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UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN

PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities
Exchange Act of 1934 (Amendment

(Amendment No.     )

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xþDefinitive Proxy Statement

¨oDefinitive Additional Materials

¨oSoliciting Material Pursuant to §240.14a-12

Scott’s Liquid Gold, Gold–Inc.

(Name of Registrant as Specified In Its Charter)

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SCOTT’S LIQUID GOLD-INC.

4880 Havana Street

Denver, Colorado 80239

NOTICE OF ANNUAL MEETING OF

SHAREHOLDERS

To Be Held May 2, 2007

18, 2011

TO OUR SHAREHOLDERS:

The Annual Meeting of Shareholders of Scott’s Liquid Gold-Inc., a Colorado corporation (the “Company”), will be held at 9:00 a.m., Mountain Time, on Wednesday, May 2, 200718, 2011 at the Company’s offices, 4880 Havana Street, Denver, Colorado 80239 for the purpose of considering and acting upon the following:

 (1)The election of sevensix directors;

 (2)An increase in the number of shares of common stock available under the Company’s 2005 Stock Incentive Plan from 1,500,000 to 3,000,000 shares; and

(3)Such other matters as may properly come before the meeting or any adjournment thereof.

Only shareholders of record at the close of business on March 13, 200729, 2011 are entitled to notice of and to vote at the meeting.

Important notice regarding availability of proxy materials for the Annual Meeting of Shareholders to be held on May 18, 2011 or any adjournment thereof: The Proxy Statement for the Annual Meeting, the form of proxy and the Annual Report on Form 10-K for the year ended December 31, 2010 are available at the Company’s website atwww.scottsliquidgold.com under the “Company & Investor Relations” tab.

BY ORDER OF THE BOARD OF DIRECTORS

Dennis P. Passantino

/s/ Jeffrey R. Hinkle

Jeffrey R. Hinkle

Corporate Secretary

Denver, Colorado
March 28, 2007

April 20, 2011

THE FORM OF PROXY IS ENCLOSED. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE PREPAID, ADDRESSED ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.

 

TABLE OF CONTENTS

Page

VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS

 1

SECURITY OWNERSHIP OF BENEFICIAL OWNERS

   2  

SECURITY OWNERSHIP OF MANAGEMENT

 3

PROPOSAL 1: ELECTION OF DIRECTORS

   3  

ELECTION OF DIRECTORSBOARD LEADERSHIP STRUCTURE AND MANAGEMENT INFORMATIONROLE IN RISK OVERSIGHT

4
   5  
Nominees
4

EXECUTIVE OFFICERS

   6  
Directors’ Meetings and Committees
5

DIRECTORS’ MEETINGS AND COMMITTEES

   6  
Nomination Process
7

NOMINATION PROCESS

   8  
Director Attendance at Company Annual Meetings
7

DIRECTOR ATTENDANCE AT COMPANY ANNUAL MEETINGS

   9  
Stockholder Communications with the Board
7

SHAREHOLDER COMMUNICATIONS WITH THE BOARD

   9  
Code of Business Conduct and Ethics
8

CODE OF BUSINESS CONDUCT AND ETHICS

   9  
Compensation Committee Interlocks and Insider Participation
8

EXECUTIVE COMPENSATION

   9  
Executive Compensation
9

STOCK PLANS

   11  
Stock Plans
11

COMPENSATION OF DIRECTORS

   14  
Compensation of Directors
13

PROPOSAL 2: AMENDMENT TO STOCK INCENTIVE PLAN

   16  

CERTAIN TRANSACTIONS

14
   22  

SECTION 16 REPORTS

14
   22  

COMPANY ACCOUNTANTS

14
   23  
General
14

SHAREHOLDER PROPOSALS

   
Disclosure of Auditor Fees
16
24  
Policy on Pre-Approval of Audit and Non-Audit Services
16

SHAREHOLDER PROPOSALS

16
20062010 ANNUAL REPORT ON FORM 10-KSB10-K

16
   24  

SOLICITATION OF PROXIES

17
   24  

OTHER BUSINESS

  1725

APPENDIX A

APPENDIX B

FORM OF PROXY

 

i

SCOTT’S LIQUID GOLD-INC.
4880 Havana Street

Denver, Colorado 80239

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 2, 2007

18, 2011

The enclosed Proxyproxy is solicited by and on behalf of the Board of Directors (the “Board”) of Scott’s Liquid Gold-Inc., a Colorado corporation (the “Company”), for use at the Company’s Annual Meeting of Shareholders to be held at 9:00 a.m., Mountain Time, on Wednesday May 2, 200718, 2011 at the Company’s offices, 4880 Havana Street, Denver, Colorado 80239, or any adjournment thereof. This Proxy Statement, and the accompanying form of Proxyproxy and a copy of the Annual Report on Form 10-K for the year ended December 31, 2010 are first being mailed or given to the shareholders of the Company on or about March 28, 2007.

April 22, 2011.

Any shareholder signing and mailing the enclosed Proxyproxy may revoke it at any time before it is voted by giving written notice of the revocation to the Company’s Corporate Secretary, by voting in person at the meeting or by filing at the meeting a later executed proxy.

VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS

All voting rights are vested exclusively in the holders of the Company’s $0.10 par value common stock. Each share of the Company’s common stock is entitled to one vote. Cumulative voting in the election of directors is not permitted. Holders of a majority of shares entitled to vote at the meeting, when present in person or by proxy, constitute a quorum. On March 13, 2007,29, 2011, the record date for shareholders entitled to vote at the meeting, the Company had 10,533,00010,898,500 shares of its $0.10 par value common stock issued and outstanding.

When a quorum is present, in the election of directors, those sevensix nominees having the highest number of votes cast in favor of their election will be elected to the Company’s Board of Directors.Board. Consequently, any shares not voted (whether by abstention, broker non-vote or otherwise) have no impact in the election of directors except to the extent the failure to vote for an individual results in another individual receiving a larger number of votes.

1 With respect to any other matter, unless a greater number of votes is required by law, a matter is approved by the shareholders if the votes cast in favor of the matter exceed the votes cast in opposition. Any shares not voted (whether by abstention, broker non-vote or otherwise) have no impact on the vote for such other matters, if any, so long as a quorum is present.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following persons are the only persons known to the Company who on March 13, 2007,31, 2011, owned beneficially more than 5% of the Company’s common stock, its only class of outstanding voting securities:
         
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
Mark E. Goldstein
  2,811,407(1)(2)  26.1%
4880 Havana Street
Denver, Colorado 80239		        
         
Scott’s Liquid Gold-Inc.
  1,205,331(3)  11.4%
Employee Stock
Ownership Plan
4880 Havana Street
Denver, Colorado 80239		        
         
Yorktown Avenue Capital, LLC
  1,429,530(4)  13.6%
and Boston Avenue Capital, LLC
415 South Boston, 9th Floor
Tulsa, Oklahoma 74103
        

Title of Class

(1)

Name and Address of Beneficial Owner

  Amount
and Nature
of Beneficial
Ownership		Percent
of Class

Mark E. Goldstein

4880 Havana Street

Denver, Colorado 80239

    Common Stock

2,685,578(1)(2)24.4% 

Scott’s Liquid Gold-Inc.

Employee Stock

Ownership Plan

4880 Havana Street

Denver, Colorado 80239

    Common Stock

1,263,820(3)11.6% 

Yorktown Avenue Capital, LLC

and Boston Avenue Capital, LLC

415 South Boston, 9th Floor

Tulsa, Oklahoma 74103

    Common Stock

1,461,530(4)13.4% 

Timothy Stabosz

1307 Monroe Street

Laporte, IN 46350

    Common Stock

541,936(5)5% 

(1)Includes 2,126,473 shares held by the Goldstein Family Partnership, Ltd., a limited partnership of which the general partner is the Goldstein Family Corporation and whose limited partners include Mark E. Goldstein, his children, a sister, and certain other relatives. Mr. Goldstein is the sole director and sole executive officer of the Goldstein Family Corporation, and he owns 100% of the outstanding stock of the Goldstein Family Corporation. Mr. Goldstein has the sole voting and disposition powers with respect to these shares of the Company owned by the Goldstein Family Partnership, Ltd. Also includes 219,94294,113 shares underlying stock options granted by the Company and exercisable within 60 days, and 86,670 shares held by Mr. Goldstein’s minor children. Includes 52,600 shares held jointly by Mr. Goldstein and his wife,spouse, and does not include 25,890 shares of the Company’s common stock owned by Mr. Goldstein’s spouse, and 500 shares underlying stock options granted on March 23, 2010 by the Company to Mr. Goldstein’s spouse as an employee and which vest over 48 months, as to which Mr. Goldstein disclaims any beneficial ownership.
(2)Does not include 119,863140,808 shares held by the Company’s Employee Stock Ownership Plan attributable to Mr. Goldstein’s vested interest in the Plan as of December 31, 2006.2010.
(3)The five-person committee administering the Employee Stock Ownership Plan directs the voting of shares held under such Plan. The Company’s four executive officers are members of this five-person committee.
(4)Yorktown Avenue Capital, LLC and Boston Avenue Capital, LLC are limited liability companies managed by Value Fund Advisors, LLC. This information is based upon a Schedule 13D filedfilings by Yorktown Avenue Capital, LLC and Boston Avenue Capital, LLC with the Securities and Exchange Commission on February 1, 2007.(the “SEC”).

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(5)This information is based upon a filing by Mr. Stabosz with the SEC.

SECURITY OWNERSHIP OF MANAGEMENT

The following table shows as of March 13, 2007,31, 2011, the shares of the Company’s common stock beneficially owned by each director and executive officer of the Company and the shares beneficially owned by all of the directors and executive officers as a group:

         
  Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership (1) of Class
Mark E. Goldstein  2,811,407(2)(3)(4)  26.1%
Jeffrey R. Hinkle  350,320(3)(4)(5)  3.3%
Jeffry B. Johnson  236,442(3)(4)(6)  2.2%
Dennis P. Passantino  229,858(3)(4)  2.1%
Carl A. Bellini  93,383(3)  .9%
Dennis H. Field  77,667(3)  .7%
Gerald J. Laber  91,250(3)  .9%
All Directors and executive officers as a Group (seven persons)  3,890,327(3)(4)  33.4%

Title of Class

(1)

Name of Beneficial Owner

 Amount and
Nature of
Beneficial
Ownership (1)		Percent
of Class

Mark E. Goldstein

2,685,578(2)(3)(4)24.4% 

Jeffrey R. Hinkle

221,303(3)(4)(5)2.0% 

Dennis P. Passantino

153,082(3)(4)1.4% 

Brian L. Boberick

41,620(3)(4)0.4% 

Carl A. Bellini

94,998(3)0.9% 

Dennis H. Field

142,823(3)1.3% 

Jeffry B. Johnson

207,664(3)(4)(6)1.9% 

Gerald J. Laber

58,126(3)0.5% 

All Directors and executive officers as a Group (eight persons)

3,523,705(3)(4)31.1% 

(1)Beneficial owners listed have sole voting and disposition power with respect to the shares shown unless otherwise indicated.
(2)For information regarding Mr. Goldstein’s beneficial ownership of shares, see footnote 1 under the table in “Voting Securities and Principal Shareholders.“Security Ownership of Certain Beneficial Owners.”
(3)For each named person, includes the following number of shares underlying stock options granted by the Company and exercisable within 60 days: 219,94294,113 for Mr. Goldstein; 228,44299,425 for Mr. Hinkle; 199,442103,082 for Mr. Passantino; 39,620 for Mr. Boberick; 88,698 for Mr. Bellini; 139,323 for Mr. Field; 89,175 for Mr. Johnson; 199,85858,126 for Mr. Passantino; 87,083Laber; and 711,562 for Mr. Bellini; 77,667 for Mr. Field,directors and 91,250 for Mr. Laber.executive officers as a group.
(4)Does not include shares owned by the Company’s Employee Stock Ownership Plan under which, at December 31, 2006,2010, Mark E. Goldstein had a vested interest in 119,863140,808 shares, Jeffrey R. Hinkle had a vested interest in 79,46596,943 shares, Jeffry B. Johnson had a vested interest in 75,323 shares, and Dennis P. Passantino had a vested interest in 62,02177,081 shares, and Brian L. Boberick had a vested interest in 25,090 shares.
(5)Of Mr. Hinkle’s shares, 121,878 shares are held in a revocable trust of which Mr. Hinkle and his wifespouse are co-trustees.
(6)Of Mr. Johnson’s shares, 32,000 are held jointly by Mr. Johnson and his wife.spouse.

There has been no change in control of the Company since the beginning of the last fiscal year, and there are no arrangements known to the Company, including any pledge of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

Because of his beneficial ownership of the Company’s stock and his positions as President, Chief Executive Officer and Chairman, Mark E. Goldstein may be considered a parent (i.e., a controlling person) of the Company.

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PROPOSAL 1: ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
Nominees

The Company’s Board currently consists of Directors consists currentlysix directors. On April 15, 2011, Mr. Passantino resigned from the Board and the Board reduced the number of seats from seven directors. to six following such resignation. Mr. Passantino will continue to serve as the Company’s Vice President of Operations.

Unless authority to vote is withheld, the persons named in the enclosed form of proxy will vote the shares represented by such proxy for the election of the sevensix nominees for director named below. If, at the time of the Meeting,meeting, any of these nominees shall have become unavailable for any reason to serve as a

director, the persons entitled to vote the proxy will vote for such substitute nominee or nominees, if any, as they determine in their discretion. If elected, the nominees for director will hold office until the next annual meeting of shareholders or until their successors are elected and qualified. The nominees for director, each of whom has consented to serve if elected, are as follows:

           
Name of Nominee and     Director Principal Occupation for
Position in the Company Age Since Last Five Years
Mark E. Goldstein
(Chairman of the Board, President and Chief Executive Officer)
  51   1983  Chairman of the Board of the Company since February 22, 2000, President and Chief Executive Officer of the Company since August, 1990. From 1982 to 1990, Vice President-Marketing of Company. Employed by the Company since 1978.
           
Jeffrey R. Hinkle
(Vice President — Marketing and Sales)		  53   2000  Vice President-Marketing and Sales of the Company since February 2000. Vice President of Marketing and Sales for the Company’s subsidiaries from November 1992 to 2000. Employed by the Company since 1981.
           
Jeffry B. Johnson
(Treasurer and Chief Financial Officer)		  61   2000  Treasurer and Chief Financial Officer of the Company since November 2000. From 1981 to 2000, Controller of Company. Employed by the Company since 1976.
           
Dennis P. Passantino
(Vice President — Operations and Corporate Secretary)		  51   2002  Vice President – Operations and Corporate Secretary since November 2002. From 1991 to 2002, Operations Manager. Employed by the Company since 1981.
           
Carl A. Bellini  73   2000  Management Consultant since 1997. From 1987 to 1997, Executive Vice President and Chief Operating Officer of Revco D.S., Inc. (a large drug store chain).
           
Dennis H. Field  74   1991  Management Consultant since 1990. From 1984 to 1990, Executive Vice President/General Manager, Faberge USA, Inc. (mass market health and beauty aids).
           
Gerald J. Laber, CPA  63   2004  Director since January, 2004. Investor and community volunteer since 2000. From 1980 to 2000 partner with Arthur Andersen L.L.P. Director with Boulder Specialty Brands, Inc., Qualmark Corporation, and Spectralink Corporation.

Name of Nominee and Position
in the Company

   Age  

  Director  
Since

  

Principal Occupation for

Last Five Years

Mark E. Goldstein

(Chairman of the Board, President

and Chief Executive Officer)

  55   1983  Chairman of the Board of the Company since February 2000, President and Chief Executive Officer of the Company since August, 1990, Vice President-Marketing of the Company from 1982 to 1990. Employed by the Company since 1978. Mr. Goldstein was selected as a director for his extensive experience in management, marketing, sales, consumer products and other aspects of the Company’s business.

Jeffrey R. Hinkle

(Vice President – Marketing and

Sales and Corporate Secretary)

   57  2000  Vice President-Marketing and Sales of the Company since February 2000. Vice President of Marketing and Sales for the Company’s subsidiaries from November 1992 to 2000. Employed by the Company since 1981. Mr. Hinkle was selected as a director for his in-depth knowledge of consumer products, the marketplace for the Company’s products, the Company’s sales force, international suppliers of distributed products and customers. Mr. Hinkle was selected as a director for his extensive experience in marketing, sales and management.

Carl A. Bellini

   77  2000  Management Consultant since 1997. From 1987 to 1997, Executive Vice President and Chief Operating Officer of Revco D.S., Inc. (a large drug store chain). Mr. Bellini was selected as a director for his extensive experience in management, retail sales, marketing and strategic planning.

Dennis H. Field

   78  1991  Management Consultant since 1990. From 1984 to 1990, Executive Vice President/General Manager, Faberge USA, Inc. (mass market health and beauty aids). Mr. Field was selected as a director for his extensive experience in marketing and sales of consumer products, including cosmetic and skin care products, and strategic planning.

Jeffry B. Johnson

   65  2000  Retired. Formerly Treasurer and Chief Financial Officer of the Company from November 2000 to January 2009. From 1981 to 2000, Controller of the Company. Employed by the Company since 1976. Mr. Johnson was selected as a director for his extensive knowledge of the Company’s finances and experience in management and financial matters.
Gerald J. Laber, CPA   67  2004  President, The Catholic Foundation for the Roman Catholic Church in Northern Colorado since January

2008. Investor and community volunteer since 2000. From 1980 to 2000 partner with Arthur Andersen L.L.P. Currently a director, chair of the audit committee and member of the finance, compensation and nominating and governance committee of Smart Balance, Inc. (a manufacturer and distributor of heart-healthy food products); currently a director, member of the compensation committee and chair of the audit committee of Allied Motion Technologies; currently a director of three companies (Centennial Specialty Foods Corporation, HealtheTech, Inc. and Qualmark Corporation) which were public reporting companies while Mr. Laber served as a director and which ceased being public reporting companies during the past five years. Formerly, during the past five years, a director and chair of the audit committee of Spectralink Corporation until it was acquired in March 2007 and a director and chair of audit committee of Applied Films Corporation until it was acquired in July 2007. Mr. Laber was selected as a director for his extensive experience in accounting, financial matters and strategic planning and his ability to serve as an audit committee financial expert.

All of the foregoing persons are currently directors of the Company. Their positions on standing committees of the Board of Directors are shown below under “Directors’ Meetings and Committees”.

4

Committees.”

     The Company’s only executive officers are those who are described in the foregoing table. The officers of the Company are elected annually at the first meeting of the Company’s Board of Directors held after each annual meeting of shareholders and serve at the pleasure of the Board of Directors.
There are no family relationships among the executive officers or directors of the Company. There are no arrangements or understandings pursuant to which any of these persons were elected as an executive officer or director.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES.

Directors’ MeetingsBOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT

The Board is actively involved in assessing and Committeesmanaging risks that could affect the Company. Part of the Board's role is to periodically assess the processes utilized by management with respect to risk assessment and risk management, including identification by management of the primary risks of the Company’s business, and the implementation by management of appropriate systems to deal with such risks. The Board fulfills these responsibilities either directly, through delegation to committees of the Board, or, as appropriate, through delegation to individual directors. When the Board determines to delegate any risk management oversight responsibilities, typically such delegation is made to the standing committees of the Board.

Mr. Goldstein serves as both the Chairman of the Board and the Chief Executive Officer of the Company. The Company believes this is appropriate in light of Mr. Goldstein’s significant experience and leadership roles with the Company, and his in-depth knowledge of consumer products and the Company’s management, marketplace, customers, marketing, sales and strategic vision.

EXECUTIVE OFFICERS

The Company has four executive officers. They are Mr. Goldstein, Mr. Hinkle, Mr. Passantino and Brian L. Boberick. Information regarding Mr. Goldstein and Mr. Hinkle is stated above under “Nominees.” Information concerning Mr. Passantino and Mr. Boberick is as follows:

Mr. Passantino, 55, has been employed by the Company since 1981. He has been Vice President – Operations of the Company since November 2002 and Corporate Secretary from 2002 until 2011. From 1991 to 2002, he served as Operations Manager of the Company.

Mr. Boberick, 55, a certified public accountant, has been the Chief Financial Officer and Treasurer of the Company since his election to these positions by the Board on February 24, 2009. Mr. Boberick was formerly Controller/Credit Manager of the Company since October 2000. While Controller/Credit Manager, he was involved in, among other things, the daily operations of the finance department, preparation of annual and quarterly reports to the SEC, and the Company’s relationships with lenders and others. Prior to joining the Company, Mr. Boberick was a controller at a sports marketing company, held finance positions at two other companies and was a senior auditor at an accounting firm.

The officers of the Company are elected annually at the first meeting of the Company’s Board held after each annual meeting of shareholders and serve at the pleasure of the Board.

DIRECTORS’ MEETINGS AND COMMITTEES

During the year ended December 31, 2006,2010, the Company had seven directorsfour Board meetings plus two actions by unanimous written consent. The Company’s Board of Directors has both a Compensation Committee and an Audit Committee. The Company does not have a nominating committee.

No member of the Board attended fewer than 75% of the meetings of the Board or of committees for which such member served during 2010.

Compensation Committee

The primary responsibilities of the Compensation Committee include, without limitation, reviewing the development of an executivea compensation philosophy for the Company; origination of allCompany, reviewing the compensation packages for executive officers and engaging and overseeing compensation proposals; review of the appropriate mix of variable versus fixed compensation;consultants and review of all transactions between the Company and any executive officer or director, whether oradvisers. The Compensation Committee may not involving compensation.delegate its authority. The Compensation Committee operates under resolutions adopted by the Board of Directors that may constitute a charter, a copy of which is attached hereto asAppendix A to this proxy statement. There is no authority on the part of the Compensation Committee to delegate any of these functions to other persons. The Committee consists currently of three outside directors of the Company and, in addition, the Chairman of the Board of the Company.B. Current members of the Compensation Committee are Dennis H. Field (Chairperson), Carl A. Bellini, and Gerald J. Laber, and Mark E. Goldstein (with Mr. Goldstein having no vote), each of whom is an independent director as defined inunder the Nasdaq rules, except for Mr. Goldstein.NASDAQ rules. The Compensation Committee had one meeting during 2006.

     The Compensation Committee recommends to the Company’s Board of Directors all elements of the compensation of the Company’s executive officers. 2010.

In making decisions regarding the executive compensation, the Compensation Committee requests the comments of the chief executive officerChief Executive Officer and the other executive officers about their compensation and considers a number of factors. In determining the executive compensation in 20062009 and 2007,2010, the Committee considered, among other things, the following matters:

Overview

The objectives of the Company’s compensation program;

•The objectives of the Company’s compensation program.
•What the compensation program is designed to reward.
•Each element of the compensation.
•How does the Company determine the amount (and, where applicable, the formula) for each element?
•How does each compensation element and the Company’s decisions regarding that element fit into the Company’s overall compensation objectives and affect decisions regarding other elements?

What the compensation program is designed to reward;

Each element of the compensation;

How the Company determines the amount (and, where applicable, the formula) for each element; and

How each compensation element and the Company’s decisions regarding that element fit into the Company’s overall compensation objectives and affect decisions regarding other elements.

Specific Factors

Services performed and time devoted to the Company by the executive;

5

Amounts paid to executives in comparable companies;

The size and complexities of the Company’s business;

Successes achieved by the executive;

The executive’s abilities;

•Services performed and time devoted to the corporation by the executive;
•Amounts paid to executives in comparable companies;
•The size and complexities of the business;
•Successes achieved by the executive;
•The executive’s abilities;
•The executive’s tenure;
•Corporate financial results;
•Prevailing economic conditions;
•Compensation paid to other employees of the corporation; and
•The amount previously paid to the executive.

The executive’s tenure;

The Company’s financial results;

Prevailing economic conditions;

Compensation paid to other employees of the Company; and

The amount previously paid to the executive.

The Compensation Committee hashad previously determined that an outside consultant on compensation matters should be used once every three yearsperiodically to provide information about the compensation paid to the Company’s executive officers compared to compensation paid by other companies. Most recently, the Compensation Committee engaged The Hay Group in 2004 to provide this type of market analysis. The report from The Hay Group compared each element of the Company’s base salary, total cash compensation and total direct compensation for the executive officers to The Hay Group’s all company executive compensation survey and to a peer group of 14 companies in the consumer products and specialty chemical industries. The Committee approvedThis report showed, among other things, that the aggregate actual total direct compensation levels for the Company’s executive officers fell between the 25th and 50th percentile levels of this approach.the peer group market, with the Chief Executive Officer’s actual total direct compensation levels below the median of such market by approximately 20% to 25%. The Compensation Committee has not engaged aan independent compensation consultantexpert to assist the Compensation Committee in 2007 in order to save onevaluating the costs;Company’s

current compensation programs and policies. The Company anticipates having the Committee will reviewresults of this decisioncompensation analysis in the second halfthird quarter of 2007.

the year. To the extent such evaluation leads to changes in compensation, the Company will make any required disclosures in current or periodic reports it files with the SEC.

The Board of DirectorsCompensation Committee also determines the fees paid to the non-employee directors. The Board does so without the use of a compensation consultant. The fees for the non-employee directors result from discussions between the executive officers and each of the non-employee directors as to a reasonable amount. The Company pays the same director fees to all non-employee directors.

Audit Committee

The Audit Committee has as itsCommittee’s primary responsibilities the appointment ofinclude appointing the independent auditor for the Company, the pre-approval ofpre-approving all audit and non-audit services, and assistance toassisting the Board of Directors in monitoring the integrity of the financial statements of the Company, the independent auditor’s qualifications, independence and performance and the Company’s compliance with legal requirements. The Audit Committee operates under a written charter adopted by the Board, of Directors, a copy of which was attached as an exhibit tohas been filed with the SEC and is available at the Company’s proxy statement for the 2005 annual meeting of shareholders.website at www.scottsliquidgold.com. The current members of the Audit Committee are Gerald J. Laber (Chairperson), Carl A. Bellini and Dennis H. Field. Each member of the Audit Committee is an independent director as defined in the NasdaqNASDAQ rules. Mr. Laber has the professional experience deemed necessary to qualify as an audit committee financial expert under rules of the Securities and Exchange Commission.SEC. The Audit Committee had sixfour meetings during 2006.

6

2010.

NOMINATION PROCESS

Nomination Process
The Board of Directors of the Company does not have a nominating committee. The full Board of Directors performs the functions of a nominating committee. The Board of Directors believes that it does not need a separate nominating committee because the full Board is relatively small, has the time to perform the functions of selecting Board nominees and in the past has acted unanimously in regard to nominees.

In considering an incumbent director whose term of office is to expire, the Board of Directors reviews the director’s overall service during the person’s term, the number of meetings attended, level of participation and quality of performance. In the case of new directors, the directors on the Board of Directors are asked for suggestions as to potential candidates, discuss any candidates suggested by a shareholder of the Company and apply the criteria stated below. The Company may engage a professional search firm to locate nominees for the position of director of the Company. However, to date the Board of Directors has not engaged professional search firms for this purpose. A selection of a nominee by the Board of Directors requires a majority vote of the Company’s directors. The Board of Directors consists of sevensix members of which Carl A. Bellini, Dennis H. Field, and Gerald J. Laber are independent as defined in Nasdaqunder NASDAQ rules.

The boardBoard seeks candidates for nomination to the position of director who have excellent decision-making ability, business experience, particularly those relevant to consumer products, personal integrity and a high reputation, diverse backgrounds and who meet such other criteria as may be set forth in a writing adopted by a majority vote of the Board.

During 2011, the Board is undertaking a search for a qualified, independent director. The Board’s preference is to nominate a candidate who has experience and expertise in consumer products marketing, advertising, branding and sales. While it is not a requirement for the Company, the goal of Directors.

the Board is to have a majority of its members meet the independence requirements under the NASDAQ rules in the near term.

Pursuant to a policy adopted by the Board, of Directors, the directors will take into consideration a director nominee submitted to the Company by a shareholder; provided that the shareholder submits the director nominee and reasonable supporting material concerning the nominee by the due date for a shareholder proposal to be included in the Company’s proxy statementProxy Statement for the applicable annual meeting as set forth in rules of the Securities and Exchange CommissionSEC then in effect. See “Shareholder Proposals” below.

Director Attendance at Company Annual MeetingsDIRECTOR ATTENDANCE AT COMPANY ANNUAL MEETINGS

The Company does not have a policy regarding attendance by members of the Board of Directors at the Company’s annual meeting of shareholders. The Company has always encouraged its directors to attend its annual meeting. In 2006,2009, the year of our last annual meeting, all directors attended the Company’s annual meeting of shareholders.

Stockholder Communications With the BoardSHAREHOLDER COMMUNICATIONS WITH THE BOARD

Historically, the Company has not had a formal process for stockholdershareholder communications with the Board of Directors.Board. The Company does not believe a formal process for handling stockholdershareholder communications is necessary because the Board of Directors reviews and considers all material communications from stockholders.

7

shareholders.

CODE OF BUSINESS CONDUCT AND ETHICS

Code of Business Conduct and Ethics
The Company has a Code of Business Conduct and Ethics that reflects long-standing positions of the Company and contains additional provisions.provisions that address the Company’s expectations relating to ethical business conduct. The Code applies to all employees, including executive officers, and to directors. The Code concerns, among other things, compliance with applicable law, the avoidance of conflicts of interest, no trading by such a person if the person isrestrictions imposed on persons who are aware of material non-public information, that may be considered material, a prohibition on taking corporate opportunities, competing fairly and honestly, diversity as an asset, the Company’s efforts to provide a safe and healthful work environment, recordkeeping, confidentiality, proper use of Company assets and payments to government personnel. The Code sets forth steps which may be followed if there is a situation where it is difficult to know right from wrong. A copy of the Code of Business Conduct and Ethics may be obtained upon request to: Corporate Secretary, Scott’s Liquid Gold–Inc., 4880 Havana Street, Denver, Colorado 80239.
Compensation Committee Interlocks and Insider Participation
     Mr. Dennis Field serves on both the Compensation Committee and the Audit Committee. From 1978 to 1982, Mr. Field was President and Chief Operating Officer of Aquafilter Corporation, a wholly-owned subsidiary of the Company which manufactured cigarette filters. After leaving Aquafilter Corporation, Mr. Field had virtually no contact with the Company from the date of his resignation to 1991 when he was asked to join The Code is also available at the Company’s Board. Prior to 1991, he was Executive Vice President/General Manager, U.S. Division, of Faberge. Mr. Field has a distinguished career with significant consumer product companies.
     During 2006, none of the Company’s executive officers served on the board or compensation committee of another entity which had one of its executive officers serve as a director of the Company or a member of the Company’s Compensation Committee.

8

website.

EXECUTIVE COMPENSATION

Executive Compensation
     Summary Compensation Table
The following Summary Compensation Table shows the annual and other compensation of the chief executive officerChief Executive Officer and all other executive officers of the Company at December 31, 2006,2010, for services in all capacities provided to the Company and its subsidiaries for the past two years.
The Company's compensation packages to the executive officers, as determined by the Compensation Committee, are designed to enable the Company to recruit, retain and motivate a talented and diverse group of people who contribute to the Company’s success. The packages are also intended to synchronize executive compensation with the Company's performance, motivate executive officers to achieve the Company’s business objectives, provide performance incentives and minimize undue risk to the Company. The Company's Chief Executive Officer provides input on determining and recommending compensation packages of the executive officers other than himself.

SUMMARY COMPENSATION TABLE

                                     
                          Change in    
                          pension value    
                          and non-    
                          qualified    
                      Non-equity deferred    
Name and             Stock Option incentive plan compensation All Other  
Principal     Salary Bonus Awards awards compensation earnings Compensation Total
Position Year $(1) $(2) $ $ $ $ ($)(3) $
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
                   
Mark E. Goldstein
  2006   387,684   —   —   —   —   —   47,929   435,513 
Chairman of the
  2005   400,000   —   —   46.467   —   —   48,911   495,378 
Board, President and
Chief Executive
Officer		                                    
                                     
Jeffrey R. Hinkle
  2006   218,203   —   —   —   —   —   14,270   232,473 
Vice President –
  2005   225,000   —   —   48.498   —   —   15,156   288,654 
Marketing and
Sales		                                    
                                     
Jeffry B. Johnson
  2006   184,860   —   —   —   —   —   17,178   202,038 
Treasurer and Chief
  2005   190,000   —   —   48,498   —   —   14,699   253,197 
Financial Officer                                    
                                     
Dennis P. Passantino
  2006   178,152   —   —   —   —   —   19,258   197,410 
Vice President –
  2005   183,750   —   —   33,597   —   —   18,990   236,337 
Operations and
Corporate Secretary
                                    

(1)

Name and

Principal

Position

 In YearSalary
$(1)		Bonus
$(2)		Stock
Awards
$		Option
awards
$(3)		Non-equity
incentive
plan
compensation
$		Non-qualified
deferred
compensation
earnings $		All Other
Compensation
($)(4)		Total
$

(a)

(b)(c)(d)(e)(f)(g)(h)(i)(j)

Mark E. Goldstein

Chairman of the Board, President and Chief Executive Officer


2010
2009

342,000
342,000
23,914
56,614
66,706

422,528
408,706

Jeffrey R. Hinkle

Vice President – Marketing and Sales


2010
2009

192,375
192,375
24,448
14,129
11,969

230,952
204,344

Dennis P. Passantino

Vice President – Operations and Corporate Secretary


2010
2009

165,375
165,375
17,563
25,029
25,640

207,967
191,015

Brian L. Boberick

Controller until February 2009; Treasurer and Chief Financial Officer commencing on February 24, 2009


2010
2009

135,000
130,708

3,804
3,511

27,494

23,588



166,298
157,807

(1)September 20062008 through the date of this Proxy Statement, the Company, as a cost cutting measure, reduced the base salary of each of its executive officersMr. Goldstein and Mr. Hinkle, with their consents, by 5%. Prior to that, in September 2006, the base salary of each of Mr. Goldstein and Mr. Hinkle was reduced by 10%, for an aggregate reduction through the date of this Proxy Statement of 15%.
(2)The Company has adoptedhad a bonus plan for its executive officers for the year 2007.2010. The plan providesprovided that an amount willwould be distributed to the Company’sCompany's executive officers equal to 10% of the annual before tax profit exceeding $1 million, excluding items that are infrequent, unusual, or extraordinary. Such amount if any, for 2007 will be2010 would have been divided among the Company’sCompany's executive officers as follows: President, 31%, Vice President-Marketing and Sales, 25%, Treasurer, 22%, and Vice President – Operations, 22%. In no event iswould a bonus have been paid unless pre-tax profits, excluding the above-mentioned items, exceedexceeded $1,000,000 for the fiscal year, nor iswould any bonus have been paid on the first $1,000,000 of pre-tax earnings, excluding the above-mentioned items. The Company hadAfter receiving the recommendation of the Compensation Committee, the Board has adopted substantially the same plan in 2006 and 2005.for 2011.

9

(3)Amounts shown in the column “Option Awards” are the aggregate grant date fair value of stock options granted in 2010 and 2009, computed in accordance with ASC 718. For information on the valuation assumptions for the stock options, please refer to Note 1(n) of the Company’s Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the SEC on March 29, 2011, a copy of which accompanies this Proxy Statement. These amounts do not necessarily correspond to the actual value that may be recognized by the executive officers in the future.

(4)The dollar amount of All Other Annual Compensation changes from year to year because of fluctuations in the costs of benefits and their timing. All Other Annual Compensation in the table above for 20062010 and 20052009 is comprised of the following:

                 
  Mark E. Goldstein  Jeffrey R. Hinkle 
  2006  2005  2006  2005 
Automobile purchase (1) $—  $—  $—  $— 
Income taxes on automobile purchase (1)  —   —   —   — 
Other automobile expenses  4,122   4,853   391   1,068 
Memberships  22,887   25,247   —   — 
Life insurance  2,412   2,412   1,478   1,478 
Income taxes on life insurance  1,839   1,839   1,035   1,035 
Medical plan (2)  5,785   4,694   2,908   4,037 
Disability insurance  4,672   4,672   4,987   4,987 
ESOP (3)  3,480   2,551   3,471   2,551 
Other  2,732   2,643   —   — 
   
Total other compensation $47,929  $48,911  $14,270  $15,156 
             
                 
  Jeffry B. Johnson  Dennis P. Passantino 
  2006  2005  2006  2005 
Automobile purchase (1) $—  $—  $7,349  $7,349 
Income taxes on automobile purchase (1)  —   —   5,155   5,155 
Other automobile expenses  1,263   2,061   313   656 
Memberships  —   —   —   — 
Life insurance  4,332   3,348   966   1,016 
Income taxes on life insurance  3,039   2,349   678   713 
Medical plan (2)  4,649   3,612   1,369   1,798 
Disability insurance  929   992   514   — 
ESOP (3)  2,966   2,337   2,914   2,303 
Other  —   —   —   — 
   
Total other compensation $17,178  $14,699  $19,258  $18,990 
             

   Mark E. Goldstein   Jeffrey R. Hinkle 
   2010   2009   2010   2009 

Automobile lease/allowance(a)

  $9,081   $12,961   $—      $—    

Income taxes on automobile lease/allowance(a)

   6,890    9,832    —       —    

Other automobile expenses

   953     1,810     1,012     668  

Memberships

   16,884    16,882     —       —    

Life insurance

   4,716    4,716     1,814     1,814  

Income taxes on life insurance

   3,578    3,578     1,280     1,280  

Medical plan(b)

   5,421    8,288     3,814     2,354  

Disability insurance

   4,672    4,672     4,987     4,987  

ESOP(c)

   1,545    1,094     1,222     866  

Other

   2,874    2,873     —       —    
                    

Total other compensation

  $56,614   $66,706    $14,129    $11,969  
                    
   Dennis P. Passantino   Brian L. Boberick 
   2010   2009   2010   2009 

Automobile lease/allowance(a)

  $6,066   $7,341   $6,000   $5,125  

Income taxes on automobile lease/allowance(a)

   4,274    5,165    4,225    3,608  

Other automobile expenses

   858    477    401    757  

Memberships

   —       —       —       —    

Life insurance

   1,245    1,245    2,719    4,065  

Income taxes on life insurance

   876    875    1,915    2,862  

Medical plan(b)

   8,269    6,644    8,991    5,305  

Disability insurance

   2,365    3,127    2,314    1,228  

ESOP(c)

   1,076    766    929    638  

Other

   —       —       —       —    
                    

Total other compensation

  $25,029   $25,640   $27,494   $23,588  
                    

(a)
(1)Every three to five years, theThe Company provides funds needed, plus an amount to pay resulting income taxes, to each executive officer for the purchaselease or allowance for the use of an automobile. In the case of Mr. Passantino, the amount shown for 20062010 and 20052009 represents the lease value, and income tax on that value, for his use in 20062010 and 20052009 of a vehicle leased by the Company. In the third quarter of 2009, under this policy, Mr. Goldstein leased a vehicle for use by Mr. Goldstein. Mr. Goldstein had previously not purchased or leased an automobile under this policy since 2000. In the case of Mr. Boberick, the amount shown for 2010 and 2009 represents an allowance for use of his personally-owned vehicle.
(2)(b)In addition to group life, health, hospitalization and medical reimbursement plans which generally are available to all employees, the Company has adopted a plan which provides for additional medical coverage of not more than $50,000 per year to each of the Company’sCompany's executive officers.
(3)(c)All Other CompensationESOP compensation for each of the executive officers consists of Company contributions under an Employee Stock Ownership Plan and Trust Agreement (“ESOP”("ESOP") which provides that the. The Company may contribute annually to the ESOP cash or common stock which, in an amount notcombination with any employer contribution made to the 401(k) Plan, cannot exceed 25% of all participants’participants' total compensation (the maximum amount currently deductible under tax laws). The Board of Directors determines whether any contributions will be made for the year. Benefits are allocated to all eligible employees according to a formula based on compensation, except that any income earned on assets of the Trust is allocated to ESOP participants based upon the value that each participant’sparticipant's account bears to the total value of Trust assets.

10

STOCK PLANS

Stock Plans
Executive officers and non-employee directors of the Company are eligible to receive stock awards under the Company’s 1998 Stock Option Plan and 2005 Stock Incentive Plan as amended, which expireexpires on November 9, 2007 and March 31, 2015. The number of shares available under the 1998 Plan and 2005 Plan are 1,100,000 and 600,000is 1,500,000 shares of common stock.stock; however, under Proposal 2 of this Proxy Statement, shareholders are being asked to approve of an increase in the number of available shares to a total of 3,000,000. The 1998 Plan provides for the issuance of incentive stock options or non-qualified stock options; the 2005 Plan provides for the issuance of stock awards consisting of incentive and non-qualified stock options, stock appreciation rights, restrictiverestricted stock or restrictive

restricted stock units. To date, the Company has only granted stock options under its plans. Eligible persons are full-time employees and non-employee directors for purposes ofunder the 19982005 Plan and they are full-time and part-time employees, non-employee directors and consultants under the 2005 Plan.consultants. Under the 2005 Plan, stock awards vest upon a change in control. All options granted in or prior to 20072006 were 100% vested on the date of grant. Options granted after 2006 including those granted to date in 20072011 vest 1/1/48 of the shares subject to the options each month after the date of grant and upon a change in control.

The Company’s 1998 Stock Option Plan expired on November 8, 2008 and had covered 1,100,000 shares of common stock. Options Grantedunder the 1998 Plan remain outstanding. The terms of the 1998 Plan are similar to those of the 2005 Plan.

Option Grants in 2007

2009

On February 27, 2007,24, 2009, the Company’s Board of Directors granted five-year options, effective February 26, 2009, for a total of 485,75090,000 shares of common stock to employees,an executive officersofficer and certain non-employee directors at an exercise price of $0.82$0.17 per share (the closing market price on February 27, 2007), except26, 2009). The number of shares subject to these options were 30,000 for Mr. Laber, 30,000 for Mr. Boberick and 30,000 for Mr. Bellini. On August 11, 2009, the Company’s Board granted a five-year option, effective on that date, for a total of 3,000 shares of common stock to Mr. Boberick at an exercise price is $0.902of $0.25 per share for Mr. Goldstein.(the closing market price on August 11, 2009). These options vest at 1/48 per month from the date of grant or upon a change in control as indicated above.

Option Grants in 2010

On May 13, 2010, the Company’s Board granted five-year options, effective on that date, for a total of 357,000 shares of common stock to the four executive officers and two non-employee directors at an exercise price of $0.22 per share (the closing market price on May 13, 2010), except in the case of Mr. Goldstein whose options have an exercise price of $0.24, representing 110% of the closing market price. The number of shares subject to these options were 25,00080,000 each for Mr. Goldstein, Mr. Hinkle, Mr. Passantino and Mr. Johnson, 30,000 for Mr. Bellini and 7,000 for Mr. Boberick. On August 10, 2010, the Company’s Board granted five-year options, effective on that date, for a total of 265,000 shares of common stock to three executive officers and the four non-employee directors at an exercise price of $0.23 per share (the closing market price on August 10, 2010), except in the case of Mr. Goldstein whose options have an exercise price of $0.25, representing 110% of the closing market price. The number of shares subject to these options were 50,000 each offor Mr. Goldstein, Mr. Hinkle and Mr. Johnson, 35,0005,000 for Mr. Passantino, 50,00055,000 for Mr. Bellini (replacing an expired option), 100,000Belini, 25,000 for Mr. Field (replacing an expired option), and 30,000 for Mr. Laber.

     Option Grants On November 10, 2010, the Company’s Board granted five-year options, effective December 14, 2010, for a total of 122,000 shares of common stock to the four executive officers and two non-employee directors at an exercise price of $0.20 per share (the closing market price on December 14, 2010), except in Last Fiscal Year
     Nothe case of Mr. Goldstein whose options have an exercise price of $0.22, representing 110% of the closing market price. The number of shares subject to these options were granted to18,400 each for Mr. Goldstein, Mr. Hinkle, Mr. Passantino, Mr. Boberick and Mr. Johnson, and 30,000 for Mr. Laber. These options vest at 1/48 per month from the Company’s officers and non-employee directors during 2006.

11

date of grant or upon a change in control as indicated above.

     Outstanding Options
     No options were exercised by any of the Company’s executive officers during 2006. The following table summarizes information with respect to each person’s outstanding stock options at December 31, 2006.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2006
                   
  Option Awards Stock Awards
      Equity         Equity Equity incentive
      incentive         incentive plan plan awards:
      plan awards:       Market awards: Market or
  Number of Number of Number of     Number of value of Number of payout value
  securities securities securities     shares or shares or unearned of unearned
  underlying underlying underlying     units of units of shares, units shares, units
  unexercised unexercised unexercised Option   stock that stock that or other rights or other rights
  options options unearned exercise Option have not have not that have not that have not
  # # options price expiration vested vested vested vested
Name Exercisable Unexercisable # $ date # $ # $
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Mark E. Goldstein 70,500 — — 0.68 Nov. 27, 2008 — — — —
  80,000 — — 0.59 May 3, 2010 — — — —
  50,000 — — 0.66 Aug. 22, 2010 — — — —
  18,400 — — 1.06 Dec. 13, 2010 — — — —
Jeffrey R. Hinkle 79,000 — — 0.62 Nov. 27, 2008 — — — —
  80,000 — — 0.54 May 3, 2010 — — — —
  50,000 — — 0.60 Aug. 22, 2010 — — — —
  18,400 — — 0.96 Dec. 13, 2010 — — — —
Jeffry B. Johnson 42,000 — — 0.46 Feb. 24, 2008 — — — —
  8,000 — — 0.62 Nov. 27, 2008 — — — —
  80,000 — — 0.54 May 3, 2010 — — — —
  50,000 — — 0.60 Aug. 22, 2010 — — — —
  18,400 — — 0.96 Dec. 13, 2010 — — — —
Dennis P. Passantino 10,000 — — 0.50 April 30, 2007 — — — —
  77,000 — — 0.46 Feb. 24, 2008 — — — —
  8,000 — — 0.62 Nov. 27, 2008 — — — —
  80,000 — — 0.54 May 3, 2010 — — — —
  5,000 — — 0.60 Aug. 22, 2010 — — — —
  18,400 — — 0.96 Dec. 13, 2010 — — — —

122010.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2010

 
   Option Awards  Stock Awards 

Name

(a)

  Number
of
securities
underlying
unexercised
options
#
Exercisable
(b)		  Number
of  securities
underlying
unexercised
options
#
Unexercisable
(c)		  Equity
incentive
plan
awards:
Number of
securities
underlying
unexercised
unearned
options
#
(d)		   Option
exercise
price
$
(e)		   Option
expiration
date
(f)		  Number
of
shares
or units
of stock
that
have
not
vested
#
(g)		   Market
value
of
shares
or
units of
stock
that
have
not
vested
$
(h)		   Equity
incentive
plan
awards:
Number
of
unearned
shares,
units or
other
rights
that have
not
vested
#
(i)		   Equity
incentive
plan
awards:
Market
or
payout
value of
unearned
shares,
units or
other
rights
that have
not
vested
$
(j)		 

Mark E. Goldstein

   15,525(1)   675    —       0.90    Feb. 26, 2012   —       —       —       —    
   36,719(4)   33,781    —       0.19    Nov. 27, 2013   —       —       —       —    
   12,500(7)   67,500    —       0.24    May 12, 2015   —       —       —       —    
   4,688(8)   45,312    —       0.25    Aug. 9, 2015   —       —       —       —    
   192(9)    18,208    —       0.22    Dec. 13, 2015   —       —       —       —    

Jeffrey R. Hinkle

   15,525(1)   675    —       0.82    Feb. 26, 2012   —       —       —       —    
   41,146(4)   37,854    —       0.17    Nov. 27, 2013   —       —       —       —    
   12,500(7)   67,500    —       0.22    May 12, 2015   —       —       —       —    
   4,688(8)   45,312    —       0.23    Aug. 9, 2015   —       —       —       —    
   192(9)    18,208    —       0.20    Dec. 13, 2015   —       —       —       —    

Dennis P. Passantino

   25,108(1)   1,092    —       0.82    Feb. 26, 2012   —       —       —       —    
   40,375(3)   16,625    —       0.55    Feb. 25, 2013   —       —       —       —    
   4,167(4)   3,833    —       0.17    Nov. 27, 2013   —       —       —       —    
   12,500(7)   67,500    —       0.22    May 12, 2015   —       —       —       —    
   469(8)    4,531    —       0.23    Aug. 9, 2015   —       —       —       —    
   192(9)    18,208    —       0.20    Dec. 13, 2015   —       —       —       —    

Brian L. Boberick

   7,083(1)   2,917    —       0.82    Feb 26, 2012   —       —       —       —    
   1,750(2)   1,250    —       0.82    Sep. 3, 2012   —       —       —       —    
   2,292(3)   2,708    —       0.55    Feb. 25, 2013   —       —       —       —    
   6,250(5)   23,750   —       0.17    Feb. 23, 2014   —       —       —       —    
   250(6)    2,750   —       0.25    Aug. 10, 2014   —       —       —       —    
   1094(7)   5,906   —       0.22    May 12, 2015   —       —       —       —    
   192(9)   18,208   —       0.20    Dec. 13, 2015   —       —       —       —    

(1)

These options were granted on February 27, 2007 and vest1/ 48 per month from date of grant.

(2)

These options were granted on September 4, 2007 and vest1/ 48 per month from date of grant.

(3)

These options were granted on February 26, 2008 and vest1/ 48 per month from date of grant.

(4)

These options were granted on November 28, 2008 and vest1/ 48 per month from date of grant.

(5)

These options were granted on February 24, 2009 and vest1/ 48 per month from date of grant.

(6)

These options were granted on August 11, 2009 and vest1/ 48 per month from date of grant.

(7)

These options were granted on May 13, 2010 and vest1/ 48 per month from date of grant.

(8)

These options were granted on August 10, 2010 and vest1/ 48 per month from date of grant.

(9)

These options were granted on December 14, 2010 and vest1/ 48 per month from date of grant.

Compensation of DirectorsCOMPENSATION OF DIRECTORS
     Four

Three directors are full-time executive officers of the Company and receive no additional compensation for service as a director. Carl A. Bellini, Dennis H. Field, and Gerald J. Laber were in 2009 and are currently non-employee directors. Mr. Johnson was an executive officer until January 29, 2009 and is currently a non-employee director. The Company payspaid $2,250 per month (through November 30, 2009) to each non-employee director for his services as director. The Company through August of 2006Beginning December 2009, compensation paid each non-employee director $2,500 per month beginning in September 2006, as a cost cutting measure,to Messrs. Bellini, Field, and Johnson was reduced to $1,125 per month, while Mr. Laber’s compensation was reduced to $1,250 per month. The following table shows the annual and other compensation of the non-employee directors at December 31, 2010 for services to the Company reduced this amount by 10% resulting in monthly payments of $2,250.

DIRECTOR COMPENSATION
                             
                  Non-Qualified    
              Non-Equity Deferred    
  Fees Earned Stock Option Incentive Plan Compensation All Other  
  or Paid in Cash Awards Awards Compensation Earnings Compensation Total
Name ($) ($) ($) ($) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (j)
Each non-employee directors  29,000   —   —   —   —   —   29,000 
     As of March 13, 2007, no current non-employee director has exercised any options granted to the director. No options were granted to non-employee directors during 2006.
for 2010.

DIRECTOR COMPENSATION FOR 2010

 

Name

(a)

  Fees Earned
or Paid in Cash
($)
(b)		   Stock
Awards
($)
(c)		   Option
Awards
($)
(d)(1)		   Non-Equity
Incentive Plan
Compensation
($)
(e)		   Non-Qualified
Deferred
Compensation
Earnings
($)
(f)		   All Other
Compensation
($)
(g)		   Total
($ ) (j)		 

Carl A. Bellini

   13,500     —       13,763    —       —       —       27,263  

Dennis H. Field

   13,500     —       3,824     —       —       —       17,324  

Gerald J. Laber

   15,000     —       8,753     —       —       —       23,753  

Jeffry B. Johnson

   13,500     —       24,469     —       —       —       37,969  

(1)Amounts shown in the column “Option Awards” are the aggregate grant date fair value of stock options granted in 2010, computed in accordance with ASC 718. For information on the valuation assumptions for the stock options, please refer to Note 1(n) of the Company’s Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the Securities and Exchange Commission on March 29, 2011, a copy of which accompanies this Proxy Statement. These amounts do not necessarily correspond to the actual value that may be recognized by the directors in the future.

The following table summarizes information with respect to each non-employee director’s outstanding stock options at December 31, 2006:

2010:

   Outstanding Options at December 31, 2010 

Name

  Number of Securities
Underlying Unexercised
Options
#
Exercisable		  Number of Securities
Underlying Unexercised
Options
#
Unexercisable		   Option
Exercise
Price
$		   Option
Expiration
Date		 

Carl A. Bellini

   47,917(1)   2,083    0.82     Feb. 26, 2012  
   13,750(4)   16,250    0.17     Feb. 23, 2014  
   4,688(5)   25,312    0.22     May 12, 2015  
   5,156(6)   49,844     0.23     Aug. 9, 2015  

Dennis H. Field

   95,833(1)   4,167    0.82     Feb. 26, 2012  
   23,438(2)   21,562     0.17     Nov. 27, 2013  
   2,344(6)   22,656     0.23     Aug. 9, 2015 

Gerald J. Laber

   28,750(1)   1,250    0.82     Feb. 26, 2012  
   13,750(4)   16,250    0.17     Feb. 23, 2014  
   2,813(6)   27,187    0.23     Aug. 9, 2015  
   313(7)   29,687     0.20     Dec. 13, 2015  

Jeffry B. Johnson

   15,525(1)   675     0.82     Feb. 26, 2011  
   29,750(3)   12,250     0.55     Feb. 25, 2013  
   4,167(4)   3,833     0.17     Nov. 27, 2013  
   12,500(5)   67,500     0.22     May 12, 2015  
   4,688(6)   45,312     0.23     Aug. 9, 2015  
   192(7)   18,208     0.20     Dec. 31, 2015  

(1)

These options were granted on February 27, 2007 and vest1/ 48 per month from the date of grant.

(2)

These options were granted on November 28, 2008 and vest1/ 48 per month from the date of grant.

(3)

These options were granted on February 26, 2008 and vest1/ 48 per month from the date of grant.

(4)

These options were granted on February 24, 2009 and vest1/ 48 per month from the date of grant.

(5)

These options were granted on May 13, 2010 and vest1/ 48 per month from the date of grant.

(6)

These options were granted on August 10, 2010 and vest1/ 48 per month from the date of grant.

(7)

These options were granted on December 14, 2010 and vest1/ 48 per month from the date of grant.

PROPOSAL 2: AMENDMENT TO STOCK INCENTIVE PLAN

Amendment

The Company’s Board amended on March 16, 2011, the Company’s 2005 Stock Incentive Plan (the “2005 Plan”) to increase the number of shares of common stock available under the 2005 Plan by 1,500,000 shares of common stock, for a total authorized number of 3,000,000 shares. The amendment increasing the number of shares under the 2005 Plan is subject to approval of the Company’s shareholders and is included asAppendix A hereto. The effective date of the amendment will be the date of shareholder approval.

Prior to the amendment, 1,500,000 shares have been available under the 2005 Plan. After the amendment, the total number of shares available under the 2005 Plan will be 3,000,000 shares. The reasons for the amendment to the 2005 Plan include:

           
  Outstanding Options at December 31, 2006 
  Number of Securities Number of Securities     
  Underlying Unexercised Underlying Unexercised Option   
  Options Options Exercise Option 
  # # Price Expiration 
Name Exercisable Unexercisable $ Date 
Carl A. Bellini 50,000 — 0.57 February 18, 2007
  30,000 — 0.54 May 4, 2010
  30,000 — 0.60 August 22, 2010
  25,000 — 0.60 August 22, 2010
Dennis H. Field 100,000   — 0.57 February 18, 2007
  45,000 — 0.62 November 27, 2008
  25,000 — 0.60 August 22, 2010
Gerald J. Laber 30,000 — 0.76 February 25, 2009
  30,000 — 0.60 August 22, 2010
  30,000 — 0.96 December 13, 2010

The Company’s Board believes that the Company must have available and grant options to employees in order to retain employees in a competitive environment, particularly employees who are subject to the Company’s salary and wage freeze.

13

The 2005 Plan is the only stock plan of the Company’s under which grants may be made.

The increase in options is intended in part to replace options which expire, without being exercised, under the Company’s 1997 Stock Option Plan and 1998 Stock Option Plan. See “Shares Under All Plans as of March 31, 2011” below. Stock options issued under the 1997 and 1998 Plans remain outstanding after the expiration of those Plans and continue for the term of the options, which has typically been five years from the date of grant. The amendment will subtract from the total number of shares available under the 2005 Plan the number of shares which are actually issued under the 1997 and 1998 Plans.

Options reward persons who have stayed with the Company.

Options provide an incentive on the part of officers and other employees, as well as directors, to improve the Company’s performance.

The grant of options aligns the goals of the optionees with those of the shareholders.

The options provide to directors and executive officers a meaningful stake in the Company.

Shares Under All Plans As of March 31, 2011

The Company currently has outstanding options under three stock option plans. They are the 1997 Stock Option Plan (for which the executive officers and directors are ineligible), the 1998 Stock Option Plan and the 2005 Plan. The number of shares available under the Plans are shown in the following table:

     For information

  2005 Plan(3) 
  1997 Plan  1998 Plan  With Amendment  Total 

Shares authorized for future issuances

  —          —          3,000,000 (1)(2)   3,000,000 (1)(2) 

Shares subject to outstanding options

  240,500    296,900    1,396,150    1,933,550  

Shares previously issued upon exercise of options

  —          22,000    3,500    25,500  

Shares available for option grants

    1,600,350    1,040,950 (2)

(1)Includes 1,500,000 shares added by the amendment being submitted to the shareholders for approval.

(2)The number of shares under the 2005 Plan is decreased by options exercised under the 1997 and 1998 Plans after May 6, 2008.

(3)Expires on March 31, 2015.

Significant features of the 2005 Plan are summarized below, as currently in effect and as the 2005 Plan will be in effect after the amendment which solely increases the number of shares available for awards. This summary is qualified in its entirety by reference to the full text of the 2005 Plan which is available from the Company and is an exhibit to filings with the SEC.

General

In March, 2005, the Company’s Board adopted the 2005 Plan, subject to approval and ratification by shareholders. The shareholders approved the 2005 Plan in May 2005. The shareholders approved an amendment to increase the number of shares available under the 2005 Plan from 900,000 to 1,500,000 on plans under which non-employee directorsMay 6, 2008.

The 2005 Plan provides that the 2005 Plan administrator may receiveissue stock awards consisting of incentive and non-qualified stock options, stock appreciation rights, restricted stock and restricted stock units. The 2005 Plan administrator may grant one or more of these types of awards. The Board will administer the 2005 Plan unless the Board delegates the administration of the 2005 Plan to a committee, which will be appointed by and serve at the pleasure of the Board. The 2005 Plan administrator determines and designates from time to time (a) those eligible persons to whom awards are granted, (b) the size, form, terms (including vesting, if any) and conditions of awards under the 2005 Plan and (c) rules with respect to the administration of the 2005 Plan. The 2005 Plan administrator may at any time cancel an award, whether vested or unvested, if the participant engages in conduct that the 2005 Plan administrator determines to be detrimental to the best interest of the Company, including failure to comply with policies or procedures of the Company.

Shares Subject to 2005 Plan; Limitations

The aggregate number of shares of Common Stock that may be issued under awards granted pursuant to the 2005 Plan will be 3,000,000 shares of the Company’s common stock, less the number of shares issued as a result of the exercise of options under the 1997 and 1998 Plans, after May 6, 2008. If there is a stock dividend, subdivision, reclassification, recapitalization, merger, consolidation, stock split, combination or exchange of stock, or other event described under the terms of the 2005 Plan, the administrator will make appropriate adjustments to the total number of shares available under the 2005 Plan and to outstanding awards. If an outstanding award expires or ceases to be exercisable, the shares that were subject to the award will continue to be available under the 2005 Plan.

During any single calendar year, no participant will be eligible to be granted awards exceeding 10% of the limit on shares under the 2005 Plan. From March, 2005 to the date on which the 2005 Plan terminates, no participant will be eligible to be granted awards exceeding 20% of the limit on shares.

Term of 2005 Plan

The 2005 Plan was effective as of March 31, 2005. The 2005 Plan will terminate on March 31, 2015, unless terminated earlier by the Board. Termination of the 2005 Plan will not affect grants made prior to termination.

Eligibility

All full-time and part-time employees are eligible to receive any award under the 2005 Plan. Directors and consultants of the Company and its subsidiaries, who are not employees, are eligible to receive any award, other than incentive stock options, under the 2005 Plan.

Securities Issuable Under the 2005 Plan

Stock Options

The exercise price for an option granted under the 2005 Plan must not be less than 100% of the fair market value of the shares subject to the option at the date of grant. No option will be repriced. The term of each option may not be more than ten years from the date of grant. An option is fully vested unless otherwise provided by the 2005 Plan administrator in the option agreement. A participant may pay the exercise price and withholding taxes in cash or, upon approval of the 2005 Plan administrator, in common stock of the Company or another form of legal consideration. No incentive stock option may be granted to an employee who, at the time the incentive stock option is granted, owns stock (as determined in accordance with the Internal Revenue Code) representing more than 10% of the total combined voting power of all classes of stock of the Company or of any parent or subsidiary, unless the option price of such incentive stock option is at least 110% of the fair market value of the stock subject to the incentive stock option and the incentive stock option by its terms is not exercisable more than five years from the date it is granted.

Stock Appreciation Rights

A stock appreciate right, or SAR, is exercisable for the receipt of a number of shares of common stock having a fair market value equal to (1) the fair market value on the date of exercise of the number of shares as to which the SAR has been exercised over (2) the aggregate exercise price of the SAR for such number of shares. The exercise price for each SAR will be no less than the fair market value of the common stock at the time the SAR is granted. No SAR will be repriced. The term of any SAR may not

exceed ten years from the date of grant. SARs will be fully vested unless otherwise determined by the 2005 Plan administrator and stated in a stock appreciation rights agreement.

Restricted Stock and Restricted Stock Units

Restricted stock may be granted to a participant without the payment of a purchase price. If a grant of restricted stock requires the payment of a purchase price, the purchase price of the restricted stock may not be repriced. If restricted stock has a purchase price, a participant must pay the purchase price in cash or, upon approval of the 2005 Plan administrator, in common stock or another form of legal consideration. If a participant fails to satisfy any applicable restriction (including vesting requirements) on the restricted stock, the restricted stock will be forfeited to the Company in return for no consideration or such consideration as specified in the applicable award agreement. Restricted stock constitutes issued and outstanding shares of common stock for all corporate purposes. The participant will have the right to vote the restricted stock, to receive and retain all regular cash dividends and such other distributions as the Board may, in its discretion, pay on the common stock, and to exercise all other rights, powers and privileges of a holder of common stock.

A restricted stock unit represents an obligation of the Company to deliver a specific number of shares of common stock to the participant on a specified date. Any award of restricted stock or an RSU will be fully vested or will vest in accordance with a vesting schedule provided in the agreement for that award as determined by the 2005 Plan administrator.

Valuation

For purposes of the 2005 Plan, the fair market value of common stock optionsmeans the average of the closing sales prices for the common stock on its trading market for the five preceding trading days as reported in The Wall Street Journal or another publication or source for market prices selected by the Board. If there has not been trading of the common stock on a specific day, then a trading day is the next preceding day on which there was such trading. If closing sales prices are not available for the trading market, the average of the closing bid and asked prices are used. If none of these alternatives are available, the 2005 Plan administrator will determine the fair market value by applying any reasonable valuation method.

Change in Control

If a change in control event occurs, then the vesting of all awards held by participants in continuous service at the time will be accelerated in full. In anticipation of a change in control event, the 2005 Plan administrator may require that all unexercised awards be exercised upon the change in control event or within a specified number of days of the change in control. The 2005 Plan administrator may in its discretion also accelerate the vesting of any outstanding award in connection with any proposed or completed change in control event, and prior to non-employee directorsa change in February 2007, please see “Stock Plans” above.

control event the 2005 Plan administrator may in its discretion terminate all unexercised awards (after acceleration of vesting) in exchange for consideration similar to that received by shareholders of common stock of the Company in the change of control event less the exercise price of the award. Alternatively, if a change in control event occurs, any surviving corporation or acquiring corporation may assume any outstanding award under the 2005 Plan or may substitute similar stock awards.

Termination of Continuous Service

Any vesting of an award ceases upon termination of a participant’s service with the Company. A stock option or SAR will terminate and may not be exercised after three months after a participant’s

service with the Company ceases for any reason other than cause, disability or death. If a participant ceases service with the Company for cause or if the participant breaches any covenant not to compete or non-disclosure agreement, an unexercised stock option or SAR shall terminate immediately. If a participant ceases their service with the Company due to death or disability, an outstanding stock option or SAR will be exercisable for one year after that time but not later than the expiration date of the award. The 2005 Plan administrator may in its discretion extend the dates for termination of awards as stated in this paragraph.

If a participant terminates service with the Company for any reason, any unvested restricted stock or unvested RSUs held by the participant as of the date of termination of service will be forfeited to the Company unless otherwise provided in an applicable award agreement.

Amendment of 2005 Plan

The Board may at any time and from time to time alter, amend, suspend or terminate the 2005 Plan or any part thereof as it may deem proper, except that no such action can diminish or impair the rights under an award previously granted. However, approval of the shareholders shall be required to increase the total number of shares issuable under the 2005 Plan, to reduce the exercise price for any option, SAR or RSU or the purchase price for any restricted stock below a level required by the 2005 Plan or to modify materially requirements for eligibility under the 2005 Plan. The 2005 Plan administrator may modify, extend or renew outstanding awards except that this action must not diminish or impair the rights of a previously granted award without the consent of the participant.

Federal Income Tax Consequences

The rules governing the tax treatment of stock awards granted under the 2005 Plan depend largely on the surrounding facts and circumstances. Generally, under current federal income tax laws, a participant will recognize income, and the Company will be entitled to a deduction as follows:

Stock Options

If an employee does not dispose of the shares acquired pursuant to the exercise of an incentive stock option within one year after the transfer of the shares to the participant and within two years from the grant of the option, the employee will not realize taxable income as a result of the grant or exercise of the option (except for purposes of the alternative minimum tax upon the exercise of the option), and any gain or loss that is subsequently realized may be treated as a long term capital gain or loss, depending on the circumstances. The Company will not be able to deduct any amount for the grant of the incentive stock option or the transfer of shares upon exercise. If the employee disposes of the stock prior to one year after the transfer of the shares (or two years prior to the option grant date), the participant will realize ordinary income in an amount equal to the lesser of (a) the excess of the fair market value of the common stock acquired on the date of exercise over the exercise price or (b) the gain recognized on such disposition. Upon the exercise of a nonqualified stock option, the participant will generally realize ordinary income equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. The Company will be able to deduct an amount equal to the ordinary income realized by the participant.

Restricted Stock

A participant who receives an award of restricted stock will realize ordinary income (on a per share basis) at the time any restrictions lapse equal to the difference between the fair market value of the common stock at the time such restrictions lapse and the amount (if any) paid for the stock. Alternatively,

under Section 83 of the Internal Revenue Code, the participant may elect to accelerate the tax event and realize ordinary income (on a per share basis) equal to the difference between the purchase price (if any) of the common stock and the fair market value of the common stock on the date of grant upon the receipt of an award of restricted stock. When the participant recognizes ordinary income, the Company will be able to deduct an amount equal to the ordinary income recognized by the participant.

Restricted Stock Units

A participant who is granted an RSU will generally not recognize any income upon the grant of the award. The participant will generally recognize as ordinary income an amount equal to the fair market value of any shares transferred to the participant upon the vesting of such award. The Company will ordinarily be entitled to a deduction, in the amount of the ordinary income recognized by the participant, at the same time the participant recognizes such income, so long as the amount constitutes reasonable compensation.

Stock Appreciation Rights

Upon the exercise of any SAR, the value of any stock received will constitute ordinary income to the participant equal to the fair market value of the shares transferred to a participant upon the exercise. The Company will ordinarily be entitled to a deduction in the same amount and at the same time, so long as the amount constitutes reasonable compensation.

Section 409A

Section 409A, a section added to the Code in 2004, can affect the tax treatment of certain types of deferred compensation. Failure to comply with the requirements of Section 409A results in current income of amounts deferred, along with interest and a significant tax penalty. Certain types of equity-based compensation are exempt from Section 409A. The Company intends to operate the 2005 Plan so that all grants under the 2005 Plan are exempt from Section 409A.

Amendment Benefits

As of the date of this Proxy Statement, no executive officer, employee, director or consultant has been granted any award based upon the proposed amendment to the 2005 Plan. The benefits to be received by the eligible participants pursuant to the proposed amendment to the 2005 Plan are not determinable at this time.

Other Equity Compensation Plan Information

The following table provides, as of December 31, 2010, information regarding the Company’s equity compensation plans. The Company also has an Employee Stock Ownership Plan which invests only in common stock of the Company, but which is not included in the table below.

Plan Category

 

 

Number of

Securities

to be issued

upon

exercise of

outstanding

options,

warrants and

rights

(a)

 

 

Weighted average

exercise price of

outstanding

options,

warrants and

rights

(b)

 

 

Number of securities

remaining available

for future issuance

under equity

compensation plans

(excluding securities

reflected in

column (a))

(c)

 

Equity compensation plans approved by security holders 1,933,550 $0.39 100,350
Equity compensation plans not approved by security holders __ __ __

Total

 1,933,550 $0.39 100,350

Vote required and Recommendation

The approval of the amendment to the 2005 Plan requires a majority of shares present and voting at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE AMENDMENT TO THE 2005 PLAN.

CERTAIN TRANSACTIONS

The Company has indemnification agreements with each of its directors and executive officers. These agreements provide for indemnification and advancement of expenses to the full extent permitted by law in connection with any proceeding in which the person is made a party because the person is a director or officer of the Company. They also state certain procedures, presumptions and terms relevant to indemnification and advancement of expenses.

SECTION 16 REPORTS

Section 16(a) of the Securities Exchange Act of 1934 requires directors, executive officers and beneficial owners of more than 10% of the outstanding shares of the Company to file with the Securities and Exchange CommissionSEC reports regarding changes in their beneficial ownership of shares in the Company. To the Company’s knowledge, based solely upon review of Forms 3, 4 and 5, and amendments thereto furnished to the Company, there was full compliance with all Section 16(a) filing requirements applicable to those persons for reports filed in 2006.

2010.

COMPANY ACCOUNTANTS

General

Ehrhardt Keefe Steiner & Hottman PC, has been selected by the Audit Committee of the Board of Directorsan independent registered public accounting firm, served as the Company’s independent auditors for the fiscal year ended December 31, 2007.2010 and has been selected by the Audit Committee of the Board as the Company’s independent auditors for the fiscal year ending December 31, 2011. Ehrhardt Keefe Steiner and& Hottman PC has been the Company’s independent auditors since June 2003. A representative of Ehrhardt Keefe Steiner & Hottman PC is expected to be present at the Annual Meeting of Shareholders and to have the opportunity to make a statement if the representative so desires. Such representative also is expected to be available to respond to appropriate questions at that time.

14

REPORT OF AUDIT COMMITTEE
February 27, 2007

March 16, 2011

To the Board of Directors of Scott’s Liquid Gold-Inc.:

We have reviewed and discussed with management the Company’s audited financial statements. We have discussed with Ehrhardt Keefe Steiner & Hottman PC, its independent auditors, the matters required to be discussed by Statement on Auditing Standards No. 61,114,The Auditors’ Communication with Audit Committees,Those Charged with Governance.as amended, by the Auditing Standards Boardadopted in a rule of the American Institute of Certified Public Accountants.Company Accounting Oversight Board (“PCAOB”). We have received and reviewed the written disclosures and the letter from the independent auditors required by Independence Standard No. 1,Independence Discussionsapplicable requirements of the PCAOB regarding the independent auditors’ communications with the Audit Committees,as amended, by the Independence Standards Board,Committee concerning independence and have discussed with the auditors the auditors’ independence.

Based on the reviews and discussions referred to above, we recommendrecommended to the Board of Directors that the audited financial statements referred to above be included in the Company’s Annual Report on Form 10-KSB10-K for the year ended December 31, 20062010 and filed with the Securities and Exchange Commission.

SEC.

The Audit Committee is composed of the three directors named below, all of whom are independent directors as defined in Rule 4200(a)(15) of the NasdaqNASDAQ Stock Market listing standards.

The Board has adopted a written charter for the Audit Committee.

Submitted by the members of the Audit Committee of the Board of Directors.

Board.

Gerald J. Laber, Chairman

Carl A. Bellini

Dennis H. Field

The preceding information under the caption “Report of the Audit Committee” shall be deemed to be “furnished” but not “filed” with the Securities and Exchange Commission.

15SEC.

Disclosure of Auditor Fees

The following is a description of the fees billed to the Company by its independent auditor (Ehrhardt Keefe Steiner & Hottman PC) for each of the years ended December 31, 20062010 and 2005.

         
Audit and Non-Audit Fees 2006  2005 
Audit fees $54,018  $47,607 
Audit-related fees  31,922   34,620 
Tax fees  2,000   1,800 
All other fees  10,956   15,470 
       
Total
 $98,896  $99,497 
       
2009.

Audit and Non-Audit Fees  2010   2009 

Audit fees

  $60,693    $60,184  

Audit-related fees

   1,185     1,185  

Tax fees

   2,523     2,500  

All other fees

   —       —    
          

Total

  $64,401    $63,869  
          

Audit fees are for the audit of the Company’s annual financial statements and the review of the Company’s Annual Report on Form 10-K.10-K and the quarterly reviews of the financial statements included in the quarterly reports on form 10-Q. Audit-related fees include review of the Company’s interim financial statements and Forms 10-Q, required review of certain filings with the SEC, and issuance of consents, and review of correspondence between the Company and the SEC.SEC and services concerning internal controls and transactions. Tax fees primarily include tax compliance, tax advice, including the review of, and assistance in the preparation of, federal and state tax returns. All other fees in 2006 relate to audit of the three employee benefit plans of the Company.

Policy on Pre-Approval of Audit and Non-Audit Services

The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent public accountants. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services. The Audit Committee has delegated limited pre-approval authority to its chairperson. The chairperson is required to report any decisions to pre-approve such services to the full Audit Committee at its next meeting.

SHAREHOLDER PROPOSALS

Shareholder proposals for inclusion in the Company’s proxy materials relating to the next annual meeting of shareholders must be received by the Company on or before November 30, 2007.December 24, 2011. Also, persons named in the proxy solicited by the Board of Directors of the Company for its year 20082011 annual meeting of shareholders may exercise discretionary authority on any proposal presented by a shareholder of the Company at that meeting if the Company has not received notice of the proposal by February 12, 2008.

24, 2011.

20062010 ANNUAL REPORT ON FORM 10-KSB10-K

Shareholders who wish to obtain, without charge, a copy of the Company’s Annual Report on Form 10-KSB report10-K for the year ended December 31, 20062010 in the form filed with the Securities and Exchange CommissionSEC should address a written request to Dennis P. Passantino, Corporate Secretary, Scott’s Liquid Gold-Inc., 4880 Havana Street, Denver, Colorado 80239. The Company’s annual report to shareholders consists of suchForm 10-KSB and accompanies this proxy statement.

16

SOLICITATION OF PROXIES

The Company will pay the cost of soliciting proxies in the accompanying form. In addition to solicitation by mail, proxies may be solicited by officers and other regular employees of the Company by telephone, telegraph or by personal interview for which employees will not receive additional compensation. Arrangements also may be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to beneficial owners of the shares held of record by such

persons, and the Company may reimburse such persons for reasonable out-of pocket expenses incurred by them in so doing.

OTHER BUSINESS

As of the date of this Proxy Statement, Managementmanagement was not aware that any business not described above would be presented for consideration at the meeting. If any other business properly comes before the meeting, it is intended that the shares represented by proxies will be voted in respect thereto in accordance with the judgment of the persons voting them.

The above Notice and Proxy Statement are sent by order of the Board of Directors.Board.

/s/ Jeffrey R. Hinkle

Jeffrey R. Hinkle

Corporate Secretary

Dennis P. Passantino
Corporate Secretary

Denver, Colorado
March 28, 2007

17

April 20, 2011

APPENDIX A

Form of Amendment to 2005 Stock Incentive Plan

1.       Recitals. Pursuant to corporate resolution and subject to shareholder approval, Scott’s Liquid Gold-Inc. wishes to amend the Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan (the “Plan”) by increasing by 1,500,000 the number of shares available under the Plan from 1,500,000 shares to 3,000,000 shares.

2.       Amendment of Plan. The following amendment to the Plan is adopted, effective as provided in Paragraph 3 below:

The Plan is hereby amended to revise the first sentence of Section 4.1 of the Plan to read in its entirety as follows:

4.1Plan Limit. Subject to the provisions of Section 4.4, the aggregate number of shares of Common Stock that may be issued under Awards granted pursuant to the Plan shall not exceed 3,000,000 shares, less the number of shares issued after May 6, 2008 as a result of the exercise of stock options under the 1997 Stock Option Plan and the 1998 Stock Option Plan of the Company.

3.       Effective Date. The Effective Date of this Amendment shall be the date on which the shareholders approve this amendment.

4.       Terms and Conditions of Plan. Except for the amendment in paragraph 2, all terms and conditions of the Plan are unamended and shall remain in full force and effect.

5.       Execution. Scott’s Liquid Gold-Inc. has executed this Amendment as of the date set forth below.

SCOTT’S LIQUID GOLD-INC.

COMPANY

By:

APPENDIX B

COMPENSATION COMMITTEE CHARTER

SCOTT’S LIQUID GOLD-INC.

COMPENSATION COMMITTEE CHARTER

March 2007
RESOLUTION

April 2011

RESOLVED, that there is hereby established a Compensation Committee of the Board of Directors and that the members of the Compensation Committee shall consist of at least two or more outside Directors of the Company and, in addition, the Chairman ofas determined by the Board of the Company, but with the Chairman of the Board not being a voting member of the Committee;

Directors from time to time;

RESOLVED, that the Compensation Committee of the Board of Directors shall have the following authority and responsibilities:

1. To developreview the development of an executive compensation philosophy for the Company; and to obtain all relevant data and information to perform its functions, including the retention of outside consultants at the Company’s expense, if necessary;

2. To originatereview all executive compensation proposals, including recommendations as to salaries, bonuses, determinations of stock grants under various stock plans and other executive benefits and perquisites;

3. To review the duties and responsibilities of the executive officers over time; and to recommend adjustments to compensation of executive officers up or down as appropriate;

4. To review the appropriate mix of variable versus fixed compensation for the Company’s executives and to make recommendations on this issue, as appropriate;

and

5. To review the Company’s bonus and other long-term incentive plans and to determine if procedures followed historically are the most effective;

     6.effective.

Form of Proxy

LOGO

SCOTT’S LIQUID GOLD-INC. 4880 HAVANA ST.

DENVER, CO 8023 ATTN: SHELLEY KENNISON

1

Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 1 1 OF Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET 2 ANY CITY, ON A1A 1A1

NAME

THE COMPANY NAME INC.—COMMON THE COMPANY NAME INC.—CLASS A THE COMPANY NAME INC.—CLASS B THE COMPANY NAME INC.—CLASS C THE COMPANY NAME INC.—CLASS D THE COMPANY NAME INC.—CLASS E THE COMPANY NAME INC.—CLASS F THE COMPANY NAME INC.—401 K

x

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

VOTE BY INTERNET—www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To consider, subjectsign up for electronic delivery, please follow the instructions above to approval byvote using the wholeInternet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

VOTE BY PHONE—1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

CONTROL # 000000000000

SHARES 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345

PAGE 1 OF 2

KEEP THIS PORTION FOR YOUR RECORDS

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

DETACH AND RETURN THIS PORTION ONLY

For Withhold For All

To withhold authority to vote for any

All

All

Except

individual nominee(s), mark “For All

Except” and write the number(s) of the

The Board of Directors and/recommends you vote

nominee(s) on

the line below.

02

FOR the following:

0

0

0

1. Election of Directors

Nominees

01 Mark E. Goldstein 02 Jeffrey R. Hinkle 03 Carl A. Bellini 04 Dennis H. Field 05 Jeffry B. Johnson

06 Gerald J. Laber 0000000000

The Board of Directors recommends you vote FOR the following proposal:

For

Against

Abstain

2. To increase the number of shares of common stock available under the Company’s 2005 Stock Incentive Plan from 1,500,000 to

0

0

0 3,000,000 shares.

NOTE: Such other business as may properly come before the meeting or any adjournment thereof.

Investor Address Line 1 Investor Address Line 2 R1.0.0.11699

Investor Address Line

3

Investor Address Line

4

Investor Address Line

5

1 Please sign exactly as your name(s) appear(s) hereon. When signing as

_

John Sample

attorney, executor, administrator, or other fiduciary, please give fulltitle as such. Joint owners should each sign personally. All holders must

1234 ANYWHERE

STREET

sign. If a corporation or partnership, please sign in full corporate or

ANY CITY, ON

A1A 1A1

partnership name, by authorized officer.

0000106163

SHARES

CUSIP #

JOB #

SEQUENCE #

Signature [PLEASE SIGN WITHIN BOX]

Date

Signature (Joint Owners)

Date

LOGO

0000106163_2 R1.0.0.11699

Important Notice Regarding the shareholders where necessary and appropriate, any request or proposalAvailability of Proxy Materials for any loanthe Annual Meeting: The Notice & Proxy Statement, Annual Report is/

are available at www.proxyvote.com .

SCOTT’S LIQUID GOLD-INC.

Annual Meeting of Shareholders

May 18, 2011 9:00 AM

This proxy is solicited by the Company to directors, officers or other insidersBoard of the Company; and

     7. To review all transactions between the Company or any of its subsidiaries and any executive officer or director of the Company, whether or not involving compensation.

18

Directors

SCOTT’S LIQUID GOLD-INC.
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, May 2, 2007
9:00 A.M. Mountain Time
4880 HAVANA STREET
DENVER, COLORADO 80239
(LIQUID GOLD LOGO)
Scott’s Liquid Gold-Inc.
4880 Havana Street
Denver, Colorado 80239		proxy
This proxy is solicited by the Board of Directors for use at the Annual Meeting on May 2, 2007,18, 2011, at 9:00 A.M. Mountain Time, or any

adjournment thereof.

The shares of stock you hold in your account will be voted as you specify on the reverse side.

If no choice is specified, the proxy will be voted “FOR”“FOR” Item 1.

1 and Item 2.

By signing the proxy, you revoke all prior proxies and appoint Mark E. Goldstein, and Jeffrey R. Hinkle Jeffry B. Johnson and Dennis P. Passantino, and each of them acting in the

absence of the others, with full power of substitution, as your proxies to vote all your shares on the matters shown on the reverse side and

any other matters which may come before the Annual Meeting and all adjournments.

Seeadjournments

Continued and to be signed on reverse for voting instructions.

side

òPlease detach hereò
The Board of Directors Recommends a Vote FOR Item 1.
                       
1. Election of directors:  01  Mark E. Goldstein  05  Carl A. Bellini   Vote FOR   Vote WITHHELD
     02  Jeffrey R. Hinkle  06  Dennis H. Field o all nominees o from all nominees
     03  Jeffry B. Johnson  07  Gerald J. Laber   (except as marked)    
     04  Dennis P. Passantino              
(Instructions: To withhold authority to vote for any indicated nominee, write the number(s) of the nominee(s) in the box provided to the right.)
2.    In their discretion, the Proxies are authorized to vote upon such other business as properly may come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTEDFOR PROPOSAL ONE.
Address Change? Mark Boxo Indicate changes below:Date

Signature(s) in Box
Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.