as provided in
                  Section 4(c).

                  c.       "Annual RONA Factor" means, for a Participant for a
Fiscal Year (i) five percent if actual RONA for such Fiscal Year equals or
exceeds the Participant's Threshold Annual RONA Objective for such Fiscal Year,
plus (ii) ten percent multiplied by a fraction (not less than zero and not
greater than one), the numerator of which is the actual RONA for such Fiscal
Year less the Participant's Threshold Annual RONA Objective for such Fiscal Year
and the denominator of which is the Participant's Maximum Annual RONA Objective
for such Fiscal Year less the Participant's Threshold Annual RONA Objective for
such Fiscal Year; provided, however,

                           i. that the Annual RONA Factor shall be subject to
                  adjustment as provided in Section 6(b);

                           ii. that the percentages referred to in this
                  definition may be adjusted by the Committee as provided in
                  Section 4(b); and

                           iii. that the percentages referred to in this
                  definition may be adjusted by the Committee as provided in
                  Section 4(c).

                  d.       "Average Annual Compensation" means, for a Long-Term
Performance Period, the Participant's average annual salary rate during such
period, determined on a monthly basis, or such lesser amount as the Participant
and the Company shall agree to, in writing.

                  e.       "Board" means the Board of Directors of the Company.

                  f.       "Committee" means a committee designated by the
Board, which shall consist of not less than two members of the Board who shall
be appointed by and serve at the pleasure of the Board and who shall be
"outside" directors within the meaning of Section 162(m) of the Code.


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                  g.       "Company" means Payless ShoeSource, Inc.,  a Missouri
corporation, provided, that immediately after the effective time of the Merger
such term shall mean Payless ShoeSource, Inc. (formerly Payless ShoeSource
Holdings, Inc.), a Delaware corporation.

                  h.       "Disability" means the inability of a Participant to
perform the normal duties of the Participant's regular occupation.

                  i.       "EPS Growth" means (i) for a Fiscal Year, the annual
growth rate in EPS measured from the immediately preceding Fiscal Year; and (ii)
for a Long-Term Performance Period, the compound annual growth rate in EPS
measured from the Fiscal Year immediately preceding the Long-Term Performance
Period to the last Fiscal Year in the Long-Term Performance Period. For purposes
of this definition, "EPS" for a Fiscal Year means the Company's EPS for such
Fiscal Year as reported in the Company's annual report to its shareholders for
the year of determination (or, in the event that such item is not included in
such annual report, such comparable figure as may be determined by the
Committee) adjusted by the Company's independent certified public accountants to
exclude such non-recurring or extraordinary items as the Committee shall
determine are not representative of the on-going operations of the Company.

                  j.       "Fiscal Year" means the fiscal year of the Company.

                  k.       "Long-Term Award" means, for a Participant for a
Long-Term Performance Period, the product of the Participant's Average Annual
Compensation for such period multiplied by the aggregate of:

                           i. the Participant's Long-Term EPS Factor for such
                  period, plus

                           ii. the Participant's Long-Term RONA Factor for such
                  period

as such product is adjusted in accordance with Section 5(b) of the Plan.

                  l.       "Long -Term EPS Factor" means, for a Participant for
a Long-Term Performance Period, (i) five percent if actual EPS Growth for such
period equals or exceeds the Participant's Threshold Long-Term EPS Growth
Objective for such period, plus (ii) ten percent multiplied by a fraction (not
less than zero and not greater than one) the numerator of which is the actual
EPS Growth for such period less the Participant's Threshold Long-Term EPS Growth



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Objective for such period and the denominator of which is the Participant's
Maximum Long-Term EPS Growth Objective for such period less the Participant's
Threshold Long-Term EPS Growth Objective for such period; provided, however,

                           i. that the Long-Term EPS Factor shall be subject to
                  adjustment as provided in Section 6(b); and

                           ii. that the percentages referred to in this
                  definition may be adjusted by the Committee as provided in
                  Section 5(c).

                  m.       "Long-Term Performance Period" means three
consecutive Fiscal Years; provided, however, that the first Long-Term
Performance Period under the Plan shall be Fiscal Year 1996 and the second
Long-Term Performance Period under the Plan shall be Fiscal Years 1996 and 1997.

                  n.       "Long-Term RONA Factor" means, for a Participant for
a Long-Term Performance Period (i) five percent if actual RONA for such period
equals or exceeds the Participant's Threshold Long-Term RONA Objective for such
period plus (ii) ten percent multiplied by a fraction (not less than zero and
not greater than one), the numerator of which is the actual RONA for such period
less the Participant's Threshold Long-Term RONA Objective for such period and
the denominator of which is the Participant's Maximum Long-Term RONA Objective
for such period less the Participant's Threshold Long-Term RONA Objective for
such period; provided, however,

                           i. that the Long-Term RONA Factor shall be subject to
                  adjustment as provided in Section 6(b); and

                           ii. that the percentages referred to in this
                  definition may be adjusted by the Committee as provided in
                  Section 5(c).

                  o.       "Market Value" means the average closing price of the
Stock on the New York Stock Exchange, Inc. during the month of February of the
year specified; provided, however, that "Market Value" for Fiscal Year 1996
means the arithmetic average of the high and low trading prices of the Stock on
the New York Stock Exchange for each of the first 30 trading days on which
trading in the Stock on that exchange occurs.

                  p. "Minimum Annual Compensation" means, for a Fiscal Year,
the Participant's rate of minimum annual salary on the first day of the fiscal
month of November in the Fiscal Year.


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                  q.       "Participant" means an individual who has been
designated to participate in the Plan in accordance with Section 3 of the Plan.

                  r.       "Plan" mean the Payless ShoeSource, Inc. Executive
Incentive Compensation Plan for Payless Executives.

                  s.       "Relative Performance Rank" means, for a Fiscal Year
or for a Long-Term Performance Period, the relative rank of the Company (as
among the Company and a group of competitors designated by the Committee) based
on the EPS Growth and RONA, respectively, of all such corporations for such
corporations' comparable fiscal periods, as determined by the Committee.
Relative Performance Rank shall be determined based on data provided by the
Company's independent certified public accountants from publicly available
information about all such corporations, and adjusted by such independent
certified public accountants for comparability (adjustments for LIFO, major
non-recurring transactions, etc.) subject to the direction and approval of the
Committee. The Committee may change the number of competitors or corporations
included in the group when, as a result of extraordinary or unforeseen events,
it is no longer appropriate for a particular corporation to be included in the
competitor group (such as when one of the group ceases operations, merges with
another corporation, files for bankruptcy protection or significantly changes
the nature of its business).

                  t.       "Retirement" means, as to a Participant, retirement
as that word is defined in the Company's Profit Sharing Plan.

                  u.       "RONA" means (i) for a Fiscal Year, the Company's
return on beginning net assets for such Fiscal Year as reported in the Company's
annual report to its shareowners for the year of determination (or, in the event
that such item is not included in such annual report, such comparable figure as
may be determined by the Committee) adjusted by the Company's independent
certified public accountants to exclude such non-recurring or extraordinary
items as the Committee shall determine are not representative of the ongoing
operations of the Company; and (ii) for a Long-Term Performance Period, the sum
of the RONA for each Fiscal Year in the Long-Term Performance Period divided by
three.

                  v.       "Stock" means the common stock of the Company.

                  w.       "Subsidiary" means a subsidiary corporation of the
Company within the meaning of Section 425(f) of Code.


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                  x.       The terms "Maximum Annual EPS Growth Objective,"
"Maximum Long-Term EPS Growth Objective," "Target Annual EPS Growth Objective,"
"Target Long-Term EPS Growth Objective," "Threshold Annual EPS Growth
Objective," "Threshold Long-Term EPS Growth Objective," "Maximum Annual RONA
Objective," "Maximum Long-Term RONA Objective," "Target Annual RONA Objective,"
"Target Long-Term RONA Objective," "Threshold Annual RONA Objective" and
"Threshold Long-Term RONA Objective" shall mean the respective objectives
determined by the Committee for each Participant pursuant to Section 7 of the
Plan.

                  y.       "Merger" means the merger of Payless Merger Corp., a
Missouri corporation and wholly-owned subsidiary of Payless ShoeSource, Inc.
(formerly Payless ShoeSource Holdings, Inc.), a Delaware corporation, with the
Company, pursuant to an Agreement and Plan of Merger among the Company, Payless
Merger Corp. and Payless ShoeSource, Inc. (formerly Payless ShoeSource Holdings,
Inc.).

         Section 3. ELIGIBILITY. Management employees of the Company and its
Subsidiaries shall be eligible to participate in the Plan. The Committee may, in
its sole discretion, designate any such individual as a Participant for a
particular Fiscal Year and/or for a particular Long-Term Performance Period
before the end of such Fiscal Year and Long-Term Performance Period,
respectively. Designation of an individual as a Participant for any period shall
not require designation of such individual as a Participant in any other period,
and designation of one individual as a Participant shall not require designation
of any other individual as a Participant in such period or in any other period.

         Section 4. ANNUAL AWARD.

                  a.       Subject to the other provisions of the Plan, a
Participant for a Fiscal Year who is designated as such for an entire Fiscal
Year shall be entitled to an Annual Award for such Fiscal Year. Subject to the
other provisions of the Plan, a Participant for a Fiscal Year who is designated
as such for less than an entire Fiscal Year shall be entitled to a reduced
Annual Award for such Fiscal Year equal to the Annual Award for such Fiscal Year
multiplied by a fraction, the numerator of which shall be the number of complete
fiscal months between (i) the first day of the fiscal month in which occurs the
date as of which the Participant was so designated and (ii) the end of such
Fiscal Year and the denominator of which shall be twelve.

                  b.       The Committee may change the percentages referred to
in the definitions of "Annual EPS Factor" and "Annual RONA Factor" for any
Fiscal Year, provided that the maximum Annual Award which may be paid under such
different percentage may not be greater than 45% of the Participant's Minimum
Annual Compensation for such Fiscal Year.



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                  c.       The percentages referred to in the definitions of
"Annual EPS Factor" and "Annual RONA Factor" may be adjusted by the Committee,
in its sole discretion, to provide that such percentages

                           i. with respect to the chairman of the Board and
                  chief executive officer of the Company may be up to two times
                  the percentages stated in such definitions (subject to a
                  maximum of 56.25% for each factor), and

                           ii. with respect to the president of the Company may
                  be up to one and two-thirds times the percentages stated in
                  such definitions (subject to a maximum of 31.25% for each
                  factor).

                  d.       Notwithstanding any other provision of the Plan, the
maximum dollar amount of any Annual Award for any Participant for any Fiscal
Year shall not exceed $1,850,000.

         Section 5.        LONG-TERM AWARD.

                  a.       Subject to the other provisions of the Plan, a
Participant for a Long-Term Performance Period who is designated as such for an
entire Long-Term Performance Period shall be entitled to a Long-Term Award for
such period. Subject to the other provisions of the Plan, a Participant for a
Long-Term Performance Period who is designated as such for less than an entire
Long-Term Performance Period shall be entitled to a reduced Long-Term Award for
such period equal to the Long-Term Award for such period multiplied by a
fraction, the numerator of which shall be the number of complete fiscal months
between (i) the first day of the fiscal month in which occurs the date as of
which the Participant was so designated and (ii) the end of such Long-Term
Performance Period and the denominator of which shall be thirty-six.

                  b.       The Long-Term Award otherwise payable pursuant to
Section 5(a) of the Plan for a Long-Term Performance Period shall be adjusted by
multiplying such Long-Term Award by a percentage equal to a fraction, the
numerator of which shall be the Market Value of the Stock in February of the
calendar year in which such Long-Term Performance Period ends and the
denominator of which shall be the Market Value of the Stock in February of the
calendar year in which such Long-Term Performance Period begins; provided,
however, that such percentage shall in no event be greater than one hundred
fifty percent nor less than seventy-five percent.

                  c.       The percentages referred to in the definitions of
"Long-Term EPS Factor" and "Long-Term RONA Factor" may be adjusted by the
Committee, in its sole discretion, to provide that such percentages



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                           i. with respect to the chairman of the Board and
                  chief executive officer of the Company may be up to two times
                  the percentages stated in such definitions (subject to a
                  maximum of 37.5% for each factor), and

                           ii. with respect to the president of the Company may
                  be up to one and two-thirds times the percentages stated in
                  such definitions (subject to a maximum of 31.25% for each
                  factor).

                  d.       Notwithstanding any other provision of the Plan, the
maximum dollar amount of any Long-Term Award for any Participant for any
Long-Term Performance Period shall not exceed $1,500,000.

         Section 6. ADJUSTMENTS.

                  a.       Discretionary Adjustment of Awards. In the event that
the Committee determines, in its absolute discretion, that an Annual Award or a
Long-Term Award payable to a Participant in accordance with the other terms of
the Plan should be adjusted, upwards or downwards, based on all the facts and
circumstances known to the Committee at the time, then, the Committee may, in
its sole and absolute discretion, increase or decrease any such Annual Award or
Long-Term Award to such amount as it determines; provided, however, that the
Committee may not adjust upwards any Annual Award or Long-Term Award of any
Participant who is a "covered employee" (as defined in Section 162 (m) of the
Code and the regulations thereunder) with respect to the particular performance
period for which the Annual Award or Long-Term Award is being granted.

                  b.       Adjustment for Relative Rank. A Participant's Annual
EPS Factor, Annual RONA Factor, Long-Term EPS Factor and Long-Term RONA Factor
shall be adjusted in the following manner based upon the number of competitors
in the group of competitors used to determine the Company's Relative Performance
Rank and the Company's Relative Performance Rank therein:

           Number of Competitor Companies (not including the Company)
<TABLE>
<CAPTION>

                                    16     15      14     13      12     11      10     9       8      7       6      5       4
<S>                                 <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>
Factor will be no less than         1st-   1st-    1st-   1st-    1st-   1st-    1st-   1st-    1st-   1st-    1st-   1st-    1st
"Target" if the Company's rank is:  4th    4th     4th    4th     3rd    3rd     3rd    3rd     2nd    2nd     2nd    2nd

Factor will be no less than         5th-   5th-    5th-   5th-    4th-   4th-    4th-   4th -   3rd-   3rd-    3rd    3rd     2nd
"Threshold" if the Company's
  rank is:                          8th    8th     7th    7th     6th    6th     5th    5th     4th    4th

Factor will be no higher than       14th-  13th-   12th-  11th-   11th-  10th-   9th-   8th-    8th-   7th-    6th-   5th-    5th
"Threshold" if the Company's
  rank is:                          17th   16th    15th   14th    13th   12th    11th   10th    9th    8th     7th    6th

</TABLE>


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         Section 7. ANNUAL AND LONG-TERM TARGETS. Threshold, target and maximum
annual and long-term objectives with respect to EPS Growth and with respect to
RONA shall be determined by the Committee as soon as practicable prior to the
commencement of each Fiscal Year and each Long-Term Performance Period for each
Participant or within the period permitted by applicable law. The Committee
shall cause the respective objectives for each Participant to be provided to
such Participant as soon thereafter as practicable. Such objectives shall remain
in effect for the entire Fiscal Year or Long-Term Performance Period, as
appropriate.

         Section 8. PAYMENT OF AWARDS.

                  a.       Annual Awards for a Fiscal Year shall be payable in
cash within three months after the close of such Fiscal Year or as soon
thereafter as practicable.

                  b.       Long-Term Awards for a Long-Term Performance Period
shall be payable in cash within three months after the close of such Long-Term
Performance Period or as soon thereafter as practicable.

                  c.       A Participant may elect to defer all or a portion of
an award by making such election under the Payless ShoeSource, Inc. Deferred
Compensation 401(k) Mirror Plan with respect to such award. Such election must
be made not later than December 31 of the calendar year preceding the
commencement of the Fiscal Year or Long-Term Performance Period, as appropriate.

                  d.       The Company shall have the right to deduct any sums
that federal, state or local tax laws require to be withheld with respect to any
payment of awards.

                  e.       Before any award is paid to a Participant who is a
"covered employee" (as defined in Section 162(m) of the Code and the regulations
thereunder), the Committee shall certify in writing that the material terms of
the Plan have been satisfied.

         Section 9. TERMINATION OF EMPLOYMENT.

                  a.       Death or Disability.  In the event of either the
death or Disability of the Participant while employed (a "Section 9(a) Event"),
the Participant shall be entitled to the following:



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                           i. An Annual Award with respect to the Fiscal Year in
                  which the Section 9(a) Event occurs equal to the Annual Award
                  otherwise payable (if any) for that Fiscal Year, prorated to
                  the end of the fiscal month in which such Section 9(a) Event
                  occurs; and

                           ii. A Long-Term Award with respect to each Long-Term
                  Performance Period which includes the Fiscal Year of the
                  Section 9(a) Event; provided, however, that for purposes of
                  this Section 9(a)(ii) the Long-Term Award for any Long-Term
                  Performance Period (1) shall be determined at the end of the
                  Fiscal Year in which the Section 9(a) Event occurs, (2) shall
                  be determined (and averages used in that determination shall
                  be calculated) based only on the Fiscal Year and any preceding
                  Fiscal Years otherwise included in the Long-Term Performance
                  Period and (3) shall be prorated to the end of the fiscal
                  month in which the Section 9(a) Event occurs.

                  b.       Retirement.

                           i. In the event of the Retirement of the Participant
                  with the written consent of the Company, such event shall be
                  deemed to be a Section 9(a) Event, and the Participant shall
                  be entitled to an Annual Award and to a Long-Term Award as
                  provided in Section 9(a).

                           ii. In the event of the Retirement of the Participant
                  without the consent of the Company (a "Section 9(b)(ii)
                  Event"), the Participant shall be entitled to the following:

                                    (1) An Annual Award with respect to the
                           Fiscal Year in which the Section 9(b)(ii) Event
                           occurs equal to the Annual Award otherwise payable
                           (if any) for the Fiscal Year, prorated to the end of
                           the fiscal month in which the Section 9(b)(ii) Event
                           occurs; and

                                    (2) No Long-Term Award following the Section
                           9(b)(ii) Event. The Participant shall forfeit any
                           right or entitlement to any award with respect to any
                           Long-Term Performance Period which has not been
                           completed on the date of the Section 9(b)(ii) Event.
                           Any Long-Term Award for a period which ended prior to
                           the Section 9(b)(ii) Event shall remain unaffected.

                  c.       Termination of Employment.

                           i. In the event of the termination of employment of
                  the Participant not covered by Sections 9(a) or 9(b) above
                  which occurs at the end of the term of the Participant's then-
                  current written employment agreement (if



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                  any) with the Company or Subsidiary, or in the event of such a
                  termination of a Participant who has no current written
                  employment agreement with the Company or Subsidiary, such
                  event shall be deemed to be a Section 9(b)(ii) Event, and the
                  Participant shall be entitled to an Annual Award (but not to a
                  Long-Term Award) as provided in Section 9(b)(ii).

                           ii. In the event of the termination of employment of
                  the Participant not covered by Sections 9(a) or 9(b) above
                  before the end of the term of the Participant's then-current
                  written employment agreement (if any) with the Company or
                  Subsidiary, with the written consent of the Company (a
                  "Section 9(c)(ii) Event"), the Participant shall be entitled
                  to the following:

                                    (1) An Annual Award with respect to the
                           Fiscal Year in which the Section 9(c)(ii) Event
                           occurs equal to the actual award otherwise payable
                           for the Fiscal Year (if any); provided, however, that
                           in the event that the term of the Participant's then-
                           current employment agreement is due to expire during
                           that Fiscal Year, then the Annual Award shall be
                           prorated to the end of the fiscal month in which such
                           term is due to expire; and

                                    (2) A Long-Term Award with respect to each
                           Long-Term Performance Period which includes the
                           Fiscal Year of the 9(c)(ii) Event equal to the Long-
                           Term Award otherwise payable with respect to each
                           Long-Term Performance Period; provided, however, that
                           in the event that the term of the Participant's then-
                           current employment agreement (if any) with the
                           Company is otherwise due to expire during any such
                           period, then the Long-Term Award with respect to such
                           period shall be prorated to the end of the calendar
                           month in which such term is due to expire.

                           iii. In the event of the termination of employment of
                  the Participant not otherwise covered by this Section 9 before
                  the end of the term of the then-current written employment
                  agreement (if any) with the Company or Subsidiary, without the
                  written consent of the Company, the Participant shall not be
                  entitled to any Annual Award or to any Long-Term Award with
                  respect to any Fiscal Year or Long-Term Performance Period
                  which has not been completed as of the date of such
                  termination of employment. The Participant shall forfeit any
                  right or interest in any award for any such Fiscal Year or
                  Long-Term Performance Period. Annual Awards and Long-Term
                  Awards with respect to Fiscal Years and Long-Term Performance
                  Periods which ended prior to the date of such termination of
                  employment shall remain unaffected.


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                  d.       For purposes of this Section 9, the term "written
consent of the Company" shall refer to an express written consent of the
Company, duly executed by the Company, which, by its own terms, expressly refers
to this Section 9 of the Plan.

         Section 10. CHANGES IN RESPONSIBILITIES. In the event that (i) the
duties of a Participant change and the Participant becomes eligible to
participate in another bonus plan of the Company, or (ii) the duties of an
employee who is a participant in another bonus plan of the Company change and
the employee is newly designated by the Committee as a Participant in this Plan,
then the maximum amount that such Participant would be entitled to receive under
the Plan shall be

                  a.       the Annual Award determined in accordance with the
provisions of the Plan with respect to the entire Fiscal Year in which such
event occurred; and

                  b.       a Long-Term Award with respect to each Long-Term
Performance Period which has commenced at the time of the event, determined in
accordance with the provisions of the Plan,

subject, in all events, to the Committee's right to adjust such awards in
accordance with and subject to the restrictions set forth in Section 6(a), in
its absolute discretion, which may be exercised in such a way that the Committee
deems fair and equitable based on the performance of Participant while
participating in the other bonus plan of the Company.

         Section 11. RIGHTS OF PARTICIPANTS AND BENEFICIARIES.

                  a.       Nothing contained in the Plan shall confer upon any
Participant any right to continue in the employ of the Company or constitute any
contract or agreement of employment or interfere in any way with the right of
the Company to terminate or change the conditions of employment.

                  b.       The Company shall pay all amounts payable hereunder
only to the Participant or his or her personal representatives. In the event of
the death of a Participant, payments of all amounts otherwise due to the
Participant under the Plan shall be made to the Participant's beneficiary at the
time of death under the Company Paid Life Plan of Payless ShoeSource, Inc. or to
such other beneficiary as the Participant shall have designated, in writing, for
purposes of this Plan on a form provided by the Company.

                  c.       Subject to the provisions of Section 11(d), rights to
payments under the Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, levy or charge, and
any attempt to do so shall be void; nor shall any such amounts be in any manner
liable for or subject to the


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<PAGE>   14


debts, contracts, liabilities, engagements or torts of the Participant or his or
her beneficiaries.

                  d.       Nothing in this Section 11 shall prohibit the
personal representatives of a Participant from designating that any amount that
would otherwise be distributed to the Participant's estate should be distributed
in accordance with the terms of the Participant's last will and testament or
pursuant to the laws of descent and distribution.

         Section 12. UNFUNDED CHARACTER OF THE PLAN. The right of a Participant
to receive any Annual Award or Long-Term Award hereunder shall be an unsecured
claim against the general assets of the Company. Nothing in the Plan shall
require the Company to invest any amounts in Stock or in any other medium.

         Section 13. CHANGES IN CAPITAL STRUCTURE. In the event that there is
any change in the Stock through merger, consolidation, reorganization,
recapitalization, spin-off or otherwise, or if there shall be any dividend on
the Stock, payable in such Stock, or if there shall be a stock split or
combination of shares, then the fraction provided for in Section 5(b) of the
Plan shall be adjusted by the Committee as it deems desirable, in its absolute
discretion, to prevent dilution or enlargement of the rights of Participants.
The issuance of Stock for consideration and the issuance of Stock rights shall
not be considered a change in the Company's capital structure.

         Section 14. AMENDMENT OR TERMINATION. The Committee may, by resolution,
amend or terminate the Plan at any time. Any amendment necessary to bring the
Plan into compliance with Section 162(m) of the Code and any regulations
thereunder shall not require shareowner approval and the effectiveness of such
amendment shall be as of the effective date of the provision in Section 162(m)
of the Code or regulations thereunder giving rise to the amendment. However, (i)
shareowner approval shall be sought for any changes to the Plan which would
require shareowner approval under Section 162(m) of the Code and (ii) except as
provided in the preceding sentence, the Committee may not, without the consent
of the Participant, amend or terminate the Plan in such a manner as to affect
adversely any Annual Award or Long-Term Award which would have been payable,
based on the terms of the Plan immediately prior to any such amendment or
termination, for any Fiscal Year or Long-Term Performance Period which has
already commenced as of the effective date of the amendment or termination.