UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )

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DSW Inc.

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DSW INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD

 May 21, 2009

AND

PROXY STATEMENT

IMPORTANT

     If you received a copy of the proxy card by mail, please complete, sign and date your proxy and promptly return it in the enclosed envelope. No postage is necessary if mailed in the United States.

DSW INC.
810 DSW Drive
Columbus, Ohio 43219
(614) 237-7100

April 8, 2009

To Our Shareholders:

The 2009 Annual Meeting of Shareholders of DSW Inc. will be held at DSW’s corporate office, 810 DSW Drive, Columbus, Ohio, on May 21, 2009, at 11:00 a.m., Eastern Daylight Savings Time, for the following purposes:

	1.		To elect four Class II directors, each to serve until the 2012 Annual Meeting of Shareholders and until their successors are duly elected and qualified;
	2.		To approve the 2005 Equity Incentive Plan;
	3.		To approve the 2005 Cash Incentive Compensation Plan; and
	4.		To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

Only the holders of record of Class A and Class B Common Shares at the close of business on March 24, 2009, our record date for the Annual Meeting, are entitled to notice of and to vote at the meeting. Each shareholder is entitled to one vote for each share of Class A common stock held as of the record date, and eight votes for each share of Class B common stock held as of the record date.

By Order of the Board of Directors,                  

/s/ William L. Jordan

William L. Jordan                 
Secretary                  

YOUR VOTE IS IMPORTANT

If you received a copy of the proxy card by mail, you are urged to date, sign and promptly return the enclosed form of proxy in the enclosed envelope to which no postage need be affixed if mailed in the United States. Voting your shares by the proxy does not affect your right to vote in person in the event you attend the meeting. You are cordially invited to attend the meeting. If you attend, you may revoke your proxy and vote in person if you wish, even if you have previously returned your proxy.

Contents

		Page
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT			1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			3
PROPOSAL 1 - ELECTION OF DIRECTORS			7
EXECUTIVE OFFICERS			11
OTHER DIRECTOR INFORMATION, COMMITTEES OF DIRECTORS AND CORPORATE GOVERNANCE INFORMATION			13
AUDIT AND OTHER SERVICE FEES			17
AUDIT COMMITTEE REPORT			18
COMPENSATION DISCUSSION AND ANALYSIS			20
REPORT OF THE COMPENSATION COMMITTEE			28
COMPENSATION OF MANAGEMENT			29
PROPOSAL 2 - APPROVAL OF THE 2005 EQUITY INCENTIVE PLAN			38
PROPOSAL 3 - APPROVAL OF THE 2005 CASH INCENTIVE COMPENSATION PLAN			49
EQUITY COMPENSATION PLAN TABLE			53
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			54
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS			63
OTHER MATTERS			63
APPENDIX A - 2005 EQUITY INCENTIVE PLAN			A-1
APPENDIX B - 2005 CASH INCENTIVE COMPENSATION PLAN			B-1

DSW INC.
810 DSW Drive
Columbus, Ohio 43219
(614) 237-7100

PROXY STATEMENT

This proxy is being solicited on behalf of our Board of Directors for use at our 2009 Annual Meeting of Shareholders to be held at 11:00 a.m., Eastern Daylight Savings Time, on Thursday, May 21, 2009, and any postponements or adjournments thereof (the “Annual Meeting”). The Annual Meeting will be held at our corporate office, 810 DSW Drive, Columbus, Ohio. This proxy statement, including the Notice of Meeting and our Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (“fiscal 2008”), is being made available electronically on or about April 8, 2009.

Pursuant to rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) to our shareholders of record and beneficial owners. All shareholders will have the ability to access the proxy materials on a website referred to in the Notice of Internet Availability or request to receive a printed set of the proxy materials, at no charge. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found on the Notice of Internet Availability. In addition, shareholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis by following the instructions on the website referred to in the Notice of Internet Availability.

We have two classes of securities outstanding and entitled to vote at the Annual Meeting, our Class A Common Shares, no par value, and our Class B Common Shares, no par value. Only shareholders of record at the close of business on March 24, 2009, our record date for the Annual Meeting, are entitled to notice of and to vote at the meeting or any adjournments thereof. The total number of outstanding Class A Common Shares entitled to vote at the meeting is 16,232,545 and the total number of Class B Common Shares entitled to vote at the meeting is 27,702,667. Each outstanding Class A Common Share is entitled to one vote with respect to each matter to be voted on at the meeting and each outstanding Class B Common Share is entitled to eight votes with respect to each matter to be voted on at the meeting. Class A Common Shares and Class B Common Shares vote together as a single class with respect to all matters submitted to a vote of shareholders.

Prior to the completion of our initial public offering in July 2005, we were operated as a direct wholly-owned subsidiary of Retail Ventures, Inc. (Retail Ventures). As of March 24, 2009, Retail Ventures owned 27,702,667 of our Class B Common Shares, constituting all of our issued and outstanding Class B Common Shares, or in excess of 63% of our total outstanding shares and 93.1% of the combined voting power of our outstanding Common Shares. Retail Ventures has the power acting alone to approve any action requiring a vote of the majority of our voting shares, to elect all our directors, approve the 2005 Equity Incentive Plan and approve the 2005 Cash Incentive Compensation Plan.

Without affecting any vote previously taken, the proxy may be revoked by the shareholder by giving a written notice of revocation to us in writing (attention: William L. Jordan, Secretary). A shareholder may also change his or her vote by executing and returning to us a later-dated proxy or by giving notice of revocation in person at the meeting.

All properly executed proxies received by the Board of Directors will be voted as directed by the shareholder. All properly executed proxies received by the Board of Directors which do not specify how shares should be voted will be voted “FOR” the election as directors of the nominees listed below under “Proposal 1 – Election of Directors,” “FOR” the approval of the 2005 Equity Incentive Plan, “FOR” the approval of the 2005 Cash Incentive Compensation Plan, and in the discretion of the proxies, on any other business properly brought before the meeting or any adjournments thereof.

The presence, in person or by proxy, of a majority of the outstanding Common Shares is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes are counted

for purposes of determining the presence or absence of a quorum. Broker non-votes occur when brokers holding shares on behalf of beneficial owners do not receive voting instructions from the beneficial holders at least ten days before the meeting. If that happens, the broker may vote those shares only on matters deemed “routine” by the New York Stock Exchange, such as the election of directors. On non-routine matters, such as approval of the 2005 Equity Incentive Plan and the 2005 Cash Incentive Compensation Plan, brokers cannot vote unless they receive voting instructions from beneficial holders, resulting in so-called “broker non-votes.”

Solicitation of proxies may be made by mail, personal interview and telephone by our officers, directors and regular employees, and by the employees of our transfer agent, National City Bank. We will bear the cost of the solicitation of proxies, including the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of shares.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

The following table sets forth information with respect to the only persons known to us to own beneficially more than five percent of our outstanding Class A or Class B Common Shares as of March 24, 2009, unless as otherwise specified:

																		Percentage of
																		Combined Voting
		Number of Shares								Percentage of Shares								Power of All
		Beneficially Owned								Beneficially Owned								Classes of
Name and beneficial owner		Class A				Class B				Class A				Class B				Common Stock
Retail Ventures, Inc.			—				27,702,667	(1)			—				100	%			93.1	%
4150 East Fifth Avenue Columbus, Ohio 43219
Schottenstein Stores Corporation			1,973,685	(2)			—				10.8	%			—				0.8	%
1800 Moler Road Columbus, Ohio 43207
SEI, Inc.			1,292,900	(2)			—				7.9	%			—				0.5	%
1800 Moler Road Columbus, Ohio 43207
Jay L. Schottenstein			4,002,520	(2)			—				21.9	%			—				1.6	%
1800 Moler Road Columbus, Ohio 43207
FMR LLC			2,365,637	(3)			—				14.5	%			—				0.9	%
82 Devonshire Street Boston, Massachusetts 02109
Wellington Management Company, LLP			1,814,665	(4)			—				11.1	%			—				0.7	%
75 State Street Boston, Massachusetts 02109
Wells Fargo & Company			1,343,397	(5)			—				8.2	%			—				0.5	%
420 Montgomery Street San Francisco, California 94163
Lord, Abbett & Co. LLC			1,292,837	(6)			—				7.9	%			—				0.5	%
90 Hudson Street Jersey City, New Jersey 07302

The information with respect to beneficial ownership is based upon information furnished by the shareholder or information contained in filings made with the Securities and Exchange Commission.

Security Ownership of Management

The following table sets forth, as of March 24, 2009, information with respect to our Class A Common Shares owned beneficially by each director and director nominee individually, by the executive officers named in the Summary Compensation Table of this proxy statement and by all directors and executive officers as a group:

																		Percentage of
																		Combined Voting
		Number of Shares								Percentage of Shares								Power of All
		Beneficially Owned(1)								Beneficially Owned(2)								Classes of
Name		Class A				Class B				Class A				Class B				Common Stock
Elaine J. Eisenman			4,813				—				*				—				*
Deborah L. Ferrée			147,160				—				*				—				*
Carolee Friedlander			14,155				—				*				—				*
Joanna T. Lau			4,664				—				*				—				*
Kevin M. Lonergan			55,320				—				*				—				*
Michael R. MacDonald			—				—				—				—				—
Roger S. Markfield			8,455				—				*				—				*
Philip B. Miller			19,006				—				*				—				*
Harris Mustafa			26,280								*								*
Douglas J. Probst			78,580				—				*				—				*
James D. Robbins			16,876				—				*				—				*
Jay L. Schottenstein (3)			4,002,520				—				21.9	%			—				1.6	%
Harvey L. Sonnenberg			12,446				—				*				—				*
Allan J. Tanenbaum			22,786				—				*				—				*
Heywood Wilansky			25,000				—				*				—				*
All directors and executive officers as a group (17 persons)			4,528,820				—				24.2	%			—				1.8	%

		Stock Options Exercisable within				Restricted Shares that could be issued
Beneficial Owner		60 days of March 24, 2009				within 60 days of March 24, 2009
Elaine J. Eisenman			—				4,813
Deborah L. Ferrée			127,160				—
Carolee Friedlander			—				11,155
Joanna T. Lau			—				4,664
Kevin M. Lonergan			55,320				—
Michael R. MacDonald			—				—
Roger S. Markfield			—				8,455
Philip B. Miller			—				11,006
Harris Mustafa			26,280				—
Douglas J. Probst			74,080				—
James D. Robbins			—				10,876
Jay L. Schottenstein			56,920				—
Harvey L. Sonnenberg			—				10,446
Allan J. Tanenbaum			—				21,786
Heywood Wilansky			—				—
All directors and executive officers as a group (17 persons)			428,520				83,201

The information with respect to beneficial ownership is based upon information furnished by each director, director nominee or executive officer, or information contained in filings made with the Securities and Exchange Commission.

PROPOSAL 1 – ELECTION OF DIRECTORS

Our Board of Directors currently consists of ten members and is divided into three classes, designated Class I, Class II and Class III. The members of the three classes are elected to serve for staggered terms of three years. Pursuant to Section 2.02 of our Code of Regulations, the number of directors constituting each class will, as nearly as practicable, be equal.

On March 25, 2009, in accordance with our Code of Regulations, the Board of Directors increased the size of the Board from 10 to 11 directors. At the Annual Meeting, four directors are nominated for election as Class II directors with a term to expire in 2012. Each of the nominees for director, other than Michael R. MacDonald, currently serves as a director of the Company. Mr. MacDonald was elected to serve as our President and Chief Executive Officer, effective April 27, 2009, following a search conducted by our Board of Directors. Following his election, Mr. MacDonald was recommended to serve as a member of our Board of Directors by the Nominating and Governance Committee.

The names and ages of the “Nominees” and the “Continuing Directors,” their principal occupations during the past five years, and certain other information are listed below.

Nominees for Class II Directors for term to expire in 2012:

						Our Directors and Their Positions with Us/		Director
Name		Age				Principal Occupations / Business Experience		Since
Jay L. Schottenstein			54			Mr. Schottenstein serves as our Chief Executive Officer and Chairman of the Board of Directors. He was appointed as our Chief Executive Officer in March 2005. Mr. Schottenstein became a director of DSW in March 2005. He has been Chairman of the Board of Directors of Retail Ventures, American Eagle Outfitters, Inc. and SSC since March 1992 and was Chief Executive Officer of Retail Ventures from April 1991 to July 1997 and from July 1999 to December 2000. Mr. Schottenstein served as Vice Chairman of SSC from 1986 until March 1992 and as a director of SSC since 1982. He served in various executive capacities at SSC since 1976. Mr. Schottenstein is also a director of American Eagle Outfitters, Inc., and Retail Ventures.			2005
Michael R. MacDonald			57			Mr. MacDonald has been appointed to serve as our Chief Executive Officer effective as of April 27, 2009. Prior to accepting employment with us, Mr. MacDonald served as Chairman and Chief Executive Officer of Shopko Stores from May 2007 to March 2009. Prior to that time, Mr. MacDonald held executive positions at Saks Incorporated from 1998 – 2006, most recently as Chairman and Chief Executive Officer of the Northern Department Stores Group for six years. Prior to serving in that capacity, Mr. MacDonald held executive positions at Carson Pirie Scott, including the position of Chairman and Chief Executive Officer. Mr. MacDonald has over 30 years of business experience in all phases of retail, including managing merchandising, marketing, stores, operations and finance functions.			N/A
Philip B. Miller*			70			Mr. Miller is the President of Philip B. Miller Associates, a consulting firm, and an Operating Director of Tri-Artisan Capital Partners, a privately held merchant bank, and has held those positions since July 2001. Mr. Miller also serves on the Board of Directors of St. John Knits, a position he has held since December 2002. Mr. Miller served as Chairman and Chief Executive Officer of Saks Fifth Avenue, Inc. from 1993 until January 2000 and continued as Chairman of that company until July 2001. From 1983 to 1990, Mr. Miller served as Chairman and Chief Executive Officer of Marshall Fields, Inc. Mr. Miller serves as a director of Kellwood Company.			2005

						Our Directors and Their Positions with Us/		Director
Name		Age				Principal Occupations / Business Experience		Since
James D. Robbins*			62			Mr. Robbins currently holds a directorship in Huntington Preferred Capital, Inc. (NASDAQ:HPCCP), that he has held since November 2001. Mr. Robbins also serves as chairman of the audit committee of Huntington Preferred Capital, Inc. From 1993 until his retirement in June 2001, Mr. Robbins served as Managing Partner of the Columbus, Ohio office of PricewaterhouseCoopers LLP. Mr. Robbins is a certified public accountant.			2005

Continuing Class I Directors for term to Expire in 2011:

						Our Directors and Their Positions with Us/		Director
Name		Age				Principal Occupations / Business Experience		Since
Carolee Friedlander*			67			Ms. Friedlander serves as a founding partner and CEO of AccessCircles (formally known as Circle Financial Group), a membership organization that provides wealth management services, and has held that position since August 2004. From July 2001 to August 2004, Ms. Friedlander served as Senior Vice President of Retail Brand Alliance, Inc., and as President and Chief Executive Officer of Carolee Designs, Inc., a subsidiary of Retail Brand Alliance. Prior to that Ms. Friedlander served as President and Chief Executive Officer of Carolee Designs, a fashion accessory company she founded in 1973 and sold to Retail Brand Alliance in July 2001.			2005
Harvey L. Sonnenberg			67			Mr. Sonnenberg has been a partner in the certified public accounting firm, Weiser, LLP, since November 1994. Mr. Sonnenberg is active in a number of professional organizations, including the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants, and has long been involved in rendering professional services to the retail and apparel industry. Mr. Sonnenberg is a certified public accountant. Mr. Sonnenberg is a director of Retail Ventures.			2005
Allan J. Tanenbaum*			62			Mr. Tanenbaum has been General Counsel and Managing Partner of Equicorp Partners, LLC, an Atlanta-based private investment and advisory firm, since January 2006. From February 2001 to December 31, 2005, Mr. Tanenbaum served as Senior Vice President, General Counsel and Corporate Secretary for AFC Enterprises, Inc., a franchisor and operator of quick-service restaurants. From June 1996 to February 2001, Mr. Tanenbaum was a shareholder in Cohen Pollock Merlin Axelrod & Tanenbaum, P.C., an Atlanta, Georgia law firm, where he represented corporate clients in connection with mergers and acquisitions and other commercial transactions.			2005
Heywood Wilansky			61			Mr. Wilansky is the former President and Chief Executive Officer of Retail Ventures. Mr. Wilansky served as President and Chief Executive Officer of Retail Ventures from November 2004 through January 2009. Before joining Retail Ventures in November of 2004, he served as President and Chief Executive Officer of Filene’s Basement, a subsidiary of Retail Ventures, from February 2003 to November 2004. Mr. Wilansky was a professor of marketing at the University of Maryland business school from August 2002 to February 2003. From August 2000 to January 2003, he was President and Chief Executive Officer of Strategic Management Resources, LLC. From August 1995 to July 2000, he was President and Chief Executive Officer of Bon Ton Stores. Mr. Wilansky is a director of Retail Ventures and Bertucci’s Corporation.			2005

Continuing Class III Directors for term to Expire in 2010:

						Our Directors and Their Positions with Us/		Director
Name		Age				Principal Occupations / Business Experience		Since
Elaine J. Eisenman*			60			Dr. Eisenman currently serves as Dean of Babson Executive Education, the division of Babson College focused on providing education, consulting and applied research in innovation and leadership to corporations and executives, and has served in this capacity since October 2005. Dr. Eisenman also is responsible for the management of the Babson Executive Conference Center. Prior to that, Dr. Eisenman served as Senior Vice President – Human Resources and Administration of Children’s Place Retail Stores, Inc. since September 2003. Dr. Eisenman has also held senior executive positions at American Express, Enhance Financial Services Co. and private companies such as PDI International, a global consulting firm.			2008
Joanna T. Lau*			50			Ms. Lau currently serves as CEO of Lau Technologies, an executive consulting and investment company focused on providing debt and equity financing and consulting to mid-range companies. Ms. Lau founded Lau Technologies in 1990 and has been responsible for managing all aspects of the company from financing growth to the quality of the performance of the products previously sold by the company. Ms. Lau held leadership positions with Digital Equipment Corporation and General Electric before founding Lau Technologies. Ms. Lau is a member of the Board of Directors of ITT Education Services (NYSE:ESI) since 2003 and currently serves on the Audit Committee of ESI.			2008
Roger S. Markfield			66			Mr. Markfield is Vice-Chairman and Executive Creative Director of American Eagle Outfitters (NYSE: AEO) and has served in this capacity since February 2009, and has served as a Director of AEO since March 1999. From February 2007 to December 2008, Mr. Markfield served AEO as a non-executive officer employee. He served AEO as Vice-Chairman from November 2003 to February 2007, as President from February 1995 to February 2006, and as Co-Chief Executive Officer from December 2002 to November 2003. Mr. Markfield also served AEO and its predecessors as Chief Merchandising Officer from February 1995 to December 2002 and as Executive Vice President of Merchandising from May 1993 to February 1995. Prior to joining AEO, he served as Executive Vice President-General Merchandising Manager for the Limited Stores Division of Limited Brands from May 1992 to April 1993. From 1969 to 1976 and from 1979 to 1992, he was employed by Macy’s Inc. in various positions, beginning as a Buyer in Boys’ Wear and rising to President of Corporate Buying-Mens. From 1976 to 1979, Mr. Markfield served as Senior Vice President of Merchandising and Marketing for Gap.			2008

Unless otherwise directed, the persons named in the proxy will vote the proxies FOR the election of the above-named nominees as directors. While it is contemplated that all nominees will stand for election, in the event any person nominated fails to stand for election, the proxies will be voted for such other person or persons as may be designated by the directors. Management has no reason to believe that any of the above-mentioned persons will not stand for election or serve as a director.

Under Ohio law and our Code of Regulations, the nominees receiving the greatest number of votes will be elected as directors. Shares as to which the authority to vote is withheld are not counted toward the election of directors or toward the election of the individual nominees specified on the proxy.

Your Board of Directors unanimously recommends a vote FOR each of the director nominees named above.

EXECUTIVE OFFICERS

The following persons are our executive officers. Our officers are elected annually by our Board and serve at the pleasure of the Board.

Jay L. Schottenstein, age 54, serves as our Chief Executive Officer and Chairman of the Board of Directors, but as previously disclosed, will resign as Chief Executive Officer upon the effectiveness of Mr. MacDonald’s appointment as Chief Executive Officer on April 27, 2009. Mr. Schottenstein was appointed as our Chief Executive Officer in March 2005. He became a director of DSW in March 2005. He has been Chairman of the Board of Directors of Retail Ventures, American Eagle Outfitters, Inc. and SSC since March 1992 and was Chief Executive Officer of Retail Ventures from April 1991 to July 1997 and from July 1999 to December 2000. Mr. Schottenstein served as Vice Chairman of SSC from 1986 until March 1992 and as a director of SSC since 1982. He served in various executive capacities at SSC since 1976. Mr. Schottenstein is also a director of American Eagle Outfitters, Inc., which is a company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, or the Exchange Act.

Deborah L. Ferrée, age 55, has served as our Vice Chairman and Chief Merchandising Officer since January 2006. Ms. Ferrée joined us in November 1997. She served as our President and Chief Merchandising Officer from November 2004 until January 2006. From March 2002 until November 2004, she served as Executive Vice President and Chief Merchandising Officer. Prior to that, she served as Senior Vice President of Merchandising beginning in September 2000, and Vice President of Merchandising beginning in October 1997. Prior to joining us, Ms. Ferrée worked in the retail industry for more than 30 years in various positions, including serving as Divisional Merchandising Manager of Shoes, Accessories and Intimate Apparel for Harris Department Store, women’s buyer for Ross Stores and Divisional Merchandise Manager of the May Company.

William L. Jordan, age 37, serves as our Executive Vice President, General Counsel and Secretary, a position he has held since March 2009. From May 2008 to March 2009 he was our Senior Vice President, General Counsel and Secretary. In January 2006, Mr. Jordan joined us as our Vice President, General Counsel and Secretary. Prior to joining us he had served as Corporate Counsel for Lancaster Colony Corporation since 2005, and was with the firm of Porter, Wright, Morris & Arthur LLP in Columbus, Ohio, from 1997 to 2005 where he specialized in Corporate Securities and Mergers & Acquisitions law.

Kevin M. Lonergan, age 60, serves as our Executive Vice President and Chief Operating Officer. Prior to joining us in January 2006, Mr. Lonergan served as Vice President of the West Zone for American Eagle Outfitters beginning in January 2004, where he was responsible for 397 stores in 30 states. Prior to that time, Mr. Lonergan served as Executive Vice President and Chief Operating Officer of Old Navy, a division of Gap, Inc., where he oversaw all store operations and helped build the newly formed Old Navy division from its inception in 1993. Prior to serving in that capacity, Mr. Lonergan held executive positions at various divisions of Gap, Inc., Target and Carson Pirie Scott. Mr. Lonergan has over 35 years of business experience in all phases of retail, including department stores, specialty and mass merchandising, and has been responsible for many areas of business, including stores, operations, finance, real estate, human resources, systems, and customer service.

Harris Mustafa, age 55, serves as our Executive Vice President, Supply Chain and Merchandise Planning and Allocation. Prior to joining us in July 2006, Mr. Mustafa served as Executive Vice President, Private Brand and Product Development from August 2004 to June 2006 at Saks Department Store Group. Prior to serving in that capacity, he served as their Senior Vice President, Planning and Operations, Private Brand Group from October 2003 to August 2004. From May 2002 to March 2003, Mr. Mustafa served as Senior Vice President Business Planning for Williams-Sonoma, Inc. Prior to serving in that capacity, Mr. Mustafa served in various executive positions at Payless ShoeSource, Inc. from 1987 to 2001.

Douglas J. Probst, age 44, serves as our Executive Vice President and Chief Financial Officer. Mr. Probst joined DSW in March 2005. From April 1990 to February 2005, he held various positions with Too Inc., a company spun-off from The Limited, Inc., including Vice President of Finance and Controller from May 2004 to February 2005, Vice President Finance from October 2003 to May 2004 and Vice President Financial Analysis and Store Control from December 1999 to October 2003. From August 1986 to March 1990, he was in the practice of public accounting with KPMG. Mr. Probst is a certified public accountant.

Jon J. Ricker, age 59, has served as our Executive Vice President, Chief Administrative Officer since September 2008. Prior to this role, Mr. Ricker served as DSW’s Executive Vice President – Strategic Business Development, and Chief Technology Officer from the time he joined the Company in February 2006 until September 2008. Prior to joining DSW, Mr. Ricker held various senior leadership positions at Limited Brands from January 1996 through November 2005 including Chief Information Officer, Strategic Business and Technology Officer, and President and Chief Executive of the Limited Technology Services Company. Over his career, Mr. Ricker also served in other senior executive capacities for companies such as BellSouth Corporation, Federal Express Corporation, and Federal Mogul Corporation. Mr. Ricker has over 10 years experience in each of the Retail, Logistics and Transportation, and Manufacturing industries.

Derek Ungless, age 60, serves as our Executive Vice President and Chief Marketing Officer, a position he has held since June 2005. From April 2002 to May 2005, he was Executive Vice President of Marketing for Express, part of Limited Brands. Mr. Ungless was Senior Vice President and Head of Global Brand Design of the Estee Lauder brand, part of Estee Lauder Companies Inc. from September 2000 until November 2001 and was Executive Vice President and Creative Director of Brooks Brothers from October 1997 until September 2000. Mr. Ungless has over thirteen years of experience working in the retail industry.

OTHER DIRECTOR INFORMATION, COMMITTEES OF DIRECTORS AND CORPORATE GOVERNANCE INFORMATION

General

A total of five meetings of the Board of Directors were held during fiscal 2008. No director attended less than 75 percent of the aggregate of (i) the total number of meetings of the Board of Directors held during the time in which such director was a member of the Board of Directors and (ii) the total number of meetings held by all committees of the Board of Directors on which that director served during the period each director served as a member of such committee.

There are no family relationships among our directors and executive officers.

Our Corporate Governance Principles provide that all incumbent directors and director nominees are encouraged to attend our Annual Meeting of Shareholders. All ten of our directors then in office attended our 2008 Annual Meeting of Shareholders.

Corporate Governance Principles

In June 2005, the Board of Directors adopted Corporate Governance Principles that address Board structure, membership (including nominee qualifications), performance, operations and management oversight. The Corporate Governance Principles were last amended in March 2008. A current copy of our Corporate Governance Principles can be found at our corporate and investor website at www.dswinc.com and is available in print (without charge) to any shareholder upon request.

The Board of Directors meets in regularly scheduled executive sessions (without management present). The independent members of the Board also meet alone in regularly scheduled executive sessions. The Board of Directors does not have a designated director who leads executive sessions held by the independent directors. The non-management directors alternate as the chair of such executive sessions in alphabetical order by last name.

Director Independence

Our director independence standards are set forth in our Corporate Governance Principles, a copy of which can be found at our corporate and investor website at www.dswinc.com. The Corporate Governance Principles provide that the Board of Directors’ goal is that a majority of the directors should be independent directors. A director will be designated as independent if he or she:

	•		has no material relationship with us or our subsidiaries;
	•		satisfies the other criteria specified by New York Stock Exchange listing standards;
	•		has no business conflict with us or our subsidiaries; and
	•		otherwise meets applicable independence criteria specified by law, regulation, exchange requirement or the Board of Directors.

During its review of director independence, the Board considered whether there were any transactions or relationships between the Company and any director or any member of his or her immediate family (or any entity of which a director or an immediate family member is an executive officer, general partner or significant equity holder). As a result of this review, the Board of Directors has affirmatively determined that the following persons are independent under our independence standards:

Elaine J. Eisenman
Carolee Friedlander
Joanna T. Lau
Philip B. Miller
James D. Robbins
Allan J. Tanenbaum

Our Board of Directors has a Nominating and Corporate Governance Committee, a Compensation Committee and an Audit Committee, all of which are comprised solely of independent directors as defined under applicable Securities and Exchange Commission rules and the listing standards of the New York Stock Exchange. Our Board of Directors also has a Technology Committee comprised of a mixture of independent and non-independent directors.

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Messrs. Tanenbaum (Chair) and Mses. Eisenman and Friedlander, each of whom is independent as discussed above. A current copy of our Nominating and Corporate Governance Committee charter can be found on our corporate and investor website at www.dswinc.com and is available in print (without charge) to any shareholder upon request.

The Nominating and Corporate Governance Committee met four times during fiscal 2008. Its functions include assisting the Board in determining the desired qualifications of directors, identifying potential individuals meeting those qualification criteria, proposing to the Board a slate of nominees for election by the shareholders and reviewing candidates nominated by shareholders. In addition, the Committee also reviews the Corporate Governance Principles, makes recommendations to the Board with respect to other corporate governance principles applicable to us, oversees the annual evaluation of the Board and management, and reviews management and Board succession plans.

The Nominating and Corporate Governance Committee meets to discuss, among other things, identification and evaluation of potential candidates for nomination as a director. Although there are no specific minimum qualifications that a director candidate must possess, potential candidates are identified and evaluated according to the qualification criteria set forth in the Board’s Corporate Governance Principles, including:

	•		independence;
	•		judgment;
	•		skill;
	•		diversity;
	•		strength of character;
	•		age;
	•		experience as an executive of, or advisor to, a publicly traded or private organization;
	•		experience and skill relative to other Board members;
	•		specialized knowledge or experience;
	•		service on other boards; and
	•		desirability of the candidate’s membership on the Board or any committees of the Board.

The Nominating and Corporate Governance Committee will consider nominees recommended by shareholders for the 2010 Annual Meeting of Shareholders, provided that the names of such nominees are submitted in writing, not later than January 1, 2010, to DSW, 810 DSW Drive, Columbus, Ohio 43219, Attn: Corporate Secretary. Each such submission must include:

As to the nominee:

	•		name, age, business address and residence address;
	•		principal occupation or employment;
	•		the class and number of DSW shares beneficially owned; and
	•		any other information relating to the nominee that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Exchange Act; and

As to the shareholder giving the notice:

	•		name and record address; and
	•		the class and number of our shares beneficially owned.

Such notice shall be accompanied by a consent signed by the nominee evidencing a willingness to serve as a director, if nominated and elected, and a commitment by the nominee to meet personally with the Nominating and Corporate Governance Committee members.

Other than the submission requirements set forth above, there are no differences in the manner in which the Nominating and Corporate Governance Committee evaluates a nominee for director recommended by a shareholder.

Compensation Committee

The members of our Compensation Committee are Messrs. Miller (Chair) and Robbins and Mses. Eisenman and Friedlander. Each member of the Compensation Committee is independent as discussed above. None of the members of the Compensation Committee are present or former officers of our Company, nor are they or any of their affiliates, if any, parties to agreements with us.

A current copy of our Compensation Committee charter can be found on our corporate and investor website at www.dswinc.com and is available in print (without charge) to any shareholder upon request.

Our Compensation Committee met six times during fiscal 2008. The Compensation Committee’s functions include evaluating the Chief Executive Officer’s performance and, based upon these evaluations, setting the Chief Executive Officer’s annual compensation; reviewing and approving the compensation packages of our other executive officers; making recommendations to the Board with respect to our incentive compensation, retirement and other benefit plans; making administrative and compensation decisions under such plans; and recommending to the Board the compensation for non-employee Board members. See the Compensation Discussion and Analysis below for a more complete description of the Compensation Committee’s deliberations and decisions relating to executive compensation, including the Committee’s retention of a compensation consultant and the role of our executive officers in determining executive compensation.

Audit Committee

The members of our Audit Committee are Messrs. Robbins (Chair), Miller and Tanenbaum and Ms. Lau. The Board of Directors has determined that each of them is independent and is financially literate in accordance with the applicable Securities and Exchange Commission rules and listing standards of the New York Stock Exchange. The Board has also determined that our Audit Committee’s Chairman, James D. Robbins, qualifies as an audit committee financial expert as such term is defined by the Securities and Exchange Commission under Item 401(h) of Regulation S-K.

A current copy of our Audit Committee charter can be found on our corporate and investor website at www.dswinc.com and is available in print (without charge) to any shareholder upon request.

Our Audit Committee met ten times during fiscal 2008. The purpose of our Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities of:

	•		the integrity of our financial statements;
	•		compliance with legal and regulatory requirements;
	•		the independent auditor’s qualifications and independence; and
	•		performance of our internal audit function and independent auditor.

The Audit Committee is directly responsible for the appointment, compensation, retention, termination and oversight of the work of our independent auditor, including resolution of disagreements between management and the independent auditor regarding financial reporting.

No member of the Audit Committee is currently serving on the audit committees of more than three public companies.

Technology Committee

The members of our Technology Committee are Ms. Lau (Chair) and Messrs. Markfield, Robbins, and Sonnenberg. A current copy of our Technology Committee charter can be found on our corporate and investor website at www.dswinc.com and is available in print (without charge) to any shareholder upon request.

Our Technology Committee met once during fiscal 2008. The purpose of the Technology Committee is to ensure that technology endeavors are effectively managed and that technology performance meets the following objectives:

	•		aligns with our business strategy;
	•		enables the business to maximize benefits technology can provide;
	•		resources are used responsibly; and
	•		risks are managed appropriately.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and persons who are beneficial owners of more than ten percent of our Common Shares (“reporting persons”) to file reports of ownership and changes of ownership with the Securities and Exchange Commission and the New York Stock Exchange. We assist our directors and executive officers in completing and filing those reports. Based upon a review of those reports furnished to us and representations of our directors and executive officers, we believe that all filing requirements applicable to our directors, executive officers and greater than ten percent beneficial owners were complied with during the last completed fiscal year.

Code of Ethics and Corporate Governance Information

We have adopted a code of ethics that applies to all our officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and an additional code of ethics that applies to senior financial officers. Additionally, the Board of Directors has adopted a Director Code of Conduct applicable to our Board members. These codes of ethics, designated as the “Code of Conduct,” the “Code of Ethics for Senior Financial Officers,” and the “Director Code of Conduct,” respectively, by us can be found on our investor website at www.dswinc.com and are available in print (without charge) to any shareholder upon request. We intend to disclose any amendment to, or waiver from, any applicable provision of the Code of Conduct, Code of Ethics for Senior Financial Officers, or Director Code of Conduct by posting such information on our corporate and investor website at www.dswinc.com.

AUDIT AND OTHER SERVICE FEES

Our Audit Committee has adopted a policy under which audit and non-audit services to be rendered by our independent registered public accountants are pre-approved. The pre-approval policy is designed to assure that the provision of such services does not impair the independence of our independent registered public accounting firm and is summarized below.

	•		Delegation - The Audit Committee may delegate pre-approval authority to one or more of its independent members provided that the member(s) to whom such authority is delegated promptly reports any pre-approval decisions to the other Audit Committee members. The Audit Committee has not delegated to management its responsibilities to pre-approve services performed by the independent registered public accounting firm.
	•		Audit Services - Annual audit, review and attestation engagement terms and fees are subject to the specific pre-approval of the Audit Committee. Any changes in the terms, conditions or fees resulting from changes in the audit scope requires the Audit Committee’s approval.
	•		Other Services - Unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it will require specific pre-approval by the Audit Committee.
	•		Tax Services - The Audit Committee believes that our independent registered public accounting firm can provide tax services to us such as tax compliance and certain tax advice without impairing its independence. In no event, however, will the independent registered public accounting firm be retained in connection with a transaction initially recommended by the independent registered public accounting firm, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations or similar regulations of other applicable jurisdictions.

No services were provided by the independent public accountants during fiscal 2008 or fiscal 2007 that were approved by the Audit Committee under Securities and Exchange Commission Regulation S-X Section 2-01(c)(7)(i)(C) (which addresses certain services considered de minimis and may be approved by the Committee after such services have been performed).

The following table sets forth the aggregate fees for professional services rendered by Deloitte & Touche LLP, our independent registered accountants, for each of the last two fiscal years.

		2008				2007
Audit fees (1)		$	1,289,729			$	870,396
Audit-related fees		$	9,000				—
Tax fees			—				—
All other fees			—				—
Total		$	1,298,729			$	870,396

AUDIT COMMITTEE REPORT

The members of our Audit Committee are Messrs. Robbins (Chair), Miller and Tanenbaum and Ms. Lau. The Board of Directors has determined that each of them is independent and is financially literate in accordance with the applicable Securities and Exchange Commission rules and listing standards of the New York Stock Exchange. The Board of Directors has also determined that our Audit Committee’s Chairman, James D. Robbins, qualifies as an audit committee financial expert as such term is defined by the Securities and Exchange Commission under Item 407(d)(5) of Regulation S-K. Although our Board of Directors has determined that Mr. Robbins is a financial expert as defined under Securities and Exchange Commission rules, his responsibilities are the same as those of other Audit Committee members. The Securities and Exchange Commission has determined that an audit committee financial expert will not be deemed an “expert” for any purpose as a result of being identified as an audit committee financial expert.

The Audit Committee operates under a written charter, which is available on our corporate and investor website at www.dswinc.com and is available in print (without charge) to any shareholder upon request. Under the charter, the Audit Committee’s responsibilities include:

	•		Review of our annual financial statements to be included in our Annual Report on Form 10-K and recommendation to the Board of Directors whether the audited financial statements should be included in our Annual Report on Form 10-K;
	•		Review of our quarterly financial statements to be included in our Quarterly Reports on Form 10-Q;
	•		Oversight of our relationship with our independent auditors, including:

	o		Appointment, termination and oversight of our independent auditors; and
	o		Pre-approval of all auditing services and permitted non-audit services by our independent auditors;

	•		Oversight of our internal controls;
	•		Oversight of the review and response to complaints made to us regarding accounting, internal accounting controls and auditing matters or other compliance matters;
	•		Oversight of our internal audit function; and
	•		Review and approval of related party transactions.

Our management is responsible for our internal controls and preparing our consolidated financial statements. Our independent registered public accounting firm, Deloitte & Touche LLP, is responsible for performing an independent audit of the consolidated financial statements and issuing a report thereon. Their audit is performed in accordance with the standards of the Public Company Accounting Oversight Board. The Audit Committee is responsible for overseeing the conduct of these activities. In performing its oversight function, the Audit Committee relies, without independent verification, on the information provided to it and on representations made by our management and our independent registered public accounting firm.

In conducting its oversight function, the Audit Committee discusses with our internal auditors and our independent registered public accounting firm, with and without management present, the overall scope and plans for their respective audits. The Audit Committee also reviews our programs and key initiatives to design, implement and maintain effective internal controls over financial reporting and disclosure controls.
The Audit Committee has sole discretion, in its areas of responsibility and at our expense, to engage independent advisors as it deems appropriate and to approve the fees and retention terms of such advisors.

The Audit Committee meets with the internal auditors and independent registered public accounting firm, with and without management present, to discuss the results of their audits, the evaluations of our internal controls and the overall quality of our financial reporting. The Audit Committee has reviewed and discussed with management and Deloitte & Touche LLP the audited financial statements for the fiscal year ended January 31, 2009. The Audit Committee also reviewed and discussed with Deloitte & Touche LLP its report on our annual financial statements.

The Audit Committee discussed with Deloitte & Touche LLP the matters required to be discussed by Statement on Auditing Standards No. 114 (Communications with Audit Committees), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the Audit Committee has received from Deloitte & Touche LLP the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence.

Based on its review of the audited consolidated financial statements and discussions with management and Deloitte & Touche LLP referred to above, the Audit Committee recommended to the Board the inclusion of the audited financial statements for the fiscal year ended January 31, 2009 in our Annual Report on Form 10-K for filing with the Securities and Exchange Commission.

		Respectfully submitted,
		Audit Committee
		James D. Robbins, Chair
		Joanna T. Lau
		Philip B. Miller
		Allan J. Tanenbaum

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes the material compensation decisions and elements for DSW’s executive team. As more fully described below, the Compensation Committee of DSW’s Board of Directors (the “Committee”) makes all compensation decisions for DSW’s executive officers, including the executive officers named in the Summary Compensation Table below (the “Named Executive Officers”) as follows:

	•		Jay L. Schottenstein — Chairman and Chief Executive Officer;
	•		Deborah L. Ferrée — Vice Chairman and Chief Merchandising Officer;
	•		Douglas J. Probst — Executive Vice President, Chief Financial Officer;
	•		Kevin M. Lonergan — Executive Vice President and Chief Operating Officer; and
	•		Harris Mustafa — Executive Vice President, Supply Chain and Merchandise Planning & Allocation.

Executive Compensation Philosophy & Objectives

The Committee believes that executive compensation packages should incorporate an appropriate balance of fixed versus variable compensation—as well as cash-based versus stock-based compensation—and reward performance that is measured against established goals that correspond to our short-term and long-term business plan and objectives.

DSW’s executive compensation program is designed to:

(1)

Attract and retain highly talented, experienced retail executives who can make significant contributions to our long-term business success. Specifically, we structure our compensation program to attract and keep executives we believe are critical to the implementation of our business strategy to:

	•		Anticipate the desires of our brand-, quality- and style-conscious customers who have a passion for footwear and accessories and provide them with a vast, exciting selection of in-season styles combined with the convenience and value they desire;
	•		Create a distinctive store experience that satisfies both the rational and emotional shopping needs of our customers; and
	•		Execute on a growth strategy to increase total net sales through DSW store expansion, positive comparable store sales growth for DSW stores, and the growth of dsw.com.

At DSW, we believe we have assembled an experienced and talented executive team with a proven track record of delivering growth results.

Mr. Schottenstein, our CEO, is a seasoned retail industry executive who provides strategic leadership to DSW’s senior executive team and guidance and insight around our key growth initiatives. Ms. Ferrée, our Vice Chairman and Chief Merchandising Officer, and other senior leaders, provide daily leadership to DSW’s executive team. Additionally, Ms. Ferrée oversees a merchandising team that is focused on continually delivering a broad selection of fresh and current merchandise into our stores at price points that appeal to consumers from a broad range of socioeconomic and demographic backgrounds. Ms. Ferrée also leads the Marketing function. Mr. Lonergan, our Chief Operating Officer, has over 35 years of retail industry experience and occupies a critical leadership role in creating the distinctive store experience that is integral to our long-term business success. Mr. Lonergan also leads our real estate and store construction functions. Mr. Probst, our Chief Financial Officer, provides daily leadership to a Finance function that plays a critical role in ensuring the availability of the investment capital necessary to deliver on our growth strategy. Finally, Mr. Mustafa leads our merchandise planning, allocation and supply chain functions. We believe that our current senior executive team possesses a proven ability to develop and execute merchandising, customer, real estate and infrastructure strategies. As a result, we believe our compensation program must incentivize and reward their efforts and also serve to keep their services with DSW, thus allowing us to compete in attracting and developing talent to support the continued growth of DSW.

(2)

Reward executives for delivering superior performance. The Committee regularly reviews executive compensation packages to ensure a proper balance between fixed and variable compensation with more of

the focus on, and potential reward to the executive for, achievement of short- and long-term performance goals. This was true for 2008 — in aggregate, the Named Executive Officer compensation opportunity consisted of approximately 40% fixed compensation (base salary) and approximately 60% variable compensation (annual cash incentive compensation and long-term equity compensation). The Committee believed this was an appropriate balance given the current focus and goals of the Company.

(3)

Create a strong link among the interests of shareholders, DSW’s financial performance and the total compensation of executives, and align executive incentives with shareholder value creation. The Committee believes targeting above-median long-term equity award levels (as discussed below) is appropriate for DSW, a growth company, during a critical growth phase. As a result, the Committee annually awards equity, generally in the form of stock options and restricted stock units, to the Named Executive Officers based, in part, on DSW’s financial performance. Such grants also strongly align these officers’ interests with the interests of our shareholders as each are focused on the same result — value creation.

Setting Executive Compensation

Based on the objectives described above, the Committee has structured DSW’s executive compensation programs primarily to motivate executives to achieve the business goals established by DSW and reward executives for meeting business goals, and perhaps more importantly, delivering superior performance as measured against those business goals. For 2008, the Committee engaged Hay Group, a global human resources consulting firm, to conduct a review of its total compensation program for the Named Executive Officers as well as for other company executives. As requested by the Committee, Hay Group provided the Committee with market data from proprietary databases to consider when making compensation decisions for our Named Executive Officers. While Hay Group was engaged directly by the Committee, Hay Group also provided similar input to company management to support compensation recommendations and decisions made for company executives who are not Named Executive Officers.

In making compensation decisions for executive officers in fiscal 2008, including the Named Executive Officers, the Committee compared each officer’s compensation against market compensation benchmarks drawn from a peer group of publicly-traded and private-held retail industry companies (collectively, the “Survey Peer Group”). With input from Hay Group, the Committee ensured the Survey Peer Group generally consisted of retail companies with a focus on specialty retail and fashion similar to DSW. In addition, the Committee ensured the Survey Peer Group included companies against which the Committee believes DSW competes for talent and shareholder investment. The companies included in the Survey Peer Group for 2008 were:

		Abercrombie & Fitch		Aeropostale		American Eagle Outfitters
		AnnTaylor Stores		Big Lots		Bon-Ton Stores
		Brown Shoe Company		Children’s Place		Coach
		Eddie Bauer Holdings		J.C. Penney		J. Crew Group
		Kohl’s		Limited Brands		Linens ‘n Things
		Macy’s		Mervyn’s		Michaels Stores
		New York & Company		Nordstrom		Payless ShoeSource
		Stage Stores		Talbots		Target
		Timberland		TJX Companies		Tween Brands
		Ulta Salon

DSW’s revenue is slightly below the median revenue of the Survey Peer Group companies. However, Hay Group uses proprietary methodologies that allow for pay comparisons for the same job between companies of different sizes. As a result, pay comparisons may be made directly without adjusting for the difference in the size of the companies.

The pay elements used for comparison purposes are target total cash compensation (consisting of base salary and annual cash incentive compensation) and long-term equity incentive compensation. Generally, the Committee targets Named Executive Officer pay to fall between the 50th and 75th percentiles of Survey Peer Group data for both total cash compensation and long-term incentive compensation. This pay objective reflects the fact that DSW is a growth company and executives with the skills and experience necessary to deliver contributions that will significantly impact DSW’s long-term business success and intended growth pattern

command a premium in the marketplace. These objectives also recognize the Committee’s expectation that, over the long term, the Company will generate shareholder returns in excess of the average of its Survey Peer Group. Variations to this pay objective may occur as dictated by the experience level of the individual and market factors.

In addition, for Named Executive Officers where comparison data was available in 2008, the Committee also evaluates the actual pay of the Named Executive Officer with pay data drawn from proxy-disclosed pay information for the following publicly-traded companies (collectively, the “Proxy Peer Group”):

		Abercrombie & Fitch		Aeropostale		American Eagle Outfitters
		AnnTaylor Stores		Big Lots		Bon-Ton Stores
		Brown Shoe Company		Charming Shoppes		Coach
		Dick’s Sporting Goods		Finish Line		J. Crew Group
		Limited Brands		New York & Company		Pacific Sunwear
		Payless ShoeSource		Skechers U S A		Stein Mart
		Timberland		Tween Brands

For fiscal 2008, the compensation paid to Messrs. Schottenstein, Lonergan and Probst and Ms. Ferrée was reviewed pursuant to the Proxy Peer Group (in addition to the Survey Peer Group above). By looking at this proxy-disclosed information, as reviewed and summarized for the Committee by Hay Group, the Committee was able to analyze the relation between performance and the resulting pay delivered.

Finally, the Committee takes into consideration a review of each Named Executive Officer’s compensation relative to the other Named Executive Officers, taking into account each officer’s performance and impact on DSW’s business results.

Role of Executive Officers in Compensation Decisions

The Committee makes all compensation decisions for DSW’s Named Executive Officers (other than the Chief Executive Officer) based upon input provided by certain members of company management, as discussed under “DSW’s 2008 Executive Compensation Elements” below, and the objective market data provided by Hay Group. The Committee can exercise its discretion and modify any recommendations that may be provided by company management and the independent compensation consultant. Company management does not provide input in determining the compensation of the Chief Executive Officer, which is determined solely by the Compensation Committee.

DSW’s 2008 Executive Compensation Elements

For the fiscal year ended January 31, 2009, the total compensation opportunity for DSW’s executives (including the Named Executive Officers) was generally comprised of the following principal components:

	•		base salary;
	•		performance-based annual cash incentive compensation;
	•		long-term equity incentive compensation in the form of service-based stock options and restricted stock units; and
	•		retirement savings contributions through the 401(k) plan.

     Base Salary

While the Committee’s focus is on variable compensation based on performance, a clear objective of our executive compensation program is to pay a base salary that is competitive with the stated Survey Peer Group and Proxy Peer Group (where applicable) in order to retain our Named Executive Officers. The base salaries of all DSW executives (including the Named Executive Officers) are determined based on job responsibilities and individual contribution, and with reference to the considerations set forth below. Salary bands are designed so that the salary opportunity for a given position generally falls between 80% and 140% of the base salary midpoint established for that position.

In March each year, the Committee determines the base salary of each Named Executive Officer for the next year. During its review, the Committee primarily considers:

	•		overall DSW financial performance during the prior year;
	•		the individual performance of the Named Executive Officer during the prior year;
	•		the target total cash compensation level of the appropriate benchmark position(s) as reflected in Survey Peer Group and Proxy Peer Group (where applicable) data;
	•		base salary data drawn from the Survey Peer Group and Proxy Peer Group (where applicable) information where available; and
	•		if relevant, compensation paid by a previous employer.

In March 2008, the Committee decided to keep Mr. Schottenstein’s annual base salary unchanged at $500,000. Mr. Schottenstein reviewed with the Committee overall DSW performance for fiscal year 2007 and the performance of Ms. Ferrée. Based upon the duties and responsibilities of Ms. Ferrée in fiscal 2007, DSW’s overall performance and her individual performance against pre-established individual objectives, and Ms. Ferrée’s pay relative to applicable benchmark data for the Survey Peer Group and Proxy Peer Group (where applicable) companies, the Committee decided that the base salary of Ms. Ferrée would increase by 2.5% pursuant to the terms of her employment agreement with DSW.

The Chief Executive Officer reviewed with the Committee the accomplishments and contributions made by each senior manager under his supervision and provided his proposed base salary changes. The Chief Executive Officer discussed with the Committee the accomplishments of Mr. Lonergan in fiscal 2007, including the opening of 37 new DSW stores and the rollout of a new service model in the stores. The Chief Executive Officer noted that Mr. Probst provided leadership in helping to shape the Company’s business strategy and help keep expenses in line with budgeted expectations. The Chief Executive Officer also discussed with the Committee the contributions made by Mr. Mustafa during fiscal year 2007, including reshaping the merchandise planning and allocation and supply chain functions and reducing carryover inventory levels to historic lows. In addition, the Chief Executive Officer noted that Mr. Mustafa had not received a base salary increase since he was hired in July 2006. Based upon the Chief Executive Officer’s recommendations, and upon the Committee’s individual review and analysis of compensation paid by Survey Peer Group companies for the comparable positions, the Committee decided to increase the base salaries of Mr. Lonergan, Mr. Probst and Mr. Mustafa by 4.2%, 4.5% and 6.0%, respectively.

Performance-Based Annual Cash Incentive Compensation

Prior to our IPO in 2005, the DSW Inc. 2005 Cash Incentive Compensation Plan (the “ICP”) was approved by DSW’s shareholders. The ICP gives the Committee the ability to foster and promote the financial success of the Company and increase shareholder value by providing cash incentives to the Named Executive Officers based on the achievement of specified annual business objectives. The ICP is designed to promote the achievement of annual performance goals and focuses the Named Executive Officers on short-term objectives which ultimately will contribute to the likelihood of achieving long-term business objectives and increase shareholder value. Under the ICP, Named Executive Officers earn annual cash incentives only when pre-established business objectives and targets are achieved. The Company currently has approximately 500 associates who are eligible to receive awards under the ICP. The Named Executive Officers are generally treated the same as all other eligible DSW associates under the ICP.

Generally, in the first quarter of each year, the Committee establishes the performance criteria that will be used to determine incentive compensation awards for the subsequent year. Company associates who participate in the plan have incentive levels that vary based on the individual’s position and contribution to business performance. Target award opportunities are established as a percentage of base salary and range from 50% to 100% of base salary for the Named Executive Officers. Mr. Schottenstein is not eligible to earn annual cash incentive compensation under the ICP. The target award opportunities for Ms. Ferrée and Messrs. Probst, Lonergan and Mustafa were 100%, 80%, 80% and 50%, respectively, and were established based on market data provided by the independent compensation consultant and the scope of the leadership positions the executives occupy in the DSW business.

For fiscal 2008, the Committee determined that 100% of each Named Executive Officer’s annual cash incentive compensation award would be based upon DSW’s total sales and net income performance as reported in DSW’s financial statements. The Committee believed total sales and net income were the most relevant metrics to DSW’s existing growth plan and best aligned with the growth objective shared with investors. Additionally,

both total sales and net income are publicly disclosed in our financial statements and provide transparency to all ICP participants.

In April 2008, the Committee established a target threshold performance level for fiscal 2008. Unless otherwise determined by the Committee, all associates who participate in the plan (including the Named Executive Officers) receive:

	•		no payment unless the Company achieved total sales of $1.506 million and $26.8 million of net income (approximately 50% of the target net income level established);
	•		a payment of 35% of the target award opportunity if the company achieved or exceeded total sales of $1.506 million and $26.8 million of net income but did not achieve $38.2 million of net income (approximately 71% of the target net income level established);
	•		a payment of at least 50% but less than 100% of the target award opportunity if the Company achieved or exceeded $38.2 million of net income but did not achieve $53.8 million of net income (the target net income level established);
	•		a payment of at least 100% but less than 200% of the target award opportunity if the Company achieved or exceeded $53.8M of net income but did not achieve $71.6M of net income (approximately 133% of the target net income level established); and
	•		a payment of 200% of the target award opportunity if the Company achieved or exceeded $71.6 million of net income.

In making the annual determination of the minimum, target and maximum net income levels, the Committee may consider specific circumstances facing the company during the prior and subsequent years. In fiscal 2008, the Committee set the target net income level equal to prior year actual performance. Generally, the Committee sets the minimum, target and maximum levels such that the relative difficulty of achieving the target level is consistent from year to year.

DSW’s fiscal 2008 performance led to no payout for ICP participants, including each of the Named Executive Officers (other than Mr. Schottenstein, who does not participate in the ICP).

The Committee did determine, however, to pay a discretionary bonus to participants (including Named Executive Officers excluding Mr. Schottenstein) equal to fifty percent (50%) of each participant’s target award opportunity. The Committee took this action—despite the fact that the Company did not achieve the performance goals established by the Committee—based on the performance of the Company in a very challenging retail environment in fiscal 2008. Specifically, the Company achieved the following:

	•		Improved the profitability of the Stores and Leased Business Group throughout the year despite a deteriorating economic environment;
	•		Increased the cash and short-term investments of the Company from approximately $131 million to approximately $156 million;
	•		Increased total sales by approximately $56 million—+4% to the prior year—despite negative comparable store sales;
	•		Increased the merchandise margin rate by 100 basis points, despite negative comparable store sales;
	•		Decreased SG&A expense relative to budget;
	•		Decreased year-end store inventories by 16% to the prior year on a cost per square foot basis;
	•		Opened a record 41 new stores;
	•		Executed a reduction in force, reducing non-stores positions by 13%;
	•		Launched dsw.com, a new direct channel to customers; and
	•		Increased the number of members in the Company’s customer loyalty program to 10 million.

The discretionary bonuses paid to the Named Executive Officers for the fiscal year ending January 31, 2009 are reflected in the Bonus column of the Summary Compensation Table below.

Long-Term Equity Incentive Compensation

Prior to our IPO in 2005, the DSW Inc. 2005 Equity Incentive Plan (the “Equity Plan”) was approved by our shareholders. The Equity Plan generally furthers the Committee’s objectives to retain its executives as well as build a link between executive compensation and shareholder interests and objectives. All equity awards are granted in respect to DSW’s Class A Common Stock.

DSW’s executive compensation philosophy generally calls for grants of both service-based stock options and restricted stock units to executives (Vice President and above) including the Named Executive Officers. As discussed above, in determining the value of annual long-term equity incentive grants for DSW executives, the Committee’s overall objective—consistent with the executive compensation philosophy—is to target the combined grant value of stock options and restricted stock units to fall between the 50th and 75th percentile of Survey Peer Group long-term incentive data. The Committee believes targeting above-median long-term incentive levels is appropriate for a growth company that is seeking to create a compelling value proposition during a critical growth phase. Furthermore, the Committee believes that an above-median long-term equity incentive target is necessary to attract and retain executives with the skills and experience necessary to deliver contributions that will significantly impact DSW’s long-term business success and intended growth pattern.

In addition, long-term equity incentive grants to the Named Executive Officers are based on each individual’s (i) scope of job responsibilities, (ii) assessment of past performance and (iii) assessment of potential future contribution.

Historically, the value of long-term equity incentive awards has been delivered to executives 70% in stock options and 30% in restricted stock units. The Committee believes that delivery in this form provides an appropriate incentive to the leadership team to focus on long-term shareholder value creation and, at the same time, provides the Company with the retention value necessary in a competitive labor market. The value delivered in stock options is converted to a number of shares using the same fair value methodology the Company uses in determining accounting expense under Statement of Financial Accounting Standards (SFAS) 123R (“FAS 123(R)”). The value delivered in restricted stock units is determined by the grant date share price and adjusted based on an assumed forfeiture rate to calculate the total number of Common Shares to be delivered once all vesting requirements are satisfied.

     Stock Options

Stock options provide executives with financial gain derived from the potential appreciation in the DSW share price between the award’s grant date and the date the executive elects to exercise the option. As a result, DSW’s long-term financial performance, as reflected in share price appreciation, ultimately determines the value of stock options. Because financial gain from stock options is only possible after the price of DSW common stock has increased, the Company believes grants encourage executives to focus on behaviors and initiatives that should lead to an increase in the DSW share price, thus benefiting both company associates and shareholders. Generally, stock options vest annually in equal installments over the five years following the grant date.

     Restricted Stock Units

Restricted stock units provide the company with retention value vis-à-vis executives because, generally, they cliff vest 100% at the end of four years. In this way, executives are unable to realize the value of restricted stock units until a significant period of time has passed since the grant date. Additionally, since the restricted stock unit value is tied directly to the market value of DSW common stock, and not exclusively to the increase in the market value of DSW common stock, restricted stock units provide retention value even when the stock price is stable or declining. Thus, the Committee believes that restricted stock units are a key component of the long-term incentive portfolio in that they help retain executives and keep them focused on long-term value creation for shareholders. Dividend equivalents are not paid on restricted stock units granted to company executives, including those granted to the Named Executive Officers.

     2008 Long-Term Equity Incentive Awards for the Named Executive Officers

In March 2008, the Committee granted long-term equity incentive awards to Named Executive Officers as part of the annual performance review process. The Committee considered various alternatives based on input from management and the independent compensation consultant which included different multiples of market

competitive long-term incentive values based on Survey Peer Group data. The Committee considered alternative scenarios to effectively balance the delivery of cash and equity to the Named Executive Officers. Based upon the information provided, the Committee determined to deliver to each Named Executive Officer a long-term incentive award with a value reasonably consistent with market data for the Survey Peer Group companies at the 65^th percentile. In addition, the Committee determined to deliver the award 70% in stock options and 30% in restricted stock units to each Named Executive Officer, other than Mr. Schottenstein, consistent with the Committee’s typical practice for Executives. As a result, in the March 2008 meeting, the Committee approved a grant of 93,400 stock options to Mr. Schottenstein, grants of 44,000 stock options and 8,000 restricted stock units to each of Messrs. Probst and Lonergan, and grants of 30,000 stock options and 5,000 restricted stock units to Mr. Mustafa. At a meeting held in April 2008, the Committee approved grants of 79,000 stock options and 14,000 restricted stock units to Ms. Ferrée.

     Equity Grant Practices

Under the Equity Plan, the Committee approves all equity awards and has not delegated to management the authority to approve equity awards. The Committee may not grant stock options at a discount to the closing price of DSW common stock on the grant date, nor may the Committee reduce the exercise price of outstanding stock options except in the case of a stock split or other similar event. All stock options granted under the Equity Plan have an exercise price that is equal to the closing market price of DSW common stock on the grant date. The grant date is the date of Compensation Committee approval, except in the case of prospective hires who meet the criteria outlined below.

The Committee also reviews and considers approval of off-cycle equity awards recommended by management at regularly scheduled Committee meetings (generally quarterly). These off-cycle equity awards reflect commitments made by DSW, subject to Committee approval, and are for current associates (generally in the case of promotion or retention), new hires who have already become employees of DSW or prospective hires who have agreed to a start date with DSW that will occur within the three weeks following the Committee meeting. The grant date for current associates and for new hires who have already become employees of DSW is the date the Committee approves the grant. The grant date for prospective hires is their future start date.

In March 2007, the Committee established a methodology to determine the grant date on which annual equity awards would be granted to eligible associates. The Committee determined that the annual equity grant date would be the seventh calendar day following DSW’s fiscal year-end earnings release. Prior to the establishment of this methodology, the Committee made annual equity grants on pre-established dates. Since DSW is a new public company, annual equity grants were made for the first time in April 2006. The Committee does not backdate stock options or grant stock options retroactively. Additionally, the Committee does not coordinate equity grants so that they are made before announcement of favorable information or after announcement of unfavorable information.

     401(k) Retirement Savings Contributions

SSC sponsors a tax-qualified 401(k) plan (the “SSC Plan”) in which all DSW associates, including the Named Executive Officers, were eligible to participate—after meeting certain age and service requirements—through June 30, 2008. Beginning July 1, 2008, DSW sponsored a tax-qualified 401(k) plan (the “DSW Plan”) in which all DSW associates, including the Named Executive Officers, were eligible to participate. Under the SSC Plan, participants were able to contribute up to 30% of their total eligible cash compensation (including base salary and annual cash incentives) on a pre-tax basis up to the limits imposed by the Internal Revenue Code. Under the DSW Plan, participants were able to contribute up to 50% of their total eligible cash compensation (including base salary and annual cash incentives) on a pre-tax basis up to the limits imposed by the Internal Revenue Code. The maximum allowable per participant deferral in 2008 under the Internal Revenue Code was $15,500. DSW provides a 100% match on the first 3% contributed by a participant and an additional 50% match on the next 2% contributed by a participant. These matching contributions are not available to participants until they have completed at least one year of service with DSW. In light of each plan’s matching contribution for participants, and the Internal Revenue Code section 401(a)(17) annual compensation limit, the maximum allowable per participant company matching contribution in 2008 was $9,200. Participants choose to invest their account balances from an array of investment alternatives as selected by plan fiduciaries from time to time. A DSW stock fund is not among the investment alternatives available to plan participants in either the SSC Plan or the DSW Plan. The DSW Plan allows for distributions in a lump sum after termination of service. However, loans—and in-service distributions under certain circumstances such as a hardship, attainment of age 59-1/2 or a disability—are permitted.

     Tax Considerations

Section 162(m) of the Internal Revenue Code limits deductibility of certain compensation paid to the chief executive officer and three other executive officers (exclusive of the Chief Financial Officer) who are the highest paid and employed at fiscal year-end to $1 million per year. The Committee annually considers the impact of Section 162(m) of the Internal Revenue Code in structuring DSW’s executive compensation program. In light of the competitive nature of the market for our executive talent, and our philosophy to pay and reward individual contributions to overall Company performance, the Committee reserves the discretion to reward significant contributions by the Named Executive Officers to building shareholder value, regardless of the tax deductibility limits of Section 162(m).

     Termination and Change in Control Arrangements

DSW has not entered into an employment agreement with Mr. Schottenstein, our Chief Executive Officer. As of March 24, 2009, Mr. Schottenstein beneficially owns 65.6% of SSC. SSC and its affiliates own approximately 52.3% of the outstanding shares and beneficially own 60.7% of the outstanding shares of Retail Ventures. Additionally, Mr. Schottenstein is the Chairman of the Board of Retail Ventures, which holds an approximately 63% ownership stake in DSW. The remaining Named Executive Officers have employment agreements that entitle them to receive certain benefits and payments if their employment terminates in specified separation scenarios. All of the Named Executive Officers are entitled to certain payments or benefits upon a change in control, including acceleration of the vesting of outstanding equity awards pursuant to the Equity Plan, which benefit is available to all Company associates. These arrangements are described under Potential Payments upon Termination and Change in Control below.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on the Compensation Committee’s review and discussion with management, the Compensation Committee has recommended to the Board of Directors, and the Board of Directors has approved, that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the year ended January 31, 2009.

Respectfully submitted,

Compensation Committee

Philip B. Miller, Chair
Elaine J. Eisenman
Carolee Friedlander
James D. Robbins

COMPENSATION OF MANAGEMENT

The following table summarizes compensation awarded or paid to, or earned by, each of the named executive officers during fiscal 2008, fiscal 2007 and fiscal 2006. We follow a 52/53 week fiscal year that ends on the Saturday nearest to January 31 in each year. Fiscal 2008 and 2007 consisted of 52 weeks, and fiscal year 2006 consisted of 53 weeks.

SUMMARY COMPENSATION TABLE

																										Changes in Pension
																						Non-Equity				Value and Non-
														Stock				Option				Incentive Plan				Qualified Deferred				All Other
Name and		Fiscal				Salary				Bonus				Award(s)				Award(s)				Compensation				Compensation				Compensation
Principal Position		Year				($)				($)				($)(1)				($) (2)				(3)				Earnings				($) (4)				Total
Jay L. Schottenstein			2008			$	500,000				—				—			$	378,582				—				—			$	0			$	878,582
Chairman and Chief			2007			$	500,015				—				—			$	257,107				—				—			$	2,994			$	760,116
Executive Officer			2006			$	455,666				—				—			$	40,626				—				—			$	2,998			$	499,290
Deborah L. Ferrée			2008			$	825,859			$	414,485			$	169,388			$	405,686				—				—			$	11,353			$	1,826,771
Vice Chairman and			2007			$	770,481				—			$	133,950			$	400,008				—				—			$	55,205			$	1,359,644
Chief Merchandising			2006			$	755,769				—			$	133,950			$	414,656			$	1,500,000				—			$	50,718			$	2,855,093
Officer
Douglas J. Probst			2008			$	437,077			$	176,000			$	83,283			$	185,842				—				—			$	10,000			$	892,202
Executive Vice			2007			$	398,577				—			$	61,750			$	175,248				—				—			$	29,205			$	664,780
President and Chief			2006			$	377,885				—			$	61,750			$	186,048			$	600,000				—			$	32,963			$	1,258,646
Financial Officer
Kevin M. Lonergan			2008			$	566,923			$	236,000			$	94,248			$	276,309				—				—			$	815			$	1,174,295
Executive Vice President			2007			$	513,462				—			$	319,500			$	265,428				—				—			$	22,895			$	1,121,285
and Chief Operating			2006			$	509,615				—			$	319,500			$	254,665			$	800,000				—			$	107,412			$	1,991,192
Officer
Harris Mustafa			2008			$	510,538			$	128,750			$	62,670			$	193,833				—				—			$	10,244			$	906,035
Executive Vice President,			2007			$	467,423				—			$	49,211			$	152,810				—				—			$	29,484			$	698,928
Supply Chain &			2006			$	268,269			$	189,036			$	28,707			$	53,383			$	261,954				—			$	50,627			$	851,976
Merchandise Planning & Allocation

		401(k) Matching				Life Insurance
Name		Contributions				Premium				Total
Jay L. Schottenstein		$	0			$	0			$	0
Deborah L. Ferrée		$	10,538			$	815			$	11,353
Douglas J. Probst		$	9,288			$	712			$	10,000
Kevin M. Lonergan		$	0			$	815			$	815
Harris Mustafa		$	9,433			$	811			$	10,244

FISCAL YEAR 2008 GRANTS OF PLAN-BASED AWARDS

																		All Other				All Other Option
																		Stock Awards:				Awards: Number
						Estimated Possible Payouts Under Non-												Number of				of Securities								Grant Date Fair Value
						Equity Incentive Plan Awards (1)												Shares of Stock				Underlying				Exercise or Base Price				of Stock and Option
						Threshold				Target				Maximum				or Units				Options				of Option Awards				Awards
Name		Grant Date				($)				($)				($)				(#) (2)				(#) (3)				($/Sh)				($)
Jay L. Schottenstein			4/3/2008				N/A				N/A				N/A				0				93,400			$	12.92			$	537,321
Deborah L. Ferrée			4/23/2008			$	290,139			$	828,970			$	1,657,940				14,000				79,000			$	13.50			$	670,979
Douglas J. Probst			4/3/2008			$	123,200			$	352,000			$	704,000				8,000				44,000			$	12.92			$	356,488
Kevin M. Lonergan			4/3/2008			$	165,200			$	472,000			$	944,000				8,000				44,000			$	12.92			$	356,488
			11/20/2008				—				—				—				5,000				—				—			$	41,150
Harris Mustafa			4/3/2008			$	90,125			$	257,500			$	515,000				5,000				30,000			$	12.92			$	237,187

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2008

		Option Awards																				Stock Awards
																																		Equity
										Equity																				Equity				Incentive Plan
										Incentive																				Incentive Plan				Awards:
										Plan Awards:																				Awards:				Market or
		Number of				Number of				Number of																				Number of				Payout Value of
		Securities				Securities				Securities												Number of				Market Value of				Unearned				Unearned
		Underlying				Underlying				Underlying												Shares or				Shares or Units				Shares, Units,				Shares, Units,
		Unexercised				Unexercised				Unexercised				Option								Units of Stock				of Stock That				or Other Rights				or Other Rights
		Options				Options				Unearned				Exercise				Option				That Have Not				Have Not				That Have Not				That Have Not
		Exercisable				Unexercisable				Options				Price				Expiration				Vested				Vested				Vested				Vested
Name		(#)				(#)				(#)				($)				Date				(#)				($) (1)				(#)				($)
			16,680				25,020	(2)			N/A			$	27.80				9/7/2016
Jay L. Schottenstein			10,780				43,120	(3)			N/A			$	42.88				4/5/2017				—				—				N/A				N/A
			0				93,400	(4)			N/A			$	12.92				4/3/2018
			90,000				60,000	(5)			N/A			$	19.00				6/28/2015
Deborah L. Ferrée			10,680				42,720	(3)			N/A			$	42.88				4/5/2017				42,200	(7)		$	421,156				N/A				N/A
			0				79,000	(6)			N/A			$	13.50				4/23/2018
			42,000				28,000	(8)			N/A			$	19.00				6/28/2015
Douglas J. Probst			4,640				18,560	(3)			N/A			$	42.88				4/5/2017				21,000	(9)		$	209,580				N/A				N/A
			0				44,000	(4)			N/A			$	12.92				4/3/2018
			30,000				20,000	(10)			N/A			$	24.85				12/19/2015
Kevin M. Lonergan			8,260				33,040	(3)			N/A			$	42.88				4/5/2017				23,000	(11)		$	229,540				N/A				N/A
			0				44,000	(4)			N/A			$	12.92				4/3/2018
			12,000				18,000	(12)			N/A			$	35.79				7/10/2016
Harris Mustafa			4,140				16,560	(3)			N/A			$	42.88				4/5/2017				10,500	(13)		$	104,790				N/A				N/A
			0				30,000	(4)			N/A			$	12.92				4/3/2018

FISCAL YEAR 2008 OPTION EXERCISES AND STOCK VESTED

Option Awards

Stock Awards

Number of Shares Acquired on

Value Realized

Exercise

On Exercise

Number of Shares Acquired

Value Realized

Name

(#)

($)

on Vesting

on Vesting

Jay L. Schottenstein

N/A

N/A

N/A

N/A

Deborah L. Ferrée

N/A

N/A

N/A

N/A

Douglas J. Probst

N/A

N/A

N/A

N/A

Kevin M. Lonergan

N/A

N/A

N/A

N/A

Harris Mustafa

N/A

N/A

N/A

N/A

Potential Payments Upon Termination and Change in Control

Ms. Ferrée and Messrs. Probst, Lonergan and Mustafa have employment agreements with DSW that provide for limited payments and benefits following termination of their employment without “cause” or if the executive terminates employment for “good reason.” Additionally, our Equity Plan provides for acceleration of the vesting of outstanding equity awards upon a change in control for all Company associates, including the Named Executive Officers.

Employment Agreements with Ms. Ferrée and Messrs. Probst, Lonergan and Mustafa

Generally, pursuant to each Named Executive Officer’s employment agreement, if DSW involuntarily terminates the officer’s employment without “cause” or if the officer voluntarily terminates employment for “good reason,” each of Ms. Ferrée and Messrs. Probst, Lonergan, and Mustafa are entitled to receive:

	(i)		salary continuation for at least a 12-month period based on the executive’s salary as of the date of termination;
	(ii)		a pro-rata share of any annual cash incentive bonus paid for performance in the fiscal year when termination occurs;
	(iii)		one year of accelerated vesting with respect to outstanding stock options; and
	(iv)		continuing health coverage for at least 12 months.

Also, pursuant to each officer’s employment agreement, if employment terminates as a result of death or disability, each of Ms. Ferrée and Messrs. Probst, Lonergan, and Mustafa are entitled to receive a pro-rata share of any annual cash incentive bonus paid for performance in the fiscal year when termination occurs.

Each executive’s employment agreement also contains confidentiality and non-disparagement provisions effective through the term of the agreement, a non-competition provision effective through the longer of one year following termination of employment or the period of any salary continuation, and a non-solicitation provision effective through the longer of two years following termination of employment or the period of any salary continuation.

For additional information about these employment agreements, see “Employment Agreements with Key Executives” (below).

Equity Plan

Pursuant to the Equity Plan and any applicable award agreement, termination by reason of death, disability or retirement (defined as termination after reaching age 65 and completing at least five years of employment) entitles each Named Executive Officer to receive accelerated vesting with respect to all equity awards that are not vested as of the date of termination.

Pursuant to the Equity Plan and any applicable award agreement, a change in control entitles all associates, including each Named Executive Officer, to receive accelerated vesting with respect to all equity awards that are not vested as of the date of the termination.

Potential Termination and Change in Control Payments

The estimated value of the benefits described above are presented in the table below and are calculated as if the respective termination event occurred on January 31, 2009 and our stock price was $9.98, the closing price of our Class A Common Shares on January 30, 2009, the last trading day of fiscal 2008. The amounts below assume each Named Executive Officer’s salary and annual incentive award is as set forth above in the Summary Compensation Table for fiscal 2008. The actual amounts to be paid out will only be determinable at the time of such executive’s termination.

		Involuntary
		Termination
		Without
		Cause or				Involuntary
		Voluntary				Termination				Voluntary
		Termination				Because of				Termination
		for Good				Death or				Because of				Change in
Named Executive Officer		Reason (1)				Disability (2)				Retirement (2)				Control (2)
Jay L. Schottenstein		$	0			$	0			$	0			$	0
– Salary Continuation		$	0			$	0			$	0			$	0
– Benefits Continuation		$	0			$	0			$	0			$	0
– Accelerated Vesting of Equity		$	0			$	0			$	0			$	0
– Total
Deborah L. Ferrée		$	828,970			$	0			$	0			$	0
– Salary Continuation (3)		$	4,613			$	0			$	0			$	0
– Benefits Continuation (4)		$	281,436			$	421,156			$	421,156			$	421,156
– Accelerated Vesting of Equity		$	1,115,019			$	421,156			$	421,156			$	421,156
– Total
Douglas J. Probst		$	440,000			$	0			$	0			$	0
– Salary Continuation (3)		$	9,098			$	0			$	0			$	0
– Benefits Continuation (4)		$	129,740			$	209,580			$	209,580			$	209,580
– Accelerated Vesting of Equity		$	578,838			$	209,580			$	209,580			$	209,580
– Total
Kevin M. Lonergan		$	590,000			$	0			$	0			$	0
– Salary Continuation (3)		$	5,372			$	0			$	0			$	0
– Benefits Continuation (4)		$	99,800			$	229,540			$	229,540			$	229,540
– Accelerated Vesting of Equity		$	695,172			$	229,540			$	229,540			$	229,540
– Total
Harris Mustafa		$	515,000			$	0			$	0			$	0
– Salary Continuation (3)		$	9,098			$	0			$	0			$	0
– Benefits Continuation (4)		$	0			$	104,790			$	104,790			$	104,790
– Accelerated Vesting of Equity		$	524,098			$	104,790			$	104,790			$	104,790
– Total