SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
[X] Filed by Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
STEVEN MADDEN, LTD.
(Name of Registrant As Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
N/A
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2) Aggregate number of securities to which transaction applies:
N/A
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
N/A
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4) Proposed maximum aggregate value of transaction:
N/A
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(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and date of its filing.
1) Amount Previously Paid:
N/A
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2) Form, Schedule or Registration Statement No.:
N/A
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3) Filing Party:
N/A
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4) Date Filed:
N/A
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STEVEN MADDEN, LTD.
52-16 BARNETT AVENUE
LONG ISLAND CITY, NY 11104
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2001
-----------------------------------
TO THE STOCKHOLDERS OF STEVEN MADDEN, LTD.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Steven Madden, Ltd., a Delaware corporation (the
"Company"), will be held on May 25, 2001, at the Company's showroom located at
1370 Avenue of the Americas, 12th Floor, New York, New York at 10:00 a.m., local
time, and thereafter as it may from time to time be adjourned, for the purposes
stated below.
1. To elect eight (8) directors to the Board of the Company for a
one (1) year term;
2. To approve an amendment to the Company's 1999 Stock Plan to
increase the maximum number of shares of the Company's common
stock subject to the plan from 975,000 shares to 1,600,000
shares;
3. To ratify the appointment of Richard A. Eisner & Company, LLP
as independent auditors of the Company for fiscal year 2001;
and
4. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
All Stockholders are cordially invited to attend the Annual Meeting.
Only those Stockholders of record at the close of business on April 16, 2001 are
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof. A complete list of stockholders entitled to vote at the Annual Meeting
will be available at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ STEVEN MADDEN
-----------------------------------------
April 25, 2001 Steven Madden,
Chief Executive Officer
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN THE
ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO AMERICAN
STOCK TRANSFER & TRUST COMPANY, 40 WALL STREET, NEW YORK, NEW YORK 10005.
STEVEN MADDEN, LTD.
52-16 BARNETT AVENUE
LONG ISLAND CITY, NY 11104
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Steven Madden, Ltd., a Delaware
corporation (the "Company"), for use at the annual meeting of the Company's
stockholders to be held at the Company's showroom located at 1370 Avenue of the
Americas, 12th Floor, New York, New York on May 25, 2001 at 10:00 a.m., local
time, and at any adjournments thereof (the "Annual Meeting").
The Annual Meeting has been called to consider and take action on the
following proposals: (i) to elect eight (8) directors to the Board of Directors
of the Company for a one (1) year term, (ii) to approve an amendment to the
Company's 1999 Stock Plan to increase the maximum number of shares of Company's
Common Stock subject to the plan from 975,000 shares to 1,600,000 shares, (iii)
to ratify the appointment of Richard A. Eisner & Company, LLP as independent
auditors of the Company for fiscal year 2001, and (iv) to transact such other
business as may properly come before the Annual Meeting or any adjournments
thereof. The Board of Directors knows of no other matters to be presented for
action at the Annual Meeting. However, if any other matters properly come before
the Annual Meeting, the persons named in the proxy will vote on such other
matters and/or for other nominees in accordance with their best judgment. THE
COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF
EACH OF THE PROPOSALS. Only holders of record of common stock, $.0001 par value
(the "Common Stock"), of the Company at the close of business on April 16, 2001
(the "Record Date") will be entitled to vote at the Annual Meeting.
The principal executive offices of the Company are located at 52-16
Barnett Avenue, Long Island City, NY 11104 and its telephone number is (718)
446-1800. The approximate date on which this Proxy Statement, the proxy card and
other accompanying materials are first being sent or given to stockholders is
April 25, 2001. The Company's Annual Report for the fiscal year ended December
31, 2000, including audited financial statements, are being sent to stockholders
together with this Proxy Statement and are incorporated herein by reference.
INFORMATION CONCERNING SOLICITATION AND VOTING
As of the Record Date, there were outstanding 11,366,605 shares of
Common Stock held by approximately 72 holders of record and 3,836 beneficial
owners. Only holders of shares of Common Stock on the Record Date will be
entitled to vote at the Annual Meeting. The holders of Common Stock are entitled
to one vote on all matters presented at the meeting for each share held of
record. The presence in person or by proxy of holders of record of a majority of
the shares outstanding and entitled to vote as of the Record Date shall be
required for a quorum to transact business at the Annual Meeting. If a quorum
should not be present, the Annual Meeting may be adjourned until a quorum is
obtained. The nominees to be selected as a Director named in Proposal 1 must
receive a plurality of the eligible votes cast at the Annual Meeting with
respect to such Proposal. The approval of the amendment to the Company's 1999
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Stock Plan described in Proposal 2 and the ratification of the appointment of
Richard A. Eisner & Company, LLP as independent auditors of the Company for
fiscal year 2001 described in Proposal 3 must be approved by the affirmative
vote of the holders of a majority of the total votes cast on such proposal in
person or by proxy. Abstentions and broker non-votes will have no effect with
respect to any of the Proposals. Brokers who hold shares in street name may vote
on behalf of beneficial owners with respect to Proposals 1,2 and 3. The approval
of all other matters to be considered at the Annual Meeting requires the
affirmative vote of a majority of the eligible votes cast at the Annual Meeting
on such matters.
The expense of preparing, printing and mailing this Proxy Statement,
exhibits and the proxies solicited hereby will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by officers and
directors and regular employees of the Company, without additional remuneration,
by personal interviews, telephone, telegraph or facsimile transmission. The
Company will also request brokerage firms, nominees, custodians and fiduciaries
to forward proxy materials to the beneficial owners of shares of capital stock
held of record and will provide reimbursements for the cost of forwarding the
material in accordance with customary charges.
Proxies given by stockholders of record for use at the Annual Meeting
may be revoked at any time prior to the exercise of the powers conferred. In
addition to revocation in any other manner permitted by law, stockholders of
record giving a proxy may revoke the proxy by an instrument in writing, executed
by the stockholder or his attorney authorized in writing or, if the stockholder
is a corporation, under its corporate seal, by an officer or attorney thereof
duly authorized, and deposited either at the corporate headquarters of the
Company at any time up to and including the last business day preceding the day
of the Annual Meeting, or any adjournment thereof, at which the proxy is to be
used, or with the chairman of such Annual Meeting on the day of the Annual
Meeting or adjournment thereof, and upon either of such deposits the proxy is
revoked.
ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
SPECIFIED ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO
CONTRARY SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE
DISCRETION OF THE BOARD OF DIRECTORS WITH RESPECT TO ANY OTHER BUSINESS THAT MAY
COME BEFORE THE ANNUAL MEETING.
None of the matters to be acted on at the Annual Meeting give rise to
any statutory right of a Stockholder to dissent and obtain the appraisal of or
payment for such Stockholder's shares.
PROPOSAL ONE
TO ELECT EIGHT DIRECTORS TO SERVE FOR ONE YEAR AND UNTIL THEIR SUCCESSORS HAVE
BEEN DULY ELECTED AND QUALIFIED
Under the By-Laws of the Company (the "By-Laws"), the Board of
Directors of the Company is required to be comprised of a minimum of one (1)
director, subject to which limitation the number of directors may be fixed from
time to time by action of the stockholders or of the directors, with all
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directors elected by the stockholders each year at the annual stockholders
meeting. The Company's board presently consists of eight (8) directors whose
terms expire at the Annual Meeting. Officers are elected annually by and serve
at the discretion of the Board of Directors.
The Board has nominated eight (8) candidates to serve as directors all
of whom are currently directors. The names and biographical summaries of the
eight (8) persons who have been nominated by the Board of Directors to stand for
election at the Annual Meeting have been provided below for your information.
The Board of Directors has proposed that these persons be elected at the Annual
Meeting to serve until the next annual meeting of stockholders. The Proxies will
be voted for the election of the eight (8) nominees listed below as directors of
the Company unless otherwise specified on the form provided. The vote of a
majority of the capital stock, present and constituting a quorum at the Annual
Meeting, will be necessary to elect the directors listed below. If, for any
reasons, any of the nominees shall be unable or unwilling to serve, the Proxies
will be voted for a substitute nominee who will be designated by the Board of
Directors at the Annual Meeting. Stockholders may abstain from voting by marking
the appropriate boxes on the enclosed Proxy. Abstentions shall be counted
separately and shall be used for purposes of calculating quorum.
BIOGRAPHICAL SUMMARIES OF NOMINEES FOR THE BOARD OF DIRECTORS
CHARLES KOPPELMAN has been a director of the Company since June 1998
and acting Chairman of the Board since June 2000. Since February 4, 1998, Mr.
Koppelman has been the Chairman and Chief Executive Officer of CAK Universal
Credit Corp., a joint venture created with Prudential Securities to provide
financing to the entertainment, sports and licensing industries. From 1988 to
1997, Mr. Koppelman served as the Chairman and Chief Executive Officer of EMI
Capital Music, N.A. See "Recent Developments."
STEVEN MADDEN has been the Chief Executive Officer and a director since
the Company's inception. In February 2000, Mr. Madden relinquished the position
of President which he held since the Company's inception, and in June 2000, Mr.
Madden resigned as Chairman of the Board. In 1980, Mr. Madden joined L.J.
Simone, a domestic footwear manufacturer, as an Account Executive. At that time,
L.J. Simone had annual sales of approximately $800,000. Mr. Madden was promoted
to Sales Manager and Director of Product Development and was instrumental in the
company's growth to $28 million in annual sales. After leaving L.J. Simone in
1988, Mr. Madden joined M.C.M. Footwear, where he commenced the design,
development and marketing of the "Souliers" line of footwear for women. In 1990,
Mr. Madden founded the Company. See "Recent Developments."
RHONDA J. BROWN has been the President of the Company since February
2000 and a director of the Company since October 1996. Ms. Brown also served as
Chief Operating Officer of the Company from July 1996 to January 2001. Prior to
joining the Company, Ms. Brown served as President and Chief Executive Officer
of Icing, Inc. from May 1995 to December 1995. Previously, from August 1992 to
December 1994, Ms. Brown served as Merchandise President of Macy's East, a
division of R.H. Macy & Co., Inc. From July 1988 to July 1992. Ms. Brown served
as Senior Vice-President and General Merchandise Manager to Lord & Taylor, a
division of the May Company. Ms. Brown attended the American University,
receiving a BS in Marketing and Public Communications in 1976. See "Recent
Developments."
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ARVIND DHARIA has been the Chief Financial Officer of the Company since
October 1992 and a director since December 1993. From December 1988 to September
1992, Mr. Dharia was Assistant Controller of Millennium III Real Estate Corp.
See "Recent Developments."
JAMIESON KARSON has been a director of the Company since January 2,
2001. Mr. Karson has practiced law for over 16 years. He has been a partner in
the real estate department of the law firm Tannenbaum Helpern Syracuse &
Hirshtritt, LLP since January 1, 1997. Previously, he was a partner at Karson
McCormick from February 1992 through December 31, 1996.
JOHN L. MADDEN has been a director of the Company since the Company's
inception. Since April 1998, Mr. Madden has owned and managed a branch office of
Tradeway Securities Group, Inc. in Florida. From May 1996 through December 1996,
Mr. Madden formed JLM Consultants, Inc. which acted as a branch office of Merit
Capital, Inc. for several broker-dealers. From May 1994 to May 1996, Mr. Madden
served as Vice President of Investments for GKN Securities, Inc. From August
1993 to April 1994, Mr. Madden was employed by Biltmore Securities, Inc. as
Managing Director and registered sales representative. Mr. Madden is the brother
of Steven Madden, the Company's founder and Chief Executive Officer. See "Recent
Developments."
PETER MIGLIORINI has been a director of the Company since October 1996.
From 1994 to present, Mr. Migliorini has served as Sales Manager for Greschlers,
Inc., a major supply company located in Brooklyn, New York. From 1987 to 1994
Mr. Migliorini served as Director of Operations for Mackroyce Group. Mr.
Migliorini has previously served in a number of capacities, ranging from
Assistant Buyer to Chief Planner/Coordinator for several shoe companies
including Meldico Shoes, Perry Shoes, and Fasco Shoes. See "Recent
Developments".
HEYWOOD WILANSKY has been a director of the Company since January 2,
2001. Mr. Wilansky served as the President and Chief Executive Officer of
Bon-Ton Stores, Inc, from August 1995 to July 2000 and a director of Bon-Ton
Stores, Inc. from August 1995 to present. Prior to that, he was employed by The
May Department Stores Company for more than 19 years, last serving as President
and Chief Executive Officer of the Foley's division from1992 to 1995. Mr.
Wilansky is a director of First Washington Realty Trust, a real estate
organization which principally owns neighborhood shopping centers.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION
OF MS. RHONDA BROWN AND MESSRS. CHARLES KOPPELMAN, STEVEN MADDEN, ARVIND DHARIA,
JAMIESON KARSON, JOHN L. MADDEN, PETER MIGLIORINI, AND HEYWOOD WILANSKY. UNLESS
OTHERWISE INSTRUCTED OR UNLESS AUTHORITY TO VOTE IS WITHHELD, THE ENCLOSED PROXY
WILL BE VOTED FOR THE ELECTION OF THE ABOVE LISTED NOMINEES.
DIRECTOR COMPENSATION
Directors who are also employees of the Company are not paid any fees
or other remuneration, for service on the Board or any of its Committees. Each
non-employee director receives (i) an annual grant of options to purchase 10,000
shares of Common Stock at an exercise price per share equal to two dollars
($2.00) above the fair market value of the Common Stock on the date of grant and
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(ii) twenty thousand dollars ($20,000) in immediately available funds. In
addition, non-employee directors are reimbursed by the Company for all expenses
related to attending meetings.
On July 18, 2000, the Company granted Mr. Koppelman 50,000 options (the
"Options") at an exercise price of $7.00 per share as compensation for assuming
the duties of Chairman of the Board of the Company. These Options vested on July
18, 2000 and will expire on July 18, 2005. Provided that Mr. Koppelman continues
his service as acting Chairman of the Board, he is entitled to receive (i)
75,000 options on May 31, 2001 at an exercise price of $7.00 per share, (ii)
75,000 options on May 31, 2002 at an exercise price per share equal to the
closing bid price of the Company's common stock on May 31, 2002 as quoted on The
Nasdaq Stock Market, (iii) 75,000 options on May 31, 2003, at an exercise price
per share equal to the closing bid price of the Company's common stock on May
31, 2003 as quoted on The Nasdaq Stock Market, and (iv) 75,000 options on May
31, 2004 at an exercise price per share equal to the closing bid price of the
Company's common stock on May 31, 2004 as quoted on The Nasdaq Stock Market.
Each of these options will expire five (5) years following the date of the
grant. In the event there is a change of control transaction requiring the
approval of the Company's stockholders, the Options will be granted and vest
immediately prior to the closing of the change of control transaction at an
exercise price of $7.00 per share.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met six (6) times during the fiscal year ended
December 31, 2000. The Board of Directors has standing Audit, Real Estate and
Compensation Committees.
The Audit Committee of the Board of Directors consists of directors
Charles Koppelman, Peter Migliorini and Heywood Wilansky, none of whom was an
employee of the Company during 2000. This Committee is primarily responsible for
reviewing the services performed by the Company's independent auditors,
evaluating the Company's accounting policies and its system of internal
controls, and reviewing significant finance transactions.
The audit functions of the Audit Committee are focused on three areas:
- the adequacy of the Company's internal controls and financial
reporting process and the reliability of the Company's
financial statements.
- the independence and performance of the Company's independent
auditors.
- the Company's compliance with legal and regulatory
requirements.
The Audit Committee meets with management periodically to consider the
adequacy of the Company's internal controls and the objectivity of its financial
reporting. The Audit Committee discusses these matters with the Company's
independent auditors and with appropriate Company financial personnel. Meetings
are held with the independent auditors who have unrestricted access to the
committee. The Audit Committee also recommends to the Board the appointment of
the independent auditors and review periodically their performance and
independence from management. In addition, the committee reviews the Company's
financing plans and reports recommendations to the full Board of Directors for
approval and to authorize action. The Directors who serve on the committee are
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all "Independent" for purposes of The Nasdaq Stock Market listing standards.
That is, the Board of Directors has determined that no member of the Audit
Committee has a relationship to the Company that may interfere with its
independence from the Company and its management. The Board has adopted a
written charter setting out the audit related functions the committee is to
perform. A copy of that charter is attached to this proxy statement as Annex B.
Management has primary responsibility for the Company's financial
statements and the overall reporting process, including the Company's system of
internal controls. The independent auditors audit the annual financial
statements prepared by management, express an opinion as to whether those
financial statements present fairly the financial position, results of
operations and cash flows of the Company in conformity with generally accepted
accounting principles and discuss with the Audit Committee any issues they
believe should be raised with the Audit Committee.
This year, the committee reviewed the Company's audited financial
statements and met with both management and Richard A. Eisner & Company, LLP,
the Company's independent auditors, to discuss those financial statements.
Management has represented to the committee that the financial statements were
prepared in accordance with generally accepted accounting principles. The
committee has received from and discussed with Richard A. Eisner & Company, LLP
the written disclosure and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). These items
relate to that firm's independence from the company. The committee also
discussed with Richard A. Eisner & Company, LLP any matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). Based on these reviews and discussions, the committee recommended
to the Board that the Company's audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2000.
For the year ended December 31, 2000, the Company incurred professional
fees to its auditors in the amount of $356,000, of which $120,000 related to
auditing services and $236,000 related to all other services. The Audit
Committee has considered whether the non-audit services provided by the
Company's auditors in connection with the year ended December 31, 2000 were
compatible with the auditor's independence and has concluded that the Company's
auditors have maintained its independence.
AUDIT COMMITTEE
Charles Koppelman,
Peter Migliorini
Heywood Wilansky
The Compensation Committee of the Board of Directors consists of
directors Charles Koppelman, John Madden and Peter Migliorini. The Compensation
Committee is primarily responsible for approving salaries, bonuses and other
compensation for the Company's Chief Executive Officer and named executive
officers, reviewing management recommendations relating to new incentive
compensation plans and changes to existing incentive compensation plans, and for
administering the Company's stock plans, including granting options and setting
the terms thereof pursuant to such plan (all subject to approval by the Board of
Directors).
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The Real Estate Committee of the Board of Directors consists of
directors Steven Madden, Rhonda Brown and Jamieson Karson. This Committee is
primarily responsible for overseeing real estate transactions for the Company.
In light of the Company's aggressive retail store expansion plan, the Real
Estate Committee was formed to consider proposed real estate transactions for
approval.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company during the year ended December 31, 2000,
all Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were satisfied.
RECENT DEVELOPMENTS
On June 20, 2000, Steven Madden, the Company's former Chairman and
current Chief Executive Officer, was indicted in the Southern District and
Eastern District of New York. The indictments allege that Mr. Madden engaged in
securities fraud and money laundering activities. In addition, the Securities
and Exchange Commission filed a complaint in the United States District Court
for the Eastern District of New York alleging that Mr. Madden violated Section
17(a) of the Securities Exchange Act of 1934, as amended.
Neither the indictments nor the SEC complaint alleges any wrongdoing by
the Company or its other officers and directors. Mr. Madden has denied any
improper conduct and has advised the Company that he will vigorously defend
himself against any and all charges.
On June 21, 2000, Steven Madden resigned as Chairman of the Board of
Directors and the Company appointed Charles Koppelman acting Chairman of the
Board. Mr. Koppelman has been a director of the Company since June 1998. Mr.
Madden continues to serve as the Company's Chief Executive Officer.
On March 14, 2001, the Company became aware that the Securities and
Exchange Commission had issued a formal order of investigation with respect to
trading in the Company's securities. The Company has reason to believe that the
Staff is investigating possible securities law violations by persons trading in
the Company's securities prior to June 20, 2000 who may have been in possession
of alleged material, non-public information. As previously disclosed on Form 4's
filed with the Securities and Exchange Commission, certain officers and
directors of the Company sold shares of the Company's common stock during 1999
and the first half of 2000. Each of such officers and directors denies having
knowledge of any material, non-public information prior to engaging in such
transactions.
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DIRECTORS AND EXECUTIVE OFFICERS
Certain information concerning the directors and executive officers of
the Company is set forth below:
Name Age Position(s) with the Company
- ---- --- ----------------------------
Charles Koppelman 60 Acting Chairman of the Board(1)
Steven Madden 44 Chief Executive Officer and Director(2)
Rhonda Brown 45 President and Director(3)
Arvind Dharia 51 Chief Financial Officer, Director and
Secretary
Richard Olicker 43 Chief Operating Officer(4)
Gerald Mongeluzo 60 President of Adesso-Madden, Inc.
Mark Jankowski 40 General Merchandise Manager
Robert Schmertz 37 President of Shoe Biz, Inc. and Diva
Acquisition Corp.
Joseph Masella 52 President of l.e.i. Footwear and Stevies,
Inc.
Les Wagner 60 Vice President of Real Estate of Steven
Madden Retail, Inc. and Director(5)
John L. Madden 53 Director
Peter Migliorini 52 Director
Jamieson Karson 43 Director(6)
Heywood Wilansky 52 Director(7)
John Basile 49 Executive Vice President and Director(8)
- -----------------
(1) Mr. Koppelman was appointed Acting Chairman of the Board in June 2000.
(2) Mr. Madden held the additional titles of President until February 2000 and
Chairman of the Board until June 2000. See "Recent Developments."
(3) Ms. Brown was appointed President in February 2000 and relinquished her
position as Chief Operating Officer in January 2001.
(4) Mr. Olicker commenced his employment with the Company in January 2001.
(5) Mr. Wagner resigned as officer of Steven Madden Retail, Inc. and a director
of the Company in March 2001.
(6) Mr. Karson was appointed as a director of the Company in January 2001.
(7) Mr. Wilansky was appointed as a director of the Company in January 2001.
(8) Mr. Basile resigned as officer and director of the Company in December
2000.
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See "Biographical Summaries of Nominees for the Board of Directors" for
biographical summaries of Ms. R. Brown and Messrs. A. Dharia, J. Karson, C.
Koppelman, J. Madden, S. Madden, P. Migliorini, and H. Wilansky.
RICHARD OLICKER has been Chief Operating Officer of the Company since
January 3, 2001. Prior to joining the Company, Mr. Olicker spent more than 12
years at AeroGroup International, Inc., marketers of Aerosoles and What's What
shoes. As cofounder of Aerosoles, Mr. Olicker served as President of the
company's private label division and was responsible for managing all aspects of
sourcing, production, pricing, sales, service, systems and finance. Mr. Olicker
began his career in footwear in 1982 as the General Counsel and Licensing
Director at El Greco Leather Products and later held an executive position with
the apparel licensing firm New Retail Concepts, Inc.
GERALD MONGELUZO has been President of Adesso-Madden, Inc., a wholly
owned subsidiary of the Company, since September 1995. Previously, Mr. Mongeluzo
was the founder and President of Adesso Shoes, Inc., a buying agent of private
label shoes. From 1987 through 1991, Mr. Mongeluzo was the President of the
Prima Barabaro Division of Cells Enterprise, Inc. Mr. Mongeluzo founded Prima
Shoes, Inc., a buying agent of private label shoes, and served as President from
1974 to 1987.
MARK JANKOWSKI has been the General Merchandise Manager of the Company
since December 2000. Previously, Mr. Jankowski had been the President of Steve
Madden Retail, Inc. from February 1999 to December 2000 and the Company's Vice
President of Product Development from 1995 to 1999. From 1980 to 1995, Mr.
Jankowski held several positions at Edison Brothers including Head of Buying.
ROBERT SCHMERTZ has been the President of Shoe Biz, Inc., a wholly
owned subsidiary of Steve Madden Retail Inc. since May 1998 and President of
Diva Acquisition Corp. since January 2001. Before joining the Company, Mr.
Schmertz was President of Daniel Scott Inc. from November 1995 to May 1998.
Previously, Mr. Schmertz was the East Coast Sales Manager for Impo International
from January 1993 through November 1995. From April 1990 to December 1992, Mr.
Schmertz served as a sales representative for Espirit de Corp. based in San
Francisco, California.
JOSEPH MASELLA has been President of Stevies, Inc. since April 2000 and
the Company's l.e.i. Footwear since July 1998. Previously, he was Vice
President-Sales of the Company's Adesso-Madden subsidiary since October 1995.
From 1992 to 1995, Mr. Masella served as General Manager-Far East Division of US
Shoe Co.
LES WAGNER was the Vice President-Real Estate for Steven Madden Retail,
Inc. from April 1999 to March 2001 and a Director of the Company from October
1996 to March 2001. Mr. Wagner resigned as officer of Steven Madden Retail, Inc.
and a Director of the Company in March 2001. From 1993 to 1996, Mr. Wagner
served as the President of Baker/Leeds Shoe Store, a Division of Edison Brothers
Stores, Inc. Mr. Wagner has served in a number of other capacities for
Baker/Leeds from 1963 to 1993 which included, General Merchandise Manager from
1989 to 1993; Vice President Real Estate Northeast Area from 1988 to 1989; and
President, Gussini Discount Shoe Division from 1987 to 1988. Mr. Wagner attended
Harvard University, completing the Advanced Management Program (AMP 100).
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JOHN BASILE was the Company's Director of Operations from June 1994
until December 1997 and the Company's Executive Vice President from January 1998
through December 2000. Mr. Basile was a director of the Company from November
1996 through December 2000. Mr. Basile resigned as officer and Director of the
Company in December 2000. Currently, Mr. Basile is a consultant to the Company.
From 1990 to 1994, Mr. Basile was Executive Vice President of Cougar U.S.A.
responsible for the United States Division of Susan Shoes of Canada. Previously,
Mr. Basile was a Sales Manager at Bellini Imports from 1980 to 1990.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth for each of the last three fiscal years
ended December 31, 2000, December 31, 1999 and December 31, 1998 the
remuneration paid by the Company to its Chief Executive Officer and the four
other most highly compensated executive officers:
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION
-------------------------------------------------------
NAME AND FISCAL AWARDS OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(1) COMPENSATION
- --------------------------------------------------------------------------------
Steven Madden, 2000 $300,000 $400,000 -0- $311,437(2)
Chief Executive Officer 1999 $275,000 $800,000 -0- $318,641(2)
1998 $274,231 $ 0.00 191,189 $315,394(2)
Rhonda Brown, 2000 $270,052 $581,150 190,575
President 1999 $257,278 $537,920 -0-
1998 $236,888 $242,493 188,811
John Basile, Executive 2000 $250,000 $614,047 -0-
Vice President 1999 $299,135 $ 88,299 100,000
1998 $274,711 $189,000 250,000
Arvind Dharia, 2000 $171,769 $ 80,000 25,000 $ 91,743(3)
Chief Financial Officer 1999 $140,000 $ 39,367 25,000 $ 88,606(3)
1998 $140,000 $ 46,561 32,000 $ 86,891(3)
Gerald Mongeluzo 2000 $257,653 $ 75,000 -0-
President, Adesso- 1999 $249,769 $ 50,000 -0-
Madden, Inc. 1998 $230,992 $ 35,000 50,000
- ----------
(1) Options to purchase shares of Common Stock.
(2) Life insurance premium and other expenses paid on behalf of Mr. Madden.
(3) Life insurance premium paid on behalf of Mr. Dharia.
11
The following table sets forth certain 2000 information with respect to
options granted during the last fiscal year to the Company's executive officers
named in the above Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Number of Securities Percent of Total Exercise or
Underlying Options/SARS Granted to Base Price
Name Options/SARS Granted (#) Employees in Fiscal Year % ($/Sh) Expiration Date
- ---- ------------------------ -------------------------- ------ ---------------
Rhonda Brown 190,575 38.9% $11.63 August 30, 2010
Arvind Dharia 25,000 5.1% $ 6.57 June 29, 2010
The following table sets forth certain information with respect to
options exercised during the last fiscal year by the Company's executive
officers named in the Summary Compensation Table, and with respect to
unexercised options held by such persons at the end of the last fiscal year:
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
Shares Number of Securities Value of Unexercised in the
Acquired on Value Realized Underlying Unexercised Money Options/SARS at
Name Exercise (#) $ Options/SARS At FY-End (#) FY-End ($) (1)
- ---- ------------ - -------------------------- --------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Steven Madden 100,000 $ 1,268,943 1,051,189 -- 4,734,238 --
Rhonda Brown 100,000 $ 1,036,803 230,454 142,931 0 0
Arvind Dharia 15,000 $ 157,488 95,750 6,250 118,136 6,625
John Basile 45,000 $ 418,359 470,000 -- 1,601,100 --
Gerald Mongeluzo -- -- 62,500 -- 25,625 --
- ----------
(1) Based upon a closing price on December 29, 2000 of $7.63 per share as
reported by The Nasdaq Stock Market.
12
1999 STOCK PLAN
As of March 15, 1999, the Board of Directors of the Company, adopted
the 1999 Stock Plan (the "1999 Plan"), and on June 4, 1999 the Company's
stockholders approved the adoption of the 1999 Plan. In May 2000, the Company's
stockholders approved an amendment to the 1999 Plan increasing the number of
shares of common stock subject to the plan from 400,000 to 975,000 shares. The
purpose of the 1999 Plan is to provide a means whereby directors and selected
employees, officers, agents, consultants, and independent contractors of the
Company, may be granted incentive stock options and/or nonqualified stock
options to purchase shares of common stock, in order to attract and retain the
services or advice of such directors, employees, officers, agents, consultants,
and independent contractors and to provide additional incentive for such persons
to exert maximum efforts for the success of the Company by encouraging stock
ownership in the Company. The 1999 Plan is expected to provide even greater
flexibility to the Company's compensation methods, after giving due
consideration to competitive conditions and the impact of federal tax laws. See
Proposal Number 2 - Amendment of the 1999 Stock Plan.
OTHER OPTIONS
In March 1995, the Company issued options to purchase 1,000,000 shares
of its Common Stock to a company wholly owned by the Company's Chief Executive
Officer. The options were subsequently transferred to the Chief Executive
Officer. The options which are fully exercisable, have an exercise price of
$1.75 and an exercise period of 10 years. Unearned compensation was recorded in
the amount of $575,000 which represented the difference between the exercise
price and the fair value of the stock on the date of grant and was classified as
a component of stockholders equity. The unamortized portion was charged to
operations in 1997 in connection with the President's amended employment
agreement.
EMPLOYMENT AGREEMENTS
In July 1997, the Company entered into a ten (10) year Employment
Agreement with Steven Madden, the Company's founder, Chief Executive Officer and
Chairman of the Board. In February 2000, the term of the Employment Agreement
with Mr. Madden was extended to December 31, 2009 and Mr. Madden relinquished
his title as President of the Company. The Company agreed to pay Mr. Madden an
annual salary of $275,000 for the two year period commencing January, 1998,
$300,000 for the year commencing January, 2000 and an incremental increase of
ten percent (10%) per annum for each year thereafter. The agreement provided for
payment of a signing bonus of $200,000, and annual non-accountable expense
allowance of $50,000 and use of an automobile having a retail selling price of
no more than $50,000. In addition, in the event of Mr. Madden's total disability
or his death, the Company is obligated to pay to Mr. Madden's estate an amount
equal to the appropriate salary for the twelve (12) month period immediately
subsequent to the date of total disability or his death. In the event Mr.
Madden's employment agreement is terminated for any reason other than "for
cause" or due to his "total disability", the Company is obligated to pay Mr.
Madden the balance of his salary, fifty percent (50%) upon termination and the
remaining fifty percent (50%) in annual installments over the life of the
agreement. Further, in the event of a "change of control" of the Company, Mr.
Madden is entitled to terminate the Employment Agreement and to receive the
balance of his salary upon termination and an amount equal to his bonus (if any)
13
for the preceding calendar year multiplied by the remaining years left under his
Employment Agreement. Mr. Madden's Employment Agreement contains other customary
provisions. See "Recent Developments."
In July 1996, the Company entered into a three (3) year Employment
Agreement with Rhonda Brown pursuant to which Ms. Brown agreed to serve as the
Company's Chief Operating Officer. The Company agreed to pay Ms. Brown an annual
salary of $200,000 plus a 10% annual increase in the base salary. The agreement
provided that Ms. Brown received options to purchase 66,000 shares of the
Company's Common Stock at an exercise price equal to the closing bid price of
the Company's Common Stock on June 28, 1996, as quoted on The Nasdaq Stock
Market. As of May 1, 1998, the Company and Ms. Brown amended her employment
agreement so that (i) the term of her employment agreement is extended to July
31, 2001 and (ii) her annual base salary increase will be reduced from 10% per
annum to 5% per annum commencing on July 1, 2000. In addition, in the event that
a "change of control" of the Company occurs without Ms. Brown's consent, she is
entitled to receive an amount equal to the greater of (i) the balance of the
Base Salary during the remainder of the Term, and (ii) the Base Salary for two
years and Ms. Brown's most recent annual bonus multiplied by the number of years
remaining under the agreement. As of March 15, 1999, the Company and Ms. Brown
executed a second amendment to her employment agreement. The second amendment
accelerated the reduction in her annual base salary increase from July 1, 2000
to July 1, 1999 and reduced by one half (1/2) the number of the options issuable
as an Option Bonus. Ms. Brown's Employment Agreement contains other customary
provisions. In February 2000, Ms. Brown was appointed as the President of the
Company and in January, 2001 Ms. Brown relinquished her title as Chief Operating
Officer.
In November 2000, the Company and Ms. Brown amended her employment
agreement to extend the term of her employment agreement to December 31, 2003.
The Company agreed to pay Ms. Brown an annual base salary of (i) two hundred
seventy five thousand dollars ($275,000) through December 31, 2000, (ii) three
hundred fifty thousand dollars ($350,000) from January 1, 2001 through June 30,
2002, and (iii) four hundred thousand dollars ($400,000) from July 1, 2002
through December 31, 2003. In addition, the most recent amendment provides that
Ms. Brown is entitled to receive a cash bonus equal to four percent (4%) of the
amount by which the aggregate EBIT-D (earnings before the payment of interest or
taxes or a deduction for depreciation) for the four (4) calendar quarters ending
on the most recent December 31st exceeds EBIT-D for the four (4) calendar
quarters ending on the preceding December 31st. The agreement also provides that
on each August 31st during the term of the Agreement, Ms. Brown is entitled to
receive options (the "Performance Options") to purchase 100,000 shares of Common
Stock of the Company. The options comprising the Performance Options are
exercisable at a price equal to the average closing bid price of the Company's
shares of Common Stock for the five trading days ending on August 29th.
In January 1998, the Company entered into a four (4) year Employment
Agreement with Arvind Dharia, pursuant to which Mr. Dharia will serve as the
Company's Chief Financial Officer. The term of the agreement is subject to
automatic extension for one (1) year unless either party terminates the
agreement with ninety (90) days' prior notice. The Company agreed to pay Mr.
Dharia an annual salary of $140,000 subject to annual incremental increases of
ten percent (10%) commencing on the third anniversary of the Employment
Agreement. The agreement provides that Mr. Dharia receive options to purchase
25,000 shares of the Company's Common Stock on June 30 of each year during the
14
term of the agreement. The options are to vest quarterly over a period of one
(1) year and are exercisable at an exercise price equal to the closing bid price
of the Company's Common Stock on June 30 of each year, as quoted on The Nasdaq
Stock Market. If the Company does not extend the term of Mr. Dharia's Employment
Agreement (other than "for cause" or "total disability"), Mr. Dharia shall
receive severance pay equal to three months salary on the expiration of the
agreement. In addition, in the event of Mr. Dharia's total disability or death
the Company is obligated to pay Mr. Dharia or his estate an amount equal to the
appropriate salary for the twelve (12) month period immediately subsequent to
the date of his total disability or death. In the event Mr. Dharia's employment
agreement is terminated for any reason other than "for cause" or due to his
"total disability", the Company is obligated to pay Mr. Dharia the balance of
his salary and benefits, fifty percent (50%) on January 1 after the date of
termination and the remaining fifty percent (50%) one year after. Further, in
the event of a "change in control" of the Company, Mr. Dharia is entitled to
terminate the Employment Agreement and to receive the balance of his salary upon
termination and an amount equal to his bonus (if any) for the preceding calendar
year multiplied by the remaining years left under his Employment Agreement plus
$200,000 as severance pay. Mr. Dharia's Employment Agreement contains other
customary provisions.
In January 2001, the Company entered into a two (2) year Employment
Agreement with Richard Olicker pursuant to which Mr. Olicker agreed to serve as
the Company's Executive Vice President and Chief Operating Officer. The Company
agreed to pay Mr. Olicker an annual base salary of $225,000 plus a 5% annual
increase in the base salary. The agreement provides that Mr. Olicker receive
options to purchase 75,000 shares of the Company's Common Stock at an exercise
price equal to the closing bid price of the Company's Common Stock on January 2,
2001, as quoted on The Nasdaq Stock Market. Mr. Olicker is entitled to receive a
cash bonus equal to two percent (2%) of the amount by which the aggregate EBIT-D
(earnings before the payment of interest or taxes or a deduction for
depreciation) for the fiscal year ending on the most recent December 31st
exceeds EBIT-D the fiscal year ending on the preceding December 31st. The
agreement also provides that Mr. Olicker receive a one time cash bonus of
$125,000 in the event that the aggregate EBIT-D for any 4 consecutive fiscal
quarters during the term of the agreement equals or exceeds $40,000,000. Mr.
Olicker's Employment Agreement contains other customary provisions.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee ("Committee") is responsible for reviewing
and approving the Company's compensation policies and the compensation paid to
its executive officers, including the Chief Executive Officer and the other
named executive officers. The Compensation Committee is comprised of Charles
Koppelman, Peter Migliorini and John Madden each of whom are non-employee
Directors of the Company.
The Compensation Committee's goal is to develop executive compensation
policies and practices that are consistent with and linked to the Company's long
term goal of maximizing shareholder value. The program is designed to facilitate
the long-term success and growth of the Company through the attraction,
motivation, and retention of outstanding executives.
15
The objectives of the Company's executive compensation programs are to:
(i) attract and retain the highest quality executives, (ii) inspire and motivate
executive officers to increase Company performance, (iii) align executive
officers' financial interest with those of the Company's long-term investors,
and (iv) reward executive officers for exceptional individual contributions to
the achievement of the Company's objectives.
Executive compensation consists of three components: base salary,
annual incentive bonuses and long-term incentive awards (stock options). Each
compensation component is offered to executives in varying combinations,
structured in each case, to meet varying business objectives and to provide a
level of total compensation comparable to similarly situated public companies.
The Company has negotiated employment agreements with respect to base
salary, annual incentive awards and stock option awards for each of the
Company's named executive officers based upon the Company's performance and
individual performance.
Steven Madden, the Company's Chief Executive Officer, is eligible to
participate in the same compensation plans available to the other executive
officers.
The Internal Revenue Code of 1986 prohibits the Company from taking a
tax deduction in any year for compensation paid the persons who would be named
executive officers in that year in excess of $1 million unless such compensation
is "performance-based compensation." The Company did not pay in 2000 any officer
compensation which will be subject to the $1 million deduction limitation;
however, the Company's Chief Executive Officer exercised options which when
combined with other compensation paid by the Company resulted in his total
compensation exceeding the $1 million deduction limitation. The Compensation
Committee will take into consideration the $1 million deduction limitation when
structuring future compensation packages for the Company's executive officers
and, if appropriate and in the best interests of the Company, will conform such
packages to permit the Company to take a deduction for the full amount of all
compensation.
COMPENSATION COMMITTEE
Charles Koppelman
John Madden
Peter Migliorini
16
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the Common Stock during the period
beginning on December 31, 1996 and ending on December 31, 2000 with the
cumulative total return on the Russell 2000 Index and the Standard & Poor's
Footwear Index. The comparison assumes that $100 was invested on December 31,
1996 in the Company's Common Stock and in the foregoing indices and assumes the
reinvestment of dividends.
GRAPHIC CHART OMITTED
PLOT POINTS FOR GRAPHIC CHART APPEAR BELOW
- --------------------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- --------------------------------------------------------------------------------
Steven Madden, Ltd. 100 147.55 165.85 371.94 148.78
- --------------------------------------------------------------------------------
Russell 2000 Index 100 120.69 116.53 139.40 133.53
- --------------------------------------------------------------------------------
S&P Footwear Index 100 66.90 64.80 76.23 91.31
- --------------------------------------------------------------------------------
17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information as of the Record Date with
respect to the beneficial ownership of the outstanding shares of the Company's
Common Stock by (i) each person known by the Company to beneficially own five
percent or more of the outstanding shares; (ii) the Company's officers and
directors; and (iii) the Company's officers and directors as a group. A person
is deemed to be a beneficial owner of any securities of which that person has
the right to acquire beneficial ownership within sixty (60) days. See
"Compensation of Directors and Executive Officers."
Amount and
Nature of Percentage
Name and Address Beneficial (%) of
of Beneficial Owner(1) Ownership(2) Class(2)
---------------------- ------------- ------------
Steven Madden(3) 2,241,005(4) 16.5%
BOCAP Corp.(5) 2,241,005(6) 16.5%
John Madden(7) 15,000(8) *
Arvind Dharia(9) 102,000(10) *
John Basile(11) 300,000(12) 2.6%
Les Wagner(13) 20,000(14) *
Rhonda Brown(15) 373,386(16) 3.2%
Gerald Mongeluzo(17) 62,500(18) *
Joseph Masella(19) 90,425(20) *
Mark Jankowski(21) 50,000(22) *
Robert Schmertz(23) 19,000(24) *
Peter Migliorini(25) 20,000(26) *
Charles Koppelman(27) 124,000(28) *
Richard Olicker(29) 1,200 *
Kennedy Capital
Management, Inc.(30) 833,750 6.8%
Directors and Officers
as a Group (13 persons) 3,418,516 25.3%
* indicates beneficial ownership of less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
Steven Madden, Ltd., 52-16 Barnett Avenue, Long Island City, New York
11104.
(2) Beneficial ownership as reported in the table above has been determined
in accordance with Item 403 of Regulation S-K of the Securities Act of
1933 and Rule 13(d)-3 of the Securities Exchange Act, and based upon
11,366,605 shares of Common Stock outstanding.
(3) Mr. Madden is Chief Executive Officer and a director of the Company.
(4) Includes (i) 1,184,816 shares of Common Stock held by BOCAP, a
corporation owned by Mr. Madden, (ii) 1,051,189 shares of Common Stock
issuable upon the exercise of options held by Mr. Madden. See
"Executive Compensation-Employment Agreements."
(5) BOCAP Corp. is a company wholly-owned by Steven Madden, Chief Executive
Officer of the Company.
(6) Includes (i) 1,051,189 shares of Common Stock issuable upon the
exercise of options held by Mr. Madden and (ii) 5,000 shares of Common
Stock held by Mr. Madden.
(7) John Madden, a director of the Company, is the brother of Steven
Madden.
(8) Includes 15,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Madden.
(9) Mr. Dharia is a director and the Chief Financial Officer of the
Company.
18
(10) Includes 102,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Dharia.
(11) Mr. Basile resigned as a director and Executive Vice President of the
Company in December 2000.
(12) Includes 300,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Basile.
(13) Mr. Wagner resigned as a director of the Company and the Vice
President-Real Estate of Steven Madden Retail, Inc. in March 2001.
(14) Includes 20,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Wagner.
(15) Ms. Brown is a director and the President of the Company.
(16) Includes 373,386 shares of Common Stock issuable upon the exercise of
options held by Ms. Brown.
(17) Mr. Mongeluzo is the President of Adesso-Madden, Inc., a subsidiary of
the Company.
(18) Includes 62,500 shares of Common Stock issuable upon the exercise of
options held by Mr. Mongeluzo.
(19) Mr. Masella is the President of l.e.i. Footwear and Stevies, Inc., a
subsidiary of the Company.
(20) Includes 90,425 shares of Common Stock issuable upon the exercise of
options held by Mr. Masella.
(21) Mr. Jankowski is the General Merchandise Manager of the Company.
(22) Includes 50,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Jankowski.
(23) Mr. Schmertz is the President of Shoe Biz, Inc., a subsidiary of the
Steven Madden Retail, Inc. and the President of Diva Acquisition Corp.
(24) Includes 9,000 shares held by Mr. Schmertz's wife.
(25) Mr. Migliorini is a director of the Company.
(26) Includes 20,000 shares issuable upon the exercise of options held by
Mr. Migliorini.
(27) Mr. Koppelman is acting Chairman of the Board of the Company.
(28) Includes 50,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Koppelman.
(29) Mr. Olicker is the Chief Operating Officer of the Company.
(30) Based upon a Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2001. The address for such stockholder is
10829 Olive Blvd., St. Louis, MO 63141.
19
PROPOSAL TWO
AMENDMENT OF THE 1999 STOCK PLAN
At the 1999 Annual Meeting of Stockholders, the Company's stockholders
approved the adoption of the Company's 1999 Stock Plan (the "1999 Plan"). The
1999 Plan originally authorized up to 400,000 shares of Company common stock for
grants of non-qualified and incentive stock options. In May 2000, the Company's
stockholders approved an amendment to the 1999 Plan increasing the number of
shares of common stock subject to the plan from 400,000 to 975,000 shares. The
Board of Directors has amended the 1999 Plan, subject to stockholder approval,
to authorize 625,000 additional shares for future awards (the "1999 Plan
Proposal").
Because of the limited number of remaining shares that may be granted
under the 1999 Plan, the Board of Directors believes it is appropriate and
necessary at this time to authorize additional shares for future awards.
Authorization of these additional shares will allow grants to employees,
consultants and directors in furtherance of the Company's goal of continuing to
achieve significant gains in stockholder value and operating results.
The Company intends to continue awarding options in order to attract
and retain the services or advice of such directors, employees, officers,
agents, consultants, and independent contractors and to provide additional
incentive for such persons to exert maximum efforts for the success of the
Company and its affiliates. The following is a summary of the principal features
of the 1999 Plan. The summary is qualified in its entirety be reference to the
complete text of the 1999 Plan, as proposed to be amended. The proposed
amendment to the 1999 Plan is set forth as Annex A to this Proxy Statement.
DESCRIPTION OF THE 1999 PLAN
The maximum number of shares of Common Stock with respect to which
awards may be presently granted pursuant to the 1999 Plan is 975,000 shares. The
1999 Plan Proposal would authorize the use of up to an additional 625,000 shares
of the Company's common stock for a total of 1,600,000 shares being subject of
the 1999 Plan. Shares issuable under the 1999 Plan may be either treasury shares
or authorized but unissued shares. The number of shares available for issuance
will be subject to adjustment to prevent dilution in the event of stock splits,
stock dividends or other changes in the capitalization of the Company.
Subject to compliance with Rule 16b-3 of the Securities Exchange Act of
1934, the Plan shall be administered by the Board of Directors of the Company
(the "Board") or, in the event the Board shall appoint and/or authorize a
committee, such as the Compensation Committee, of two or more members of the
Board to administer the Plan, by such committee. The administrator of the Plan
shall hereinafter be referred to as the "Plan Administrator". Except for the
terms and conditions explicitly set forth herein, the Plan Administrator shall
have the authority, in its discretion, to determine all matters relating to the
options to be granted under the Plan, including, without limitation, selection
of whether an option will be an incentive stock option or a nonqualified stock
option, selection of the individuals to be granted options, the number of shares
to be subject to each option, the exercise price per share, the timing of grants
and all other terms and conditions of the options.
20
Options granted under the 1999 Plan may be "incentive stock options"
("Incentive Options") within the meaning of Section 422 of the Internal Revenue
Code (the "Code") or stock options which are not incentive stock options
("Non-Incentive Options" and, collectively with Incentive Options, hereinafter
referred to as "Options"). Each option may be exercised in whole or in part;
provided, that only whole shares may be issued pursuant to the exercise of any
option. Subject to any other terms and conditions herein, the Plan Administrator
may provide that an option may not be exercised in whole or in part for a stated
period or periods of time during which such option is outstanding; provided,
that the Plan Administrator may rescind, modify, or waive any such limitation
(including by the acceleration of the vesting schedule upon a change in control
of the Company) at any time and from time to time after the grant date thereof.
During an Optionee's lifetime, any incentive stock options granted under the
Plan are personal to such Optionee and are exercisable solely by such Optionee.
The Plan Administrator can determine at the time the option is granted
in the case of incentive stock options, or at any time before exercise in the
case of nonqualified stock options, that additional forms of payment will be
permitted. To the extent permitted by the Plan Administrator and applicable laws
and regulations (including, without limitation, federal tax and securities laws
and regulations and state corporate law), an option may be exercised by:
(a) delivery of shares of Common Stock of the Company held by an
Optionee having a fair market value equal to the exercise price, such fair
market value to be determined in good faith by the Plan Administrator;
(b) delivery of a properly executed Notice of Exercise, together
with irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price and any federal,
state, or local withholding tax obligations that may arise in connection with
the exercise; or
(c) delivery of a properly executed Notice of Exercise, together
with instructions to the Company to withhold from the shares of Common Stock
that would otherwise be issued upon exercise that number of shares of Common
Stock having a fair market value equal to the option exercise price.
Upon a Change in Control of the Company, any award carrying a right to
exercise that was not previously exercisable shall become fully exercisable, the
restrictions, deferral limitations and forfeiture conditions applicable to any
other award granted shall lapse and any performance conditions imposed with
respect to awards shall be deemed to be fully achieved.
Awards under the 1999 Plan may not be transferred, pledged, mortgaged,
hypothecated or otherwise encumbered other than by will or under the laws of
descent and distribution, except that the Committee may permit transfers of
awards for estate planning purposes if, and to the extent, such transfers do not
cause a participant who is then subject to Section 16 of the Exchange Act to
lose the benefit of the exemption under Rule 16b-3 for such transactions.
The Board may amend, alter, suspend, discontinue or terminate the 1999
Plan at any time, except that any such action shall be subject to stockholder
approval at the annual meeting next following such Board action if such
stockholder approval is required by federal or state law or regulation or the
21
rules of any exchange or automated quotation system on which the Common Stock
may then be listed or quoted, or if the Board of Directors otherwise determines
to submit such action for stockholder approval. In addition, no amendment,
alteration, suspension, discontinuation or termination to the 1999 Plan may
materially impair the rights of any participant with respect to any award
without such participant's consent. Unless terminated earlier by action of the
Board of Directors, the 1999 Plan shall terminate ten (10) years after adoption
by the shareholders.
RECOMMENDATION OF BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 PLAN
PROPOSAL. UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED FROM STOCKHOLDERS WILL
BE VOTED IN FAVOR OF THE PROPOSED 1999 PLAN.
PROPOSAL THREE
RATIFICATION OF SELECTION OF THE FIRM OF RICHARD A. EISNER &
COMPANY, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY
The Board of Directors upon recommendation of the members of the Audit
Committee, concluded that the continued engagement of Richard A. Eisner &
Company, LLP as the Company's independent public accountants for the 2001 fiscal
year was in the best interests of the Company. The Board of Directors recommends
that Stockholders ratify its choice of Richard A. Eisner & Company, LLP.
The Board of Directors unanimously recommends a vote FOR the ratification of the
selection of Richard A. Eisner & Company, LLP as independent public accountants
for the Company. Unless marked to the contrary, proxies received from
Stockholders will be voted in favor of the proposed amendment.
UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED FROM STOCKHOLDERS WILL BE VOTED
IN FAVOR OF THE PROPOSED AMENDMENT.
STOCKHOLDER PROPOSALS AND SUBMISSIONS
If any Stockholder wishes to present a proposal for inclusion in the proxy
materials to be solicited by the Company's Board of Directors with respect to
the 2002 Annual Meeting of Stockholders, that proposal must be presented to the
Company's secretary prior to December 1, 2001.
22
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. YOUR VOTE IS IMPORTANT. IF YOU ARE A
STOCKHOLDER OF RECORD AND ATTEND THE ANNUAL MEETING AND WISH TO VOTE IN PERSON,
YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE VOTE.
STEVEN MADDEN, LTD.
April 25, 2001 By: /s/ STEVEN MADDEN
-------------------------------------
Steven Madden, Chief Executive Officer
and Director
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ANNEX A
STEVEN MADDEN, LTD.
1999 STOCK PLAN
This Steven Madden, Ltd. 1999 Stock Plan (the "1999 Plan") is hereby
amended as follows:
1. Section 3 of the 1999 Plan is amended to read as follows:
SECTION 3. STOCK SUBJECT TO THE PLAN. The stock subject to this Plan
shall be the Common Stock, presently authorized but unissued or subsequently
acquired by the Company. Subject to adjustment as provided in Section 7 hereof,
the aggregate amount of Common Stock to be delivered upon the exercise of all
options granted under the Plan shall not exceed in the aggregate 1,600,000
shares as such Common Stock was constituted on the effective date of the Plan.
If any option granted under the Plan shall expire, be surrendered, exchanged for
another option, canceled, or terminated for any reason without having been
exercised in full, the unpurchased shares subject thereto shall thereupon again
be available for purposes of the Plan, including for replacement options which
may be granted in exchange for such surrendered, canceled, or terminated
options.
2. Except as expressly amend, the provisions of the Plan shall remain
in full force and effect.
3. This Amendment shall be effective immediately upon approval by the
Company's Board of Directors and stockholders of the Company.
Adopted by the Board of Directors
this 30th day of March, 2001
Approved by the Stockholders
this ________ day of May, 2001
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ANNEX B
AUDIT COMMITTEE CHARTER
OF
STEVEN MADDEN, LTD.
The Audit Committee is appointed by the Company's Board of Director to
assist the Board in monitoring (1) the integrity of the financial statements of
the Company, (2) the compliance by the Company with legal and regulatory
requirements and (3) the independence and performance of the Company's auditors.
The members of the Audit Committee shall meet the independence and
experience requirements of The Nasdaq Stock Market. The members of the Audit
Committee shall be appointed by the Board.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
2. Review the annual audited financial statements with
management, including major issues regarding accounting and
auditing principles and practices as well as the adequacy of
internal controls that could significantly affect the
Company's financial statements.
3. Review an analysis prepared by management and the independent
auditor of significant financial reporting issues and
judgments made in connection with the preparation of the
Company's financial statements.
4. Review with management and the independent auditor the
Company's quarterly financial statements prior to the filing
of its Form 10-Q.
5. Meet periodically with management to review the Company's
major financial risk exposures and the steps management has
taken to monitor and control such exposures.
6. Review major changes to the Company's auditing and accounting
principles and practices as suggested by the independent
auditor or management.
7. Recommend to the Board the appointment of the independent
auditor, which firm is ultimately accountable to the Audit
Committee and the Board.
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8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor
regarding the auditor's independence, discuss such reports
with the auditor, and if so determined by the Audit Committee,
recommend that the Board replace the independent auditor.
10. Evaluate together with the Board the performance of the
independent auditor and, if so determined by the Audit
Committee, recommend that the Board replace the independent
auditor.
11. Review the appointment and replacement of the senior internal
auditing executive, if any.
12. Review the significant reports to management prepared by the
accounting department and management's responses.
13. Meet with the independent auditor prior to the audit to review
the planning and staffing of the audit.
14. Obtain from the independent auditor assurance that Section 10A
of the Securities Exchange Act of 1934 has not been
implicated.
15. Obtain reports from management, the Company's senior financial
executive and the independent auditor that the Company's
subsidiaries and/or affiliated entities are in conformity with
applicable legal requirements.
16. Discuss with the independent auditor the matters required to
be discussed by Statement on Auditing Standards No. 61
relating to the conduct of the audit.
17. Review with the independent auditor any problems or
difficulties the auditor may have encountered and any
management letter provided by the auditor and management's
response to that letter. Such review should include:
(a) Any difficulties encountered in the course of the
audit work, including any restrictions on the scope
of activities or access to required information; and
(b) Any changes required in the planned scope of the
audit.
18. Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual
proxy statement.
19. Advise the Board with respect to the Company's policies and
procedures regarding compliance with applicable laws and
regulations and with the Company's Employee Handbook and/or
Code of Conduct.
20. Review with the Company's legal counsel legal matters that may
have a material impact on the financial statements, the
Company's compliance policies and any material reports or
inquiries received from regulators or governmental agencies.
21. Meet at least annually with the chief financial officer, the
senior financial executive and the independent auditor in
separate executive sessions.
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While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Employee Handbook
and/or Code of Conduct.
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STEVEN MADDEN, LTD. PROXY
STEVEN MADDEN, LTD.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE CLEARLY INDICATE A RESPONSE BY CHECKING EITHER THE PROXY (THE "PROXY")
[FOR] OR [AGAINST] BOX NEXT TO EACH OF THE THREE (3) PROPOSALS
THE UNDERSIGNED HEREBY APPOINT(S) MR. STEVEN MADDEN WITH THE POWER OF
SUBSTITUTION AND RESUBSTITUTION TO VOTE ANY AND ALL SHARES OF CAPITAL STOCK OF
STEVEN MADDEN, LTD. (THE "COMPANY") WHICH THE UNDERSIGNED WOULD BE ENTITLED TO
VOTE AS FULLY AS THE UNDERSIGNED COULD DO IF PERSONALLY PRESENT AT THE ANNUAL
MEETING OF THE COMPANY, TO BE HELD ON MAY 25, 2001, AT 10:00 A.M. LOCAL TIME,
AND AT ANY ADJOURNMENTS THEREOF, HEREBY REVOKING ANY PRIOR PROXIES TO VOTE SAID
STOCK, UPON THE FOLLOWING ITEMS MORE FULLY DESCRIBED IN THE NOTICE OF ANY PROXY
STATEMENT FOR THE ANNUAL MEETING (RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED):
1. ELECTION OF DIRECTORS
VOTE
[ ] FOR ALL NOMINEES LISTED BELOW EXCEPT AS MARKED TO THE CONTRARY
BELOW
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S NAME BELOW.)
[ ] ABSTAIN
RHONDA J. BROWN, ARVIND DHARIA, JAMIESON KARSON, CHARLES KOPPELMAN, JOHN L.
MADDEN, STEVEN MADDEN, PETER MIGLIORINI, AND HEYWOOD WILANSKY
2. AMENDMENT OF THE 1999 STOCK PLAN
[ ] FOR THE AMENDMENT OF THE 1999 STOCK PLAN
[ ] WITHHOLD AUTHORITY
[ ] ABSTAIN
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3. RATIFICATION OF THE APPOINTMENT OF RICHARD A. EISNER & COMPANY, LLP. AS
INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL YEAR 2001.
[ ] FOR THE RATIFICATION OF THE APPOINTMENT OF RICHARD A. EISNER &
COMPANY, LLP.
[ ] WITHHOLD AUTHORITY
[ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE
INDICATED, THIS PROXY WILL BE VOTED FOR ELECTION OF THE EIGHT (8) NOMINEES NAMED
IN ITEM 1, THE AMENDMENT OF THE 1999 STOCK PLAN IN ITEM 2, AND THE RATIFICATION
OF THE APPOINTMENT OF RICHARD A. EISNER & CO., LLP. AS INDEPENDENT AUDITORS OF
THE COMPANY FOR FISCAL YEAR 2001 IN ITEM 3.
IN HIS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN DATE AND RETURN THIS PROXY PROMPTLY USING THE
ACCOMPANYING POSTAGE PRE-PAID ENVELOPE. THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF STEVEN MADDEN, LTD.
DATED:
-----------------------------------
-----------------------------------------
SIGNATURE
-----------------------------------------
SIGNATURE IF JOINTLY OWNED:
-----------------------------------------
PRINT NAME:
PLEASE SIGN EXACTLY AS THE NAME APPEARS ON YOUR STOCK CERTIFICATE. WHEN SHARES
OF CAPITAL STOCK ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, OR CORPORATE OFFICER,
PLEASE INCLUDE FULL TITLE AS SUCH. IF THE SHARES OF CAPITAL STOCK ARE OWNED BY A
CORPORATION, SIGN IN THE FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF THE
SHARES OF CAPITAL STOCK ARE OWNED BY A PARTNERSHIP, SIGN IN THE NAME OF THE
PARTNERSHIP BY AN AUTHORIZED OFFICER.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE
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