SUMMARY COMPENSATION SHEET

3.  Split-Dollar Life Insurance

In March 1999, the Company established a split-dollar life insurance arrangement on the lives of Mr. Lemond and his spouse.  The life insurance policy provides coverage in the amount of $1.0 million, payable on the death of the last to survive.  The annual premiums on the policy are $21,300.  Under the arrangement, at the later of the death of Mr. Lemond or his spouse, the Company will be reimbursed for all premiums paid by it, and the balance of the proceeds of the policy would be paid to the estate of Mr. Lemond or his spouse.

Prior to the enactment of the Sarbanes-Oxley Act on July 30, 2002, the Company paid all of the premiums on the policy.  There is currently uncertainty as to whether the payment of premiums on a split-dollar life insurance policy by a company would constitute a personal loan prohibited under the Sarbanes-Oxley Act.  Due to this uncertainty, Mr. Lemond now pays the premiums on his split-dollar life insurance policy, and the Company pays to Mr. Lemond a bonus in an amount sufficient to cover the premium paid by Mr. Lemond and the tax liability on the bonus.  The bonus to reimburse Mr. Lemond for the 2005 premium payment and associated taxes was $35,000.

4.  Annual Incentive Compensation Goals for Fiscal 2005

On March 18, 2005, the Compensation Committee established the performance criteria and targets for the 2005 bonus payable in 2006 under the Company’s Executive Incentive Compensation Plan.  The performance criteria is operating income before bonus expense.  Subjective factors based on an executive’s individual performance can reduce an executive’s bonus potential by up to 20%.  As chief executive officer, Mark L. Lemond’s bonus target is 40% of his salary but he can earn up to 60% of his salary if all performance targets are met.  J. Wayne Weaver, as chairman, is not eligible to receive a bonus.  The other named executive officers’ bonus target is 30% of their salary but can earn up to 45%.

5.  Grants of Restricted Stock

On March 18, 2005, the Compensation Committee approved grants of restricted stock to the Company’s executive officers and other key personnel under the Shoe Carnival, Inc. 2000 Stock Option and Incentive Plan.  Mark L. Lemond received a grant of 12,500 shares and Timothy T. Baker, Clifton E. Sifford and W. Kerry Jackson each received a grant of 6,000 shares.  No grant was made to Mr. Weaver.  The restricted shares will vest upon the achievement of specified levels of annual earnings per diluted share during a six-year period.

6.  Director’s Compensation

On March 25, 2005, the Board approved modifications to the compensation to be paid to the Company’s non-employee directors.  The annual retainer for each non-employee director was increased from $15,000 to $20,000.  The Chairman of the Audit Committee will receive additional annual compensation of $5,000, while the Chairman of the Compensation Committee, Chairman of the Nominating and Corporate Governance Committee and the Lead Director will each receive additional annual compensation of $2,000. 

Non-employee directors will continue to receive a per meeting fee of $1,000 for each meeting of the Board and the accompanying committee meetings attended and $1,000 for each committee meeting attended in person in which the full Board does not meet.  If the committee meeting is attended by conference call the non-employee directors will receive $750.  The Company will continue to reimburse all directors for all reasonable out-of-pocket expenses incurred in connection with meetings of the Board.

On March 25, 2005, the Board also suspended all further automatic grants of stock options to non-employee directors on April 1 of each year under the Company’s Outside Director’s Option Plan.  The Board adopted, subject to shareholder approval, amendments to the Shoe Carnival, Inc. 2000 Stock Option and Incentive Plan to allow non-employee directors to participate.  If the amendment is approved by shareholders at this year’s annual meeting of shareholders, non-employee directors will receive an annual grant of 500 shares of restricted stock.  It is contemplated that the restrictions on the shares will lapse only after a director no longer serves on the Board.