Ross Stores (ROST)

Section 162(m) of the Internal Revenue Code of 1986

It is the Committee’s policy to seek to qualify executive compensation for deductibility under Section 162(m) of the Internal Revenue Code of 1986 to the extent consistent with the Company’s overall objectives in attracting, motivating and retaining its executives.  The Committee has reviewed the Company’s executive compensation structure in light of the current tax law.  The Committee believes that compensation resulting from stock option grants made under the Prior Option Plans or the 2004 Equity Incentive Plan will be fully deductible when an option is exercised.  The Committee also believes that payments under the Incentive Compensation Plan will be fully deductible.  Sign-on bonuses, guaranteed bonuses and certain other cash compensation costs related to the hiring of the Company’s Chief Executive Officer and each of the four other most highly compensated executive officers of the Company as of the end of the 2005 fiscal year (the “Named Executive Officers”) may not be fully deductible to the extent that, when added to other non-exempt compensation for that particular executive, the total exceeds $1 million.  Non-performance-based restricted stock awards made under the 2004 Equity Incentive Plan or the 1988 Restricted Stock Plan also do not qualify as performance-based compensation and, therefore, may not be fully deductible to the extent the share value upon vesting, when added to other non-exempt compensation for a particular executive, exceeds the $1 million limit in any tax year.

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Section 162(m) of the Internal Revenue Code of 1986

It is the Committee’s policy to seek to qualify executive compensation for deductibility under Section 162(m) of the Internal Revenue Code of 1986 to the extent consistent with the Company’s overall objectives in attracting, motivating and retaining its executives.  The Committee has reviewed the Company’s executive compensation structure in light of the current tax law.  The Committee believes that compensation resulting from stock option grants made under the Prior Option Plans or the 2004 Equity Incentive Plan will be fully deductible when an option is exercised.  The Committee also believes that payments under the Incentive Compensation Plan will be fully deductible.  Sign-on bonuses, guaranteed bonuses and certain other cash compensation costs related to the hiring of executive officers may not be fully deductible to the extent that, when added to other non-exempt compensation for a particular executive, they exceed $1 million paid to the Chief Executive Officer or any of the four other highest compensated officers in any tax year.  Non-performance-based restricted stock awards made under the 2004 Equity Incentive Plan or the 1988 Restricted Stock Plan also do not qualify as performance-based compensation and, therefore, may not be fully deductible to the extent the share value upon vesting of restricted stock, when added to other non-exempt compensation for a particular executive, exceeds the $1 million limit in any tax year. 

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