Bebe stores (BEBE)

ITEM 9B. OTHER INFORMATION

On September 10, 2007, the Compensation and Management Development Committee (the “Compensation Committee”) of the Board of Directors of the Company met and adjusted the base salaries of the Company’s Named Executive Officers. The fiscal 2008 salaries for the Named Executive Officers are set forth in the table below.

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Base salaries may be adjusted from time to time as determined by the Compensation Committee.

On September 10, 2007, the Compensation Committee approved a fiscal 2008 cash incentive plan. The cash incentive plan has multiple performance criteria for an individual award, including (1) individual management bonus objectives (MBOs) such as, total corporate or divisional sales, comparable sales, operating profit, gross margin, inventory shrink and (2) an additional performance target for divisional income and/or corporate net income. Any bonus award under the cash incentive plan for any participant is dependent on the participant’s individual MBOs being achieved, and that if all MBOs are achieved for an individual officer, a percentage of the total award is payable depending on the officer’s position, with the remaining percentage of the individual’s potential total award payable if the divisional income and/or corporate net income target is also achieved. The size of the corporate net income and/or divisional income target bonus awards will vary within a specified range depending on the actual level of performance achieved. Participants included the named executive officers as well as other management and key employees. The plan is administered by the Compensation Committee.

The Compensation Committee also approved a fiscal 2008 performance based restricted stock incentive plan. The restricted stock units (RSUs) incentive award for any individual is to be granted upon the successful achievement of specified performance criteria for fiscal 2008 approved by the Compensation Committee, such as corporate net income, total corporate sales, divisional comparable sales and comparable sales gross margin dollars. The RSUs will be awarded, if at all, by the Compensation Committee on determination of achievement of the performance targets for fiscal 2008. The RSU opportunity for each officer is a range depending on performance achieved in fiscal 2008 for the applicable factors. The vesting of any RSUs awarded upon achievement of the fiscal 2008 performance targets is over two years from the grant date, and vesting 50% per year on the anniversary of the grant date.

PART III

ITEM 9B. OTHER INFORMATION

On September 8, 2006, the Compensation and Management Development Committee (the “Compensation Committee”) of the Board of Directors of the Company met and adjusted the base salaries of the Company’s Named Executive Officers (as defined in the Company’s 2005 proxy statement). The fiscal 2007 salaries for the Named Executive Officers are set forth in the table below.

Base salaries may be adjusted from time to time as determined by the Compensation Committee.

(1)          As defined in the Company’s 2005 proxy statement. The determination of the Company’s named executive officers for fiscal 2006 will be set forth in the Company’s 2006 proxy statement, which shall be filed within 120 days of the end of the Company’s 2006 fiscal year end.

(2)          Also on September 8, 2006 Mr. Parks was promoted from the position of Chief Financial Officer to the position of Chief Operating Officer and Chief Financial Officer. For additional information regarding Mr. Parks’ background, please refer to the information set forth under the heading “Executive Officers and Directors of the Registrant” in Part I, Item I of this report.

On September 8, 2006, the Compensation Committee approved a fiscal 2007 cash incentive plan. The cash incentive plan has multiple performance criteria for an individual award, including (1) individual management bonus objectives (MBOs) such as, total corporate or divisional sales, comparable sales, operating profit, gross margin, inventory shrink and (2) an additional performance target for divisional income and/or corporate earnings per share (EPS). Any bonus award under the cash incentive plan for any participant is dependent on the participant’s individual MBOs being achieved, and that if all MBOs are achieved for an individual officer, a percentage of the total award is payable depending on the officer’s position, with the remaining percentage of the individual’s potential total award payable if the divisional income and/or corporate EPS target is also achieved. The size of the MBO and corporate EPS and/or divisional income target bonus awards will vary within a specified range depending on the actual level of performance achieved. Participants included the named executive officers as well as other management and key employees. The plan is administered by the Compensation Committee.

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The Compensation Committee also approved a fiscal 2007 performance based restricted stock incentive plan. The determination of the size of the opportunity for restricted stock units (RSUs) for fiscal 2007 performance relative to the size of stock option grants for individual officers was based on the size of the total long term incentive allocated for the individual officer based on the responsibilities and expected contribution from the individual officer as well as a determination of the Compensation Committee, with the recommendation of management, as to the best motivator for each officer. The RSU incentive award for any individual is to be granted upon the successful achievement of specified performance criteria for fiscal 2007 approved by the Compensation Committee, such as corporate EPS, total corporate sales, divisional comparable sales and comparable sales gross margin dollars. The RSUs will be awarded, if at all, by the Compensation Committee on determination of achievement of the performance targets for fiscal 2007. The RSU opportunity for each officer is a range depending on performance achieved in fiscal 2007 for the applicable factors. The vesting of any RSUs awarded upon achievement of the fiscal 2007 performance targets is over two years from the grant date, and vesting 50% per year on the anniversary of the grant date.

PART III

Not applicable.

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         Not applicable.

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