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 Under Rule 14a-12
STEVEN MADDEN, LTD.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1)
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 (set forth the amount on which the
filing fee is calculated and state how it was determined.):
N/A
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4) Proposed maximum aggregate value of transaction:
N/A
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5) Total fee paid:
N/A
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[ ] Fee paid previously with preliminary materials:
N/A
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[ ] 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 17, 2002
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To the Stockholders of Steven Madden, Ltd.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of the Company will be held on May 17, 2002, 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 Directors 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 available
for issuance under the plan from 1,600,000 shares to 2,280,000 shares;
3. To ratify the appointment of Richard A. Eisner & Company, LLP as
independent public accountants for the Company for fiscal year 2002;
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 12, 2002 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/ JAMIESON A. KARSON
April 19, 2002 ----------------------------------------
Jamieson A. Karson
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 17, 2002 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 1,600,000 shares to 2,280,000 shares,
(iii) to ratify the selection of Richard A. Eisner & Company, LLP as independent
public accountants for the Company for fiscal year 2002, 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 12, 2002 (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
19, 2002. The Company's Annual Report for the fiscal year ended December 31,
2001, including audited financial statements, is being sent to stockholders
together with this Proxy Statement.
INFORMATION CONCERNING SOLICITATION AND VOTING
As of the Record Date, there were outstanding 12,407,716 shares of Common
Stock (excluding treasury shares) held by approximately 73 holders of record and
3,401 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. Each nominee to be elected as a director named in Proposal 1 must
receive a plurality of the votes cast by the holders of Common Stock present in
person or represented by proxy at the Annual Meeting with respect to such
proposal. The amendment to the Company's 1999 Stock Plan described in Proposal 2
and the ratification of the selection of Richard A. Eisner & Company, LLP as
independent public accountants of the Company for fiscal year 2002 described in
Proposal 3 must be approved by the affirmative vote of the holders of a majority
of the total votes cast on such proposals in person or by proxy. Abstentions and
broker non-votes are counted as present and entitled to vote and are, therefore,
included for purposes of determining whether a quorum of shares is present at
the meeting. An abstention from a vote with respect to Proposal 1 will have no
effect. An abstention from a vote with respect to Proposal 2 or 3 will have the
same practical effect as a vote against such proposal. Broker "non-votes" are
not deemed to be "votes cast." As a result, broker "non-votes" are not included
in the tabulation of the voting result on the election of directors or issues
requiring approval of a majority of the votes cast and, therefore, do not have
the effect of votes in opposition in such tabulations and as such will have the
practical effect of reducing the number of affirmative votes required to achieve
a majority vote for a matter by reducing the total number of shares from which a
majority is calculated. 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, the
exhibits hereto 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 Common 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 PERSONS NAMED IN THE PROXY 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.
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PROPOSAL ONE
TO ELECT EIGHT DIRECTORS TO SERVE FOR ONE YEAR AND
UNTIL THEIR SUCCESSORS HAVE BEEN DULY ELECTED AND QUALIFIED
Under the Amended and Restated 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 the foregoing limitation, the number of directors
may be fixed from time to time by action of the directors. The Company's board
presently consists of eight (8) directors whose terms expire at the Annual
Meeting.
The Board has nominated eight (8) candidates to serve as 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. Proxies will be voted for the election of
the eight (8) nominees listed below as directors of the Company unless otherwise
specified on the proxy. A plurality of the votes of shares of Common Stock
present in person or represented by proxy at the Annual Meeting will be
necessary to elect the directors listed below. If, for any reason, 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 whether a quorum is present at the meeting.
Biographical Summaries of Nominees for the Board of Directors
Charles A. Koppelman has been a director of the Company since June 1998 and
Chairman of the Board since July 1, 2001. Previously Mr. Koppelman was acting
Chairman of the Board from June 2000 to July 2001. Presently, Mr. Koppelman
serves as Chairman of CAK Entertainment, Inc. From 1988 to 1997, Mr. Koppelman
served first as Chairman and Chief Executive Officer of EMI Music Publishing and
then as Chairman and Chief Executive Officer of EMI Records Group, North
America.
Jamieson A. Karson has been the Chief Executive Officer of the Company and
Vice Chairman of the Board of Directors of the Company since July 1, 2001. Mr.
Karson has been a director of the Company since January 2, 2001. Prior to
joining the Company as Chief Executive Officer, Mr. Karson practiced law for
over 17 years. He was a partner in the New York City law firm of Tannenbaum
Helpern Syracuse & Hirshtritt LLP from January 1, 1997 through June 30, 2001,
where he served on the firm's three person Finance Committee. He was a partner
at the law firm of Karson McCormick from February 1992 through December 31,
1996. Prior to that, Mr. Karson was an associate attorney at the law firm of
Shea & Gould.
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.
Gerald Mongeluzo has been a director of the Company since July 2001. Mr.
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 its President from 1974 to
1987.
Marc S. Cooper has been a director of the Company since July 2001. Mr.
Cooper has served as a Managing Director of Peter J. Solomon Company in its
Mergers and Acquisitions Department since May 1999. Previously, Mr. Cooper
worked at Barington Capital Group from March 1992 to May 1999, where he was a
founding member and Vice Chairman overseeing its investment banking operations.
Prior to his tenure with Barington Capital Group, Mr. Cooper spent three years
as a partner of Scharf Brothers, a private merchant banking firm. Currently, Mr.
Cooper serves as a director of Thinking Tools, Inc. and North Atlantic Trading
Company, Inc.
-3-
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 former Chief Executive Officer and current
Creative and Design Chief. See "Recent Developments."
Peter Migliorini has been a director of the Company since October 1996. Mr.
Migliorini has served as Sales Manager for Greschlers, Inc., a supply company
located in Brooklyn, New York since 1994. 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 Meldisco Shoes,
Perry Shoes, and Fasco Shoes.
Heywood Wilansky has been a director of the Company since January 2, 2001.
Since 2001, Mr. Wilansky has served as President and Chief Executive Officer of
Strategic Management Resources, a management consulting firm for the wholesale
and retail trade. Previously, 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 July 2000. 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
from 1992 to 1995. Mr. Wilansky was a director of First Washington Realty Trust
from 1994 to 2001.
Recommendation of the Board of Directors
The Board of Directors unanimously recommends a vote FOR the election of
Messrs. Charles A. Koppelman, Jamieson A. Karson, Arvind Dharia, Gerald
Mongeluzo, Marc Cooper, 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 and
AGAINST any other 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
(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 at an
exercise price of $7.00 per share as compensation for assuming the duties of
Chairman of the Board of the Company pursuant to a letter agreement between the
Company and Mr. Koppelman (the "Option Letter"). These options vested on July
18, 2000 and will expire on July 18, 2005. The Option Letter provided that if
Mr. Koppelman continued his service as acting Chairman of the Board, he was
entitled to receive 75,000 options at an exercise price of $7.00 per share which
options were issued on May 31, 2001. In addition, he was also entitled to
receive 75,000 options on each of May 31, 2002, 2003 and 2004 at an exercise
price per share equal to the closing bid price of the Company's common stock on
the date of grant (the "Additional Options"). In connection with the execution
of his current agreement with the Company, Mr. Koppelman surrendered all of the
Additional Options. See "Agreement with the Chairman of the Board."
Meetings and Committees of the Board of Directors
The Board of Directors met six (6) times during the fiscal year ended
December 31, 2001. The Board of Directors has standing Audit, Real Estate and
Compensation Committees. The Board of Directors does not have a standing
Nominating Committee.
-4-
Audit Committee
During the year ended December 31, 2001, the Audit Committee of the Board
of Directors consisted of directors Charles A. Koppelman, Peter Migliorini and
Heywood Wilansky. In January 2002, the Board of Directors appointed Marc Cooper
to the Audit Committee. At the first meeting of the Board of Directors following
the Annual Meeting, Charles A. Koppelman will relinquish his membership on the
Audit Committee. The Audit Committee is comprised of directors who are
"independent" for purposes of The Nasdaq Stock Market listing standards. The
Audit Committee is primarily responsible for reviewing the services performed by
the Company's independent public accountants, evaluating the Company's
accounting policies and its system of internal controls, and reviewing
significant finance transactions. During 2001, the Audit Committee met two (2)
times.
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 public
accountants.
- 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 public accountants and with appropriate Company financial personnel.
Meetings are held with the independent public accountants who have unrestricted
access to the Audit Committee. The Audit Committee also recommends to the Board
the appointment of the independent public accountants and reviews periodically
their performance and independence from management. In addition, the Audit
Committee reviews the Company's financing plans and reports recommendations to
the full Board of Directors for approval and to authorize action. The Board has
adopted a written charter setting out the audit related functions the Audit
Committee is to perform.
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 public accountants 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.
The following Audit Committee Report does not constitute soliciting
material and shall not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent the Company
specifically incorporates this Audit Committee Report by reference therein.
-5-
Audit Committee Report
The Audit Committee reviewed the Company's audited financial statements for
the fiscal year ended December 31, 2001 and met with both management and Richard
A. Eisner & Company, LLP, the Company's independent public accountants, to
discuss such audited financial statements. Management and the Company's
independent public accountants have represented to the Audit Committee that the
financial statements were prepared in accordance with generally accepted
accounting principles. The Audit Committee has received from and discussed with
Richard A. Eisner & Company, LLP the written disclosure and the letter regarding
the independence of Richard A. Eisner & Company, LLP as required by Independence
Standards Board Standard No. 1. The Audit Committee also discussed with Richard
A. Eisner & Company, LLP any matters required to be discussed by Statement on
Auditing Standards No. 61. Based on these reviews and discussions, the Audit
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, 2001.
AUDIT COMMITTEE
Charles A. Koppelman
Peter Migliorini
Marc Cooper
Heywood Wilansky
Compensation Committee
The Compensation Committee of the Board of Directors consists of directors
Charles A. 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
administering the Company's stock plans, including granting options and setting
the terms thereof pursuant to such plans (all subject to approval by the Board
of Directors). During 2001, the Compensation Committee met three (3) times.
Real Estate Committee
The Real Estate Committee of the Board of Directors consists of directors
Jamieson A. Karson and Heywood Wilansky. The Real Estate 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. During
2001, the Real Estate Committee met four (4) times.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that 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,
file with the Securities and Exchange Commission ("SEC") reports of initial
ownership of the Company's common stock and subsequent changes in that ownership
and furnish the Company with copies of all forms they file pursuant to Section
16(a). 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, 2001,
all Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
-6-
Recent Developments
On June 20, 2000, Steven Madden, the Company's former Chairman and Chief
Executive Officer, was indicted in the United States District Courts for the
Southern District and Eastern District of New York. The indictments alleged 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. On May 21, 2001, Steven Madden entered into a plea agreement with the
U.S. Attorney's Office, pursuant to which he pled guilty to four of the federal
charges filed against him. In addition, Mr. Madden reached a separate settlement
agreement with the Securities and Exchange Commission regarding the allegations
contained in its complaint. As a result, Mr. Madden resigned as the Company's
Chief Executive Officer and as a member of the Company's Board of Directors
effective July 1, 2001. Mr. Madden has agreed to serve as the Company's Creative
and Design Chief, a non-executive position. On April 4, 2002 Mr. Madden was
sentenced in the United States District Court for the Southern District of New
York to forty one (41) months imprisonment in connection with two of the federal
charges to which he pled guilty. It is expected that Mr. Madden will be
sentenced in late April 2002 in the United States District Court for the Eastern
District of New York in connection with the other charges to which he pled
guilty, which sentence should run concurrently with the 41 month sentence. Under
the settlement agreement with the Securities and Exchange Commission, Mr. Madden
has agreed to not serve as an officer or director of a publicly traded company
for 7 years.
Neither the indictments nor the Securities and Exchange Commission
complaint allege any wrongdoing by the Company or its other officers and
directors. In connection with Steven Madden relinquishing his position as Chief
Executive Officer of the Company, the Company entered into an amended employment
agreement with Steven Madden and new agreements with Charles A. Koppelman and
Jamieson A. Karson. See "Employment Agreements with Certain Executive Officers,"
"Employment Agreement(s) with Other Employee(s)," and "Agreement with the
Chairman of the Board."
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.
On or about September 26, 2000, a purported shareholder derivative
complaint was filed in the United States District Court for the Eastern District
of New York, captioned Herrera v. Steven Madden and Steven Madden, Ltd., 00 CV
5803 (JG). The Company is named as a nominal defendant in the action. The
complaint seeks to recover alleged damages on behalf of the Company from Mr.
Madden arising from his June 2000 indictment and to require him to disgorge
certain profits, bonuses and stock option grants he received. On January 3,
2001, plaintiff filed an Amended Shareholder's Derivative Complaint. On February
2, 2001, both the Company and Mr. Madden filed motions to dismiss the Amended
Complaint because of plaintiff's failure to make a pre-litigation demand upon
the Company's board of directors. On October 1, 2001, plaintiff filed a Second
Amended Complaint. On November 2, 2001, the Company filed a motion to dismiss
this pleading on grounds that plaintiff had failed to make a pre-litigation
demand upon the Company's board of directors. On February 7, 2002, the
Magistrate Judge filed a Report recommending that the Company's motion to
dismiss be denied. The Company filed its objections to the Report on March 4,
2002. On March 22, 2002 the District Judge entered an order adopting the
Magistrate Judge's report and recommendation in full. The defendants' responses
to the Second Amended Complaint are due on April 19, 2002.
On or about November 28, 2001, a purported shareholder derivative complaint
was filed in the United States District Court for the Eastern District of New
York, captioned Herrera v. Karson, et al., 00 CV 7868. Named as defendants
therein are the Company (as nominal defendant) and certain of the Company's
present and/or former directors. The complaint alleges that the individual
defendants breached their fiduciary duties to the Company in connection with a
decision by the Board of Directors of the Company to enter into an employment
agreement with Mr. Steven Madden in or about May 2001. The complaint seeks
declaratory and other equitable relief, as well as an unspecified amount of
compensatory damages, costs and expenses. On or about February 1, 2002,
plaintiff filed an Amended Shareholder Derivative Complaint (the "Amended
Complaint"). The Amended Complaint contains substantially the same allegations
and names the same defendants as the original complaint.
-7-
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 A. Koppelman 61 Chairman of the Board
Jamieson A. Karson 44 Chief Executive Officer and Vice Chairman of the Board
Arvind Dharia 52 Chief Financial Officer, Director and Secretary
Richard Olicker 44 President and Chief Operating Officer
Gerald Mongeluzo 61 President of Adesso-Madden, Inc., Director
Mark Jankowski 41 President of Steve Madden Retail, Inc.
Robert Schmertz 38 President of Steve Madden Womens Wholesale Division
Joseph Masella 53 President of l.e.i. Footwear and Stevies, Inc.
John L. Madden 54 Director
Peter Migliorini 53 Director
Heywood Wilansky 53 Director
Marc Cooper 40 Director
- ----------------------
See "Biographical Summaries of Nominees for the Board of Directors" for
biographical summaries of Messrs. Charles A. Koppelman, Jamieson A. Karson,
Arvind Dharia, Gerald Mongeluzo, Marc Cooper, John L. Madden, Peter Migliorini
and Heywood Wilansky.
Richard Olicker has been Chief Operating Officer of the Company since
January 3, 2001. In September 2001 Mr. Olicker was appointed President of the
Company. 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.
Mark Jankowski has been the President of Steve Madden Retail, Inc. since
July 1, 2001. Previously, Mr. Jankowski had been the General Merchandise Manager
of the Company from December 2000 to June 30, 2001. Prior to that, 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 Steve Madden Womens Wholesale
Division since September 2001, the President of Shoe Biz, Inc., a wholly owned
subsidiary of Steve Madden Retail Inc. since May 1998 and the 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 Division 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.
-8-
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, 2001, December 31, 2000 and December 31, 1999 the
remuneration paid by the Company to its Chief Executive Officer, the four most
highly compensated executive officers (other than the Chief Executive Officer),
and certain other persons for whom information is required to be disclosed:
Summary Compensation Table
Annual compensation Long-term compensation
------------------------------------------ ---------------------------------------
Restricted Other
Awards Stock Awards annual
Name and principal position Fiscal year Salary($) Bonus($) options(1) ($) compensation
- ----------------------------- ----------- ------------- ------------ ---------- ------------ ------------
Jamieson A. Karson, 2001 $187,500 $50,000 100,000 $188,000(3) $17,791(4)
Chief Executive Officer(2) 2000 N/A N/A N/A N/A
1999 N/A N/A N/A N/A
Richard Olicker, 2001 $252,723 N/A 150,000 N/A
President and 2000 N/A N/A N/A N/A
Chief Operating Officer 1999 N/A N/A N/A N/A
Arvind Dharia, 2001 $200,000 $50,000 40,000 N/A $92,857(5)
Chief Financial Officer 2000 $171,769 $80,000 25,000 N/A $91,743(5)
1999 $140,000 $39,367 25,000 N/A $88,606(5)
Gerald Mongeluzo, 2001 $299,040 $93,623 -0- N/A
President, Adesso- 2000 $257,653 $75,000 -0- N/A
Madden, Inc. 1999 $249,769 $50,000 -0- N/A
Mark Jankowski 2001 $292,789 $132,071 6,000 N/A $3,462(6)
President, Steve Madden 2000 $261,538 $100,000 -0- N/A
Retail, Inc. 1999 $202,769 $106,250 -0- N/A
Steven Madden, 2001 $524,808 $587,203 -0- N/A $402,398(8)
Creative and Design Chief(7) 2000 $300,000 $400,000 -0- N/A $311,437(8)
1999 $275,000 $800,000 -0- N/A $318,641(8)
Rhonda Brown(9) 2001 $276,884 $98,217 -0- N/A
2000 $270,052 $581,150 190,575 N/A
1999 $257,278 $537,920 -0- N/A
- ----------------------
(1) Options to purchase shares of Common Stock.
(2) Mr. Karson has been the Chief Executive Officer of the Company since July
1, 2001.
(3) On July 10, 2001, Mr. Karson was issued 10,000 shares of restricted Common
Stock, 25% of which will become unrestricted at the end of each of the four
quarters following the date of issuance. The closing price of the Company's
Common Stock on July 10, 2001 as reported by The Nasdaq Stock Market was
$18.80. The value of these restricted shares of Common Stock as of December
31, 2001 was $140,700 (based upon a closing price on December 31, 2001 of
$14.07 per share as reported by The Nasdaq Stock Market). To the extent
dividends are paid on the Common Stock, such dividends will be paid on
these restricted shares.
(4) Expenses paid on behalf of Mr. Karson pursuant to his employment agreement.
(5) Life insurance premium and other expenses paid on behalf of Mr. Dharia.
(6) Expenses paid on behalf of Mr. Jankowski pursuant to his employment
agreement.
(7) Mr. Madden resigned as Chief Executive Officer of the Company effective as
of July 1, 2001. He currently holds the position of Creative and Design
Chief of the Company, which is a non-executive position.
(8) Life insurance premium and other expenses paid on behalf of Mr. Madden.
(9) Ms. Brown resigned as President of the Company effective as of September
21, 2001.
-9-
The following table sets forth certain information with respect to options
granted during the last fiscal year to the persons named in the above Summary
Compensation Table.
Option/SAR Grants In Last Fiscal Year
Number of Percent of Total Potential Realizable
Securities Options/SARS Exercise Value at Assumed Annual
Underlying Granted to or Base Rates of Stock Price
Options/SARS Employees in Price Appreciation for Option
Name Granted (#) Fiscal Year % ($/Sh) Expiration Date Term
- ---------------------- ------------- ---------------- --------- --------------- ------------------------
5% 10%
--------- ----------
Jamieson A. Karson 100,000 16.3% $18.80 7/10/06 $519,409 $1,147,759
Richard Olicker 75,000 12.2% $8.00 1/02/11 $377,337 $956,245
Richard Olicker 75,000 12.2% $9.12 9/24/11 $430,164 $1,090,120
Arvind Dharia 40,000 6.5% $9.55 9/25/08 $97,195 $226,506
Gerald Mongeluzo -0- N/A N/A N/A N/A N/A
Mark Jankowski 5,000 0.1% $19.07 7/16/11 $299,826 $759,817
Steven Madden -0- N/A N/A N/A N/A N/A
Rhonda Brown -0- N/A N/A N/A N/A N/A
The following table sets forth certain information with respect to options
exercised during the last fiscal year by the persons 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 Value Number of Securities Value of Unexercised in the
Acquired on Realized Underlying Unexercised Money Options/SARs at
Name Exercise (#) $ Options/SARS at FY-End (#) FY-End ($) (1)
- ---------------------- ------------ ------------ ------------------------------ -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Jamieson A. Karson -0- N/A 25,000 75,000 -0- -0-
Richard Olicker -0- N/A 75,000 75,000 $433,688 $390,563
Arvind Dharia -0- N/A 112,000 30,000 722,340 135,600
Gerald Mongeluzo 12,500 $144,375 50,000 -0- 191,000 -0-
Mark Jankowski 80,000 $703,300 1,250 3,750 -0- -0-
Steven Madden -0- N/A 1,051,189 -0- 11,503,895 -0-
Rhonda Brown 373,386 $1,260,991 -0- -0- -0- -0-
- ----------------------
(1) Based upon a closing price on December 31, 2001 of $14.07 per share as
reported by The Nasdaq Stock Market.
-10-
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. In
July 2001, the Company's stockholders approved an amendment to the 1999 Plan
increasing the number of shares of common stock subject to the plan from 975,000
to 1,600,000 shares. As of the Record Date, options to purchase 1,565,000 shares
of Common Stock have been granted pursuant to the 1999 Plan. 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 Proposal 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 Steven Madden. The options were
subsequently transferred to Steven Madden. The options which are fully
exercisable, have an exercise price of $1.75 and an exercise period of 10 years.
As of the Record Date, 500,000 of these options remain unexercised. 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 Steven
Madden's then-existing amended employment agreement.
Employment Agreements with Certain Executive Officers
In May 2001, the Company entered into an employment agreement with Jamieson
A. Karson pursuant to which Mr. Karson agreed to serve as the Company's Chief
Executive Officer and Vice Chairman of the Board. The term of Mr. Karson's
employment under the agreement is three (3) years commencing on July 1, 2001 and
ending on June 30, 2004. The term will be automatically extended for successive
one year periods unless the Company timely notifies Mr. Karson of its intention
not to extend the term. In connection with the execution of his Employment
Agreement, Mr. Karson surrendered 5,000 options which had been granted to him
for his service as an outside director. The Company agreed to pay Mr. Karson an
annual salary of $375,000 which base salary will be subject to a 10% annual
increase on each July 1st of the term if the Company's net income for the four
calendar quarters ending on the most recent June 30th is greater than the net
income for the four calendar quarters ending on the preceding June 30th. In
addition, the agreement provides that: (a) Mr. Karson receive a cash bonus equal
to $100,000 for fiscal year 2001 pro-rated for the number of months he serves as
Chief Executive Officer in 2001 and (b) for each succeeding fiscal year that
occurs during the term of employment, Mr. Karson receive a cash bonus, in an
amount determined by the Board, not less than four percent (4%) of the increase
in the Company's EBITDA (earnings before interest, tax, depreciation and
amortization) over the EBITDA of the prior fiscal year. On or about July 10,
2001, Mr. Karson received options to purchase 100,000 shares of the Company's
Common Stock at an exercise price equal to the closing market price on the date
prior to the grant date as quoted on The Nasdaq Stock Market. These options will
vest quarterly over the one year period following the date of grant and will be
exercisable after vesting for a period of five (5) years from the date of grant.
On or about July 10, 2001, the Company issued to Mr. Karson 10,000 shares of
restricted common stock, 25% of which will become unrestricted at the end of
each of the four quarters following the date of issuance. Subject to approval by
the Company's stockholders of the Amendment of the Company's 1999 Stock Plan and
subject to availability of shares under such plan or any other plan designated
by the Board of Directors and approved by the Company's stockholders, on or
about the date of the Company's annual meeting for each year of the term of the
agreement (beginning in 2002), Mr. Karson is entitled to receive, annual options
to purchase shares of the Company's Common Stock equal to the dollar amount of
the annual bonus received by Mr. Karson for the previous fiscal year; provided,
however, that no annual option shall be for greater than 100,000 shares. The
annual options shall vest quarterly over the one year
-11-
period following the date of grant and shall be exercisable after vesting for a
period of five (5) years from the date of grant at an exercise price equal to
the closing price of the Company's Common Stock on the applicable date of grant,
as quoted on The Nasdaq Stock Market (or such other market or exchange on which
the Company's Common Stock is listed or traded). In addition, in the event of
Mr. Karson's total disability or his death, the Company is obligated to continue
to pay Mr. Karson (or Mr. Karson's estate) his base salary for the twelve (12)
month period immediately subsequent to the date of such total disability or
death. In the event Mr. Karson's employment agreement is terminated (or not
extended) for any reason other than For Cause (as defined in the agreement) or
due to his death or his total disability, the Company is obligated to pay Mr.
Karson an amount equal to the product of (i) Mr. Karson's base salary plus the
cash bonus which Mr. Karson was paid for the immediately preceding fiscal year
multiplied by (ii) the greater of (A) the number of years remaining on the term
of the agreement or (B) two. In the event that there is a "change of control"
transaction terminating Mr. Karson's employment, all unvested options to
purchase shares of the Company's Common Stock held by Mr. Karson will vest on
the date of termination and Mr. Karson will be entitled to receive a lump sum
cash payment equal to (a) the amount of compensation that is accrued and unpaid
through the date of termination and (b) three (3) times the total compensation
(base salary and cash bonus) received by Mr. Karson for the preceding 12 month
period ending December 31. Mr. Karson's employment agreement contains other
customary provisions, including provisions regarding confidentiality,
solicitation and competition.
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 for 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.
In January 1998, the Company entered into an employment agreement with
Arvind Dharia, pursuant to which Mr. Dharia agreed to serve as the Company's
Chief Financial Officer, which agreement was amended as of June 29, 2001. The
agreement will expire on December 31, 2005. However, 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 $169,400 until September 30, 2001,
$200,000 from October 1, 2001 through December 31, 2002, $220,000 from January
1, 2003 through December 31, 2003, $234,000 from January 1, 2004 through
December 31, 2004, and $240,000 from January 1, 2005 through December 31, 2005.
Mr. Dharia received a $50,000 signing bonus upon execution of the amendment to
the agreement on June 29, 2001. The agreement provides that Mr. Dharia receive
options to purchase 40,000 shares of the Company's Common Stock on June 30 of
each year during the term of the agreement (commencing June 30, 2001). The
options are to vest quarterly over a period of one (1) year and are exercisable
at an exercise price equal to the lesser of (i) the average closing bid price of
the Company's Common Stock as quoted on The Nasdaq Stock Market or such other
exchange on which the common stock shall be listed on the date of grant or (ii)
if the date of grant is not June 30th, the average closing bid price of the
Company's Common Stock as quoted on The Nasdaq Stock Market or such other
exchange on which the common stock shall be listed on June 30th of the year in
which the grant shall occur. In addition, the agreement provides that for each
fiscal year that occurs during the term of employment (beginning with the fiscal
year ended December 31, 2001), Mr. Dharia receive a cash bonus, in an amount
equal to one and one-half percent (1.5%) of the increase in the Company's EBITDA
(earnings before interest, tax, depreciation and amortization) over the EBITDA
of the prior fiscal year, provided, however that in no event shall the annual
cash bonus exceed Mr. Dharia's base salary for such fiscal year. Also, Mr.
Dharia shall, at the end of a calendar quarter, receive a bonus of $50,000 if
the Company has had sales of $300,000,000 or more for such calendar quarter and
the immediately preceding three (3) calendar quarters, provided, however, that
Mr. Dharia shall not receive this $50,000 bonus more than once in any given
calendar year. In addition, during the term of the agreement, the Company is
obligated to pay life insurance premiums on behalf of Mr. Dharia of
approximately $80,000 per year. 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
-12-
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 by the Company for any reason other than "for
cause" or due to his "total disability", the Company is obligated to pay Mr.
Dharia an amount equal to the product of (a) Mr. Dharia's base salary on the
effective date of such termination plus the bonus paid or payable for the fiscal
year ended on the December 31st immediately preceding the date of termination
multiplied by (b) the number of years (and fractions of years) remaining in the
term of the employment agreement. In addition, the Company will be obligated to
continue to pay the life insurance premiums on behalf of Mr. Dharia provided for
above. The payments due Mr. Dharia upon his termination for any reason other
than "for cause" or due to his "total disability" will be payable in two
installments: 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 (i) accrued and unpaid compensation through
the termination date, (ii) an amount equal to the balance of his base salary
that would have been paid over the term of the employment agreement, (iii) the
life insurance premium payments that would have been made on his behalf by the
Company during the term of the employment agreement, and (iv) an amount equal to
Mr. Dharia's bonus, if any, for the preceding 12-month period ending December
31st, multiplied by the remaining years (including fractional years) remaining
under the employment agreement, provided, however, that in no event will the
amount payable in the event of a "change of control" be greater than three (3)
times the total compensation received by Mr. Dharia for the preceding
twelve-month period ending December 31st or less than one and one-half (1.5)
times the total compensation so received by Mr. Dharia during such period. Mr.
Dharia's employment agreement contains other customary provisions.
Employment Agreement(s) with Other Employee(s)
In May 2001, the Company entered into an employment agreement with Steven
Madden, the Company's founder, pursuant to which Mr. Madden agreed to serve as
the Company's Creative and Design Chief. The employment agreement amends and
restates the prior employment agreement dated July 29, 1997 (and amended
February 28, 2000). The term of Mr. Madden's employment under the agreement is
ten (10) years commencing on July 1, 2001 and ending on June 30, 2011. The
Company has agreed to pay Mr. Madden an annual base salary of $700,000, which
the Board may increase, but not decrease, at any time. For each fiscal year
during the term of the agreement, Mr. Madden is entitled to receive a cash bonus
in an amount determined by the Board, but not less than 2% of the Company's
EBITDA (earnings before interest, tax, depreciation and amortization for such
year); provided however, that the Company is not required to pay such cash bonus
for any fiscal year during which Mr. Madden is not actively engaged in the
duties of Creative and Design Chief for at least six months. Subject to approval
by the Company's stockholders of the Amendment of the Company's 1999 Stock Plan
and subject to availability of shares under such plan or any other plan
designated by the Board of Directors and approved by the Company's stockholders,
on or about the date of the Company's annual meeting for each year of the term
(beginning in 2002), Mr. Madden is eligible to receive, during the term of the
agreement, annual options to purchase shares of the Company's common stock in an
amount equal to not less than 150% of the largest aggregate amount of options
granted to any other continuing full time employee of the Company over the 12
month period up to and including the applicable grant date; provided that all
annual options shall be subject to final approval of the Board. The annual
options shall vest quarterly over the 1 year period following the date of grant
and shall be exercisable after vesting for a period of 5 years from the grant
date at an exercise price equal to the closing price of the Company's Common
Stock on the grant date as quoted on The Nasdaq Stock Market (or such other
market or exchange on which the Company's Common Stock is listed or traded). The
Company is not required to grant an annual option if Mr. Madden is not actively
engaged in the duties of Creative and Design Chief for at least six months out
of the twelve months immediately preceding the grant date for such annual
option. The Company also agreed to provide Mr. Madden with an annual $200,000
non-accountable expense allowance which amount will be payable in equal monthly
installments; provided however, that the Company will not be required to pay the
non-accountable expense allowance for any month during which Mr. Madden is not
actively engaged in the duties of Creative and Design Chief.
In addition, in the event of Mr. Madden's total disability or death, the
Company is obligated to continue to pay Mr. Madden (or Mr. Madden's estate) Mr.
Madden's base salary for the twelve (12) month period immediately subsequent to
the date of such total disability or death. In the event Mr. Madden's employment
agreement is terminated for any reason other than "for cause" or due to his
death or his total disability, the Company is obligated to pay Mr. Madden the
balance of his base salary that would have been paid over the full term of the
agreement if
-13-
the agreement had not been terminated, fifty percent (50%) upon termination and
the remaining fifty percent (50%) in equal annual installments until June 30,
2011. The indictment, plea agreement, sentencing and other matters described
above under "Recent Developments" are not grounds for termination "for cause"
under Mr. Madden's employment agreement. In the event there is a "change of
control" transaction terminating Mr. Madden's employment, all unvested options
to purchase shares of the Company's Common Stock held by Mr. Madden will vest on
the date of termination and Mr. Madden will be entitled to receive a lump sum
cash payment equal to (a) the amount of compensation that is accrued and unpaid
through the date of termination and (b) three (3) times the total compensation
(base salary, cash bonus and non-accountable expense allowance) received by Mr.
Madden for the preceding 12 month period ending December 31.
To the extent not previously assigned or consented to, except as provided
below, (i) Mr. Madden sold, assigned and transferred to the Company the
exclusive right and interest to his name and (ii) Mr. Madden consented to the
use of his name as trademarks, service marks, corporate names and/or internet
domain name addresses of the Company (the "Marks"). Mr. Madden also agreed to
never challenge the Company's ownership of his name or the validity of the
Company's ownership of the Marks or of any registration or application for
registration thereof. Mr. Madden may however use his name for all non-commercial
purposes and for use in connection with any business that is not in the design,
manufacture, sale, marketing or distribution of (i) branded or designer
footwear, apparel, accessories and other products in the categories of products
sold by, or under license from, the Company or any of its affiliates, (ii)
jewelry and other giftware, (iii) cosmetics, fragrances and other health and
beauty care items, (iv) housewares, furniture, home furnishings and related
products and (v) other products related to fashion, cosmetics or lifestyle (any
of such activities being a "competitive business"). Further, Mr. Madden agreed
to not directly or indirectly (i) engage in any competitive business in any
relationship or capacity, (ii) solicit any customers of the Company, or (iii)
solicit or employ any employee or agent to the Company, until the later of (a)
June 30, 2011 or (b) the date which is twelve (12) months after the date on
which Mr. Madden is no longer employed by the Company, or until twelve months
after the date of termination should Mr. Madden be terminated in connection with
a change of control. Mr. Madden's Employment Agreement contains other customary
provisions.
Agreement with the Chairman of the Board
In May 2001, the Company entered into an agreement with Charles A.
Koppelman pursuant to which Mr. Koppelman agreed to serve as the Company's
Executive Chairman of the Board. The term of the agreement is two (2) years
commencing on July 1, 2001 and ending on June 30, 2003. The Company agreed to
pay Mr. Koppelman an annual base salary of $125,000. The Company also agreed to
provide Mr. Koppelman with an annual $125,000 non-accountable expense allowance.
Pursuant to the agreement, on or about July 10, 2001 Mr. Koppelman received
options to purchase 100,000 shares of the Company's Common Stock at an exercise
price equal to the closing market price on the date prior to the grant date, as
quoted on The Nasdaq Stock Market. These options will vest quarterly over the
one year period following the date of grant and will be exercisable after
vesting for a period of five (5) years from the date of grant. On or about July
10, 2001, the Company issued to Mr. Koppelman 10,000 shares of restricted common
stock, 25% of which will become unrestricted at the end of each of the four
quarters following the date of issuance. As of May 31, 2001, Mr. Koppelman
received fully-vested options to purchase 75,000 shares of the Company's Common
Stock, which are exercisable for a period of five (5) years from the date of
grant at an exercise price of $7.00. These options were granted pursuant to an
outstanding letter agreement between the Company and Mr. Koppelman (the "Option
Letter"). Mr. Koppelman surrendered the remaining 225,000 options to be granted
to him pursuant to the Option Letter in connection with the execution of his
agreement. Pursuant to the terms of the agreement, Mr. Koppelman is also
entitled to receive annual options to purchase 100,000 shares of the Company's
Common Stock on the date of the Company's annual meeting held in each of 2002,
2003, and 2004. Twenty five percent (25%) of each annual option will vest at the
end of each of the four full calendar quarters after the applicable grant date.
The annual options shall be exercisable after vesting for a period of five (5)
years from the date of grant at an exercise price equal to the lesser of (a) the
closing market price on the applicable grant date, as quoted on The Nasdaq Stock
Market (or such other market or exchange on which the Company's Common Stock is
listed or traded) or (b) $13.50. In the event that Mr. Koppelman ceases to be
either an employee or director of the Company, any annual option not yet granted
shall be forfeited as of the date of termination; provided however, that if the
agreement shall have been terminated (or not extended) by the Company other than
For Cause (as defined in the agreement) or by Mr. Koppelman with Good Reason (as
defined in the agreement) any annual options which were granted prior to such
termination shall be deemed granted as of the date prior to the date of such
termination. The agreement also provides that in the event there is a "change of
control" of
-14-
the Company, (i) all unvested options granted to Mr. Koppelman prior to such
"change of control" shall immediately vest (ii) if Mr. Koppelman is an employee
or director of the Company at the time of such "change of control", any annual
options which have not been granted prior to such change of control shall
immediately be granted and vest, and (iii) the exercise price of all unexercised
options shall be reduced to $7.00. Mr. Koppelman's agreement contains other
customary provisions, including provisions regarding confidentiality,
solicitation and competition.
Certain Relationships and Related Transactions
In July 2001, the Company entered into a consulting agreement with Peter J.
Solomon & Company, a financial advisory firm of which Marc Cooper, one of the
Company's directors, is a managing director. The agreement provides for a fee of
$150,000 over the one year term of the agreement which expires in June 2002. The
firm is to provide financial advisory and investment banking services to the
Company.
Compensation Committee Report On Executive Compensation
The Compensation 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 A. Koppelman, Peter
Migliorini and John Madden. Each member of the Compensation Committee was a
non-employee directors of the Company during 2001, however, Mr. Koppelman
received a salary and certain other benefits for serving as the Chairman of the
Board of Directors (see "Agreement with the Chairman of the Board").
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 stockholder 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.
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 total compensation of Jamieson A. Karson, the Company's Chief Executive
Officer, is determined pursuant to his employment agreement with the Company.
Mr. Karson was appointed Chief Executive Officer effective as of July 1, 2001.
Under his employment agreement, Mr. Karson received a one-time grant of 10,000
shares of restricted stock and a one-time grant of options to purchase 100,000
shares of the Company's common stock. Mr. Karson's compensation for the six
months he served as Chief Executive Officer in 2001 consisted of $187,500 in
base salary payments and a $50,000 bonus, which bonus was fully paid by March
2002. Mr. Karson is also entitled to receive options to purchase 50,000 shares
of common stock for his service as Chief Executive Officer in 2001. The
Compensation Committee believes that Mr. Karson's compensation should be heavily
weighted towards enhancing stockholder value, and accordingly, Mr. Karson's
employment agreement provides that a significant portion of his future
compensation will be based upon the Company's overall performance. See
"Employment Agreements with Certain Executive Officers."
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 the
individual performance of such named executives.
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 2001 any officer
-15-
compensation which will be subject to 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 Interlocks and Insider Participation
The Compensation Committee makes all compensation decisions. During 2001,
the following directors served on the Compensation Committee: Charles A.
Koppelman, John Madden and Peter Migliorini. During the fiscal year 2001, no
interlocking relationship existed between the Company's Board of Directors or
Compensation Committee and the board of directors or compensation committee of
any other company.
COMPENSATION COMMITTEE
Charles A. Koppelman
John Madden
Peter Migliorini
-16-
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Common Stock during the period beginning on
December 31, 1996 and ending on December 31, 2001 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.
[Graph Appears Here]
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
Steven Madden, Ltd. 100.00 147.55 165.85 371.94 148.78 274.37
Russell 2000 Index 100.00 120.69 116.53 139.40 133.53 134.72
S&P Footwear Index 100.00 66.90 64.80 76.23 91.31 91.62
-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 directors and the persons
named in the Summary Compensation Table; 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."
Name and Address of Amount and Nature of Percentage (%)
Beneficial Owner(1) Beneficial Ownership(2) of Class(2)
- ------------------------------------------------- ----------------------- --------------
Charles A. Koppelman 185,000 (3) 1.47%
Jamieson A. Karson 85,000 (4) *
Arvind Dharia 122,000 (5) *
Gerald Mongeluzo 50,000 (6) *
Richard Olicker 113,700 (7) *
Mark Jankowski 3,750(8) *
Marc Cooper 7,500 (9) *
John Madden 20,000 (10) *
Peter Migliorini 20,000 (11) *
Heywood Wilansky 20,000 (12) *
Rhonda Brown (13) -0- N/A
Steven Madden (14) 1,865,189 (15) 13.86%
BOCAP Corp. 1,865,189 (16) 13.86%
T. Rowe Price Associates, Inc. (17) 820,500 6.61%
T. Rowe Price Small-Cap Value Fund, Inc. (18) 650,000 5.24%
Liberty Wanger Asset Management, L.P. (19) 1,061,900(20) 8.56%
WAM Acquisition GP, Inc. (21) 1,061,900(22) 8.56%
Benson Associates, LLC (23) 640,400 5.16%
Kennedy Capital Management, Inc. (24) 713,800 5.75%
Directors and Officers as a Group (13 persons) 715,675(25) 5.46%
- ----------------------
* 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 12,407,716
shares of Common Stock outstanding (excluding treasury shares) as of the
Record Date.
(3) Includes (i) 175,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Koppelman, (ii) 7,500 shares of Common Stock held by
Mr. Koppelman and (iii) 2,500 shares of restricted Common Stock held by Mr.
Koppelman.
(4) Includes (i) 75,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Karson and (ii) 7,500 shares of Common Stock held by
Mr. Karson's wife and (iii) 2,500 shares of restricted Common Stock held by
Mr. Karson's wife.
(5) Includes 122,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Dharia.
(6) Includes 50,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Mongeluzo.
(7) Includes 112,500 shares of Common Stock issuable upon the exercise of
options held by Mr. Olicker.
(8) Includes 3,750 shares of Common Stock issuable upon the exercise of options
held by Mr. Jankowski.
(9) Includes 7,500 shares of Common Stock issuable upon the exercise of options
held by Mr. Cooper.
(10) Includes 20,000 shares of Common Stock issuable upon the exercise of
options held by Mr. J. Madden.
(11) Includes 20,000 shares issuable upon the exercise of options held by Mr.
Migliorini.
(12) Includes 20,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Wilansky.
-18-
(13) Ms. Brown resigned as President of the Company effective as of September
21, 2001.
(14) Mr. Madden resigned as Chief Executive Officer of the Company effective as
of July 1, 2001. He currently holds the position of Creative and Design
Chief of the Company, which is a non-executive position.
(15) Includes (i) 809,000 shares of Common Stock held by BOCAP, a corporation
wholly-owned by Mr. S. Madden, (ii) 1,051,189 shares of Common Stock
issuable upon the exercise of options held by Mr. Madden.
(16) 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.
(17) Based upon a Schedule 13G filed with the Securities and Exchange Commission
on February 11, 2002. The address for such stockholder is 100 E. Pratt
Street, Baltimore, MD 21202.
(18) Based upon a Schedule 13G filed with the Securities and Exchange Commission
on February 11, 2002. The address for such stockholder is 100 E. Pratt
Street, Baltimore, MD 21202.
(19) Based upon a Schedule 13G filed with the Securities and Exchange Commission
on February 12, 2002. The address for such stockholder is 227 West Monroe
Street, Suite 3000, Chicago, IL 60606.
(20) Includes 1,061,900 shares beneficially owned by WAM Acquisition GP, Inc.
(21) Based upon a Schedule 13G filed with the Securities and Exchange Commission
on February 12, 2002. The address for such stockholder is 227 West Monroe
Street, Suite 3000, Chicago, IL 60606.
(22) Includes 1,061,900 shares beneficially owned by Liberty Wagner Asset
Management, L.P.
(23) Based upon a Schedule 13G filed with the Securities and Exchange Commission
on February 13, 2002. The address for such stockholder is 111 S.W. Fifth
Avenue, Suite 2130, Portland, OR 97204.
(24) Based upon a Schedule 13G/A filed with the Securities and Exchange
Commission on February 14, 2002. The address for such stockholder is 10829
Olive Blvd., St. Louis, MO 63141.
(25) Includes 695,675 shares issuable upon the exercise of options.
-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. In
July 2001, the Company's stockholders approved an amendment to the 1999 Plan
increasing the number of shares of common stock subject to the plan from 975,000
to 1,600,000 shares. The Board of Directors has amended the 1999 Plan, subject
to stockholder approval, to authorize 680,000 additional shares for future
awards (the "1999 Plan Proposal"). The affirmative vote of the holders of a
majority of the total votes cast on the 1999 Plan Proposal is needed to approve
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 by 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 1,600,000 shares. The 1999
Plan Proposal would authorize the use of up to an additional 680,000 shares of
the Company's common stock for a total of 2,280,000 shares being available for
issuance under 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 "Exchange Act"), 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 "Plan
Administrator"). Except for the terms and conditions explicitly set forth in the
Plan, 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.
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.
-20-
The Plan Administrator can determine at the time the Option is granted in
the case of Incentive Options, or at any time before exercise in the case of
Non-Incentive 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.
Options granted 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 Plan Administrator 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.
For federal income tax purposes, the grant to an optionee of a
Non-Incentive Option will not constitute a taxable event to the optionee or to
the Company. Upon exercise of a Non-Incentive Option (or, in certain cases, a
later tax recognition date), the optionee will recognize compensation income
taxable as ordinary income, measured by the excess of the fair market value of
the Common Stock purchased on the exercise date (or later tax recognition date)
over the amount paid by the optionee for such Common Stock, and will be subject
to tax withholding. The Company may claim a deduction for the amount of such
compensation. The optionee will have a tax basis in the Common Stock purchased
equal to the amount paid plus the amount of ordinary income recognized upon
exercise of the Non-Incentive Option. Upon the subsequent sale of the Common
Stock received upon exercise of the Non-Incentive Option, an optionee will
recognize capital gain or loss equal to the difference between the amount
realized on such sale and his or her tax basis in the Common Stock, which may be
long-term capital gain or loss if the optionee holds the Common Stock for more
than one year from the exercise date.
For federal income tax purposes, neither the grant nor the exercise of an
Incentive Option will constitute a taxable event to the optionee or to the
Company, assuming the Incentive Option qualifies as an "incentive stock option"
under Code ss.422. If an optionee does not dispose of the Common Stock acquired
upon exercise of an Incentive Option during the statutory holding period, any
gain or loss upon subsequent sale of the Common Stock will be long-term capital
gain or loss, assuming the shares represent a capital asset in the optionee's
hands. The statutory holding period is the later of two years from the date the
Incentive Option is granted or one year from the date the Common Stock is
transferred to the optionee pursuant to the exercise of the Incentive Option. If
the statutory holding period requirements are satisfied, the Company may not
claim any federal income tax deduction upon either the exercise of the Incentive
Option or the subsequent sale of the Common Stock received upon exercise
thereof. If the statutory holding period requirement is not satisfied, the
optionee will recognize compensation income taxable as ordinary income on the
date the Common Stock is sold (or later tax recognition date) in an amount equal
to the lesser of (i) the fair market value of the Common Stock on that date less
the amount paid by the optionee for such Common Stock, or (ii) the amount
realized on the disposition of the Common Stock less the amount paid by the
optionee for such Common Stock; the Company may then claim a deduction for the
amount of such compensation income.
-21-
The federal income tax consequences summarized hereinabove are based upon
current law and are subject to change.
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
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 Option
granted before amendment 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 stockholders.
Recommendation of the Board of Directors
The Board of Directors unanimously 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 1999 Plan Proposal.
-22-
PROPOSAL THREE
RATIFICATION OF THE 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 2002 fiscal
year was in the best interests of the Company. The affirmative vote of the
holders of a majority of the total votes cast on this proposal is needed to
ratify the selection of the firm of Richard A. Eisner & Company, LLP as
independent public accountants for the Company. Representatives of Richard A.
Eisner & Company, LLP are expected to be present at the Annual Meeting to
respond to questions and to make a statement should they so desire.
Audit Fees
For the year ended December 31, 2001, the Company incurred professional
fees to its independent public accountants in the amount of $130,000 related to
auditing services.
Financial Information Systems Design and Implementation Fees
For the year ended December 31, 2001, there were no fees billed by the
Company's independent public accountants for professional services rendered for
information technology services relating to financial information systems design
and implementation.
All Other Fees
For the year ended December 31, 2001, the Company incurred professional
fees to its independent public accountants in the amount of $84,000 related to
all other services.
The Audit Committee has considered whether the non-audit services provided
by the Company's independent public accountants during the year ended December
31, 2001 were compatible with the independent public accountants' independence
and has concluded that Richard A. Eisner & Company, LLP has maintained its
independence.
Recommendation of the Board of Directors
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 ratification of the selection of
Richard A. Eisner & Company LLP as independent public accountants for the
Company for fiscal year 2002.
-23-
STOCKHOLDER PROPOSALS AND SUBMISSIONS
FOR THE COMPANY'S 2003 ANNUAL MEETING
In accordance with rules promulgated by the Securities and Exchange
Commission, any stockholder who wishes to submit a proposal for inclusion in the
proxy material to be distributed by the Company in connection with the 2003
Annual Meeting must do so no later than December 18, 2002.
In addition, in accordance with Article I, Section 7(f) of the Company's
Amended & Restated By-Laws, in order to be properly brought before the 2003
Annual Meeting, a matter must be (i) specified in the notice of such meeting
given by or at the direction of the Board of Directors (or any duly authorized
committed thereof), (ii) otherwise properly brought before such meeting by or at
the direction of the Board of Directors (or any duly authorized committed
thereof) or (iii) specified in a written notice given by a stockholder of record
on the date of the giving of the notice and on the record date for such meeting,
which notice conforms to the requirements of Article I, Section 7(f) of the
Amended & Restated By-Laws and is delivered to, or mailed and received at, the
Company's principal executive offices not less than 120 days nor more than 150
days prior to the first anniversary of the date of the Company's 2002 Annual
Meeting. Accordingly, any written notice given by or on behalf of a stockholder
pursuant to the foregoing clause (iii) in connection with the 2003 Annual
Meeting must be received no later than January 17, 2003.
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 19, 2002 By: /s/ JAMIESON A. KARSON
---------------------------------
Jamieson A. Karson
Chief Executive Officer
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 by deleting Section 3 in its
entirety and replacing it with the following:
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 2,280,000
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 amended hereby, the provisions of the Plan are and
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
as of the 8th day of April, 2002
Approved by the Stockholders
this ___ day of May, 2002
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 ONE OF THE BOXES ([FOR] [WITHHOLD
AUTHORITY] [AGAINST] OR [ABSTAIN]) NEXT TO EACH OF THE THREE (3) PROPOSALS
The undersigned hereby appoint(s) Charles A. Koppelman as a proxy (the
"Proxy") for the undersigned, 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 17, 2002, 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 and proxy statement for
the Annual Meeting (receipt of which is hereby acknowledged):
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS NO. 1, 2 AND 3.
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
Charles A. Koppelman, Jamieson A. Karson, Arvind Dharia, Gerald Mongeluzo, Marc
Cooper, John L. Madden, Peter Migliorini and Heywood Wilansky
2) AMENDMENT OF THE 1999 STOCK PLAN
--------------------------------
[ ] FOR the Amendment of the 1999 Stock Plan
[ ] AGAINST
[ ] ABSTAIN
3) RATIFICATION OF THE SELECTION OF RICHARD A. EISNER & COMPANY, LLP. AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY FOR FISCAL YEAR 2002.
---------------------------------------------------------------------
[ ] FOR the ratification of the selection of Richard A. Eisner & Company,
LLP.
[ ] AGAINST
[ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE INDICATED,
THIS PROXY WILL BE VOTED (1) FOR THE ELECTION OF THE EIGHT (8) NOMINEES NAMED IN
ITEM 1, (2) FOR THE AMENDMENT OF THE 1999 STOCK PLAN IN ITEM 2, (3) FOR THE
RATIFICATION OF THE SELECTION OF RICHARD A. EISNER & CO., LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE COMPANY FOR FISCAL YEAR 2002 IN ITEM 3 AND (4) IN THE
DISCRETION OF THE PROXY ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING.
In his discretion, Charles A. Koppelman (or his substitute(s)) 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