Foot Locker (FL)

APPROVAL OF THE FOOT LOCKER 2007 STOCK INCENTIVE PLAN

The Board of Directors has adopted, subject to our shareholders’ approval, the Foot Locker 2007 Stock Incentive Plan (the “2007 Stock Plan”). This plan combines the features of the stock plans currently in effect for officers and other employees, as well as for the Company’s Nonemployee Directors, and is intended to replace our current stock plans. We are seeking shareholder approval of the 2007 Stock Plan because the Board of Directors believes that consolidating into one plan all of the forms of stock awards and stock payment provisions for Nonemployee Directors, officers, and other employees will provide it with reasonable flexibility to meet both current and anticipated future needs in retaining, rewarding, and attracting key employees who have the ability to enhance the value of the Company, and to retain and attract Nonemployee Directors of outstanding competence.

Our current plans are the 1998 Stock Option and Award Plan (the “1998 Award Plan”), the 2003 Stock Option and Award Plan (the “2003 Award Plan”), and the 2002 Directors Stock Plan (the “Directors Stock Plan”). The 1998 Award Plan will expire by its terms on April 14, 2008, and no further grants or awards may be made under that plan as of that date. The Directors Stock Plan and the 2003 Award Plan will expire in 2012 and 2013, respectively.

As of April 5, 2007, the following shares were available for grant under the current plans:

The number of shares authorized under the 2007 Stock Plan is 6 million, with the maximum number of shares that may be awarded under the new plan to any one participant over the life of the plan set at 1.5 million shares. Approval of the new plan, which will expire in 2017, will result in a net increase of 2.265 million shares available for award and issuance.

If shareholders approve the 2007 Stock Plan at this annual meeting, it will replace the 2003 Award Plan, the 1998 Award Plan, and the Directors Stock Plan (together, referred to as the “Current Plans”), and no further stock, options, or other awards will be issued from the Current Plans as of May 30, 2007. Existing awards made under the Current Plans will remain unaffected.

In addition to the administrative convenience that will result from consolidating all of the existing stock award plans into one plan, the 2007 Stock Plan will increase the number of shares available for grant, give the Compensation Committee flexibility to continue to make appropriate equity compensation awards to our Chief Executive Officer, provide the Compensation Committee with the ability to make performance-based awards, and provide greater flexibility in the nature and amount of stock awards that may be made to Nonemployee Directors.

The following is a summary of the material terms of the 2007 Stock Plan and is qualified in its entirety by the complete text of the 2007 Stock Plan, which is attached as Appendix A. The capitalized terms used but not defined in this summary have the meanings given to them in the 2007 Stock Plan.