SEVERANCE AGREEMENT

This SEVERANCE AGREEMENT (the “Agreement”) is effective as of October 30, 2006 (“Effective Date”) by and between Mark E. Hood (“Employee”) and Brown Shoe Company, Inc., a New York corporation (“Brown Shoe” and, together with its subsidiaries, the “Company”).

WHEREAS, Brown Shoe is engaged, directly and indirectly through its subsidiaries, in the sourcing and retail and wholesale sale of footwear in the United States and throughout the world;

WHEREAS, Employee is employed by Brown Shoe or a wholly-owned subsidiary of Brown Shoe in an executive capacity, possesses or will possess intimate knowledge of the business and affairs of the Company, and has acquired, and will continue to acquire, certain confidential, proprietary and trade secret information and data with respect to the Company;

WHEREAS, Brown Shoe desires to insure, insofar as possible, that the Company will continue to have the benefit of Employee’s services and to protect the confidential information and goodwill of the Company; and

WHEREAS, the Company recognizes that circumstances may arise in which a change in the control of Brown Shoe occurs, through acquisition or otherwise, thereby causing uncertainty of employment without regard to Employee’s competence or past contributions which uncertainty may result in the loss of valuable services of Employee to the detriment of the Company and Brown Shoe’s shareholders, and the Company and Employee wish to provide reasonable security to Employee against changes in Employee’s relationship with Brown Shoe in the event of any such change in control; and

WHEREAS, both the Company and Employee are desirous that a proposal for any change of control or acquisition will be considered by Employee objectively and with reference only to the business interests of the Company and Brown Shoe’s shareholders; and

WHEREAS, Employee will be in a better position to consider the best interests of the Company if Employee is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisition.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually covenant and agree as follows:

Section 1.    Definitions

1.1    “Board” means the Board of Directors of Brown Shoe.

1.2    “Business Unit” means any direct or indirect subsidiary, operating division or business unit of Brown Shoe.

1.3    “Cause” means (i) engaging by Employee in willful misconduct which is materially injurious to the Company; (ii) conviction of Employee of a felony; (iii) engaging by Employee in fraud, material dishonesty or gross misconduct in connection with the business of the Company; (iv) engaging by Employee in any act of moral turpitude reasonably likely to materially and adversely affect the Company or its business; (v) engaging by Employee in the illegal use of a controlled substance or using prescription medications unlawfully; or (vi) abuse by Employee of alcohol.

1.4    “Change of Control” means the occurrence of any of the following events after the Effective Date:

(a)    The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of common stock of Brown Shoe (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then outstanding voting securities of Brown Shoe entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this paragraph (a) the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with the exception set forth in paragraph (c) below; or

(b)    Individuals who, as of the Effective Date of this Agreement, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c)    Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation (a “Business Combination”), in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 65% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership,

(d)    Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

1.5    “Code” means the Internal Revenue Code of 1986, as amended.

1.6    “Competitor” means any Person which (a) in its prior fiscal year had annual gross sales volume or revenues of more than $20,000,000 attributable to the sale of footwear or (b) is reasonably expected to have such level of footwear sales or revenues in either the current fiscal year or the next following fiscal year.

1.7    “Confidential Information” shall have the meaning set forth in Section 10.

1.8    “Customer” means any wholesale customer of Brown Shoe and/or any Business Unit which either purchased from Brown Shoe and/or any Business Unit during the one (1) year immediately preceding the Termination Date, or is reasonably expected by Brown Shoe and/or any Business Unit to purchase from Brown Shoe and/or any Business Unit in the one (1) year period immediately following the Termination Date, more than $1,000,000 in footwear.

1.9    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.10    “Good Reason,” when used with reference to a voluntary termination by Employee of Employee’s employment with the Company, means (i) a reduction in Employee’s base salary as in effect on the date hereof, or as the same may be increased from time to time; (ii) a reduction in Employee’s status, position, responsibilities or duties; (iii) the required relocation of Employee’s principal place of business, without Employee’s consent, to a location which is more than fifty (50) miles from Employee’s principal place of business on the Effective Date, or from such location to which Employee may transfer with Employee’s consent after the Effective Date; (iv) a material increase in the amount of time Employee is required to travel on behalf of the Company; (v) the failure of any successor of Brown Shoe to assume this Agreement, or (vi) a material breach of this Agreement by the Company.

1.11    “Person” means any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).

1.12    “Termination Date” means the effective date as provided in this Agreement of the termination of Employee’s employment with the Company.

Section 2.    Term

2.1    Subject to Section 2.2, the term of this Agreement (the “Term”) shall be a period of three (3) years commencing on the Effective Date.

2.2    The Term shall be automatically extended for successive one (1) year periods unless either party to this Agreement provides the other party with notice of termination at least

Section 3.    Termination of Employment

3.1    The Company may terminate Employee’s employment at any time for Cause, effective upon written notice to Employee specifying in reasonable detail the particulars of Employee’s conduct deemed by the Company and/or such subsidiary to justify such termination for Cause.

3.2    The Company may terminate Employee’s employment without Cause at any time, effective upon written notice to Employee of termination specifying that such termination is without Cause.

3.3    Employee may terminate Employee’s employment with the Company at any time, with or without Good Reason.

Section 4.    Separation Benefits

4.1    If Employee’s employment is terminated by the Company for any reason other than for Cause, death or disability and Section 4.2 does not apply, Employee shall be entitled to the following separation benefits:

(a)    The Company shall pay, or cause to be paid, to Employee within 30 days of the Termination Date (i) the full base salary earned by Employee through, but unpaid at, the Termination Date, plus (ii) credit for any vacation earned by Employee but not used at the Termination Date, plus (iii) all other amounts owed by the Company to Employee (other than any bonus payment of any kind) but unpaid as of the Termination Date.

(b)    The Company shall pay, or cause to be paid, to Employee (i) in a lump sum not later than thirty (30) days after the Termination Date an amount equal to 200% of the sum of (A) Employee’s base annual salary at the highest rate in effect at any time during the twelve (12) months immediately preceding the Termination Date, and (B) Employee’s targeted bonus for the current year, and (ii) Employee’s targeted bonus payment for the year of termination prorated to the Termination Date.

(c)    The Company shall provide to Employee for a period of eighteen (18) months after the Termination Date medical and/or dental coverage under the Company’s medical and/or dental plans, without any cost to Employee in excess of any employee contribution that would be payable by Employee if Employee remained employed by a member of the Company; provided, however, that if Employee becomes employed with another employer during such eighteen (18)-month period and is eligible to receive medical and/or dental coverage under another employer-provided plan, the medical and/or dental coverage described herein shall be secondary to those provided under such other plan. In addition, on the last day of such eighteen (18)-month period, the Company shall pay, or cause to be paid, to Employee an amount in cash equal to the aggregate amount that would be payable by the Company for such medical and/or

(d)    The restrictions applicable to each share of non-vested restricted stock of Brown Shoe held by Employee that would have vested within the two (2) year period following the Termination Date had Employee remained employed by the Company shall lapse as of the Termination Date.

(e)    Each non-vested option to purchase Brown Shoe stock held by Employee that would have vested within the two (2) year period following the Termination Date had Employee remained employed by the Company shall vest as of the Termination Date.

(f)    The Company shall pay the reasonable costs of outplacement services selected by the Company for a reasonable period of time following the Termination Date; provided, however, that no such outplacement services shall be provided after the last day of the second calendar year following the calendar year in which the Termination Date occurs.

4.2    If Employee’s employment is terminated within twenty-four (24) months after a Change of Control (x) by the Company for any reason other than for Cause, death or disability, or (y) by Employee within ninety (90) days after the occurrence of Good Reason, Employee shall be entitled to the following separation benefits in place of, and not in addition to, the benefits set forth in Section 4.1:

(a)    The Company shall pay, or cause to be paid, to Employee within 30 days of the Termination Date (i) the full base salary earned by Employee through, but unpaid at, the Termination Date, plus (ii) credit for any vacation earned by Employee but not taken at the Termination Date, plus (iii) all other amounts owed by the Company to Employee (other than any bonus payment of any kind) but unpaid as of the Termination Date.

(b)    The Company shall pay, or cause to be paid, to Employee (i) in a lump sum six (6) months after the Termination Date an amount equal to 300% of the sum of (A) Employee’s base annual salary at the highest rate in effect at any time during the twelve (12) months immediately preceding the Termination Date, and (B) Employee’s targeted bonus for the current year; and (ii) Employee’s targeted bonus payment for the year of termination prorated to the Termination Date.

(c)    The Company shall provide to Employee for a period of eighteen (18) months after the Termination Date medical and/or dental coverage under the Company’s medical and dental plans, without any cost to Employee in excess of any employee contribution that would be payable by Employee if Employee remained employed by the Company; provided, however, that if Employee becomes employed with another employer during such eighteen (18)-month period and is eligible to receive medical and/or dental coverage under another employer-provided plan, the medical and/or dental coverage described herein shall be secondary to those provided under such other plan. In addition, on the last day of such eighteen (18)-month period, the Company shall pay, or cause to be paid, to Employee an amount in cash equal to the aggregate amount that would be payable by the Company for such medical and/or dental

(d)    The restrictions applicable to each share of non-vested restricted stock of Brown Shoe held by Employee shall lapse and be exercisable as of the Termination Date.

(e)    Each non-vested option to purchase Brown Shoe stock held by Employee shall vest and be exercisable as of the Termination Date.

(f)    For purposes of determining Employee’s benefit under the Company’s Supplemental Employment Retirement Plan, an additional three (3) years of Credited Service shall be credited to Employee’s actual or deemed Credited Service.

(g)    The Company shall pay the reasonable costs of outplacement services selected by the Company for a reasonable period of time following the Termination Date; provided, however, that no such outplacement services shall be provided after the last day of the second calendar year following the calendar year in which the Termination Date occurs.

4.3    If Employee’s employment is terminated for any reason other than such reasons specified in Sections 4.1 and 4.2, the Company shall pay, or cause to be paid, to Employee within 30 days of the Termination Date (i) the full base salary earned by Employee through, but unpaid at, the Termination Date, plus (ii) credit for any vacation earned by Employee but not taken at the Termination Date, plus (iii) all other amounts owed by the Company to Employee (other than any bonus payment of any kind) but unpaid as of the Termination Date.

4.4    The benefits set forth in Sections 4.1(c) and 4.2(c) shall run concurrently with any period of continuation coverage to which Employee is entitled under Section 601 of ERISA. Upon Employee’s re-employment during the period specified in each such Section, to the extent covered by the new employer’s plan, coverage under the Company’s plan shall lapse, subject to any continuation of coverage rights under Section 601 of ERISA. Employee’s participation in and/or coverage under all other employee benefit plans, programs or arrangements sponsored or maintained by the Company shall cease effective as of the Termination Date except as otherwise provided in such employee benefit plan, program or arrangement.

Section 5.    Mitigation or Reduction of Benefits

Employee shall not be required to mitigate the amount of any payment provided for in Section 4 by seeking other employment or otherwise. Except as otherwise specifically set forth herein, the amount of any payment or benefits provided in Section 4 shall not be reduced by any compensation or benefits or other amounts paid to or earned by Employee as the result of employment by another employer after the