UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Payment of Filing Fee (Check the appropriate box):

April 27, 2012

Dear Fellow Stockholder:

You are cordially invited to attend our Annual Meeting of Stockholders on Wednesday, June 13, 2012, at 9:00 a.m. at the Tarrytown House Estate and Conference Center, 49 East Sunnyside Lane, Tarrytown, New York.

At the Annual Meeting, we will ask you to elect the Class III members of the Board of Directors, to ratify the selection of the independent registered public accounting firm, and to hold an advisory vote concerning named executive officer compensation. We will also update you on the Company’s progress during the past year and answer your questions.

This booklet includes the Notice of Annual Meeting and Proxy Statement. The Proxy Statement describes the business we will conduct at the Annual Meeting and provides information about the Company that you should consider when you vote your shares.

It is important that your stock be represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting in person, we hope that you will vote on the matters to be considered. You may vote your proxy via the internet, by telephone, or by mail by signing, dating and returning your proxy card in the envelope provided.

Very truly yours,

Norman Matthews
Chairman of the Board

April 27, 2012

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The 2012 Annual Meeting of Stockholders of The Children’s Place Retail Stores, Inc. will be held at the Tarrytown House Estate and Conference Center, 49 East Sunnyside Lane, Tarrytown, New York, on Wednesday, June 13, 2012, at 9:00 a.m., for the following purposes:

Stockholders of record at the close of business on April 16, 2012 are entitled to vote at the Annual Meeting.

Your vote is important. We encourage you to vote by proxy, even if you plan to attend the Annual Meeting. You may vote your proxy via the internet or by telephone by following the instructions included on your proxy card. You may also vote by mail by signing, dating and returning your proxy card in the envelope provided. Voting now will not limit your right to change your vote or to attend the Annual Meeting.

By order of the Board of Directors,

Bradley P. Cost
Senior Vice President, General Counsel and Secretary
The Children’s Place Retail Stores, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094

If you have any questions or require any assistance with voting your shares, please contact:

MACKENZIE PARTNERS, INC.

105 Madison Avenue

New York, New York 10016

(212) 929-5500 (Call Collect)

or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com

TABLE OF CONTENTS

PROXY STATEMENT

The Children’s Place Retail Stores, Inc. (referred to in this Proxy Statement as “we,” “The Children’s Place” or the “Company”) is sending you this Proxy Statement in connection with the solicitation by the Board of Directors (the “Board”) of proxies to be voted at the 2012 Annual Meeting of Stockholders (the “Annual Meeting”).

We are mailing a printed copy of this Proxy Statement, a proxy card and the 2011 Annual Report on Form 10-K of the Company to our stockholders beginning on or about April 27, 2012. The 2011 Annual Report on Form 10-K mailed with the Proxy Statement is not part of the proxy-soliciting material.

VOTING PROCEDURES

Who Can Vote

The Company has one class of voting stock outstanding: Common Stock. If you were a record owner of Common Stock on April 16, 2012, the record date for voting at the Annual Meeting, you are entitled to vote at the Annual Meeting. At the close of business on April 16, 2012, there were 24,433,654 shares of Common Stock outstanding and entitled to vote. Each share of Common Stock has one vote.

How to Vote

You can vote your shares in two ways: either by proxy or in person at the Annual Meeting by written ballot. If you choose to vote by proxy, you may do so by mail, using the internet or by telephone. Each of these procedures is more fully explained below. Even if you plan to attend the Annual Meeting, the Board recommends that you vote by proxy.

Voting by Proxy

Because many stockholders cannot attend the Annual Meeting in person, it is necessary that a large number of stockholders be represented by proxy. You may vote your proxy by mail, using the internet or by telephone, each as more fully explained below. In each case, we will vote your shares as you direct. When you vote your proxy, you can specify whether you wish to vote for or against or abstain from voting on each nominee for Class III Director, the ratification of the selection of BDO USA, LLP as the Company’s independent registered public accounting firm for fiscal 2012, and the approval of the compensation for the Company’s named executive officers on an advisory basis (“Say on Pay”).

If any other matters are properly presented for consideration at the Annual Meeting, the persons named on the voting web site and your proxy card as the Proxy Committee (the “Proxy Committee”) will have discretion to vote for you on those matters. At the time this Proxy Statement was printed, we knew of no other matters to be raised at the Annual Meeting. Attending the Annual Meeting alone will not be deemed to revoke your proxy.

Voting at the Annual Meeting

If you wish to vote at the Annual Meeting, written ballots will be available from the ushers at the Annual Meeting. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the Annual Meeting. Voting by proxy, whether by mail, using the internet or by telephone, will not limit your right to vote at the Annual Meeting if you decide to attend in person. However, if you vote by proxy and also attend the Annual Meeting, there is no need to vote again at the Annual Meeting unless you wish to change your vote.

Revocation of Proxies

You can revoke your proxy at any time before it is exercised at the Annual Meeting by taking any one of the following actions: (1) you can follow the instructions given for changing your vote using the internet or by telephone or deliver a valid written proxy with a later date; (2) you can notify the Secretary of the Company in writing that you have revoked your proxy (using the address in the Notice of Annual Meeting of Stockholders above); or (3) you can vote in person by written ballot at the Annual Meeting.

Quorum

To carry on the business of the Annual Meeting, a minimum number of shares, constituting a quorum, must be present. The quorum for the Annual Meeting is a majority of the votes represented by the outstanding Common Stock of the Company. This majority may be present in person or by proxy. Abstentions and “broker non-votes” (which are explained below) are counted as present to determine whether there is a quorum for the Annual Meeting.

Broker Non-Votes

A “broker non-vote” occurs when your broker submits a proxy for your shares but does not indicate a vote for a particular proposal because the broker does not have authority to vote on that proposal and has not received voting instructions from you. “Broker non-votes” are not counted as votes for or against the proposal in question or as abstentions, nor are they counted to determine the number of votes present for the particular proposal (but, are counted for purposes of determining whether a quorum for the Annual Meeting exists).

If your broker holds shares in your name and delivers this Proxy Statement to you, the broker is entitled to vote your shares on Proposal 2 even if the broker does not receive voting instructions from you. The broker is not entitled to vote your shares on Proposals 1 or 3 without your instructions.

Required Vote

Proposal 1: Election of Two Class III Directors. Each of the two nominees for Class III Director who receives at least a majority of the votes cast for such nominee, either in person or by proxy, will be elected. Votes cast include votes for or against each nominee and exclude abstentions and withheld authority. This means that if you abstain from voting or withhold authority to vote for a particular nominee, your vote will not count for or against the nominee. As more fully described in “Majority Voting in Director Elections” below, any nominee in this election who does not receive a majority of the votes cast must promptly offer to tender his resignation to the Board. The Nominating and Corporate Governance Committee will then consider the resignation and make a recommendation to the Board. When voting your proxy, the Proxy Committee will vote for each of the nominees unless you instruct otherwise. As discussed above, if your broker holds shares in your name and delivers this Proxy Statement to you, the broker is not entitled to vote your shares on this proposal without your instructions.

Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm. The affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, is required to ratify the selection of the independent registered public accounting firm. This means that if you abstain from voting on this proposal, your vote will not count for or against this proposal. When voting your proxy, the Proxy Committee will vote for this proposal unless you instruct otherwise.

Proposal 3: Advisory Vote on Named Executive Officer Compensation (“Say on Pay”). The affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, is required to approve the advisory vote on named executive officer compensation. This means that if you abstain from voting on this proposal, your vote will not count for or against this proposal. When voting your proxy, the Proxy Committee will vote for this proposal unless you instruct otherwise.

Proposal 4: Other Matters As May Properly Come Before the Annual Meeting. For any other matter that may properly come before the Annual Meeting, the affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, and entitled to vote on the proposal, is required for adoption of the proposed resolution. If you abstain from voting on a stockholder proposal, it will have the same effect as if you voted against it. When voting your proxy, the Proxy Committee will vote against these proposals unless you instruct otherwise. As discussed above, if your broker holds shares in your name and delivers this Proxy Statement to you, the broker is not entitled to vote your shares on either stockholder proposal without your instructions.

Confidential Voting

All proxies, ballots and vote tabulations that identify stockholders are confidential. An independent tabulator will receive, inspect and tabulate your proxy whether you vote by mail, using the internet or by telephone. Your vote will not be disclosed to anyone other than the independent tabulator without your consent, except if doing so is necessary to meet legal requirements.

Majority Voting in Director Elections

Under the Company’s charter, in an uncontested election for directors (i.e., an election where there are the same number of nominees as seats on the Board up for election), directors must be elected by a majority of the votes cast at the Annual Meeting. A majority of votes cast is defined to mean that the number of shares voted “for” a director’s election exceeds 50% of the total number of votes cast “for” or “against” the election of the nominee.

If a nominee for director who is an incumbent director is not re-elected by a majority of the votes cast as set forth above, and no successor has been elected at the Annual Meeting, the Company’s Corporate Governance Guidelines require the director to promptly offer to tender his or her resignation to the Board.

The Nominating and Corporate Governance Committee will then make a recommendation to the Board as to whether to accept or reject the tendered resignation or to take other action. The Board will act on the tendered resignation, taking into account the Committee’s recommendation, and will publicly disclose its decision and rationale within 90 days from the date of certification of the election results. The Committee, in making its recommendation, and the Board, in making its decision, may each consider any factors or other information that it considers appropriate or relevant. The director who tenders his or her resignation shall not participate in the recommendation of the Committee or the decision of the Board with respect to the acceptance or rejection of his or her resignation.

If a director’s resignation is accepted by the Board, or if a nominee who is not an incumbent director is not elected, then the Board in its discretion may determine either to fill such vacancy or to reduce the size of the Board.

In contested elections, where there are more nominees than seats on the Board up for election, directors are elected by a plurality vote. This means that the nominees who receive the most votes of all the votes cast for directors will be elected.

GOVERNANCE OF THE COMPANY

The Company’s Corporate Governance Commitment

The Company’s Board strongly believes that good corporate governance accompanies and greatly aids our long-term business success. Reflecting its commitment to continuous improvement, the Board reviews its governance practices on an ongoing basis to ensure that they reflect best practices and promote stockholder value.

Board Independence, Experience and Diversity

Established Policies Guide Governance and Business Integrity

Board Focused on Key Business Priorities

Direct Access to Management

Ensuring Management Accountability

Board Practices Promote Effective Oversight

Continuous Improvement through Evaluation

The Board of Directors

The Board oversees the business, assets, affairs, performance and financial integrity of the Company. In accordance with the Company’s long-standing practice, the Board is independent, consisting of a substantial majority of outside directors. During fiscal 2011, the Board had nine directors, with eight independent directors and one employee director, Jane Elfers, who is the President and Chief Executive Officer of the Company. Sally Frame Kasaks, who has served as a director since 2000, and Malcolm Elvey, who has served as a director since 2002, are not standing for reelection and will retire from the Board effective as of the Annual Meeting. Kenneth Reiss has been nominated to fill one of the positions Ms. Kasaks and Mr. Elvey will vacate at the Annual Meeting. Mr. Reiss has been recommended to the Company by a number of sources, including our Chairman and our Chair of the Audit Committee. If elected, Mr. Reiss will be an independent director. From and after the Annual Meeting, the Board has decreased the number of persons constituting the entire Board of Directors to eight from nine.

During fiscal 2011, the Board met six times, and the independent directors met regularly in executive session without Ms. Elfers present.

The Company’s charter provides for a “classified” Board comprised of three classes, designated Classes I, II and III, whose members serve staggered three-year terms. Class I directors were last elected at the Company’s 2010 annual meeting of stockholders, Class II directors were last elected at the Company’s 2011 annual meeting of stockholders and Class III directors were last elected at the Company’s 2009 annual meeting of stockholders. Class III directors are to be elected at this year’s Annual Meeting and will serve for a three-year term, extending until the third succeeding annual meeting of stockholders, and in each case until their successors are duly elected and qualified.

Board Nominees

The Company’s Corporate Governance Guidelines outline the characteristics expected of all directors, including independence, integrity, high personal and professional ethics, sound business judgment and the ability and willingness to commit sufficient time to the Board. The Nominating and Corporate Governance Committee annually reviews the individual skills and characteristics of the directors, as well as the composition of the Board as a whole. In evaluating the suitability of individual Board members, the Nominating and Corporate Governance Committee seeks directors with strong reputations and experience in areas relevant to the strategy and operations of our business and takes into account many factors, including a general understanding of retailing, apparel, marketing, finance and other disciplines relevant to the success of a publicly traded specialty apparel retailer in today’s business environment, educational and professional background, personal accomplishment, gender, age and ethnic diversity. The Nominating and Corporate Governance Committee, however, does not base its nomination of a candidate solely on these factors. The Nominating and Corporate Governance Committee strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills and expertise to oversee the Company’s business. Each nominee and continuing director set forth below satisfies the above criteria. Each nominee and continuing director has served in a senior executive position in a large, complex organization and has gained experience in core management skills, such as strategic and financial planning, financial reporting, corporate governance, risk management and leadership development. This variety and depth of experience enables the nominees to understand the Company’s business and to make significant contributions to the deliberations of the Board. Biographical information and the qualifications of each director nominee for election at this year’s Annual Meeting are set forth below. Mr. Matthews has been a director since 2009 and Mr. Reiss has been nominated to serve on the Board for the first time.

The following table sets forth certain information with respect to the nominees of the Board for election as a Class III director at the Annual Meeting, including their memberships on the Board’s standing committees.

Continuing Directors

The following table sets forth certain information with respect to the Class I and Class II Directors, whose term of office continues beyond the Annual Meeting. Each of our continuing directors possesses strong experience and educational and professional background in areas relevant to the strategy and operations of our business. Each has complementary skills in areas such as strategic and financial planning, financial reporting, corporate governance and leadership development which enables our continuing directors to make significant contributions to our Board.

Sally Frame Kasaks, who has served as a Director since 2000, and Malcolm Elvey, who has served as a Director since 2002, are not standing for reelection and will retire from the Board effective as of the Annual Meeting.

Director Independence

All of the continuing members of our Board (other than Ms. Elfers) are non-management Directors who meet the criteria for director independence of the listing standards of The NASDAQ Stock Market. All of the members of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are independent directors.

The Company’s Corporate Governance Guidelines provide that the Board intends that, except during periods of temporary vacancies, a substantial majority of our directors will be independent. The Board has determined that an independent director is one who the Board affirmatively determines has no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) and is considered independent under the listing standards of The NASDAQ Stock Market and under the rules and regulations promulgated by the SEC, as they may from time to time be amended. The Board will also consider all other relevant factors and circumstances bearing on independence.

Each year each Director (and any Director-nominee) completes and submits to the Company a questionnaire which, among other purposes, is used by the Nominating and Corporate Governance Committee to help evaluate whether the Director has any material relationship with us (whether directly or as a partner, stockholder, or officer of an organization that has a relationship with us), including any material relationship with our affiliates and management, pertinent to determining the Director’s independence. With the assistance of the Nominating and Corporate Governance Committee, our Board made a determination that of our continuing Directors, Messrs. Fisch, Gromek, Iannone, Lipschitz and Matthews, and Dr. Alutto are independent within the meaning of the listing standards of The NASDAQ Stock Market, and with respect to the members of the Audit Committee, the provisions of SEC Rule 10A-3. The Board also made a determination that Mr. Reiss, if elected to the Board at the Annual Meeting, will be independent within the meaning of such listing standards.

Board Leadership Structure

The Board selects the Company’s CEO and Chairman of the Board in the manner that it determines to be in the best interests of the Company’s stockholders. The Board has determined that having an independent director serve as Chairman is in the best interest of the Company’s stockholders at this time. This structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing Board priorities and procedures. Further, this structure permits the Chief Executive Officer to focus on strategic matters and the management of the Company’s day-to-day operations.

The Board does not have a policy as to whether the Chairman of the Board should be an independent director, an affiliated director, or a member of management. The Company’s Corporate Governance Guidelines provide that when the Chairman is an affiliated director or a member of Company management, the independent directors shall and otherwise may, from time to time, select an independent director to act as the Lead Independent Director of the Board, with responsibility for coordinating the activities of the other independent directors and for performing the duties specified in these guidelines, including but not limited to (i) presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors, (ii) serving as liaison between the Chairman and the independent directors, (iii) approving information sent to the Board, (iv) approving meeting agendas for the Board, and (v) approving meeting schedules to assure that there is sufficient time for discussion, and such other duties as are assigned from time to time by the Board.

Board Role in Risk Oversight

The Company faces a variety of risks, including strategic, operational, financial and compliance risk. The Board believes an effective risk management system will (1) timely identify the material risks that the Company faces, (2) communicate necessary information with respect to material risks to senior executives and, as appropriate, to the Board or relevant committee, (3) implement appropriate and responsive risk management strategies consistent with the Company’s risk profile, and (4) integrate risk management into Company decision-making.

Management performs an annual risk assessment to identify and prioritize the major risks to the Company and to develop mitigation strategies or ensure that mitigation strategies are in place to address identified risks, and periodically reports to the Board on its status. The Board reaches conclusions regarding the adequacy of the Company’s risk management processes based upon the briefings provided by management and advisors as well as upon periodic reports the Board receives from the Audit Committee regarding the Audit Committee’s assessment of financial statement reporting risk and from the Compensation Committee regarding the Compensation Committee’s assessment of the risk, if any, arising from the Company’s compensation policies and practices. In addition to the formal compliance program, the Board encourages management to promote a corporate culture that incorporates risk management into the Company’s corporate strategy and day-to-day business operations. The Board also continually works, with the input of the Company’s executive officers, to assess and analyze the most likely areas of future risk for the Company.

Consideration of Board Nominees

The Nominating and Corporate Governance Committee acts on behalf of the Board to recruit, consider the qualifications of and recommend to the Board nominees for election as directors by the stockholders and candidates to be elected by the Board to fill vacancies on the Board. Our Corporate Governance Guidelines provide that the Nominating and Corporate Governance Committee will consider candidates recommended by stockholders and will have a policy that there will be no differences in the manner in which it evaluates nominees recommended by stockholders and nominees recommended by the Nominating and Corporate Governance Committee or Company management. Stockholders wishing to suggest director candidates should submit their suggestions in writing to the attention of the Secretary of the Company, providing the candidate’s name and qualifications for service as a Board member, a document signed by the candidate indicating the candidate’s willingness to serve, if elected, and evidence of the stockholder’s ownership of Company stock. A stockholder wishing to formally nominate a candidate must do so by following the procedures described in our Bylaws which are available from the Secretary of the Company.

Communications to the Board of Directors

Stockholders and other interested parties may communicate directly with the Company’s independent directors by sending an e-mail to childrensplaceboard@childrensplace.com or by writing to Board of Directors, c/o Secretary, The Children’s Place Retail Stores, Inc., 500 Plaza Drive, Secaucus, New Jersey 07094. Stockholders and other interested parties may also communicate with committee chairs by writing to them at the above mailing address, in care of the Secretary. The sender should specify in each communication the applicable addressee or addressees to be contacted. We will initially review communications before forwarding them to the addressee. Our Secretary generally will not forward to the directors a stockholder communication that relates to an improper or irrelevant topic, that requests information about the Company that is generally available (which will instead be forwarded to our Investor Relations Department) or that is unrelated to the stockholder’s ownership of our stock.

Concerns about accounting, internal controls over financial reporting or auditing matters or possible violations of the Company’s Code of Business Conduct should be reported pursuant to the procedures outlined in our Code of Business Conduct, which is available on our website, http://www.childrensplace.com, under the “Corporate Governance” tab in the section entitled “Investor Relations.”

Director Attendance at Annual Meetings

It is the Company’s policy that all members of the Board should attend the Company’s annual meeting of stockholders, unless extraordinary circumstances prevent a director’s attendance. All Directors of the Company attended the 2011 annual meeting of stockholders.

Committees of the Board of Directors

The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. The members of these committees during fiscal 2011 and a summary of the responsibilities of these committees are set forth below. The committee charters are available on our website, http://www.childrensplace.com, under the “Corporate Governance” tab in the section entitled “Investor Relations.”

Current Committee Membership (* indicates Chair)

Audit Committee

The Audit Committee, which is a separately designated standing audit committee established in accordance with Section 3(a)(58) of the Securities and Exchange Act of 1934, as amended, or the Exchange Act, monitors the preparation and integrity of our financial statements, our other financial reports and our overall disclosure practices; the soundness of our system of internal financial controls and our compliance with good accounting practices; and the appointment, qualifications, independence and performance of our independent registered public accounting firm. Additionally, the Audit Committee has oversight responsibility for the performance of our internal audit function and compliance with related legal and regulatory requirements. The Board has determined that all members of the Audit Committee are “independent,” as required by the Exchange Act and the listing standards of The NASDAQ Stock Market and meet the “financial sophistication” requirement within the meaning of The NASDAQ Stock Market rules, and has also determined that Mr. Lipschitz qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K.

The Audit Committee met nine times during fiscal 2011, including to review and participate in discussions regarding each quarterly earnings press release prior to its announcement. The Audit Committee also met separately on four occasions in executive session with the Company’s independent registered public accounting firm, head of Internal Audit and other members of management.

Compensation Committee

The Compensation Committee has been charged with the responsibilities of our Board relating to compensation of our executive officers. The Compensation Committee establishes our management compensation policies and reviews and recommends to the Board the terms of the Company’s incentive compensation plans and programs. The Compensation Committee oversees the implementation of these plans and programs, including the granting of all equity awards, to ensure alignment with the Company’s strategy and performance and determines all aspects of the compensation of our executive officers. All members of the Compensation Committee are independent directors. For more information on the role played by the Compensation Committee in setting the compensation of our executives and the role of executive officers in determining or recommending the amount or form of executive compensation, see “Executive Compensation - Compensation Discussion and Analysis” below. In addition, the Compensation Committee makes recommendations to the Board regarding the compensation of Directors. The Compensation Committee met eight times during fiscal 2011.

The Compensation Committee periodically retains the services of outside compensation consultants to provide it with objective, third party recommendations and advice on the appropriateness of the Company’s compensation of the CEO and other executive officers. In July 2011, the Compensation Committee retained Towers Watson to advise it with respect to such matters and such other matters as the Compensation Committee may direct. Towers Watson does not provide any other services to the Company. Towers Watson works directly with the Compensation Committee and its Chair and meets with the Committee in executive session.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee has been an officer of the Company and none were employees of the Company during fiscal 2011, and none had any relationship with the Company or any of its subsidiaries during fiscal 2011 that would be required to be disclosed as a transaction with a related person. None of the executive officers of the Company has served on the board of directors or compensation committee of another company at any time during which an executive officer of such other company served on the Company’s Board or the Compensation Committee.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee recommends nominees for the Board and develops and implements formal Board self-evaluation procedures. It also makes recommendations to the Board regarding Board and committee structure and corporate governance. In the event of an uncontested election, the Nominating and Corporate Governance Committee also must assess the appropriateness of accepting the resignation of a nominee of the Board for election as a director who is in office as a director and does not receive a majority of the votes cast by the stockholders in respect of his or her election. The Nominating and Corporate Committee met three times during fiscal 2011. All members of the Nominating and Corporate Governance Committee are independent directors.

Audit Committee Report

The Audit Committee reviews the Company’s financial reporting process on behalf of the Board. The Audit Committee has authority to appoint, discharge and replace our independent registered public accounting firm, and is directly responsible for the oversight of the scope of its audit work and the determination of its compensation.

As stated in the Audit Committee’s charter, a copy of which is available on the Company’s website, http://www.childrensplace.com, under the “Corporate Governance” tab in the section entitled “Investor Relations,” the Audit Committee’s responsibility is one of oversight. It is the responsibility of our management to establish and maintain a system of internal control over financial reporting and to prepare financial statements of the Company and its subsidiaries in accordance with generally accepted accounting principles and to prepare other financial reports and disclosures. Our independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and to issue a report thereon. The Audit Committee does not provide any expert or other special assurance as to our financial statements or any expert or professional certification as to the work of our independent registered public accounting firm.

In fulfilling its oversight responsibilities, the Audit Committee has, among other things, reviewed and discussed with management our audited consolidated financial statements for fiscal 2011, met and held discussions with management and with our independent registered public accounting firm and the head of our internal audit function (both with and without management present) regarding the fair and complete presentation of our financial results and discussed the significant accounting policies applied in our financial statements as well as alternative treatments. The Audit Committee also reviewed and discussed with management, the head of our internal audit function and our independent registered public accounting firm the reports required by Section 404 of the Sarbanes Oxley Act of 2002, namely, management’s annual assessment of our internal control over financial reporting and our independent registered public accounting firm’s attestation report thereon. The Audit Committee has discussed with our independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, “Communication with Audit Committees,” as adopted, amended, modified or supplemented, by the Public Company Accounting Board, or PCAOB. In addition, the Audit Committee has received the written disclosures and the letter from our independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm such firm’s independence.

Based on the review and discussions referred to above, the Audit Committee recommended to our Board that our audited consolidated financial statements for fiscal 2011 be included in our Annual Report on Form 10-K for such fiscal year for filing with the SEC.

The foregoing Audit Committee report has been submitted by the members of the Audit Committee: Louis Lipschitz (Chair), Malcolm Elvey, Jamie Iannone and Sally Frame Kasaks.

EXECUTIVE OFFICERS

Set forth below are the names, ages and titles of our executive officers as of April 16, 2012:

The biography of Ms. Elfers is set forth above under the heading “Governance of the Company – Continuing Directors.”

Eric Bauer joined the Company in May 2011. Mr. Bauer has more than 25 years of broad-based retail experience. Most recently, he spent eight years with GAP, Inc., culminating in his appointment as Executive Vice President, Operations–Chief Operating Officer, for GAP North America where he was responsible for finance, store operations, real estate, distribution, logistics, information technology and their Canadian operations. He previously served as Senior Vice President and Chief Financial Officer for Banana Republic. Prior to GAP, he held the position of Executive Vice President, Administration and Chief Financial Officer for Tickets.com. Mr. Bauer began his career with Banque Arabe et Internationale D’Investissement and subsequently held positions of increasing responsibility with KPMG Peat Marwick, International Marketing Associates, Pepsico Corporation’s Taco Bell Division and Choice Hotels International.

Natalie Levy joined the Company in April 2010. Ms. Levy began her career with R.H. Macy and Company and also held a series of merchandising positions with Mervyn’s and Caldor. She joined Lord & Taylor in 1999 where she spent seven years and last held the position of Senior Vice President/GMM for Proprietary Brands with responsibility for all apparel, shoes, handbags, accessories and gifts. Ms. Levy is a graduate of Simmons College with a degree in Retail Management.

Bradley Cost joined the Company in December 2010. Prior to joining us, Mr. Cost had been a partner with Bachelder Law LLP since September 2006, where he specialized in corporate governance, securities and senior executive compensation matters. Prior to that, Mr. Cost was a partner in private practice in New York City for over 20 years representing numerous public and private companies in securities, mergers & acquisitions and corporate matters. He earned his undergraduate degree from Georgetown University and law and graduate business degrees from Northwestern University.

Michael Giannelli joined the Company in March 2011. Mr. Giannelli has more than 20 years of design experience. He spent 18 years with Gap Inc. culminating in his appointment as Vice President, Gap Body. For 12 years of his tenure with that company, Mr. Giannelli designed children’s apparel and non apparel for Gap Kids and Baby Gap. Most recently, Mr. Giannelli held the position of Senior Vice President, Design for Ann Taylor Loft.

Kevin Low joined the Company in September 2011. Prior to joining us, Mr. Low spent 15 years with GAP, Inc. culminating in his appointment as Zone Vice President—Northeast in 2007 responsible for store operations at 515 stores in 6 regions and 23 districts. During his tenure at GAP, Inc., Mr. Low held positions of increasing responsibility as a manager of stores and as a district and regional store manager.

Lori Tauber Marcus joined the Company in November 2011. Ms. Marcus has over 25 years of broad-based global marketing experience. She spent 25 years with Pepsico Corporation culminating in her appointment as Senior Vice President, Marketing Activation in 2008. During her tenure at Pepsico, Ms. Marcus held executive positions of increasing responsibility in the areas of branding, marketing and strategy.

Bruce Marshall joined the Company in March 2011. Mr. Marshall has more than 25 years of experience managing franchising, licensing and joint ventures for global brands. Most recently, from 2006 to 2010, he was Senior Vice President and Managing Director, International Development and Operations, for Claire’s Stores Inc., where he was responsible for their joint venture and franchise operations across 23 countries. Previously, he spent six years with Warner Bros. culminating in his appointment as Senior Vice President and Managing Director, Asia Pacific. Mr. Marshall began his retail career with Marks and Spencer, where he spent 16 years in a variety of managerial positions, including across Central and Eastern Europe.

Jason McAndrew joined the Company in April 2012. Prior to joining us, Mr. McAndrew spent 6 years in senior executive positions with Ann Inc. (formerly Ann Taylor) culminating in his appointment as Senior Vice President, Corporate Inventory Operations. For over six years prior to Ann Inc., Mr. McAndrew held planning and distributions management positions with Gap Inc.

Lawrence McClure joined the Company in March 2010. Prior to joining us, Mr. McClure served as Senior Vice President of Human Resources at Liz Claiborne Inc. for over eight years where he helped establish a global human resources presence within a diverse set of brands. Prior to that, he held senior human resources leadership roles with The Dexter Corporation, Aetna, and United Technologies.

Peter Warner joined the Company in September 2011. Most recently, he was Senior Vice President Global Sourcing and Operations for Liz Claiborne Inc. Mr. Warner has over 20 years of experience in global product development, sourcing, logistics and distribution activities. Prior to joining Liz Claiborne in 2008, Mr. Warner held the position of Senior Vice President, Global Sourcing and Production at Banana Republic from 2005. Mr. Warner began his career with Nike, Inc. and subsequently held positions of increasing responsibility with Foot Locker, Inc. and Ann Taylor, Inc.

Bernard McCracken has held various finance and accounting positions with the Company since 2004 and has been the Company’s Controller since 2009, Vice President, Controller since 2010 and Interim Principal Accounting Officer since February 2011. Prior to 2004, Mr. McCracken was the Vice President of Finance for Meldisco, a division of Footstar, Inc., and a Manager in Deloitte & Touche’s consulting group.

John Taylor has held various finance positions with the Company since 2005 and has been our Vice President, Finance since 2007 and our Interim Principal Financial Officer since February 2011. From 1997 to 2005, Mr. Taylor held various finance positions with Dell Inc. Mr. Taylor earned an MBA from the University of Washington.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Executive Summary

Our business mission is to build on our position as the largest pure-play children’s specialty apparel retailer in North America in order to deliver long-term shareholder return by expanding our market share in North America, expanding internationally, and consistently delivering quality, value and fashion to our customers.

The Company’s compensation programs are designed to align compensation with our business goals and to pay for performance. We emphasize performance-based compensation to motivate our executives and other members of management and long-term compensation to incentivize and retain those who are expected to contribute to the long-term success of the Company and to deliver significant total shareholder return (TSR).

Performance – TSR and Operating Results

In January 2010, Jane Elfers became our CEO. Since then, she has assembled a strong senior leadership team across our Company, including in design, merchandising, marketing, planning and allocation, supply chain, store operations, outlets and international. This team has been sharply focused on driving our key growth initiatives, and we achieved significant progress in fiscal 2011 on each of these initiatives. This success in turn, drove our operating results and TSR, despite the continued economic uncertainty experienced in fiscal 2011:

Performance – Growth Initiatives

Set forth below is a brief summary of the significant progress we made during fiscal 2011 on our key growth initiatives:

Best Practices

During fiscal 2011, the Compensation Committee engaged in a number of activities to ensure that our executive compensation programs reflect best practices and remain aligned with the interests of our shareholders, including:

Prior to fiscal 2011, the following matters were adopted by the Company:

* * *

Compensation Philosophy

To realize our business goals and to further our growth initiatives, we rely on the contributions of our executives and all of our other employees. In fiscal 2011, we continued to focus on building a culture that recognizes the collective contributions of all employees, promotes the values of respect and diversity in the workplace, and encourages and rewards teamwork and collaboration.

Our compensation philosophy is designed to support our business mission, growth initiatives and culture. We use the following principles in developing and implementing compensation programs to achieve these objectives and to foster our culture:

These principles form the framework for the Compensation Committee and management to evaluate existing compensation programs and to implement new ones, from time to time. The Compensation Committee assesses and adjusts these principles, as necessary, to ensure that they meet changing economic, business and competitive conditions and that they continue to be aligned with our business objectives, culture and shareholder interests.

At last year’s annual meeting of stockholders, the votes cast in favor of the Company’s fiscal 2010 executive compensation constituted over 98% of the total number of votes cast on the advisory “Say on Pay” proposal. The Company considers this vote to be an overwhelming approval of our compensation philosophy, the above principles and the Company’s application of those principles in the design and implementation of our executive compensation programs. Accordingly, in fiscal 2011, the Company has continued to apply the same principles to executive compensation.

Peer Group

The Company uses comparative compensation data from a group of other leading retail companies in our size range, referred to in this CD&A as the “Peer Group,” as a point of reference in designing our compensation programs and in setting compensation levels. We do not use this data as a single determinative factor, but rather as an external check to verify that our compensation programs are reasonable and competitive in light of compensation practices at similarly situated companies.

In fiscal 2011, the Compensation Committee, with the assistance of Towers Watson, our independent compensation consultants, reviewed the Peer Group to determine if any changes were warranted. Two companies that went private were removed from the Peer Group (Gymboree and J.Crew), and two companies were added (Buckle and Express). The Peer Group is comprised of specialty apparel retailers, including those who compete with us, with revenues generally between one-half and two times our revenues. For fiscal 2011, the Peer Group consisted of the following 16 companies:

Benchmark compensation data was collected from the Peer Group for the Company’s three primary compensation components discussed below (base salary, annual incentive pay and long-term incentive pay), both individually and in the aggregate. The Compensation Committee also reviewed our performance relative to the Peer Group on a number of financial metrics to assess our pay-for performance alignment relative to that of the Peer Group.

Compensation Components

The Company’s executive compensation programs generally consist of the following three primary components:

In allocating compensation among these three components, we seek to provide reasonable and competitive levels of fixed compensation (salary), while emphasizing performance-based annual and long-term incentive compensation tied to our overall performance and time-vested incentive compensation which encourages management retention and a longer-term focus.

The mix between annual incentives (cash bonus) and long-term incentives (equity) is determined based on competitive practices, including within our Peer Group, with emphasis placed on long-term incentives.

The chart below summarizes our three primary components of compensation as a targeted approximate percentage of compensation for our NEOs in fiscal 2011:

Fiscal 2011

(1)          Annualized.

(2)          Other than Susan Riley who resigned on February 10, 2011.

Role of the Compensation Committee, the CEO, Other Executives and Compensation Consultant

Each member of the Compensation Committee is independent, in accordance with applicable rules of The NASDAQ Stock Market. For more information about the Compensation Committee’s composition, responsibilities and practices, see “Governance of the Company - Committees of the Board of Directors” above.

The Compensation Committee reviews and approves target compensation levels, applicable performance metrics and other terms of the Company’s executive compensation programs, determines the total amounts to be awarded each year under these programs, and evaluates and approves the salary, target annual bonus level, actual annual bonus payments, equity incentive awards and other benefits provided to our executive officers. Accordingly, the Compensation Committee approved the compensation for each of the Company’s NEOs for fiscal 2011.

Generally, the Compensation Committee works with the Company’s Chief Executive Officer, Senior Vice President, Human Resources and the Company’s independent compensation consultant in establishing our executive compensation policies and programs and in making specific executive compensation decisions. Compensation decisions regarding executive officers, other than the Chief Executive Officer, are made after the Compensation Committee reviews performance evaluations and recommendations with respect to salary adjustments, annual bonus awards and incentive awards prepared by the Chief Executive Officer. The Compensation Committee then exercises its discretion in deciding whether or not to modify any such recommended adjustments or awards. The Chief Executive Officer compensation package is set independently by the Compensation Committee, without the involvement of the Chief Executive Officer. Once set by the Compensation Committee, this compensation package is submitted to the full Board for approval.

In fiscal 2011, the Compensation Committee retained Towers Watson, a nationally recognized compensation consulting firm, as our independent compensation consultant to advise the Committee with respect to executive compensation matters. As a first step in supporting the Compensation Committee, Towers Watson conducted a review of the Company’s executive compensation programs. As a result of this review, Towers Watson has been actively involved in advising the Compensation Committee on the design of the long-term incentive awards under our 2011 Plan, updating the Company’s Peer Group, the setting of target compensation levels and performance goals, and ensuring that there is a strong positive relationship between earned compensation and performance, as measured by operating results and increase in shareholder value.

Base Salary

Base salaries are designed to provide a reasonable, competitive level of fixed compensation. Salaries above the Peer Group median are paid to key contributors to our success. Setting salaries in the median range or above mitigates the incentive that might otherwise exist for an executive to support short-term focused or higher-risk business strategies if fixed compensation were set below market rates. Accordingly, salaries for the NEOs in fiscal 2011 ranged between the median and 75th percentile of salaries for similar jobs in the Peer Group based on the most recent data available to the Company.

Performance Targets

At the beginning of fiscal 2011, the Compensation Committee set specific operating income goals for purposes of the annual incentive opportunity (cash bonus) and long-term performance-based incentive awards (equity) for executives, including the NEOs, and other members of management. The operating income measure was selected to create a strong focus on our overall profit goal and the underlying drivers of revenues and cost control. Set forth below are the operating income targets applicable to performance-based incentive awards, both annual and long-term, in fiscal 2011:

Annual Incentives—Cash Bonuses

Cash bonuses are designed to reward performance over a one-year period against a pre-established financial performance measure set by the Compensation Committee and, in certain cases, against individual objectives set by our CEO, both at the beginning of the fiscal year. Achievement of the financial performance measure is determined by the Compensation Committee based on audited financial results available early in the following year in accordance with a set formula based on the achievement of actual operating income against an operating income target.

Our executives, including the NEOs, are each assigned a bonus award opportunity, which is expressed as a percentage of base salary. For fiscal 2011, the target bonus award opportunity for each of the NEOs was: Ms. Elfers 120% of her base salary (as provided in her amended employment agreement); Mr. Bauer 75% of his base salary; Ms. Levy 60% of her base salary; Ms. Marcus 40% of her base salary; and Mr. Taylor 25% of his base salary. For fiscal 2011, the formula-driven award payouts ranged from zero, if performance fell below Threshold, 100% of target if the operating income performance target was met, to a maximum of 200% of target.

As a result of the Company’s actual operating income for fiscal 2011 of approximately $110 million, no NEO received an incentive cash bonus for fiscal 2011. However, Mr. Bauer was paid a $525,000 bonus as called for by the terms of his sign-on arrangements with the Company entered into in May 2011 and Ms. Marcus was paid a $100,000 sign-on bonus as called for the by the terms of her employment arrangements with the Company entered into in October 2011.

Long-Term Incentives – Equity Awards

The Company’s long-term incentive compensation is designed to focus our executives, including the NEOs and other members of management, on long-term performance, and to reward their contribution to our long-term growth and increase in shareholder value. Consistent with our long-standing practice to reward our associates for the long-term value they create, and to create common interests between management and our shareholders, long-term equity grants are a significant component of total compensation for our executives, including the NEOs.

During fiscal 2011, we granted time-vested and performance-based deferred stock awards under our 2005 Equity Incentive Plan (the “2005 Plan”) until our shareholders approved our 2011 Plan in May 2011. Following the adoption of the 2011 Plan, we use two types of long-term incentives, each paid in the form of shares of Common Stock: time-vested restricted stock units (“RSUs”) and performance-based RSUs (which also include a deferred pay-out component such that, if earned, performance shares are paid out on later dates). We typically award performance-based and time-vested RSUs once a year, in the first quarter of our fiscal year. For fiscal 2011, all of our senior executive officers, other than our CEO and those senior executives who commenced their employment during the year, received equity awards in a ratio of 60% performance vested and 40% time-vested. At January 28, 2012 (the end of our 2011 fiscal year), there were 2,238,922 shares available for grant under our 2011 Plan.

Time-Vested Stock Awards

In general, time-vested stock awards are subject to annual vesting in three equal installments beginning on the first anniversary of the date of the award. The three-year vesting period underscores the long-term focus of this award program and is designed to retain and motivate the NEOs and other Company executives.

During fiscal 2011, time-vested deferred stock awards were made to Mr. Bauer and Ms. Marcus in connection with their initial employment by the Company and to each of Ms. Levy and Mr. Taylor as part of our annual long-term incentive award grants to eligible employees. In addition, in fiscal 2011, Ms. Elfers received a time-vested deferred stock award under her amended employment agreement (see “CEO Compensation” below).

See the “Grants of Plan-Based Awards” table below for the number of time-vested stock awards granted to NEOs in fiscal 2011. See the “Option Exercises and Stock Vested” table below for the number of shares of time-vested stock that vested to Ms. Elfers, Ms. Levy and Mr. Taylor during fiscal 2011 arising out of prior fiscal year grants.

Performance-Based Stock Awards

Performance-based awards are used to motivate decision-making designed to achieve key business objectives. Performance-based awards ensure that payouts are tied directly to a pre-established performance measure (operating income) which is critical to the achievement of shareholder value. As mentioned earlier, the operating income measure was selected to create a strong focus on our overall profit goal and the underlying drivers of revenues and cost control. Given that the payouts under the performance-based stock awards are dependent on the achievement of an operational goal that is directly influenced by the performance of management, these awards are intended to ensure that volatility in stock price does not create an incentive for an executive to support short-term focused or higher-risk business strategies at the expense of stable, long-term growth.

For fiscal 2011, the NEOs (other than Ms. Marcus, given that she joined the Company late in the fiscal year) were granted performance-based deferred stock awards having a one-year performance cycle and, if earned based on achieving a performance target, a three-year cliff vesting in April 2014 provided that the applicable NEO is employed at that time. Mr. Bauer received his performance-based award in connection with his initial employment by the Company, Ms. Levy and Mr. Taylor received their performance-based equity awards as part of our annual long-term incentive award grants to eligible employees, and Ms. Elfers received her performance-based stock award under her amended employment agreement (see “CEO Compensation” below).

As a result of the Company’s actual operating income for fiscal 2011 of approximately $110 million, no NEO earned any performance shares for fiscal 2011.

Benefits and Perquisites

In addition to the three primary components of compensation discussed above, the Company provides its executives, including the NEOs, and other members of management, with the same employee benefits other employees receive, including matching contributions to our 401(k) plan, health insurance coverage and life insurance coverage. In addition, they receive an opportunity to participate in our deferred compensation plan, an opportunity to purchase group long-term disability coverage and supplemental disability coverage, and certain perquisites. These perquisites are modest and, for fiscal 2011, represented approximately 0.7% of our NEOs’ (other than Ms. Elfers) total compensation at target (excluding one-time relocation costs). In the case of Ms. Elfers, under her amended employment agreement, these perquisites consisted primarily of the use of a Company car and driver, as well as financial planning and tax preparation services (not to exceed $20,000 annually), payment or reimbursement for the premium cost (not to exceed $10,000 annually) of supplemental life insurance, and payment or reimbursement for the premium cost (not to exceed $25,000 annually) of supplemental long-term disability insurance. These prerequisites represented approximately 1% of Ms. Elfers’ total compensation, at target. For more information on perquisites provided to the NEOs in fiscal 2011, see the “Summary Compensation Table” below. Any personal income taxes due as a result of these perquisites are the responsibility of the NEOs – we do not provide tax gross-ups to our executives, including the NEOs (other than in connection with certain relocation expenses).

The compensation and benefits payable to the NEOs in the event of termination or a change in control are described below under “Potential Payments Upon Termination or Change in Control”. The Company’s severance programs are designed to provide our employees with fair and adequate replacement income based upon market practice. In general, the NEOs participate in the same severance programs that are available to other employees. In addition, the Compensation Committee has approved change in control severance agreements with each of our executive officers, including the NEOs (other than our CEO, who is entitled to change in control severance benefits under her amended employment agreement). These agreements are intended to achieve our objective of attracting and retaining strong talent by offering competitive compensation and protections and motivating executives to concentrate on building shareholder value. The potential payments and benefits under these various programs did not influence the decisions discussed in this CD&A regarding the setting of salary, annual bonus and long-term incentives for the NEOs since these programs serve very different purposes.

Stock Ownership Guidelines

The Board believes it is important that our directors and our CEO have, and are recognized both internally and externally as having, long-term financial interests that are aligned with those of the Company’s shareholders. Accordingly, in fiscal 2011, stock ownership guidelines were adopted for our non-employee directors and our CEO.

The guideline for our CEO provides that she is to own a number of shares of Common Stock having a value equal to three times her annual base salary, that she has five years from the adoption of the guideline to comply with the ownership requirement, and that ownership is defined to be shares owned, performance shares earned, but not delivered, and unvested time-vested stock awards. Failure to meet or, in unique circumstances, to show sustained progress toward meeting this stock ownership guideline may be a factor considered by the Compensation Committee in determining future long-term incentive equity grants and/or appropriate levels of incentive compensation.

The guideline for our non-employee directors is three times the amount of the annual cash retainer paid to these directors, calculated as of the later of the date the guideline was adopted and the date the director is elected to the Board. These directors are required to achieve the ownership guideline within three years of joining the Board, or, in the case of directors serving at the time the guideline was adopted, within three years of the date of adoption of the guideline.

Policies and Provisions Concerning Equity Grants, Recovery of Incentive Compensation and Hedging.

Equity Grant Policy. We make equity awards pursuant to our Policy Regarding Awards of Equity-Vested Incentives to Executive Officers and Other Employees (the “Equity Grant Policy”), which was adopted by our Board of Directors in 2007. The Equity Grant Policy applies to all awards of equity compensation to employees and sets forth procedures with respect to the granting, reporting, documenting and timing of awards. The Equity Grant Policy is intended to help ensure that all equity awards are made in accordance with applicable laws, are properly accounted for and disclosed, and are otherwise handled in accordance with the Board’s intentions and good business practices. Subject to oversight by the Board, the Compensation Committee is charged with supervising the application by management of the Equity Grant Policy.

Under the Equity Grant Policy, all awards must be approved by the Compensation Committee, which must approve the recipient, the number of shares involved in the award (or a formula for determining the number of shares) and all other material terms before the award is given effect, except that, as permitted by the Equity Grant Policy, the Compensation Committee has delegated the granting of equity awards to associates other than executive officers or a member of the Board to a committee of three senior executive officers who, during fiscal 2011, consisted of our CEO, Senior Vice President, Human Resources and Senior Vice President, General Counsel.

Recovery (“Clawback”) of Incentive Compensation. Our 2011 Plan provides that an equity award agreement adopted by the Compensation Committee may provide for the recovery (“clawback”) of incentive compensation awards under the 2011 Plan in certain circumstances. The Compensation Committee has adopted an equity award agreement under the 2011 Plan which provides that, in the event of a restatement of our financial statements due to a material noncompliance with financial reporting requirements, awardees are required to promptly return to us any compensation received by them under the award agreements which is in excess of what they would have been received if the compensation had been calculated using the restated results.

Under Section 304 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), if the Company is required to prepare an accounting restatement due to a material noncompliance, as a result of misconduct, with any financial reporting requirement under the securities laws, our Chief Executive Officer and Chief Financial Officer must reimburse us for any bonus or other incentive based or equity-based compensation received by them during the 12-month period following the first public issuance or filing with the SEC (whichever first occurs) of the document embodying that restatement, and any profits realized by them from the sale of the Company’s securities during that 12-month period. In the event of any future restatement, we will rely on an evaluation by the Board, after receiving advice of counsel, as to whether the circumstances giving rise to any restatement of the Company’s financial statements warrant our seeking to recover any compensation from executives.

Under Section 954 of Dodd-Frank, the SEC is to direct national securities exchanges to prohibit the listing of any security of an issuer if that issuer fails to develop and implement a policy providing that, in the event that the issuer is required to prepare an accounting restatement due to the material noncompliance of the issuer with any financial reporting requirement under the securities laws, the issuer will recover from any current or former executive officer of the issuer who received incentive based compensation during the three-year period preceding the date on which the issuer is required to prepare an accounting statement, based on erroneous data, in excess of what would have been paid to the executive officer under the accounting restatement. SEC rule making, and the related issuance of listing rules by national securities exchanges, is required before Section 954 of Dodd-Frank will become operable.

Hedging Policy. Section 955 of Dodd-Frank directs the SEC to adopt rules concerning proxy statement disclosure of whether employees and directors of public companies are permitted to purchase financial instruments to hedge or offset any decrease in market value of shares granted by the public company as compensation or otherwise held by such person. SEC rule making is required before Section 955 of Dodd-Frank will become operable.

The Company has a policy prohibiting hedging and related matters (which policy will be reviewed following future SEC rule making in connection with Section 955 of Dodd-Frank). The Company’s Insider Trading Policy provides that:

“No director, officer or associate may trade in derivatives of The Children’s Place stock (other than by exercising an option granted by the Company to the holder to purchase stock). That is, puts, calls, and other financial derivatives may not be purchased or sold. No financial transactions may be entered into which could “lock in” the price of The Children’s Place stock, such as a hedging transaction. In addition, “short sales” of The Children’s Place stock (a sale of securities which are not then owned), including a “sale against the box” (a sale with delayed delivery) are prohibited. Directors, officers and associates are also prohibited from holding The Children’s Place securities in a margin account that permits the sale of The Children’s Place securities should the value of the account decline.”

Change in Control Arrangements.

For a discussion of our change in control arrangements, see “CEO Employment Agreement” and “Change in Control Agreements” below.         

Tax and Accounting Considerations

Section 162(m) of the Code limits the tax deductibility of certain compensation paid to NEOs. This provision disallows the deductibility of certain compensation to our NEOs in excess of $1 million per year unless it is considered performance-vested compensation under the Code. We generally endeavor to pay compensation to the NEOs that is tax deductible to the Company under Section 162(m) of the Code; however, we may forgo any or all of the tax deduction if we believe it to be in our best long-term interests and that of our shareholders. The Company believes that all performance-based long-term incentives and annual incentives granted to NEOs qualify as performance-based compensation under Section 162(m) of the Code, but that time-vested long-term incentives and guaranteed bonuses granted to them do not.         

Other provisions of the Code can also affect compensation decisions. Section 409A of the Code, which governs the form and timing of payment of deferred compensation, imposes sanctions, including a 20% penalty and an interest penalty, on the recipient of deferred compensation that does not comply with Section 409A. The Compensation Committee takes into account the potential implications of Section 409A in determining the form and timing of compensation awarded to executives and strives to structure any nonqualified deferred compensation plans or arrangements to be exempt from or to comply with the requirements of Section 409A.

Section 280G of the Code disallows a company’s tax deduction for payments received by certain individuals in connection with a change in control to the extent that the payments exceed an amount approximately three times their average annual compensation and Section 4999 of the Code imposes a 20% excise tax on those payments. The Compensation Committee takes into account the potential implications of Section 280G in determining potential payments to be made to executives in connection with a change in control. Nevertheless, to the extent that certain payments upon a change in control are classified as excess parachute payments, such payments may not be deductible pursuant to Section 280G.

The Company does not provide tax gross-ups for any “golden parachute” excise tax payable under Sections 280G and 4999 of the Code. Rather, upon a termination of employment in connection with a change in control that gives rise to the payment of severance, the NEOs and other executives party to the Company’s change in control severance agreements (and Ms. Elfers pursuant to her amended employment agreement) will receive the greater of (i) the largest portion of the payment that is not subject to a “golden parachute” excise tax under Sections 280G and 4999 of the Code or (ii) the full amount of the payment if the net-after-excise tax amount retained by the executive would exceed the amount in clause (i). See “Employment Agreement” and “Change in Control Agreements” below.

CEO Compensation

The Company and Jane Elfers, our CEO, entered into a three-year employment agreement in December 2009. In March 2011, the Company and Ms. Elfers entered into an amended and restated employment agreement (the “amended employment agreement”) for an extended term expiring on April 15, 2015, with automatic one-year renewals unless either party gives the other 90 days written notice prior to the expiration of a term. In connection with the amended employment agreement, the Compensation Committee worked with Hay Group, our independent compensation consultant at the time, to analyze the compensation arrangements for Ms. Elfers, including as compared to CEOs in our Peer Group. In March 2012, the amended employment agreement was further amended. The discussion below under the heading “CEO Employment Agreement” summarizes this amendment, including to increase Ms. Elfers’ base salary to $1,100,000 annually.

The amended employment agreement was approved by the Board following its receipt of a recommendation for approval from the Compensation Committee. In making its recommendation of approval to the Board, the Compensation Committee took into account the significant progress the Company had made during Ms. Elfers’ tenure on our five key growth initiatives, as well as the depth of experience and talent of the senior management team that Ms. Elfers had assembled since joining the Company in January 2010. The Compensation Committee (and the Board) determined that it was important and in the best interests of our customers, employees and shareholders to provide both for continuity in strong and effective leadership and for appropriate performance-based and other incentives to motivate and retain that leadership. Further, in recognition of our TSR performance and the substantial increase in our stock price experienced during Ms. Elfers’ tenure (see “Executive Summary” above), as well as the significant progress on the Company’s growth initiatives, on April 20, 2012, the Compensation Committee granted to Ms. Elfers 100,000 time-vested RSUs. These RSUs will vest as to one-third (1/3) of the number of shares covered thereby on the first, second and third anniversaries of the date of grant and contain the same terms as Ms. Elfers’ other time-vested equity awards.

Set forth below under the heading “CEO Employment Agreement” is a discussion of certain of the terms contained in the amended employment agreement. These terms include an extension of the term of Ms. Elfers’ employment with us to address the Compensation Committee’s (and the Board’s) continuity objective. These terms also include the grant and agreement to grant to Ms. Elfers time-vested stock awards to address the retention objective, and performance-based stock awards to address the motivation objective. In keeping with the Compensation Committee’s emphasis on the long-term, long-term equity incentives, at target, comprised approximately 82% of Ms. Elfers’ annual compensation under the amended employment agreement in fiscal 2011. The remaining approximately 18% is comprised of base salary, cash bonus, at target, benefits and perquisites. Also, in keeping with our pay-for-performance philosophy, Ms. Elfers’ performance-based stock awards, at target, comprise two-thirds (2/3) of all stock awards (performance-based and time-vested) required to be granted to Ms. Elfers over the term of the amended employment agreement pursuant to its terms. The base salary and annual cash bonus provided for in the amended employment agreement were, at the time the amended employment agreement was entered into, at the median of that paid to CEOs in our Peer Group.

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis and, based on such review and discussion, recommended to our Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for fiscal 2011 and this Proxy Statement.

The foregoing Compensation Committee report has been submitted by the members of the Compensation Committee: Sally Frame Kasaks (Chair), Robert Fisch, Joseph Gromek and Norman Matthews.

Summary Compensation Table

The following table shows the compensation of the Company’s President and Chief Executive Officer (our principal executive officer), our principal financial officers, and the three other most highly compensated executive officers (NEOs) for fiscal 2011 and, to the extent any of these officers was an NEO in the prior years, for fiscal 2010 and fiscal 2009.

Notes to the Summary Compensation Table

(1)         Includes amounts deferred under our Deferred Compensation Plan and 401(k) Plan.

(2)         The amounts shown relate to time-vested stock awards and performance-based stock awards. The stock award grant date fair value for both time-vested and performance-based stock awards is determined in accordance with “Compensation – Stock Compensation” topic of the Financial Accounting Standards Board’s Accounting Standards Codification, in the case of performance-based stock awards, based on the number of shares probable of vesting multiplied by the fair market value of our Common Stock on the grant date. For fiscal 2011, at the maximum possible vesting values, the performance-based stock awards set forth in this column, computed on the basis of the closing sales price of our Common Stock on the grant date, were $14,999,967, $3,136,350, $1,686,240, and $295,092 for Ms. Elfers, Mr. Bauer, Ms. Levy and Mr. Taylor, respectively. Ms. Marcus did not receive a performance-based stock award for fiscal 2011. For fiscal 2010, at the maximum possible vesting value, the performance-based stock award set forth in this column, computed on the basis of the average of the high and low selling price of our Common Stock on the grant date, was $963,050 for Ms. Levy. For fiscal 2009, at the maximum possible vesting value, the performance-based stock awards set forth in this column, computed on the basis of the average of the high and low selling price of our Common Stock on the grant date, was $7,157,788, for Ms. Elfers. For more information, see Note 3 – Stock-Based Compensation in the accompanying Notes to Consolidated Financial Statements filed in our Annual Report on Form 10-K for our 2011 fiscal year.

(3)         The amounts shown are bonuses earned in accordance with the annual bonus plan approved by the Compensation Committee at the beginning of each respective fiscal year. Amounts shown are for services performed during the fiscal year and paid during the subsequent fiscal year.

(4)         Ms. Elfers commenced serving as our President and Chief Executive Officer on January 4, 2010.

(5)         The amount shown includes $57,429 for a driver, $16,346 for driver reimbursements, $26,199 for a leased vehicle, $1,067 for legal fees, $1,650 for tax preparation services, $9,251 for life insurance premiums, and $6,417 in other reimbursements.

(6)         The amount shown includes $93,776 for a driver, $12,380 for driver reimbursements, $29,928 for a leased vehicle, $22,094 for legal fees, $3,500 for tax preparation services, and $1,284 for life insurance premiums.

(7)         The amount shown includes $5,192 for a driver and $7,399 for life insurance premiums.

(8)         Mr. Bauer commenced serving as Chief Operating Officer on May 16, 2011.

(9)         The amount shown includes $159,835 for relocation expenses, $133,010 for relocation tax gross-ups and $804 for life insurance premiums.

(10)        Ms. Levy commenced serving as our Senior Vice President, Merchandising on June 1, 2010. Ms. Levy was subsequently promoted to Executive Vice President, Merchandising and Design on November 8, 2010.

(11)        The amount shown includes $118,975 for relocation expenses, $99,007 for relocation tax gross-ups and $1,004 for life insurance premiums.

(12)        The amount shown is for life insurance premiums.

(13)        Ms. Marcus commenced serving as our Senior Vice President, Chief Marketing Officer on November 16, 2011.

(14)        The amount shown includes $40,000 for relocation and $124 for life insurance premiums.

(15)        Mr. Taylor commenced serving as Interim Principal Financial Officer on February 10, 2011.

(16)        The amount shown includes $6,197 for matching contributions under the Company’s 401(k) plan and $310 for life insurance premiums.

(17)        Ms. Riley resigned from her positions with the Company (which included acting as the Chief Financial Officer) on February 10, 2011.

(18)        The amount shown includes $1,603 for matching contributions under the Company’s 401(k) plan, $513,614 for severance benefits, and $8,454 for life insurance premiums.

(19)        The amount shown includes $6,166 for matching contributions under the Company’s 401(k) plan and $1,382 for insurance premiums.

(20)        The amount shown includes $5,611 for matching contributions under the Company’s 401(k) plan and $513 for insurance premiums.

Grants of Plan-Based Awards

The following table shows information about the non-equity incentive awards, equity incentive awards and other stock awards that are reflected in the Summary Compensation Table for fiscal 2011 and that were granted to the NEOs who received such awards during fiscal 2011.

Notes to the Grants of Plan-Based Awards Table

(1)         Amounts reflect bonuses available to be earned in accordance with our annual bonus plan approved by the Compensation Committee at the beginning of fiscal 2011. As a result of the Company’s actual performance, no bonuses were paid for fiscal 2011 with the exception of (i) a $525,000 bonus paid to Mr. Bauer which the Company agreed to pay as part of his sign-on employment arrangements, and (ii) a $100,000 signing bonus paid to Ms. Marcus which the Company agreed to pay as part of her employment arrangements.

(2)         Reflects the aggregate grant date fair value of the awards, computed in accordance with “Compensation – Stock Compensation” topic of the Financial Accounting Standards Board’s Accounting Standards Codification based on the fair value of our Common Stock on the date of grant. The estimated fair value of the performance-based awards is based upon the probable outcome of the performance conditions on the date that each award was communicated to each of our NEOs for the performance period and the fair market value of our Common Stock on that date.

(3)         Awarded pursuant to the terms of a performance stock award granted under the Company’s 2005 Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Ms. Elfers based upon the achievement of the performance target for fiscal 2011. Earned performance shares would have vested in April 2014, provided Ms. Elfers was employed by the Company on February 1, 2014. As a result of the Company’s actual performance in fiscal 2011, no performance shares were earned under this award.

(4)         Awarded pursuant to the terms of a deferred stock award granted under the Company’s 2005 Plan. These deferred shares vest 50%, 25% and 25% on the first, second and third anniversaries of the award date, provided Ms. Elfers is employed by the Company on the respective vesting dates.

(5)         Awarded pursuant to the terms of a performance stock award granted under the Company’s 2005 Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Mr. Bauer based upon the achievement of the performance target for fiscal 2011. Earned performance shares would have vested on the third anniversary of the award date, provided Mr. Bauer was employed by the Company on that date. As a result of the Company’s actual performance in fiscal 2011, no performance shares were earned under this award.

(6)          Awarded pursuant to the terms of a deferred stock award granted under the Company’s 2005 Plan. Of the deferred shares awarded, one-third vest on each of the first, second and third anniversaries of the award date provided Mr. Bauer is employed by the Company on the respective vesting dates.

(7)         Awarded pursuant to the terms of a performance stock award granted under the Company’s 2005 Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Ms. Levy based upon the achievement of the performance target for fiscal 2011. Earned performance shares would have vested on the third anniversary of the award date, provided Ms. Levy was employed by the Company on that date. As a result of the Company’s actual performance in fiscal 2011, no performance shares were earned under this award.

(8)         Awarded pursuant to the terms of a deferred stock award granted under the Company’s 2005 Plan. Of the deferred shares awarded, one-third vest on each of the first, second and third anniversaries of the award date provided Ms. Levy is employed by the Company on the respective vesting dates.

(9)          Awarded pursuant to the terms of a time-vested RSU award granted under the Company’s 2011 Plan. Of the RSUs awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Ms. Marcus is employed by the Company on the respective vesting dates.

(10)          Awarded pursuant to the terms of a performance stock award granted under the Company’s 2005 Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Mr. Taylor based upon the achievement of the performance target for fiscal 2011. Earned performance shares would have vested on the third anniversary of the award date, provided Mr. Taylor was employed by the Company on that date. As a result of the Company’s actual performance in fiscal 2011, no performance shares were earned under this award.

(11)        Awarded pursuant to the terms of a deferred stock award granted under the Company’s 2005 Plan. Of the deferred shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Taylor is employed by the Company on the respective vesting dates.

Outstanding Equity Awards at Fiscal Year-End

The following table contains information about equity awards held by the NEOs as of January 28, 2012 (the end of our 2011 fiscal year).

Notes to the Outstanding Equity Awards at Fiscal Year-End Table

(1)         Calculated based on $50.05 per share, which was the closing market price per share of the Company’s Common Stock as reported on the NASDAQ Stock Market on January 27, 2012.

(2)         Represents the unvested portion of a deferred stock award of 93,255 shares of Common Stock granted to Ms. Elfers on January 4, 2010. Of the shares awarded, one-third vested on each of the first and second anniversaries of the award date, and one-third vests on the third anniversary of the award date, provided Ms. Elfers is employed by the Company on the vesting date, subject to the terms and conditions of the 2005 Plan.

(3)         Represents the unvested portion of a deferred stock award of 100,725 shares of Common Stock granted to Ms. Elfers on March 28, 2011. Of the shares awarded, 50% vest on the first anniversary of the award date and 25% vest on each of the second and third anniversaries of the award date, provided Ms. Elfers is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(4)         The amount shown reflects the target number of shares of Common Stock which would have been issued to Ms. Elfers pursuant to a performance stock award granted to her on March 28, 2011 based on the achievement of a performance threshold fiscal 2011. Of the performance shares awarded, any shares earned would have vested in April 2014, provided Ms. Elfers was employed by the Company on the vesting date, subject to the terms and conditions of the 2005 Plan. In March 2012, the Compensation Committee determined that the performance threshold for fiscal 2011 was not met, and, accordingly, Ms. Elfers did not earn any of these performance shares.

(5)         Represents the unvested portion of deferred stock awards totaling 22,000 shares of Common Stock granted to Mr. Bauer on May 17, 2011. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Bauer is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(6)         The amount shown reflects the target number of shares of Common Stock which would have been issued to Mr. Bauer pursuant to a performance stock award granted to him on May 17, 2011 based on the achievement of a performance threshold for fiscal 2011. Of the performance shares awarded, any shares earned would have vested on the third anniversary of the award date, provided Mr. Bauer was employed by the Company on the vesting date, subject to the terms and conditions of the 2005 Plan. In March 2012, the Compensation Committee determined that the performance threshold for fiscal 2011 was not met, and, accordingly, Mr. Bauer did not earn any of these performance shares.

(7)         Represents the unvested portion of a deferred stock award of 5,000 shares of Common Stock granted to Ms. Levy on June 1, 2010. Of the deferred shares awarded, one-third vested on the first anniversary of the award date, and one-third vests on each of the second and third anniversaries of the award date, provided Ms. Levy is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(8)         Represents the unvested portion of a performance stock award of 3,500 shares of Common Stock granted to Ms. Levy on June 1, 2010. The award amount was based upon the achievement of a performance threshold for fiscal 2010 and certified by the Compensation Committee in March 2011. Of the performance shares awarded, one-third vested and were delivered on the first anniversary of the award date, and one-third vests and will be delivered on each of the second and third anniversaries of the award date, provided Ms. Levy is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(9)          Represents the unvested portion of a deferred stock award of 5,000 shares of Common Stock granted to Ms. Levy on November 29, 2010. Of the deferred shares awarded, one-third vested on the first anniversary of the award date and one-third vest on each of the second and third anniversaries of the award date provided Ms. Levy is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(10)        Represents the unvested portion of a time-vested RSU award of 8,000 shares of Common Stock granted to Ms. Levy on April 15, 2011. Of the shares awarded, on-third vest on each of the first, second and third anniversaries of the award date, provided Ms. Levy is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Plan.

(11)        The amount shown reflects the target number of shares of Common Stock which would have been issued to Ms. Levy pursuant to a performance stock award granted to her on April 15, 2011 based on the achievement of a performance threshold for fiscal 2011. Of the performance shares awarded, any shares earned would have vested on the third anniversary of the award date, provided Ms. Levy was employed by the Company on the vesting date, subject to the terms and conditions of the 2005 Plan. In March 2012, the Compensation Committee determined that the performance threshold for fiscal 2011 was not met, and, accordingly, Ms. Levy did not earn any of these performance shares.

(12)        Represents the unvested portion of a time-vested RSU award of 20,000 shares of Common Stock granted to Ms. Marcus on December 1, 2011. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Ms. Marcus is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Plan.

(13)        Represents the unvested portion of a deferred stock award of 2,500 shares of Common Stock granted to Mr. Taylor on September 21, 2009. Of the deferred shares awarded, one-third vested on the first and second anniversaries of the award date, and one-third vests on the third anniversary of the award date, provided Mr. Taylor is employed by the Company on the vesting date, subject to the terms and conditions of the 2005 Plan.

(14)        Represents the unvested portion of a deferred stock award of 1,600 shares of Common Stock granted to Mr. Taylor on September 21, 2010. Of the deferred shares awarded, one-third vested on the first anniversary of the award date, and one-third vests on each of the second and third anniversaries of the award date, provided Mr. Taylor is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(15)        Represents the unvested portion of a deferred stock award of 2,400 shares of Common Stock granted to Mr. Taylor on April 15, 2011. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Taylor is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(16)        The amount shown reflects the target number of shares of Common Stock which would have been issued to Mr. Taylor pursuant to a performance stock award granted to him on April 15, 2011 based on the achievement of a performance threshold for fiscal 2011. Of the performance shares awarded, any shares earned would have vested on the third anniversary of the award date, provided Mr. Taylor was employed by the Company on the vesting date, subject to the terms and conditions of the 2011 Plan. In March 2012, the Compensation Committee determined that the performance threshold for fiscal 2011 was not met, and accordingly, Mr. Taylor did not earn any of these performance shares.

Option Exercises and Stock Vested

The following table contains information about the number of shares acquired and value realized during fiscal 2011 upon the exercise or vesting of equity awards previously granted to each of the NEOs.

Notes to the Option Exercises and Stock Vested Table

(1)         Represents the aggregate dollar amount realized based upon the fair market value of the Company’s Common Stock on the vesting date of each award.

(2)         Represents the second partial vesting of 93,255 shares of Common Stock granted to Ms. Elfers pursuant to a deferred stock award on January 4, 2010, one-third of which are deliverable to Ms. Elfers on each of the first, second and third anniversaries of the date of grant, provided that Ms. Elfers is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(3)         Represents the first partial vesting of 5,000 shares of Common Stock granted to Ms. Levy pursuant to a deferred stock award on June 1, 2010, one-third of which are deliverable to Ms. Levy on each of the first, second and third anniversaries of the date of grant, provided Ms. Levy is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(4)         Represents the first partial vesting of 3,500 shares of Common Stock earned by Ms. Levy pursuant to a performance-based stock award granted to Ms. Levy on June 1, 2010, one-third of which are deliverable to Ms. Levy on each of the first, second and third anniversaries of the date of grant, provided Ms. Levy is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(5)         Represents the first partial vesting of 5,000 shares of Common Stock granted to Ms. Levy pursuant to a deferred stock award on November 29, 2010, one-third of which are deliverable to Ms. Levy on each of the first, second and third anniversaries of the date of grant, provided Ms. Levy is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.

(6)         Represents the final partial vesting of 6,500 shares of Common Stock granted to Mr. Taylor pursuant to deferred stock awards on July 14, 2008, one-third of which are deliverable to Mr. Taylor on each of the first, second and third anniversaries of the date of grant, provided Mr. Taylor is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2005 Plan.