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                                                                  EXHIBIT 10.1

                    VENATOR GROUP DIRECTORS STOCK OPTION PLAN

1.       PURPOSE

         The purpose of the Venator Group Directors Stock Option Plan (the
"Plan") is to promote the interests of Venator Group, Inc. (the "Company") and
its shareholders by increasing the proprietary interest of non-employee
directors in the growth and performance of the Company by granting such
directors options to purchase shares of common stock.

2.       ADMINISTRATION

         The Plan shall be administered by the Company's Board of Directors
(the "Board"). Subject to the provisions of the Plan, the Board shall be
authorized to interpret the Plan, to establish, amend, and rescind any rules
and regulations relating to the Plan and to make all other determinations
necessary or advisable for the administration of the Plan; provided, however,
that the Board shall have no discretion with respect to the selection of
directors to receive options, the number of shares subject to any such options,
the purchase price thereunder or the timing of grants of options under the
Plan. The determinations of the Board in the administration of the Plan, as
described herein, shall be final and conclusive. The Secretary of the Company
shall be authorized to implement the Plan in accordance with its terms and to
take such actions of a ministerial nature as shall be necessary to effectuate
the intent and purpose thereof. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of New York.

3.       ELIGIBILITY

         The class of individuals eligible to receive grants of options shall
be directors of the Company who are not employees of the Company or its
affiliates ("Eligible Directors"). Any holder of an option hereunder shall
hereinafter be referred to as a "Participant."

4.       SHARES SUBJECT TO THE PLAN

         Subject to adjustment as provided in Section 6, an aggregate of
100,000 shares of the Company's Common Stock, $.01 per share ("Shares"), shall
be available for issuance under the Plan. The Shares deliverable upon the
exercise of options may be made available from authorized but unissued Shares
or treasury Shares. If any option granted under the Plan shall be terminated
for any reason without having been exercised, the Shares subject to, but not
delivered under, such option shall be available for issuance under the Plan.

5.       GRANT, TERMS AND CONDITIONS OF OPTIONS

         (a)    Subject to shareholder approval of the Plan, each Eligible
Director on the date of such approval will be granted on such date an option to
purchase that number of shares having a market value of $50,000 on the date of
grant. Such market value shall be determined by dividing 50,000 by the Fair
Market Value of a Share on the date of grant. "Fair Market Value" shall mean
the average of the high and low prices of a Share as reported for such date on
the Composite Tape for New York Stock Exchange-Listed Stocks, or, if the Shares
were not traded on the New

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York Stock Exchange on such date, the "Fair Market Value" of a Share as of such
date shall be the average of the high and low prices of a Share as reported on
said Composite Tape on the next preceding date on which such trades were
reported on said Composite Tape.

         (b)    Each Eligible Director on the first business day of a fiscal
year of the Company beginning thereafter, will be granted on such a day an
option to purchase that number of shares having a market value of $50,000 on
the date of grant. Such market value shall be determined by dividing 50,000 by
the Fair Market Value on the date of grant.

         (c)    The options granted will be nonstatutory stock options not
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") and shall have the following terms and conditions:

                (i)     Price. The purchase price per Share deliverable upon
the exercise of each option shall be 100 percent of the Fair Market Value per
Share on the date the option is granted.

                (ii)    Payment.  Options may be exercised only upon the cash
payment of the purchase price thereof in full.

                (iii)   Exercisability and Term of Options. Options shall
become exercisable in three equal annual installments commencing on the first
anniversary of the date of grant, provided the holder of such Option is an
Eligible Director on such anniversary, and shall be exercisable until the
earlier of ten years from the date of grant or the expiration of the one-year
period from the date upon which the Participant ceases to be a Director,
provided that in no event shall the options be exercisable beyond the period
provided for in paragraph (iv) below.

                (iv)    Termination of Service as Eligible Director. Upon
termination of a Participant's service as a director of the Company for any
reason, all outstanding options held by such Eligible Director, to the extent
then exercisable, shall be exercisable in whole or in part for a period of one
year from the date upon which the Participant ceases to be a Director, provided
that in no event shall the options be exercisable beyond the period provided
for in paragraph (iii) above.

                (v)     Nontransferability of Options. No option may be
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant otherwise than by will or the laws of descent and
distribution, and during the lifetime of the Participant to whom an option is
granted, it may be exercised only by the Participant or by the Participant's
guardian or legal representative.

                (vi)    Option Agreement. Each option granted hereunder shall
be evidenced by an agreement with the Company which shall contain the terms and
provisions set forth herein and shall otherwise be consistent with the
provisions of the Plan.

6.       ADJUSTMENT OF AND CHANGES IN SHARES

         In the event of a stock split, stock dividend, extraordinary cash
dividend, subdivision or combination of the Shares or other change in corporate
structure affecting the Shares, the number of Shares authorized by the Plan
shall be increased or decreased proportionately, as the

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case may be, and the number of Shares subject to any outstanding option shall
be increased or decreased proportionately, as the case may be, with appropriate
corresponding adjustment in the purchase price per Share thereunder.

7.       NO RIGHTS OF SHAREHOLDERS

Neither a Participant nor a Participant's legal representative shall be, or
have any of the rights and privileges of, a shareholder of the Company in
respect of any Shares that may be purchased under any option, in whole or in
part, unless and until certificates for such Shares shall have been issued.

8.       PLAN AMENDMENTS

         The Plan may be amended by the Board as it shall deem advisable or to
conform to any change in any law or regulation applicable thereto; provided,
that the Board may not, without the authorization and approval of shareholders
of the Company:

                -     increase the number of Shares which may be purchased
                      pursuant to options hereunder, either individually or in
                      the aggregate, except as permitted by Section 6,

                -     change the requirement of Section 5(b) that option grants
                      be priced at Fair Market Value, except as permitted by
                      Section 6,

                -     modify in any respect the class of individuals who
                      constitute Eligible Directors or

                -     materially increase the benefits accruing the
                      Participants hereunder.

9.       LISTING AND REGISTRATION

Each Share shall be subject to the requirement that if at any time the Board
shall determine, in its discretion, that the listing, registration or
qualification of the Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting
of such Shares, no such Shares may be disposed of unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any condition not acceptable to the Board.

10.      EFFECTIVE DATE AND DURATION OF PLAN

         The Plan shall become effective on the date the Company's shareholders
approve the Plan. The Plan shall terminate on the day following the 2010 annual
shareholders meeting unless the Plan is extended or terminated at an earlier
date or is terminated by exhaustion of the Shares available for issuance
hereunder.

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                                                                  EXHIBIT 10.2

AMENDMENT TO THE VENATOR GROUP 1998 STOCK OPTION AND AWARD PLAN

         1.       The first sentence of Section 5(a) is hereby amended to read
as follows:

                           (a)      The maximum number of shares of Stock
reserved for issuance pursuant to the Plan or with respect to which Awards may
be granted shall be twelve million (12,000,000) shares, subject to adjustment
as provided herein, except that the number of such shares reserved for issuance
as Restricted Stock and Other Stock-Based Awards shall be three million
(3,000,000) shares.

         2.       Section 5(c) is deleted in its entirety.

         3.       Sections 5(d), 5(e), 5(f), and 5(g) are amended by
designating them as Sections 5(c), 5(d), 5(e) and 5(f), respectively.<PAGE>   1

                                                                EXHIBIT 10.3

                                     AS AMENDED THROUGH JANUARY 30, 2000

                                 VENATOR GROUP
                       ANNUAL INCENTIVE COMPENSATION PLAN
                               (SHORT-TERM PLAN)

         Effective as of February 1, 1983, the Board of Directors of Venator
Group Specialty, Inc. adopted an Annual Incentive Compensation Plan (the "Prior
Plan")for certain employees of Venator Group Specialty, Inc. Effective as of
August 7, 1989, Venator Group, Inc. ("Venator Group") adopted the Prior Plan,
as amended. For "Covered Employees" (as defined below), the Prior Plan was
amended and restated effective as of January 1, 1994 (the "1994 Plan") and was
approved by the shareholders at the 1994 annual meeting. For all other
employees, the 1994 Plan was amended and restated effective January 1, 1994.
For Covered Employees, the 1994 Plan was further amended and restated as of
January 28, 1996 (the "1996 Plan"), and was approved by the shareholders at the
1996 annual meeting. For all other employees, the 1996 Plan was further amended
and restated as of January 28, 1996. The Board of Directors further amended the
1996 Plan effective January 30, 2000 (the "Plan"), subject to shareholder
approval at the 2000 annual meeting.

         The purposes of the Plan are:

                  (a)      to reinforce corporate organizational and business
development goals.

                  (b)      to promote the achievement of year-to-year and
long-range financial and other business objectives such as high quality of
service and product, improved productivity and efficiencies for the benefit of
our customers' satisfaction and to assure a reasonable return to Venator
Group's shareholders.

                  (c)      to reward the performance of officers and key
employees in fulfilling their personal responsibilities for annual
achievements.

                  (d)      to serve as a qualified performance-based
compensation program under Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor section and the Treasury regulations
promulgated thereunder ("Section 162(m) of the Code").

1.       DEFINITIONS.

         The following terms, as used herein, shall have the following
meanings:

         (a)      "Annual Base Salary" with respect to any Plan Year shall mean
the total amount paid by Venator Group and its subsidiaries to a participant
during such Plan Year without reduction for any amounts withheld pursuant to
participation in a qualified

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                                                                EXHIBIT 10.3

"cafeteria plan" under Section 125 of the Code or in a cash or deferred
arrangement under Section 401(k) of the Code. Annual Base Salary shall not
include any amount paid or accruing to a participant under the Venator Group
Long-Term Incentive Compensation Plan or any other incentive compensation or
bonus payment or extraordinary remuneration, expense allowances, imputed income
or any other amounts deemed to be indirect compensation, severance pay and any
contributions made by Venator Group to this or any other plan maintained by
Venator Group or any other amounts which, in the opinion of the Committee, are
not considered to be Annual Base Salary for purposes of the Plan.

         (b)      "Board shall mean the Board of Directors of Venator Group.

         (c)      "Committee" shall mean two or more members of the
Compensation Committee of the Board, each of whom is an "outside director"
within the meaning of Section 162(m) of the Code.

         (d)      "Covered Employee" shall mean an officer or key employee of
Venator Group who is designated as an executive officer for purposes of Rule
3b-7 of the Securities Exchange Act of 1934 for the relevant Plan Year.

         (e)      "Individual Target Award" shall mean the targeted performance
award for a Plan Year specified by the Committee as provided in Section 5
herein.

         (f)      "Plan Year" shall mean Venator Group's fiscal year during
which the Plan is in effect.

2.       ADMINISTRATION OF THE PLAN.

         The Plan shall be administered by the Committee. No member of the
Committee while serving as such shall be eligible for participation in the
Plan. The Committee shall have exclusive and final authority in all
determinations and decisions affecting the Plan and its participants. The
Committee shall also have the sole authority to interpret the Plan, to
establish and revise rules and regulations relating to the Plan, to delegate
such responsibilities or duties as it deems desirable, and to make any other
determination that it believes necessary or advisable for the administration of
the Plan including, but not limited to: (i) approving the designation of
eligible participants; (ii) setting the performance criteria within the Plan
guidelines; and (iii) certifying attainment of performance goals and other
material terms. The Committee shall have the authority in its sole discretion,
subject to and not inconsistent with the express provisions of the Plan, to
incorporate provisions in the performance goals allowing for adjustments in
recognition of unusual or non-recurring events affecting Venator Group or the
financial statements of Venator Group, or in response to changes in applicable
laws, regulations, or accounting principles; provided that the Committee shall
have such authority with regard to the performance goals of Covered Employees
solely to the extent permitted by Section 162(m) of the Code. To the extent any
provision of the Plan creates impermissible discretion under Section 162(m) of
the Code or would otherwise violate Section 162(m) of the Code with regard to
the performance goals of Covered Employees, such provision shall have no force
or effect.

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                                                                EXHIBIT 10.3

3.       PARTICIPATION.

         Participation in the Plan is limited to officers or key employees of
Venator Group. Individual participants shall be those employees selected in the
sole discretion of the Committee (in the case of Covered Employees) or its
designee (in the case of all other officers and key employees). In determining
the persons to whom awards shall be granted, the Committee shall take into
account such factors as the Committee shall deem appropriate in connection with
accomplishing the purposes of the Plan. The Committee may from time to time
designate additional participants who satisfy the criteria for participation as
set forth herein and shall determine when an officer or key employee of Venator
Group ceases to be a participant in the Plan.

4.       RIGHT TO PAYMENT.

         Unless otherwise determined by the Committee in its sole discretion, a
participant shall have no right to receive payment under this Plan unless the
participant remains in the employ of Venator Group at all times during the
applicable Plan Year, provided, however, that the Committee may, in its sole
discretion, make an "Interim Payment" to any participant (other than a Covered
Employee). Such Interim Payment shall be equal to the amount of the payment the
participant would have received, pursuant to Sections 5 and 6 hereof, at the
completion of the Plan Year during which such Interim Payment is made (the
"Interim Year") and shall be the sum of: (a) the actual performance results
achieved relative to the Plan's performance goals with respect to the period
from the commencement of the Interim Year to the date of the Interim Payment,
and (b) the performance results that would have been achieved had the Plan's
budget goal been met for the balance of such Interim Year, multiplied by a
fraction, the numerator of which is the number of completed months between the
commencement of the Interim Year and the date of the Interim Payment and the
denominator of which is 12. Following the close of the Interim Year, the
Committee shall make a "Final Payment" to each participant who received an
Interim Payment in an amount equal to the difference, if any, between the
amount of the Interim Payment and the amount of the payment that would have
been made pursuant to Sections 5 and 6 hereof, absent such Interim Payment.

5.       PAYMENT.

         (a)    Payment under this Plan to a participant will be made in cash
in an amount equal to the achieved percentage of such participant's Annual Base
Salary as determined by the Committee for each Plan Year. Such percentage shall
be based on the participant's achievement of his or her Individual Target
Award. Except to the extent provided for in Section 4 hereof with respect to
Interim Payments, payment shall be made only if and to the extent the
performance goals with respect to the Plan Year are attained.

         (b)    At the beginning of each Plan Year (or, with respect to Covered
Employees, within the time period prescribed by Section 162(m) of the Code),
the Committee shall establish all performance goals and the Individual Target
Awards for such Plan Year and Venator Group shall inform each participant of
the Committee's determination with respect to such participant for such Plan
Year. Individual Target Awards shall be expressed as a percentage of such
participant's Annual Base Salary. At the time the performance goals are

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                                                                EXHIBIT 10.3

established, the Committee shall prescribe a formula to determine the
percentages of the Individual Target Award which may be payable based upon the
degree of attainment of the performance goals during the Plan Year.

         (c)    Notwithstanding anything to the contrary contained in this
Plan, (1) the performance goals in respect of awards granted to participants
who are Covered Employees, shall be based on one or more of the following
criteria: (i) the attainment of certain target levels of, or percentage
increase in, pre-tax profit; (ii) the attainment of certain target levels of,
or a percentage increase in, after-tax profits of Venator Group (or a
subsidiary, division, or other operational unit of Venator Group); (iii) the
attainment of certain target levels of, or a specified increase in, operational
cash flow of Venator Group (or a subsidiary, division, or other operational
unit of Venator Group); (iv) the achievement of a certain level of, reduction
of, or other specified objectives with regard to limiting the level of increase
in, all or a portion of, Venator Group's bank debt or other long-term or
short-term public or private debt or other similar financial obligations of
Venator Group, if any, which may be calculated net of such cash balances and/or
other offsets and adjustments as may be established by the Committee; (v) the
attainment of a specified percentage increase in earnings per share or earnings
per share from continuing operations of Venator Group (or a subsidiary,
division or other operational unit of Venator Group); (vi) the attainment of
certain target levels of, or a specified percentage increase in, revenues, net
income, or earnings before (A) interest, (B) taxes, (C) depreciation and/or (D)
amortization, of Venator Group (or a subsidiary, division, or other operational
unit of Venator Group); (vii) the attainment of certain target levels of, or a
specified increase in, return on invested capital or return on investment;
(viii) the attainment of certain target levels of, or a percentage increase in,
after-tax or pre-tax return on shareholders' equity of Venator Group (or any
subsidiary, division or other operational unit of Venator Group); and (ix) the
attainment of a certain target level of, or reduction in, selling, general and
administrative expense as a percentage of revenue of Venator Group (or any
subsidiary, division or other operational unit of Venator Group) and (2) in no
event shall payment in respect of an award granted for a performance period be
made to a participant who is a Covered Employee as of the end of such Plan Year
in an amount which exceeds $1.5 million. Subject to Section 2 of the Plan
regarding certain adjustments, in connection with the establishment of the
performance goals, the criteria listed above for Venator Group (or any
subsidiary, division or other operational unit of Venator Group) shall be
determined in accordance with generally accepted accounting principles
consistently applied by Venator Group, but before consideration of payments to
be made pursuant to this Plan and pursuant to the Venator Group Long-Term
Incentive Compensation Plan.

6.       TIME OF PAYMENT.

         Subject to Section 4 hereof, all payments earned by participants under
this Plan will be paid within a reasonable period after performance goal
achievements for the Plan Year have been finalized, reviewed, approved, and to
the extent required by Section 162(m) of the Code, certified by the Committee,
except as may otherwise be agreed by a participant and Venator Group in a
written agreement executed prior to the beginning of the fiscal year to which
it relates in accordance with any deferred compensation program (a "Deferred
Compensation Program") applicable to such participant. Venator Group's
independent accountants shall examine as of the close of the Plan Year and
communicate the results of

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                                                                EXHIBIT 10.3

such examination to the Committee as to the appropriateness of the proposed
payments under the Plan. Any award deferred by a Covered Employee shall not
increase (between the date on which the award is credited to any Deferred
Compensation Program applicable to such Covered Employee and the payment date)
by a measuring factor for each fiscal year greater than either (x) one hundred
and twenty percent (120%) of the applicable federal long-term rate, compounded
annually, and as set as of the first day of the calendar year; or (y) a
hypothetical investment in such shares of Venator Group Common Stock, par value
$0.01 per share (as determined under such Deferred Compensation Program), as
irrevocably elected by the Covered Employee in the deferral agreement. The
participant shall have no right to receive payment of any deferred amount until
he or she has a right to receive such amounts under the terms of the applicable
Deferred Compensation Program.

7.       MISCELLANEOUS PROVISIONS.

         (a)      A participant's rights and interests under the Plan may not
be sold, assigned, transferred, pledged or alienated.

         (b)      In the case of a participant's death, payment, if any, under
the Plan shall be made to his or her designated beneficiary, or in the event no
beneficiary is designated or surviving, to the participant's estate.

         (c)      Neither this Plan nor any action taken hereunder shall be
construed as giving any employee any right to be retained in the employ of
Venator Group.

         (d)      Venator Group shall have the right to make such provisions as
it deems necessary or appropriate to satisfy any obligations it may have to
withhold federal, state or local income or other taxes incurred by reason of
payments made pursuant to the Plan.

         (e)      The Plan is designed and intended to comply with Section
162(m) of the Code with regard to awards made to Covered Employees, and all
provisions hereof shall be limited, construed and interpreted in a manner so to
comply.

         (f)      The Board or the Committee may at any time and from time to
time alter, amend, suspend or terminate the Plan in whole or in part; provided,
that, no amendment which requires shareholder approval in order for the Plan to
continue to comply with the exception for performance based compensation under
Section 162(m) of the Code shall be effective unless the same shall be approved
by the requisite vote of the shareholders of Venator Group as determined under
Section 162(m) of the Code. Notwithstanding the foregoing, no amendment shall
affect adversely any of the rights of any participant, without such
participant's consent, under the award theretofore granted under the Plan.

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