CEO succession plan,

<PAGE>

                                                                    Exhibit 10.1

                                                       PERSONAL AND CONFIDENTIAL

                            PAYLESS SHOESOURCE, INC.

                              3231 EAST 6TH AVENUE

                                  P.O. BOX 1189

                            TOPEKA, KANSAS 66601-1189

                                 (785) 233-5171

                                EXECUTIVE OFFICES

Jay A. Lentz, PhD.

Senior Vice President

   Human Resources

                                                   May 26, 2005

Steven J. Douglass

3231 SE Sixth Avenue

Topeka, Kansas 66607

Dear Steven:

              In connection with the CEO succession plan, you and Payless

ShoeSource, Inc. (the "Company") mutually agree that the last day of your

employment will be the day immediately preceding the date on which your

successor commences employment with the Company (your "Separation Date"). The

Company expects that the new CEO will commence employment on or before August 1,

2005. For the avoidance of doubt, until your Separation Date you will continue

to